Millions of pounds of public capital poured into the NHS as a result of last week's comprehensive spending review announcement will 'transform' the scope of private finance initiative projects, MPs have been told.

NHS finance director Colin Reeves told the Commons health select committee that there would be 'more focus on the use of exchequer capital to reduce the backlog of maintenance'. He estimated the backlog at pounds2.7bn.

He said PFI deals should include scope for fixed price contracts and hybrid deals. 'The PFI consortium would do the design, building and finance and the operation would then lie solely with the NHS,' said Mr Reeves. He said PFI had become more focused on strategic requirements.

He added that money from the review would easily finance proposals in The New NHS white paper, and predicted that the costs of an ageing population and NHS information technology needs might not be as great as had been anticipated.

Asked by Conservative MP Robert Walker whether the most efficient trusts would still be required to make efficiency savings, Mr Reeves replied: 'They will be asked to increase efficiency by less than the least efficient ones.'

He had been gladdened by the fact that 83 per cent of trusts were paying their bills on time, 'which is much better than the last two or three years', and said that over the period 1993 to 1998, health service and general inflation had been in step.