The use of the ‘Private Finance Initiative’ (PFI) to fund new hospitals and infrastructure was a nightmare solution most famously embraced by New Labour from 2000: but the two major hospital deals signed off since the Tories took over in 2010 remain stubbornly embarrassing, costly failures.
Both the Royal Liverpool Hospital and Birmingham’s Midland Metropolitan fell victim to the collapse of construction giant Carillion: work on both unfinished hospitals halted immediately, and has yet to resume. In each case the public sector is having to step in and pick up an additional £300m-plus bill for the remaining work – effectively doubling the initial cost for completing each hospital, both of which have been heavily delayed.
In Liverpool ministers have rejected calls for a full public inquiry into the scandal of a building which was not only left incomplete, but also unsafe: major sections of the work built by Carillion have had to be demolished after major structural issues were identified by the new contractors Laing O’Rourke. The trust is seeking another £300m to complete the 646-bed hospital in addition to the £76m loan to the trust to help buy out the failed PFI contract, which initially costed the new building at £335m.
In May it was revealed that the trust was having to spend £500,000 per month to look after the unused hospital, including leaving lights on 24/7 and a team running all 4,000 taps regularly to prevent bacteria building up.
Meanwhile the Sandwell and West Birmingham hospitals trust is still waiting for the go-ahead to restart building work on the Midland Met, even though a £358m contract to complete the hospital was approved by the Treasury 9 months ago.
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