Thursday, September 14, 2006

Paper Shuffling... Or Worse?


We all know that quangos love to play post offices, with lots of paper shuffling, official coloured forms to stamp, and boxes to tick. So it's quite possible that yesterday's announcement from the Department of Health is just that:

"Department of Health to buy partnerships UK's stake in Partnerships for Health (PFH)

The Department of Health and Partnerships UK (PUK) today announced that the Department is set to become the sole owner of Partnerships for Health (PfH), the public private partnership set up to encourage investment in GP premises and health centres.

Under the deal, the Department will assume sole responsibility for PfH's 20 per cent stake in each of the 42 NHS LIFT companies. The seven schemes in the fourth wave of NHS LIFT will continue as planned, with the department providing all investment and support to PfH."

In case you don't know, Partnerships UK is a Treasury sponsored quango that promotes PFI deals, and Partnerships for Health is a DoH sponsored quango that... er, promotes PFI deals. NHS LIFT companies are 42 local health authority sponsored quangos that... er, promote and "own" PFI deals.

So amid a flurry of paperwork, press releases, and no doubt expensive "closing" dinners and a sackful of those perspex deal tombstones, one quango has sold its stake in another quango- and all its subsidiary stakes in 42 other quangos- to the Department of Health.

How very useful.

Some questions. First, when we say "sold", what money actually changed hands? Unlike such announcements in the real world, the DoH press release makes no mention of it. But "sold" sort of implies something. And given what we know about NHS LIFT, it should have been quite a lot.

You don't know what LIFT is? It's the government's £1 billion NHS Local Improvement Finance Trust (LIFT) programme to improve primary and community healthcare facilities by building a whole load of new spec offices around Britain. The idea was to get GPs surgeries out of their converted front rooms into glossy new buildings, which would also accomodate NHS dentists and other primary care providers.

Unfortunately, the new accomodation has turned out to be very expensive. The Public Accounts Committee produced figures suggesting LIFT accomodation is 15-20% more expensive than comparable brand new premises, and the excess over the cost of existing premises is often 3 to 4 times higher. A staggering gap.

Which means it's extremely difficult to find paying tenants. So to make the sums add up, GPs and others are being "incentivised" to move in. To start with, the DoH has made it virtually impossible to build new premises outside of LIFT. Moreover, tenants who can't reclaim the costs from the DoH already are being given rent subsidies. GPs can reclaim from their Primary Care Trusts, but as many have pointed out, money spent on fancy premises is not then available for actual care.

So who benefits? The PAC pointed out that the financial return on these projects- described by the National Audit Office as low risk- is a very attractive 15% pa. Which means that anyone owning a slice has got a pretty attractive asset. And via their 50% stake in PfH, PUK owned 10% of all LIFTCos. Which must have been worth a few bob.

Why does that matter? Well, it wouldn't if Partnerships UK was owned 100% by the Treasury. But it isn't- as you may just be able to make out from the convoluted diagram above, 51% of it is owned by private investors. Who have now copped 51% of whatever DoH paid for that stake.

And we taxpayers are paying for it.

Sound like an urgent job for FOI.

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