To ask Her Majesty's Government which hospitals have been constructed under the private finance initiative, or its successor schemes, in the past ten years; on what dates the construction of each such hospital started and completed; what was the total cost of each; and what are the current annual interest payments due to the financiers. [HL2194]

Information on the capital value and estimated revenue payments for the lifetime of each completed private finance initiative (PFI) scheme together with the start on site and opening dates has been placed in the Library.

The revenue payments are the annual payments made by National Health Service trusts to their private sector partners. This is to cover the cost of the funding raised by the contractors on the project (known as senior debt) in terms of financing charges and repayment of principal, building maintenance, lifecycle costs and, in many cases, non-clinical support services such as cleaning, laundry, catering, portering and security. On an annualised basis, the cost of the funding, comprising finance charges and principal in varying proportions, accounts for approximately 50 per cent of the annual payment for a scheme including non-clinical services.

PFI schemes are normally funded by two types of senior debt finance; traditional fixed rate project finance (a bank loan) and index linked bonds, priced by reference to bank and gilts rates respectively. Each source of debt finance has its relative merits and their prices move in relation to each other depending on market conditions. Decisions on the preferred source are made as part of the value for money calculation by the trust and its private sector partner at the time of preparing the full business case (FBC). To these rates is then added a margin, which is an annual charge pricing the risks in the project. Both funding routes also involve a number of costs associated with arranging and maintaining the funding for a scheme such as arrangement and commitment fees. The combination of rates, margins and fees is the overall financing charge—the equivalent of an interest payment.

The overall financing charges therefore vary from scheme to scheme and depend on several factors. Information on financing charges is contained in the FBC for each scheme, which must be made publicly available following its approval. The financing charges are modelled for each year of the term of the loan in the financial models which are contained in the FBC and are fixed for the public sector, but these may differ from the actual charges incurred in any year by the private sector (the risk sits with the senior debt provider and contractors). The information on the actual finance charges paid in any one year for all PFI schemes which have opened could be obtained only at disproportionate cost.