Trust says cost to finish the project will be cheaper than if it had been completed under the terms originally agreed with Carillion
Laing O’Rourke has officially been named as Carillion’s replacement on the stalled Royal Liverpool Hospital project, which the trust says will end up being cheaper than if it had been completed under the original deal.
The contractor, which has been linked with the projects for months and is currently working on the neighbouring Clatterbridge Cancer Centre, has officially been appointed on a construction management contract by the Royal Liverpool and Broadgreen University Hospitals NHS trust.
The trust said that when combined with earlier payments made to the trust, the total cost to finish the project will now be cheaper than if it had been completed under the terms originally agreed with Carillion, although financial details have not been revealed.
While the government is still finalising details of the funding package that will enable the completion of the project, the trust said it hoped that work could restart as early as next month, with construction work on the new Royal expected to be completed in 2020.
Aidan Kehoe, chief executive of the Royal Liverpool and Broadgreen University Hospitals NHS Trust, said: “All parties have worked extremely hard to resolve the issues caused by the collapse of Carillion. The lenders in particular have shown considerable goodwill in reaching this agreement.
“Our priority now is for Laing O’Rourke to get work restarted as soon as possible. We hope to be able to continue working with the existing subcontractors so that work can be completed quickly.”
Paul McNerney, director at Laing O’Rourke, said his firm was delivering the Clatterbridge Cancer Centre next door to the new Royal and had been working closely with the team there already. “The business now looks forward to partnering with the trust directly to re-start this important works for the local community.”
The confirmation of the appointment follows the trust officially signing off a legal agreement to terminate the existing PFI.
The agreement will take effect immediately and means the trust is now responsible for completing and operating the hospital.
Under the terms of the original contract the funders, the European Investment Bank and Legal and General, will receive a termination payment from the trust, which has been agreed at £42m, as well as funding held by The Hospital Company, the special purpose vehicle set up to run the scheme, at the time of its winding up.
The lenders have supplied £180m of funding to the project and in line with the risk transfer arrangements agreed in the original contract will lose a substantial proportion of the funding they have advanced, although details were not given. In addition, the equity funders, Carillion Private Finance and Pensions Infrastructure Platform, will lose all their investment.
As part of the wider package of support to be provided by the department of health and social care it has been agreed that the department will cover the termination payment of £42m.
The payment, along with the funding for the remaining construction work identified to date, is being made available through public dividend capital funding.