PFI health flagship in danger

The œ193 million flagship PFI contract to build the Norfolk and Norwich district hospital may be killed off by a Labour Government, following the withdrawal of General Healthcare Group as partner to John Laing in the winning consortium.

General Healthcare Group is to be sold by its French parent company Generale Des Eaux. The sale will delay the completion of the deal until after the Election, throwing the project open to a radical review which Labour shadow health minister Chris Smith has vowed to instigate if Labour wins power.

General Healthcare Group is partner to John Laing in the PFI consortium Octagon Healthcare, but is to be sold to UK venture capitalists Cinven along with Compagnie Generale de Sant' for œ1 billion. The deal is expected to be struck by June.

The sale has raised industry and City concerns that the PFI project may face further delays, preventing the deal being finalised before the General Election. Norfolk and Norwich would have been the first large PFI healthcare project to make it beyond the drawing board.

Labour's Chris Smith pledged in January to review the contract under a Labour Government "if it is not fully signed and sealed" by the time of the election.

Laing refused to comment on the implications of the sale but a source at the Norfolk and Norwich Health Care NHS Trust confirmed that "it is unlikely a deal will now be struck this side of the General Election."

Cinven refused to comment on the sale, but sources close to Cinven told CJ that the company is "backing the original management team which it regards as high quality".

"Cinven is not in the business of asset stripping. Nor will it cancel any contracts or renege on any projects in place," said the source.

Generale des Eaux denied it is pulling out of healthcare in the UK because of the failure of PFI to deliver any "live" hospital projects so far.

"The rationale for Generale des Eaux selling General Healthcare has nothing to do with PFI," said a spokeswoman: "Generale des Eaux is selling its healthcare interests because they are not part of the group's core business, which it now wants to focus on."