40 Labor MPs have called on Rachel Reeves to scrap plans to fund NHS buildings through private finance initiatives (PFIs), which would saddle the health system with debt.
Work MPs including Kat Eccles, Clive Lewis and Rebecca Long-Bailey demanded the Chancellor commit to investing in the NHS without using private capital and warned that a return to the New Labour-era private funding of public projects would damage confidence in government.
“We ask that you learn from the mistakes of the past. We must reject the notion that private funding can be used to create public services in a way that brings long-term benefit to society,” their letter said. “We ask that you abandon any plans for new private financing in National Health Service from the autumn budget and any future policies.”
Although it was originally conceived under the Conservatives, Tony Blair Work the government made extensive use of PFI, a form of public-private partnership used to build schools, hospitals and other public infrastructure, without increasing public debt.
In a joint letter, dozens of Labor MPs said using private partnerships was more expensive than publicly funded projects and had contributed to the NHS's mounting debts since 1997, with 80 trusts still paying out a total of £44 billion while services suffered.
“As I'm sure you know, using private funding to build new health facilities does not bring new money into the NHS – it is simply an expensive way of borrowing money that future generations of taxpayers will have to pay back,” MPs said.
“It is also unlikely that using private finance will allow you to remain within current investment and borrowing rules, even if they are classified as outside the public sector balance sheet.
“Office for Budget Responsibility indicated in 2017, the use of “off-balance sheet” public infrastructure financing to circumvent borrowing rules constitutes a “fiscal illusion” and should only be used where there is a clear value for money rationale.
“However, since The State Audit Office was created in 2017 there is no evidence that these schemes are cost-effective as PFI hospitals are 70% more expensive than the government-funded option.”
UK Infrastructure Strategy And 10 Year Health Plan mention exploring the possibility of using private capital to finance the construction of NHS facilities, including community health centers (HCHCs).
Deputies pointed to analysis this suggests that using private finance for small projects provided even worse value to taxpayers than using it for larger projects. NHCs are likely to be closer in nature to these small projects than to large hospitals.
More than 50 academics, including Labor peer and accounting expert Prem Sikka, have already written to the Chancellor asking him to “abandon this dangerous and destructive proposal and fund public services through direct taxation or borrowing.”
Labour's general election manifesto stated that the National Health Service with the Labor Party “will always be publicly owned and publicly funded”.
Wes Streeting, the health secretary, has already tried to reassure MPs that any new use of private funding in the NHS will be limited and targeted and aimed at avoiding the pitfalls of PFI.
A government spokesman said: “This government is committed to moving healthcare out of hospitals and into the community, as set out in the 10-year health plan.
“As set out in our 10-year infrastructure strategy, we are exploring the use of new public-private partnership (PPP) models for taxpayer-funded projects in very limited circumstances where they can provide value for money, for example in certain types of primary and public health infrastructure or to decarbonise wider public assets.
“The design and development of any future PPP models will be based on lessons learned from past and current models.”
