Hengrove profits eyed up by a wunch of bankers

Good news. The South Bristol Community Hospital - awaited by generations of South Bristolians - could actually be delivered in the next three years or so.

It's only a little hospital (60 beds) but its planning and construction involves a hugely complex net of quangos, councils, agencies, and - of course - private sector interests. At Withywood this evening there was a presentation about it, set up by the local Neighbourhood Partnership, so I thought I'd check on progress and add a reminder that for most of us in South Bristol, Hengrove will be less accessible than the institutions that it replaces.

We were assured that they've overcome the little technical difficulties that had dogged the project back in the summer. The German supplier of the modular units to build the hospital had dropped out, so the whole thing's been redesigned using traditional construction methods, which will take twice as long. The reluctance of bankers to finance the project has, apparently, melted away, and now there are four or five of them queing to provide the money. That will free up Bristol Infracare LIFT (BIL)to get on with building and running the hospital. BIL's the Private/Public Partnership that binds the health and civic authorities with Carillion (the consortium that's got Bristol's health service sewn up just as securely as First have got the public transport monopoly). They're responsible for Whitchurch's new health centre (below)


Now it just needs the OK from the Department of Health, before the JCBs move in. It seems the Health Ministry has to approve because there's £54 million of public money involved. I still don't understand that... if that's public money, what the hell is it that the bankers are providing? That's the great mystery of the PFI system.

The government's effectively refused any other kind of funding structure - the health service is stuck with these private-public partnerships or nothing if they want to build anything. If and when the current general hospital gets sold by the NHS, you can be sure that the income won't be used to pay for this Hengrove hospital.

Someone asked about the environmental standards of the new hospital. The answer showed that it's not a big priority. It will meet minimum statutory standards!

There could well be a CHP unit to provide both heat and power, they're looking at different systems. Which begs the question of why the hell there isn't a unit to provide for the hospital, the college, the 'Healthplex' and the commercial development on this flagship site. The city council, as landowner, is already well into providing the road and services infrastructure for the whole site. Why on earth doesn't that include efficient on-site energy?

All this happens while Mandelson and the Tories compete to urge cuts in public spending - and as someone pointed out, it's vital to get the Hengrove project signed off before a general election throws everything into doubt again.

But for those who are getting confident that all will be well, it's worth a look at any of the exposures of all the PFI projects that rip off the public. The one highlighted by Green Party deputy leader Adrian Ramsay in his conference speech is a pretty good example.

Hengrove Handout

Tomorrow, the city council's Cabinet will be recommended to hand over £800,000 to an unsuccessful bidder for the Hengrove 'Healthplex' PFI project.

They don't have to cough up, of course. According to officers, they've done nothing to make such a payment necessary. In fact the contractor that has come cap-in-hand (or rather wig-in-hand) to the council has neither the right nor the entitlement to the cash.

Yes, it's a proposed out-of-court settlement of a dispute over the bid for the contract to build and operate the planned Leisure Centre/ Pool. The report to Cabinet (pdf) gives all the background, but the essential part seems to be this:

DC Leisure Management (DCLM) are threatening to sue the city council. They say that the bidding process for this lucrative contract (ok, they didn't actually say lucrative) wasn't followed. The consortium that got the contract (Bristol Active Ltd) was allowed to change one of its members during the bid, and its proposals for a ten-lane swimming pool were accepted whilst DCLM's similar proposals were not.

The council's own legal advice is that DCLM haven't got much of a case - if any. But what they have got is the ability to delay the whole project through legal action - unless an out-of-court settlement can be reached. So it looks like a transfer of £800,000 pounds is going to find its way into DCLM's account instead of any of the much needed services that our council is supposed to be providing.

Of course, the council could go ahead and say we'll fight this. So what if the Healthplex is delayed? Other flagship Hengrove projects are already behind schedule; the Hospital, originally intended to open about now, has just been put back a couple of years and the Computershare HQ is also delayed.

A delay to the opening of the new pool might even be welcomed in some quarters too - especially among users of the Jubilee and Bishopsworth pools, due to be shut down as soon as the Healthplex opens.

And maybe £800,000 would help kickstart the long-promised provision of a library to serve Hengrove and Whitchurch....

...and more PFIffle

Looks like there's yet another high risk element in the bid for PFI backing for an incinerator. The PFI pot itself is drying up.

The Guardian reports on a leaked NHS memo revealing government warnings of a 'capital desert' in PFI credits for new ventures. As 'none of the banks have any money or are likely to have any for a few years, the absence of a 'plan B' is going to cause a real problem.'

Odd, that. Back in October I asked Mark Bradshaw if there's a 'Plan B' in case his own PFI bid fails. Evidently not. They'd just expect to pay a further £84 million to get the same scheme from taxation - although that scheme is selected solely because it's the one most likely to get bank funding!
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While all this PFIffle is going on, the West of England has thoughtfully launched a CONsultation into how best to allocate land to deal with the sub-region's waste.

Option B, with waste management spread over 8 smaller sites - is the one preferred by environmentalists.

WoE makes it very clear that its own choice is for Option C, the one with a big site at Avonmouth that happens to be just the right size for a great big incinerator. And if you doubt their sincerity, judge them by the fact that they've already bid for the cash, months before March 12th deadline for public comment.

PFIffle

The big thing claimed for the Private Finance Initiative (PFI) is that it gets local authorities off the hook of putting big money into high risk projects. Instead, the private sector takes on the risks (and as we all know, that's what they're good at!)

Successive governments have been so enthusiastic about this that they give councils and health authorities big incentives to go down the PFI funding route. I suspect it's because it shows up better in the national books if capital funding comes from the private sector - even if, as generally happens, the public finish up paying far more for an inferior product.

Now, it's that risk element that intrigues me. The controversial bid to seek PFI funds for a waste incinerator at Avonmouth should rest on the premise that the private sector bears the investment risk. In practice, the whole choice of preferred technology rests on the fact that the banks won't risk their money on anything else but this sure-fire cash cow - fed by public cash in the form of 25-30 years of contractual gate fees, with penalty clauses for any shortfall in waste delivered. Negligible risk for the banks. Every risk for the public - especially if consumption and waste rates go down, or recycling rates rise. Not to mention the mind-boggling costs of setting up the deals in the first place.

Given, too, that the banks' new found reluctance to lend is now having to be shored up by government guarantees against loss, the whole case for PFI is shown to be doubly flawed - high risks are transferred the public at both local and national level.

We've been set up. Look at it from a council treasurer's viewpoint, and PFI still offers government (i.e the nation's taxpayers') cash to offset against locally raised capital. Attractive, eh? But all it means is that we're paying through taxation for PFI schemes nationwide, instead of just paying locally for local schemes. For councils the choice might look easy - but for individuals we'd all be far better off without PFI. We'd have far better waste disposal too.