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Wednesday, May 19, 1999 Published at 11:43 GMT 12:43 UK


Private hospital deal 'will cost more'

Trust building deal overestimated benefits - and underestimated costs

The first ever hospital in Britain to be built with private finance will end up costing taxpayers more than originally planned, a government watchdog has said.

The National Audit Office has released a critical report into the £177m Dartford and Gravesham Hospital project in Kent, which reveals that the potential benefits of a private finance initiative were overestimated by millions.

The trust also underestimated the amount it would need to pay advisers by nearly 700%, says the report.

The criticisms are bound to reawaken debate over the merits of private finance initiatives, particularly a massive redevelopment of Edinburgh Royal Infirmary.

Both the British Medical Association and Unison, the hospital staff trade union, have been scathing in their criticisms of PFI.

There are currently 12 PFI schemes underway in the NHS.

Harder work for staff

The BMA claimed that doctors and nurses will have to work "20 per cent harder" to deal with the number of patients specified in the Dartford private finance deal.

Dr Peter Hawker, chairman of the BMA's Consultant's Committee, said: "We are worried about loss of beds, about rash assumptions about work intensity. Above all, we are worried that this is a poor use of public money."

But Health Minister John Denham said that procedures had been tightened for subsequent schemes.

He said: "The NAO has identified some weaknesses in the PFI process as it applied to Dartford and Gravesham. We have been working to improve the PFI process.

"All of the recommendations in the report are lessons we have already absorbed from the early schemes and have been incorporated into the current PFI process."

'Savings may have been overestimated'

Sir John Bourn, the Comptroller and Auditor General, found that Dartford and Gravesham NHS Trust had overestimated the potential savings of the project by £12m.

He said: "There is a greater possibility than the trust estimated that the PFI solution could prove more expensive than traditional procurement."

In addition, West Kent Health Authority, which had hoped the hospital would cost no more than the existing hospital to run, found that an extra £4m a year would have to be found.

PFI, originally developed by the Conservative government, involves commercial firms building and owning public services like hospitals and prisons, leasing them back to the NHS or the prison service over a number of years.

The advantage to the government is that a large sum of money for the building does not have to be found at once, although critics maintain that the overall cost to the taxpayer over the decades-long lease is higher, as the private financer must make a profit from the scheme.

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