Carillion collapse further delays building at two major hospitals

The chair of the British Medical Association has demanded answers about the future of two major hospitals that Carillion was building when it collapsed, amid mounting concern about the impact of any delays on stretched NHS services.

Patients’ groups joined the doctors’ trade body in calling for clarity after local NHS trusts admitted that work on the £335m Royal Liverpool University and Birmingham’s £350m Midland Metropolitan hospitals is on hold.

Aidan Kehoe, chief executive of the Royal Liverpool and Broadgreen University hospitals NHS trust, said Carillion’s liquidation would further postpone a project that has already been delayed twice.

Dr Chaand Nagpaul, chair of the British Medical Association Council, called for more information about efforts to resume the projects, which are being built as the NHS faces its worst winter crisis in years.

“We urgently need clarity on exactly what is going to happen to the hospitals in Liverpool and Birmingham,” he said. “With the construction in Liverpool already delayed by more than a year, patients and staff need answers on when construction will resume and if services will be further delayed.

“Unfortunately, this is a classic example of what can happen when these PFI [private finance initiative] deals go wrong – construction stalls, services are delayed or collapse and taxpayers are expected to foot the bill.”

Carillion’s collapse has fuelled criticism of PFI deals, in which the government outsources major projects to private firms. Labour’s leader Jeremy Corbyn vowed to end the “racket” in an interview with the Guardian.

The two hospitals were among multimillion pound public-private partnership (PPP) contracts that were proving far more costly than Carillion had hoped and have been cited as key contributors to the company’s financial failure.

While the government has agreed to keep funding Carillion’s public sector staff in an effort to prevent disruption to public services, the future of the hospitals, planned to serve densely populated urban areas, is less certain.

A Department of Health spokesperson said: “The government is doing everything possible to minimise the impact and along with the hospital regulator NHS Improvement we will continue to support all NHS organisations involved to ensure there are plans in place to keep any construction delays to a minimum.”

Jonathan Ashworth MP, Labour’s shadow health secretary, said: “The collapse of Carillion has extremely serious implications for those hospital trusts with a relationship to the firm.

“In the midst of an unprecedented winter crisis, the government must urgently reassure patients and staff that their meals will still be cooked, hospital wards cleaned and that construction on new hospitals will not cease.”

Workers were sent home earlier this week from the sites, overseen by two firms jointly owned by Carillion, both called the Hospital Company.

Lenders to the two developments, which include the European Investment Bank, French bank Crédit Agricole and Legal & General pensions, are understood to have attended emergency talks with the government this week.

But local NHS trusts admitted on Friday that they do not know when new contractors will be found to resume work on the hospitals, which are both running well behind schedule already.

The Royal Liverpool was originally slated for completion in March 2017 but has faced successive delays, after workers found asbestos in the ground and cracks in concrete beams. It was expected to open in June 2018 but the local NHS trust admitted it now does not know when the building will be finished.

Aidan Kehoe, chief executive of the Royal Liverpool and Broadgreen University hospitals NHS trust said contingency plans were under way to minimise disruption but said “very little” work was going on at the state-of-the-art 646-bed hospital, where patients will enjoy their own private en-suite rooms.

“Handover of the new Royal has already been delayed,” he said. “We expect that the liquidation of Carillion will add to that delay.”

Kehoe said the Hospital Company, a special purpose vehicle that houses the project, run by a board composed largely of former Carillion staff, was working to find a new contractor. He said the hospital would still be built and that the Hospital Company has insurance funds to fund its resumption.

The Midland Metropolitan, in Smethwick, west Birmingham, was originally scheduled for completion in autumn this year but has also been hit by engineering problems, pushing it back to June 2019. Sandwell and West Birmingham NHS trust chief executive Toby Lewis said in a video that work would be on hold for “some weeks or even longer”.

Liz McAnulty, chair of the Patients Association, said: “The impact of the collapse of Carillion on patients is currently unclear and will vary a lot according to local circumstances. We would hope that any major NHS construction projects would have safeguards and contingency planning in place.”

As the future of the two hospitals was thrown into doubt, documents obtained by the Guardian under freedom of information showed that Carillion won the contract to build the Royal Liverpool University hospital following a tendering process in which cost savings were prioritised. The company was lagging behind a consortium called Horizon in the interim stage of bidding, according to a document released by the council, but leapfrogged its rival in the final stage.

A separate document showing the criteria for awarding the contract reveal that this final stage, when Carillion moved ahead, put greater stress on the importance of keeping costs down.

One criterion that was added reads: “Bidders should include detailed assumptions and calculations of the projected savings in their written submission.”