0:00:35 > 0:00:39In the West: $$ NEWLINE We're going to tell you the cost of the new
0:00:39 > 0:00:41super hospital at Southmead in Bristol. Under the PFI scheme it's
0:00:41 > 0:00:44a figure that will make your eyes water.
0:00:44 > 0:00:54Labour optimistic of a West Country comeback, maybe things can only get
0:00:54 > 0:00:54
0:00:54 > 0:36:46Apology for the loss of subtitles for 2152 seconds
0:36:46 > 0:36:52The today we meet the politicians getting hot under the collar about
0:36:52 > 0:36:59the cost of our new hospital. At �100,000 a day will the private
0:36:59 > 0:37:04finance deal proved to be good value for us? Previous governments
0:37:04 > 0:37:07borrowed all the money they could and still wanted to do more. It was
0:37:07 > 0:37:14only only rider at the Labour conference for our two remaining
0:37:14 > 0:37:24Labour MPs. They say things are looking bright for them. We will be
0:37:24 > 0:37:26
0:37:26 > 0:37:31talking to the Conservative MP for First, the Politics Show can reveal
0:37:31 > 0:37:35the enormous cost of building the new hospital under the
0:37:35 > 0:37:41controversial private finance initiative. When you take into
0:37:41 > 0:37:47account interest, it is �100,000 a- day and rising every year for 30
0:37:47 > 0:37:52years. That is �4,000 an hour and it does not include maintenance. Is
0:37:52 > 0:38:02it fair to lumber our children and grandchildren of those costs? I
0:38:02 > 0:38:10
0:38:10 > 0:38:14will be asking a Tory minister and Like so many of our hospitals,
0:38:14 > 0:38:18these buildings at Frenchay were designed during the Second World
0:38:18 > 0:38:23War. They may have been state-of- the-art then, but now the rooms are
0:38:23 > 0:38:26crumbling. The cost of rebuilding them was too high so the NHS Trust
0:38:26 > 0:38:32decided to build an entire new hospital down the road in Southmead
0:38:32 > 0:38:36with a price tag of �430 million. With no money available from the
0:38:36 > 0:38:41Treasury they had to look for private finance.
0:38:41 > 0:38:46The foundations for PFI dealers in the NHS were laid by John Major and
0:38:46 > 0:38:51built upon by Tony Blair. Over 100 hospitals like this one in
0:38:51 > 0:38:56Southmead have now been developed. Concerns from the Health Secretary
0:38:56 > 0:39:00Andrew Lansley who has warned 22 trusts, including the one building
0:39:00 > 0:39:05this hospital, will struggle to afford the payments. He lays the
0:39:05 > 0:39:09blame at the last government's door. Not at all because the government
0:39:09 > 0:39:14borrows money to invest in infrastructure. We were faced with
0:39:14 > 0:39:18the devastation of our hospitals, our schools, we have just got to
0:39:19 > 0:39:22look at Bristol. All the schools that were being built and a Labour
0:39:22 > 0:39:28government desperate to bring forward capital expenditure and to
0:39:28 > 0:39:33build up public transport, schools and hospitals. PFI was a mechanism
0:39:33 > 0:39:38to do that. Did it work perfectly? Well, I think we can see that some
0:39:38 > 0:39:45of them were not well negotiated. Overall, I think whoever you speak
0:39:45 > 0:39:50to, there are pros and cons for a PFI. In the end, we got our schools
0:39:50 > 0:39:57and hospitals. The building work here at Southmead Hospital should
0:39:57 > 0:40:02be finished at 24 teams. The cost will fix at �430 million. Just like
0:40:02 > 0:40:09when you take it a mortgage, you need to pay back interest. Over 30
0:40:09 > 0:40:16years the trust will pay back �1.7 billion. That is liked by one
0:40:16 > 0:40:18hospital, pay for four. They say it is a good deal. Previous
0:40:18 > 0:40:24governments borrowed all the money they could and still wanted to do
0:40:24 > 0:40:28more. So they borrowed of private companies. We PFI it is like
0:40:28 > 0:40:33relaxing out on your own credit card and going to a high interest
0:40:33 > 0:40:38lender. The trust declined our interview request but said they can
0:40:38 > 0:40:42afford the repayments. May said PFI was their only option. Funding for
0:40:43 > 0:40:50the NHS in England has come under fire as budgets are tightened. In
0:40:50 > 0:40:55some cases, there has been a real terms decreasing funding. We should
0:40:55 > 0:40:59be funding -- were read. The entire focus on the NHS is value for money.
