CIRCLE will have to repay Hinchingbrooke Hospital’s £39million debt by the end of its 10-year contract.

And if the hospital continues to lose money, the firm will have to pay the first £5m of losses.

The announcement was made in Parliament by health minister Simon Burns after an urgent question was raised by shadow health minister Liz Kendall.

Flanked by North West Cambridgeshire and Huntingdon MPs, Shailesh Vara and Jonathan Djanogly, Mr Burns said the franchise decision had been scrutinised by the Department of Health and the Treasury and was the best solution for the “struggling hospital”.

“Circle is an established provider of services to NHS patients, although it is important to emphasise that in this contract NHS services will continue to be provided by NHS staff, from NHS buildings, and NHS patients will continue to access them in the same way as now.

“No NHS staff are transferring or leaving, and assets remain within public ownership. Hinchingbrooke Hospital will continue to deliver the same NHS services, as long as commissioners continue to purchase them.”

And he added: “This is not privatisation in any shape or form.”

He said that Circle had aims to improve length of stay and theatre usage, and reshape back room functions at the hospital.

Responding to questions from MPs, Mr Burn added: “[The debt] will have to be repaid by the end of the 10-year contract and Circle will be paid by any surplus.”

He added: “Without the deal the future of this NHS hospital would have been in doubt.”

Concerns raised in the house also included threats of redundancies, changes to staff terms and conditions and the running down of expensive services – such as A&E and maternity.

Mr Burns reassured the House that staff would remain in jobs – Circle had said it may retrain and redeploy some staff – and contracts, as well as buildings, remained with the NHS.

As for services, the health minister said Circle would be expected to provide all of the services that are currently available at Hinchingbrooke – as well as conform to any changes within the NHS in the future.

He also said that details of the contact – minus commercially sensitive information – would be put into the public domain.