Anger over œ30m PFI bill - Minister vows to cut red tape to redirect money away from advisors fees

The end of the road for money-making advice on Private Finance Initiative schemes was signalled by the Government this week after it was revealed the National Health Service has spent œ30 million on consultancy fees without a contract being secured.

Alan Milburn, Minister of State for Health, slated the current system, commenting: "The Tories' mishandling of PFI in the NHS has cost a small fortune. Not one major hospital has been built through the PFI, yet taxpayers have footed a vast consultancy bill.

"The Government is committed to making PFI work so that new hospitals get built," he said. "By cutting PFI red tape, we will get NHS cash spent on patient services, not on exorbitant advisors fees."

Milburn believes that a central advisory body within the Department of Health could have provided the same advice much more cheaply and promised action to streamline PFI red tape.

"We are considering ways of providing advice from the Department of Health to enable trusts to handle PFI deals without employing expensive external advisors to cover ground already covered in other parts of the NHS.

"There should be no more reinventing of the wheel."

Milburn revealed that in two cases, Guy's and St Thomas' in London and the Royal Berks and Battle, money totalling œ1.3 million has been spent on PFI projects which will not now go ahead.

The œ30 million spent on consultancy is equivalent to the cost of 45 large GP surgeries, 15 health centres with a range of primary care facilities, 7,500 hip replacements or 2000 kidney transplants.

The move was welcomed by Graham Watts, Chief Executive of the Construction Industry Council, which represents professionals and consultants.

"Milburn's proposal is very, very close to one of our recommendations. Enormous amounts of money have been made on the gravy train of advice. I don't blame anyone for that: it was a legal requirement.

"It's definitely a good move to centralise the advice. It may not speed things up that much, but it should lead to a consistency of approach."

Richard Baldwin, Chairman of the National Contractors Group which represents the largest companies within the Building Employers Confederation, commented: "It is imperative that the new Government takes action to ensure that the major hospital projects which we have been negotiating over the last two years can finally go ahead.

"The legislation recently introduced into the House of Lords will make it clear that NHS Trusts have the resources necessary to conclude these deals."

The Bill, which will remove legal obstacles preventing deals from being closed, had its second reading on Tuesday 3 June.