When Private Finance Initiatives were first introduced in 1993, they were hailed as the Conservative Party's "big idea" to fund its ambitious public sector building programme.

As Birmingham's super-hospital was given the go ahead by Tony Blair, a second PFI scheme at St Helens Hospital, in Merseyside, was also approved but with a third of its proposed beds axed.

There are already 24 PFI schemes, with a combined value of #2.1 billion, up and running across the country, with a further 14 totalling #3 billion under construction. Several others, under negotiation and not yet advertised, are expected to cost #12.1 billion.

But as NHS trusts have fallen further into debt, lead-ing to thousands of jobs being axed at hospitals across the country, are PFI schemes the way to drive forward public sector projects?

Some existing PFI hospitals have paid the price for treating too many patients, such as Worcestershire Royal Hospital, which was forced to pay a #200,000 penalty after its bed occupancy rate rose from 90 to 98 per cent following the closure of Kidderminster Hospital.

Health Minister Liam Byrne claimed the NHS cash crisis would not necessarily see PFI schemes shelved.

He said: "There are issues around health sector finances but 50 per cent of the NHS deficit lies within seven per cent of the country's trusts.

"There will be a second phase of PFI schemes, which will also result in billions of pounds being invested in new hospital facilities.

"The current financial climate does not necessarily spell the end of PFI, I think these still represent the best way for improving the health service's infrastructure."

When University Hospital Birmingham NHS Trust was established in 1993, it had an acute deficit of #30 million but the board managed to claw that back without borrowing money or making redundancies. It has achieved financial balance every year since 1994.

John Charlton, the trust's chairman, said all PFI schemes were underwritten by the Government which guaranteed private sector partners were paid for their work if hospital trusts plunged into deficit.

He added: "The Chancellor, Gordon Brown, is committed to developing PFI as a way of developing a complete infrastructure for health and eduction services, but there needs to be rigorous appraisal of the

'value for money' element. While there have been concerns about PFI, nobody has been able to come up with a viable alternative."

One alternative is for local councils with surplus cash to build their own hospital, as Wychavon District Council has done in Pershore with a #6.7 million 26-bed hospital that will be leased to the local PCT and replaces a 19-bed cottage hospital.