Carlisle Hospitals trust has reacted strongly to a report by opponents of the private finance initiative that claims its well-advanced project has 'worsened the trust's financial situation'.

Trust chief executive Brian Waite said it was ready to provide a 'comprehensive response' to the 'frankly flawed' Unison report by David Price, Declan Gaffney and Allyson Pollock of University College London .

Trust managers admitted last month that they had identified only£2m of the£3.2m savings needed to finance the new hospital's running costs, with a large part of the shortfall resulting from unexpectedly high business rates for the£67m development.

It also needed£7m to cover double-running costs, tower block demolition at Cumberland Infirmary and variations to the PFI scheme.

Mr Waite said last week that talks with North Cumbria health authority and Northern and Yorkshire regional office had now resolved all these issues.

Of the Unison report, he said: 'This is trying to make this all PFI, whereas most of these things happen under any scheme.

'We are not saying everything is hunky-dory, but we will open ahead of time and on budget - and that can't be bad.'

The hospital is due to open on 1 April, more than a month ahead of schedule, with some facilities released to the trust in February.

The trust has previously argued that the PFI hospital is£5.9m cheaper than its public sector equivalent, an idea derided in the Unison report.

It says the trust's figures are out by£11m because£7.5m of clinical and litigation risk supposedly transferred to the private sector have not been transferred, and the risk of building over-run has been exaggerated by£3.5m.

It also rehearses a long-running argument about the 'political assumptions' trusts are told to make about interest rates when making comparisons between private and publicly funded developments.

The report says that if rates were adjusted by as little as 0.5 per cent, a publicly funded scheme would have appeared better value for money in Carlisle.

Mr Waite said that while 'playing around' with the risk assessment figures could produce different results, he remained confident that the PFI option 'stacks up'.

The report claims the trust will be paying£3.5m a year more than it is paying for its current facilities, partly because the higher cost of borrowing for the private sector will be passed on in higher capital charges.

It says the hospital will open with 25 per cent fewer beds than the trust operated in 1996 and with at least 87 fewer trained staff.

The trust says:

its workforce plan is still being finalised;

bed numbers have been reduced from 520 in 1996 to 444 in the new hospital, but this is 'a composite of changes in service delivery and the need for all trusts to make efficiency savings year on year';

direct patient care services will be reduced, but this is an effect of site rationalisation not the funding mechanism for it.

The Unison report concludes that 'more people will have to go private' or be 'denied care', a claim described as 'quite frankly a ludicrous statement' by Mr Waite.

The Only Game in Town? : a report on the Cumberland Infirmary, Carlisle, PFI .

Unison northern region. www.unison.org.uk