Two hospitals due to be built by defunct engineering giant Carillion won’t be completed for several years, according to an official report released by the National Audit Office (NAO).
Carillion was building two private finance initiative hospitals when it collapsed: Royal Liverpool University Hospital and Midland Metropolitan Hospital.
The NAO’s report found that the 646-bed Royal Liverpool, which was due to open in June 2017, is now forecast to be completed more than five years late, in autumn 2022. It is now predicted to cost a total of £1,063 million to build and run, compared to the original £746 million forecasted.
The 669-bed Midland Metropolitan at Smethwick, which was originally due to open in October 2018, is now expected to open in July 2022 and cost at least £988 million to build and run, more than £300 million above the original £686 million. This includes £315 million still to be spent to complete the construction.
Most of the increased construction costs so far have been borne by the private PFI investors and Carillion, rather than the taxpayer, said the NAO. It is estimated that shareholders, investors, insurers and Carillion have lost at least £603 million on the construction of both projects.
There were significant construction problems and delays before Carillion went into liquidation on 15 January 2018 but the contractor’s collapse created more delays.
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 and the government decided to terminate the PFI schemes and provide public financing to complete the hospitals.
There are significant risks of further delays and added costs at the hospitals, although their situations are different, said the NAO.
The affected trusts are now directly managing the contracts with new construction firms. At Midland Metropolitan, the Sandwell and West Birmingham Trust has negotiated a target price for work by its new contractor, Balfour Beatty, and prices shouldn’t rise unless the trust changes the scope of the project or there are unforeseen problems with Carillion’s work.
NHS England and NHS Improvement have worked with the Liverpool University Hospitals Trust to develop additional oversight arrangements, such as using an independent construction consultancy to advise on the appropriateness of costs.