Hospital plan ‘will save £175m’ - but a new PFI deal is needed

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Controversial plans to demolish Huddersfield Royal Infirmary and replace the hospital with a smaller site without an A&E department will save the NHS £175m – but are reliant on pursuing a new PFI deal, a business case supporting the proposal has revealed.

The board of directors at Calderdale and Huddersfield NHS Foundation Trust has approved the business case which states HRI would require £473m of investment to stay open – a figure made up of £94m for repairs over the next decade and a further £379m after that for rebuilding costs for the hospital built in the 1960s.

The business case said the alternative proposal to build new facilities on the adjacent Acre Mill outpatients centre site while sending all A&E patients to an expanded department at Calderdale Royal Hospital in Halifax five miles away would instead cost a total of £298m, a £175m saving that would allow the trust to “achieve and maintain a financial surplus” by 2024/25.

But as the trust has been advised there is no publicly financed capital funding available from the Government, new buildings will have to be financed through a private finance initiative (PFI) deal, in which a private firm funds upfront construction costs and the money is paid back over several decades.

It is expected almost 500 jobs will be lost over the next decade from the current 6,000-strong workforce if the plans progress, with the number of beds available in Huddersfield falling from more than 400 to just 64. Across the two sites, extra beds would be added at CRH but there would still be an overall loss of 105 beds on what is currently available.

Campaigners argue that plans are being driven by financial motives instead of patient care.

An open letter by local Labour MPs Barry Sheerman, Paula Sherriff, Thelma Walker and

Tracy Brabin sent last month to the trust said its current financial problems could partly be attributed to the previous PFI deal to build CRH in the 1990s. It opened in 2001, with building costs spiralling to more than £100m – three times more than was originally planned. PFI repayments are due to run until 2061.

“It is clear that if Calderdale Royal Hospital was not at the mercy of a ruinous PFI deal, this reconfiguration would look very different and patients in Huddersfield would not find themselves required to travel long distances, on highly congested roads, to receive healthcare,” the MPs said.

The business case admits that the high finance costs of its current PFI is one of two key factors “driving the underlying deficit”, with the other being having the same services based across two sites. The trust currently has a “significant underlying deficit and is reliant on financial support from the Department of Health to provide the cash to pay creditors and staff”.

The report says the trust

anticipates it needs to eliminate a £27m deficit working on the assumption that national funding it currently receives will not be available after 2019/20.

The report said: “A number of external independent clinical reviews of the trust have recommended that staying the same is not possible unless there is a major injection of both permanent staffing and financial resources beyond that which is known to be available from Government, and on that basis, service reconfiguration is needed.”

Regulator NHS Improvement will now scrutinise the business case, while the plans have already been referred to Health Secretary Jeremy Hunt by local councillors.