NAO report slams government on Carillion mess

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Nationaltradesmen.co.uk has learnt that the report published by the National Audit office highlights the government failures to get the two flagship Carillion hospitals built, creating misery for patients and staff forced to cope with failing buildings.

Carillions collapse

The report describes how after Carillion collapsed on 15 January 2018 the government has struggled to ensure that work on both hospitals was restarted.

Some of the delay was a result of the government being initially still wedded to completing both projects under the Private Finance Initiative (PFI). However the problems were so great that not only could PFI not be used for the two hospitals but the government has scrapped in its entirety.

The report raises concerns about Laing O’Rourke’s remediation and finishing agreement with the local Liverpool NHS Trust because of an absence of contractual incentives to control costs.

At the Midland Metropolitan, the Sandwell Trust has negotiated a ‘target price’ for Balfour Beatty.

The report hopes that prices should not rise on this hospital unless the Trust changes the scope of the project or there are unforeseen problems with Carillion’s work.

Construction of the Royal Liverpool is now expected to cost at least £724m compared with the original £350m budget. This includes the current estimate of £293m for remedial work to the structure and to complete the construction.

The construction of the Midland Metropolitan is now expected to cost at least £663m compared with £350m in the original business case. This includes £315m still to be spent to complete.

The report does highlight that the government wrongly paid £42 million in compensation to the private investors on the Royal Liverpool. If it had delayed paying the compensation until it was fully aware of the cost of the project to complete, the money could have been saved.

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.”