Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The government has sounded out private finance investors about backing up to 200 neighbourhood health centres, in a move that could transform NHS care in England but threatens to reignite a fierce debate over the funding model.
Investors would win long-term contracts to design, build and manage local NHS centres with the aim of having one in every community by 2035 and the most deprived areas targeted first, under plans set out in documents from the Department of Health and Social Care and seen by the Financial Times.
The new PFI clinics would combine healthcare, voluntary and local authority services in a “one-stop shop” aimed at moving care out of hospitals, with construction costs ranging from £10mn to £40mn per facility using a “standardised design”.
Ministers have said they will consider new forms of public private partnership, such as the Mutual Investment Model in Wales, and promised to deliver a shift in care “from hospital to community” as part of their 10-year plan for the NHS.
But any decision to press ahead with private finance initiative health schemes is likely to be controversial.
The financing strategy was widely used during Sir Tony Blair’s Labour government between 1997 and 2007, but the Conservatives ended it in 2018 after the National Audit Office, the public spending watchdog, found the schemes had cost taxpayers billions of pounds in extra costs for no clear benefit.
People familiar with the matter said at least two “market testing sessions” were held over the summer by the health department, which is being advised by management consultancy Deloitte and law firm Addleshaw Goddard and working with the new National Infrastructure and Service Transformation Authority.
The public sector would provide the land while private companies deliver the facilities and services on contracts of between 25 and 30 years, the documents noted.
One private provider would be expected to deliver “several batched lots”, they added, while health clinic services would be delivered by a single public sector organisation, which would charge tenants and manage the use of the space.
The Department of Health and Social Care said: “While no decisions have been made, it’s right that we look at a range of options to provide the best care for people across the country, especially in underserved, deprived or rural areas.”
A final decision on whether to go ahead with the privately financed clinics is expected in the Budget on November 26.
Several healthcare trusts are still struggling under the weight of their PFI debts, while many of the 25- to 30-year contracts under the PFI scheme are coming to an end in bitter legal disputes over the state of the assets.
Johnbosco Nwogbo, lead campaigner at public ownership campaign group We Own It, said: “Using PFI might seem like a good deal at the time, but the debt just grows and grows; then 25 years later, when it’s still not paid off, you’re left skint and scratching your head.”
But backers of a new brand of PFI projects point to the crumbling NHS estate and the New Hospital Programme, which was announced by the then Tory government in 2020 but has been beset by delays.
The AIIP, a group of infrastructure investors pressing for an expansion of public private partnerships, has argued that 90 PFI hospitals were built in less than a decade under PFI.
Lord John Hutton, AIIP chair and former minister, said the model would ensure that “critical infrastructure is maintained and managed in the long-term interests of the nation, insulating it from the short-termism of budget cuts”.
The NHS Confederation, which represents managers and is led by former Blair adviser Matthew Taylor, welcomed the “new public-private partnership model for the NHS’s nascent neighbourhood health centres at the forthcoming Budget”.
But ministers needed to “go much further and promise the same to hospital trusts and other parts of the health service”, the organisation added.
In a report released on Monday, it said off-balance sheet models, which keep the debt off the government’s books, were a “political necessity in the current fiscal climate”.
