Bicester's new £5m hospital could be privately funded despite plans for it to be built using Government money.

North East Oxfordshire Primary Care Trust may use a Private Finance Initiative to pay for the 30-bed unit, which will replace the town's 12-bed hospital in Kings End.

But the trust's chief executive, Geraint Griffiths, said he would prefer the hospital to be NHS- funded. Bicester hospital is due to be built on about 4.5 acres of farmland behind the Esso petrol station, off Oxford Road, and will have a day unit, minor injuries unit and outpatient clinics.

The planning application has been referred to a public inquiry, which is due to be held in July. PCT managers want to complete the project by 2004 and had planned to fund it by selling the exisiting hospital.

But Mr Griffiths said Government policy in- sisted that PFI schemes should be considered when planning any NHS developments on greenfield sites. The PFI would mean the new buildings are funded by a private organisation, which would receive "rent" from the NHS for 30 years. After that, ownership of the hospital would pass to the NHS.

Mr Griffiths said: "It has always been expected that the new hospital will be funded from capital receipts from the old hospital, but we cannot rely on that because the Government may want to use that money for something else.

"We are not expecting to have to use the PFI system, but we can't rule it out.

"Our priority is having the new hospital as soon as possible, so if we have money from the old hospital we could get on with building it, but a PFI would take time to arrange because of contracts."

Union leaders, who are already concerned about PFI schemes at the Nuffield Orthopaedic Centre, John Radcliffe Hospital and the Churchill in Oxford, are angry that it may be introduced in Bicester.

Mark Ladbrooke, chairman of Oxfordshire Unison, said: "We will be very concerned if PFI is used to fund Bicester hospital.

"This form of financing can be brought in even at GP level.

"The PFI system will bring the private sector into the NHS for a very long time and it will be murder to get out of it."