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Land and buildings in PFI schemes

  • Last modified date:
    8 February 2007

LAND AND BUILDINGS IN PFI SCHEMES (VERSION 2)

June 2003: Amendment to Version 2 of 'Land and Buildings in PFI Schemes' and new supporting worksheet for the guidance

There was an error in Annex 2 (Technical Accounting for Residual Interests) of the revised guidance published in January this year. Under Note 4 - Capitalisation of the Unitary Charge - on Page 26 the 'Rate of Uplift (revised)' should read 2.035/1.965 instead of 2.35/1.65.

The guidance below has been amended accordingly. Also attached below is a new spreadsheet to use for worked examples to help trusts and their advisers understand better the application of the guidance.

INTRODUCTION

This guidance sets out the principles which apply when assets are included in PFI deals. It supersedes the version of Land and Buildings in PFI Deals dated 26 October 2000 previously on this website and the Department of Health's guidance on the PFI (Public Private Partnerships in the National Health Service: The Private Finance Initiative, Section 3 Technical Issues, Chapter 8) published in December 1999. Whilst this guidance is specifically written from the perspective of NHS Trusts, the principles can be applied to all NHS bodies involved in PFI deals.

The guidance is consistent with the approach outlined in Treasury Technical Note No.1 Revised (July 1999), the current NHS Capital Accounting Manual (November 2002) and Sold On Health (NHS Estates' paper on modernising the operation and disposal of the NHS estate - May 2000). In particular, attention should be given to the following sections where the guidance has been updated:

  • Clarification of the value for money test to be applied where surplus land is injected into schemes (para 31);
  • The valuation of buildings included in PFI Schemes for refurbishment (para 59);
  • Assets donated by third parties in exchange for a reduction in annual unitary payments borne by trusts (paras 68 to 66);
  • accounting for residual interests (paras 67 to 80); and
  • taxation (para 82).

ACTION

The guidance represents the Department of Health's recommended approach to accounting for land and buildings in PFI schemes. However, it is ultimately up to the Trust and its external auditor to agree upon the appropriate accounting treatment.

The following actions are recommended:

  • Trusts with existing PFI schemes should follow this guidance starting for the financial year 2002-2003 and future years.
  • Trusts with prospective PFI schemes should take account of the guidance in VFM and affordability calculations.

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