PFI payments are becoming a “significant issue”, GWH finance chiefs have warned.

Great Western Hospital will this year pay back an estimated £12.5million to private firms that built the hospital, Marlborough’s Savernake Hospital and an IT system.

Hospital bosses say they are frustrated that the payments are being made when they are having to make “challenging” savings.

At a meeting of Great Western Hospital NHS Foundation Trust’s board of directors last week, chief executive Nerissa Vaughan warned: “We’ve reached the point when the PFI is now a significant issue.” Her comments were reported by Marlborough News.

Great Western Hospital was built under a 30-year private finance initiative (PFI) agreement with firm Semperian. Pioneered by New Labour, these deals brought in millions in private investment to help build schools and hospitals. But PFI has proved controversial, with critics saying that it ties public bodies to decades’-worth of making expensive rent payments.

Currently, the hospital is forecast to spend almost £12.5million on PFI charges this year. So far since April, GWH has paid out £5.2million.

Last week, the trust’s board of directors heard that a recent investigation by hospital finance staff had found that their PFI charges were £8-12million higher than normal financing charges found with, for example, a bank loan.

Karen Johnson, GWH’s finance director, said: “Unless the PFI charges are reduced, this trust will never be out of a deficit position.”

So far this year, the hospital is running a £2million deficit, when money from NHS England’s Sustainability and Transformation Fund is excluded. The figure is around double the hospital’s target of £1.1million.

It is expected that the hospital will end the year with a £6.7million loss, when this NHS England money is taken out of the equation. Hospital accountants have put in place a “recovery plan”.

Last month, the trust’s finance director Karen Johnson told board directors the trust planned to make a loan application to improve their cash flow. The trust’s accountants said they would need to borrow £11million.

A spokesman for GWH said: “While the PFI provides us with a good, modern hospital to care for patients in, the ever-increasing mortgage repayments are a significant financial burden.

“Each year, we are spending more money on the PFI at a time when we are having to make challenging savings, which is money that could potentially be reinvested in new or existing patient services.

“We have recently been looking at ways to reduce what we pay each year – such as renegotiating our existing facilities services contracts, whilst pushing for improvements in the quality of those services, which are included as part of the PFI – however this continues to be challenging as we are bound by the terms of the original 1999 contract.

“With more than 10 years left on this current contract, we will continue to look at any ways that will help to reduce the cost of the PFI.”