Companies that have built NHS hospitals under the private finance initiative have made pre-tax profits of £831m over the past six years and are poised to make almost £1bn more over the next five years.

Large sums that could have been used for patient care have instead gone into the pockets of a handful of PFI companies at a time when the health service is starved of funding, according to the Centre for Health and the Public Interest.

Its analysis, published on Wednesday, found that if the NHS had not been paying pre-tax profits on PFI schemes between 2010 and 2015 inclusive, the deficits in its hospitals would have been reduced by a quarter.



Expected payments to PFI companies in the form of pre-tax profits over the next five years constitute 22% of the extra cash the government has promised the NHS between 2016-17 and 2020-21, it says.

The centre’s co-chair, Colin Leys, said: “This money was designated by parliament to pay for patient care, not to pay dividends to a small number of investors. Given the extreme austerity in the NHS where patients are being denied treatment and waiting times for operations are rising, the government needs to take action to stop this leakage of taxpayer funds out of the NHS.”

PFI contracts have proved controversial because they are much more expensive than the traditional method of public borrowing. A private company called a special purpose vehicle is set up and borrows money from the private sector to build a facility, such as a hospital, which it leases back to the public body in exchange for annual payments, known as unitary charges.



In the case of the current 125 health PFI projects, the average payment term is 31 years. The CHPI says the capital value of the assets that have been built under the contracts is £12.4bn but the NHS will pay about £80bn for their use.



It found that about 8% of the cash the NHS has paid to PFI companies over the past six years has left the health service in the form of pre-tax profit, but in 13 contracts the figure was more than 20%. For example, the PFI company for University College Hospital London made 31% (£139.7m) in pre-tax profit on the money paid to it by the trust between 2010 and 2015.

The returns are high even though the risks are low once construction is completed, as the government guarantees the payments, save in exceptional circumstances.

The figures were derived from a study of the Treasury database and the accounts of PFI companies held by Companies House. They do not include information on the borrowing costs the NHS has to pay to the companies on top of these profits so, according to Leys, they form “only part of the full picture”.

The CHPI found that just eight companies, which each employ a handful of people, have equity stakes in 92% of the NHS PFI schemes.

It calculates that if the PFI companies continue to accrue the same percentage profit – 9.4% – as in 2015, they will earn about £973m in real terms pre-tax profit over the next five years.

Its report, PFI Profiting from Infirmaries, includes recommendations to renegotiate contracts or use public sector loans to buy them out, tax PFI companies to recoup some of the excess profits and cap the amount they can make.

The Labour MP Stella Creasy, who has been campaigning for an urgent competition enquiry into the market for public borrowing, said: “PFI companies are squeezing our public services at a great cost to the taxpayer and a great profit to their shareholders. Governments may keep using these loans but with Britain struggling with so much public debt we can’t afford to keep paying for this mistake.”

A Department of Health spokesperson said: “The NHS is recognised by the independent Commonwealth Fund as the most efficient healthcare system in the world and currently spends less than 3% of its annual budget on PFI.

“The first PFI contracts for NHS hospitals, which were signed in 1997, range between 25-30 years – this report analyses just six years of contracts and as a result does not represent the full picture.”