MINISTERS have been urged to exploit historically low interest rates and buy hospitals out of “eyewatering” PFI deals as figures reveal the contracts cost health boards in Scotland a record £260 million last year. 

Critics said the arrangements were draining a cash-strapped NHS and handing banks control over decisions affecting patient care. 

Some of Scotland’s busiest hospitals are subject to PFI (private finance initiative) contracts costing health boards tens of millions annually, including Wishaw General and Hairmyres Hospital in Lanarkshire, Forth Valley Royal Hospital, Edinburgh Royal Infirmary, and the new Stobhill and Victoria outpatient hospitals in Glasgow. Only staff and medicines cost health boards more each year.

Tam Waterson, chairman of the health committee for Unison in Scotland, said the trade union had urged the Scottish Government to save taxpayers’ money by buying health boards out of PFI deals, including NHS Lothian’s controversial contract with Consort over Edinburgh Royal Infirmary. 

Mr Waterson said: “Part of the evidence submitted to the Scottish Government by Unison is that it’s far cheaper now to get a loan, so why not go to a bank, get a loan, and pay off the contractor. You’ll still have to pay interest, but at a much lesser rate. 

“I’ve got no idea why they don’t do it and, to be fair, it’s not just this Government – the previous Labour government were the same: unwilling to have a real look at removing the private contractors behind PFI, or holding public inquiries.

The Royal Infirmary [PFI contract] is an even bigger financial scandal than the Edinburgh trams or the Holyrood Parliament.”

It previously emerged that despite paying £1.6 billion over the lifetime of the contract, the terms mean NHS Lothian will not actually own the ERI at the end of it.

Instead, it will be up to health chiefs to buy the hospital – built for just £184m – from Consort, extend the lease, or give up the premises. 

Mr Waterson said PFI deals also put banks in charge of hospitals. The ERI contract, for example, is ultimately backed by 11 different banks. 

It comes as figures obtained by The Herald show that PFI repayments – which combine debt and a service charge to run and maintain the premises – cost NHS Scotland £260m in 2016/17, compared to £102m a decade ago.

NHS Lanarkshire spent nearly £59m, followed by NHS Lothian on £56m and NHS Forth Valley on £46.8m. The bill for NHS Greater Glasgow and Clyde was £34.5m. Many contracts still have 15-25 years left, at interest rates of 10-15 per cent or higher. 

Professor Allyson Pollock, one of the UK’s leading experts on PFI who founded and directed Edinburgh University’s Centre for International Public Health Policy, said: “I don’t think we should just say we’re going to buy them out, because buying out is very expensive and that will cost us many millions of pounds.”

The use of PFI became widespread under New Labour to deliver  schools, hospitals and other public sector projects. However, new PFI schemes have been banned in Scotland since the SNP came to power in 2007. 

A Scottish Government spokesman said: “Our focus on old PFI/PPP contracts is to ensure best value for money for the taxpayer, which is why we have asked the Scottish Futures Trust to consider buying out old contracts, where doing so is affordable.”

ANALYSIS - Controversial £5.6bn finance initiatives set to cost the public £30bn by Jody Harrison

IT IS estimated Private Finance Initiative (PFI) use will cost Scotland £30 billion over the coming decades.

The scheme was introduced by John Major’s Conservative Government, but massively expanded by New Labour in the decade from 1997. It was particularly championed by Gordon Brown when he was Chancellor and embraced by former first minister Jack McConnell in Scotland.

The idea was that private companies and consortiums would be paid by the public sector to build and manage new facilities ranging from hospitals and schools to water treatment works. Over time, annual unitary charges would be paid by local authorities, covering the cost of everything from maintenance of buildings to catering and interest payments.

However, this has proven controversial as the estimated final bill is more than five times the £5.6bn initial costs associated with constructing and opening the buildings.

According to the Treasury, there are 80 projects completed in Scotland between 1993 and 2006 that still have contracts being paid for by the taxpayer.

There has also been further controversy when it emerged that some contracts will end without public bodies owning the buildings constructed as part of the deal. 

For example, NHS Lothian will have to pay a total of £1.26bn for the privately-built Edinburgh Royal Infirmary after signing a deal with provider Consort.

Under the deal, the health board is tied to a £50 million-a-year contract with Consort to run and maintain the hospital. The deal expires in 2028. 

At that stage, health chiefs will have to negotiate a new price to buy the hospital, extend the lease by another 25 years, or walk away, leaving the hospital and its contents to the firm. 

The operator has been criticised in the past when a power failure at the hospital occurred while a patient undergoing surgery. 

The blackout was later revealed to have been caused by Consort workers cutting the hospital’s power supply ahead of scheduled maintenance.

NHS boards face paying back £10bn to firms for new hospitals that cost just £2bn to build under controversial private finance deals.