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House of Commons Committee of Public Accounts
On 3rd May, the House of Commons Committee of Public Accounts (PAC) published its report on the refinancing of the Norfolk and Norwich PFI hospital. This followed on from the National Audit Office report entitled “The Refinancing of the Norfolk & Norwich PFI Hospital: How the deal can be viewed in the light of the refinancing”, published in June 2005.
Background The contract to build a new hospital, and subsequently provide maintenance and facilities management services, for Norfolk & Norwich University Hospital NHS Trust was one of the first PFI hospital contracts ever let. This contract was let in 1998, at a time where it was not mandatory for PFI projects to have contractual arrangements to share benefits arising from debt refinancing. In such cases, however, a voluntary code was subsequently agreed with HM Treasury in September 2002 whereby authorities could expect to receive around 30% of any refinancing gains voluntarily from the private sector. In the case of Norfolk and Norwich, this meant that the Trust secured 29% of the total refinancing gain from the private sector, amounting to £34 million, despite there being no contractual obligation for this to happen.
However, PFI contracts signed since July 2002 have provisions for the private sector to share 50% of any refinancing gains with the public authorities. According to the refinancing report published in April 2006 by the National Audit Office, the government has secured £137 million from PFI debt refinancing to date.
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Thursday, May 11, 2006
Striking the right balance over PFI
Evening Standard | Anthony Hilton
Why is it, I wonder, that when the contractors behind the Private Finance Initiative make exceptional returns out of the Norfolk and Norwich Hospital it is the unacceptable face of capitalism, but when Sea Containers is brought to the edge of bankruptcy, because its subsidiary GNER has agreed to pay more than £1 billion the group cannot afford for the contract to operate trains from London to Edinburgh, no one complains at all?
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