The FT has reported this morning that:
The Treasury is searching for investors for the stalled £353m Midland Metropolitan Hospital project after a consortium of banks including the European Investment Bank pulled out of the deal in the wake of Carillion's collapse.
For good measure they add:
The 670-bed Midland Metropolitan Hospital Project in Smethwick, near Birmingham, was six months behind schedule and beset by engineering problems when Carillion collapsed on January 15. The site has remained closed since February, with the Sandwell & West Birmingham Hospitals NHS Trust and the government attempting to negotiate a deal to secure its future.
And, to add the twist to the tale:
But the EIB and four other banks РCr̩dit Agricole, KfW IPEX, DZ Bank and Sumitomo Mitsubishi Banking Corporation Рwithdrew from the private initiative project this week, leaving the government scrambling to find an alternative and pushing the completion date back until at least 2022.
This is ridiculous. The world is queueing up to give the government money at the lowest possible interest rates. Every government bond issue is over-subscribed. There is then no shortage of funds to build this hospital with much cheaper funds than those the government is seeking. It is purely dogma in that case that is preventing this hospital being built. But whilst the FT recognises the possibility that the government could fund this project directly, it does not point out that this would, very obviously, be the cheapest option available.
Nor does it point out that if things are so dire but this hospital is really needed then People's QE could be used to fund it. People's QE was always intended as a backstop for the time that the market failed. The market has failed here. In that case it is just time to get on and use the viable alternatives to get this hospital built. That is the message that needs to be sent to politicians. The time for fighting around with incredibly expensive market alternatives has come to an end. It is public and not private finance that has to build our infrastructure now.
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The only way private finance of this kind makes any sense is as a continued support of the concept of “money being scarce” etc. After all, if one admitted that government money could be borrowed/created for this project it would start questions about why this is not being done for other priorities.
Although the government and household budget equivalence is tripe, this kind of private finance nonsense deserves its own pithy kitchen sink analogy – maybe “buying your house on a credit card”?
🙂
Buying your house with a Wonga loan? 🙂
“… if one admitted that government money could be borrowed/created for this project it would start questions about why this is not being done for other priorities”
The Tories are already printing money (£5 billion) for the nuclear station on Anglesey. Begging the question: why can’t they print a bit more for a hospital.
(answer: cos it would open the flood gates).
I thought the local MP John Spellar’s phrase to describe the situation as ‘ paralysis by process ‘ entirely apt. Time to change the process then . It’s not as though the building works have run out of inches !