... are you shitting me

[kaberett]

Official cost of the bank bailout: £850 billion. [The Indy was the first google hit so w/e.]

The deficit of the first ever NHS trust to be put into administration? £150 million.

Comments

[emperor]

"Administration" here doesn't mean what it usually means as regards companies (i.e. going bust); it essentially means the health secretary sending someone in to take over and try and balance the books. There's a letter here to creditors outlining this:

http://www.slh.nhs.uk/media/documents/2012-06-29-rdouglas-doh-letter-to-suppliers.pdf

[ewx]

A large proportion of the £850bn sum is loans and guarantees of various kinds so AFAICT the cost to the public only reaches that level if everything that can possibly go wrong does so in the absolutely worst possible way. The actual money irrevocably spent identified in that article is a far smaller quantity.

As to the £150M figure: I think by "deficits" they mean total spending in excess of income, summed over the years since 2009. The total debt that the trust is servicing, at a cost of £61M/year, runs into billions, so they can't mean that.

While there might very well be a meaningful comparison to be made between aspects of NHS funding and financial sector support, these figures aren't it.

[gerald_duck]

I got the impression the £150 is what the annual defecit has risen to, and the total defecit is in the low hundreds of millions (because it's risen sharply). That constitutes an unplanned debt in addition to the PFI liability they intended to take on.

It's important to note that banks are bigger than NHS trusts. Lloyds TSB's annual revenues are sixty times as large as South London Healthcare's, so a £76bn bailout to them scales to a £1.3bn bailout for one small NHS trust.

It seems the bank had a proportionately small liquidity problem and the NHS trust has a proportionately large unsustainable PFI liability problem.

[ewx]

The BBC has "Last year it finished £69m in deficit on a turnover of £424m" which is roughly speaking consistent with Lansley's statement that it's spending £1M/week more than its income (I think the estimate for the next year was £30-50M down, though I can't find that right now). At any rate I don't believe that the £150M can be an annualized figure of any kind.

The thing (well, one thing...) I'm still missing is how the income it's overspending from is determined in the first place. Presumably it's either the DoH or some element of NHS bureaucracy but whoever decides, there's a question about how they decided on the figure and whether it adequately takes the inbuilt PFI liability into account; it's not like it's news!

That said it seems a bit on the bizarre side to indirect settled details of infrastructure financing through operational bodies, given it's all public sector stuff in the end anyway. Attach the PFI liability to the DoH and then the questions of the trust's financing become ones about how much patient care (etc) does and should cost.

[hairyears]

The 'insolvent' NHS Trust's funding gap is £150 Million, but its debts - in the form of PFI and PPP obligations - are between ten and twenty times more than that.

It is particularly odious that the Trust did not negotiate those PFI agreements: they were imposed upon it by central government, on excessively favourable terms to the private 'partners'. Likewise, the Trusts's income *and* its obligations are set by central government.

It is therefore difficult to regard this as a failure or 'bankruptcy' on the part of the Trust: and, despite the legal fictions that portray the Trust as an independent entity, it is obvious that this 'insolvency' is actually refusal to construct a balanced budget, and to pay the resulting bills, on the part of Her Majesty's Government.

However... This refusal to pay is not a default of HMG's obligations (or in our legal fiction, the Trust's obligations) to the PFI partners; you will find that the administration procedure protects them from any losses. There is no suspension of interest payments, and no 'haircut' or write-down of their capital.

No, the 'default' that is to be administered is a defunding of the Trust's healthcare activities; and not, I might add, a default on their obligations to the public, because their is now *no* obligation or 'duty of care' to provide a health care service.

That's the undiscussed central tenet of the latest NHS reforms, and it is far more damaging than private ownership and service provision.

The administration process will resemble a commercial insolvency in one or two familiar ways: there will be drastic cutbacks and 'efficiency savings', including redundancies and a complete cessation of staff training; there will be asset disposals; and the 'business' will be sold as a going concern to the highest bidder.

But the PFI debts will still be there; and many of the asset disposals will be sale-and-leaseback arrangements that leave the Trust's successor entity with even higher costs. As, indeed, wlll the cutbacks, especially in training: not all savings are efficient.

The whole process will be highly profitable to the maggots and vultures who are feeding on the corpse of our Health Service - or rather, on the taxpayers' money which we should be spending on healthcare. And the profiting-from-illness businesses which will replace the NHS are nowhere near replacing it: it will be several years before they can do so, even at the dismal standard of the American system our elected leaders hope to emulate.

We live in interesting times.