Never mind Panama, it's the Guernsey offshore tax haven where equity in Salford Royal Hospital is parked.
In 2007 Salford Royal NHS Foundation Trust set out a business case for a massive re-vamp of the old Hope Hospital, including a new entrance, new blocks and new clinical departments. The capital cost of the work was £137million which would be financed through a PFI scheme (Private Finance Initiative)...
"The PFI scheme and associated facilities management (FM) services generate an annual unitary charge (UC) of £12.036m at 2007/08 prices" the business case stated "This and other PFI related costs are all affordable within the Trusts overall financial plans covering the period up to 2016/17... During this period the Trust will deliver surpluses, whilst dealing with other NHS cost pressures."
This was written in 2007. We are now in 2016/17, and the `unitary charges', according to the Government's official table, are estimated at £17million for this year, followed by £18million for next year, and rising every year after that to a high of £32million for the year 2041-42. By the time the PFI is over in 2042-43, the total payments for the PFI project are estimated at £705million Ė from an initial £137million cost.
The £705million includes facilities management costs and the latest Trust accounts, for 2015, show the huge annual amounts being paid...£5.37million in interest alone. Stretched over the 34 years of the PFI this would mean that the Trust was paying £170million just in interest Ė more than the original £137million cost of the new blocks.
Meanwhile in 2015, the Trust also paid to the `service concession operator' a £3.126million `repayment of finance lease liability'; £4.707million for the `service element' (facilities management); a `capital lifestyle maintenance' charge of £242,000 and a `contingent rent' of £1.851million Ė giving a total of £15.296million.
Salford Royal NHS Foundation Trust is forecasting a deficit of £14.9million this year, and had a `Better Care at Lower Cost' drive to save £30million by the end of March. Meanwhile, the owners of the PFI equity in Salford Royal Hospital are cashing in...
Balfour Beatty had a 50% holding in the Consort Healthcare SPV (Special Purpose Vehicle) which owns the PFI. In July 2013 Balfour Beatty sold this to HICL Infrastructure Company Limited for £22million, generating a profit of £11.5million... "The proceeds from the transaction...exceed the Directors' valuation by £8.3million" slavered a Balfour Beatty press release at the time (see here).
HICL Infrastructure Company Limited is registered in the offshore tax haven of Guernsey. At the time of the sale, Balfour Beatty was getting an annual rate of return of 18.8%, according to the European Services Strategy Unit, which is studying and producing reports on all the country's PFI projects.
"PFI rewires the relationship between the citizen and the state, so that our public services are no longer owned by, or directly accountable to us" states the Strategy Unit "Because private finance is used not Government borrowing, PFI is significantly more expensive than Government funded projects.
"Your local hospital looks like a normal NHS hospital, except it was financed by a consortia of banks and construction firms" it explains "It might be owned by HSBC via an offshore tax haven, subject to contracts which are so `commercially sensitive' they are not available in the public realm. PFI contracts require Freedom of Information requests just to find out how your local service should operate, where money is really going, and who is responsible for contract maintenance.
"Yet despite frequently calling for an end to `Labours flawed PFI program' whilst in opposition, in 2011 Chancellor George Osborne rebranded and continued the PFI gravy train under the `PFI 2' banner" it adds "With the number of NHS Trusts in financial trouble having doubled in the last financial year, it is up to us to call an end to the madness of PFI."
Meanwhile, the community campaign People vs Barts PFI is calling for the nationalisation of Special Purpose Vehicles to "end profiteering from public assets", and is urging trade union branches, community and other relevant organisations to pass motions in support of its aims.
Its full proposal The People v PFI has a full explanation of what SPVs and PFI are and how they work, together with its alternative nationalisation ideas. The 15 page report can be read here...
As the striking junior doctors wind down their fourth walkout this evening, fighting exploitation and for the future of the NHS, in the background, in some grubby tax haven, financial speculators are making £millions out of the NHS.
ē The Salford Royal Hospital PFI is one of seven current PFIs operating in Salford, almost all of which have equity owned by offshore companies based in Guernsey and Jersey Ė further details to follow.
* To read more about the European Services Strategy Unit and its reports Ė click here
* Also see previous Salford Star article: Striking Junior Doctors say NHS is facing a doctor shortage - click here
Main photo shows junior doctors on the picket line at Salford Royal Hospital this morning. Photo by Steven Speed