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Editorial Thurssday 28 June 2012: Spinning a yarn over why the Peterborough PFI blew up the money

I was intrigued by this story in the Financial Times about Peterborough and Stamford FT's PFI problem.


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The article is intriguing for a number of reasons.

It seems that Monitor commissioned this independent report to learn lessons from Peterborough and Stamford financial situation from KPMG.

This report found (amongst other things) that:
1. A large majority of P&S's problem is an unaffordable PFI
2. Monitor assessed the PFI proposal and said it was unaffordable
3. Monitor advised the trust's Board, the DH and  HM Treasury not to proceed with the PFI
4. The P&S PFI was approved nevertheless

It states that "On 12 January 2007 Monitor wrote to Peterborough stating that it believed the long term affordability of the proposal to be in significant doubt. The letter was copied to the DH and HMT whose approval was required in order to obtain the Deed of Safeguard. However, Peterborough committed to the scheme in June 2007. Monitor’s power to prevent Peterborough’s Board from committing to a potentially unaffordable PFI in 2007 was very limited".

Monitor has now published this report and its response to the report, and - naturally - shared both with the DH prior to publication.

The FT story was published prior to Monitor publishing its report and response today.

This suggests that it was based on two briefings:
a political briefing to FT Westminster correspondent Kiran Stacey, which emphasised the aspects blaming former Labour Ministers for approving dud PFI against advice of their own regulator.

That briefing, presumably by a special advisor who said "Labour were warned repeatedly by their own regulator that this dodgy PFI deal could bankrupt Peterborough hospital, but they pressed on regardless. A hospital that was deemed to be in satisfactory financial health was saddled with unaffordable debts and its patients were made to suffer as waiting times increased and A&E care deteriorated", is A Thing That Is Not Surprising.

The more interesting part is that there also appears to have been a briefing by a senior DH executive, emphasising that Monitor had been at fault for not intervening and managing the situation.

This un-named person told the FT, "why did the problem escalate so quickly and why were mechanisms not put in place sooner to stem the financial problems?  (The PFI proved) overambitious and was a significant percentage of turnover. Why did the regulator not challenge the board on pursuing this, because in the end the taxpayers have to pick up the cost of the poor decisions of the regulatory regime around foundation trusts. ...(other factors were) the management stewardship and the oversight of Monitor".

Mmmm. A few thoughts.

Firstly, this resembles an interestingly-timed resumption of the former culture wars between the DH in general and Sir David Nicholson in particular and Monitor under its former executive chair Bill Moyes, over such issues as Comrade Sir David's efforts to order FTs to do the pretty pointless 'deep clean' when the Comrade In Chief enjoyed no power to do so.

It attacks Monitor for not doing something that Monitor fairly clearly did do: warning about the risks associated with the proposed PFI. That is, I think we can agree, silly.

Secondly, the anti-Monitor briefing has the effect of skewering the political briefing by the DH's own political masters.

In  the wake of the Comrade In Chief's 'bereavement' speech to the NHS Confederation conference last week, we may be glimpsing another resumption of hostilities between the Comrade In Chief and Our Saviour And Liberator.

Health Policy Insightdiscussed this some long time ago; indeed it led to our coining the phrase 'the Nicholson Health Service'.

Briefing and counter-briefing (and indeed counter-productive briefing) is nothing new. However, we can reach a few conclusions from this.

The first is that the DH has acted as if it is super-sensitive to criticism. That is quite curious.

The second is that some of the very people responsible for approving PFI schemes, and so wasting taxpayers' millions, are still at large in the DH and are now circling the wagons as PFI hits the headlines courtesy of SLHT.

The third is a re-revalation of the gulf between DH and political leadership. If there are more provider failures to be addressed sooner rather than later, this is Not-Great Timing.

The fourth is that Monitor seems somewhat ill-equipped for this political rough-and-tumble, in failing to anticipate that the story would be used against it. That is evidence of mild naivety on Monitor's part. Monitor is a huge political player in the new world now emerging.

The final conclusion is, in truth, an unanswered question. Why was the P&S PFI approved against Monitor's recommendations?