Sherwood Forest NHS Trust reveals £1bn PFI overspend

King's Mill Hospital In 2006, the trust estimated the PFI project would cost £976m in its 38-year lifetime.

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The costs of redeveloping a hospital in Nottinghamshire have more than doubled to over £2bn, according to figures obtained by the BBC.

King's Mill Hospital, run by Sherwood Forest Hospitals NHS Foundation Trust, signed a PFI deal for the period 2005-2043, for a total cost of £976m.

But in figures obtained under a Freedom of Information request, the trust now believes PFI will cost it £2.05bn.

The trust said the issue was "complex" and it would comment further later.

'Completely bonkers'

The information, obtained by BBC Radio Nottingham, shows the trust estimates the "mortgage" costs - paying back capital and other initial costs - to be £738m.

The service costs, for "ongoing maintenance, life-cycle replacements and facilities services" for the 38-year PFI period are estimated at £1.26bn. The original estimate for those service costs was £193m.

Start Quote

We have to get behind [the new chairman] and sort out the mess”

End Quote Mark Spencer Sherwood MP (Conservative)

Conservative MP for Sherwood Mark Spencer said: "It is completely bonkers.

"We need to find out who signed the deal and who was going through the small print and what they were thinking of when they signed the deal.

"We have a new chairman and we have to get behind him and sort out the mess."

Public finance expert Malcolm Prowle, from Nottingham Trent University, said: "This contract is over a 38-year period and that's why the figures are so large.

"But PFI was the name of the game in 2004, it was very popular and people knew if they didn't get PFI through they wouldn't get the project.

Analysis

PFI is most closely associated with New Labour but was in fact introduced by the Conservatives in the 1990s. Hospitals get private consortia to build hospitals and run services such as maintenance, security and catering. That leaves NHS managers to focus on patient care. But they have to pay back the private capital, typically over 25 to 35 years, with annual charges.

It is these annual fees that Sherwood Forest NHS Foundation Trust, which runs King's Mill and Newark hospitals, is now struggling with. The problem there is that the yearly repayments are more than 15% of the trust's income.

Critics say PFI is an expensive way of the state spreading the cost of new buildings. But supporters of the concept say it can be a good way of spreading the cost of capital projects.

Locked into a lengthy contract, King's Mill may end up having to borrow to avoid bankruptcy.

"There was a lot of enthusiasm to make sure the PFI got through, if that meant understating some of the costs perhaps that tended to happen."

A spokesperson for Skanska, which is involved in the PFI deal, told the BBC it provided "hard facilities management services only to the trust - our services form a small proportion of the overall service charge".

"We cannot comment on the overall budget for the project," the spokesperson said.

£6m loss

In September, the trust's chair Tracy Doucet stepped down after a letter from the independent health regulator group Monitor was made public that stated it was "extremely concerned by the very serious issues facing the trust".

A report found the trust was struggling to meet its PFI payments.

A Monitor spokesman said it did not approve the PFI scheme because it was signed off in 2005 before the hospital was granted foundation status.

The trust lost almost £6m in its first quarter of 2012 and warned it could run out of cash by January.

Work on a £320m PFI expansion at King's Mill Hospital to modernise its acute services began in 2006 but lack of income and the hospital being "under-utilised", according to Monitor's report, means the trust is struggling to meet its repayments.

Sherwood Forest was awarded foundation trust status in 2007 and serves a population of more than 400,000 people across Nottinghamshire as well as parts of Derbyshire and Lincolnshire.

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