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The annual costs of the private finance initiative (PFI) to the Scottish National Health Service are set to increase nearly five fold from £107m to more than £510m over the next five years, a report by the University of Edinburgh warns.

The study, by the University’s Centre for International Public Health Policy, adds that the need to meet these financial commitments could lead to unprecedented hospital, community, and primary care closures and will come at the expense of patient care.

”The report shows the impact of large PFI hospital schemes in Scotland on health board budgets. Funding is being diverted away from clinical care, staff and supplies, to pay ‘rent’ to the private sector,” said the report’s lead author Mark Hellowell.

Under PFI the private sector designs, builds, and finances new health facilities and runs services like cleaning and catering. In return, the NHS pays an annual charge to the private sector - often for 30 years or more.

The “rent” is much higher on PFI buildings, usually accounting for between 11 and 18.5 per cent of hospital turnover compared with between five and eight per cent in non-PFI buildings.

Of the total PFI charges, amounting to some £512m, that will be paid out by the early part of the next decade, it is estimated that around 60 per cent, or £307m, will go on ‘rent’, otherwise known as the availability charge. This includes the provision of assets and servicing of debt. An estimated 40 per cent will go on services such as building maintenance and catering.

All health boards with major PFI schemes are also planning major hospital and service closures. The findings come as the Scottish Executive plans to expand PFI schemes across the NHS.

Read the full report.