A study claims the high interest rates being charged for private finance initiative projects are helping banks restore their profits.

Researchers at Edinburgh University claim the quality and financial performance of NHS services is being impaired because PFIs are forced to pay “unjustified” interest rates.

They say the government is allowing banks to restore profit levels at the expense of PFIs and that the opportunity presented by the taxpayer takeover of two major banks to negotiate better interest rates has been missed

The team analysed the 149 major PFI hospital projects that have been signed by the NHS so far.

They found that two banks in which the government is the major shareholder - Royal Bank of Scotland and Lloyds - have lent money to or invested in 54 separate PFI projects.

In total these projects have raised £12.27bn under PFI, but over the next 30 to 60 years the public sector will pay off a total of £41bn in capital costs alone.

Professor Allyson Pollock, of Edinburgh University’s Centre for International Public Health Policy, said: “Instead of using the opportunity of the taxpayer bail-out to reopen the contracts, the UK government is allowing the banks to restore their balance sheets.”