Royal Liverpool PFI deal to be terminated

The private finance initiative deal to deliver the troubled £335m Royal Liverpool Hospital is to be terminated after 30 September, the hospital’s NHS Trust has confirmed.

Earlier reports had suggested the deal was close to termination and the Royal Liverpool and Broadgreen University Hospitals Trust has now agreed it would be exiting the PFI agreement as of the end of this month, following a board meeting on Tuesday.

The NHS Trust’s board has agreed to run a managed termination process after 30 September, which will see The Hospital Company, which was in charge of managing construction, operation, and future maintenance of the building, transfer its contracts back to the Trust over the coming months.

This will be completed “subject to detailed Government approvals and legal agreements being finalised”.

The Trust said this was “the fastest way in which we can see construction on the new Royal restarted, and means we have outlined a process for doing so”.

Construction stalled on site earlier this year after the collapse of contractor Carillion.

Funded by L&G and the European Investment Bank, the troubled hospital has seen major delays, even before Carillion’s demise; its original completion date was March 2017, but this was first pushed back to February 2018, and delayed further when Carillion reported cracks in concrete beams and asbestos in the ground.

Consultant Arup has been undertaking a review of the development but this has unearthed a series of issues, including the cladding, along with structural problems. Laing O’Rourke had been in talks to take over the project.

It is hoped the termination of the PFI deal will allow construction on site to restart.

Aidan Kehoe, chief executive of the 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.

“We would like to thank our colleagues at the Department of Health and Social Care, the Treasury, The Hospital Company and funders the European Investment Bank and Legal and General. We would also like to thank our local politicians, in particular our local MP Louise Ellman, our staff, patients and local people, who have supported us throughout this challenging period.

“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.”

Health minister Steve Barclay said: “I am pleased to confirm that the Government will step in and publicly fund the remaining work so that the hospital is completed.

“It is a central purpose of PFI that construction risk sits with the funders. This has also been at the heart of the time it has taken since January when Carillion went into liquidation, as the lenders commissioned detailed expert assessments of the previous construction work.

“The Trust’s Board agreed yesterday that the PFI agreement should be terminated after the 30 September 2018, which under the contract, is the latest acceptable date for the hospital to be completed. The Government has made clear it supports the Trust’s decision.”