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NHS: Private Finance Initiative

Volume 488: debated on Monday 23 February 2009

To ask the Secretary of State for Health (1) which private contractors have withdrawn from NHS private finance initiative contracts in the last 12 months; what the contract was in each case; and what the monetary value of the contract was in each case; (255300)

(2) what assessment his Department has made of the effects of the economic downturn on hospital private finance initiative projects;

(3) what hospital building projects are planned to be completed in each of the next 10 financial years;

(4) which hospital private finance initiative projects are waiting for approval from HM Treasury; and on what date each was first submitted to the Treasury for approval;

(5) what data his Department collects to monitor progress on hospital building projects;

(6) what new hospitals have been built since 1997; when each was opened; how each was funded; and what the current capital asset value of each is;

(7) how many of the 100 new hospitals referred to in the NHS Plan have opened; on what date each opened; and how much capital expenditure there was on each;

(8) how many of the 100 new hospitals referred to in the NHS Plan have not yet opened; when each is expected to be opened; and how much capital expenditure there will be on each.

Information on the hospital schemes which have opened or begun construction (with their expected opening date) since 1997, with the capital construction cost of each, has been placed in the Library.

The private finance initiative (PFI) schemes in the list are currently accounted for as off balance sheet and are not therefore accounted as an asset by trusts. The national health service is in the process of determining the value these assets which will be disclosed in their 2009-10 accounts under the new international financial reporting standards (IFRS) which apply to public sector accounts with effect from 2009-10. In respect of the public capital funded schemes, the total asset value of land and buildings for each trust is held centrally, but these are aggregate values which do not separately identify individual capital investment projects.

The 2000 NHS Plan set a target of opening 100 new hospital schemes by 2010. At the time of the NHS Plan, 69 schemes had already been given the go ahead—all but three of these schemes have opened (these three are currently under construction). The NHS Plan identified another 18 schemes to go ahead in the next two years under the PFI, bringing the total at the time to 87 schemes; the target of 100 was set in anticipation of more schemes being given the go ahead in future years. For example in addition to the 18 future PFI schemes identified in the NHS Plan, another 11 PFI schemes were given the go ahead shortly afterwards. Since then a number of other PFI and public capital funded projects have also proceeded and opened, which means that the NHS Plan target of opening 100 new hospital schemes was achieved in October 2008.

The information placed in the Library identifies both PFI and public capital schemes currently under construction and which are due to be completed (open) in the next 10 years. Schemes developing PFI proposals and actively preparing an initial outline business case (OBC) or currently in procurement, are shown in the following table.

Commissioning body

OBC approved/OBC to be submitted for approval

Estimated total capital value (£ million)

Royal National Orthopaedic Hospital NHS Trust

2009

143

North Bristol/South Gloucestershire PCTs

1

475

Southampton University Hospitals NHS Trust

2009

61

Sandwell and West Birmingham Acute NHS Trust

2009

368

West Hertfordshire Hospitals NHS Trust

2010

280

East and North Hertfordshire NHS Trust

2010

110

Papworth Hospitals NHS Foundation Trust

2009

160

Royal Liverpool Children's Hospital NHS Trust

2009

235

Mersey Care NHS trust

2009

170

Royal Liverpool and Broadgreen University Hospitals NHS Trust

2009

477

1 OBC approved May 2007 Financial close expected before the end of 2009

Proceeding to financial close and construction for these schemes is dependent on business cases being submitted and approved. It is too early to provide financial close and opening milestone dates for these schemes apart from the most advanced, North Bristol/South Gloucestershire primary care trusts (PCTs), where an expected financial close date is given.

The Government's policy continues to be that PFI and other public private partnerships should be used to deliver public services when this offers value for money. This is assessed on a case by case basis at the appropriate approval point for each scheme. The North Bristol/South Gloucestershire PCTs is the only health sector PFI scheme in the market at the moment and the two consortiums competing to be appointed preferred bidder have held discussions about current economic conditions and have factored this into their bids as part of the competitive process. No bidding consortium (which includes the prime contractor) has withdrawn from competition on an NHS PFI scheme in the last 12 months.

None of these schemes is awaiting approval from Treasury. The business case for the appointment of the preferred bidder at North Bristol/South Gloucestershire PCTs is expected to be submitted to the Department in April or May this year; it will need subsequent approval by Treasury.

There are a further four public capital hospital building schemes timetabled to begin construction in the next financial year (2009-10), subject to approval of their full business cases. No information is held centrally on the expected pipeline of public capital funded schemes for 2010-11 or later years.

The Department monitors the progress of all hospital building schemes (i.e. both PFI and public capital) in terms of the major project milestone dates (business case approval dates, financial close and opening) and collects and collates the appropriate information as it becomes available.