pounds 260m private hospital deal slated
Thursday 04 April 1996
Chief political correspondent
Labour last night criticised the Government for giving Treasury approval to private sector consortia to build two NHS hospitals at a total cost pounds 260m. The two deals were seen by ministers as ground-breaking investment in public service capital projects by private companies, which may release millions of pounds for NHS hospitals in the future.
But Labour warned it could be the "thin end of the wedge" for private enterprise in the health service, a charge denied by Health ministers. The consortiums will own the buildings at the end of the contracts, but NHS trusts may lease them.
The hospitals will be privately built, but run by the NHS for NHS patients. There will be private patients units and the private companies will provide support services, including cleaning and maintenance.
Harriet Harman, Labour's health spokeswoman, said: "These are major departures for the NHS. We think they are using the private finance initiative to drive the private sector into the NHS."
The contracts are for the pounds 170m Norfolk and Norwich hospital, providing 700 beds, to replace two hospitals in Norwich, by a consortium involving John Laing Construction; and a pounds 90m rebuilding project for 520 beds at the Princess Margaret Hospital , Swindon, by a consortium led by Tarmac with United Medical Enterprises.
The contracts for the hospitals have yet to be signed, and Whitehall officials denied the consortia were waiting for the passage of a Bill being rushed through Parliament to give the Health Secretary, Stephen Dorrell, power to take over debts from hospital trusts.
The Bill was needed because some private sector companies had been anxious to ensure that the Government would take on the debts, in the unlikely event that any NHS trusts went bankrupt, or were wound up.
If Labour win the next election, they will be bound by the contracts and will have to face running the NHS with privately-financed hospitals.
Ms Harman said the contracts were "shrouded in secrecy" and needed to be opened to public accountability. The Norfolk and Norwich contract will run for 60 years: at the end of the term, the NHS trust has the option of taking the hospital into its ownership. The NHS Trust will employ the staff and there can be no change to the facilities without specific agreement of the Trust.
At the Swindon hospital, the contract will run for 25 years with an option to extend it for 15 years. After construction, the consortium, the Hospital Company, will own the buildings and lease them to the Trust.
pounds 14bn target, page 22
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