Exclusive: A hospital project in Birmingham, along with schools and defence projects, among first to benefit from ‘son of PFI’

PFI hospital ward

Greater Birmingham is set to be one of the first areas to benefit from the government’s new PFI scheme, rebranded as PF2, with the government targeting £325m in private finance investment in a new hospital in the city, Building can reveal.

Some of the first projects to benefit from the government’s new PFI model, to be unveiled by the chancellor George Osborne tomorrow, are expected to be in the health sector, with the Sandwell and West Birmingham Hospitals NHS Trust working with the Department of Health to assess the suitability of PF2 to deliver around £325m of new investment.The total expected cost of the new hospital in Smethwick is £484m.

For further details of the government’s new PFI scheme see here

Government sources said the project would see the consolidation of services from multiple sites and reorganisation of activity between hospital and community settings

As expected the first project pipeline will also include the £1.75bn privately financed element of the Priority Schools Building Programme (PSBP). The Treasury and the Department for Education have been working together closely in the development of PF2.

But in addition, the Treasury is also understood to be working with the Ministry of Defence, to explore how PF2 can be used to finance maintenance and construction activity across the defence estate as the MoD finalises its new estates strategy, with the chancellor expected to announce further details tomorrow.

The new Birmingham hospital is set to replace the old Victorian buildings at City Hospital and the facilities at Sandwell Hospital that are no longer fit modern healthcare.