Questions raised over value for money of PFI hospitals

Patients started moving in to Peterborough City Hospital on 15 November

Peterborough City Hospital, the latest to be built under the controversial Private Finance Initiative, has accepted its first patients.

At the same time, the chairman of one of the first hospitals to be built under the scheme has admitted it was expensive and did not constitute a good deal for taxpayers.

The Norfolk and Norwich University Hospital has been controversial from the day building began.

Opened in 2001, it was one of the first NHS hospitals to be financed by private companies, under the PFI scheme.

But now, with public spending under review, the current chairman has admitted the hospital was expensive and that the taxpayer had lost out.

Speaking to BBC East Inside Out, David Prior said: "It's a great deal for patients, there's no doubt about that and we have made this hospital work, we're delivering care at a low cost at this hospital.

"Could it have been negotiated more cheaply at the beginning, yes it could, so to that extent it's not as good a deal for taxpayers as it has been for patients."

To many observers it is no secret that mistakes were made in the original deal. Just three years after Norfolk and Norwich's PFI contract was signed, it was re-negotiated.

Mistakes made

The hospital had its charges reduced but its chairman has told the BBC that the PFI deal cost the hospital £30m a year.

Ten years ago, Chief Executive Malcolm Stamp confirmed that the annual cost would be much less, a figure of £24.4m a year.

Mr Prior stressed that without PFI the Norfolk and Norwich University hospital would not have been built.

But one question remains - exactly how much has it cost?

Mr Prior dismissed figures obtained from the House of Commons Committee of Public Accounts which state that it will cost £1.3bn over the life of the PFI contract.

He said: "It costs a lot of money to maintain and fund a hospital, so it probably costs that much over a 40-year period to run any hospital.

"So it's kind of a nonsense figure that gets bandied around by people who don't know what they're talking about."

Since the Norfolk and Norwich Hospital, many other hospitals, schools and public buildings have been paid for with PFI.

Peterborough's flagship hospital, admitted its first patients last week.

Lessons learned

Local taxpayers will pay £37.7m for each of the 35 years of the PFI contract.

The repayments for PFI hospitals have to be repaid out of local budgets, so with finances expected to get tighter in the future that could mean less money for patients.

Former nurse Angela Broekhuizen, who is now Associate Project Director of the new hospital, believes lessons were learned from the Norwich experience and that the hospital is value for money.

She said: "When you look at the quality of this building it's just unbelievable, we've been very lucky.

"Yes, it's expensive but what you have got to think about is we get imaging equipment and anaesthetic equipment as part of the PFI deal.

"We also get our decorating, catering, all of our maintenance for the next 30 years included as well, which doesn't always happen."

The full report can be seen on Inside Out (East) on BBC One at 1930 GMT on Monday 22 November 2010.