'Lease-back' shows way forward for NHS

The Leeds hospital deal signals the start of a pounds 2bn health servic e revolution, writes Nicholas Timmins
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The Independent Online
There are now 25 potential deals, each worth more than pounds 25m, under consideration for new hospitals as part of the Government's Private Finance Initiative.

The Chancellor's expected announcement tomorrow of the first scheme signals the start of the process, which will lead to the private sector building hospitals worth nearly pounds 1bn to be leased back to the NHS.

The Leeds deal, struck with Medipark, a consortium whose members include the Charterhouse Bank and the builders Laing, will include an 80-bed patient "hotel" of which 35 beds will initially be run as a private patient unit. Medipark will pay St James's (known locally as Jimmy's) a royalty on the turnover it attracts.

The South Bucks scheme includes replacing Second World War hutted wards at Amersham General Hospital which were built in 1940 and whose replacement was first promised by Enoch Powell when he was Minister of Health in 1963. Subsequent redevelopment plans have been repeatedly cancelled.

Mr Dorrell is expected to use that to back his claim that the private finance initiative means new NHS hospitals will no longer have to wait in the queue for public sector capital.

Labour may argue that the schemes will lead to privatisation but find them impossible to cancel, said Kingsley Manning, managing director of Newchurch, a consultancy which holds a database on the schemes. Projects worth nearly pounds 2bn could be in the pipeline by the general election. "If Labour does cancel them, it will either have to find pounds 2bn of capital from taxation to replace them, or it will have to tell 40 or so communities that they are not going to get the new hospital they have been promised."

Some critics, however, say it could lead to a public spending crisis. Nicholas Bosanquet, Professor of Health Policy at Imperial College, London, said growing use of commercial capital was creating a new breed of "private sector rent-seekers", with a vested interest in driving up public spending to make returns on capital they have invested.