The use of controversial private finance initiatives to build new hospitals was thrust back into the spotlight last night as it was revealed a plan to rebuild one Midland hospital will cost more than £1 billion.
The redevelopment of University Hospital of North Staffordshire, which has cut up to 1,000 jobs to save £30 million, was one of six PFI projects approved by the Government yesterday.
But the £272 million scheme, which will see services currently spread over two sites under one roof, will cost £1.125 billion, as the trust will pay £37.5 million a year over 30 years term to private consortium Equion.
Unions last night questioned the wisdom of saddling financially-challenged NHS trusts like UHNS with PFIs.
University Hospital in Coventry and Worcestershire Royal Hospital in Worcester - one of the region's first PFI hospitals - have already made job cuts to save millions as they struggled to balance books.
Walsall Manor Hospital will be rebuilt under a £140 million PFI it was announced yesterday, although its 30-year "mortgage" has yet to be set. Work on both is due to start by the end of the year.
Work will also begin in December on a new maternity unit and cancer hospital at UHNS, costing £65 million, financed by NHS money.
The new super hospital will house 1,000 patients, compared to 1,200 in existing UHNS wards.
A UHNS spokesman said: "Work on the new hospital will begin on the existing City General site in Stoke in December, and the hospital should be completed by 2012/13.
"The Royal Infirmary, about 150 years old, will disappear and land will be sold, we hope, for something like £18 million but it will have to go back into the NHS, it can't be set against debts.
"We can't not build a new hospital, we're confident this is affordable, and our current financial issues will be sorted in 18 months. They have to be.
"There is no other option other than remaining in a Victorian hospital, but the new hospital will benefit the next three generations and beyond."
Sue James, chief executive of Walsall Hospitals NHS Trust, which runs Walsall Manor, said the Treasury was right to scrutinise the latest PFIs to ensure hospitals did not run up massive debts.
She said: "I think our scheme is very different to those in Coventry and Worcester, and the review found ours financially viable and affordable.
"However it's almost impossible to guess what the NHS will look like in five years, especially at this volatile time, let alone 40 years' time, when it comes to funding. And there's no such thing as free money. It always has to be paid back at a cost."
In announcing the six PFIs, Health Minister Andy Burnham said the new facilities would be affordable, and would lead to new A&E departments as well as cancer and mental health facilities.
But Mike Jackson, of health union Unison, said: "Of course we welcome news patients will benefit from bright, new hospitals, but using PFI to finance them is a waste of taxpayers' money.
"PFIs are expensive, inflexible, and add to the financial burdens of many trusts."
Geoff Martin, of pressure group Health Emergency, added: "For the Government to sign off new PFIs, despite the fact they are bad value, a money-making racket for the private sector, and provide poor facilities, flies in the face of rational thought processes."