Government inquiry ordered after £1.1bn Paddington PFI collapse

The £1.1bn PFI hospital planned for Paddington was finally ditched this week, eight years after the scheme was first proposed.

A meeting at the North West London Strategic Health Authority on Tuesday agreed to end the project, as well as to launch an independent inquiry into how the team behind the project failed to get the hospital off the ground.

A report submitted to the board meeting acknowledged that attempts at striking a land deal for the scheme late last year were flawed. The report said: “The continuation of the project at this stage is not in the best interests of the public. With the time and cost constraints that now pertain to the land transactions, it is unlikely that maximum value for money can be obtained at this stage.”

New health secretary Patricia Hewitt is expected to approve the inquiry and was also reported last week to doubt the need for multiple big PFI hospital schemes in the future.

Documents submitted to Tuesday’s meeting also revealed the cash spent on plans for the scheme had reached nearly £14m, which included £7.8m spent on consultants such as Davis Langdon, Turner & Townsend and EC Harris. The rest of the money was spent on wages, accommodation and other costs (see left).

A source at one of the consultants said his firm’s work had effectively ended in January. The source said: “We are submitting our final fees but have not been really engaged since the start of the year. It’s been in meltdown since then and this week’s decision was pretty inevitable.”

The collapse of the scheme was welcomed by campaigners against the project, first proposed in 1998. Jean Brett, who has campaigned to save one of the three hospitals, the Harefield Hospital in Hillingdon, said: “It’s a huge victory for common sense tinged with near disbelief that it took five years and nearly £14m being wasted for NHS management to accept the truth.”

The continuation of the project at this stage is not in the best interests of the public.

Board Report

QS News also understands that alternative plans are being considered to rebuild one of the hospitals, the St Mary’s in Paddington, on a nearby site.

Sources claim that the hospital is looking at soon to be vacated land owned by the North Westminster Community School. Such a scheme will cost around £500m.

A source claimed that the parties involved in the PHC, which include the St Mary’s and Brompton & Harefield NHS Trusts and Imperial College, would have trouble getting new plans off the ground.

The source said: “There is going to be minimal confidence at present after the trouble at the PHC.”

QS News sister magazine Building first revealed news of a controversial land deal which could have cost the client up to £148m for 1.3 ha of land in the Paddington Basin. The site was seen as crucial to providing the hospital with enough capacity. However, in March, the landowner walked away from the deal leaving the project floundering.