Client behind St Helier Hospital raises concerns about price growth impact
The NHS trust behind a major hospital redevelopment in south London is worried that growing construction costs could make the scheme too expensive.
The impact of mounting labour and material costs on tender prices has been a growing concern for clients in the sector.
This month Arcadis said materials costs had risen by an average of 15% this year alone – compared to a long-term trend of 3%.
It added the problems meant the cost of jobs would inevitably increase, saying tender prices for building work would rise 3% this year before easing in 2023.
Now Epsom and St Helier University Hospitals NHS Trust, which was one of six trusts to be handed a share of £2.7bn by the government in 2019, has raised affordability concerns.
According to board papers, non-executive director and deputy chair Martin Kirk asked how significant an impact soaring costs would have on plans to rebuild St Helier Hospital in Sutton, south London.
Rakesh Patel, the trust’s chief financial officer, said that “pay and non-pay costs were continuing to rise across all areas of the trust”.
He added that “this included the cost of materials which in some cases were also scarce and which was driving up their value. The cost of inflation was increasing to a point which was higher than planned.”
This is not the first time the trust has raised worries about the affordability of the project. It has previously said a number of factors could make the plan to redevelop St Helier Hospital “unaffordable”, including covid-19 and net zero obligations.