The National Audit Office (NAO) has found Peterborough and Stamford Hospitals NHS Foundation Trust failed to recognise in 2007 that a PFI scheme to build a new hospital, Peterborough City Hospital, would place considerable strain on its finances.
According to the report, the board compounded the decision to proceed with the PFI scheme, which it could not afford, with a failure to monitor other changes affecting its income and costs between 2007 and 2011. The result was that the trust faced a very large, recurrent deficit once the new hospital opened.
The NAO report reveals that the in-year deficit for 2011-12 was £46m and the trust is now facing an increase to more than £50m in the year ahead.
It found that neither the trust board nor the Department of Health addressed affordability concerns fully before approval of the business case.
A PPP expert at a Big Four firm was quick to defend the PFI (private finance initiative) procurement and financing model, and told AccountingWEB that it was the public sector, not the private sector, which decides how big a hospital should be.
“It's not the negotiation on rates or equity,” he said. “It comes down to who made the decision on how big the hospital should be, in terms of patients, beds and theatres. This is determined by the public sector, which will be determined by the hospital, by the commissioners and by the regulators and other parts of the Department of Health.
“It’s not just relevant to Peterborough and Stamford - all hospitals up and down the land have been determined by the public sector side of the equation. If the truth be known, if the private sector had decided them, they'd have made them smaller.”