Construction News

Thu October 29 2020

Related Information

NHS crippled by £65bn PFI bill

13 Aug 10 The National Health Service must pay out a total of £65bn for new hospitals built under the private finance initiative, prompting calls for a renegotiation of the contracts.

The National Health Service must pay out a total of £65bn for new hospitals built under the private finance initiative, prompting calls for a renegotiation of the contracts.

The payments will account for more than 10% of annual turnover for some NHS trusts, according to the BBC.

The construction cost of the hospitals was £11.3bn when they were built, but the cost over the full duration of the contracts – usually 30 years – is £65.1bn, including facilities management and maintenance.

With the public sector facing a spending squeeze, there have been suggestions that the PFI payments should be renegotiated downwards.

Professor John Appleby, chief economist at the King's Fund health think-tank, told the BBC: "It is a bit like taking out a pretty big mortgage in the expectation your income is going to rise, but the NHS is facing a period where that is not going to happen.

"Money is being squeezed and the size of the repayments will make it harder for some to make the savings it needs to. I don't see why the NHS can't go back to its lenders to renegotiate the deals, just as we would with our own mortgages."

Related Information

At Coventry and Warwickshire NHS Trust, which currently spends almost 15% of income servicing its PFI contract, chief executive Andrew Hardy said the trust is looking to reduce its payments.

However, a Department of Health spokeswoman said the schemes were providing "value for money" and were "affordable".

She said: "All trusts, not just those with PFI contracts, will need to deliver significant efficiencies over the coming years in order to meet rapidly rising demands while protecting front-line services.

"One of the benefits of PFI is that the buildings are always contractually required to be kept in good condition - good maintenance will always cost more than not maintaining facilities to a high standard."

Sign up to our FREE email newsletters or subscribe to our RSS feed for regular updates on the latest construction news, construction tenders, construction data, and construction law.

Got a story? Email news@theconstructionindex.co.uk

MPU

Click here to view more construction news »