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PFI costs 'to soar'

12th September 2007

A study has said the costs paid by the NHS for private finance projects are set to rise sharply in the future.

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Researchers at Edinburgh University discovered that the health services' repayments will go up to £2.3bn from the £470m fee they paid for 53 schemes in 2005-6. The huge rise is estimated to come by 2014, if all of the 126 planned projects have been launched.

Mark Hellowell, lead author of the research, said: "The payments to PFI consortia are an albatross for the NHS and are associated with service cuts."

"As the PFI programme expands, the problems will become even more acute."

Private financing schemes are a contentious subject for the health service, as they have committed to making repayments for the next 30 years as part of a "mortgage"-style arrangement.

The agreement allows the private sector to design, build and finance projects. The health service will pay back the costs - with interest - over the next 30 years.

The team warned that the payments were already beginning to cause difficulties within the NHS.

The study found that trusts with projects costing £50m had been faced with repayments which were higher than their construction budgets for new buildings.

On average, the deficit was 4.4%. The team warned that trusts would have to use funds which were meant for other services and compromise standards of care.

 

 

 

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