An additional £1 million a year will be channelled into patient care in Lothian following successful refinancing negotiations between NHS Lothian and our PFI partners, Consort, who operate the Royal Infirmary of Edinburgh.

Under the terms of the agreement a total cash benefit of almost £32 million has been achieved. This will be paid as a lump sum of £5.2 million and an initial reduction in payments to Consort of £1.12 million per year, rising to £1.44 million by the end of the contract in 2028. The discounted value of the benefit is £18.9 million.

Refinancing has been achieved following detailed negotiations between the two parties, demonstrating a joint commitment to reaching a successful outcome.

The contract was a first generation PFI arrangement that did not offer the best deal to NHS Lothian. Changes have now been made that better reflect the needs of a modern, single system health service.

Agreement has now been reached on the cost of facilities management services such as cleaning, catering, security, portering and maintenance that Consort provides to NHS Lothian at RIE.

James Barbour, Chief Executive NHS Lothian, said: "Refinancing of the PFI will deliver multi-million pound gains for NHS Lothian in the years to come.

"When NHS Trusts were dissolved in 2004 NHS Lothian took over the running of health services and inherited a first generation PFI deal that did not meet our requirements on costs and risk sharing.

"Following detailed negotiations, and within the confines of a nine-year-old PFI contract we have now secured a better deal for our patients within the guidelines laid down by the Exchequer through the Office of Government Commerce."

Stephen Gordon, Consort General Manager, said: "We are delighted the negotiations have been concluded and that the refinancing of the PFI contract has delivered significant financial benefit to NHS Lothian.

"We look forward to working in partnership with NHS Lothian and to continue to deliver quality services to patients, visitors and staff at the Royal Infirmary of Edinburgh."

BACKGROUND

The Private Finance Initiative (PFI) contract was signed in 1998 between Consort and the then Royal Infirmary of Edinburgh NHS Trust to build a new hospital at Little France at a cost of £184 million. The hospital became operational in 2002.

NHS Lothian became the holder of the contract with the dissolution of Trusts in 2004. The ownership of Consort has also changed and is now owned by Balfour Beatty and Infrastructure Investors who wished to refinance the deal.

The Materials Management Service, which involves a range of services including stores and distribution, has moved back into NHS Lothian control from the private sector and the staff affected will transfer with their pay and conditions protected under TUPE arrangements.

Car parking charges at the Royal Infirmary of Edinburgh are currently subject to a three-month trial reduction that began on 1st April. This involves a reduction in the all-day parking cost from £10 to £7.