Please find enclosed the British Medical Association's submission to the above inquiry. The BMA views this as a crucial issue to be discussed and we welcome the Committee's timely inquiry.
The BMA submission focuses on Private Finance Initiative projects in healthcare. BMA policy has been consistently opposed to the use of PFIs to develop healthcare facilities since its introduction in the early 1990s. The main objections to the use of PFI schemes have been the high cost, associated low value for money, the lack of flexibility that results, and the transfer of public funds into private sector profits. The BMA has significant concerns about their long-term affordability, and their impact on local health economies and service delivery.
If required, we very much welcome any opportunity to further expand on the issues raised in the submission.
24 September 2009
The British Medical Association (BMA) welcomes the opportunity to respond to the Select Committee on Economic Affairs inquiry into Private Finance Projects and off-balance sheet debt. We hope that our submission is useful.
The BMA is an independent trade union and voluntary professional association which represents doctors and medical students from all branches of medicine all over the UK. We have a membership of over 143,000 worldwide. We promote the medical and allied sciences, seek to maintain the honour and interests of the medical profession and promote the achievement of high quality healthcare.
The BMA submission focuses on Private Finance Initiative (PFI) projects in healthcare. Under PFI the public sector enters into a long term contractual arrangement with private sector companies to design, build, finance and operate an asset like a hospital. At the end of the contractual period the buildings then pass to the public sector. The NHS does not make an upfront capital payment but is contractually obligated to pay an annual leasing and maintenance payment to the private sector for the use of the facilities.
BMA policy has been consistently opposed to the use of PFIs to develop healthcare facilities since its introduction in the early 1990s. The main objections to the use of PFI schemes have been the high cost, associated low value for money, the lack of flexibility that results, and the transfer of public funds into private sector profits. The BMA has significant concerns about their long-term affordability, and their impact on local health economies and service delivery.
1. How should the cost and benefits of Private Finance projects be assessed? What discount rate should be used in comparing Private Finance with conventional public procurement? Are current procurement procedures satisfactory? Is enough information disclosed on Private Finance projects fully to assess whether the taxpayer is getting value for money? And
2. How does the performance (eg cost, delivery dates and service quality) of schools, hospitals, prisons, roads and other projects operated under private finance compare to those which were traditionally procured?
1.1 The BMA believes that the Private Finance Initiative (PFI) is "not supported by robust evidence of cost effectiveness"3 and does not provide value for money. Rather, PFI appears to be an unnecessarily costly and short-sighted means of building new hospitals.
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3 2006 BMA Annual Representational Meeting Resolution.