The Department of Health has risked losing control of hospitals and land valued at £517m as a result of PFI deals.

In five hospital schemes signed in the late 1990s the department gave the private sector a lease on the land that was longer than the length of the PFI deal. The leases could have been made to end at the same time as the PFI contracts but in several cases they were extended for many years after the deals were due to end.

At the £93m Queen Elizabeth hospital in Greenwich, south-east London, the PFI ends in 2061 but the Skanska/Innisfree consortium has a lease on the land until 2126. The lease cannot be activated after the PFI contract is completed, but if the NHS trust decides to walk away from the deal during “break points” in 2031 and 2046, the consortium would then own the land and could apply for planning permission to develop it.

David Wragg, director of finance at Queen Elizabeth Hospital NHS Trust, said this kind of “head lease” clause provided the consortium with commercial protection if the trust decided to pull out of the PFI half way through the deal. He said: “If the head lease protection had not been granted, the deal would have been more expensive.”

If the lease protection had not been granted, the hospital deal would have been more expensive

David Wragg, Queen Elizabeth NHS Trust

A senior PFI lawyer said that the idea behind extended leases was to ensure that there were “sweeteners” for the private sector to encourage them to bid. The source added that by demonstrating that the private sector had some sort of ownership of the assets, the projects could legitimately be taken off the government’s balance sheet.

Allyson Pollock, a professor of health policy at Edinburgh university and a prominent PFI critic, questioned this rationale. She said: “The government told us that all land and buildings would revert back to the public sector. What we now need to understand is whether this is indeed the case.”