News story

PFI approvals and Deeds of Safeguard

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Department of Health continues to support the use of PFI to fund hospital redevelopments where its use is shown to be value for money for the taxpayer.

The Department has looked closely at whether Deeds of Safeguard continue to be necessary and value for money as a means of enabling trusts to secure funding from PFI-lenders and investors for the largest PFI-scheme proposals, and has concluded that they are. They will therefore continue to be made available for PFI-schemes that are in development of more than £70 million in capital value.

Outline and Full Business Case approvals will be needed for all PFI schemes put forward by NHS Trusts or PCTs, and SHA approval will be required for all schemes above the delegated limits of NHS Trusts and PCTs.  Approval by the DH and Treasury will be required for schemes with capital values greater the SHA delegated limits.

SHAs will need to ensure that they are able to perform this approval role for any PFI schemes in their patches.  A key role played by SHAs and PCTs is to confirm that they want the services proposed by the Trust in the planned geographical location and that the activity levels proposed in the PFI business case are realistic. SHAs will also be expected to validate designs and capital costings.

Deeds of Safeguard will be made available to guarantee obligations of NHS Trusts when they become FTs, both on signed schemes and schemes that are currently in procurement or developing outline business cases. Deeds of Safeguard will also be available for schemes being developed by Trusts that are already FTs.  The business case approval requirements will apply to all schemes that require Deeds of Safeguard and are in development, including those where the Trust already has foundation status.

A number of criteria need to be met for business cases to be approved. These include demonstration of value for money, both of the preferred development option and of the use of PFI to deliver it, and adherence to government commercial policy, including the standard project agreement for PFI schemes.  Very importantly, business cases must demonstrate robustly that schemes are affordable to the trusts putting them forward, and that their costs will not risk the trusts’ viability as Foundation Trusts.

Further information

Up to date versions of all necessary guidance associated with business case approvals can be obtained from Peter Cockett (telephone 0113 2546132) in DH’s Capital Investment Branch.

Any FTs seeking Deeds of Safeguard for PFI schemes that are in procurement or otherwise under development will also need to comply with any requirements that are in place from their regulator, Monitor. Information on any requirements can be obtained from Monitor.

Deeds of Safeguard will continue to be available on already-signed PFI schemes with capital values in excess of £10 million, and will not require any further business case approvals.