Damning report lays out failures and soaring price of Carillion hospital schemes

Costs to complete the stalled new 646-bed Royal Liverpool Hospital have soared to more than £1.1bn, compared with original estimates of £335m, a report by the National Audit Office (NAO) revealed today.

The scheme will overrun by more than five years, to 2022. It was halted in January 2018 when construction giant Carillion went bust with debts of £1.5bn.

Work restarted in late 2018, but faults discovered in the building, including replacing wrongly-installed and dangerous cladding and reinforcing the structure with steelwork and additional reinforced concrete, meant costs for repair and remediation work at the troubled site have almost doubled to nearly £600m.

The report, which also covers the stalled 669-bed Birmingham Midland hospital that, too, has been delayed by Carrillion’s collapse, said: “Work on both sites stopped while the hospital Trusts, government and the private investors attempted to rescue the projects.

“By September 2018, these attempts had failed; government decided to terminate the PFI schemes and provide public financing to complete the hospitals. It has then taken time to put in place new contracts and restart the projects.”

While the report says most of the increased costs on the project have been met by Carillion and private PFI investors, the taxpayer is currently still expected to pay £739m in total.

However, the NAO investigation reveals that the Department of Health paid £42m compensation to Royal Liverpool’s investors to terminate the PFI contract.

The contract required the Trust to pay compensation to the PFI company’s lenders, based largely on the estimated cost to complete the hospital, before the actual cost to complete the hospital was known.

The report said: “Had the Department and Trust better understood the cost to complete the hospital, they may not have paid anything to the lenders.”

Steve Warburton, chief executive of Liverpool University Hospitals NHS Foundation Trust, said: “Progressing the construction and remedial works with a sense of urgency remains our absolute focus to enable us to deliver a hospital of the highest standards, with a working environment that supports our excellent staff in delivering exceptional care for our patients.”

Unite the Union said the NAO report highlights the government failures to get the two flagship Carillion hospitals built, creating misery for patients and staff forced to cope with failing buildings.

Unite assistant general secretary, Gail Cartmail, said: “The report makes for grim reading and endorses what hospital patients and NHS staff in Liverpool and the West Midlands already knew.

“Two desperately-needed hospitals are going to be years late and in the meantime local communities are left with facilities that are no longer fit for purpose.

“The responsibility for these delays has to lie squarely at the door of the Government, which consistently failed to prioritise the overriding need that these hospitals had to be built.

“While the report notes the financial cost of the projects, the human cost of the delays of completing the hospitals has not been recognised.”

A Government spokesman said: “To support staff and local communities in Sandwell and Liverpool, we’re giving both Trusts the funding they need to minimise the delays caused by the collapse of Carillion and get these two new hospitals open.”