NHS bill of £65bn to build new hospitals.
As the Government increases pressure on the NHS to save money, the NHS in England faces a total bill of £65bn for new hospitals built under private finance initiatives (PFI).
Under the PFI schemes – private firms pay for and build the new hospitals and mental health units, with the NHS having to pay these costs off over a 30-year period – effectively an “NHS mortgage.”
In real terms, the costs of the hospitals under PFI means that some trusts annual payments is more than 10% of their turnover.
The net affect of this is as fees rise each year doctor's fear that it would be harder to achieve savings, which would mean less money available for patient care. But the government said the 103 schemes were providing value for money.
Current figures show that the value of the projects when they were built was £11.3bn. However, over the lifetime of the repayments, the “NHS mortgage” due to be paid back will have actually cost the NHS £65bn once extra costs such as maintenance, cleaning and catering are taken into account.
The figures also show the levels of repayments are rising. Currently the NHS pays back in total £1.25bn each year – a figure, which rises year-on-year until 2030 when it will top £2.3bn. The final payment will not be made until 2048.
Under current NHS reform – the emphasis is to move more care out of hospitals and into the community with critics of the PFI arguing for the NHS to renegotiate better deals to help it cope better during the public sector squeeze on spending.
Although the NHS budget is being ring-fenced, the health service still has to find up to £20bn of savings by 2014 to help it cope with pressures from lifestyle changes such as obesity, an ageing population and the rising costs of drugs.
Professor John Appleby, chief economist at the King's Fund health think-tank, said: "It is a bit like taking out a pretty big mortgage in the expectation your income is going to rise, but the NHS is facing a period where that is not going to happen. Money is being squeezed and the size of the repayments will make it harder for some to make the savings it needs to. I don't see why the NHS can't go back to its lenders to renegotiate the deals, just as we would with our own mortgages."
Dr Mark Porter, of the British Medical Association, added: "Locking the NHS into long-term contracts with the private sector has made entire local health economies more vulnerable to changing conditions. Now the financial crisis has changed conditions beyond recognition, so trusts tied into PFI deals have even less freedom to make business decisions that protect services, making cuts and closures more likely."
Nigel Edwards, director of policy at the NHS Confederation, which represents trusts, accepted there was a problem. "They were planned for a different world. I'm sure that in some cases people feel their hands are tied."
And former NHS trust chief executive Roy Lilley warned, “The building of large hospitals under PFI was out of kilter with the move in the NHS towards community treatment.”
But a Department of Health spokeswoman said, “The schemes were providing “value for money” and were “affordable”. She added: "All trusts, not just those with PFI contracts, will need to deliver significant efficiencies over the coming years in order to meet rapidly rising demands while protecting front-line services. One of the benefits of PFI is that the buildings are always contractually required to be kept in good condition - good maintenance will always cost more than not maintaining facilities to a high standard."
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