H ow will we account for it? How, in 10 or 15 years' time, when the bills for all the PFI mortgages are gobbling up huge chunks of revenue so that day-to-day services cannot be paid for, will we explain the fact that we signed away our future?
The government wants to extend private-sector involvement in our public services through a dramatic proliferation of public-private partnerships, private finance initiatives and now through foundation hospitals. Once established, the foundations are to become the model for turning many other public institutions into "public interest companies".
These funding fixes represent a transformation as significant as Thatcher's privatisations of the 1980s. It threatens to open the way for charging and to create sharp inequalities in provision. Yet we appear to be sleepwalking into this new territory. Just as it took years and the disaster of Railtrack to wake up the shareholding Sids to the enormity of the vandalism that was privatisation, so we are in danger of only opening our eyes to the implications of these PFI mortgages too late.
The unions, whose hospital workers have already experienced the cuts in staff and capacity that have come with PFIs, have fought hard against them, but will they now be bought off by backroom deals on pay? Numbed by the detail - on- or off-balance sheet, cost of capital, discount rates, securitisation of future income - most of us have decided it is too difficult. But the essentials of PFI are simple enough.
PFI means going to the private sector to take out loans on which interest rates are higher than normal for government borrowing, and then paying private sector profits on top. These repayments have to be made just like a mortgage over 20 or 30 years out of income - whether that's a hospital's revenue that might otherwise be used to pay doctors and nurses, or the school budget, which might otherwise pay teachers, or a council's income that could be used on other services. Ministers argue that savings made by more efficient private-sector managers will more than offset the costs, but the evidence so far is unconvincing.
So why does the government persist in borrowing not only in the most expensive way, but also in a way that pushes back the payments to individual organisations and local bodies?
PFIs have usually been put in place where you can also introduce user charges - tolls for new roads or bridges, higher train fares for tube investment. Where will that money come from in the health service? The inexorable logic of PFI - which pushes trusts to find new sources of income - leads to foundation hospitals. PFI is a way of handing new hospitals over to the private sector. Foundation hospitals are a new form of privatisation. Tony Blair and Alan Milburn propose to free the best-performing hospitals from top-down hierarchical planning. Foundation hospitals will have independence from central government control and the power to borrow on the capital markets.
How will they pay for this borrowing? The details remain remarkably sketchy. If most of the favoured hospitals' extra income comes from government, as they start drawing in more NHS patients and the money that goes with them, it can only be at the expense of other hospitals. Remember opt-out schools - centres of excellence which left sink schools around them?
Who will be the losers this time? If foundation hospitals are attracting extra money through government funding and government budgets are capped, keeping Gordon Brown happy, what they win has to be at the expense of other NHS trusts. Unless, of course, it is at the expense of users in the form of charges.
Is this the hidden agenda? Perhaps the creeping privatisation that foundation hospitals will facilitate has just not been thought through. Charging is no doubt too politically explosive to handle in one leap. But the steps leading towards it are in place. The crucial mechanism was outlined in the NHS plan, which created a new category of "intermediate care". When you go into hospital in future, the clock will start ticking. Your intermediate care will be time-limited: one to two weeks to recover from pneumonia, a maximum of six for a stroke. After that, patients will be assessed to decide what they are eligible for under the NHS - and what is "personal care", for which they can be charged and means-tested. This extension of means-tested care, already applied to long-term care of the elderly, represents a major departure. No doubt foundation hospitals can lead the way.
T hen there will be additional private patients and sales of assets. But if resources and staff are scarce, why should they be diverted to treating private patients? And if assets are being sold, why should hospitals in wealthier areas, whose land values are high, be allowed to have more than those in deprived areas, where the assets are less valuable but where people are often sicker and in greater need? It is this need for planning, to take into account the difference in needs and pool the risk across the population, that opt-out hospitals put in jeopardy.
Go-it-alone hospitals appear to return to the unplanned system of pre-war, pre-NHS voluntary institutions, as John Mohan argues in his new book, Planning, Markets and Hospitals. What is the government playing at? Mohan speculates that greater diversity, though inevitably inequitable, is a way of stopping the defection of the middle class from tax-funded public services.
Blair is determined to lead from the front. No more one-size-fits-all, he insisted, in an individualistic and consumerist age. But no discussion of what we are prepared to pay to maintain equitable access to services for all. Instead, critics are dismissed - as old left diehards poisoning the debate with their jeremiads, if they are academics like Professor Allyson Pollock, whose detailed work has exposed the full cost of PFI, or as vested interests if they are medical professionals who have to struggle with the consequences.
There is a touch of Thatcher in Blair in all this. Adair Turner, ex-CBI boss, your man charged with blue-skies thinking on the health service, sees storm clouds and warns against foundation hospitals. Never mind. You turn if you want to, this Tony's not for turning. Perhaps Mr Blair will listen to his own Sedgefield constituents, who are fortunate to have not one but two major new PFI hospitals. This has not secured the trusts' future, quite the opposite. Bishop Auckland's new £67m hospital has been forced to merge even as it opens with North Durham's new £90m-plus hospital and Darlington hospital in Milburn's constituency. Bishop Auckland, which serves Sedgefield, will lose most of its acute and emergency care. County Durham does not have enough income to maintain the service the population enjoyed until very recently because of the cost of PFI. Perhaps the "new localism", the latest New Labour buzz, will have shifted responsibility from the centre before the rest of PFI comes home to roost.
We can now look forward to the prospect of not just moving house to get near a decent school but of moving again to be near the best hospital for our old age. And as we dig deep into our retirement funds to pay for what used to be free on the NHS, we will examine our pensions, which have also had the invigorating experience of being handed over to the market, and realise they too are worth nothing.
Felicity Lawrence is the Guardian's consumer affairs correspondent
felicity.lawrence@theguardian.com
