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.