Ballooning loan repayments could put the county’s hospitals under increasing financial pressure.

The Oxford Radcliffe Hospitals (ORH) Trust now faces an annual bill of £46.6m to fund repayments on the loans taken out to pay for developments such as the Children’s Hospital and Oxford Cancer Centre.

And if the planned merger of the ORH and Nuffield Orthopaedic Trusts goes ahead, that bill is like to spiral by at least another £6m.

The financial meltdown was revealed when the Government announced that 22 NHS trusts, including Oxford, had reported their “clinical and financial stability” were at risk because of the spiralling cost of private finance initiatives (PFI), which fund big hospital projects.

Health Secretary Andrew Lansley said the ORH was among a group of trusts battling to pay back an annual PFI bill of £46.6m. That’s around seven per cent of the trust’s annual income.

He said: “Over the last year, we have been working to expose the mess Labour left us with, and the truth is that some hospitals have been landed with PFI deals they simply cannot afford.

“Like the economy, Labour has brought some parts of the NHS to the brink of financial collapse.” Under the PFI schemes, which were heavily promoted by the last Labour Government, private capital is used to fund public projects, such as schools and hospitals.

The private contractor owns the building for up to 35 years, while the public sector pays interest on the cost of construction, as well as paying the contractor to maintain the building.

But the final cost of the project is often far more than the value of the assets, which has prompted concerned calls from hospital trusts as they also fight cost cuts.

ORH finance director Mark Mansfield, said: “PFI repayments are index linked so do increase with inflation.

l Continued from Page One “If income received by the trust decreases and the repayment figure goes up, then the percentage of income attributed to PFI will grow.

“The expectation is therefore that PFI repayments will become an increasing pressure on organisations during the 30-year lifetime of the loans.”

Mr Mansfield said the trust’s loans were “significantly smaller” than other trusts as a percentage of turnover.

He explained annual PFI repayments accounted for around seven per cent of the trust’s yearly income.

However, its payments could rise to £53m if a planned merger with the Nuffield Orthopaedic Centre goes ahead, although the percentage figure would stay virtually the same.

The ORH refused to say whether it was struggling to meet repayments, but Mr Mansfield said: “We recognise that this is a very difficult financial climate and we are not complacent.

“We must manage our finances well and keep a close eye on efficiency, reduce waste and ensure high-quality patient care is our top priority.”

The Department of Health said yesterday it will meet with executives whose trusts are in difficulty in an effort to resolve the problem in coming months.

Proposals are expected to include the renegotiation of PFI contracts and cost-cutting.

Andrew Smith, Labour MP for Oxford East, defended the schemes, saying: “These investments in our local hospital provided a vital boost to facilities and standard of local care.

“Their clearly needs to be a full investigation into how the PFI costs could have gone up so much.

“Part of me thinks that Andrew Lansley is trying to shift the blame from the costs of the consequences of the present Government’s actions back on to Labour “But I think the public is more interested in getting this sorted out than in Andrew Lansley’s political attacks.”

THE OTHER TRUSTS AFFECTED St Helens and Knowsley, South London Healthcare, University Hospitals Coventry and Warwickshire, Wye Valley, Barking, Havering and Redbridge, Worcester Acute Hospitals, Oxford Radcliffe and NOC, Barts and the London, University Hospitals of North Staffordshire, Dartford and Gravesham, North Cumbria University Hospitals, Portsmouth Hospitals, Buckinghamshire Healthcare, West Middlesex University Hospital, Mid Yorkshire Hospitals, Walsall Hospitals, North Middlesex, North Bristol, Mid Essex Hospital, Maidstone and Tunbridge Wells, Sandwell and West Birmingham, Royal National Orthopaedic Hospital.

PRIVATE FINANCE INITIATIVES PFI deals hand financing of large-scale buildings or infrastructure schemes, such as new schools and hospitals, from the Treasury to developers.

The company owns the building and leases it back to the public sector over a period of a minimum of 25 years.

The benefit to the public sector is that there is no up-front burden on the taxpayer. The benefit to the private sector is that the repayment interest rates are usually high.

Some companies charge interest rates of up to 70 per cent. The county’s fire control room in Kidlington was also built through a PFI.