Tories: NHS wasted billions in PFI deals

Friday, 27 October 2006 12:00 AM

The Conservatives have accused ministers of wasting £45 billion on NHS hospital building contracts by pressing ahead with unpopular private finance initiative deals (PFI).

Figures collated by the party suggest NHS trusts will have to pay private firms £53 billion for hospitals over the next 30 years, although their total value is only £8 billion.

"The extra cost of £45 billion is complete lunacy in the context of an NHS under intolerable financial pressure," said shadow health secretary Andrew Lansley.

He also warned that as the government plans to shift care into the community, many NHS trusts found themselves burdened with bills for hospitals that were no longer needed.

Today's figures show the Birmingham and Solihull mental health trust will have paid out £330 million by the time its hospital is built under PFI, but the building itself will have a capital value of just £18 million.

In London, King's College hospital NHS trust will pay out £950 million for a hospital worth just £76 million, Mr Lansley said.

However, the analysis - which is based on figures obtained in a parliamentary question - was rejected by the government, who said that comparing the capital value of hospitals and their costs over a long period of time was like "comparing chalk and cheese".

"Cost value relates to capital construction, whereas repayment covers the cost of maintaining each PFI hospital over a period of 30 years," a Department of Health spokesman said.

"For instance, the cost of feeding patients, cleaning a hospital, maintaining the hospital building and so on and so forth. It is misleading to suggest that repayments are in any way related to capital cost."

PFI has always been controversial, and earlier this year MPs condemned a deal to build the Norwich and Norfolk hospital, after they found the refinancing arrangements had netted the private contractors £84 million but put the trust at significant financial risk.

Several hospitals have also cited their PFI deals as a major contributing factor to their deficits, which reached a total of £520 million last year.

In August, the government announced six new PFI hospital deals, and health minister Andy Burnham said they would provide modern buildings for thousands of patients and be "affordable well into the future".

But Mr Lansley said it was "perverse" that more than 80 NHS organisations were locked into long-term contracts for building large hospitals "that we have no idea whether the NHS will actually need".

"While there is a key need for private sector investment in the NHS, Gordon Brown has failed to recognise that 30-year-long PFI contracts are often at odds with the government's concept of competition between hospitals," he said.

He added: "The NHS needs much greater flexibility when it secures borrowing from the private sector. It is time for a fundamental review of how the NHS accesses capital for future investment."

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