Laurie Marsh: The man with a plan to stop government 'wasting billions'

Laurie Marsh will explain his charity initiative to the Health Secretary today after five years of trying. Margareta Pagano hears about his extraordinary life

Today Laurie Marsh is to meet Jeremy Hunt, the Health Secretary, to present a radical plan that he claims will allow the Royal National Orthopaedic Hospital in Stanmore, Middlesex, to redevelop for nothing. That's right – zero, compared to the £260m cost proposed by the PFI bidders.

Under his innovative financial proposal, the RNOH will be able to turn its clutch of 90 pre-and-post-war buildings spread over a 112-acre site in Harrow into one of the world's tip-top hospitals with cutting edge medical services – as well as a new university centre and new nursing accommodation – at no cost to the taxpayer.

Dr Marsh, one of the UK's most successful property businessmen, has devised a scheme that he calls the Charitable Finance Initiative, whereby public bodies set themselves up as charities and develop their assets to produce capital investment funds – and/or investment income. He first used the concept more than 32 years ago to fund the Theatre Royal in Bath, and has since used the scheme to finance Charles Darwin's home at Down House in Kent and Buckston Browne, part of the Darwin estate, the Core Arts in Hackney, the sixth form college at his alma mater, the Perse School in Cambridge, and the London Academy of Music and Dramatic Art.

This is what he proposes for the RNOH: let the hospital trust set itself up as charity and then, through a trading subsidiary, sell off part of its land for residential housing. With the money raised from this, the profits can fund the hospital.

He explains: "Usually public bodies realise value from their redundant or surplus property assets by selling them off to the private sector. What I have come up with is a tax-efficient way for the RNOH to use its assets and retain all the developmental value."

So simple you wonder why no one's thought of it before. He shrugs his shoulders: "Too easy perhaps? And of course, there wouldn't be such big bonuses for the private developers."

We meet at his quirky house tucked away off the leafy streets in St John's Wood. He sits me down in his modest study – although the art on the walls reveals the eye of a collector – and pulls out the thick and detailed plan he will show Mr Hunt. "Look at these numbers. If the hospital uses CFI, it can get more buildings and services for its money than under the PFI schemes being proposed. There's no VAT to pay, no corporation tax or EU procurement fees. I'll even go as far as saying there could be a surplus of profits."

That's a big call. But then Dr Marsh is rather extraordinary. He's 83 years old, for starters, has been tussling with the Government for five years and two weeks to explain his proposal, spending thousands of pounds of his own money – and for no personal gain.

His campaign began after meeting Professor Tim Briggs at the RNOH who was treating a friend of his there. "He told me about how the hospital has been trying to modernise for decades. So I got thinking, and I've been working on this ever since."

It's also extraordinary that we don't know more about him as he once ran the UK's third biggest property company, the English Property Corporation, as well as four other listed companies, owned the Kensington, Chelsea and Carnaby Street markets and more than a hundred cinemas as well as West End and Broadway theatres – building from scratch the New London theatre of Cats fame in Drury Lane.

So why don't we? "Ah, I have kept a low profile, purposefully, partly due to my divorce. Divorce to me is an embarrassment and I was very sad about it. I gave away all my money as part of the deal and had to start all over again."

Now the stories flow. He knew all four Avengers girls – and dated a couple – and used to zip around the capital on a chauffeur-driven scooter after giving up his drop-head green Corniche. "It was too extravagant so I got rid of it. Instead, Tom, the doorman at our office, drove me around on the scooter. I can't bear displays of wealth. You can only wear one pair of shoes at a time," he laughs, pointing to his own – made in Hong Kong circa the 1950s, a period when he was importing toys like Noddy from Hong Kong and was the first to bring Disney's Mickey Mouse into the UK.

"I've got a hundred stories like this but we'll save them for another time."

But he gives a taste; gooning with Spike Milligan and Peter Sellers, who were leasing one of his Kensington offices, and the nearby Biba crowd; making films, trading cinemas with the Grades and the Delfonts and building theatres with Brian Rix; the English National Orchestra that he helped to create, and the Queen of the South, the UK's biggest paddle steamer, which he restored, making a splash on the cover of Time Out. Just a flavour.

Since the 1980s he's been technically retired, concentrating on his philanthropy behind the scenes.

Until now. "Now it's my duty to speak out. This Government – and the last Labour one – are wasting taxpayer's money with PFI projects. Mark two is just as bad. About £300bn has been wasted – it's outrageous, if not criminal, and must be stopped."

Friends in high places are helping out. With him at the Whitehall meeting will be Lord Feldman, while Lord Rix and Lord Tebbit, whose wife was treated at Stanmore for injuries sustained in the Brighton bombing, are also backers. "I've just come off the phone to Norman [Tebbit] and he's fighting for us. It's only because he, Feldman and Rix wrote to the Prime Minister that I've finally got to see Hunt."

An earlier attempt to persuade Andrew Lansley, the former Health Secretary, to consider his proposal was rejected after the minister commissioned an independent review into CFI. Mr Lansley's officials said the review claimed that using CFI was illegal as charities are not permitted trading subsidiaries. Yet he didn't give up. "This was nonsense. The review didn't say that at all. Since then I have taken my own independent legal advice which shows that it is legal. Every charity in the country has a trading arm."

He's cynical about next week's meeting: "Either Mr Hunt has been told by the PM to 'listen to the old bugger and see him off' or he sees it makes sense. Let's hope it's the latter and he halts the PFI bidding review [Balfour Beatty and Bouygues are potential bidders] and lets me start with a pilot scheme."

Working with him in the CFI consortium are half a dozen top property experts, such as Savills and Gleeds, while Barclays has signed up to provide the £80m of short-term borrowings to fund the development stage.

He now has a new passion: low-cost, affordable houses that "can be built for £75,000 each with energy bills that are only about £60 a year. We are all being defrauded by the energy companies."

After months of lobbying, he says the Mayor of London's office has agreed to look for suitable sites where these new homes can be built. Yet he won't stop there – helping to build new schools is next on his agenda: "There's no reason CFI can't be used for public bodies throughout the country. I'm doing this for all taxpayers."