Failed Hinchingbrooke hospital deal left taxpayer exposed, say MPs

18 Mar 15

The decision to let private operator Circle run Hinchingbrooke Healthcare NHS Trust was an unsuccessful experiment that has left the taxpayer exposed, the Public Accounts Committee has concluded today.

Circle pulled out of Hinchingbrooke at the start of the year, just three years into its 10-year franchise.

In a damning report, published today, the PAC said none of the responsible parties had been held to account.

‘As we warned in 2013, the taxpayer has been left exposed by the failure of the Hinchingbrooke franchise,’ said PAC chair Margaret Hodge.

‘Circle was not able to make the trust sustainable and the NHS Trust Development Authority did not take effective action to protect the taxpayer.’

The savings projected in Circle’s bid were ‘overly optimistic’, Hodge added, while the Department of Health had played down risks.

‘The total deficit incurred during the franchise will be well above the level that Circle is contractually committed to cover, leaving the taxpayer to pick up the rest of the bill,’ she said.

‘We want to know the total cost to the taxpayer due to the failure of the franchise, including the costs of transition arrangements and the total cost of covering the financial deficits incurred during the franchise.’

The PAC said it was concerned about inconsistent inspection ratings. The Care Quality Commission rated Hinchingbrooke as ‘inadequate’ following a September 2014 inspection. However, earlier CQC inspections were more positive, an inconsistency the committee said was not adequately explained by witnesses.

Hodge also warned that lessons on awarding and managing major contracts needed to be learned.

‘Public bodies will not achieve value for money from their contracts until they become more commercially skilled – both in letting contracts in the first place, but also in ongoing contract management,’ she said.

Yesterday, the Public Administration Select Committee similarly warned that costly outsourcing blunder would persist unless civil service skills were honestly reappraised.

Responding to the PAC’s report, a Department of Health spokeswoman said: ‘Hinchingbrooke Hospital had severe problems for over a decade which needed sorting.

‘After rigorous competition in a process that began in 2009, Circle had the most comprehensive turnaround plans, which included taking on £5m of risk to the taxpayer.

‘Under close scrutiny, the trust since made some improvements, but patients rightly expect high standards and we make no apology for our rigorous new inspection regime identifying underperformance wherever it is found.

‘Because the contract was designed to significantly reduce risk to the taxpayer, Circle has not received a single payment from the trust or any other NHS body.’

  • Vivienne Russell
    Vivienne Russell is managing editor of Public Finance magazine and

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