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'credit Warning For New Hospitals'

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The NHS hospital building programme in England could be badly disrupted by the recession, a health service memo seen by the BBC suggests.

A document leaked to the Conservatives raises concerns over projects funded through private finance initiatives.

In a meeting with Health Secretary Alan Johnson, senior NHS managers were told there is no "plan B" for when the banks cannot provide capital, the memo says.

But a government source said work was going ahead as planned...

Link to full article:

Credit warning for new hospitals

It's looking like half-built hospitals will have to be abandoned when the credit dries out. Yet another irresponsible waste of future tax payers money.

But what a relief, though, that this PFI debt is all off balance sheet, so our foreign creditors will never know about it :rolleyes:

Edited by bugged bunny

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I reckon the 'Connecting for Health' IT project will be quietly canned aswell, at God knows what expense.

An enormous white elephant and testament to the influence that management/IT consultancies have managed to gain over civil service decision makers.

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This is not a disaster. This is great news.

The disaster is the ongoing rape of the taxpayer by PFI companies that will continue for another 30 years stemming from these odious contracts.

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Link to full article:

Credit warning for new hospitals

It's looking like half-built hospitals will have to be abandoned when the credit dries out. Yet another irresponsible waste of future tax payers money.

But what a relief, though, that this PFI debt is all off balance sheet, so our foreign creditors will never know about it :rolleyes:

Personally this news cheered me up on an otherwise unrelentingly miserable weekend (global financial collapse, relative died last week, dog in the process).

The government has been busy transferring the NHS to private companies like Virgin and GE and giving them a shed-load of money for the privilage of making a shedload more by outsourcing work and down-skilling staff. I was very concerned about my future since I could be replaced with a Bengali cowherd with a good line in bull5hit and it would take at least until after the next election for any comeback. In the NHS this is considered "long term planning" now.

It looks like these plans may all now be floundering as companies cannot get loans to build new hospitals and imaging centres and the government runs out of money to bribe them. Also our plunging £ makes Bengali cowherds relatively pricey to employ.

So it looks like socialism will apply to the NHS as well as to our financial institutions in the immediate future.

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testament to the influence that management/IT consultancies have managed to gain over civil service decision makers.

100% Agree. I wince when I hear of the grip the consultants have them in. A well run business with good Directors would consider it an act of dishonour to need to bring in consultants to tell them what to do. I would personally fall upon my sword if it came to that.

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This is not a disaster. This is great news.

The disaster is the ongoing rape of the taxpayer by PFI companies that will continue for another 30 years stemming from these odious contracts.

Dead right. And a plague upon the politicians (both Tory & Labour) who are behind it.

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Dead right. And a plague upon the politicians (both Tory & Labour) who are behind it.

genuinely interested to know - how are the tories behind it?

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genuinely interested to know - how are the tories behind it?

The Tories started the PFI process, in a small way, and like other things (looting money from pension funds etc) Gordon Brown extended it greatly and also cocked up the process so that the risk was transferred back to the taxpayer.

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genuinely interested to know - how are the tories behind it?

The Tories invented it! It was introduced by Norman Lamont in 1992. At the time Labour bleated long & loud about how they'd abandon it once in office (their reasons being all the problems we are now seeing) but after the 1997 election, surprise, surprise, they expanded it...

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Link to full article:

Credit warning for new hospitals

It's looking like half-built hospitals will have to be abandoned when the credit dries out. Yet another irresponsible waste of future tax payers money.

But what a relief, though, that this PFI debt is all off balance sheet, so our foreign creditors will never know about it :rolleyes:

The banking crisis means that PFI has descended into farce.

Now the process essentially means the government borrows money to bailout the banks so they can lend money to PFI contractor so that they can in turn charge the government a hefty mark up fee on top of the loan.

The government was always able to borrow money more cheaply than the private industry so PFI was never going to save the taxpayers money. Its only purpose was allow Brown to keep the liabilities hidden off the government balance sheet in a sort of PFI SIV. Now that the government is funding the banks as well this is going to ve very difficult to continue in the future.

