Magazine article Public Finance

Audit Shows PFI Hospital Was Overpriced

Magazine article Public Finance

Audit Shows PFI Hospital Was Overpriced

Article excerpt

Health Secretary Patricia Hewitt will come under pressure to put together a financial rescue package for the NHS in Norfolk after government auditors confirmed that the local trust is paying over the odds for its Private Finance Initiative hospital.

Norman Lamb, the MP for North Norfolk whose campaigning prompted the National Audit Office review of the deal, told Public Finance that the health service across the county was struggling with mounting debts.

These were being exacerbated by the high costs that Norfolk and Norwich University Hospital NHS Trust is paying to contractor Octogon for the construction and management of a new hospital, he said.

'This report shows we are paying a premium for being a pioneer of the PFI in the health service,' Lamb added. 'We've got a big historic burden of debt. We need to get help. I'm going to challenge the secretary of state with these findings to try to persuade her to help the Norfolk health economy out of this mess.'

The deal was refinanced in 2003, nearly six years after the original contract was agreed, netting the contractors £115m in gains. Of this, just £34m was shared with the trust and will be taken over time rather than as a lump sum. …

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