Calls for NHS to renegotiate controversial ERI contract

Published on Wednesday 21 July 2010 20:05

HEALTH bosses in Lothian today faced calls to renegotiate the controversial PFI contract for Edinburgh Royal Infirmary after the Evening News revealed it will cost a total of £1.26 billion but still leave the hospital in private ownership.

Lothian MSPs said the contract, which dates back to 1998 and will cost 50m a year until it ends in 2028, had been a bad deal for the health board and for taxpayers.

The PFI contract - which involves NHS Lothian leasing the hospital from private operator Consort Healthcare for 25 years - had many critics at the time, including health union Unison, the British Medical Association and Labour MPs Malcolm Chisholm and John Home Robertson.

However, health chiefs at the time argued Edinburgh was getting a world-class hospital which would not have happened without private finance.

Independent Lothians MSP Margo MacDonald today questioned the way it had been handled and called for a fresh attempt at ensuring the infirmary ended up in public ownership.

She said: "We always knew ERI was costing an arm and a leg. From the point of view of the health board, the patients and the taxpayers who are picking up the bill, this contract was not a good deal.

"The ERI was much bigger than other PFI projects up to then and it was in the very early days of the policy. I don't think they got in the expertise to negotiate the best contract in the first place and we have been running to catch up ever since.

"It is worth trying to see if the contract could be renegotiated so the eventual ownership would pass to the health board because that has happened in the newer contracts.

"At the very least the consortium should be approached and told we are all having to cut our cloth and they should cut theirs as well."

Lothians SNP MSP Shirley-Anne Somerville said she would like the health board to look at renegotiating the contract. "We need to get the best out of the bad hand we were dealt That may include getting it back into public hands."

Susan Goldsmith, NHS Lothian finance director, said it had already carried out refinancing negotiations with Consort which resulted in a 32m cash benefit in 2007.

She said: "The contract is commercially binding. There would be potential to re-negotiate a contract if the circumstances were right for both parties. We have management-led discussions on a regular basis with Consort to ensure that we continue to get value for money.

"The initial contract is due to expire in 2028. At that time we can opt to terminate the contract. If we do not, the contract will continue into a second phase for another 25 years."

A Scottish Government spokesman was sceptical about whether the contract could be renegotiated.

He said: "It has to be kept under financial scrutiny to see if anything can be done, but unfortunately people in Lothian have been saddled with this PFI project, conceived by the Tories and delivered by Labour."