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NHS wants to pay for general practice 'transformation' via private finance

The NHS is looking to borrow money from private financiers to pay for local plans to boost GP and primary care services and reduce pressure on hospitals.

NHS Improvement, which said it is already in talks with private sector financiers, wants to set up an infrastructure pot funded by loans from investors including hedge funds.

Chief executive Jim Mackey said that current low interest rates in the private market was a 'golden opportunity' which the NHS otherwise risks missing out on.

Mr Mackey said that ‘realistically’ the health service cannot expect the funding it needs from Government and called for radical new ways of raising capital which could help fund services in the long term.

Mr Mackey has to make his case to the Treasury, as strict rules impedes NHS organisations from such borrowing. But he said the proposition could provide ‘realistic funding for local plans to improve local health services and to join up local NHS organisations’.

This is in reference to the 44 Sustainability and Transformation Plan (STP) areas of England which have all set out how to to move care into the community where it is expected to be delivered more cheaply and at greater convenience to patients.

Some £325m was pledged by chancellor Philip Hammond to support STPs in the last budget but a Department of Health-commissioned review has estimated £10bn is needed to fund STPs, with £5bn required to pay for the ‘backlog’ of routine maintenance work.

The Naylor review also said primary care premises payments should be linked to the ‘the quality of facilities’ and their ability to deliver the NHS’s objectives around working at scale and access.

NHS Improvement said the health service has already held talks ‘with private sector financiers keen to loan money to the NHS’ as it looks to improve facilities.

Mr Mackey said: ‘We have to be realistic because we are not going to get a £10bn cheque to pay for all the transformation underway and the massive maintenance backlog, so we need to think long and hard about another way of doing things.

‘Historically low interest rates are a golden opportunity for the NHS but we are constrained by rigid rules around borrowing that prevent us from taking action.

‘An NHS Fund could power the improvement needed to sort out problems at our hospitals and to drive the change required to get the NHS ready for future challenges. If we are open to new ideas then we could really be in business.’

Other areas that NHS Improvement said could benefit from a private infrastructure fund included building extra capacity in hospitals to boost A&E performance; and upgrading hospital facilities and equipment. It also suggested the fund could 'provide managers with more stability on expected investment'.

But the BMA's deputy chair Dr David Wrigley, who co-authored a book on NHS privatisation, said the news was 'shocking' an the Government should be taking advantage of low interest rates directly.

He told Pulse: 'It is shocking to see NHS managers having to go cap in hand to City-based, profit hungry, hedge funds in order to shore up the inadequate NHS budget. This is PFI mark 2 and will leave taxpayers handing over huge sums of money to hedge funds for years to come – money lost to patient care.

'Interest rates are low and it begs the question why the Government is not taking advantage of the low rates to fund the NHS properly. One could conclude they are not doing this in order to run down the NHS further and allow more private companies to move in and take over profitable NHS services.

'How the Government can continue to say "we are not privatising the NHS" beggars belief.'

Readers' comments (15)

  • and how much profit will be bled from the tax payer long term?????
    Look how successful the PFIs were..... for the investors....

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  • Effectively this is as bad as PFI. It will further transfer parts of the NHS to private ownership on the basis of a secured loan. Hedge funds are not going to lend on an unsecured loan. Why would NHS 'bodies' want to do this at a time when there is no chance of creating savings/profit to pay the interest, let alone the capital sum back.

    This is selling off a public service so that only a few 'in the know' will gain financially.

    "But keep in mind that the typical minimum hedge fund investment is between $500,000 and $1 million. Most of the big successful funds have a much higher minimum initial investment. Managers are legally allowed to accept investments from up to 35 people who aren't accredited investors.15 Jul 2000"

    So how do we know which hedge funds will gain and where is the advertisement allowing people to purchase shares. At least in Thatcher's day she made sure that all people could buy shares in whatever new company was being formed from the sell-off of public services.

    The extra debt that is being forced on the NHS by senior NHS managers / Government along with defunding and increased patient need / demand will result in the bankruptcy of the NHS.

    The hedge funds (think the 0.0001% of the population), which by then will probably own the majority of the NHS, having been given almost free money through Bank of England QE, will bring in copayment further increasing their profit. Meanwhile we will be forced to work even harder for less income with no autonomy.

