Nearly £1.5bn still left to be paid on expensive PFI deal for Sutton's King's Mill Hospital

Nearly £1.5 billion still needs to be paid on an expensive financial deal signed to fund the reconstruction of Sutton’s King’s Mill Hospital.
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And the deal, which funded the rebuild of the major hospital site alongside improvements to other healthcare centres, continues to cost taxpayers £1 million every week.

PFIs – private finance initiatives – allow the private sector to fund, build and operate projects for public-facing organisations like the NHS.

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In return, the public body then agrees the private sector company provides long-term servicing and management of the facilities.

King's Mill Hospital in Sutton. (Photo by: Local Democracy Reporting Service)King's Mill Hospital in Sutton. (Photo by: Local Democracy Reporting Service)
King's Mill Hospital in Sutton. (Photo by: Local Democracy Reporting Service)

Sherwood Forest Hospitals NHS Trust, which runs King’s Mill, signed the 38-year deal in 2005 to fund the rebuild of King’s Mill and improvements to the trust’s Mansfield Community and Newark hospitals.

It came as part of a scheme backed by the then-Labour Government to support the public sector with major capital projects.

However, politicians in Nottinghamshire have long described the deal at King’s Mill as a “massive stitch-up” which will cost the taxpayer billions of pounds.

Swedish contractor

Counr Ben Bradley, Mansfield MP and Nottinghamshire Council leader. (Photo by: Local Democracy Reporting Service)Counr Ben Bradley, Mansfield MP and Nottinghamshire Council leader. (Photo by: Local Democracy Reporting Service)
Counr Ben Bradley, Mansfield MP and Nottinghamshire Council leader. (Photo by: Local Democracy Reporting Service)
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The rebuilt hospital opened in 2011 after being delivered by Sweden-based contractor Skanska at a cost of more than £300m.

However, it later emerged the cost of financing the agreement was far higher than the original estimates and it will cost £2.2bn between 2005 and 2043.

Trust papers reveal in the most recent financial year, which ended in March, £53.8m was spent specifically on funding the PFI contract – £1.035m per week.

This included £10.1m for debt repayment, with the remaining cash given to Skanka to maintain and secure the hospital sites.

Coun Paul Henshaw, Nottinghamshire Council Labour member for Mansfield West and Mansfield Council Labour member for Oak Tree. (Photo by: Local Democracy Reporting Service)Coun Paul Henshaw, Nottinghamshire Council Labour member for Mansfield West and Mansfield Council Labour member for Oak Tree. (Photo by: Local Democracy Reporting Service)
Coun Paul Henshaw, Nottinghamshire Council Labour member for Mansfield West and Mansfield Council Labour member for Oak Tree. (Photo by: Local Democracy Reporting Service)
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The trust has confirmed this figure is due to rise for 2023-24 to £57.583m, including £9.5m for debt repayment, while £1.494bn still needs to be paid in fees relating to the PFI between now and 2043.

The trust said the PFI deal was “vital” in providing the “much-needed redevelopment” of its hospitals and was “instrumental” in King’s Mill being graded ‘outstanding’ by the Care Quality Commission health watchdog, as well as ‘good’ ratings for the other two sites.

Sold down the river

However, politicians have continually raised concerns about the deal.

Coun Ben Bradley, Mansfield’s Conservative MP and Nottinghamshire Council leader, said the deal has “sold Mansfield down the river”.

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He said: “It’s a massive stitch-up and the Labour Government, bluntly, got us into a real mess where about 14 per cent of the trust’s budget is spent just on this.

“When you consider, in recent weeks, the problem with the ceiling and water coming into A&E, they’ve spent all the money putting the shiny frontage onto the building, but didn’t sort out some of the fundamental issues.

He said the trust is “lumbered” with “extortionate” maintenance cost arrangements as part of the contract.

“Unfortunately, it’s a legal agreement that was incredibly well-written and we’ve had all sorts of conversations with ministers about how to get out of it, to work a way to change it or make it better.”

Maintenance and security

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As part of the agreement, Skanska is paid to repair and maintain the hospitals and employed for all cleaning, maintenance, security and food provision.

When the deal ends in 2043, the entire estate will be handed back to the trust “in the same condition as the day they opened”.

The trust says its annual repayments allow residents to access “great patient care”, adding they avoid “any additional burden of incurring any further maintenance costs”.

However, Coun Jason Zadrozny, Ashfield Council leader, said: “The shocking state of the debt incurred by rebuilding King’s Mill Hospital remains a national scandal.

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“The debt repayments, well above £1m a week and rising, represent close to a fifth of its entire, annual expenditure.”

‘Only option’

But Coun Paul Henshaw, county council Labour member for Mansfield West, said the PFI deal was the “only option” for a new hospital in 2004.

He said: “The old building was in a state of disrepair and the people like me who remember using the old site are glad it was replaced.

“It is important to ask questions about the cost. But taxpayers will rightly be more concerned at the staggering £15bn spent by the Conservatives in the last two years for dodgy PPE during the pandemic which didn’t work.

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“This was a huge waste which would’ve paid for King’s Mill many times over.”

Patient benefits

Paul Robinson, trust chief executive, said the costs of the deal are offset by the benefits it has provided to patient care.

He said: “Individuals and organisations across the country are dealing with the challenge of rising costs right now – and your local hospitals are no different.

“At the time it was introduced, this agreement was vital in funding the much-needed redevelopment of our hospitals and it remains a key part of how we maintain our buildings and provide great patient care to our local communities each and every day.

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“This agreement was also instrumental in seeing our Newark and Mansfield Community Hospitals rated as ‘good’ by the Care Quality Commission, as well as King’s Mill Hospital being named the only ‘outstanding’ NHS-run hospital anywhere in the East and West Midlands.

“The nature of this agreement means that these high-quality facilities will be maintained in the same condition as they were on the day they opened, right up to when this agreement ends.

“That is great news for our local communities and avoids any additional burden of incurring any further annual maintenance costs.

“We closely manage this agreement to ensure that it continues to help make great patient care happen and to make sure that it offers the best possible value to our local communities.”

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As well as funding the rebuilding of King’s Mill, the PFI deal also supported the construction of Mansfield Community Hospital and “vital” redevelopments of Newark Hospital.

Best value for money

A trust spokesman added: “The trust works closely with all active parties in the PFI agreement to ensure that the contract control measures in place are delivered against.

“This is a vital part of ensuring the contract delivers the best possible value for money in the circumstances.

“At the end of the term of the agreement, each hospital will be transferred back into the complete ownership of the trust in the same condition as they were at the start of the contract.

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“The trust is confident there has been no detrimental impact on patient care as a result of this agreement being introduced and maintained.”

A Department for Health and Social Care spokesman said the DHSC will continue to honour existing PFI deals, but is “determined to tackle the worst excesses of previous PFI deals”.

He said: “We are working to maximise the value of these contracts and are supporting all affected NHS trusts to ensure they are implementing high-quality contract management to achieve better value for money.”

The Government also said it has found PFI contracts to be “inflexible and overly complex”, with these forms of deals to “not be used for any future Government project”.

A specific unit at DHSC has also assessed existing contracts to ensure they offer “better value for money and deliver efficiencies”.