In early 2012 the government agreed to a £1.5bn subsidy to seven NHS Trusts with PFI projects, which had major affordability challenges in meeting budgets (Public Finance, 2012). Twenty two NHS trusts were reported to be in financial difficulty because of PFI contract payments in early 2012 (BBC News, 2012).
PPP equity has been sold in five of the seven NHS Trusts in receipt of bail out funds - see Table 19. Profit data is available for only one transaction, but the evidence of average rate of return from the sale of equity in other PPP hospital projects (25.5%, Table 12), the private sector has extracted many millions in excess profits from these PPP projects, whilst NHS Trusts are in crisis seeking ways to meet their PPP financial commitments.
South London Healthcare NHS Trust has two large PPP projects, Queen Elizabeth Hospital, Woolwich and Princess Royal University Hospital, Bromley, and a smaller project at Queen Mary Sidcup. Equity in the Queen Elizabeth hospital has been sold four times in the last decade - see Table 20.
Annual contract payments for the two major PPP projects are about £70m and increase annually. The South London Healthcare NHS Trust is expecting the Department of Health bailout to be £21 m per annum "...based upon the difference between the costs incurred under PFI and those that would have been incurred with a Treasury funded scheme" (Audit Commission, 2012) - a 30% cost differential.
Table 19: Equity sales in NHS Trusts in financial crisis
Date of sale of equity | Owner of equity | Purchaser of equity | % share stake sold | Price paid £m | Profit £m (%) | Annual Rate of Return at time of equity sale (%) |
South London Healthcare NHS (Queen Elizabeth Hospital, Greenwich) | ||||||
April 2011 | John Laing plc | John Laing Infra Fund | 12.5 | n/a | n/a | n/a |
Nov 2010 | John Laing plc | John Laing Infra Fund | 15.0 | n/a | n/a | n/a |
2009 | John Laing plc | Innisfree Ltd | 22.5 | n/a | n/a | n/a |
March 2001 | Macquarie Group | John Laing | 50.0 | 12.8 | n/a | n/a |
Barking, Havering and Redbridge Hospitals NHS Trust (Queens Hospital, Romford) | ||||||
Nov 2009 | Lend Lease Corp | HICL Infrastructure Co | 50.0 | 23.9 | n/a | n/a |
Brentwood Community Hospital | ||||||
June 2011 | Kajima Partnerships | HICL Infrastructure Co | 75.0 | 4.6 | n/a | n/a |
Dartford and Gravesham NHS Trust (Darent Valley Hospital) | ||||||
Oct 2003 | Carillion | Barclays Infrastructure Fund | 50.0 | 5.2 | 1.1 | 4.3 - excludes £10.8m refinance profit |
North Cumbria University Hospital Trust (Cumberland Infirmary) | ||||||
July 2007 | Amec plc | Land Securities Trillium (now Semperian) | 50 | n/a | n/a | n/a |
St Helens and Knowsley (St Helens Hospital) | ||||||
March 2009 | Taylor Woodrow | Innisfree Ltd | 30.0 | n/a | n/a | n/a |
Source: European Services Strategy Unit PPP Equity Database 2012
Equity in PFI projects in the Maidstone and Tunbridge Wells NHS Trust and the Peterborough & Stamford Hospitals NHS Foundation Trust has not been sold to date.
PPP equity has been sold in nine other NHS trusts that were reported to be in financial difficulties:
• Wye Valley NHS Trust (Hereford Hospital)
• Worcestershire Acute Hospitals NHS Trust
• Oxford Radcliffe Hospitals NHS Trust
• Nuffield Orthopaedic Centre, Oxford University Hospitals NHS Trust (Global Solutions)
• Barts and the London University
• Portsmouth Hospitals NHS Trust
• Buckinghamshire Healthcare NHS Trust (Stoke Mandeville)
• West Middlesex University Hospital NHS Trust
• Mid Yorkshire Hospitals NHS Trust (Pinderfields)
This section has summarised the evidence of profiteering by SPC shareholders. Part 6 reveals the dominant role of offshore infrastructure funds in acquiring PPP assets.