0:40:59 > 0:41:02I have been saying for a very long time that it simply does not
0:41:02 > 0:41:06deliver value for money, particularly in the current climate
0:41:06 > 0:41:11when we're trying to take services out of hospitals and deliver them
0:41:11 > 0:41:15more cheaply. It does not make sense to have expensive PFI deals.
0:41:15 > 0:41:20I hope the numbers stack up but I fear they do not. In a few years'
0:41:20 > 0:41:24time, this building site will be a state-of-the-art hospital with more
0:41:24 > 0:41:29rooms than anywhere else in the country. Of course that comes with
0:41:29 > 0:41:33a hefty price tag, more than �100,000 per day. The NHS are
0:41:33 > 0:41:38committed to spending bills -- billions on hospitals that were
0:41:38 > 0:41:43built now but we will be paying for long after many of us have retired.
0:41:43 > 0:41:47It will be a beautiful hospital, but is it worth it? With me to
0:41:47 > 0:41:53discuss this is a Rebecca Pritchard who is the director of Grant
0:41:53 > 0:41:58Thornton and the Conservative MP for Weston-super-Mare. Rebecca, at
0:41:58 > 0:42:03�100,000 a day for the new hospital, is it worth it? It sounds like a
0:42:03 > 0:42:07lot of money, but it is an age hundred bed hospital. When you look
0:42:07 > 0:42:12at that cost, it represents something less than 7% of the
0:42:12 > 0:42:19trust's budget. It is a larger number, but it is delivering a
0:42:19 > 0:42:26fantastic service. �100,000 is about the cost of a GP per year.
0:42:26 > 0:42:31The cost of A GP every single day,. It is a big commitment, but that is
0:42:31 > 0:42:35what it takes to finance and run a hospital of that size. It does not
0:42:35 > 0:42:40sound like good value. It is hard to look good value purely on
0:42:40 > 0:42:44financial terms, but that is what people are focusing on. At the time
0:42:44 > 0:42:49that this deal was done, the cost of finance for the private sector
0:42:49 > 0:42:53was really high. Since the crash of Lehman Brothers, the cost of
0:42:53 > 0:42:57borrowing in the private sector have been higher than in the past.
0:42:57 > 0:43:02John Penrose, we are going to get the benefit of this shiny new
0:43:02 > 0:43:06hospital. It will be great, but our children and grandchildren will be
0:43:06 > 0:43:11paying probably when it is clapped out at the end of its 30 your life
0:43:11 > 0:43:16for. Absolutely. PFI is like a mortgage, some are good value and
0:43:16 > 0:43:22some are bad. This may be good, but around the country there are
0:43:22 > 0:43:25examples of very bad value PFI contracts. Hugh and I and all our
0:43:25 > 0:43:32viewers and their children will be paying for that for a very long
0:43:32 > 0:43:36time. Can they be renegotiated? they can. It is difficult, but we
0:43:36 > 0:43:40are engaged in doing precisely that. We cannot sit by and pour money
0:43:40 > 0:43:46down the drains. Companies who have lent the Smiley are not going to
0:43:47 > 0:43:52say, pay us less, are they? finance arrangements are quite
0:43:52 > 0:43:57complex and difficult to unwind. In all cases, the projects are being
0:43:57 > 0:44:02financed by banks at a fixed rate. It is difficult to terminate those
0:44:02 > 0:44:07arrangements without incurring a lot of cost. It is probably about
