The private finance initiative and the National Health Service: time to buy out the contracts?

Document type
Chris Edwards
Date of publication
3 February 2009
Thinkpiece; 45
Health Services
Social welfare
Material type

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This paper examines the role and costs of Private Finance Initiative (PFI) investment in healthcare. The PFI is the scheme whereby companies in the private sector build and finance new hospitals and primary care premises and rent them back to the NHS over long contract periods of more than 30 years. Since 2004/05, the role of PFI investment in the NHS has grown rapidly. This research focuses on hospitals and in particular the Norfolk and Norwich University Hospital (NNUH). It examines the public and private costs of the investment and calculates that the extra cost imposed annually on the NNUH as a result of the PFI contracts is a minimum of £18.8 million. The reasons for government interest in PFI contracts are then explored in relation to the debate on public sector debt. The report concludes that buying out PFI hospital contracts may well generate large expenditure savings for the government and that future PFI programmes should be cut back so as to avoid even higher costs in the future.

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