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PFI hospital funding is at risk

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A leaked memo has revealed that the recession is putting plans for NHS projects under the Private Finance Initiative at risk

The Department of Health ‘has no plan B’ according to the memo written by a senior NHS manager Graham Eccles, summarising a meeting on 13 January with health secretary Alan Johnson. Bank finance for PFI schemes is likely to dry up, Eccles warns.

Eccles is chief executive of the South East Coast Strategic Health Authority and said he had been told to expect a ‘capital desert’ in 2010/11, when Johnson predicted NHS funding ‘is going to get really tight’.

The leak comes as doubts continue to emerge about the future of a raft of other public projects, particularly schools . In recent weeks the AJ has reported on the investment shortage facing the BSF (Building Schools for the Future) programme and the delays caused by financing facing the LSC (Learning and Skills Council) building programme.

HLM healthcare director Leslie Welch said 'this news is not a major surprise to us. The UK is undergoing a learning curve of procurement – a pattern is emerging of producing large schemes in smaller packages in Scotland, Wales and Northern Ireland, which could be a model for the future.'

Andrew Lansley, shadow health secretary, has said that the memo showed Gordon Brown’s promise ‘to spend his way out of the recession’ by bringing forward capital spending programmes was ‘hollow’. The conservative party suggested that projects at Liverpool, Hertfordshire Southampton and Bristol could be among those at risk from funding shortage.

But the Department of Health have countered saying that the Treasury has agreed to provide ‘resource cover’ for schemes under construction and that only one new NHS project was scheduled to be in the market to raise private funds over the next 18 months.

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