'Crippling' bill for Queen Alexandra Hospital's £1bn PFI rebuild jumps an extra £700m

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TAXPAYERS are set to fork out an extra £700m for a hospital’s expansion after costs for a critical redevelopment project spiralled.

An investigation by JPI Media, which owns The News, has revealed a £1bn deal made almost 14 years ago to upgrade Cosham’s Queen Alexandra Hospital (QA) will end up costing more than £1.7bn.

Queen Alexandra Hospital in Cosham

Queen Alexandra Hospital in Cosham

The £256m rebuild was completed in 2009 and was funded as part of a 32-year PFI (private finance initiative) deal struck by Portsmouth Hospitals NHS Trust and consortium The Hospital Company in December 2005.

An investigation by this paper has revealed costs to repay investment firms have ballooned from £32m in 2009/10 to £54.6m last year – and are expected to swell further to £93.9m by 2039/40.

Bosses at Portsmouth Hospitals NHS Trust have insisted the deal was the only ‘government-approved method’ at the time able to fund QA’s makeover.

But the news has horrified health campaigners and politicians who are demanding the government steps in. 

Portsmouth City Council leader Gerald Vernon-Jackson

Portsmouth City Council leader Gerald Vernon-Jackson

Penny Mordaunt, Portsmouth North MP, said PFI schemes like the one at QA had ‘crippled hospital finances’.

Councillor Gerald Vernon-Jackson, leader of Portsmouth City Council, said: ‘PFI has never been fit for purpose, it was a financial scam to move spending off the government’s balance sheets.

‘This is money that could and should be spent on patient care but instead is going into the financial firms who came up with this clever wheeze.

‘That’s £700m that could have gone into caring for the people of Portsmouth but instead it has been wasted on this financial scam.’

Portsmouth North MP Penny Mordaunt

Portsmouth North MP Penny Mordaunt

Roger Batterbury, chairman of Portsmouth Healthwatch which scrutinises the hospital, vowed to lobby for health secretary Matt Hancock to take action.

He added: ‘I’m worried. Hospitals like QA have been saddled with debt because of this. Things now need to change.

‘We will make raising this with the health secretary our number one priority. We will shout loudly for Portsmouth so patient care is put first.’ 

Portsmouth Hospitals NHS Trust has spent £420.6m on annual costs since 2009.

The lost billions

The lost billions

However, the scheme had to be renegotiated in the wake of the collapse of Carillion last year. 

The new 22-year deal, agreed in February with investment firm Engie, is set to cost a further £1.3bn.

Mark Cubbon, chief executive of Portsmouth Hospitals NHS Trust, insisted the contract helped QA to maintain its vast estate to a ‘high standard’.

Defending the arrangement, Mr Cubbon added: ‘I am absolutely determined to ensure we get the very best value for money from the ongoing PFI contract and that the quality of the service provided is the best it can be for our patients, staff and the taxpayer.’

However, Ms Mordaunt, said PFI schemes had made ‘vastly inflated’ assumptions about whole-life costs.

The former defence secretary added: ‘The campaign I ran with Jesse Norman MP called “No to PFI” highlighted the disaster of Labour’s scheme, which saddled our public services with off-balance-sheet debt, debts which were then often sold on to other companies.’ 

The government has said it is committed to pumping more cash into overhauling the health service.  A Department of Health and Social Care spokeswoman added: ‘The government has already announced that it will no longer use PFI financing for projects.

‘We recently injected an extra £1.8bn of new capital funding into the NHS to upgrade buildings and equipment and tackle the most urgent infrastructure projects.

‘As with all PFI contracts, annual payments at Portsmouth’s Queen Alexandra Hospital vary in line with the contract.’