Trust with £1bn PFI scheme could sign another deal

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One of the country’s biggest hospital trusts says it is considering using a PFI scheme to pay for new buildings more than a decade after signing similar deals which will cost in excess of £1bn over 30 years.

Government figures show Leeds Teaching Hospitals NHS Trust paid £33.6m last year as part of Private Finance Initiative contracts to build the Bexley Wing at St James’s Hospital and Wharfedale Hospital in Otley.

The deals for the Bexley Wing and Wharfedale were signed in 2004 and 2002 respectively. The total capital cost of the buildings is £237m but over 30 years, £1.016bn will be paid back.

The original funding for the Bexley Wing part of the scheme came from the Treasury, making the contract one of only two health PFIs to be funded in this way.

Earlier this year the project was refinanced via a £261m bond issued by the insurance company Assured Guarantee.

According to adviser Bevan Brittan, the renegotiation means nearly £2m annually can be saved over the lifetime of the agreement and the trust can now build a £3m specialist clinical trials centre at St James’s Hospital. The trust says the overall unitary charge for its PFI deals will be £32.2m for this financial year, a cost which includes repayment of the original capital, interest, maintenance and other expenses.

A spokeswoman said: “PFI charges represent only a small proportion of the trust’s overall costs, given the turnover of the trust is in excess of £1bn.

“The trust has benefited 
from a recent refinancing of the Bexley PFI and works proactively with our PFI partners to obtain benefit for the trust, for 
example by enhanced medical equipment provided within the Bexley Wing via the PFI agreement.

“The business case for each project included a value-for-money assessment which took account of the risk transferred to the private sector under a PFI contract arrangement.”

She added: “The trust is in the process of developing a business case for ‘Building the Leeds Way’ which will be a significant development including new-build and some refurbished accommodation.

“A number of options for funding including potentially PFI will need to be considered within the business case.”

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