If at first you don’t succeed ...

‘We would be mad not to look at the lessons learned from the English Lift programme,” says Mike Baxter. He is the man charged with taking the best and ditching the worst of Lift – the troubled £1bn healthcare investment programme – and launching it in Scotland later this year. Baxter, head of private finance in the Scottish executive’s health department, is as good as his word: his visit to an east London Lift project last week was the latest in a string of such trips. He cites a scheme in St Helens that he visited last year as one of his favourites: “The key thing we saw here was that the Lift model can work. The rapid change in the development of their estate has been quite striking.”

St Helens has been one of the success stories but some of the 49 Lift companies, which are tasked with replacing 3,000 crumbling GP surgeries, have been beset by delays, cost overruns and spiralling bid costs – in some cases up to £500,000. So when the first projects in the Scottish version of Lift, to be known as Hub, are launched, contractors will be hoping for some changes.

The initial noises are encouraging. Although Baxter admits that the Scottish executive does not know the precise amount of work that needs to be done to bring primary care facilities up to scratch, he says he is determined to provide a steady stream of work – one of the loudest criticisms of Lift. “For me, the key to the success of Hub is ensuring the deal flow,” he says.

Jack Quick, Scottish business development director for contractor Balfour Beatty, says his company will “definitely be interested” in bidding for Hub projects, as long as it doesn’t end up like Lift. “We have a number of Lift schemes on the go and the flow of projects is the critical thing for us.

In east London, this has been fairly good. However, in the Midlands, there are Lifts that aren’t delivering the size and flow of projects necessary.”

Kevin Bradley, partner at consultant Davis Langdon, says the delays are often the result of the “problematic” relationship between NHS trusts and local authorities. Things will be different in Scotland, he says. “You can often have more than one NHS trust in a single local authority area. We won’t get this in Scotland, hopefully, as Scotland now has NHS boards and these tend to reflect local authority boundaries.”

In addition, the Scottish executive has hit on two ways of guaranteeing a steady stream of work. First, there will be a maximum of five Hub companies, each of which must demonstrate that it will provide services to at least 500,000 people. Second, as is the case in St Helens, the companies will not be confined to building GPs’ surgeries. These community Hubs will include premises for the police and fire services, social services, sheriff courts and mental health facilities.

“Our starting point is essentially different to Lift,” says Baxter. “We want to provide joint premises for facilities. But we have never had a strategic, programme-based approach in Scotland. Doing it this way gives the private sector a much clearer idea of what projects to expect to come on stream in the next few years.

“Ultimately, what we are trying to do is reduce the risk of projects so the deal flow isn’t solely dependent on an individual public service, such as GPs’ surgeries.”

Quick is cautiously optimistic: “We have been led to believe that the Hub projects will, on average, be bigger than their Lift equivalents. This approach is much more attractive to us, although it’ll be interesting to see how the process works with as many as five end users.”

Howard Foster is health sector leader for consultant EC Harris, which is working on the St Helens scheme. He led the industry’s response to the Hub consultation run by the Scottish executive last year and thinks the more ambitious approach of Hub is the right one. “The bad reputation of Lift in England is undeserved. However, there were some central themes that people wanted to see addressed,” he says.

The industry’s main concern, according to Foster, was that Hub should be a means of stimulating the wider regeneration of districts. “This was the aim in St Helens.

But, generally this was a secondary aim of most English Lift schemes rather than a primary one as is the intention in Scotland.

“As a consequence of focusing on the regeneration possibilities, the deal becomes much more attractive to investors. The residual value of the health facility is higher owing to the fact that the surrounding area has been overhauled as well,” he says.

Foster adds that taking the regeneration approach to the £100m St Helens project attracted property investment company William Pears to the Lift programme for the first time. Deepening the pool of private sector funding and expertise available to the programme is crucial, he says, because of the squeeze in capacity in the construction industry. “My point to the Scottish executive was that they had to take the opportunity to create a sustainable market of developers who would invest in the Hub model.”

Quick agrees that industry capacity to deliver the executive’s grand vision is an issue. “Hub will obviously stand out as a significant piece of public investment and should guarantee a workload over a number of years. It could be a good longer-term source of cashflow, certainly as far as we are concerned. But it will be competing against a lot of other large projects, particularly in education, to secure a contractor and supply chain. You have to ask: is the carrot of Hub being dangled alongside too many others?”

Baxter says: “We are extremely conscious of the capacity issue, but if we are able to provide certainty of deals then we can incentivise the private sector to skill up and tool up to deliver what we need. It is about stimulating the private sector – that is one of our roles.”

Although the executive will not go as far as underwriting bid costs, Baxter says that it will help ensure that contractors and other private sector companies are more likely to bid for contracts from the five Hub companies by staggering the bidding process over a number of years.

This is what Baxter hopes will be the final touch in ensuring the success of the Hub programme. As he says, there is no real alternative. “If we don’t do Hub then how would things in Scotland develop?

Ultimately that’s a question for ministers. But what Hub will bring is an impressive rate of development, culminating in a wide range of public–private contracts all aimed at improving public services in Scotland, which is what this is really all about.”