Global company buys out #Calderdale Royal Hospital PFI company, to profit from  “facilities management” contract

“Facilities management” at Calderdale Royal Hospital is part of the Private Finance Initiative contract. This means that the hospitals Trust has to use the PFI Facilities Management company for all the buildings and grounds maintenance.

The Trust also has to pay the PFI non-clinical services company for services such as cleaning, catering, laundry and linen, car parking, security, switchboard services and portering.

Until July this year, Lendlease Facilities Management (aka Vita Lendlease) held the CRH PFI Facilities Management Contract. But then Cofely-GDF Suez bought Lendlease Facilities Management. (Update: IN 2016, Cofely-GDF Suez became Engie.)

The hospitals Trust had no say over this buy-out, or which company holds the CRH PFI contract for facilities management (FM).

The Cofely-GDF Suez website said,

“This acquisition will make Cofely one of the UK’s largest providers of technical services PFI (Private Finance Initiative) and provide an increased portfolio of long-term FM contracts in key public sector and healthcare markets. Over the next 25 years these contracts will provide Cofely with a guaranteed revenue stream of 2.5 billion GBP.”

This guaranteed revenue stream is all coming from our taxpayers’ public money.

In a departure from previous practice, Cofely- GDF Suez are also to run the Estates side at Huddersfield

A CHFT member of staff told Plain Speaker,

“In recent years the Estates side of Huddersfield Royal Infirmary has been virtually ignored.

“People have left – either to other jobs, retirement or MARS (Mutually Agreed Redundancy Scheme) – and not been replaced. In 2012 the Director of Estates, Frank Gibbons, left after being in post since 2007.

“No one knows why, but initially he wasn’t replaced either. This was mentioned in a report criticising the absence of Estates representation on the Board of Directors.

“Money was found to update some of the areas used by the Estates staff that were left and then earlier this year 2 staff from Vita Lendlease were moved to Huddersfield to run the  Estates Department.

“Now that Cofely are to run the Estates side at Huddersfield, will the PFI company match the costs that a proper NHS Estates Dept would charge? Or will they continue to “load” any prices with profits for one or two private companies?

“At Calderdale if you wanted a notice board putting up you would have to go through the facilities management company – most recently, Lend Lease Facilities Management, aka Vita Lendlease.”At Calderdale if you wanted a notice board putting up you would have to go through the facilities management company – most recently, Lend Lease Facilities Management, aka Vita Lendlease.

“This has the effect of putting an extra cost on the work required, especially if this work is put out to another private company as BOTH of them take a cut.

“So what happens now at Huddersfield?”

Trust’s plan to cut Estates spending to meet Government’s “efficiency savings”

There is a target for saving £200K on Estates this financial year, in the hospital Trust’s Balanced Plan. This Plan aims to find ways of cutting spending and increasing income in order to meet the government’s requirement for so-called efficiency savings (ie funding cuts) of £20m this financial year and £19m next financial year .

Since 2010, the government has required the NHS to hand back £2bn/year. This goes back to the Treasury and who knows what it’s spent on? Not the NHS.

In the short term the hospitals Turst aims to make these Estates savings by closure and sale of bits of the HRI estate.

The Balanced Plan makes no mention of any review of the costly PFI Facilities Management contract

But the PFI Service Charge costs the hospitals Trust around £10.5m/year. (In 2012/13, the PFI service charge was £10.541m.)

Many criticisms have been levelled at the unreasonable costs charged by the PFI company responsible for facilities maintenance.

The PFI Service Charge is split between payments to the Facilities Management company for providing the estates and maintenance services, and to ISS Mediclean, which is responsible for non-clinical services including cleaning, catering, laundry and linen, car parking, security, switchboard services and portering.

Over the summer this year, Unison was in dispute with ISS Mediclean, over the company’s plan to cut wages and conditions for new staff.

ISS Mediclean was part of the original PFI consortium that built CRH. As such it made pots of money out of the PFI contract. And in 2005 it would have made pots more, when it sold 16.67% of the equity in the PFI holding company to Bank of Scotland for an undisclosed sum of money at an undisclosed rate of profit.

I asked CHFT how the PFI service charge (£10.451m in 2012/13) was split between the non-clinical services fee (ISS Mediclean) and the longer term facilities management maintenance fee (at the time, paid to Vita Lendlease). But CHFT said this information is commercially confidential.

The PFI Service charge amounts to nearly half of the total annual cost of the CRH PFI contract, which in 2012/13 came to £22.317m.

The principal repayment amounted to £1.312m and the interest payment on the PFI debt was £10.464m.

Overall, the CRH PFI contract eats up around 10 per cent of the total Calderdale NHS budget.

Growing risk that Trust will fail to carry on as a going concern

Because of a deterioration in its financial position, the hospitals Trust is facing an investigation by Monitor, the quango-like organisation set up by the Health and Social Care Act 2012 to enforce “competition” in the NHS “market”.

Monitor recently gave CHFT a continuity of service risk rating of 2 (1 being the highest risk and 4 the lowest). This is a measure of Monitor’s view of the risk that the trust will fail to carry on as a going concern.

Monitor has also put CHFT’s governance rating under review. The governance rating is Monitor’s degree of concern about how the trust is run.

Given the Trust’s deteriorating financial position, it would surely make sense to look at ways of renegotiating the costly PFI contracts for facilities management and non-clinical services.

Around 30 Foundation Trusts are expected to end this financial year in the red. This would put them in breach of their licence to operate, which requires them to balance their books.

On 1st October, the Foundation Trust Network said that Foundation Trusts face a funding gap that they cannot close except by providing less patient care. They said that the entire acute hospital sector is at risk of tipping into financial collapse.

You can find more information about the CHFT PFI contract here

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