Department of Health calls on Barts and The London NHS Trust to reconsider plans for £1.2bn PFI scheme

The government could be presented with a multimillion-pound bill for wasted designs on the £1.2bn Barts and Royal London PFI scheme if the rethink it requested on the project goes ahead.

The Department of Health revealed shortly before the new year that it had asked Barts and The London NHS Trust to consider whether the St Bartholomew’s part of the project, which is worth £400m, should be dropped from the scheme.

The call came even though the project has been running for four years and has just reached financial close. It is part of a wider trend in government to proceed with smaller scale healthcare facilities in the region of £100m to £300m.

A case for treatment: How the Royal London could look in the future

A case for treatment: How the Royal London could look in the future

Sources close to the scheme told Building that any decision to axe St Bartholomew’s could result in the trust paying up to £40m in wasted design and planning fees.

One insider said: “I would be amazed if it gets chopped. I don’t understand why it has been judged so unaffordable now when it was judged affordable just a few years ago. There would be an outcry from the other bidders. It would be a legal bonanza for someone.”

The source estimated that about 60% of the £150m design budget had been spent, of which between £30m and £40m had gone on designs for St Bartholomew’s. The Skanska Innisfree consortium that is undertaking the project would expect the trust to pay the difference.

The Department of Health fears that the change to “payment by results” in hospital funding will mean less guaranteed income to pay PFI consortiums their monthly rental.

It said: “We’ve asked the trust to reconsider its plans to ensure that the scheme is both affordable and meets local needs. The trust has been asked to consider further the inclusion of the Barts element within the scheme as part of this process.”

The row comes against a background of increasing cost constraints within the NHS. Last month Patricia Hewitt said “every element of health spending” was under review.