What Jeremy Hunt says about the Norfolk and Norwich hospital’s PFI burden

Health Secretary Jeremy Hunt says he can't intervene in the deal. Photo: Stefan Rousseau/PA Wire

Health Secretary Jeremy Hunt says he can't intervene in the deal. Photo: Stefan Rousseau/PA Wire - Credit: PA

The health secretary has rejected an appeal by a Norfolk MP to intervene in the controversial deal through which the region's biggest hospital was built.

North Norfolk MP Norman Lamb.

North Norfolk MP Norman Lamb. - Credit: Copyright: Archant 2015

North Norfolk MP Norman Lamb wrote to health secretary Jeremy Hunt after an investigation by this newspaper into the amount of NHS money the Norfolk and Norwich University Hospital (N&N) was paying a private firm called Octagon for building the N&N in 2001 under a Private Finance Initiative (PFI).We found Octagon had paid out almost £26m in dividends to its three shareholders since 2009.

Last year it made a record profit, while the hospital made a record deficit and will now have to find savings of around £23m this year.

The PFI contract will cost the hospital £57m this year, which includes maintenance of the site.

Mr Lamb wrote to Mr Hunt about the burden the deal was putting on the N&N and the knock-on effect on patients.

Norfolk and Norwich University Hospital. Photo: Archant

Norfolk and Norwich University Hospital. Photo: Archant - Credit: Evening News © 2009

He suggested the government intervened to buy the hospital out of the deal or put pressure on Octagon to give a share of its profits back to the N&N which could be used to improve patient care.


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Mr Hunt said the government was concerned about the levels of payment hospitals, including the N&N, entered into contracts under PFI contracts.

But he said he would not intervene.

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He said action was being taken to improve the N&N's finances after it was placed in financial special measures in July.

It was selected to take part in a programme to help it find ways to make 'immediate and significant savings' as well as longer term savings, he said.

The trust is also getting support from auditors from PwC.

The hospital's deficit was forecast to reach a record £32m this year, but the hospital now hopes it will be £25m as it finds extra savings.

In the hospital's last board papers from September, chief executive Mark Davies warned: 'We have an individual responsibility to put our foot on the brakes and stop that deficit growing.'

Octagon said it was working with the N&N to find savings in the PFI contract.

How hospital is tackling deficit

The N&N said it had been working hard to improve the health of its balance sheet.

A spokesman for the hospital said they had a 'well-defined financial recovery plan in place to make savings and reduce costs'.

They said their work would mean the hospital's deficit for this financial year would be £25m rather than £32m.

'An area of cost reduction through which we are seeing particularly positive results is that of high-cost agency and locum staffing spend,' they said.

Jeremy Over, the hospital's director of workforce, said 'significant early progress' had been made on bringing down the bill for agency staff.

He said: 'We also continue to actively recruit more permanent staff which helps to reduce our dependency on agencies.

'As part of this work we are growing our staff bank and are offering incentives for new nurses to join.'

The hospital's acting director of finance, Sheila Budd, said in board papers in September that it was behind its savings target for the year by around £3m. But the papers said an extra £5m of savings would be made.

•Do you have a health story? Email nicholas.carding@archant.co.uk

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