Private firm pocketed millions of pounds by 'selling on' the PFI contract for University Hospital of North Durham

THE firm that built a North-East hospital under a controversial PFI deal has pocketed tens of millions of pounds by selling it on.

A leading MP described the ‘flipping’ of the contract for the University Hospital of North Durham (UHND) – and many others across the UK – as a “total scandal” that had ripped off taxpayers.

The huge annual repayments that hospitals must make to service PFI deals have been blamed for helping to plunge many into financial difficulties.

But a spokesman for County Durham and Darlington NHS Foundation Trust, which runs the Durham City hospital, said the sale – by Balfour Beatty - made no difference to its annual costs.

The trust refused to discuss the scale of PFI repayments it makes, under a trailblazing 30-year deal struck in 1998, at the start of Labour’s years in office.

The spokesman said: “The recent sale by Balfour Beatty has no financial impact on the trust and University Hospital of North Durham continues to deliver healthcare services and care to meet the needs of the local population.”

The row is the latest twist in the long-standing criticism of PFI, a ‘mortgage’ scheme which saw private firms paid to build and maintain public assets for up to 30 years.

This week, Balfour Beatty ‘flipped’ the contracts for the UHND and for seven schools in Merseyside.

The two deals brought in profits of £51m, the Independent newspaper revealed, although it is not known how much of that sum was generated in North Durham.

Across England, four contractors have made profits of more than £300m from such re-sales, with Balfour Beatty (£188.9m) the biggest winner.

The resales were condemned by Margaret Hodge, the chairman of the Commons Public Accounts Committee - who acknowledged blame lay with Tony Blair and Gordon Brown.

Ms Hodge said: “It is a scandal, a total scandal that the public sector has privatised these projects so badly. We have all been ripped off.

“I'm afraid we got it wrong. I was a supporter at the time but I have completely gone off the whole concept. We got seduced by PFI."

A previous analysis found that ten North-East hospital schemes were worth £725m, but the eventual PFI payments will be £3.94bn - more than five times as much.

However, supporters of PFI argued it allowed Labour to build 100 new hospitals, the biggest building programme in the history of the NHS.

Balfour Beatty did not respond to the criticism last night, but confirmed that 50 per cent of the £90m North Durham contract had been sold on.

A statement, announcing the £51m total profit, said: “The proceeds from these transactions exceed the Directors’ valuations by £44 million, representing an uplift of 82 per cent.”

Comments (7)

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8:06am Fri 6 Jun 14

oliviaden6 says...

STOP PLAYING GAMES WITH OUR NHS, IT IS OURS NOT PRIVATE????
STOP PLAYING GAMES WITH OUR NHS, IT IS OURS NOT PRIVATE???? oliviaden6
  • Score: 1

12:11pm Fri 6 Jun 14

David Lacey says...

This is yet another legacy of the Labour government. Billions to be paid by our children and grandchildren courtesy of Brown and Blair. Smashed education, ruined economy, illegal wars, mass immigration - the list of their crimes against the UK is endless.
This is yet another legacy of the Labour government. Billions to be paid by our children and grandchildren courtesy of Brown and Blair. Smashed education, ruined economy, illegal wars, mass immigration - the list of their crimes against the UK is endless. David Lacey
  • Score: 9

12:24pm Fri 6 Jun 14

Mod says...

What's this, Margaret Hodge, the Labour "Witch Finder General" whose task it is to root out all government waste, fraud and incompetence, apologising ("I was seduced" -- shudder) herself and blaming Blair and Brown for driving the NHS towards bankrupcy. Well I never.
Maybe it is true that you can't trust Labour with the NHS.
What's this, Margaret Hodge, the Labour "Witch Finder General" whose task it is to root out all government waste, fraud and incompetence, apologising ("I was seduced" -- shudder) herself and blaming Blair and Brown for driving the NHS towards bankrupcy. Well I never. Maybe it is true that you can't trust Labour with the NHS. Mod
  • Score: 10

2:44pm Fri 6 Jun 14

durhamchap says...

