Concerns over PFI hospital deal

A report by the National Audit Office (NAO) says that at one time private investors made more than £80m out of the deal to fund the hospital.

The hospital made only £34m from the deal.

Changes have been introduced to make sure that such earnings are split equally in future.

PFIs involves a partnership private firm and public organisation, and helps fund public projects with private money.

Reports in 2002 by the NAO and the House of Commons Public Accounts Committee (PAC) highlighted private companies' ability to make significant sums by refinancing debts taken on for PFI contracts in order to take advantage of improved interest rates.

The Norfolk and Norwich refinancing deal produced a £116m profit, of which £34m went to the public purse, according to the report published on Friday.

PAC chairman Edward Leigh said the Norfolk and Norwich Hospital case highlighted an example "where the private sector was still making astronomical profits from refinancing with added risks for the authority".

Andrew Stronach, a spokesman for the Norfolk and Norwich University Hospital, said: "We fully recognise that, as one of the first and largest PFI schemes, undoubtedly lessons can be learnt from our experience."

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