Hospital officials have failed to make any ground after years trying to renegotiate the huge loan that built Calderdale Royal Hospital, the Examiner can reveal.
Meetings have been taking place for more than three years in a bid to relieve the pressure of the crippling debt on the Halifax site – now at the heart of the proposal to close Huddersfield’s A&E and demolish the whole infirmary.
Huddersfield MP Barry Sheerman has compared the hospital’s financial arrangements to a loan from controversial pay-day lender Wonga.
As reported, Calderdale and Huddersfield NHS Foundation Trust will end up paying more than £770m when the PFI term ends in 2058.
The original loan that built Calderdale Royal Hospital in 1998 was for just £65m.
The trust’s accounts show its gross PFI (private finance initiative) debt as of last March was almost £290m.
A “break clause” on the 60 year loan, allowing a buy-out, is not available until 2028 and comes with a hefty £200m price tag.
The Examiner has been told by several sources that lawyers and hospital chiefs have spent years trying to convince the owners of the PFI debt to re-negotiate the terms of the deal.
A well placed source has now revealed that the health regulator, Monitor, stepped in as the trust’s finance woes emerged in late 2014.
It attempted to negotiate more favourable terms on behalf of the hospital but it too failed to make any ground.
“The PFI deal is absolutely rock solid,” said the source. “We can’t find any way out of it.”
“It was one of the first in the NHS – I don’t think you will find another similar one,” added the source.
A second source has told the Examiner that negotiations had foundered as the economy picked up.
And they said the ownership of the debt was “phenomenally complex”.
“It’s not a single organisation, it’s not as simple as single owners,” said the source.
“The trust has been talking to the owners of the PFI debt but the window of opportunity has closed.
“A PFI portfolio has become more valuable as the economy improved,
“Three years ago there was a greater opportunity than there is now.”
The inability to shed the huge financial liability has scuppered hospital bosses’ preferred plans to have Huddersfield as the emergency centre.
The plan, first published in 2014, said Huddersfield Royal Infirmary was more suitable for redevelopment than Calderdale Royal, and had better access.
But administrators are thought to have decided that they cannot justify mothballing parts of Calderdale Royal while still paying a fortune in debt payments.
Huddersfield MP, Barry Sheerman, said questions over Calderdale Royal’s crippling mortgage needed to be investigated.
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The deal was signed by then Labour health minister, Alan Milburn, in 1998.
But it is thought the terms had been set out before Labour came to power in 1997.
The Halifax MP at the time was Labour’s Alice Mahon, who campaigned heavily to get the town a new hospital.
Her successor, Linda Riordan, told the Examiner in 2014 that the PFI deal was the only way the town could replace the crumbling old Halifax General Hospital and the Royal Halifax Infirmary.
Mr Sheerman said: “It was all arranged by the time the Labour government came in.
“The actual signature on the document came after.
“I’m not against PFI but I am against bad PFI deals.
“Many fine schools were built through PFI.
“But this one seems more like a Wonga loan than PFI.
“What sort of a deal was it when a relatively standard hospital was built but then left with enormous long term debt.
“Who are these sharp people from the city in suits that have run rings round the hospital trust when it was constructed?”
“We’ll now have to seriously look at it.
“It’s about time we dragged it kicking and screaming into the daylight and find out what it’s all about and can we do something about it.”
