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Firm which built NNUH reports record profit as hospital pays it £62m

PUBLISHED: 06:06 11 June 2020 | UPDATED: 11:14 11 June 2020

Norfolk and Norwich University Hospital paid Octagon £62m last year. Octagon, the company behind the PFI deal, reported record profits. Date: May 2020. Picture: Mike Page

Norfolk and Norwich University Hospital paid Octagon £62m last year. Octagon, the company behind the PFI deal, reported record profits. Date: May 2020. Picture: Mike Page

Mike Page

The company which built the Norfolk and Norwich Hospital reported record profits last year, as it was paid more than £62m by the NHS.

Octagon Healthcare Group doubled its profits to £17m after tax in 2019, up from £8m the year before.

It also paid out a record £13.2m in dividends to its shareholders, a rise of 60pc in 2018, its annual report published this week showed.

The NNUH, meanwhile, fell £60m into the red in the last financial year and warned that the costs of dealing with the coronavirus crisis would add another £8m to its deficit.

The hospital was built under a Private Finance Initiative (PFI) in 2001, meaning a private company, Octagon Healthcare, funded the costs.

Norwich South MP Clive Lewis said PFIs should be reviewed. Picture: Yui Mok/PA ImagesNorwich South MP Clive Lewis said PFIs should be reviewed. Picture: Yui Mok/PA Images

But the deal is controversial because the NHS has to pay the original £229m cost of building the hospital to Octagon several times over.

Norwich North Conservative MP Chloe Smith said she was raising the case with the Health Secretary and Chancellor.

She described the figures as “very frustrating”.

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Despite paying Octagon tens of millions of pounds a year, the amount it owes is only reducing by around £3m each year as much of the money is taken up by interest repayments and running costs.

Norwich South Labour MP Clive Lewis previously compared the deal to the worst credit card on a comparison site.

He said: “Surely Covid-19 has shown beyond doubt our NHS should focus wholly on keeping us well.

“The Government needs to stop pretending our health service is some kind of quasi business in which vital local institutions like the N&N are continually preyed upon.” He called for PFI deals to be reviewed.

Norfolk and Norwich University Hospital was opened in 2001 but the repayments for building it will continue until at least 2037. Picture: Mike PageNorfolk and Norwich University Hospital was opened in 2001 but the repayments for building it will continue until at least 2037. Picture: Mike Page

Ms Smith added: “We all want our hospital to be able to focus on treating people, rather than paying debt interest.”

An NNUH spokesman said it was in ongoing discussions with regulators about the contract.

The deal with Octagon runs until at least 2037 and it still owes it £187m.

Octagon is owned by two investment companies called Innisfree and Semperian PPP. They previously said that much of the dividend is paid to pension funds and they had worked with the hospital to reduce costs.

Norwich North Conservative MP Chloe Smith.  Picture: Neil DidsburyNorwich North Conservative MP Chloe Smith. Picture: Neil Didsbury

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