Following a review of 22 NHS Trusts with large PPP schemes in financial difficulty in 2011/12, the UK Department of Health was forced to provide a £1.5bn bailout fund to seven NHS Trusts with significant PFI projects because "…the trusts' plans are not viable without some level of central support" (ibid). The funding is spread over the remaining life of the PPP contract, equivalent to £60m per annum over 25 years for the seven NHS trusts (see Table 8).
The then Coalition government admitted: "In the past, local Trusts have received extra funding on the quiet in order to avoid embarrassment. We have already signalled that we are determined to end these backroom deals by bringing greater transparency and openness to the process" (Department of Health, 2012).
"Any Trusts that can satisfy the rigorous tests will have access to financial support of up to £1.5 billion in total over a period of 25 years. Some of this funding will be available from 2012/13 from within the Department of Health's budget" (Department of Health, 2012).
Fifty-seven NHS trusts had between 5% and 26.9% deficits (as a percentage of total income) in 2015/16. NHS trusts received £2.4bn additional finance from the Department of Health and NHS England in 2015-16, a 32% increase on the previous year. The Department of Health provided trusts 'in difficulty' with £1,996m revenue-based support for day-to-day operating expenses, plus £255m capital support for essential building works. NHS England provided £154m to trusts 'in difficulty' "…and is provided to support trusts that have undergone mergers and to trusts with private finance initiative (PFI) schemes" (NAO 2016a).
Table 8: NHS PFI hospitals included in Government £1.5bn bailout
| NHS Hospitals | Total cost of contract (£m) | Length of contract (years) | Operational start date |
| Cumberland Hospital, North Cumbria University NHS Trust | 619.2 | 30 | 2000/01 |
| Whiston Hospital, St Helens & Knowsley Teaching Hospitals NHS Trust | 2,596.0 | 42 | 2006/07 |
| Peterborough and Stamford Hospitals NHS Foundation Trust | 2,004.0 | 32 | 2011/12 |
| Romford Hospital, Barking, Havering and Redbridge University Hospitals NHS Trust | 2,086.0 | 34 | 2006/07 |
| Darent Valley Hospital, Dartford and Gravesham NHS Trust | 911.0 | 33 | 2000/01 |
| Tunbridge Wells Hospital, Maidstone and Tunbridge Wells NHS Trust | 961.4 | 32 | 2010/11 |
| Queen Elizabeth Hospital, Lewisham and Greenwich NHS Trust | 886.0 | 31 | 2000/01 |
Source: Department of Health, 2012.
The Department of Health's affordability criteria for substantial PPP projects were determined by whether the annual payments to the contractor exceeded 15% of Trust turnover. In the case of Peterborough and Stamford trust, it was originally 15% (since reduced to 12.5%), but rose to 20% following failure of a land deal with a developer, failure to achieve cost reductions included in the business case, control cost increases and unrealistic projections of future trust income. Some equipment replacement costs were excluded from the business case, because their inclusion would have breached the 15% threshold (NAO, 2012b).
Financial support specifically provided to NHS trusts for PFI projects was £61.0m in 2011-12, although the number of trusts involved is not available (Department of Health, 2012). Fourteen trusts received £132.4m in 2012-13 (National Audit Office, 2014), which is clearly twice the number of trusts originally envisaged. Eight trusts received £81.0m in 2014-15. No similar information could be found for the financial years 2013-14 and 2015-16, assuming the other years were an average of the three years where data is available, then the five year total would be £457.4m. On this basis, the £1.5bn allocation will be spent by 2027, well before many NHS PFI projects conclude. However, the seven PFI projects in Table 6 will still be paying PFI unitary payments over the next decade. They will collectively have a further 78 years of PFI unitary payments after 2027.
Furthermore, in 2015-16 the overall deficit of NHS trusts and NHS foundation trusts of £2,447m was 2.8 times the size of the deficit of £859m in 2014-15 (National Audit Office, 2016). Deficits are driving NHS trust mergers. PFI unitary charges for each project are set to increase annually. NHS trusts can also be placed in 'special measures' when there are concerns over the quality of care - 14 trusts in this category in January 2017 http://www.nhs.uk/NHSEngland/specialmeasures/Pages/about-special-measures.aspx -with 'financial special measures' introduced in July 2016 (with eight trusts by October 2016).