Norman Lamb calls for PFI payback for Norfolk & Norwich

Norman Lamb, the Liberal Democrat MP for North Norfolk, has urged the Government to approach the Octagon Healthcare consortium to consider sharing some its PFI profits with the troubled Norfolk and Norwich Hospital (N&N).

Last year, Octagon reported record profits of £5 million (after tax and dividend payments to shareholders) while the N&N suffered a record deficit of £21 million.  This is despite the fact that the hospital continues to pay tens of millions of pounds to the consortium each year under the terms of its PFI contract, with repayments totalling £42.5 million in 2015/16.

Mr. Lamb raised concerns over the financial implications of the deal at Health Questions in the House of Commons this morning, highlighting a 2005 report by the National Audit Office which concluded that the PFI deal to build and maintain the hospital is costing a premium for the taxpayer and the NHS.

In the Commons, he challenged the Minister to make a formal approach to Octagon Healthcare “to consider foregoing part of its profit to help confront the enormous financial black hole that this trust faces”.  It comes a week after Mr. Lamb wrote to the General Manager of the consortium to make the case for a voluntary concession on the PFI repayments owed by the hospital, in light of the stark differences in the organisations’ financial fortunes.  

In response, Health Minister Philip Dunne pointed to the Government’s £1.5bn bailout fund to support hospital trusts struggling with debts caused by PFI contracts, but acknowledged that the Norfolk and Norwich is not among the seven trusts currently benefiting from the fund.  He offered a meeting to discuss the proposal further, which Mr. Lamb intends to take up.

Commenting afterwards, Norman Lamb said:

“It seems impossible to justify the excessive profits made by Octagon at a time when the Norfolk and Norfolk is falling deeper into the red. Health services in Norfolk are already buckling under the pressure of rising demand and a severe shortage of funding which the Government has so far failed to address.

“Patient care is being directly affected by this outrageous PFI deal, which should never have been given the green light in the first place, as millions of pounds that is desperately needed for bolstering frontline services is instead going into the pockets of shareholders.

“The Government’s PFI bailout scheme is recognition of the major flaws in these contracts, which represent dreadful value for money and are simply not sustainable for many hospitals already facing extreme financial pressure.

“I hope that the Government will take swift action to negotiate a sharing of Octagon’s profits or a voluntary concession on the payments owed to it, to ease the burden on the hospital and ultimately free up resources so that patients can receive the care and treatment they need.”

 

The full exchange in the House of Commons is as follows: 

Norman Lamb MP: The National Audit Office concluded that the PFI contract for the Norfolk and Norwich Hospital was a bad deal for the taxpayer and for the NHS, yet last year Octagon Healthcare made a record profit as the Norfolk and Norwich finances sunk ever further into the red. Would the Minister consider making a formal approach to Octagon Healthcare to consider foregoing part of its profit to help confront the enormous financial black hole that this trust faces?

Health Minister, Philip Dunne MP: We have provided access for seven of the worst affected trusts with obligations under PFI to some £1.5bn of a support fund to help them with these obligations. I’m not sure off the top of my head whether Norfolk is one of these – I suspect it is not. I’d be very happy to talk to him about this, but I think what I have to say to the Honourable Gentleman rather than raising his hopes inappropriately is that many of these schemes are too costly to divert resources to pay off in their absolute. 

 

Sources:

Eastern Daily Press - Revealed: How shareholders of PFI firm are making millions from cash-strapped Norfolk and Norwich University Hospital (26th September 2016) 

BBC News - High price for PFI deal concerns (10th June 2005)

National Audit Office - The Refinancing of the Norfolk and Norwich PFI Hospital: How the deal can be viewed in the light of the refinancing (June 2005)

 

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