Exclusive: We'll pay £1.2bn for PFI hospital but NEVER own it

HEALTH chiefs were today facing demands for an inquiry after it emerged the NHS will have to pay a total of £1.26 billion for the privately built Edinburgh Royal Infirmary - and still not own it.

An Evening News investigation has discovered that while other hospitals built under private finance initiatives (PFI) eventually transfer to NHS ownership, the Little France site will not.

It means that by 2028, NHS Lothian will have effectively paid for the hospital seven times over but it will remain the property of private operator Consort.

The revelation has prompted fury from unions and politicians, who said it made a mockery of an agreement that was already a bad deal for the taxpayer.

Tom Waterson, Unison's Lothian branch chairman, said: "Can you imagine taking a mortgage out, making huge monthly payments, and then finding at the end you don't own the place?

"We had concerns about this contract from the start. Consort could even evict NHS Lothian at the end of it if they wanted."

NHS Lothian is tied to a 50 million-a-year contract with Consort to run and maintain the hospital which expires in 2028. At that stage, health chiefs will have to negotiate a price with Consort to buy the hospital, extend the lease by another 25 years, or walk away, leaving the hospital and its contents to the firm.

To make matters worse, the hospital has dropped nearly 20m in value since it opened 2002, down to 170m. Experts have also pointed out that it may halve in value by 2028, given it was only ever estimated to have a 45-year lifespan.

Similar PFI schemes in Glasgow and Forth Valley will result in the NHS owning the properties after the 30-year period.

Lothians MSP Shirley-Anne Somerville said questions now had to be asked of the deal.

"This shows the complete failure of the contract," she said. "We've been spending on this hospital hand over fist and now we find out that when it ends we won't even own it.

"We need to know what the long-term plan is.

"We also need to know what the risks are with other PFI deals that have been signed."

Details of the agreement, signed around 15 years ago, emerged after NHS Lothian's 2010 accounts revealed the deal with Consort allows health chiefs to extend the contract until 2053.

Privately, senior NHS Lothian bosses - none of whom were involved in the securing of the original deal - are despairing of the contract.

They are furious that they have a 70m black hole, a sum which could be almost plugged with just one of the annual payments to the company who built the hospital.

Any potential deal to buy the hospital is years off but it is understood there would be no way Consort, which also profits from running the canteen, hospital shops and car park, would sell prior to 2028.

At the time it was built, it was Europe's biggest PFI deal, and heralded as a world-class hospital. There were benefits. Not a penny had to be parted with until the facility was completed, and many saw it as "something for nothing".

But it is now clear that it is a massive financial burden on a health board already struggling to balance the books.

The Conservative health spokeswoman in Scotland Mary Scanlon MSP said: "As taxpayers we expect NHS Lothian to deliver value for money, and responsibility has to be taken for this."

NHS Lothian's director of finance Susan Goldsmith said: "The Royal Infirmary of Edinburgh building will remain the responsibility and be owned by PFI provider Consort at the end of the term in 2028, unless there is any material change to the contract.

"NHS Lothian inherited a first generation Private Finance Contract drawn up between the former Royal Infirmary of Edinburgh NHS Trust and its PFI provider Consort.

"The initial contract is due to expire in 2028. As there has always been, there is an option to extend the contract for another 25 years."

A spokeswoman for operator Consort said: "The initial contract expires in 2028 when it will be up to NHS Lothian to go into a second phase."

'Rip-off' in firing line once again

IT IS not the first time serious questions have been raised about the contract between NHS Lothian and Consort.

In a previous British Medical Journal report Allyson Pollock, a professor of international public health policy at Edinburgh University, and Dr Matthew Dunnigan, of the Glasgow Royal Infirmary, slammed the arrangement, saying it came at huge cost to the public purse long-term and it affected patient care.

They cited "reduced service delivery across Lothian and its associated Private Finance Initiatives development compared with other Scottish hospitals" and found that targets could also be missed.

The study also found that PFI did not meet targets to cut in-patient and day case admissions and length of hospital stays.

Those views were dismissed by then Scottish Labour leader Jack McConnell, but received widespread support elsewhere.

Dr Dunnigan told the Evening News today: "These things are wrapped up in pages and pages of lawyer letters and red tape, making it impossible to get out of.

"There is no doubt this was a bad thing for the NHS - a genuine rip-off."