This week, we revealed that the NHS in England still owes private companies more than £21bn for hospitals built under the Private Finance Initiative (PFI) decades ago.
Our research comes as the government is considering reviving public-private partnerships like PFI to finance the building of its proposed new community health centres.
New PFI projects were halted in 2018 after the scheme was judged poor value for money by the public spending watchdog.
To remind MPs just how disastrous PFI was, EveryDoctor set out to find out how much it is still costing us.
PFI resembled a “buy now, pay later” scheme for the government. Instead of paying upfront to build a new hospital, the government contracted private consortia to finance and construct them.
Those companies are then paid back by NHS trusts through annual lump-sum payments over decades. The catch is that these payments cover far more than the original construction costs: they also include interest on the private loans, ongoing maintenance, and service charges.
After 30 to 40 years, ownership of the building transfers back to the NHS trust. Until then, the trust must keep paying the private companies that run it.
To find out exactly what those private companies are charging the NHS for PFI, we sent Freedom of Information requests to dozens of trusts.
We encountered a surprising amount of resistance.
Almost a third of trusts wouldn’t provide us with the figures on the grounds that the information was already published in their annual reports.
While often the case, the figures are buried in annual accounts making it difficult for most members of the public to find them.
More than six trusts outright refused our request for the figures we asked for citing commercial confidentiality.
We challenged their refusals with the Information Commissioner’s Office (ICO), which ruled in our favour saying that the costs of PFI were in the public interest.
It took months to obtain all the information we needed. Some NHS trusts repeatedly missed their deadlines to respond to us until we complained to the ICO.
In total, we found that NHS trusts had committed to pay a further £21bn to private companies that operate the PFI buildings. But the contract lengths varied significantly, as did the ongoing costs of individual projects. Some were staggeringly high: Barking, Havering and Redbridge University Hospitals NHS Trust said it will pay more than £1.3bn in unitary charges for Queen’s Hospital in Romford over the next fifteen years.
Who exactly are the companies being paid such extraordinary sums?
We set out to find out.
Most trusts told us the names of the holding companies they pay an annual unitary charge to. But those entities are often owned by another company, which in turn is owned by yet another.
To uncover who ultimately owns each PFI project, we had to follow a Matryoshka-doll trail of holding companies. These intricate corporate structures reflect the way the projects were set up, with construction firms, facilities managers and banks each taking a stake through layered financing vehicles.
The convoluted ownership trail also makes it hard to see exactly who profits from the projects. To add to the confusion, stakes in PFI contracts are frequently sold on, meaning the firms now operating them are often not the same ones that originally built them.
Take, for example, Norfolk and Norwich University Hospital, one of the largest in the UK and one of the earliest PFI projects. It opened in 2001 and then was extended in 2004, again using PFI. Norfolk and Norwich University Hospitals NHS Foundation Trust is still paying a company called Octagon Healthcare Holdings tens of millions of pounds a year for operating the hospital.
But Octagon doesn’t ultimately own the contract, two companies called Semperian and Innisfree Group do. The latter is an investment fund based in Jersey, a tax haven, and the former is owned by South African-born property investor David Metter.
By the time the contract comes to an end in 2037, the NHS expects to have paid Octagon a further £1.2bn. That is a vast overpayment on the £229m it cost Octagon to build the hospital.
It’s no wonder then that some PFI concessions are now held by a Canadian life insurance company and a Dutch pension fund. They represent solid, regular returns for investors.
Shedding light on exactly how much the last round of public-private partnerships are costing the NHS and who is profiting took months of work.
As the government weighs up turning to the private sector to build new NHS community centres, it’s vital that the disastrous legacy of PFI remains in the spotlight.
If you believe the NHS should serve people, not profit, join us and sign the EveryDoctor Charter. Together, we can build a movement powerful enough to defend these principles and secure the future of our National Health Service.
