The Princess Royal hospital was one of the first hospitals to be born from the Private Finance Initiative (PFI) – the wheeze invented by John Major's government to refurbish Britain's dilapidated hospitals and schools while keeping the outlay off the Treasury's current account in return for phased repayments to private investors over a period of several decades.
After the tender was put out in 1995 it was awarded by Tony Blair's first government, which embraced PFI with gusto, in 1998. The winner was a consortium trading under the name of United Healthcare (Farnborough Hospital Ltd) consisting of Barclays Private Equity, developer Taylor Woodrow and Innisfree, a City investment fund with about 20 staff which has quietly become one of the country's largest PFI players by backing projects to build 269 schools and 28 hospitals costing a total of £6.4bn.
In return for their initial £118m outlay and the provision of services ranging from power to medical equipment, the consortia will receive payments of £1.2bn over 35 years. According the National Audit Office, the rate of return for the contractors is a handsome 70.6 per cent.The Edinburgh Royal Infirmary was financed with a similar deal.