Press Release - Department of Health - The Paddington Health
Campus scheme
19 May 2006
Sir John Bourn, the head of the National Audit Office, reported
to Parliament today on the cancellation of the Paddington Health
Campus scheme in June 2005 at a cost of £15 million.
The scheme was a complex and ambitious attempt to build a
world-class healthcare facility and ultimately proved to be beyond
the capacity of the scheme partners to deliver. There were three
main reasons for this. The first was the number and scale of the
risks and the lack of a single body in charge of the scheme. The
second was the way in which the partners organised and carried
through the scheme. The third was the lack of active strategic
support for the campus vision.
The 2000 Outline Business Case estimated the gross capital
construction cost to be approximately £300 million (£411 million at
2005 prices), with completion of the hospitals due by 2006. By the
time the scheme was cancelled in 2005, projected costs had risen to
£894 million and the expected completion date had slipped to
2013.
The National Audit Office considers that the North West London
Strategic Health Authority should either have required the campus
partners to draw up a new Outline Business Case in early 2003 or
cancelled the scheme at that stage. In late 2002, external
construction consultants confirmed that the estimated capital
construction costs had more than doubled and Westminster City
Council confirmed that the scheme could not fit on the land
available.
The report concludes that the failure of the Two NHS Trusts – St
Mary’s NHS Trust and the Royal Brompton and Harefield NHS Trust -
to merge at the start of the process was a key factor in the
failure of the scheme. Their diverging clinical and financial
interests were exposed as the scheme wore on, exacerbated by
developments in NHS policy.
The scheme eventually failed in May 2005 for three specific
reasons:
- The Campus partners were unable to secure adequate land for the
scheme;
- The Campus partners, and others, differed over whether the
scheme was affordable;
- Capacity planning in 2005 indicated that the local NHS in North
West London needed to reduce capacity by 500 to 600 beds.
All three reasons caused the Board of the Royal Brompton and
Harefield NHS Trust to decline to recommend the scheme for approval
to proceed in May 2005. The scheme was formally cancelled in June
2005.
The report notes that hospital building schemes cost, on
average, more than double (117 per cent) their initial estimated
cost. It recommends that the Department of Health should implement
its own Capital Investment Manual guidance on reappraising business
cases if estimated construction costs rise more than 10 per cent
above approved values. It also recommends that no NHS hospital
scheme should proceed without the formal identification of a single
sponsor, even if this means NHS Trusts must merge before starting
procurement.
Sir John Bourn said:
“A hospital development of this scale and ambition was
always going to be a challenge but the original business case was
inadequate, the lack of a single sponsor was a fatal flaw and the
final scheme was not deliverable. The cancellation of the
Paddington scheme at a cost of £15 million has left patients, staff
and visitors to the hospitals with outdated facilities.
“The Department of Health should draw on my report’s conclusions
and recommendations when deciding how best to initiate and manage
its £7 billion to 9 billion capital investment programme in order
to provide value for money to taxpayers, patients and staff.”
Notes for Editors:
- The scheme aimed to replace three run-down hospitals: St
Mary’s, the Royal Brompton and the Harefield, with state of the art
clinical accommodation. The scheme also included space for new
research facilities for Imperial College, including the National
Heart and Lung Institute, currently housed mainly on the Royal
Brompton and Harefield sites. The campus partners were Royal
Brompton and Harefield NHS Trust, St Mary’s NHS Trust, Imperial
College and, from 2002, Partnerships UK.
- The estimated capital construction cost of £894 million in 2005
included £117 million of optimism bias. Optimism bias, which was
introduced in 2003, is an adjustment required by the Treasury to
redress the tendency of capital schemes to be overly optimistic
when assessing the cost of projects. Judgements on affordability
after 2003 were based on the capital value including optimism
bias.
- Press notices and reports are available from the date of
publication on the NAO website at www.nao.org.uk
Hard copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 800 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 37/06
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