NHS trusts spent close to a half a billion pounds on interest charges from private companies for private finance initiative (PFI) contracts last year – equivalent to the salaries of 15,000 newly qualified nurses.
Hospital groups spent £2.3bn on legacy PFI projects in 2020-21, of which just under £1bn went on costs for essential services such as cleaning and maintenance. A third of the remaining PFI spend – £457m – went purely on paying off interest charges.
PFI is a method of funding infrastructure projects such as NHS hospitals, which uses private funding to pay for upfront costs such as design, construction and maintenance. These costs are paid back over many years to the companies that financed the project – often banks and construction firms. Hospital trusts pay firms each year in a unitary payment, which is written into the contract.
A total of 101 NHS trusts are still on the hook for just under £50bn in future unitary payments, despite severe upcoming budgetary challenges, according to a Guardian analysis of hospital trust accounts.
The figures reveal that four trusts saw more than half of their total PFI unitary payment going purely on interest to private companies. About 58.3% of all the money that Mersey Care spent on PFI was interest in 2020-21. That was followed by Northumbria healthcare (53.4%), Alder Hey children’s trust (52.9%) and Sussex Partnership (51%).
David Rowland, the director of the Centre for Health and the Public Interest, said: “For those trusts with a PFI hospital, the high costs of these schemes will continue to be a major drain on their budgets. This is at a time when they are making planned cuts of £12bn a year and expect to have to meet an additional £6bn of costs next year due to inflation.
“Despite the pressure on NHS trusts to make cuts, under the 25-year-long contract, PFI companies and their shareholders have been given a watertight guarantee that they will receive payments and a return on their investment. In short, expenditure on staff, equipment and other capital projects can be cut by a trust, but not their PFI payments.