|PFI company gets £95m as Norfolk & Norwich hospital struggles|
South Norfolk MP Richard Bacon has described as “woeful” the quality of the advice offered by the Department of Health to the Norfolk and Norwich hospital over its PFI project.
He was speaking as the Commons public accounts committee today (Wednesday 3 May 2006) published a report on the refinancing of the Norfolk and Norwich PFI hospital by the PFI consortium Octagon Healthcare, which borrowed an extra £106 million at the time of the refinancing in order to triple its rate of return from 19% to over 60%.
In the refinancing, Octagon Healthcare received an immediate £95 million cash benefit. The Norfolk and Norwich hospital, following advice from the Department of Health, only receives its share of the gains spread over 35 years in the former of slightly lower payments to the PFI consortium.
Mr Bacon, a longstanding critic of PFI and a member of the
committee, said: “This extra borrowing was not to build more wards or a new cardiac
unit. It wasn’t even for a bigger car park. The sole purpose of this
extra borrowing was to speed up the rate of return to the
“It is hardly surprising that people are sceptical of PFI when it produces outcomes like this. PFI has produced spectacular returns for investors but nurses and others hospital workers facing the sack will rightly feel very angry and will not understand how it has been allowed to happen”.
“The quality of advice from central government has been woeful.
While the investors took their £95 million cash benefit immediately
after the refinancing, the Department of Health advised the hospital
to take its share of the refinancing gains spread over 35 years, in
the form of slightly lower payments to the PFI provider. Yet given
the choice between cash now and cash later, most people wouldn’t
hesitate to take it now”.
3 May 2006
PAC REPORT: The refinancing of the Norfolk & Norwich Hospital
|© Richard Bacon 2010|