An NAO report reveals the Midland Metropolitan and Royal Liverpool Hospitals were removed from the Major Projects Authority's portfolio in 2015
The Department of Health lobbied to prevent independent watchdog the Major Projects Authority from having oversight over the hospital schemes stalled by the collapse of Carillion.
A report by the National Audit Office (NAO) has revealed that in the fourth quarter of 2014/15 the then Department of Health lobbied successfully to remove hospital construction projects from the MPA’s portfolio.
The department, which at the time was headed by Jeremy Hunt, now foreign secretary, argued that as responsibility for these projects lay with hospital trusts and not the department following a reorganisation they did not fall under the MPA's remit.
The projects removed from the portfolio included the Midland Metropolitan (pictured) and Royal Liverpool University hospitals, two of the four public sector contracts on which Carillion faced large losses before its collapse in January this year.
Shadow chancellor John McDonnell told the Guardian it could be “construed as reckless to remove these projects from the MPA”.
The NAO report said: "While the Authority did not scrutinise the two hospital projects, the Cabinet Office monitored Carillion as part of its risk management system for strategic suppliers.
"Once it was aware of the company’s financial difficulties in July 2017, the Cabinet Office developed detailed contingency plans."
The government has now been forced to step in to bail out the two projects, with board papers from the Sandwell and West Birmingham Hospitals Trust revealing the the final bill for completing the Midland Metropolitan Hospital now set to cost the taxpayer at least £300m.
The expected cost for finishing the Royal Liverpool Hospital, which the government agreed to fund last month, is not yet known, but an independent review by Arup has uncovered that incorrect cladding was fitted to the hospital.
The review has also been examining cracks in the hospital's concrete structural beams, which were first made public in February when former Carillion boss Richard Howson told MPs about the issues.