Star date: 2nd July 2013

AS SALFORD ROYAL MAKES HUGE CUTS, PFI  FLOG-OFF MAKES £11.5M PROFIT

While Salford Royal Hospital (Hope) is struggling to make cuts of £19million, construction company Balfour Beatty is boasting about flogging off its 50% share in the Hospital's PFI deal for a profit of £11.5million – which `exceeded the Directors' valuation by £8.3million'.

The PFI financed the new extensions to the Hospital which were completed recently, and tax payers will be paying back more than three times the initial cost of the redevelopment over the next thirty years or so.

Full details here…

Salford Royal Hospital is currently struggling to make `savings' of £19million, as health gets hammered under the ConDem Government.

Meanwhile, Balfour Beatty, the construction company involved in the development of the Hospital's new `drum' buildings facing Eccles Old Road, has made a huge £11.5million profit by flogging off its 50% interest in the PFI (Private Finance Initiative) scheme which financed the original deal.

An announcement on Balfour Beatty's website states that its "Salford Hospital PFI asset" has been "disposed" to "a subsidiary of HICL Infrastructure Company Limited for a consideration of £22million, generating a gain on disposal of £11.5 million. The proceeds from the transaction…exceed the Directors' valuation by £8.3 million."

It's not surprising that Balfour Beatty was able to cash in on its `asset' – there's rich pickings in PFI. The Salford Star reported three years ago that, according to government figures, the initial capital cost of £190million for the PFI redevelopment of Salford Royal Hospital will end up costing tax payers £620million by the end of its 34 year pay back to private investors (see here).

Figures from Salford Royal Hospital Trust reveal it will be paying back almost £5.5million in interest alone on the PFI  this year - while it struggles under the weight of finding £19million `savings'.

Meanwhile, Balfour Beatty is gloating all the way to the bank…

"It is pleasing to see that our strategy of regular asset disposals to release some of the accumulated value in our portfolio continues to deliver additional income and cash to the Group" its Chief Executive, Andrew McNaughton, said yesterday "With the completion of the Salford Hospital sale, we have achieved £80.5 million of proceeds and £44.9 million of gains on PFI disposals so far this year."

Next in line for profit hungry developers is the Pendleton PFI housing project (see here). Already denounced by the Government as too expensive, Salford Council is having to ditch the banking profiteers and go down the `bonding' route of finance in order to salvage the massive redevelopment. Even so, there should be no shortage of takers. These publicly financed `Private Finance Initiatives' are like printing money for Fat Cats…