The Time Bomb of Public Private Partnerships

Philip Arestis and Malcolm Sawyer

The South London Healthcare Trust, which runs three hospitals in south-east London, has recently been put into administration by the UK Secretary of State for Health as it struggles with its debts and deficits (see, for example, PFI will ultimately cost £300bn, Guardian, 5th July 2012). This story has much wider significance than a struggle with the effect of cuts in health expenditure, as much of the blame for the financial plight of this healthcare trust is being put at the door of the costs of the use of the private finance initiative (PFI) for the construction of two of the hospitals managed by the trust. It is also seen as a forerunner for further financial difficulties for many other healthcare trusts arising from the PFI-financed hospitals. It is indicative of the dangers of public partnerships which are costly, inflexible and disguise the financial implications of infrastructure investment.


The UK PFI is a scheme whereby an infrastructure investment (such as school, hospital, road) is financed and built by a private company. Then the government leases the infrastructure along with the provision of the servicing, repair etc of the infrastructure investment. The leasing agreement has generally been for 25 to 30 years.