0:44:07 > 0:44:12working as flexibly as you can with the contracts and maybe with the
0:44:12 > 0:44:16NHS and central Government. Whatever happens in the world,
0:44:16 > 0:44:21these are fixed costs which Southmead cannot get out of. That
0:44:21 > 0:44:27is right. Not without a substantial penalties. That is the nature of
0:44:27 > 0:44:32PFI deals. Why did we go for them? Why not say, we need this hospital,
0:44:32 > 0:44:37let's write a cheque? At the time, the Government could not afford to
0:44:37 > 0:44:42invest that level capital. We are paying over a period of 30 years,
0:44:42 > 0:44:52but it is not just about private finance. The substantial amount of
0:44:52 > 0:44:56risk is transferred through PFI. That is a fixed cost to the public
0:44:56 > 0:45:00sector, it is true, but the cost will never be higher than what is
0:45:00 > 0:45:04agreed at the outset. If the performance is not up to scratch,
0:45:04 > 0:45:07payments do not occur either forced up is it time the Government said,
0:45:07 > 0:45:10if we cannot pay for things in future, we should not do them
0:45:10 > 0:45:15because it is not fair to lumber future generations with these
0:45:15 > 0:45:18costs? Absolutely. That is why we are trying to bring down the
0:45:18 > 0:45:25deficit as quickly as we can. You're saying the government will
0:45:25 > 0:45:30not be doing any more PFIs? We will only do them in future if they
0:45:30 > 0:45:34represent good value. In the past, as we have just heard, PFI deals
0:45:34 > 0:45:39were done because they did not appear on the Government's balance
0:45:39 > 0:45:44sheet. They were invisible to us as voters. It was a way of pushing
0:45:44 > 0:45:48costs under the carpet. It will all be visible from now on. There will
0:45:48 > 0:45:54be nowhere to hide and we will only do it if it represents good value
0:45:54 > 0:45:58in future. People will say Labour have had no choice but to embrace
0:45:58 > 0:46:03PFIs because under Conservative rule, hospitals were not built,
0:46:03 > 0:46:10schools were not built, wards were not painted and public services
0:46:10 > 0:46:14when to rack and ruin. They managed to raise our national debt had at
0:46:14 > 0:46:17the fastest rate since the end of the Second World War. The watering
0:46:18 > 0:46:23if Forest which had not been watered for years. They borrowed so
0:46:23 > 0:46:27much on the nation's credit card, and we're now trying to pay it back.
0:46:27 > 0:46:33They did not think there was enough so they were even more under PFI.
0:46:33 > 0:46:38think people exaggerate just how significant that PFI costs are.
0:46:38 > 0:46:43Andrew Lansley made a huge cry about the cost of PFI hospitals,
0:46:43 > 0:46:49but the PFI hospitals represent less than 1% of the NHS budget. It
0:46:49 > 0:46:53is a significant number, but of a very, very large number. It is
0:46:53 > 0:46:58trying to distract from the case that there is a lot of pressure on
0:46:58 > 0:47:02health budgets, cuts in real terms because of the services that are
0:47:02 > 0:47:08having to be delivered, and the whole basis on which hospitals get
0:47:08 > 0:47:13paid has changed. That is a lot of care for its buildings. At the end
0:47:13 > 0:47:16of the day it is a building. It is staff who make the health service.
