Monitor has been accused of “effectively cancelling” the remaining NHS private finance initiative schemes.

Managers have said the tight limits the foundation trust regulator sets on the amount of debt a foundation trust can carry mean they cannot take forward plans.

The limits are set out in Monitor’s prudential borrowing code, which was updated in April.

Under the new code, trusts planning a PFI scheme and wanting to be granted foundation status must be able to show their annual debt payments are less than 10 per cent of their revenue.

“I’m not even sure the Department of Health knows what’s going on here”

The 10 per cent figure replaces the 12.5 per cent test set by Richard Glenn’s 2007 review of the affordability of NHS PFI schemes for the Treasury.

That figure related to the maximum size total PFI payments should be in relation to a trust’s turnover to obtain Treasury approval.

Total PFI payments include facilities management costs as well as debt servicing and so the two figures are not directly comparable.

However a number of trusts already have total payments in excess of 15 per cent of their turnover.

No chance of FT status

The chief executive of one NHS trust with a large PFI scheme told HSJ there was “absolutely no way” the trust could take forward its plans for a new hospital and still achieve foundation status.

The chief executive asked not to be named as the trust does not want to anger Monitor in advance of its application for foundation status, but said: “What they have effectively done is cancel the rest of the PFI pipeline.”

They added: “I’m not even sure the Department of Health knows what’s going on here.”

Trusts that are already foundations or that already have PFI schemes under way will permitted to exist outside the rules.

“That tells you all you need to know about it,” the chief executive said. “They have produced a code they know can’t be complied with, which is why they have had to exempt those already existing.”

A Monitor spokeswoman said the regulator’s focus was on the affordability of PFI schemes and always had been. But she added: “Given the economic climate, the challenge for hospitals that are promoting PFI schemes to demonstrate affordability, supportive commissioners, well structured projects and manageable risks will now be tougher than ever.”

More on PFI

Treasury U-turn on PFI takes pressure off DH capital budget

Noel Plumridge on problems with PFI accounting rules