Great Western Hospital slams failing PFI contractors - but can it escape?

Disastrous privatisation deals mean failing contractors Carillion have a stranglehold on NHS hospitals, with dangerous results.

Andy Newman
9 October 2014

Swindon’s Great Western Hospital’s Board has issued a damning report into their private contractor, Carillion, accusing it of providing dangerously low levels of food hygiene and cleanliness (the latter also criticised by the CQC last year), and damagingly poor employee relations. The Hospital Trust’s Board says it ‘lacks the confidence’ in Carillion’s ability to improve the situation, noting:

“There is clearly a risk to quality and safety which needs to be addressed and Carillion have not demonstrated the ability to adequately resolve any one of these major issues to the required standard, let alone all of them together.”

Food hygeine and employee relations at the hospital are the worst in the country. Yet the NHS Trust are unable to directly resolve the problems, because the hospital belongs not to them, but to a private company, Semperion PPP, who subcontract the day-to-day running to Carillion.

The NHS trust is so frustrated it is talking to lawyers about how to end their relationship with Carillion, the report reveals.

But their problem is a poorly written PFI contract which does not allow a break point until 2018, when market competitiveness can be reassessed.

The NHS was taken to the cleaners when negotiating these PFI contracts, according to Eric Shaw in his persuasive book “Losing Labour’s Soul?: New Labour and the Blair Government 1997-2007”.

Supposedly lacking commercial expertise, the NHS was forced to outsource the negotiations of the project itself, as well as its management. But the contracts these negotiations drew up for the NHS to sign were deeply flawed. The private companies operating the hospitals were paid a premium for assuming risk - but the risk was in fact still retained by the NHS as the operator of last resort.

Carillion have been involved in the Private Finance Initiative at the Great Western Hospital from the start - whilst control has slipped ever further away from the NHS through a series of financial transactions by unaccountable corporations.

Carillion designed, constructed and commissioned the PFI hospital. Having secured what was probably an excessive original price for the 26 year operational contract, they were then able to sell their stake once the real, lower, operational risk was known.

In December 2007, Carillion sold their equity in this project (and two other hospitals) to Land Securities Trillium (LST), pocketing £21.5million. The musical chairs didn’t stop there. Land Securities sold Trillium to Telereal in 2009 for £750m to form Telereal Trillium. It’s 10% stake in Trillium PPP Investment Partners fund was re-sold to existing fund investors, creating Semperian PPP Investment Partners - who subcontract the running of Great Western Hospital back to Carillion.

The report from the NHS Trust spells out their frustration:

“The Trust does not hold a contract with Carillion. Instead, through the PFI, Carillion are contracted to provide these services by Semperian - effectively the ‘owners’ of the building under the PFI agreement…. The ongoing problems we have experienced with Carillion and their inability to resolve some of the more long running issues therefore reflect poorly on both Carillion itself and Semperian….Carillion’s failings [are] not simply…a contractual issue between companies, but …a fundamental issue of ensuring the quality of care and treatment we provide to patients is the best it can be. It is also a reputational issue for the Trust… the continual issues with poor quality are adversely impacting on our reputation amongst patients and key stakeholders."

It goes on:

“Concerns about food hygiene and cleanliness, have posed a potential risk to patients, visitors and staff which is completely unacceptable…. issues have not been taken as seriously as they should be by Carillion as resolving these outstanding issues is slow and any improvements made are not being consistently maintained.

"It is therefore increasingly frustrating and disappointing that serious issues regularly arise and the Trust now lacks the confidence in Carillion neither in being able to resolve these issues once and for all, nor in their ability to foresee and prevent other, as yet unknown issues, from impacting on patient services.”

The Swindon hospital is not the first time that Carillion have spectacularly failed in the NHS. An independent report in 2013 was commissioned after the deaths of three patients at the Carillion run Surgicare centre in Hertfordshire, and a series of other scandals. The Observer reported that admissions included:

“nurses dealing with the case at the privately run centre had needed a ventilator at 8.30am the day before the patient died, but ‘no machine was available’… the resident medical officer at the Surgicentre did not ask for a more senior doctor to attend to Ms Mansi as her health deteriorated .[This] has provoked her brother, Michael, to demand the closure of the centre.

The Carillion-run unit had already been investigated over potential failings in the cases of six patients who suffered irreversible sight loss after treatment. There had been 21 serious clinical and patient information incidents since the clinic opened in September 2011. The clinic also lost the records of 8,500 ophthalmology outpatients in 2012, prompting local MP Stephen McPartland to back calls for Carillion to lose its licence.

Carillion is also mired in controversy about unlawful shakedowns of low paid Asian workers at the Great Western Hospital.

Asian members of staff were allegedly forced to give gold and other goods to their supervisors to secure their holiday approvals, shift changes and other legal working rights.

The complaints go back years. Carillion’s management knew of the allegations as long ago as 2007, but did nothing to protect staff until they went on strike in February 2012. It conducted fatally flawed ‘investigations’ where victimized staff were too intimidated to give evidence against their white supervisors. Anti-corruption recommendations made in 2010 were simply ignored by local management, as Carillion now acknowledge.

In 2012 Carillion’s 109 staff gave strong evidence of supervisor racism and bullying.

But Carillion’s HR director Liz Keates responded that Carillion would not be upholding any part of anyone’s grievance. Ms Keates said that “there was no evidence”, disregarding the testimony of Carillion’s own staff. Staff were forced to go on strike - and supported by the GMB union, found the courage to take cases to Employment Tribunal.

Over 50 Employment Tribunal cases are still pending about these matters.

Carillion admitted to the Bristol Employment Tribunal in December that no disciplinary sanction has yet been issued to any supervisor.

Carillion has refused to talk to GMB who represent 75% of their staff at GWH.

Carillion's confrontational and aggressive approach to industrial relations doesn’t end there. Carillion has been up to its neck in the blacklisting scandal, where an unlawful register was maintained on behalf of construction companies, to prevent workers (including trade unionists and health and safety representatives) who the companies disapproved of from gaining jobs on building sites.

The Scottish Affairs Select Committee investigation has seen clear evidence that Carillion was involved with the blacklisting Consulting Association from the beginning, and has been one of the most prolific users. The Information Commissioners Office has also now released hundreds of pages of un-redacted blacklist files which highlight the role played by Carillion. So far there is evidence that 224 workers were blacklisted by Carillion.

At an Employment Tribunal taken by Dave Smith, a former UCATT safety rep in 2012, it was admitted that Liz Keates - the same Carillion HR Director who belittled the reports of the Asian workers at GWH - was also involved with the blacklist.

No wonder the Trust is seeking to end their relationship with Carillion - but the PFI deal means it will be a struggle.

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