TAXPAYERS will be left with a bill running into the tens of millions of pounds when a PFI (private finance initiative) contract behind a major Scottish hospital expires next year.
The BBC reported that although the final total is unknown, the Royal Infirmary of Edinburgh (RIE) requires more than £100 million in upgrades to bring it up to standard.
The RIE was built following a PFI contract agreed by the UK government in the 1990s, before devolution. Under its terms, the hospital would be constructed and run by the PFI consortium Consort, which would then be paid an annual fee for rent and upkeep.
The RIE was completed in 2002 at a reported cost of £184m. The NHS is due to take ownership of the site at the end of 2027, by which time Consort will have been paid more than £1 billion in public money, the BBC reported.
However, the firm is alleged to have either put off maintenance work or left it undone, meaning that the public will be left to pick up the tab once the Consort contract ends.
Anne Stafford, a professor of accounting and finance at the University of Manchester, told the BBC: “The RIE documentation suggests that significant infrastructure risks, asset obsolescence and maintenance liabilities had accumulated to the point where major replacement programmes for critical systems – such as ventilation systems and fire safety measures – were only being addressed in the final years before hand back.
"The implication is that a substantial proportion of the costs associated with restoring the estate to an acceptable standard may ultimately fall on the public sector after contract expiry.”
The BBC reported that Consort had agreed to pay £86.3m following a four-year dispute with NHS Lothian.
However, NHS Lothian’s finance committee were told in June that the sum “is anticipated to fall well short of the required fire safety works and outstanding life cycle works funding required to be invested in the RIE over the coming years".
The hospital is reported to need new lighting, electrical systems, ventilation, on top of an estimated £90m in upgrades to comply with fire safety rules.
Craig Marriott, NHS Lothian’s director of finance, said: "Following extensive negotiations and advice from legal, technical and financial experts a handback agreement was recommended as the best value option. Alternative approaches carried risks, including potential disruption to patient care.
"While the agreed funding may not cover every identified issue, it represents a significant investment in the facility that may not have otherwise been secured."
