Trust votes in favour of raiding public purse to finish Carillion hospital
August 05, 2018 – A new private finance option had previously been the preferred vehicle for finishing the Midland Metropolitan hospital
The NHS trust behind one of the two PFI hospital jobs stalled by Carillion’s collapse has voted in favour of asking the government to bailout the project.
The board of the Sandwell and West Birmingham Hospitals NHS Trust, which met yesterday, voted in favour of using public funds to finish the two-thirds-built Midland Metropolitan Hospital.
In a statement, the trust said: “Assessing either a new private finance option, or changing to a publicly funded model, the Board has reversed its prior preference for PF2, and opted instead for a public funding model.
“This preference reflects a view that the market for construction demands a specific solution to a two thirds built hospital.”
The procurement process to secure a new contractor is expected to begin in October, with the hospital is due to open in 2022.
The industry’s aversion to completing the project under a new PF2 arrangement was highlighted in a financial assessment report from Deloitte published ahead of the meeting.
As part of the assessment an unnamed major contractor quoted between £319m and £424m to finish Carillion’s stalled Midland Metropolitan Hospital job.
The contractor’s £319m price tag for the job is based on the job being completed under a straight construction contract. If the job was to be let under a new PF2 deal the unnamed contractor said the construction cost to complete the building would rise to £424m.
Commenting on the decision, trust chairman, Richard Samuda said: “In 2014 and again in 2018 we selected a private finance route for this badly needed facility. Our decision to ask for public funding reflects a view that the building needs urgent attention and a partnership approach with the construction sector.
“Everyone involved in this project accepts that after seven months there is a need to choose sooner rather than later the right option. I am delighted that joint work with government officials has given rise to this recommendation, which the board has accepted. I look forward to dialogue with ministers over coming days and weeks to conclude an agreement to complete the Midland Metropolitan.”
The business case for completion of the project will now pass to NHS Improvement, the Department of Health and Social Care, and the Treasury.
The trust said these authorities would consider its recommendation and “make a decision between the options, granting public funding sufficient to manage completion and address the risks of changing contractor”.
The council also revealed than invitation to tender for an early and enabling works contract would be issued next week.
This would see work on the building restart in the autumn.