From PFI to PF2 – Business as usual for Carillion!

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We cannot give a guarantee that Carillion will not sell their equity investment in the Midland Metropolitan Hospital PF2 in the future.

This was the answer of Richard Samuda, chair of the Sandwell and West Birmingham Hospital Trust to a public question at last week’s Trust AGM and responding to the concern about profiteering by private companies from the sale of assets paid for by the taxpayer.

Local NHS campaigners questioned Carillion’s track record as a major PFI contractor of selling on their historic PFI equity investments with returns of 15 – 17%. The Midland Metropolitan Hospital will be the first major NHS construction scheme to be funded under the new national PF2 scheme.

After explaining that under PF2 that the Treasury has an equity stake and an increased say by the taxpayer in individual schemes, Mr Samuda confirmed this does not prevent PF2 contractors from the selling of their equity stake as under historic PFI schemes.

The new 670 bed Midland Metropolitan Hospital which is due to open in 2018 will replace City and Sandwell General Hospitals. Carillion has been left as the sole bidder in the procurement for the multi-million pound contract to build and then maintain the new Midland Metropolitan Hospital over a possible 30 year period. This follows the withdrawal of two other Companies from the competition for the contract leaving Carillion in prime position as the procurement reaches its final stages.

The 2012 Treasury Committee inquiry into Private Finance Initiative found PFI procurements to be uncompetitive and a market only open to a small number of companies able to meet the costs of preparing bids. The Birmingham TUC Health Campaign Committee is concerned that Carillion has significant commercial advantage by being left as the sole bidder for a contract of this size.

At the Hospital Trust AGM the campaign questioned the Trust decision to go ahead with the procurement with Carillion as a single bidder and whether value for money could be ensured. The response of the Chief Executive, Toby Lewis was that both the Treasury and the DoH had given the green light to moving ahead to complete the procurement with Carillion alone. In these circumstances the Trust had introduced an additional challenge to compare the costings of the companies that would supply Carillion in constructing the new hospital.

Although we were told that the meeting was an important opportunity for the public to scrutinise the Board’s on the Trusts activities a question about Carillion’s history of blacklisting workers and trade unionists was avoided.

The question as to why the Hospital Trust was seeking to contract with a company that has illegally ‘blacklisted’ workers was met with a single sentence response from Mr Samuda that the Trust had exercised due diligence in the shortlisting of possible contractors.

While the Trust Board is currently giving consideration to the BMA’s campaign to ethically source surgical instrumentation it is unclear what ethical standards if any were applied by the Trust to shortlisting the companies for this important contract.

Many of the criticisms of the historic PFI schemes still stand in relation to the PF2 schemes, such as Midland Metropolitan Hospital that are now coming on stream; those criticisms are of widespread market failure and opportunities for cartels to operate in a uncompetitive market conditions, the lack of effective public accountability in the management of PF2 projects, and the opportunities for private companies to continue to profit from the management of PF2 schemes and from the sale of equity in assets paid for by the taxpayer.
The procurement will be completed by the end of 2015 and barring a miracle Carillion will be awarded the contract to build the new hospital. The Birmingham TUC Health Campaign/ KONP will continue to challenge the impact of the Midland Metropolitan Hospital PF2 on the planned restructuring of local health services and loss of beds and health care professionals.

Get involved in the Health Campaign of the BTUC/KONP by contacting


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