This is the question which chapter 11 tries to answer. The answer is that it is worth buying out the contract, in spite of £300 mn having to be paid to buy out the contract and in spite of a little under £200 mn (at 2007 prices) having already been paid in rent to Octagon Healthcare. Nevertheless, over the next 28 years to 2037 (the first break point in the end of the contract), the NNUH is due to pay a further £800mn in rent (again at 2007 prices). Even when discounted at the Treasury's 3.5% per annum discount rate, this is equal to more than £500 mn thereby more than adequately covering the £300 mn which is the value of Octagon's liabilities and which, under the terms of the contract, have to be bought out.
Therefore in spite of having already spent £197mn in rent for the hospital and in spite of having to buy out £300 mn of Octagon Healthcare's liabilities, the taxpayer would still save £217 mn by buying out the NNUH's PFI contract. This is for a hospital the basic construction cost of which in the late-1990s was £158 mn. All of which goes to show what an appalling waste of public money the PFO contract has been.
Chapter 11 finishes by pointing out that buying out other PFI hospital contracts is likely to generate large savings for the government. Of course it is hardly likely that this will happen under Gordon Brown. Such a u-turn is unlikely. And it is even less likely under a government headed by David Cameron. But at the very least future PFI programmes should be cut back so as to avoid even higher costs in the future.