Following the publication of a National Audit Office Report on the refinancing of Norfolk and Norwich Hospital, South Norfolk MP Richard Bacon, a member of the Commons public accounts committee, said:

"The report confirms that the hospital continues to pay a premium for its financing compared to deals now available in the market, even after receiving a share of the refinancing gains".

"It is true that the PFI market has matured in recent years and better priced deals are now more common.

However, as the report points out, a funding competition for the original deal would have put greater pressure on the cost of finance provided by the banks".

"I believe it was a mistake not to hold such a funding competition. It is precisely when there is a significant delay in closing a deal that a funding competition will be most useful in ensuring that the best possible financing terms are obtained. For example, the funding competition held by the Treasury for the redevelopment of its own building produced a £13 million saving for taxpayers".

"The Department of Health also acknowledges in the report that there are a range of other factors which affect PFI pricing which it has not yet fully analysed".

"It seems clear that Norfolk and Norwich Hospital is paying a premium for being an early PFI hospital. Given the continued financial difficulties faced by the Norfolk health economy, there is a case for a one-off payment by the Department to compensate for higher on-going costs which will be faced by the hospital for many years".

10 June 2005

See also:
SPEECHES: Financing health services in Norfolk

SPEECHES: Getting value for money for taxpayers from PFI