Intended for healthcare professionals


PFI hospitals bear the cost of Libor manipulation

BMJ 2012; 345 doi: (Published 30 July 2012) Cite this as: BMJ 2012;345:e5095
  1. Allyson M Pollock, professor,
  2. David Price, senior research fellow
  1. 1Centre for Primary Care and Public Health, Queen Mary, University of London, London E1 2AB, UK
  1. a.pollock{at}

A public inquiry is needed to determine the extent of the problem

The fraudulent manipulation by Barclays Capital of the interbank lending rate (Libor) has real consequences for cash strapped NHS hospitals facing merger and service closure as a result of private finance initiative (PFI) debt repayments.1 Libor, which is used by banks to set interest rates,1 is linked to financial products known as derivatives that are widely used in PFI deals. By manipulating the Libor rate up or down banks can, at the expense of their clients, protect the profits they make from the trading of derivatives and mislead the market about the true cost of bank borrowing. South London Healthcare NHS Trust is in special administration, effectively bankrupt, because trust income is falling but PFI costs are rising,2 partly because of reliance on derivative arrangements of the type marketed by Barclays Capital. The government has yet to examine PFI deals for fraud, although in the United States hospitals and local councils are considering …

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