Top PFI players have denied that the government’s hospital programme is on hold.

A senior PFI source close to the Treasury rejected claims that a review was being undertaken, after news last week that the Department of Health had asked Barts and the London NHS Trust to reconsider the £400m St Batholomew’s hospital scheme. The trust met on Tuesday and resolved to stick with the current plans.

The source added that the department’s decision did not indicate a more general move towards smaller PFI projects. He said: “Barts was always going to be the largest of the healthcare PFIs so by definition any other PFI is going to be smaller. If there were a move towards smaller projects, the M25 PFI would not have just gone to the market – that’s worth £1.5bn.”

Sources in the finance community said that a shift to smaller hospitals was expected, but this was not linked to PFI financing. One source said: “The government is looking at deals that are big and ugly and need closing on £700m or £800m and are asking if they really need those hospitals.”

Another added: “The issue around hospitals is, from a clinical point of view, whether capacity is of the right type and in the right place.”

The government is looking at big, ugly £700m or £800m deals

PFI health sector source

Mowlem and Bouygues are waiting on a decision on the £200m Torbay hospital project in Devon, which is expected soon.

A decision on which contractor would be given the contract had been scheduled for 15 December but is now expected at the end of the month.