Controversy
The controversial Private Finance Initiative was first introduced to the public sector under the Conservative government of John Major and the contract for NNUH, one of the first PFI hospitals, was signed in 1996. The level of subsequent potential risks and costs borne by the public sector was thought by some critics of the deal to be unacceptably high. In 2006 Edward Leigh, Conservative Member of Parliament (MP) and chairman of the Public Accounts Committee, appropriated a famous Edward Heath quote (originally used with reference to Tiny Rowland of Lonrho International) to describe the Department of Health's approach to a refinancing deal for the NNUH PFI:
"It is hard to escape the conclusion that the public sector staff managing the project were not up to the rough and tumble of negotiating refinancing proposals with the private sector ... The unacceptable face of capitalism."
The hospital neighbours the constituency of South Norfolk MP Richard Bacon, also a member of the Public Accounts Committee. Mr. Bacon wrote about the financing of the hospital on his website; "The Department of Health would not allow the hospital to include a refinancing clause in the original contract. This meant the hospital had no right to receive any proceeds from the refinancing at all, let alone the 29% share it eventually secured. And that right was only obtained by taking on huge extra potential liabilities."
In 2006/07, the trust projected a savings target of £14.8 million but recorded a surplus of £867,000 by the end of the same financial year. In 2007, the Audit Commission's "Review of the NHS financial year 2006/07" reported that the trust was delivering the best financial management of any NHS Trust in the country
In 2006, the Public Accounts Committee released report into the PFI refinancing conducted by the private Octagon Healthcare consortium involved in building the Norfolk and Norwich University Hospital of "lining investors' pockets" and putting the trust at increased financial risk. The report noted that the consortium was receiving an over £80 million pound windfall from the deal, and the National Audit Office said that the windfall was the third it had uncovered after complaints from MPs and the public.
Read more about this topic: Norfolk And Norwich University Hospital
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