    Does this really surprise anyone?

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  • BS........

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  • Vinci Ho

    Ha ha ha, genius!
    Anyone with common sense will know:
    No private company will do a business which potentially fails to make a 'profit'.
    You owe somebody money , of course you have to pay back on time . If you don't , your lender will ensure the 'interests' are good enough for them to make profits.
    Otherwise , you have to make 'other payments' for compensation, mate. No rocket science.
    PS , historically low interest rate is not going to last long as US Federal Reserve has already raised the interest rate three times this year so far . This cycle will carry on as well as inflation has gone beyond 2% and will rise further as English pound remains depreciated after Brexit . The pressure on Bank of England to raise interest rate is imminent.

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  • It's good to know the enemy within and with infiltration of the system by former politicians and bankers, this what you get. Low interest rates, great opportunity - let's take a loan and save Primary Care !Save? Really? With the tendency of rate rise in the offing,the Americans already having lifted rates recently, UK can't be that far behind. Anybody telling us that taking loans to fund the system should be scrutinized for connections within nhse, banks, businesses and the government because this is fatal advice and probably warrants a MH assessment.
    Rational thinking and planning has taken a backseat.

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  • Interesting that Jim Mackey has a background in Accountancy and he feels this is the way forward. Wouldn't want anybody with that intuition and skills to handle my books.

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  • It's returning to mediaeval feudalism. The Lords of the Manor (global elite) will be employing the serfs (all of the NHS employees), who will be living in property, paying ever higher rents, owned by the Lords of the Manor (global elite) as property ownership will become out of reach for the majority of the serfs producing agricultural products (delivering healthcare) that will be sold at inflated prices to serfs working in other sectors. Of course we must not forget about the increased taxation that the serfs will have to pay on continually lower incomes.

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  • PFI 2: the WONGA approach to NHS finances.
    The money will just be used to pay off the hospitals' debts again, and so disappear quickly without generating the transformation needed to deliver a more efficient system.
    Hospitals need to be funded properly in the short term, and there needs to be significant investment in general practice and the out of hospital sector so we can deliver smaller, leaner, more efficient hospitals in 5 years.
    This plan is just another way of paying for the present by mortgaging the future: this will make the NHS LESS sustainable, not more.

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  • Vinci Ho

    Benefit of doubt: cannot immediately label this as 'conspiracy theory but Eistein's quote is not too far away:
    "Only two things are infinite, the universe and human stupidity, and I'm not sure about the former."

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  • When will the RCGP grow a spine, call out how the political system works, and the corruption within westminster, refuse to pay GMC fees, and put forward candidates across the UK standing on an anticorruption ticket? People trust GPs more than anybody else...... GPs collective knowledge of how the country works, where the inequality and injustice lies, their ability to detect BS is second to none- we have a fabulous understanding of the country and its people that no-one else can match.... putting up candidates in every constituency with a mandate to:
    (1) Stop Politicians profiteering from additional jobs or abuse of political position e.g. `Tony Blair, George Osborne'
    (2) Follow the Australians in stopping tax offshoring Google pays tax in Australia so why can't it here
    (3) Stop ground rent, service charge and leasehold abuse for the millions of minions forced into apartments (Another scam)
    (4) Call for criminal responsibility in white collar fraud and banking to allow prosecutions of individuals within an organisation with complete asset stripping of those found guilty i.e. their family members get stripped too unless they can prove they earned their money independently and fairly.

    We loose £70 billion a year in tax thanks to the likes of Google, Amazon, Starbucks, Cafe Nero etc. The average tax payer has had wage freezes for 10 yrs and more are pushed into debt as costs rise- this is one of the biggest healthcare issues as a consequence when we look at mental health etc as a consequence.... we need to draw out the connections for the great british public..... they should be angry..... very angry..... I wouldn't negotiate with the Government anymore.... Id go full out attack and have every surgery put up an electronic screen and put on repeat all the inequality in the country and which minister save done what, and pay for full page adverts in every national, and go to the media..... there are more intelligent GPs out there than politicians.... but we remain divided....

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