Contractors claim that a government deal with Unison will push up the costs of hospital PFIs by up to 5%
The cost to the taxpayer of private finance initiatives is creeping upwards. Earlier this month the City's fund managers threatened to add a Railtrack levy to PFI deals.

Now PFI contractors claim that hospital contracts will be 5% more expensive as a result of health secretary Alan Milburn's decision to allow porters and cleaners to remain as NHS employees in PFI hospitals. A deal that the government privately reassured contractors it wouldn't make.

Contractors claim the 5% rise will be necessary to cover the risk of managing staff they don't have control over. Up until now private companies have been able to set the pay and conditions for all the ancillary staff they hire.

From 27 March staff will be hired under NHS terms and PFI consortiums are worried about having to maintain these generous contracts. They are also wary of the future cost of appeasing Unison, the union for public sector workers that includes hospital caterers, cleaners, porters, security guards and laundry staff among its members.

The first hospital PFI to have NHS workers managed by private consortiums is the £300m Walsgrave Hospital in Coventry. PFI consortiums will review future hospital deals when the Walsgrave scheme reaches financial close.

It could get even worse for the government. Unison general secretary Dave Prentis is demanding that ancillary workers in existing PFI hospitals revert to NHS contracts too.

Prentis will be confident of wringing another concession from a government desperate to avoid any more delays in the NHS plan to build 100 more hospitals by 2010.

The union leader says that PFI firms should be prepared to accept smaller profits in the future. But the contractors will claim that 18%-plus margins are necessary to cover the risk of working with a government that changes the rules as it goes along. Whatever the outcome, PFIs aren't turning out to be as good value as they first appeared.