Millions of pounds worth of taxpayers cash will be needed to refit the Royal Infirmary of Edinburgh when the facility is transferred into public ownership next year.
In 2002, Consort Healthcare received £1bn to build and maintain the hospital over 25 years before handing it back to the NHS under New Labour’s Private Finance Initiative (PFI).
After a four-year dispute with NHS Lothian around maintenance standards Consort agreed to hand over £86m for repairs.
An NHS Lothian assessment has now asserted that this sum will fall far short of what is required to bring the bring the Royal Infirmary back up to scratch, meaning that the taxpayer funds will be required to complete repairs.
A number of safety enforcement notices from Scotland’s fire service have been issued for the hospital, and work to comply with the necessary upgrades is expected to run to at least £90m alone, according to health board documents obtained by the BBC.
Other required improvements include new lighting, ventilation and electrical systems, replacement of the facility’s analogue cameras, new lifts, and works to address the “obsolescence” of electrical systems, and new ventilation canopies.
Some of the works are already under way while others will stretch beyond the date of the official handover to NHS Lothian in 2027, the BBC said.
Experts have questioned the value to the public purse from the handover deal with Consort, which they describe as “too little, too late”.
However, NHS Lothian has said it is the “best value option” and represents a significant investment that may not have been secured otherwise.
The deal agreed between NHS Lothian and Consort means the private finance consortium will keep receiving monthly PFI payments until December, 2027 but it is not allowed to pay any dividends to its shareholders or get into further debt.
£23.4m of the £86.3m “Available Sum” agreed upon in the deal has already been spent on improvements.
According to the BBC, a report to NHS Lothian’s finance committee in June stated: “This 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”.
It added that “considering all expenditure to date, and items currently identified to be addressed, a deficit of £9.7m is predicted”.
The deficit does not include the cost of further fire preventative measures or unanticipated future works due to system failures.
Anne Stafford, professor of accounting and finance, at the University of Manchester, the the BBC the deal “represents a case of too little, too late”.
She continued: “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.
“Rather than receiving an asset that has been systematically renewed throughout the concession period, the public sector faces the prospect of inheriting significant residual investment needs, creating additional pressure on public finances and potentially delaying wider service improvements.”
Craig Marriott, NHS Lothian Director of Finance, told the broadcaster a detailed assessment of the building’s condition was carried out in 2022 to ensure contractual obligations would be met ahead of next year’s handover.
“This identified shortfalls in fire measures which were reported to the Scottish Fire and Rescue Service, Consort and other stakeholders,” he added.
“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.”
The PFI deal, signed by Tony Blair’s Labour UK government, is expected to have cost the taxpayer more than £1bn by the time it expires in December next year.
