Council lends NHS trust £110m-plus to buy itself out of PFI deal

A county council has agreed to lend an NHS trust a reported £114m so that the health body can terminate a private finance initiative (PFI) contract.

Northumbria Healthcare NHS Foundation Trust said it had been given approval from the Government and independent regulator Monitor to terminate the PFI deal, which was entered into to enable the building of Hexham General Hospital ten years ago.

The loan was taken out by Northumberland County Council through the Public Works Loan Board.

The foundation trust, which believes that it will save around £3.5m a year through the new arrangements, suggested that the deal was the first of its kind in the country.

Jim Mackey, its chief executive, said: “We are delighted that we are able to progress this agreement which delivers real value for money for taxpayers and helps save millions of pounds which will be reinvested directly in patient care.

“Without PFI, we would never have been able to build the fantastic facility we have today at Hexham General Hospital which has served people in Northumberland so well over the last decade. However, given the financial challenges facing the NHS we must constantly look for new and innovative ways to deliver good value.”

Dave Ledger, deputy leader of Northumberland County Council, said: “This announcement is excellent news for local people and the local economy. The loan we have agreed with Northumbria Healthcare NHS Foundation Trust represents good value for the residents of Northumberland as it will reduce overall borrowing costs and release resources to support frontline health and social care services across the county.

“This is a result of the very strong and close working arrangements that have existed between Northumberland County Council and Northumbria Healthcare for a number of years, resulting in some of the best examples of integrated health and social care in England.”