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Monday 17th June 2019

PFI costs put hospitals at risk

22nd September 2011

Ministers have raised concerns that the rising cost of paying for hospitals built through the Private Finance Initiative is jeopardising the finances of some NHS Trusts.


The government is concerned that PFI projects, introduced under the Labour government, are now unaffordable to some trusts amid fears that 22 are facing soaring costs that run into billions of pounds.

PFI sees private firms build hospitals, leaving the NHS with an annual fee like a mortgage over a 30-year period but ministers are now so concerned at the level of these costs and fear it is putting some hospitals at risk.

Figures from the Department of Health show yearly bills are forecast to rise by 75% to more than £2.5bn in the next 18 years, mainly because of inflation.

It means once the last scheme is paid off in 2049 more than £70bn will have been handed over, a sum exceeding the £11.4bn value of the building projects.

Health Secretary Andrew Lansley said: “The truth is that some hospitals have been landed with PFI deals they simply cannot afford.”

Details on a solution to the problem would be set out later this year, though government sources suggest if a solution was not forthcoming, money would have to be found from elsewhere in the health service to “prop up” PFI hospitals.

King’s Fund think-tank chief economist Professor John Appleby said renegotiation of the deals should be tried.

Labour defended the PFI deals saying investment was needed to replace "crumbling and unsafe buildings left behind after years of Tory neglect".


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