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Builder reaped rewards of early PFI hospital

A refinancing deal for the Norfolk & Norwich PFI Hospital generated large amounts of money for consortia Octagon which built and runs it, a report from spending watchdog the National Audit Office has revealed.
The deal was arranged two years after it opened in 2003 and the NHS Trust continues to pay a premium in financing costs compared to other PFI deals.

THE NAO has recommended the Department of Health should carry out more analysis into pricing elements of PFI deals and it could have got a better deal if there had been more competition in the market.

The trust pays Octagon £37.8 million a year - and shareholders Octagon get a return of 60 per cent compared to 16 before the refinancing - which Octagon is under no obligation to share.

Under PFI schemes hospitals are built using a mixture of private and public cash and such scheme have been the focus of controversy since they were developed.

A Department of Health spokesman said: 'We are pleased that the

NAO has again found that PFI projects deliver value for money for the NHS.

'The Norfolk and Norwich University Hospital PFI scheme is a successful project and has demonstrated value for money. The hospital opened to patients ahead of schedule and on budget.

'The refinancing has delivered real gains for the NHS. The Trust

is now paying £1.7 million less in annual fees, amounting to a total of £34 million in today's money.

'Any premium for this project is balanced by the fact that the hospital was built for a much lower price than could be achieved

today.''

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