PFI ‘a weight around neck’ of NHS trusts
Ex-watchdog boss attacks costs ‘scandal’
THE EX-CHAIRMAN of an influential parliamentary health watchdog has condemned the cost of a controversial PFI contract signed by Yorkshire hospital bosses as “nothing short of scandalous” after it emerged the region’s trusts are paying out £112m a year on similar funding deals.
David Hinchliffe, a former Wakefield MP who chaired the health select committee in the period when the use of ‘buy now, pay later’ deals became widespread under New Labour, said cash-strapped hospital bosses and local politicians should have done more to renegotiate their annual payments.
Analysis by The Yorkshire Post reveals that five Yorkshire hospital trusts have signed PFI (Private Finance Initiative) deals, where private firms fund the upfront costs of new buildings and are paid back over several decades, at a cost of £3.8bn. These include Mid Yorkshire hospital trust, which will pay £1.61bn over 35 years, including £38.9m last year, as part of the contract for Pontefract and Pinderfields Hospitals.
And Leeds’ hospital trust, one of the largest in the country, says it is considering using a PFI scheme to pay for new buildings more than a decade after signing a similar deal which will cost more than £1bn over 30 years.
A total of £111.5m was paid out last year to service these debts, for buildings with a capital value of £752.6m. In addition, four Yorkshire mental health trusts have PFI contracts worth £747.7m.
The costs pile extra pressure on NHS bosses at a time when services are under unprecedented stress. Mr Hinchliffe, who says his criticisms of PFI in a select committee report were watered down by ‘loyalist’ Labour MPs, said the cost of the Pinderfields scheme was “nothing short of scandalous”.
He said: “On this scheme and many others the NHS is being taken for a ride by the PFI companies and it concerns me deeply that the education sector, now using PFI for school projects, has not learned any lessons from the NHS. I have sympathy for those NHS Trusts – such as Mid Yorkshire – which have the albatross of PFI around their necks but, in my view, there should have been much more vigorous efforts by them and local MPs to press nationally for a renegotiation of the debt repayment arrangements.”
Mid Yorkshire Hospitals NHS Trust insists the PFI scheme represents good value for money despite significant annual costs and is saving £20m a year compared with the old hospital buildings it helped replace.
Martin Barkley, chief executive at Mid Yorkshire Hospitals NHS Trust, said: “The PFI scheme was approved on the basis that it represents good value for money. The fact it does represent good value for money does not mean the cost of the investment yearon-year is not insignificant.”
ONE OF the country’s biggest hospital trusts says it is considering using a PFI scheme to pay for new buildings more than a decade after signing similar deals which will cost in excess of £1bn over 30 years.
Government figures show Leeds Teaching Hospitals NHS Trust paid £33.6m last year as part of Private Finance Initiative contracts to build the Bexley Wing at St James’s Hospital and Wharfedale Hospital in Otley.
The deals for the Bexley Wing and Wharfedale were signed in 2004 and 2002 respectively. The total capital cost of the buildings is £237m but over 30 years, £1.016bn will be paid back.
The original funding for the Bexley Wing part of the scheme came from the Treasury, making the contract one of only two health PFIs to be funded in this way.
Earlier this year the project was refinanced via a £261m bond issued by the insurance company Assured Guarantee.
According to adviser Bevan Brittan, the renegotiation means nearly £2m annually can be saved over the lifetime of the agreement and the trust can now build a £3m specialist clinical trials centre at St James’s Hospital. The trust says the overall unitary charge for its PFI deals will be £32.2m for this financial year, a cost which includes repayment of the original capital, interest, maintenance and other expenses.
A spokeswoman said: “PFI charges represent only a small proportion of the trust’s overall costs, given the turnover of the trust is in excess of £1bn.
“The trust has benefited from a recent refinancing of the Bexley PFI and works proactively with our PFI partners to obtain benefit for the trust, for example by enhanced medical equipment provided within the Bexley Wing via the PFI agreement.
“The business case for each project included a value-formoney assessment which took account of the risk transferred to the private sector under a PFI contract arrangement.”
She added: “The trust is in the process of developing a business case for ‘Building the Leeds Way’ which will be a significant development including new-build and some refurbished accommodation.
“A number of options for funding including potentially PFI will need to be considered within the business case.”