Edited by up2nogood

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Could posters do the rest of us a favour and state at least once, preferably in the opening posting or title what PFI and other acronyms mean?

I'm beginning to hate our language for all the bloody acronyms everywhere.

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The Tories started the PFI process, in a small way, and like other things (looting money from pension funds etc) Gordon Brown extended it greatly and also cocked up the process so that the risk was transferred back to the taxpayer.

I can't see how tyhat makes them to blame - creating a tool and abusing it are not the same thing - but thanks for informing me

seems a good idea in principle, as does home ownership and credit availability, but all things in moderation - which actually plays to one of the virtues of the Tory party - sensible conservatism (which has been lost from time to time)

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Invented by the Conservatives but perfected by Labour.

Yes our glorious leaders, Blair and Brown, have taken Pfi to entirely new realms. They are economic prophets; geniuses of their time.

Edited by Errol

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seems a good idea in principle, as does home ownership and credit availability, but all things in moderation - which actually plays to one of the virtues of the Tory party - sensible conservatism (which has been lost from time to time)

It is a pointless funding mechanism which has very little to do with whether services should be supplied by the private or pubic sector. Hospitals were normally built by private companies even before PFI. The NHS is not a builder anymore than it is a drugs manufacturer. PFI is simply an exercise in dodgy accounting.

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I saw a financial adviser last year. He was telling me that investment in PFI could be packaged as a venture capitalist investment, so you'd get your tax back and your 'risky' investment was with the government.

His calc was something like this:

Invest 10k for 5 years, automatically get the tax you paid on it back (6.6k if 40% rate). Invest some in government bonds, say 6.6k @5%, invest the rest in a choice of PFI schemes (his example was buying ambulances), with a return of say 10k @10%

I may have the exact numbers wrong, but this example would turn 10k into nearly 25k over 5 years, just to keep the governement's debt low!!!

... can anyone confirm this?

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The banking crisis means that PFI has descended into farce.

PFI stands for the private finance initiative.

The banking crisis has not led to PFI descending into a farce. There is just less available bank cash around at the moment so that the lenders that ARE still able to lend (about 5 or 6 banks in the UK market and EIB now coming into the market more than it did before to help make up the shortfall) cannot do everything at once so the pipeline has had to slow down. The 5 or 6 banks that are still able to lend into PFI (and in fact,prioritising lending into this market over other markets) are working flat out trying to finalise negotiating all the current deals and move onto the next lot. The bank market in UK PFI was never that big a pool in the first place; it was an arena for specialist lenders; not high street banks. These remaining PFI banks are currently working like dogs and even recruiting new bankers into their teams to help cope with the demand. For example, a big roads deal completed in Scotland last week, the M25 expansion is limping towards completion as well as the multi-billion pound manchester waste pfi deal - these latter two are indeed limping, but that's because the deals are so big that dozens of banks from across UK and Europe are needed to fund them, rather than, for example, a £80 million project which just needs one or two banks. Smaller PFI deals in the range of £20-60 million apiece are moving forward without delay because many of them need only one bank lender - these include, among other things, street lighting, police stations and fire stations.

The PFI hospital deals have been a mess for years, since way before the credit crunch - the DoH simply ran out of money about 3 years ago to fund the large acute hospitals and had to cancel the entire programme. But the smaller community hospitals are still going through the PFI process (or the LIFT process, which is similar to PFI but a little different).

The advantage of PFI to the Govt is simply that it enables the Govt to pay for 10 schools to be built today, rather than paying for one school to be built per year over the next 10 years (I am only using schools as an example; I don't want to get dragged into a debate over the value of the separate BSF programme (part of which is PFI and part of which is not). So rather than pay up front today, you pay a much smaller amount today but you stagger your payments over the next 25 years. But as a funding concept it wasn't actually developed for a developed country like the UK; it is based upon the purer principle of project finance which has been around since the 1960's and was aimed at financing the building of large scale infrastructure in undeveloped countries. I've worked in that industry for 15 years, only getting involved in UK PFI in the last few years.

