Go-ahead for £1.5bn PFI hospital building plan

A £1.5 billion wave of new hospitals will be built under the controversial private finance initiative (PFI), the Government announced today.

Six new hospitals will open across England from 2010. Up to half the beds at the hospitals will be in single rooms "in a shift away from large, public wards", the Department of Health said.

But critics said PFI is a "money-making racket" for private companies and represents a waste of money.

Under the plans, hospitals will be built in Leicester, Torbay in Devon, North Staffordshire, Tameside and Glossop, Salford and Walsall.

Health Minister Andy Burnham said the scheme would lead to new A&E departments as well as cancer and mental health facilities.

The biggest hospital building programme in the history of the NHS had now passed the £10 billion mark, he added.

"These developments are just part of our commitment to the biggest hospital-building programme in the history of the NHS.

"New facilities like these are replacing inadequate and outdated hospitals across the country.

"The go-ahead is great news for the hundreds of thousands of patients who will benefit from the modern, bright, new buildings.

"The new facilities will not only be the best in terms of design and quality, but they will be affordable well into the future.

"Each scheme has been rigorously checked to make sure that it offers value for money and delivers services that are needed by local patients."

Under PFI, hospitals are built by private companies, with NHS trusts repaying them over a period of around 25 or 30 years.

The projects have caused deep controversy with some running into severe financial problems.

Reports in 2002 by the National Audit Office (NAO) and the Commons Public Accounts Committee highlighted private companies' ability to make significant sums by refinancing debts to take advantage of improved interest rates.

Earlier this year, the NAO raised concerns over the financing of the Norfolk and Norwich University Hospital.

It said private investors made more than £80m out of a refinancing deal but the hospital was only handed £34m.

In December, the Queen Elizabeth Hospital in Woolwich also cited PFI when admitting had become technically insolvent.

Mike Jackson, senior national officer at Unison, said: "Of course we welcome news that patients will benefit from bright, new hospital surroundings, but using PFI to finance these schemes is a waste of taxpayers' money.

"PFI schemes are expensive, inflexible and are adding to the current financial burdens of many hospital trusts.

"For example, the Queen Elizabeth Hospital is facing insolvency because, according to the auditors, PFI is costing an additional £9 million per year compared with conventional procurement.

"That is taxpayers' money and, with many other PFI hospitals facing similar financial difficulties, it makes no sense for the Government to keep going down this discredited route.

"Government claims that these schemes have been subject to extra scrutiny don't stack up, because PFI is fundamentally flawed.

"We don't want to risk waiting another five years to find out they were wrong again and more of our money has gone down the drain.

"These new schemes tie hospitals into 30-year plus contracts for services such as cleaning, catering and portering.

"They allow PFI companies to sweat even more money from the contracts.

"Time and time again PFI companies milk these projects through overcharging and lucrative refinancing deals.

"These new hospital schemes could and should be paid for by much cheaper public sector borrowing."

Geoff Martin from the pressure group Health Emergency, said: "For the Government to be signing off a new raft of PFI schemes, despite the fact we know they are extremely bad value, are a money-making racket for the private sector and provide poor quality facilities, flies in the face of any kind of rational thought process."

The biggest PFI project, for the rebuilding of St Bartholomew's and the Royal London hospitals, was signed off by the Government in March.

A total of 58 hospital projects have been completed under PFI with another 30 under construction, according to the Department of Health.