Hospital funding scheme under review

The University Hospital of Hartlepool
The University Hospital of Hartlepool

HEALTH chiefs aiming to build a new £300m hospital have welcomed scrutiny of the way the major project will be paid for.

Findings of a report into private finance initiatives (PFIs) by a national spending watchdog says the Government must be prepared to axe or alter major contracts if they do not provide value for money.

The National Audit Office also says civil servants should use the state’s buying power to get better deals and improve their commercial skills to avoid being outwitted by private sector counterparts.

The new hospital at Wynyard, which is aimed to replace existing hospitals in Hartlepool and Stockton, looks set to be funded through a PFI deal.

PFIs see private firms fund such projects, while the public sector makes repayments over many years so public bodies do not have to pay huge upfront sums for new buildings or major redevelopments.

The recommendations came in a report by the National Audit Office into lessons that should be learned from previous PFI schemes.

The report calls for “robust, impartial scrutiny of the business case” for PFI projects.

The watchdog said the taxpayer would get better value for money in such schemes by gathering more data to help decision-making and establish arrangements to test, challenge and, if necessary, stop projects.

The report said: “In the current climate, PFI may not be suitable for as many projects as it has been in the past.

“The lessons from PFI can, however, be applied to improve other forms of procurement to help Government achieve its aim of annual infrastructure savings of £2 billion to £3 billion.”

Alex Zielinski, associate director of strategic planning for North Tees and Hartlepool Foundation Trust, which is behind the new hospital plan, said: “While we cannot comment directly on the detailed content of the report, the trust welcomes any debate that leads to the clarification of arrangements for future PFI schemes.”

In January, the hospital trust rubber-stamped revised plans for a £299m hospital at Wynyard.

The interest payments in the first year the hospital is in use will be almost £22m.

The original development at a cost of £465m were scaled down after the coalition government withdrew public funding.

A chosen bidder is expected to be approved in November next year.

A Treasury spokesman said: “Going forward, all PFI projects will be considered in line with new guidance issued for major projects, this is based on the value and risk associated with the project, so ensuring all projects receive a suitable level of scrutiny.”