Department of Health voices its continued support for the use of PFI to fund new hospital developments
DESPITE recent controversy over the high cost of contracts, the Department of Health (DH) has said it will continue to support PFI as a method of funding hospital redevelopment projects.
Ministers launched a review in the spring after several hospital trusts revealed they were having trouble making the repayments on PFI deals with private contractors. There were also claims the legally-binding contracts were stopping some organisations from meeting the criteria for gaining foundation trust status.
But, following the probe, the DH has concluded that, where its use is shown to be value for money for the taxpayer, it will continue to provide Deeds of Safeguard for PFI schemes of a capital value of more than £70m.
New guidance demands that outline and full business case approvals be sought for all schemes put forward by NHS trusts or primary care trusts (PCTs). Where the value of these is above the delegated limits of these organisations, additional strategic health authority (SHA) or DH and Treasury consent will also be necessary.
A DH spokesman said: "SHAs will need to ensure that they are able to perform this approval role for any PFI schemes in their patches. A key role played by SHAs and PCTs is to confirm that they want the services proposed by the trust in the planned geographical location and that the activity levels proposed in the PFI business case are realistic. SHAs will also be expected to validate designs and capital costings.
"Deeds of Safeguard will be made available to guarantee obligations of NHS trusts when they become foundation trusts, both on signed schemes and schemes that are currently in procurement or developing outline business cases. Deeds of Safeguard will also be available for schemes being developed by trusts that are already foundation trusts. The business case approval requirements will apply to all schemes that require Deeds of Safeguard and are in development, including those where the trust already has foundation status."
The department says a number of criteria will need to be met for any business case to be approved. These include demonstration of value for money, both of the preferred development option and of the use of PFI to deliver it; and adherence to government commercial policy, including the standard project agreement for PFI schemes. Most importantly, business cases moving forward will have to demonstrate robustly that schemes are affordable to the trusts putting them forward, and that their costs will not risk the organisations' viability as foundation trusts.