1. Could you provide a brief overview of what you see as the main problems of private finance projects in the health sector and what benefits, if any, private finance projects have brought?
The benefits are non-existent, except of course to the shareholders of the companies financing the PFI projects. The rate of profit to some of these companies has been very high indeed. For example one of the most prominent companies involved in PFI projects is the Innisfree Group. The rate of profit (including directors' remuneration in the profits) for the shareholders of Innisfree Limited between 1998 and 2008 has been more than 200% pa (see Edwards C, June 2009, 73).
Similarly Cuthbert and Cuthbert, 2008 (page 10) found that the rate of profit for equity shareholders involved in the New Royal Infirmary of Edinburgh (a PFI hospital) is more than 3,000% pa.
The problems associated with PFI projects are considerable. They include;
- higher indirect costs as a result of making PFI projects "affordable";
- distortion of treatment priorities;
- poor value for money from making small changes; and