Showing posts with label profits. Show all posts
Showing posts with label profits. Show all posts

Tuesday 30 July 2013

The PFI scandal that led to NHS Trusts going bust

I received the posting below as a comment on Natalie Bennett's NHS speech LINK  but I feel it is important enough to be published as a Guest Blog:

What an excellent assessment of the problems facing the NHS, and what needs to be done to protect it! Thank you for publishing this speech, Martin.

I write as someone who was diagnosed with Type 1 Diabetes in my late 20's. My care through the NHS for more than 35 years must have cost a lot of money, but because of it I was able to continue with a relatively normal working life, and pay large amounts of income tax and NIC. That, to me, is the way things should be.

Hopefully, with a newly-diagnosed Type 1 diabetic in the cabinet, there might be a better appreciation of the NHS within government, but I won't hold my breath!

I spent 25 years of my working life as a Tax Inspector, and in the early 2000's had to consider the first accounts of a company which had won a PFI contract to build a small hospital and provide all of its support services for 30 years. I was concerned at the odd accounting treatment of the transaction, which it appeared would guarantee that the company would automatically make losses (for tax purposes)until the final year, when it would make a huge profit. The losses each year would be set against the trading profits of the two large groups which owned the company 50/50 (one a construction group, the other a major services provider).

I asked for a copy of the PFI contract, and other supporting documents, to see whether I could challenge what looked like artificial tax avoidance, and after a lot of delay and prevarication, I eventually received them. The contract was about 150 pages long, and very complex, but effectively meant that the NHS (or hospital trust involved) would repay the £30m capital cost of the building, plus a generous rate of interest on the "mortgage" for this amount, over the thirty years. The company could charge whatever it wanted to (with very little chance of the NHS being able to challenge the amount) for the services provided during the thirty years, with no chance of the hospital renegotiating the contract, finding another provider or taking the services back "in house".

How had the NHS allowed itself to be tied up in such a bad contract? Because of instructions from the government that, in order to encourage private companies to get involved in PFI projects, it would guarantee to pay their legal and professional costs of entering into contracts. So, in the case I was looking at, the NHS had paid £1.5m for the company's lawyers and accountants to draw up a contract which "stitched-up" the NHS and gave the opportunity for tax avoidance by the two big groups behind the PFI company (one of which had a former cabinet minister as its Chairman).

Why were Chancellors Ken Clarke and Gordon Brown so keen on promoting PFI contracts? Because it kept the cost of providing major capital projects "off Balance Sheet" as far as the government's accounts were concerned. They could claim to be providing new hospitals without this being charged against their budget deficit, even though the eventual costs of doing things this way would be much higher (hence NHS Trusts going bust).

I'm afraid that the Official Secrets Act prevents me from identifying the hospital and companies involved, or from disclosing the outcome of my investigation of the accounts, but it was an episode towards the end of my career in the Inland Revenue that left me frustrated by the actions of my "masters" in the Treasury!

Monday 28 May 2012

Alperton teachers strike against Co-op Academy move

Michael Gove - profits ahead for private providers?

On Thursday 31st May NUT members at Alperton Community school in Brent will be on strike against their governors decision to convert to a Co-op academy. The message to parents below from the teachers at Alperton explains why they have taken this very difficult decision to strike. There will be a picket at the school on Thursday from 8.00 am at both the Stanley Avenue and Ealing Rd entrances.

Jean Roberts, Joint BTA Secretary said, “We are proud that teachers at Alperton are standing up against this decision. The academies programme is Gove's plan to worsen state education by removing legal safeguards on teachers pay and conditions ultimately allowing unqualified teachers to teach, privatising the management of all state funded schools and again ultimately opening them all up to be run for profit. Their idea is to have a chaotic free-for-all market in state education which they say will drive down costs and improve the quality of education.

“It will certainly drive down costs but the privatisation of state education for profit will no more improve the quality of education than it will improve the quality of service for the majority of people in the national health service.”

Dear Parents/Carers
Members of the National Union of Teachers at Alperton Community School will be taking strike action on Thursday 31st May 2012. This is  as a result of the school’s  Governing body voting on Tuesday 22nd May 2012 to become an Academy. 

We ask for your support for our action and want to explain briefly why we are doing this.
Academies are publicly funded but privately run schools outside of the Local Authority. The NUT, in fact all education unions and the TUC, are opposed to schools being run in this way and believe that this Government wants to privatise the management of education as they do with, for example, the NHS, Royal Mail and prisons. 

Even though Alperton has applied to become a ‘Co-operative’ Academy, there is no evidence that Academies benefit pupils and no evidence that they get better examination results. The teachers are concerned for the future of all students and staff in all schools that change to Academies.

The Government has overspent on converting academies and free schools by £600 million. There is no guarantee that the short term 'bribe' to get schools to become academies will continue, rather the reverse. All schools and academies will receive the same funding from April next year. In fact there has been overpayment of more than £120 million to academies, some having to pay this back by July. The first for profit company has been agreed to run a free school in Suffolk. Others will follow.

Members of staff at the school, both teachers and non teachers have voted by a large majority in a secret ballot against Academy status and the Chair of Governors has acknowledged that there is no ‘consensus’ amongst the different stakeholders.   As a parent you may have been given a letter by your child asking you to vote ‘yes’ or ‘no’ but there has not really been any attempt to provide you with both sides of the argument.

Teachers and staff at the school work incredibly hard to achieve the best results for students attending the school.  Teachers do not decide to take strike action lightly.  
We strongly urge the Governing Body of the school to reconsider its application to become a Cooperative Academy and to undertake a thorough and much longer consultation, with parents and carers being allowed fully to hear both sides of the argument before having their say.
Yours sincerely
National Union of Teachers at Alperton Community School