Carillion: New hospitals delayed for years by collapse of outsourcing giant, official report says

THE END OF THE EIGHTIES MYTH OF OUTSOURCING
CARILLION ALSO OPERATED IN CANADA 

National Audit Office predicts two hospitals will now open years behind schedule and hundreds of millions of pounds over budget

Carillion was the UK's second-largest construction company at the time of its collapse in 2018 ( Reuters )


Two hospitals being built by engineering giant Carillion when it collapsed are being delayed for several years, according to an official report.

The 646-bed Royal Liverpool, due to open in 2017, is now forecast to be completed more than five years late, although an opening date has not yet been set, said the National Audit Office (NAO).

It is now predicted to cost over £1bn to build and run the hospital, compared with the original £746m, with the taxpayer expected to pay £739m, a reduction of 1 per cent from what was originally planned, said the NAO.


The 669-bed Midland Metropolitan, due to open in October 2018, is now expected to open in the summer of 2022, at a cost of at least £988 million, over £300m more than the original amount, said the report.

The taxpayer is expected to pay £709m of this, an increase of 3 per cent from the original figure, said the NAO.

The private sector has borne most of the cost increase, with shareholders, investors, insurers and Carillion losing at least £603m on the construction of both projects, it was found.

The NAO said there were significant construction problems and delays before Carillion went into liquidation in January 2018 but the contractor’s collapse created more delay.

Work on both sites stopped while the hospital Trusts, government and the private investors attempted to rescue the projects.


The full extent of construction problems at Royal Liverpool began to emerge after Carillion collapsed and over the course of 2018, said the NAO.
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The new construction contractor has had to strip out three floors of the building and start major work to reinforce the structure with steelwork and additional reinforced concrete.

The Department of Health and Social Care (DHSC) paid £42 million compensation to Royal Liverpool’s investors to terminate the PFI (private finance initiative) contract.

Unite assistant general secretary Gail Cartmail said the report made “grim reading”, adding: “Two desperately needed hospitals are going to be years late and in the meantime local communities are left with facilities that are no longer fit for purpose.

”The responsibility for these delays has to lie squarely at the door of the government, which consistently failed to prioritise the overriding need that these hospitals had to be built.

“While the report notes the financial cost of the projects, the human cost of the delays of completing the hospitals has not been recognised.”

A government spokesman said: “As this report shows, the private sector has borne the brunt of Carillion’s catastrophic failure to complete these two projects.

”To support staff and local communities in Sandwell and Liverpool, we’re giving both Trusts the funding they need to minimise the delays caused by the collapse of Carillion and get these two new hospitals open.“

Press Association