Cash-strapped hospital asks for help to pay off massive debt to firm which built it

The N&N under construction in July 2001 (l). The construction saddled it with huge debts. Photo: Arc

The N&N under construction in July 2001 (l). The construction saddled it with huge debts. Photo: Archant - Credit: Archant

A hospital has pleaded for help to pay off its huge debt to the firm behind its construction.

Mark Davies, chief executive of the Norfolk & Norwich University Hospital. Photo: NNUH

Mark Davies, chief executive of the Norfolk & Norwich University Hospital. Photo: NNUH - Credit: Archant

It comes as fresh research shows the crippling impact of Private Finance Initiatives (PFI) deals under which hospitals such as the Norfolk and Norwich (NNUH) were built.

The report found the initial £13bn which PFIs poured into building new hospitals will end up costing the NHS in England £80bn.

"Toxic PFI contracts are still driving billions away from patients and into private bank accounts," said Chris Thomas, who carried out the research for the IPPR thinktank.

In the NNUH's case it owes £190m to Octagon Healthcare Ltd for building it in 2001 - a deal previously described by Norwich South MP Clive Lewis as "the worst credit card on the comparison site".Despite paying Octagon almost £60m a year, the NNUH is barely paying off the debt as so much of the money is taken up by interest.

It reduced the amount by £3m last year to £190m and it can not get out of the deal until 2037 at the earliest.


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In the NNUH's annual report chief executive Mark Davies said the hospital struggled to make the PFI payments.

He also said a crucial factor for its £60m deficit last year was the PFI.

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"We are in discussion with our regulators as to whether the trust may be entitled to join the group of other trusts who receive central government assistance with similar costs," he wrote.

An NNUH spokesman said discussions were ongoing with NHS England about funding the PFI.

Meanwhile, Octagon Healthcare Ltd reported profits after tax of almost £8m last year and paid out that amount in dividends to its shareholders.

It is the highest amount it has paid out to shareholders since 2003.

Octagon declined to comment, but it has previously defended the payouts, stating they are largely paid to pension funds.

It also said previously it had worked with the NNUH to find savings.

The IPPR report said one-off payments should be paid to get hospital's out of the PFIs.

They found hospitals would still be paying off PFIs in 2050 and the deals were eating up a sixth of some hospitals' budgets.

In the NNUH's case it is taking up around a tenth of its income.

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