A SCOTTISH government minister has become the latest politician to raise concern over the ‘shameful’ repayments demanded by hospital PFI firms.
Alex Neil, cabinet secretary for infrastructure and capital investment, spoke out just days after England’s Health Secretary, Andrew Lansley, courted controversy by claiming 22 NHS trusts faced financial ruin because of their commitment to PFI repayments. Blaming the former Labour government for championing PFI, Lansley predicted that around 60 hospitals in England would be forced to close or their governing trusts would have to merge with other providers as they buckle under a cash crisis created by high-cost PFI deals.
It is outrageous and the people who signed these contracts on behalf of the Scottish Executive, and indeed the UK government, should be utterly ashamed of themselves
As an example, Cumberland Infirmary, which opened in 2000 and was the first major hospital in the country to be funded by PFI, cost £67m to build, but the trust had to pay £18m in PFI repayments last year alone. Most PFI contract agreements run for between 15-40 years, meaning trusts pay back much more than the price of the original development. Now, Neil has claimed similar problems will be faced by health trusts north of the border as they struggle to make payments in the wake of budget cuts, particularly as some land ownership contracts tie NHS trusts in for more than a century.
He said: “These repayments could go on for generations because some of these leases last up to 100 years, even where the PFI contract only lasts for 25 years. That means another 75 years of potential liability.
“It is outrageous and the people who signed these contracts on behalf of the Scottish Executive, and indeed the UK government, should be utterly ashamed of themselves.”
These repayments could go on for generations because some of these leases last up to 100 years, even where the PFI contract only lasts for 25 years. That means another 75 years of potential liability
Speaking to BBC Alba’s Eorpa programme, he said the PFI contract for the new Edinburgh Royal Infirmary lasts for 25 years, but the lease on the land is for 130 years. Similarly, New Craig Psychiatric Hospital near Inverness has a 25-year PFI contract, but the land will be held by the PFI company for 99 years.
Malcolm Iredale, finance director at NHS Highland health board, which runs New Craig, said: “At the time, the deal was the best deal we could get. I think it is very easy to look back and say we could do things differently. I think it is difficult to say would we do the same deal again.”