SR investigation

The billion pound

payback in the name

of Scotland's NHS

 

Kenneth Roy

Here is an interesting, though useless, piece of information. If you were determined to count to a billion, and did so at the rate of one number per second, it would take you 32 years to complete the assignment. Meals could be an issue unless you had a mad friend continuing to count as you ate. You would also have to do without sleep or have a team of assistants working in shifts while you kipped. 
     It is unlikely that I will be around in the middle years of the century to celebrate your remarkable achievement, but our deputy editor is still young and has undertaken to monitor your progress to the finishing line. 
     The reason you must go all the way to the magic billion is to imagine how it must feel to be NHS Forth Valley, which has committed itself to a programme of repayments – paybacks as they are sometimes known – to the company it has entrusted with the largest construction project in the history of the NHS in Scotland. The hospital is Forth Valley Royal, which was opened recently by the Queen, and cost just over £300m to build. The cost was met by a private consortium called Forth Health Limited.
     These repayments will continue for all the years it will take you to count to a billion. By 2043, you will finally have exhaled your last digit, and will be preparing for your interview with Dame Jackie Bird, while NHS Forth Valley will almost simultaneously have made its last repayment to Forth Health Limited. How much will the health board have shelled out by then for its 32-year-old hospital costing just over £300,000,000 in 2010? The answer – I have it in front of me – is £1,014,687,000. 
     You will have counted to a billion. NHS Forth Valley will have spent a billion. Forth Health Limited will have had a return of around £700million on its original investment. And only you will have been sectioned under the Mental Health Act. 

 

     Last week the Treasury Select Committee of MPs issued a report damning PFI (Private Finance Initiative) – the type of funding selected by NHS Forth Valley for its showcase hospital in Larbert. The committee said PFI 'does not provide taxpayers with good value for money' and is 'an extremely inefficient method of financing projects'. Compare this hatchet job on PFI by the Treasury Select Commitee with the glowing endorsement of PFI, only last year, by the chairman of NHS Forth Valley, Ian Mullen, who insisted it was excellent value for money.
     Mr Mullen said the public did not care how Forth Valley Royal Hospital was financed: 'The 300,000 people in Forth Valley are far more interested in the fact that they have a new hospital than what the funding mechanisms are'. 
In the face of stiff competition, this must qualify as one of the most condescending remarks ever made by a public appointee in Scotland about the people he is there to serve. 
     How does the chairman know what the 300,000 people in Forth Valley think about this or anything else? What gives him the right to speak for them? Are the people of Stirling and Falkirk even aware of the staggering final cost of this project and the vast profit which will accrue to its private developers? Mr Mullen's view of the patients is, however, unhappily reminiscent of the cavalier attitude of NHS Greater Glasgow and Clyde towards the critics (led by this magazine) of the train crash it insisted on arranging with Southern Cross Healthcare months before the care provider collapsed.
     Either the Treasury Select Committee is right about the dubious merits of PFI or Mr Mullen is right. They can't both be right. A few days ago, there was a salutary example of how a PFI project can go seriously wrong when NHS Ayrshire and Arran announced that it had cancelled a proposed extension of East Ayrshire Community Hospital because of contractual difficulties with its PFI partner. Local SNP MSP Adam Ingram observed: 'The benefits were short-lived'.

 

     Meanwhile, it is instructive to study the directors' report and financial statements (to 31 December 2010) of Forth Health Limited, the consortium led by builder John Laing, which came to a deal with NHS Forth Valley to 'design, build, finance and operate' the new hospital. The company turned in a loss for the year of £400,000, paid no tax, and was due to start paying off a £350m bank loan in March 2011. 
     'The current economic conditions create some uncertainty', the directors acknowledge, particularly about the ability of  sub-contractors to 'continue to meet contractual commitments'. It was only after 'making enquiries' – of an undisclosed nature – that the directors were able to express a 'reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future'. This, then, is not a directors' report brimming with confidence – to put it mildly.
     It is worth reminding ourselves that Forth Health Limited is responsible for the continuing operation of a major public project in Scotland and has signed a 30-year – repeat 30-year – contract for 'facilities management', including security, portering, cleaning and maintenance at the hospital, with Serco, an 'international service company'. As we reported last week, Serco is also responsible for such facilities in England as Yarl's Wood immigration removal centre and Hassockfield secure training centre, both the subject of damning inquiries for their standard of care of vulnerable people. Serco, with 600 on its payroll at the Larbert hospital (excluding its famous collection of robots), is now one of the largest employers in Forth Valley. 
     We must hope that Mr Mullen's faith in these arrangements continues to be justified for the next 30 years. Start counting.

 

Kenneth Roy is editor of the Scottish Review