Heavily criticised strategy to be adapted for ‘one-stop' services as government cuts £3-5bn from PFI spending

The government is to use the NHS' LIFT programme to deliver a new generation of community hospitals.

Launching the government's white paper on the NHS this week, prime minister Tony Blair said investment in healthcare would shift away from large acute hospitals towards more local facilities, including a wave of 50 small community hospitals, each costing about £50m.

Blair said: "‘One-stop' services offered closer to home, longer GP opening hours and a greater emphasis on people looking after their own health lie at the heart of the government's proposals."

The strategy could sound the death knell for large PFI hospital schemes because it requires cutting the £12bn PFI hospital programme to between £7bn and £9bn.

Building understands that, to deliver the smaller-scale facilities, Whitehall is working on adapting its heavily criticised NHS LIFT programme.

A source close to the Treasury said: "The government is looking at the LIFT programme to see how it can be improved to deliver the community hospitals. There's going to a lot more work for construction firms but it won't be LIFT as it currently stands. Everyone knows the current system is a bit too slow and frustrating."

Peter Coates, the head of PFI at the Department of Health, also said that LIFT would be adjusted.

He said: "It won't be LIFT exactly but a LIFT-type model. I don't know what form it's going to take or how it's going to be different."

He added: "Any new initiative like this is bound to have teething problems and there will always be people who will say it could be improved. But I think that overall people say it is a good thing."

The move to revamp the programme comes as a Building investigation this week reveals widespread discontent with LIFT.

Construction firms and doctors have been critical of LIFT because, like larger PFI schemes, projects can take years to reach financial close and can cost as much as £500,000 to bid for.

Alan Hope, Midas' chief executive, said the process was "certainly more expensive to bid for than a normal construction project".

‘One-stop’ services offered closer to home lie at the heart of the government’s proposals

Tony Blair

Dr Stephen Fox, a Wigan-based GP, described the process as "totally, totally useless".

Architect Mike Nightingale, of Nightingale Associates, said he supported LIFT but was concerned about its use for cottage hospitals.

He said: "The consequences of using an inappropriate system are usually complete failure or inoperative delays.

"I am not saying this will be the case if a LIFT model is used, but the government will need to make sure it is going to be effective."

The white paper carried further warnings for the 18 large PFI hospitals awaiting financial close and the 23 to come out to the market.

It said: "It should be clear that any trust with significant deficits will not be allowed to proceed to market with large capital investment schemes without agreed plans to deal with those deficits before financial close."

The hospitals most at risk are those with the biggest debts twinned with expensive proposed schemes, such as the North West London Hospital NHS Trust and the University Hospital of North Staffordshire.

Although the DoH has not set a limit for deficits, the guidance will come as a blow to the 16 NHS trusts that are more than £1m in the red. One source said: "One or two biggies could go."

But there was better news for the £1.2bn Barts and Royal London PFI scheme, which was handed a lifeline after the North East London Strategic Health Authority reported to the government that it was financially sound. The government will now decide Barts' fate.

Primary healthcare: In need of a LIFT?

Primary healthcare: In need of a LIFT?

What the white paper says

  • Fifty community hospitals to be delivered at a cost of about £50m each
  • Department of Health to scale back the intended £12bn PFI hospital programme to £7-9bn
  • Trusts with significant deficits will not be allowed to go forward with big PFI schemes
  • PFI schemes will have to seek formal approval from Department of Health before appointing a preferred bidder
  • Impact of the changes on “more developed schemes” to be reported by end of this month.