Construction News

Tue November 24 2020

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Government confirms Liverpool hospital bail-out

27 Sep 18 The government has confirmed that it will bail out the Royal Liverpool Hospital to enable construction to resume.

The new Royal Liverpool Hospital
The new Royal Liverpool Hospital

Construction work on the hospital stopped in January 2018 when the main contractor, Carillion, filed for insolvency.

The Hospital Company, selected as developer by the Royal Liverpool and Broadgreen University Hospitals NHS Trust under a private finance initiative (PFI) deal, had until the end of September 2018 to rescue the £335m project or face contract termination. The trust board decided on Tuesday this week to terminate that contract.

The government has now confirmed its support for proposals to complete construction work within the public sector as quickly as possible, and open the hospital to patients in 2020.

Health minister Steve Barclay said yesterday: “When I visited the new Royal Liverpool Hospital in May, I made clear the government’s commitment to ensuring the construction of this state-of-the-art hospital was finished. I am pleased to today confirm that the government will step in and publicly fund the remaining work so that the hospital is completed, as it has also done with the Midland Metropolitan Hospital in Birmingham.

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“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 that the PFI agreement should be terminated after 30th 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.”

Aidan Kehoe, chief executive at Royal Liverpool and Broadgreen University Hospitals, said: “We have all strived to maintain the existing project agreement, but it has become clear to us that this will no longer be possible. Our board has now agreed that the existing project agreement should be terminated, and that the trust should complete the project.  The trust intends to continue working with the existing construction contractors involved, so that the construction finishes as soon as possible, maximising the value for money of the taxpayers’ investment in the hospital.”

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