P.F.I. Profiting from Inflation?

David Rowland & Sid Ryan | October 4, 2023 | Featured, Reports, Analyses & Briefings

P.F.I: Profiting from inflation?

New analysis shows the significant impact of inflation on NHS Trusts with PFI schemes, with large profits and dividend payments continuing to be made by PFI companies.

This report shows that the costs to NHS Trusts with PFI schemes have risen rapidly due to recent increases in inflation in the years 2022/23 and 2023/24 because payments to the PFI companies are in a large number of cases contractually pegged to the Retail Price Index (RPI) the higher measure of inflation.

The PFI company profits for 99 NHS contracts totalled £1.9 billion between 2004 and 2021 with and an additional £1.07 billion has been paid in dividends payments. We have also identified that large amounts (£47.6 million) have been paid out by NHS Trusts as part of these contracts to cover the Directors fees for these companies.

The report recommends policymakers examine the debt and finance structures of these contracts to ensure that further excess profits are not being generated as a result of the recent rise in inflation.

This report was funded through the core budget of the Centre and no grant were provided by any external funding body.

Key findings:

The impact of inflation:

  • £470 million – the estimated increase in the costs of annual PFI payments for NHS Trusts as a result of the spike in inflation for the two years 2022-23 and 2023-24.
  • £30 million – the increase in the costs of annual PFI payments due to inflation between Barts Healthcare Trust in London from £120 million in financial year 19/20 to £150 million in 23/24.

Profits, dividends, management fees, high cost loans:

  • £28.4 billion – the turnover of 99 NHS PFI companies between 2004 and 2021.
  • £1.9 billion – the pre-tax profits made by 99 NHS PFI companies from NHS Trusts between 2004 and 2021.
  • £1.07 billion – the dividends paid out to 99 NHS PFI companies between 2004 and 2021.
  • £47.6 million – the total amount paid out in Directors fees by 99 PFI companies between 2004 and 2021.
  • £131 million – the total amount generated by PFI companies in interest payments in 7 NHS PFI contracts between 2004 and 2022 in return for issuing high cost loans.

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About the authors

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David Rowland

David Rowland is CHPI's Director. He joined the organisation in 2019 after over a decade of working in senior policy positions within the healthcare regulatory sector. For David's full bio see our People pageSee all posts by David Rowland
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Sid Ryan

Sid Ryan is a health policy researcher and journalist with a specialism in information law.See all posts by Sid Ryan