PFI contractors sell properties at significant profit

The Independent has reported on profits generated by PFI contractors after selling schools and hospitals developed under the scheme, taking advantage of the rises in property values. PFI contractor Balfour Beatty sold University Hospital of North Durham, one of the first hospitals to be built under the PFI scheme, with other sales including University College London Hospital (sold for a profit of £44 million), and contractor Kier’s West Berkshire and Hinchingbrooke Hospitals, which together generated a profit of £6.8 million. Labour MP and Chair of the Public Accounts Select Committee Margaret Hodge commented negatively on the sale-offs, highlighting the fact that a lot of the funds buying these properties are located in tax havens, meaning that taxpayers do not benefit from the increased value.

Elsewhere, the Sunday Times has reported that the Northumbria Healthcare NHS Foundation Trust will be the first in the NHS to raise money from a local authority to buy out a PFI hospital contract for Hexham General Hospital. Northumberland County Council has raised a loan of £114.7 million to be handed to the Northumbria Trust, with some funds to be used to repay the consortium behind the PFI contract, which includes Lend Lease and Aberdeen Asset Management. The deal, which is to be confirmed in the few days, is expected to lead to annual savings of £3.5 million.