A PFI hospital we, the taxpayer, will have to pay for over many years thanks to the idiot Blair.Less patient beds than the old Dryburn, Insufficient parking spaces for both staff and visitors - I believe a multi storey car park was originally planned.Another PFI/Blair production hospital at Bishop Auckland hardly being used.No wonder he let Brown take over to take all the flak.
A PFI hospital we, the taxpayer, will have to pay for over many years thanks to the idiot Blair.Less patient beds than the old Dryburn, Insufficient parking spaces for both staff and visitors - I believe a multi storey car park was originally planned.Another PFI/Blair production hospital at Bishop Auckland hardly being used.No wonder he let Brown take over to take all the flak. durhamchap
  • Score: 6

8:07pm Fri 6 Jun 14

greenfinger says...

Margaret Hodge gets something wrong and millions are lost? Surely her position as chief scrutineer is under pressure now. not sure on my spelling there but never mind, still sack her.
Margaret Hodge gets something wrong and millions are lost? Surely her position as chief scrutineer is under pressure now. not sure on my spelling there but never mind, still sack her. greenfinger
  • Score: 0

7:16am Sun 8 Jun 14

George19 says...

A leading MP described the ‘flipping’ of the contract for the University Hospital of North Durham (UHND) – and many others across the UK – as a “total scandal” that had ripped off taxpayers, "Just where are these LEADING MPs when contracts should be scrutinised and made watertight, leading MPs also rip off the taxpayer don't forget.
A leading MP described the ‘flipping’ of the contract for the University Hospital of North Durham (UHND) – and many others across the UK – as a “total scandal” that had ripped off taxpayers, "Just where are these LEADING MPs when contracts should be scrutinised and made watertight, leading MPs also rip off the taxpayer don't forget. George19
  • Score: 4

6:22pm Tue 10 Jun 14

pensioner2 says...

Quote- However, supporters of PFI argued it allowed Labour to build 100 new hospitals, the biggest building programme in the history of the NHS.`
A previous analysis found that ten North-East hospital schemes were worth £725m, but the eventual PFI payments will be £3.94bn - more than five times as much.

So the supporters of PFI make the argument that it meant 100 new hospitals were built because of it. Why not simply pay out the £725 million to build those hospitals and save a nice little £3.2 BILLION which could have been used to build even MORE HOSPITALS? 5 times as many- ie 500 new hospitals seeing as the gov could afford to chuck away that £3.2 billion to the PFI. The various governments seem to be able to find a few billions when they need to to support invasions in iraq or afghanistan or to give away to india, china, pakistan. Blair and brown were a mega disaster for the uk, i will never trust labour again (despite how much i hate the central gov. tories and libdems) Brown it has to be remembered sold off vast chunks of the uk gold reserves at bargain prices leaving the uk as a whole in dire straits when gold was soaring to an all time high. I do not envisage Miliband to be any better. Get a grip labour and get back to your original roots, the monkeys who blindly follow you because they "have always voted labour" are onto you and those who are not will not live forever. God help us if blair ever gets into power in the EU parliaments- a disgrace of a man, and so is his "human rights lawyer" (scavenger) wife.
Quote- However, supporters of PFI argued it allowed Labour to build 100 new hospitals, the biggest building programme in the history of the NHS.` A previous analysis found that ten North-East hospital schemes were worth £725m, but the eventual PFI payments will be £3.94bn - more than five times as much. So the supporters of PFI make the argument that it meant 100 new hospitals were built because of it. Why not simply pay out the £725 million to build those hospitals and save a nice little £3.2 BILLION which could have been used to build even MORE HOSPITALS? 5 times as many- ie 500 new hospitals seeing as the gov could afford to chuck away that £3.2 billion to the PFI. The various governments seem to be able to find a few billions when they need to to support invasions in iraq or afghanistan or to give away to india, china, pakistan. Blair and brown were a mega disaster for the uk, i will never trust labour again (despite how much i hate the central gov. tories and libdems) Brown it has to be remembered sold off vast chunks of the uk gold reserves at bargain prices leaving the uk as a whole in dire straits when gold was soaring to an all time high. I do not envisage Miliband to be any better. Get a grip labour and get back to your original roots, the monkeys who blindly follow you because they "have always voted labour" are onto you and those who are not will not live forever. God help us if blair ever gets into power in the EU parliaments- a disgrace of a man, and so is his "human rights lawyer" (scavenger) wife. pensioner2
  • Score: 1

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