Edited by rex

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It's looking like half-built hospitals will have to be abandoned when the credit dries out. Yet another irresponsible waste of future tax payers money.

But what a relief, though, that this PFI debt is all off balance sheet, so our foreign creditors will never know about it :rolleyes:

An awful lot of what is said in the press about PFI is utter rubbish, because most journalists don't understand PFI. You wouldn't get a half built hospital because bank credit has dried up. Once a deal completes, the lender "books" that debt in readiness for it being drawn down over the next 18 month period (ie as the construction of the building rolls out). The bank might run out of available credit for future deals, but not for a deal where the project documents has been signed and the debt booked. They wouldn't start to build the hospital until the docs have been signed and the debt booked. OK, the bank might go bust mid way through the construction of the hospital, but we're not talking about high street banks here that lend money for resi mortgages - many of these PFI banks are highly conservative outfits, which is why they are able to keep lending in the current climate; they were not as exposed to sub-prime securitisations as others.

And as for off balance sheet, well a number of them aren't off balance sheet any more. They changed the accounting rules and that changed the manner in which one calculates whether or not a PFI project is off balance sheet; although I don't think they have yet worked out which ones are now on balance sheet and which ones are off; I believe it comes down to an assessment of the extent to which risk has been passed to the private sector, on a deal by deal basis. The off balance sheet status isn't really the main driver anymore for putting a project through the PFI process however.

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are they still pushing ahead with that insane scheme to track every motorist with satellites and charge road tolls through which roads you drive on?

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An awful lot of what is said in the press about PFI is utter rubbish, because most journalists don't understand PFI. You wouldn't get a half built hospital because bank credit has dried up. Once a deal completes, the lender "books" that debt in readiness for it being drawn down over the next 18 month period (ie as the construction of the building rolls out). The bank might run out of available credit for future deals, but not for a deal where the project documents has been signed and the debt booked. They wouldn't start to build the hospital until the docs have been signed and the debt booked. OK, the bank might go bust mid way through the construction of the hospital, but we're not talking about high street banks here that lend money for resi mortgages - many of these PFI banks are highly conservative outfits, which is why they are able to keep lending in the current climate; they were not as exposed to sub-prime securitisations as others.

And as for off balance sheet, well a number of them aren't off balance sheet any more. They changed the accounting rules and that changed the manner in which one calculates whether or not a PFI project is off balance sheet; although I don't think they have yet worked out which ones are now on balance sheet and which ones are off; I believe it comes down to an assessment of the extent to which risk has been passed to the private sector, on a deal by deal basis. The off balance sheet status isn't really the main driver anymore for putting a project through the PFI process however.

Hmm. The government is not exactly falling over in its rush to implement the International Financial Reporting Standards

They were pushed back to 2009/2010 in the 2008 budget

http://www.todsmurray.com/news/bulletins/t...g-standards.htm

As for PFI banks being 'conservative outfits' does your definition include the likes of RBS and HBOS both of whom were big players in the PFI space ?

http://business.scotsman.com/bankinginsura...-PFI.2830069.jp

BTW the SNP have picked up on the nonsense of the bailout banks charging the government commercial rates of interest on money already supplied by the taxpayer

http://www.snp.org/node/14700

As the article points out

PFI was used so the banks took the risk on the investment not the Government. With banks now in Government ownership taxpayers are paying themselves for taking the risk with banks taking all the benefit. It is a ridiculous situation.

When all the PFI projects do get booked it is going to make interesting reading

http://dizzythinks.net/2008/11/pfi-bombshell.html

Edited by up2nogood

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Invented by the Conservatives but perfected by Labour.

Actually I think it was Mussolini in his miracle economy (as previously discussed on a HPC thread that I can't find any more ... it's how he built new roads and made the trains run on time).

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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