0:47:16 > 0:47:21I am sure you have been deserved need and Frenchay and what is there
0:47:22 > 0:47:25is not sustainable. It had to be sustainable and it makes perfect
0:47:25 > 0:47:31sense for up a new facility to replace the Southmead and Frenchay
0:47:31 > 0:47:35hospitals. The thing now is to look forward. How can PFI be using a
0:47:35 > 0:47:39smarter way? It is probably going to be about looking at finance
0:47:39 > 0:47:43terms which are not for 30 years. But you'll be playing hardball when
0:47:43 > 0:47:48you negotiate with the help the authorities? We were equally with
0:47:48 > 0:47:53the private and public sector. Both sides end up having expert advice
0:47:53 > 0:47:58to make sure they know exactly what do they are getting into. One of
0:47:59 > 0:48:02the issues are with PFI, we talked about the �100,000 a day, the way
0:48:02 > 0:48:08that the Department of Health Structured the deals, the charge as
0:48:08 > 0:48:13it starts out is 100% subject to inflation every year. It is indexed
0:48:13 > 0:48:17by inflation. In other PFI projects they say, we do not want that much
0:48:17 > 0:48:21inflation and agree on lower levels. The fact that inflation is running
0:48:21 > 0:48:30so high at the moment put on pressure if. We have to leave it
0:48:30 > 0:48:35there for the time being. You have heard of Billy No Mates,
0:48:35 > 0:48:40the one who sits alone. I know how they feel! That is a bit like the
0:48:40 > 0:48:45Labour Party in the West. Just two of their MPs are in this area and
0:48:45 > 0:48:50they do not run any councils. But Ed Miliband tried to turn all that
0:48:50 > 0:49:00around at the council this week -- conference this week. Did he
0:49:00 > 0:49:12
0:49:12 > 0:49:17impress the party's supporters from It really is just them. Of the
0:49:17 > 0:49:27West's 30 MPs, only two are Labour. The party controls no consuls in
0:49:27 > 0:49:37the region and on some they do not have a single councillor. So dawn
0:49:37 > 0:49:41
0:49:41 > 0:49:47primero -- Kerry McCarthy and dawn Roll back a quarter of a century,
0:49:47 > 0:49:52to when dawn first won her seat and it was actually worse. I remember
0:49:52 > 0:50:00in 1987 when I was the only one in the south-west. Good friends and
0:50:00 > 0:50:05colleagues lost their seats and we miss them, but what we know, is
0:50:05 > 0:50:11that we cannot rebuild from that and can make sure we have lots were
0:50:11 > 0:50:16MPs a gains. At least in Liverpool they were joined by a decent
0:50:16 > 0:50:21contingent of delegates from the region. Trying out his first full
0:50:21 > 0:50:24conference was Thomas. Sometimes, especially in a place like
0:50:24 > 0:50:28Gloucestershire where we do not have many Labour MPs, it can be a
0:50:28 > 0:50:32depressing time. When you come to things like this, you realise there
0:50:32 > 0:50:36are people worse off than you, but also a lot of people think like we
0:50:36 > 0:50:46do. We're doing the right thing and the Tories are doing the wrong
0:50:46 > 0:50:48
0:50:48 > 0:50:53thing. And there was much to lift I am at my own man. I am going to
0:50:53 > 0:50:58do things my own way. When I gathered together a group of party
0:50:58 > 0:51:05members, the mood was good. They have had plenty joining them in the
0:51:05 > 0:51:10south-west. I think it is upbeat. Her I was a member in the 1980s,
0:51:10 > 0:51:14after the defeat in 1979. There was a long period of feuding,
0:51:14 > 0:51:19infighting and it became very unpleasant and disruptive. There is
0:51:19 > 0:51:23nothing of that around at the moment. If you get knocked over at
0:51:23 > 0:51:33any general election there is a low ebb, but the Labour Party have
0:51:33 > 0:51:37picked up extraordinary wealth. extraordinarily well. As a member
0:51:37 > 0:51:41it restores your faith that they are like minded people all over the
0:51:41 > 0:51:47United Kingdom's doing the same thing. The son shone brightly on
0:51:47 > 0:51:52Labour this week and the party felt better about itself. In Liverpool,
0:51:52 > 0:51:56and the public have not been terribly excited. More worryingly,
0:51:56 > 0:51:59inside the conference and there has been grumbling, especially from the
0:51:59 > 0:52:05unions. One of the biggest cheers of the
0:52:05 > 0:52:13week was a from a speech by Dave Prentice of UNISON. Fighting
0:52:13 > 0:52:16government changes to pensions. It is potentially very divisive.
0:52:16 > 0:52:21Labour leadership insists there should not be strikes while talks
0:52:21 > 0:52:26are ongoing. For those with close links to unions it is not easy. We
0:52:26 > 0:52:30you oppose strikes if talks are still ongoing question mark there
0:52:30 > 0:52:35is not a question of there being strikes while talks are ongoing.
