25.05.11 Health

Get the data: Bungled contracts force NHS to pay-out £186m

Buying back the buildings

Onerous contract provisions forced the government to buy back Independent Sector Treatment Centres, ISTCs, after five years. This means that despite a huge taxpayer investment nine of the 31 centres initially set up have been forced to close, and others will go the same way as contracts end.

In 16 of the ISTC contracts the previous Labour government agreed to repurchase the centres at the end of the contracts under a “Residual Value Agreement”.

The government has already paid out £70.1m under these contracts, and is obliged to buy-back another six at a cost of £116.1m.

The table below details all of the centres for which there was a Residual Value agreement.

Contract (obligation to acquire at RV) RV (£m) Contract end date
GC4 East Cornwall 4.3 31 March 2010
GC4 North Oxford 15.1 31 December 2010
GC4 NEYNL 8.0 31 March 2010
GC5W Cheshire & Merseyside 33.3 31 May 2011
GC5E Nottingham 41.4 30 March 2013
GC6 Maidstone 4.7 5 November 2011
GC7 North East London 10.6 30 November 2011
GC8 Brighton 11.7 31 May 2011
GC8 Portsmouth 10.5 28 November 2010
LP2 Bradford 4.5 31 January 2010
LP3 Burton 14.4 9 July 2011
LP4 Trent 8.2 31 March 2010
LP7 Somerset 9.9 14 July 2010
LP9 Plymouth 9.2 30 April 2010
Total (obligation to acquire at RV) 185.8
Contract (option to acquire at RV) RV (£m) Contract end date
GC4 West Lincolnshire 0.3 31 March 2010
GC8 Havant 0.1 31 December 2010
Total (option to acquire at RV) 0.4
Total (obligatory and optional buyback) £186.2


Source: Department of Health

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