Health Secretary Alan Milburn has put a £160m private finance initiative hospital scheme on hold just as it was about to reach financial close.
The scheme to redevelop University College London Hospital was approved more than two years ago and was scheduled to be rubber-stamped last month.
However, Milburn has refused to give the scheme the go-ahead and has instead ordered a review of the number of hospital beds required in London.
The UCL scheme has been the subject of criticism from some hospital staff and others, including political pundit Will Hutton, who claimed that the redevelopment would lead to a cut in the number of beds and operating theatres in the capital.
A spokesperson for the Department of Health said: “We are looking at options to ensure there isn’t an overall reduction in the number of beds.
“The government is looking at the issue of taking beds out of hospitals. The long-term reduction in beds has to stop. We cannot support bed reductions in every scheme.”
The spokesperson was unable to say when the health secretary would approve the scheme.
The move comes as the government is facing mounting criticism over its running of the NHS.
Members of the consortium building the UCL hospital, which includes Amec, Balfour Beatty, Building and Property Group and Abbey National Bank, have expressed annoyance at the minister’s decision.
An insider at the consortium said he was staggered that the scheme had been put on hold.
He said: “We keep hearing that the delays are being sorted out in PFI and then the government turns around and imposes a delay on a scheme that is all set to go.
“It is a problem with the PFI that you end up caught in a political argument that you cannot foresee when you are bidding.
“We have been negotiating for over a year and spent millions bidding this scheme. If there was a problem with the bed numbers why has it taken the government till now to say so?”
A spokesperson for Amec said it had not been given a reason for the decision and declined to comment on bed numbers.
He said: “We had hoped it would have been approved by the secretary of state by now, but it’s a big political decision. It is still with the minister and Milburn is showing a keen interest in the project.
“The government has a lot of questions it wants to ask. We have no reason to expect that it will not go ahead.”