0:52:35 > 0:52:39And if negotiations are there, you should be at the table negotiating.
0:52:39 > 0:52:45As I understand that the Government is that the table but not prepared
0:52:45 > 0:52:49to negotiate for. On this, and much else, a Labour must watch and wait.
0:52:49 > 0:52:53Their fate will turn on how the coalition performs.
0:52:53 > 0:52:57The Conservatives gather this week for their party conference, but
0:52:57 > 0:53:01with gloomy skies hanging over the economy, they will be forced to ask
0:53:01 > 0:53:05if they are on the right track with their economic policies. And there
0:53:05 > 0:53:09is the big question of how to win an outright majority of the next
0:53:09 > 0:53:14elections. John Penrose is still with me. Can
0:53:14 > 0:53:19you name one thing that has gone right for you about the economy?
0:53:19 > 0:53:25Yes, I can. We have managed to start bringing the deficit under
0:53:25 > 0:53:28control. Without getting treated the same way as Greece has been.
0:53:28 > 0:53:32When we took over, it was a real possibility that the financial
0:53:32 > 0:53:38markets would go after Britain in the same way that they went after
0:53:38 > 0:53:44Greece. But it is going up, isn't it? It is coming down from this
0:53:44 > 0:53:50year onwards. Unemployment is up, inflation is high, jobless totals
0:53:50 > 0:53:57are going up. It is a completely awful in-tray which we have been
0:53:57 > 0:54:01left with. You are now 15 months on, sixteen. The sorts of measures
0:54:01 > 0:54:06which you have to tick, any Economist will say, it takes a
0:54:06 > 0:54:11while for that stuff to start feeding through. If you look at the
0:54:11 > 0:54:14people and the Bank of England, at they reckon an interest rate
0:54:14 > 0:54:19decision they take today will feed through in two years' time. There
0:54:19 > 0:54:25is nothing on the horizon, where is the sunshine? We even had a wet
0:54:25 > 0:54:29summer! The tourism industry is one of the rays of sunshine. It is
0:54:29 > 0:54:33doing well. It is growing faster than the rest of the economy. The
0:54:33 > 0:54:36economy is still growing, not as fast as we would like. That is in
0:54:36 > 0:54:45spite of the fact there has been awful international economic news
0:54:45 > 0:54:49as well. People have been worrying about double-dip recession, we are
0:54:49 > 0:54:53not in that territory and a lot of other countries are. We have of
0:54:53 > 0:55:00what is happening in the Eurozone, we're doing better than them albeit
0:55:00 > 0:55:07difficult. With people and Weston- super-Mare feeling the squeeze, how
0:55:07 > 0:55:11long is their patients? I think people, everybody I talk to, is
0:55:11 > 0:55:16worried. They are feeling the squeeze. People also understand
0:55:16 > 0:55:22this will take some time. I do not think people expect this to be
0:55:22 > 0:55:25quick. It will take four-five years to get the deficit down to zero.
0:55:25 > 0:55:31That is before we even start repaying the debt., what are your
0:55:31 > 0:55:34chances of winning an outright majority next time? I am torn
0:55:35 > 0:55:39because it is always wrong to take the electorate for granted, you
0:55:39 > 0:55:43should never do that. I do not want to take anything for granted, but I
0:55:43 > 0:55:49hope we will do well and get more seats than we have now falls up
0:55:49 > 0:55:53with the Lib Dems in tow? We will have to wait and see. We're aiming
0:55:53 > 0:55:58to increase the number of seats each time but saw the other two
0:55:58 > 0:56:01raider parties. We do come to an agreement with the Lib Dems,
0:56:01 > 0:56:05perhaps you do not run in Weston- super-Mare, we will not run
0:56:05 > 0:56:12somewhere else? He would have to ask David Cameron and Nick Clegg
0:56:12 > 0:56:16about that one. I will! That it is it from the West this week. The
0:56:16 > 0:56:19Politics Show continues in Manchester. If you want to get in