DoH will limit schemes to just six over next year as industry runs out of wherewithal to build large facilities
The Department of Health will invite contractors to bid on only half as many major hospitals as expected over the next 12 months.

The news comes as a blow to the government, which is under increasing pressure to deliver the public spending promises in its manifesto.

Officials have decided that the market can only cope with five or six new hospitals, at an average cost of £180-250m each.

With a general election believed to be only a year away, ministers are understood to have wanted to demonstrate their commitment to the NHS by announcing a string of hospital schemes.

A Whitehall source said: "Politicians see timeframes differently. Most ministers would like to see targets delivered quicker."

The source stressed, however, that the DoH is still on course to meet the government's aim of building 100 hospitals by 2010.

Politicians see timeframes differently. They would like targets to be delivered quicker

Whitehall source

A leading construction adviser to the government added: "The government has an agenda to get this stuff built, so it doesn't really care about contractors' problems.

It just wants its dream built."

The key problem facing PFI contractors at present is lack of capacity. They do not have enough management resources to bid for several additional projects – let alone build them.

One affected scheme is the £40m Plymouth hospital, known as the Vanguard Project, which will not invite bids until the summer, more than a year later than expected.

Peggie Johnson, service development co-ordinator for the project, said: "We wanted to make sure that we had firm market interest. There was no point going out when the market appeared to have reached saturation point."

The lack of capacity in the UK industry has led the DoH to approach overseas firms. Building revealed recently that the DoH had talked to Kellogg Brown & Root, the subsidiary of US construction firm Halliburton, about the possibility of entering the PFI healthcare market (26 March, page 15).