Two shareholders in Norfolk hospital PFI deal named as operating most schemes across the country
- Credit: Evening News � 2009
The government has been urged to reconsider the use of private finance initiative (PFI) contracts in the NHS, as two of the three shareholders involved in a Norfolk hospital deal were named among those operating the most contracts nationally.
A study by the Centre for Health and the Public Interest (CHPI) found private firms with contracts to build and equip NHS hospitals have made £831m profit over six years.
And the NHS will pay around £80.8bn over the life of the private finance initiative (PFI) contracts, 92pc of which are run by just eight companies.
The Norfolk and Norwich University Hospital (NNUH) was one of the first large PFI scheme hospitals in the NHS, with the deal being signed in 1996. The £229m cost was put up by consortium Octagon, now made up of three shareholders Semperian, Innifree, and 3i Infrastructure Seeds Assets Ltd.
This year, the hospital expects to pay Octagon £59m. But analysis by the CHPI found both Semperian and Innifree were two of the investment firms involved in the most schemes nationally.
You may also want to watch:
MORE: Revealed - How PFI deal is costing Norfolk and Norwich University Hospital £59m this yearDr Ian Gibson, who was Norwich North MP when NNUH was built in 2001. He said: 'It's ridiculous people are making huge profits out of it and continuing to do so.'
But an NNUH spokesman said: 'The PFI arrangement has helped us to deliver a world class hospital for the people of Norfolk where we have been able to expand services, develop a teaching hospital and become a centre for research with the Norwich Research Park and UEA.'
- 1 'It's not even that short' - schoolboy, 14, put in isolation due to haircut
- 2 'Red-and-white spray paint doesn't count' - three danger lorries stopped
- 3 Norfolk man found drunk at wheel twice in less than a month
- 4 Norfolk set for dry week with temperatures to rise
- 5 'Second time this year' - Armed police called to Norwich street
- 6 Why your phone might warn you of a 'terror attack' today
- 7 Nick Knowles joins outcry as Norfolk police told to close Twitter accounts
- 8 Two Norfolk restaurants in top five 'secret' places to eat on English coast
- 9 Hundreds flock to see exotic birds in Yarmouth bushes
- 10 Hot property - Homes selling just days after being on market
The most recent data available from HM Treasury and the Infrastructure and Projects Authority shows NNUH has so far paid £673m to Octagon.
And if estimated payments continue as planned will pay another £1.57bn by 2037.
By this time, £2.24bn will have been paid.
But very little of that money is going on paying off its debt to Octagon for building the hospital.
The vast majority is spent on paying interest on its loan from Octagon - around £17.6m this year - and paying Octagon to service and maintain the site, around £22m this year.
It hopes to pay Octagon off by 2037 – the earliest opportunity it has to end the contract.
'The government should reconsider'
Nationally the health service has a total of 125 PFI schemes - an alternative to public borrowing for major building projects that see NHS trusts make annual repayments over the length of the contracts, which have an average term of 31 years.
Eight firms are equity owners of the bodies set up to manage 115 of the schemes, with investment firms Semperian (24) and Innisfree (19) and Barclays (16) operating the most.
Analysis of 107 PFI contracts for which full data was available found pre-tax profits of £831m for the companies behind the deals, while £480m had been paid out in dividends to investors. The report by the CHPI estimated the deficit for hospitals in the study would have been reduced by a quarter if the money paid out in profits had been spent on patient care. The think tank concluded: 'The government should reconsider its use of PFI and consider using public borrowing to fund new capital investment in hospitals.'
What does the CHPI want?
Colin Leys, one of the chairmen of the CHPI, told the BBC: 'This report shows for the first time the huge amount of taxpayers' money which is leaking out of the NHS through the profits generated by PFI companies. Given the extreme austerity in the NHS, where patients are being denied treatment and waiting times for operations are rising, the government needs to take action to stop this leakage of taxpayer funds out of the NHS.'
Instead the CHPI would like to see caps on the amount of profit made from PFI contracts, taxing PFI companies to recoup costs, and either renegotiating PFI contracts or using government loans to buy out companies.
A Department of Health spokesman said just 3pc of health spending went on PFI. He added: 'The first PFI contracts for NHS hospitals, which were signed in 1997, range between 25 and 30 years. This report analyses just six years of contracts and does not represent the full picture.'