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Islington Tribune - by TOM FOOT
Published: 30 January 2009

Whittington Hospital

Blow to hospital go-it-alone hopes

Debts racked up for new buildings force shelving of bid to become foundation trust

A MASSIVE debt incurred for building work has forced Whittington Hospital to suspend a long-held ambition of becoming an independent trust.
Changes which come into effect in April mean Whittington’s accounts will for the first time have to show tens of millions of pounds owed for building work carried out through Private Finance Initiative (PFI) schemes.
The changes are necessary because the Treasury has been forced to adopt International Financial Reporting Standards (IFRS), bringing UK accountancy rules in line with worldwide standards. The aim is to give British companies better access to foreign markets.
It means the hospital has had to spike a planned application for foundation trust status, which allows hospitals to be run independently of central government control. The bid was expected to be made in February.
The impact of IFRS and the bringing of the PFI schemes onto the balance sheet have been considered by the hospital board. “The trust is not in a position to re-initiate its foundation trust application until these issues have been fully worked through,” Fiona Elliot, Whittington director of planning, has said.
PFI deals typically run for 25 years, with private financing – normally from the big banks – paying for the initial building programme. The system, favoured by the government, has fueled a rapid building programme in the health sector.
Large sections of the Archway hospital have been rebuilt under the controversial and costly scheme. In 2002, Jarvis plc, the facilities management and infrastructure services group, agreed a £30m, 30-year PFI deal for the design, construction and maintenance of new buildings at the hospital.
The project was delayed by two years after Jarvis collapsed. Another £50m PFI scheme to build a new women’s and children’s wing was agreed in 2007.
To achieve foundation trust status the board must prove it is financially solvent. The new independent hospitals have been criticised as a step towards the dismantling of the NHS.
In 2007 the hospital’s Left-wing chairman Narendra Makanji was replaced by financial expert Joe Liddane after resisting the move to become a foundation trust.
The main advantage for hospitals in becoming foundation trusts is the freedom to borrow money for building and other projects, and to keep surplus income to reinvest in services.
The £450m University College London Hospital in Bloomsbury, which was built under PFI, used £175m proceeds from the sale of its old Middlesex building to fund services. Its chief executive recently said the hospital would be “in a position of vulnerability” when IFRS comes into effect in April.
And one Whittington hospital insider said: “There is a sense at the hospital that PFI is just not worth the candle.”

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