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'False economy' at Barts

Skanska in line for £100m compensation if Hewitt succeeds in dropping hospital

THE DEPARTMENT of Health's request for Barts Hospital in London to be dropped from a huge PFI deal would save £4 million a year but cost more than £100 million in compensation.

Health secretary Patricia Hewitt has commissioned a review of hospitals in east London to prove that the £1.2 billion joint redevelopment of the Barts and Royal London hospitals is a white elephant.

The Department of Health refused to sign off the 35year project at the end of last year and asked for Barts to be dropped from the deal.

North East London Strategic Health Authority has until the end of January to complete the review, by which time the project must go ahead or preferred bidder Skanska will be entitled to claim £100 million in costs and compensation.

In a letter seen by Construction News, John Adshead, vicechairman of Barts and The London NHS Trust, warns that scrapping Barts is a false economy.

He wrote: 'The DH insisted that Barts should be locked into the PFI so that it couldn't be decoupled, and the contract reflects this. The costs of aborting the scheme are likely to exceed £100 million for no clinical gain. Removing Barts would produce relatively small cost savings in the context of a scheme of this size.

'The current cost of providing cancer and cardiac services in facilities at Barts and The London Chest hospitals is £16 million per annum. With the redevelopment, they would be all located at Barts at a cost of £20 million. The net saving from not including Barts in the redevelopment is therefore just £4 million per annum.' Shadow health secretary Andrew Lansley, said: 'I am asking Patricia Hewitt to explain what she is doing and whether she will give her approval in the next fortnight.' It has been reported that ministers are considering scaling back or cancelling 10 PFI hospital deals, including those at Bristol, Liverpool and Newcastle upon Tyne. A Department of Health spokesman refused to deny the report.