42. The data presented here shows that the profits generated by PFI companies are in many instances over and above those that could be made in other parts of economy. This suggests that they are being generated as a result of the highly favourable contracts which the PFI companies have struck with NHS trusts.
43. There is a legitimate debate about how much, if any, profit should be generated through contracts to deliver publicly funded healthcare. The current Chief Executive of the NHS finance regulator NHS Improvement has described the profitability of some NHS PFI hospital deals as 'absolutely ridiculous'.11 But what is unarguable is that the current state of NHS finances requires consideration of whether PFI companies should continue to make such large profits from NHS hospitals and other facilities.
44. Some of the options available to government have been considered before. For example the former Conservative Minister for the Cabinet Office, Francis Maude MP, considered the introduction of a one-off tax on PFI to recoup what he described as the 'ghastly' profits which had been made, but he never followed through on the initiative.12
45. In one PFI scheme, Northumbria Healthcare NHS Foundation Trust, the NHS succeeded in buying out a PFI contract after it was lent £114m by the local council, saving it an estimated £3.5m a year on the PFI contract for the Hexham General Hospital.13
46. In the light of the evidence presented in this report we recommend that the government re-visit the following options as a matter of urgency.
• Use public sector loans to buy out PFI contracts ( so far eleven PFI contracts have been bought out since the 1990s, including two NHS hospitals);14
• tax PFI companies to recoup some of the excess profits which have been made;
• cap the amount of profit which can be made by any private company which has an exclusive public sector contract with the NHS;
• share with the NHS trust concerned the profits made from sales of equity stakes in PFI contracts;
• mandate greater transparency of equity sales to prevent the unnoticed consolidation of market power by a few investors; and
• re-negotiate the existing contracts to reduce the amount that the NHS pays.
47. As we have noted in a previous report the government should reconsider its use of the private finance initiative and consider using public borrowing to fund new capital investment in hospitals.2 This is likely to be much cheaper and will mean that less money for patient care will be wasted in payments to shareholders, which is particularly important when the NHS is in the most austere decade in its history.
48. Finally, it should be noted that PFI is not a party-political issue. All three major parties have extended the use of PFI in the NHS whilst in government. The challenge now is to move on from political point-scoring in this policy area and to find a sustainable way of funding the building and maintenance of NHS hospitals and other healthcare facilities.