Struggling NHS trusts get £1.5bn bailout

A £1.5bn bailout fund was announced by the Government yesterday to help NHS trusts struggling with the "dismal legacy" of private finance initiatives (PFIs). Seven cash-strapped hospital trusts have been identified as in critical need of the financial boost, which will be made available over the next 25 years.

PFIs were introduced under John Major's government to fund new building projects. They became one of the touchstones of New Labour policy but have since been blamed for saddling institutions with generations of debt.

Announcing the new money, the Health Secretary, Andrew Lansley, said he would "not let the sick pay" for previous mistakes and that the fund would put an end to the Government bailing out individual trusts "on the quiet".

He said: "Labour left some parts of the NHS with a dismal legacy of PFI, and made them rely on unworkable plans for the future. They swept these problems under the carpet for a decade, and left us with a £60bn post-dated PFI cheque to deal with."

However, a Labour spokesman said the new fund was an attempt to divert attention from the Government's troubled reforms of the NHS. "This announcement is a smokescreen on the day that the Royal College of GPs have come out against their Health Bill, joining the royal colleges of radiologists, nursing and midwives in full opposition to their plans," he said.

The seven hospital trusts set to benefit are Barking, Havering and Redbridge; Dartford and Gravesham; Maidstone and Tunbridge Wells; North Cumbria; Peterborough and Stamford Hospitals; South London Healthcare; and St Helens and Knowsley.

More than 100 PFI schemes are running in the NHS. Under the projects, private firms pay to build new hospitals, leaving the NHS to pay an annual fee. Last year, the Commons Public Accounts Committee said four out of five trusts were struggling financially to achieve foundation status.

Most also face problems meeting quality and performance targets, and four out of 10 are hampered by poor leadership and governance, MPs found. The notion of foundation trusts was formulated under Labour; their aim is to make NHS trusts more accountable to local people.

The package of support announced yesterday is aimed at trusts with long-standing financial difficulties. To qualify for help they must pass four key tests including proving they are boosting productivity and saving money while still delivering high-quality services.