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Wednesday 26th October 2016

PFI hospital schemes cut by £4bn

4th June 2007

Figures released by the Department of Health show that the PFI hospital building programme has been cut back by a third in the last 16 months.


Private finance initiative (PFI) schemes have been under review since last year and the original £12 billion programme has now been cut by around £4bn with the possibility of further reductions.

However, some projects are still being given the go-ahead including the £1bn project at Barts and Royal in London and a £600m scheme in Birmingham. In addition, seven smaller PFI hospital projects, worth about £1.5bn, are likely to proceed. But projects in Plymouth, Liverpool, south Devon and Whipps Cross in London are now likely to be cut.

The change of emphasis in the PFI programme has arisen as a result of medical technology, growing financial uncertainty within the NHS and a trend to move care out of hospitals and back into the community.

While some schemes will go ahead, others have been reduced in size, including a Hertfordshire scheme originally scheduled to cost £550m that has been cut by £300m.

The Department of Health says the PFI review is still not complete but it plans to pay a portion of the losing bidder’s costs where projects are let under the competitive dialogue procedure, which is intended to allow more discussion of design and other details during the bidding process.

With bid costs running into millions of pounds on bigger schemes, there may well be higher short-term costs on some projects until the market adapts to the changes.


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William Walbank

Thursday 7th June 2007 @ 15:15

The very high costs of delays in organising PFI programmes are seldom assessed or considered. In our local case the insistance on PFI funding led to delays of 10 years during which the 'costs' of the hospital increased from some £10m to £35m - which is really a cost of over £120m from Public funds or taxation over the next 30 years - the Alice in Wonderland School of Economics.

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