£831m profits for private sector from PFI contracts

30 August 2017

Private companies have made £831m in pre-tax profit from private finance initiative (PFI) contracts for NHS hospitals over the last six years, a think tank has said. 

The Centre for Health and Public Interest (CHPI), estimates 8% of the £10.7bn paid to PFI companies has left the healthcare system as profit, and is therefore no longer available for patient healthcare. 

The £10.7bn figure relates to the last six years and CHPI estimates this could increase to £80.8bn over the duration of existing contracts – which have an average lifetime of 31 years. The Department of Health (DoH) currently oversees 125 PFI contracts for hospitals that have built assets worth around £12bn.

Under a PFI contract the private sector funds and constructs public facilities that the public sector then effectively rents back. Usually through a special purpose vehicle (SPV), the private sector does the borrowing, contracts the construction and in some cases also contract ancillary services such as cleaning and building maintenance.

CHPI used data from the Treasury and Companies House to calculate what the NHS has paid through PFI contracts, and the profits that the companies behind these SPVs have made.

While the average rate of profit was 8%, this varied across contracts and, in 13 of the contracts CHPI looked at, was more than 20%. 

The company managing facilities at University College London Hospital (UCLH) saw one of the highest rates, making £139.7m in pre-tax profit between 2010-15, 31% of what it was paid by the NHS Trust over that time.

In total £724.8m was paid between the facility’s opening in 2005 and 2015 to this PFI company, of which Credit Suisse and Semperian share more than 80% of the equity. The Treasury puts the capital value of the hospital at £292m.

A spokeswoman for UCLH NHS Foundation Trust said: “We are aware of the findings of the report and we are working with NHS Improvement to explore all the options available to NHS Trusts with PFI contracts.”

According to CHPI eight companies have a stake in 95% of the DoH PFI schemes, which it says raises concerns over how competitive any future PFI tendering will be.

In a statement, Philip Dunne, minister of state at DoH, said: “Of the 125 PFI contracts reviewed in this report, 118 were negotiated by the last Labour government… This government has refused to sign the taxpayer and our NHS up to such appalling deals.”

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