Introduction

We aim to promote efficiency, to improve services and to stimulate fresh flows of investment. We want to harness the private sector's management expertise and resources, bringing a new approach to investment in a whole range of activities and services traditionally regarded as the exclusive domain of the public sector. Kenneth Clarke, chancellor of the exchequer, November 1993

The private finance initiative (PFI) for public sector projects was launched by the government in 1992 to transform “public sector organisations from being owners of assets and direct providers of services into purchasers of services from the private sector.”1 The types of projects funded under the scheme range from the building and operation of trunk roads, computer systems, and vehicle fleets to the construction of hospitals and delivery of NHS support systems.2 New hospitals are leased back to the NHS at market rates for 20-60 years. NHS land and buildings are often sold to the private companies as part of the deal.

We consider here some of the implications of the use of private capital to fund NHS hospital developments, based on the plans produced for those schemes that have reached an advanced stage (table 1). We look at three of these in detail. A second wave of trusts already negotiating contracts include trusts in Glasgow, Newcastle, and the Midlands. Given the speed with which trusts have taken up the private finance initiative, it is important to examine the assumptions underlying the projects and the impact these projects will have on health services in their localities. First wave schemes will affect around 5% of acute NHS beds in England and almost a quarter in Scotland. Hence these projects are not just a local issue. They indicate the likely configuration of hospital services in England and Scotland if current policies …