Page last updated at 23:05 GMT, Wednesday, 3 June 2009 00:05 UK

New hospitals 'could drain NHS'

By Nick Triggle
Health reporter, BBC News

Building site
Most new hospitals are being funded through PFI

Hospital building projects could put NHS finances in serious peril in the coming years, doctors have warned.

New hospitals in England are predominantly funded through the Private Finance Initiative (PFI).

But the British Medical Association warned repayments could cripple the NHS at a time when the budget is set to be squeezed because of the recession.

They urged ministers to pull the plug on new projects but the government said it was looking for "value for money".

The health service already has its funding guaranteed until 2011, but after that the budget is expected to be frozen or even cut in real terms as public spending is tightened.

This comes as the NHS is preparing to pay back billions of pounds to private firms for building the new hospitals.

More than 100 hospitals have been built under PFI agreements whereby the private sector designs, builds and finances the project while the NHS repays the costs plus interest over the following decades.

It is going to be a hard few years in regards to funding and using public money to support private firms in this way makes no sense
Anne Thorpe,
British Medical Association

It has been estimated that over the next 30 years this could cost the health service £50bn for hospitals worth a fifth of that amount.

Another 20 or so are in the pipeline and the doctors' union is concerned the government is ready to use public funds to ensure private firms can push ahead with these.

The Treasury has set up a special unit to lend PFI projects money as private firms have been struggling to secure funding from banks because of the credit crisis.

So far no hospital project has received Treasury backing, but several are expected to come under consideration in the coming year.

BMA member Anne Thorpe, who is a senior hospital doctor at West Middlesex Hospital, said: "The fact that we are facing these repayments is bad enough and is going to be a drain on resources that could be going on patient care.

"But to think that we might now be using public money to prop-up these deals seems ludicrous.

"It is going to be a hard few years in regards to funding and using public money to support private firms in this way makes no sense. It must not happen."

'Dark and dangerous period'

Jonathan Fielden, chairman of the BMA's consultants committee, agreed PFI was going to be a drain on resources during what was going to be a "dark and dangerous period".

He also added the NHS could save an estimated £350m a year by cutting back on management consultants.

"We have 40,000 hospital consultants, 1.3m employees and top leaders surely we can utilise the talent we have?"

Professor John Appleby, chief economist at the King's Fund health think tank, said caution was needed over PFI schemes.

"We have already seen some schemes cancelled and I think the appetite for more in the NHS is waning.

"But the move by the Treasury is understandable as there may have been a lot of long-term planning and investment to get the projects to a certain stage and it could be a waste to let them fold because of a lack of money in banks."

A spokesman for the Treasury said any future PFI hospital schemes would have to provide "excellent value for money" under the government's funding arrangements.

"Projects are put through the same testing process that the private market does.

"Only ones that prove to be efficient will be funded - and even then it will only be an interim measure until credit is available in the markets."

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