Looking back to the 1950s and 60s, David Hinchliffe can recall visiting the old Pinderfields hospital in Wakefield, where his father was being treated in huts built for World War Two casualties.
Four decades later, the then-Wakefield MP and chairman of the Parliamentary health select committee saw his daughter being treated for appendicitis in the same huts.
He was among those who campaigned for a new hospital to serve the city, and warmly welcomed the news in 2001 that the Labour Government of the time was to provide just that.
But fast-forward 16 years, the now-retired Mr Hinchliffe, who at the time questioned the use of the Private Finance Initiative (PFI) to finance the hospital’s construction, believes the costs of the ‘buy now, pay later’ scheme have become an albatross around the necks of NHS bosses.
£112m-a-year PFI costs ‘an albatross round the neck of Yorkshire hospital bosses’
The state-of-the art Pinderfields hospital was officially opened by the Princess Royal in 2011, while the new Pontefract Hospital, also paid for under PFI, was opened by the Duke of Gloucester in July 2010.
The fact it does represent good value for money does not mean the cost of the investment year on year is not insignificant.Martin Barkley, chief executive at Mid Yorkshire Hospitals NHS Trust
As part of the deal signed with Consort Healthcare, Mid-Yorkshire’s hospital trust will pay £1.61bn over 35 years, including £38.8m last year, for buildings with a capital value of £312m.
Describing the cost of the scheme as “nothing short of scandalous”, Mr Hinchliffe told The Yorkshire Post: “In my view, there should have been much more vigorous efforts by them and local MPs to press nationally for a renegotiation of the debt repayment arrangements.”
During his spell as chairman of the health select committee, Mr Hinchliffe recruited Professor Allyson Pollock, a strong critic of PFI, as an advisor as it looked at the increasing involvement of the private sector within the NHS under New Labour.
“When, during my last Parliament, the health committee, at my behest, specifically looked at PFI, my wish to involve her again was blocked by ‘loyalist’ Labour MPs then appointed to the committee”, he said.
“The report eventually issued by the committee was far less critical of PFI than I would have liked it to be but the minority of MPs against it were simply outvoted by Labour MPs in favour who had Conservative support.”
Around Yorkshire, hospital trusts have signed PFI deals which will ultimately cost taxpayers £3.8bn, though the schemes signed locally are not even among the most expensive in the country.
In addition, four mental health trusts in Yorkshire, Leeds and York Partnership, Rotherham, Doncaster and South Humber, Bradford District Care Trust and Tees, Esk and Wear Valleys, have committed to paying £748m as part of similar projects.
Supporters of the projects, first used by the Conservatives before becomeing widespread under New Labour, say they transfer the risk of major investment to private contractors, who take on maintenance and other costs.
Martin Barkley, chief executive at Mid Yorkshire Hospitals NHS Trust, said: “The PFI scheme was approved on the basis that it represents good value for money. The fact it does represent good value for money does not mean the cost of the investment year on year is not insignificant.
“Those costs, compared to the costs of the old, poor environment hospitals Pinderfields and Pontefract have replaced, could be as much as an extra £20m per annum.
“For that money though, the local population and staff have the benefit of being served by two new, modern, fit for purpose hospitals.”
Union officials at Unison have long campaigned against the PFI scheme in Mid-Yorkshire, and in 2013 published a 28-page document describing the ‘impossible burden’ it had placed on the struggling trust.
Branch secretary Adrian O’Malley said the PFI bill was the direct cause of the financial problems for the trust, whose total yearly overspend is dwarfed by its payments to Consort, and called tor the contract to be ripped up.
He said: We support Jeremy Corbyn’s call to end PFI which is drain on NHS resources. If Jeremy Hunt can impose new contracts on the junior doctors he can do it to the PFI companies.”
One of the country’s biggest hospital trusts says it is considering using a PFI scheme to pay for new buildings more than a decade after signing similar deals which will cost in excess of £1bn over 30 years.
Government figures show Leeds Teaching Hospitals NHS Trust paid £33.6 million last year as part of Private Finance Initiative contracts to build the Bexley Wing at St James’s Hospital and Wharfedale Hospital in Otley.
The deals for the Bexley Wing and Wharfedale were signed in 2004 and 2002 respectively. The total capital cost of the buildings is £237m but over 30 years, £1.016bn will be paid back.
The original funding for the Bexley Wing part of the scheme came from the Treasury, making the contract one of only two health PFIs to be funded in this way.
Earlier this year the project was refinanced via a £261 bond issued by the insurance company Assured Guarantee.
According to advisor Bevan Brittan, the renegotiation means nearly £2 million annually can be saved over the lifetime of the agreement and the trust can now build a £3 million specialist clinical trials centre. at St James’s Hospital. The trust says the overall unitary charge for its PFI deals will be £32.2 million for this financial year, a cost which includes repayment of the original capital, interest, maintenance and other expenses.
A spokeswoman said: “PFI charges represent only a small proportion of the trust’s overall costs given the turnover of the trust is in excess of £1bn.
“The Trust has benefitted from a recent refinancing of the Bexley PFI and works proactively with our PFI partners to obtain benefit for the trust for example by enhanced medical equipment provided within the Bexley Wing via the PFI agreement.
“The business case for each project included a value for money assessment which took account of the risk transferred to the private sector under a PFI contract arrangement.”
She added: “The trust is in the process of developing a business case for ‘Building the Leeds Way’ which will be a significant development including new build and some refurbished accommodation.
“A number of options for funding including potentially PFI will need to be considered within the business case.”