Circle signed a £1bn contract to run Hinchingbrooke Health Care NHS Trust in Cambridgeshire / PA


A private firm was today given the green light to take over a debt-ridden NHS hospital in a £1 billion, 10-year deal.

But the handing over of Hinchingbrooke Hospital in Cambridgeshire to healthcare provider Circle was criticised by Labour which claimed it raised questions over the Government's "true vision" for the health service.

The company will become the first non-state provider to take over an entire hospital when the contract starts in February next year.

It was announced in November last year that Circle was to be awarded the management franchise to run Hinchingbrooke after being selected from a shortlist of three, in a process initiated by the former Labour government.

The deal was finalised when contracts were signed by representatives from the private sector firm and Hinchingbrooke Health Care NHS Trust.

Health Minister Earl Howe hailed the move which, he said, created a "win-win situation" for both patients and taxpayers while saving the hospital from possible closure.

"This is a transfer of risk on to the private sector - that is why it is a good deal," he told the Lords.

"But it is also a good deal in another sense because patients will still have a hospital in Hinchingbrooke.

"This is a hospital that in common parlance could be described as a financial and clinical basket case. There were no NHS bidders willing to take this on."

While private sector firms already operate units within the NHS - such as hip replacement centres - Circle will become the first to deliver a full range of NHS district general hospital services.

But shadow health minister Liz Kendall questioned why the private sector company - which has "close links" with the Conservative Party and no experience of running Accident and Emergency or maternity services - was selected.

"Patients and the public will be deeply worried that this morning they have seen this Government's true vision for the future of our NHS, with the wholesale transfer of the management of entire hospitals to the private sector," she said.

Hinchingbrooke Hospital, which opened in 1983, has a maternity ward and an Accident and Emergency unit and caters for more than 161,000 people in the Huntingdon area of Cambridgeshire.

The first task facing Circle will be dealing with its legacy of £39 million debts, despite an annual turnover of £90 million.

It also plans to transform the hospital.

The company has insisted its agreement - under which staff and assets will remain part of the NHS - does not rely on any redundancies.

Director of policy and strategy at NHS Midlands and East Dr Stephen Dunn welcomed the move which, he said, will end the "uncertainty" that has hung over the hospital for nearly five years.

"Without this partnership, the future for Hinchingbrooke could have been uncertain.

"Now we have a solution which aims to repay the hospital's taxpayer debt of almost £40 million, as well as giving it the best chance of a sustainable future.

"Patients will continue to receive high-quality NHS services from NHS staff in the NHS hospital they know."

Dr Peter Carter, chief executive and general secretary of the Royal College of Nursing, welcomed the "hugely significant" development but said openness and transparency around the deal was paramount.

And he stressed it was "vital" that Circle continued to provide a "comprehensive range of services that can be easily accessed by the local community".

"We know the NHS is under huge financial pressure to save £20 billion by 2014 and that Hinchingbrooke Hospital is carrying about £40 million of debt," he said.

"These financial gaps must not be plugged by cutting local services such as Accident and Emergency in the future."

GP groups backed the deal and said they could now "look forward to a more certain future".

Health Minister Simon Burns insisted the move represented a "good deal for patients and staff".

"It is important to emphasise that, in this contract, NHS services will continue to be provided by NHS staff from NHS buildings, and patients will continue to access them as they do now," he told MPs.

"This is not a privatisation in any shape or form."