Explore NHS Trusts' PFI Debt

It is EveryDoctor's position that the provision of healthcare, including the building and running of hospitals, should never be for profit - that's why we have produced this map

We have built a map of PFI contracts, with details of procuring authorities and how much the taxpayer has paid to the PFI Company.

Private Finance Initiatives (PFIs) were a method of financing public infrastructure projects via private partners. They allowed governments to defer public spending (albeit at a much higher cost in the long run given the interest on debt repayments) and, in effect, created a massive mortgage to be paid by the taxpayer.

The map shows PFI sites with links to the individual project details.

Click on the pins to see details of individual projects and how much they have cost the taxpayer (some, though not all of this “cost” is pure profit for the PFI companies.)

Please see the FAQ section below the map for more detail about what this means in reality.

PFI Contracts - FAQs

What is the Private Finance Initiative ("PFI")?

PFI is, in effect, a loan to the government by a company with what is (usually) a very high rate of interest. PFI has been used to complete public projects across the board, but in the NHS it was a way of building hospitals without the costs appearing on the government’s balance sheet.

How does PFI work?

Rather than the government using public money to build a public hospital, a private company – called a Special Purpose Vehicle – (usually a big construction company plus a “service provision” or maintenance company (see below) backed by banks and/or venture capitalists) would build a new hospital with funds from its own “pocket”.

It would then “lease” the hospital building back to an NHS Trust to use.

The NHS Trust would repay the “loan” plus interest back to the company by making monthly payments.

One of the many catches in this system was that built into the loan payment was an often deeply uncompetitive rate of interest; the average rate of interest for NHS PFI projects entered into since 1999 is 7%; the Bank of England base rate since then has been between 0.1% and 6%[1], with an average base rate of 3.59%.  

The second catch was that PFI payments weren’t just limited to interest payments.  In most cases the terms and conditions of the contracts with the companies that constructed the hospitals also required the Trust to procure certain services from them as well: things like cleaning services, maintenance, catering, etc..

And of course, because there was no competition for those service contracts, the companies that provided these services simply price-gouged the taxpayer. For example, one hospital was charged £52,000 for a job that should have cost about £750[2].

So when you say "cost to the taxpayer" you don't mean pure profit?

No we don’t, because the amount that the taxpayer will pay to the company over the lifetime of the contract is not pure profit; the company obviously has to spend money in order to run the “fabric” of the hospital (these companies do not provide any clinical services) which it sets off against the payments that the trust makes each year.

However, in contrast to these services being provided by the public sector in a not-for-profit model, the PFI company is all about making a profit.  

Working out what is pure profit from each PFI project for these companies is extremely difficult and the data provided by HM Treasury in this regard could be much clearer and more granular.

It is regrettable that this is not the case.  

This is public money and the public should be able to access information about how much has ended up in the profit part of the accounts of private companies.

The Treasury simply “lumps” the loan, interest and service charge payments all together and describes it as a “unitary charge”.  

This is unfortunate and, in EveryDoctor’s view, means that the public is not provided with the full picture of PFI debt.  

Those who are pro-PFI (a shrinking number given what poor value for money the system has provided for the taxpayer) often hide behind the global unitary charge figure and focus on the fact that the payment includes money for running the hospital itself.  

Whilst technically true, this is not an open and honest way of describing the nature of PFI payments.

The Treasury’s most recent dataset is from 2018.  Despite receiving assurances over the last 18 months that the dataset would be updated imminently, that has not happened at the time of launch of the PFI section of our map (March 2023).  We have, therefore, primarily had to rely on the Treasury’s projections of PFI payments since 2018 (we sent Freedom Of Information requests for up to date data to all PFI trusts – around 1/3 replied and where that was the case we have included actual rather than estimated data).

How much has it cost the public?

By 2017 £13 billion had been spent by private companies on constructing new hospitals in England alone.

The NHS will pay over £80 billion back to these companies over the course of around 30 years.

So the cost to the taxpayer (see above) for these projects is £67 billion (in reality this is probably more because whilst the public will “own” the hospital at the end of the contract, it will be a 30 year old property that will have depreciated in value).

It is true that the companies will have spent some of the taxpayers’ money on providing services for the trusts, but this is less than 50% of the payments they receive.  

In 2020-21, hospital groups spent £2.3bn in PFI project payments; of this, around £1bn went on costs for essential services (e.g. cleaning and maintenance) and £457m went purely towards paying off interest charges.  

That’s almost 20% of their total funds annually spent on interest charges rather than on patient care and less than 50% on service provision by PFI companies [3].  

On any analysis, this is an enormous financial benefit to private companies.

And don’t forget, hospitals pay this money back from the portion of the NHS’s annual budget that they are allocated. That means that if the government cuts the amount of money it gives to the NHS (which it has massively since 2010 [4]), hospitals won’t be able to repay the debt that politicians have saddled them with and provide services for patients; sadly it’s the patient who loses out, not the PFI companies and corporate shareholders.

This is precisely what austerity has done under the Coalition and Conservative governments since 2010 and it leaves hospitals with a Hobson’s choice: go bust, or reduce services, cut back on staffing and close beds.

Why didn’t governments since 1999 pay for the hospitals from taxpayers’ money and save on interest payments?

Given that this is taxpayers’ money, and the taxpayer is paying around 6 times more than it would have cost to build the hospitals from public money (all the while lining the pockets of private corporations and (usually) non-UK based shareholders), you’d be forgiven for thinking that it would have been much more sensible to spend the original £11.4 billion pounds simply to build the hospitals and not pay the extortionate interest and uncompetitive service charge rates.

Why did the governments of John Major, Tony Blair, Gordon Brown, David Cameron and Nick Clegg opt not do this?

It was a political decision; it meant they could keep the spending off the public balance sheet, and they didn’t need to take less popular steps (e.g. raising taxes) to meet public spending requirements.  

But this short term political decision making doesn’t stand the test of time.  As is all too clear now, the public balance sheet is creaking under the interest payments to these companies.  It’s money that is wasted and we never had to do it that way.  

Every one of these governments could have raised the initial sums by various means: tax increases on the wealthy, closing tax loopholes for non-domiciled individuals and companies, changing spending priorities to name a few. They chose not to, but in the long run these decisions have cost us all vast sums of wasted money.  

At EveryDoctor we believe that all aspects of this essential public service should be paid for from public funds and should be run by not for profit entities.

Want to know more about PFI?

If you have any specific questions or would like recommendations for further reading then email us at campaigns@everydoctor.org.uk.  We’d love to hear from you.

PFI FAQ references

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