Call for action over 'toxic' legacy of PFI contracts as NHS trusts face £80bn bill

A hospital ward. Picture by PA Archive/PA Images
A hospital ward. Picture by PA Archive/PA Images

Hospital trusts face a capital crisis under a "toxic" legacy of private finance initiatives (PFI), a new report warns today, juggling an £80bn bill for just £13bn of actual investment.

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The PFI scheme, which funded capital spending through private finance and was introduced in 1998, was last year abolished by Government.

But its legacy means the NHS faces a PFI "postcode lottery", think tank IPPR warns today, as some trusts are forced to spend up to £1 in every £6 on payments.

This weighty burden raises questions over worrying consequences for buildings, technology and patient safety, the report claims, following years of under-investment and austerity.

Calling for a right-to-buy scheme to bring contracts into public ownership, alongside major capital investment of £5.5bn annually, the IPPR says the NHS will bear this burden for decades to come unless action is taken.

“In 2018, the Chancellor told us ‘PFI was dead’," said Chris Thomas, IPPR Health Fellow. "Our analysis shows it is actually alive and well – thanks to a Government refusing to take decisive action.

"That means toxic PFI contracts are still driving billions away from patients and into private bank accounts.

"And it means the NHS has no mechanism to bring in capital investment – blocking transformation and threatening even basic safety standards in our hospitals.

“The bluster of Boris’ proposal in August – a small, one-off capital cash-injection – is wholly inappropriate given the scale of this on-going crisis.”


The IPPR analysis, based on Government data, found that NHS trusts will pay £2.1bn on PFI repayments this year, with some areas losing up to a fifth of their budget.

The impact of this is uneven, its analysis found, with the worst affected trusts being North West Anglia, Sherwood Forest, University Hospitals Coventry and St Helens and Knowsley.

Among those listed as having a PFI contract with a capital value over £300m is Mid Yorkshire NHS Trust, which faces payments at eight per cent of its net income.

Nationwide, less than a third of the final £80bn PFI bill has been paid, with a further £55bn still outstanding.

Additionally, the report warns, capital investment has "fallen off a cliff" as hospital trusts re-allocate long-term capital funds to patch up day-to-day running costs.

The NHS will not be able to provide a modern health service unless it has funds to invest in new technology and infrastructure, the report concludes, and a failure to do so puts patient safety at risk amid claims of £3bn worth of unresolved maintenance issues.

A Department of Health and Social Care spokesperson said: “We are backing the NHS with the money it needs to provide world-class care in world-class facilities and the Government has already announced that it will no longer use PFI financing for projects.”

“This is just the start of a more strategic approach to capital funding in the NHS, with the development of a new health infrastructure plan focussed on local areas where the need is greatest along with a multi-year capital budget.”