trust remortgages its debt
WORKERS, JULY 2005 ISSUE
Octagon, the Private Finance Initiative (PFI) consortium which manages the Norfolk and Norwich University Hospital NHS Trust, has "re-mortgaged" the PFI debt. This is a clever ploy being used by many PFI shareholders. When a company has been selected for a PFI project, it borrows money at a rate of interest determined by the risk factor involved. But after completion, the risk factor disappears. Also, as the government has guaranteed that profits come before everything, so the contractors must be paid before all else.
This means the company can now borrow against future earnings at a significantly lower rate than before and extend the pay-back period. So the next step is simple — borrow the same money more cheaply, pay off the bank and the difference is sheer profit!
Although the hospital will apparently get a million a year out of this, Octagon will get £70 million in total. The hospital is in fact completely strapped for cash. Last year it was found the building contractor failed to install the isolation units properly — the hospital rather than Octagon picked up the resulting £80,000 bill and the matter has been referred to the NHS Fraud unit.
Selling of PFI bonds, debts and consortia are now commonplace Stock Market business. Blair and Brown have handed over £43 billion of public money to privateers through PFI and related schemes. Whose brain-child is PFI? Why, the European Union — who else?