PFI Hospital building schemes face major cuts

The National Health Service’s £12bn hospital building programme in England under the private finance initiative faces a cut of up to 40 per cent, according to leaked documents. Although the department has repeatedly denied there is a review or moratorium on new PFI hospitals under way, it has now admitted to a “reappraisal”.

In most cases the cut is likely to be a reduction in the size of projects rather than their abandonment.

That raises question marks over 40 big PFI schemes whose affordability is also being challenged by the introduction of a system where hospitals are paid on a fixed tariff for the number of patients they treat, rather than receive block contracts. The future of the Bart’s element of the Royal London hospital’s £1.1bn redevelopment and a £700m scheme in Leicester are already under review.

A late draft of Monday’s white paper, seen by the Financial Times, says the movement of care out of hospitals means health trusts “will need to review their current plans for PFI-financed hospitals to ensure that any such plans are compatible with a future where resources and activity are moving into primary and community settings”.

A separate document adds that schemes must be “financially robust, affordable and sustainable or not”, and formal approval will be needed in future before preferred bidders are appointed.

It insists that “PFI will remain the major vehicle for delivering capital investment in acute services in the NHS ... even after completion of this reappraisal” the programme is likely to be worth “an estimated £7bn-£9bn”.

http://news.ft.com/cms/s/1235967e-8f74-11da-b430-0000779e2340.html