COMMERCIAL: The Treasury’s approval process for the private finance 2 programme has been criticised by a hospital chief executive whose trust was forced to halt plans to build a new hospital.
North Tees and Hartlepool Foundation Trust last month announced its plans to shift services into a new hospital were “paused” until after the general election after failing to secure approval for its PF2 bid.
The trust had sought £100m public funding towards the cost of the hospital in addition to the £200m it hoped to secure from private sector lenders.
Its decision to pause its application comes after the Royal National Orthopaedic Hospital Trust withdrew its bid for a place on the PF2 programme.
A spokesman for RNOH told HSJ it was seeking to fund the £90m project through public capital or loan funding instead of PF2. “Our original tender did not lock us into one particular financing source for this new building so we are carrying on,” he added.
North Tees and Hartlepool FT chief executive Alan Foster said it had been unable to secure approval from the government, leaving it frustrated and confused by the process.
“If PF2 is the way that we’re going to finance new hospital buildings, then we’ve got to find a way to make the policy work, and make the process work for foundation trusts,” he told HSJ.
“We are a flagship foundation trust. We should be able to progress the scheme, but at the moment we just are not able to get a decision,” Mr Foster added.
“We’re not able to understand the criteria. We’re not able to convince the regulator. They haven’t even got the bottle to say we don’t support the scheme. We just keep getting kicked around in a process that doesn’t seem to have any end to it.”
Mr Foster’s criticisms of the approvals process comes after the trust’s nine year drive to build a new hospital.
Its plan for a new hospital was originally approved in 2006 by the government’s independent reconfiguration review panel. While an outline business case for public funding was approved in February 2010, this was overturned after the general election.
The trust then applied for a place on the private finance initiative programme before it became “embroiled in reviews”, according to Mr Foster.
An attempt to convince two pension funds to invest in the new hospital in 2012 also failed after they became concerned about the level of risk involved.
“We’ve gone through a whole parliament and we’ve gone backwards,” Mr Foster said.
“All we’re trying to get is an outline business case approved. We’ve still got to do the final design and full business case.
“It just seems bonkers that we’re in this position and we just can’t move it forward.”
A spokewoman for the Department of Health said it would continue to work with the trust once it resumed its work on the new hospital proposals.
Information provided to HSJ