Companies behind N&N reject cash appeal
PUBLISHED: 07:30 28 June 2006 | UPDATED: 11:06 22 October 2010
Hopes that the companies behind the £229m Norfolk and Norwich University Hospital will share more of their windfall profits with the public sector receded last night after they turned down the latest request to make a “goodwill gesture” to the NHS.
Hopes that the companies behind the £229m Norfolk and Norwich University Hospital will share more of their windfall profits with the public sector receded last night after they turned down the latest request to make a "goodwill gesture" to the NHS.
The Octagon consortium which built the new N&N at Colney has written to Norman Lamb, the Liberal Democrat MP for North Norfolk, and ruled out giving a cash donation to the hospital.
Octagon - which is owned by Barclays, Innisfree, 3i, Serco and John Laing - had already turned down a similar request from David Prior, the chairman of the N&N board.
Calls for Octagon to make a donation to the N&N followed stinging criticism of the consortium by a parliamentary select comm-ittee for making an additional £75m profit on the private-finance (PFI) project by renegotiating - "refinancing" - its loans in 2003, once construction of the hospital was complete.
Octagon's letter to Mr Lamb stressed that the construction of the hospital was completed "22 weeks ahead of schedule and circa £10m under budget" - which "compares very favourably" to the public sector's record on major building projects.
"As the National Audit Office (NAO) has reported, government-procured construction projects have in 70pc of cases been late or over-budget, or both," wrote Richard Jewson, chairman of the consortium.
Mr Jewson added that the hospital's 30pc share of the refinancing gain "resulted from shareholders choosing to take dividends earlier than originally planned, and as a consequence they will not receive any further payments until 2028".
The letter spelled out "benefits to [Mr Lamb's] constituents" of the hospital deal:
A "brand-new, state-of-the- art hospital, for which they otherwise could have waited many years and which, as the NAO reported, would have cost the taxpayer much more due to inflation in construction costs".
"Octagon continues to shoulder the risk of maintaining the hospital to the very high standards specified in the contract".
The hospital trust "receiving £3.5m annually which it otherwise would not have done" because of the consortium decision to refinance the deal.
Mr Lamb also received a reply from Chris Hyman, chief executive of Serco, which owns a 5pc stake in Octagon.
According to Mr Hyman, the company is working closely with the hospital to "reduce some of its financial burdens" and Serco staff were "making a daily difference to the well-being of patients at the hospital and to the local community".
But Mr Lamb pledged to continue to put pressure on the companies - and repeated his call for the public sector to boycott them until they share more of their profits.
"I'm left with the sense that they still haven't understood the level of public concern about the contract and the profits, and there's no way I'm going to let this rest," he said.
"The public sector should consider very carefully before engaging with these businesses."
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