NHS PFI debts rising by 5pc a year
Taxpayers are paying five per cent more per year for hospitals built under Labour’s Private Finance Initiative (PFI) because the debts are linked to inflation.Currently the combined debt for some 800 PFI projects, including 103 PFI hospitals in England, stands at about £300 billion, according to makers of the programme.
When a BBC Panorama programme contacted 85 hospital trusts with PFI deals, it found 80 of them said they were having to make increased payments due to inflation.
When most of the deals were set up, inflation was low and the outlook was for that to continue well into the future.
Most trusts decided not to protect their debts from rising inflation, against the advice of the Treasury.
By contrast, the companies building the hospitals insured themselves against losses due to inflation.
The PFI deals, under which companies build hospitals to be leased back by the NHS, typically run for 30 years.
Margaret Hodge, the Labour MP who now chairs the Public Accounts Committee, admitted to the programme: “We should have been much more transparent about the costs. I think we got the balance wrong.”
Richard Bacon, a Conservative member of the committee, said he thought taxpayers were being “ripped off”.
A spokesman for the Treasury said that protecting PFI debts against inflation was “not mandatory … because it is subject to individual authorities undertaking their own project assessments”.
He added said: “The Government has consistently expressed concerns about the misuse and costliness of PFI. That is why, less than two weeks ago, the Government launched a fundamental review of the PFI model, which will see the end of PFI as we know it.”
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