NHS hospital trusts are being crippled by the private finance initiative and will have to make another £55bn in payments by the time the last contract ends in 2050, a report reveals.

An initial £13bn of private sector-funded investment in new hospitals will end up costing the NHS in England a staggering £80bn by the time all contracts come to an end, the IPPR thinktank has found.

Some trusts are having to spend as much as one-sixth of their entire budget on repaying debts due as a result of the PFI scheme. PFI was introduced by John Major’s Conservative government but its use proliferated in the Blair era .

The findings raised concerns that the diversion of such large sums at a time when many trusts are in the red and coping with the fast-rising demand for care. There are fears it could damage the quality of care and risk patient safety because trusts do not have funds to hire enough staff.

“Toxic PFI contracts are still driving billions away from patients and into private bank accounts,” said Chris Thomas, an IPPR health fellow, who carried out the research.

The PFI contract for Barts Health trust in London, involving an outlay of almost £1.2bn, is the largest by value in the English NHS. It paid for the building of the Royal London hospital, which opened in 2012 and has 845 beds spread across 110 wards.

However, the entire project will have cost the trust £6.2bn by the time it ends, according to Treasury estimates. Barts spends £116m a year servicing its debt, which is 7.66% of its income, according to the IPPR report.

The 109 contracts still active will cost the trusts involved a combined £2.15bn to service in 2020-21, rising to £2.5bn in 2030, it said.

Sherwood Forest trust in Nottinghamshire has a £326m PFI deal that costs it £50.3m a year in repayments and eats up the largest proportion of its budget of any trust – 16.51%.

University Hospitals Coventry trust spends £89.3m a year on its PFI debt while Manchester University trust’s contract costs it £77.2m.

“This timely and shocking IPPR report highlights the huge waste of taxpayers’ money from paying off PFI debts that are crippling the NHS and could be much better spent on patient care,” said Dr John Puntis, a retired paediatrician who is co-chair of the campaign group Keep Our NHS Public.

“All trust debts should be wiped clean by the Treasury, and contracts renegotiated and brought back into public ownership on grounds of poor value. The premise of PFI that the private sector is more efficient in delivering and managing infrastructure projects has repeatedly been shown to be false,” he added.

Ministers have banned the NHS from using PFI for any future building projects after criticism that many of the contracts still active represent poor value for money.

The IPPR is urging the government to legislate to let trusts buy out such contracts and bring them into public ownership and boost the NHS’s capital budget by £5.5bn so it can afford to undertake projects without PFI.

In 2013 Northumbria Healthcare trust used money it had borrowed from Northumberland county council to buy out its PFI contract, which reduced its repayments by £3m a year. Other trusts have tried to do the same but none has yet done so.

Saffron Cordery, the deputy chief executive of NHS Providers, which represents trusts, urged ministers to urgently set out how trusts can access enough capital funding to repair dilapidated buildings, build new facilities and buy the equipment they need in order to make the NHS fit for the 21st century. The Department of Health has raided £4.1bn of NHS capital funding over the last five years to help pay for the service’s day-to-day running costs.

“There are many trusts with well-designed PFIs that have benefited their patients and that are good value, but equally it is undoubtedly true that some deals were badly designed and have left trusts with repayment bills that they cannot afford,” she said.

• This article was amended on 12 September 2019 because an earlier version incorrectly stated that PFI was introduced under Blair’s Labour government. The scheme began under John Major’s Conservative government but its use proliferated in the Blair era.