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Last Updated: Tuesday, 2 December, 2003, 16:09 GMT
70m windfall for hospital backers
Controversial "refinancing" which will give the private investors behind Norfolk's flagship hospital 70m is expected to go ahead within weeks.

Octagon Healthcare, the consortium which put 229m into the building of Norfolk and Norwich University Hospital under a private finance initiative (PFI), is set to benefit from the complex "remortgaging" deal.

Less than half the windfall, 30m, will be pumped back into the hospital, at 1m a year - a rate set by the government.

Critics of such "remortgaging" deals say that had the hospital been publicly financed, the money would have stayed in the NHS to improve services.

The sheer scale of the windfall compared to the size of the project really rings alarm bells
Norman Lamb MP
North Norfolk Liberal Democrat MP Norman Lamb said he was writing to Health Secretary John Reid to ask for the original PFI contract for the hospital to be re-examined.

Mr Lamb also said he would have preferred the 30m to go back into the hospital as a lump sum to help solve immediate difficulties faced by the trust rather than in the "drip, drip" of 1m a year.

"The sheer scale of the windfall compared to the size of the project really rings alarm bells," he said.

"I'm not suggesting there are any dodgy dealings, it is just the fact that a private partner has managed to secure this substantial windfall that beggars belief given the actual size of the contract."

Mr Lamb said with the local health economy under enormous strain, it was hard for people to see private companies receive such a large reward.

He said the terms of the PFI contract needed to be re-examined because as the first big scheme in the country to be negotiated, the hospital was seen as a higher risk and therefore was a more expensive deal.

Mr Lamb said the hospital was "bearing the burden" of being one of the pioneers with costs that would last for many decades.

Refinancing discussions

A spokesman for the Norfolk and Norwich University Hospital NHS Trust confirmed that it was in discussions with Octagon Healthcare about the refinancing of the PFI contract.

"The trust is currently exploring with Octagon Healthcare the benefits that new financial arrangements between Octagon and its financial backers would bring for the trust, its patients and staff.

"Due to the commercial nature of these discussions it would not be appropriate to comment in more detail at this stage," he added.

It is expected the refinancing deal - which has been mooted for the last two years - will go through before Christmas.

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