Doubts over the future of the private finance initiative as the means of funding the biggest hospital building programme in the history of the National Health Service have been raised by a senior health department official.
Bob Ricketts, head of capacity planning, said the programme is producing expensive and unnecessary "monuments", rather than flexible health care. The NHS needed "a fundamental rethink about how much we invest in capital, rather than human resources".
He added: "Some private providers are putting up very good, modern, cheap and cheerful builds, which will only last five years, which is fine because you cannot guesstimate day surgery in 20 years' time."
The NHS programme, by contrast, was producing "some awfully grand PFI schemes" on 30-year contracts "that are starting to give us a real problem".
With the NHS set to become a highly competitive market in which unsuccessful facilities could close, Mr Ricketts was reported to have told a conference last week that "we do not need to be designing monuments on long-term leases . . . some of the better players are recognising that and are not getting into big heavy capital investment".
Instead, the NHS should build for "five years, possibly 10" and invest in staff to produce flexible solutions.
His comments came as Edward Leigh MP, who chaired the Commons public accounts committee in the last parliament, condemned as "totally unacceptable" the "huge profits" made by the consortium that built the £229m Norfolk and Norwich Hospital under the PFI.
A National Audit Office report revealed that by refinancing the hospital, which opened in 2001, the Octagon consortium has made a £117m profit. Its internal rate of return has tripled to 60 per cent, a figure "that we believe is totally unacceptable", Mr Leigh said.
Despite a £34m share in the total £150m refinancing gain, the NAO said the hospital was still paying more for the building than under later PFI deals. Local MPs complain its higher costs have helped produce a £30m overspend in the Norfolk NHS. Mr Leigh's comments on the "scandal" of huge profits from early PFI deals came as Mr Ricketts' statements revealed tensions over the future of PFI in the health department.
A health official said 52 PFI schemes had opened and 80 more, with a capital value of £18bn, were in the pipeline. "We are not going cold on PFI. We are not looking to the NHS to abandon major hospital developments." But Nigel Edwards, of the NHS Confederation, said: "Bob Ricketts has put his finger on an important issue. The government's policy is to create instability in the NHS. So we need to design clever, flexible, infrastructure. The big palace solution may be suitable for a large teaching hospital that will always be there. But elsewhere we may not want buildings into which we are tied for 30 years under the PFI."
