Government takes over second Carillion hospital project

Carillion had been working on the project but work ground to a halt at the hospital after the Wolverhampton construction and services giant went bust earlier this year.

The 646-bed hospital was originally set to open in March last year under a Private Finance Initiative (PFI) but was delayed by a string of problems with the building work.

Work is now not expected to be finished until the middle of 2020, after another £100 million is spent to complete it.

It mirrors the crisis that hit the Midland Metropolitan Hospital scheme in Smethwick, which was also being built under a public-private partnership deal with Carillion. Already delayed, work at Smethwick ground to a halt in January after the builder collapsed into liquidation.

The Government recently announced that it would take over the work and directly hire a new contractor. The cost of the project has soared from £350m to £500m and it is now expected to be four years late, opening in 2022.

Meanwhile, campaigners in Liverpool have welcomed the news that work on building their new hospital would now be completed.

Aidan Kehoe, chief executive of the Royal Liverpool and Broadgreen NHS Trust said: "The collapse of Carillion created an unprecedented situation with numerous complex legal and commercial issues that we have been working hard to try to find a solution to, alongside the various parties involved.

"All parties have been committed to getting an agreement that enables construction to restart as soon as possible.

"Today our Board of Directors agreed that this could not be achieved within the existing PFI agreement and that this agreement should be terminated after the 30 September 'long-stop date'.

"We have now reached an agreement in principle with The Hospital Company (Liverpool) on the way forward for the new Royal.

"Subject to detailed Government approvals, and legal agreements being finalised, we intend to have a managed termination process after 30 September, by which the benefit of the analyses and pre-works discussions by the lenders will be transferred to the Trust.

"This will see The Hospital Company (Liverpool) hand over its contracts for construction, supply chain and facilities management, to the Trust, over the course of the next few months.

"This is now the fastest way in which we can see construction on the new Royal restarted and means we have outlined a process for doing so.

"This is really positive news for our staff, patients and the people of Liverpool. We now have a solution and can work on moving forward."

Unite assistant general secretary Gail Cartmail said: "The belated decision by the government to step in to complete the build of the Royal Liverpool hospital would not have happened without the pressure of unions, Labour politicians and the people of Liverpool.

"The fact that it has taken so long for the government to step in, is in itself a scandal.

"Not only were they asleep at the wheel when Carillion collapsed, their slumbering inaction meant months of delays and uncertainty while building work on the Royal Liverpool hospital stood still.

"The priority now is to get the new Liverpool Royal built and to ensure that it is owned by the public the hospital will serve.

"Given the problems associated with the hospital project, the people of Liverpool need to be reassured that the hospital will be safe and structurally sound, to begin doing that we need the Trust to publish the structural survey detailing the defects on the hospital.

"The Trust also needs to ensure that when a new contractor is appointed they ensure that workers are directly employed, that unions are recognised and given access and that any form of blacklisting is absolutely outlawed."

The two hospital projects were among hundreds of government contracts being handled by Carillion, most of which have now been acquired by other companies. Of Carillion's 19,000 UK workforce, around 2,800 have lost their jobs - 400 of them at the company's headquarters in Wolverhampton where around 80 staff are left working with accountants PwC on the wind-up of the liquidated company.