Health minister Alan Milburn has angrily defended hospital building projects funded by the private finance initiative and told critics that the scheme is not the driving force behind bed cuts.

'I have heard a lot of talk about the PFI and I think it's a load of baloney - I think that is the best word to say here,' Mr Milburn snapped in response to a question from one of PFI's most persistent critics at a conference last week.

Declan Gaffney, a researcher at University College Hospital medical school, had asked whether PFI plans should be referred to the national beds inquiry.

In his speech to the conference on the future of the district general hospital, Mr Milburn said the inquiry had been set up to give 'definitive guidance on new hospital provision'.

But he told Mr Gaffney: 'If you want to go and tell the people of Warrington or Darlington or Bishop Auckland that they will have to wait another two years for the hospital they have been waiting 20 years for, you can. I am not going to.

'I have never heard any local debate about the PFI. People are bothered about getting their local hospital built and they are not bothered if the money comes from PFI or a national capital scheme.'

Mr Gaffney, and Allyson Pollock of St George's Hospital medical school, have analysed seven PFI hospital schemes and say they have resulted in an average 28 per cent cut in beds. The researchers say that workforces are also being reduced and hospitals will be forced to raise output to unrealistic levels to maintain revenue.

But Mr Milburn said: 'It is nonsense to say that PFI is the driving force behind acute bed cuts. Acute beds have been cut for the last 20 to 30 years - the PFI has been around for two or three years.'

In his speech, he said district general hospitals had a secure future as long as they adapted and integrated services with primary care groups to 'reflect the needs of the local community'.

He also said hospital doctors should not feel 'marginalised' by the primary care-led NHS.

'PCGs are not about erecting new barriers. We expect to see them engaging in all sorts of dialogues with colleagues,' he said.

'We want to see hospital doctors getting involved in drawing up local health plans for local services,' he added.

Bed numbers have declined by about 100,000 in the past 10 years but evidence from many of the winter pressure initiatives showed that 'bed closures had gone too far', Mr Milburn argued.

See Letters, page 21.