Public Accounts Committee - scope to make savings on PFI

The Public Accounts Committee today published its report on the financial sustainability of the NHS. The report's recommendations included the following regarding PFI:

There is scope to make savings in the amount paid under private finance initiative schemes, which cost the NHS some £1.8 billion a year, as there are some examples where refinancing or buying out existing schemes could provide better value for money in the long run. There are also opportunities to release funds tied up in surplus capital assets that could be used for upfront investment in new models of care. For example, there are some £1.5 billion worth of unused land and premises in London alone.

Further, the Department of Health should:

support evaluation of alternative financing or operating options for costly private finance initiative schemes where there is a clear opportunity for improving value for money

With 26% of all NHS Trusts in deficit, including 80% of Foundation Trusts, this is clearly a pressing matter. Financial pressure is set to increase. As the report concludes:

It is clear that the old ways will no longer work – radical change is required to make the NHS financially sustainable.

The report notes that four of the six trusts with deficits greater than £25million had a PFI scheme, whilst Northumbria, who bought out their PFI scheme with assistance from a Local Authority loan, expect a £21.5m surplus this year.

The DoH reported that whilst buying out PFI contracts was not always appropriate, they were exploring other options such as renegotiating soft services, which make up a large proportion of PFI schemes.