PFI critics seize on NAO report

20 May 99
Critics of the Private Finance Initiative (PFI) have leapt on a National Audit Office report criticising the first major NHS hospital built under the policy.

21 May 1999

In a finding that could lead to a reassessment of other health service deals, auditors said that the likely savings made by choosing PFI for a new £177m hospital at Dartford and Gravesham were 'uncertain' and that the project could cost more than a publicly funded alternative.

David Davis, chairman of the Commons Public Accounts Committee, accused the trust supervising the project of 'sloppy calculations' that could dent public confidence in PFI deals.

The public service union Unison used the report to condemn PFI in general. 'It is clear that PFI is not the value for money the government claims,' said Bob Abberley, the union's head of health. 'Given that the NAO says that there is uncertainty over whether PFI or public sector funding represents better value for money, we call on the government to review its policy on PFI and look at alternative methods of funding.'

Dartford and Gravesham trust had used incorrect figures when estimating the cost of a publicly funded hospital, leading Sir John Bourn, the Comptroller and Auditor General, to call on trusts to rigorously review their methods for comparing costs.

The trust estimated a publicly funded scheme would cost £193m. But the NAO discovered that this was £12m too high, reducing the projected saving from £17m to £5m. In its calculation, the trust had used the cash rather than real-terms value of building cost increases, and included weighting for inflation for ten months longer than necessary.

The professional fees involved totalled £2.36m compared with an initial estimate of £308,000.

Though it was still 'reasonable' to proceed with the Dartford deal, the spending watchdog felt there was cause for concern.

The trust hinted that many of the problems were associated with its pioneering status. 'The lessons learned from the Dartford project have benefited the whole of the NHS and placed it in a stronger position paving the way for future PFI projects,' it said.


Did you enjoy this article?