Editorial Monday 25 June 2012: SOS Lansley sacks South London Healthcare Trust board; omnishambles to follow?

Holy shit.

We knew there was a major problem, but the FT's revelation that Health Secretary Andrew Lansley (saviour, liberator) has put South London Healthcare Trust into effective administration is a big story by anybody's lights.

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Our Saviour And Liberator has, as the FT story notes, taken advantage of legislation introduced by new Labour in 2009 to avoid creating the legacy headache of all legacy headches for the commissioners of south London.

This raises a few interesting questions.

1. Who has the claim on the assets of the NHS? A few Things That Are Not Surprising:

a) SLHT is not a foundation trust, and thus the fairly clear administration measures for FTs do not apply.

b) It has an uber-PFI, dating back to the halcyon days of The Magical Money Tree Where Cash Grows For Free and the charming economic illiteracy that it it a good idea for governments to ensure that the public sector was borrowing from markets when a government with a sovereign currency can always borrow more cheaply than markets.

c) PFI lenders are people who want their money back.

I am not an expert in the legalities of how public sector PFI works, not by a country mile or ten. But I know this: the people who can afford more, better lawyers end up winning in property disputes.

2. How will this play with the public? The first NHS trust to officially go bust has done so on OSAL's watch. Now we all know that there have been quite a few technically insolvent providers and a few commissioners if the laws of economic gravity had been allowed to prevail. (Of course, if the laws of economic gravity had been allowed to prevail, we wouldn't have a public sector.)

It is less than clear that the public is ready for the loss of a provider - even a troubled provider. The case has, as Mike Farrar's speech pointed out last week, not been made that change is coming. (It's a bit like the Health And Social Care Bill, which wasn't really a triumphant hit with the public - or indeed the professions.)

Without a very strong narrative of why this is happening, this could get a bit omnishambolic.

And the Secretary Of State has not exactly won himself a reputation as a Great Communicator.