Laing O’Rourke to restart construction on Royal Liverpool hospital

26 October 2018 | By Neil Gerrard

Image: Royal Liverpool Hospital (Google Streetview)

Laing O’Rourke is to take over the construction of the stalled Royal Liverpool hospital.

This follows the earlier decision by the NHS trust to terminate its deal with Carillion PFI vehicle The Hospital Company, after the contractor went into liqudiation earlier this year.

Aidan Kehoe, chief executive of Royal Liverpool and Broadgreen University Hospitals Trust confirmed that the PFI deal had now been officially terminated and the contracts transferred to the trust.

That has allowed the Trust to install Laing O’Rourke as management contractor.

Kehoe said: "Our priority now is for Laing O’Rourke to get construction 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. We expect to see some work on site from November, with the new Royal expected to be completed in 2020."

The new Royal will now be publicly funded through the Department of Health and Social Care (DHSC).

Under the terms of the original contract, the funders will receive a £42m termination payment from the Trust (provided by DHSC), as well as funding held by The Hospital Company at the time of its winding up.

This is required to cover PFI unitary payments that The Hospital Company will no longer receive, and deducts the cost of the remaining construction work, and the projected cost of maintaining the hospital – both of which will now fall to the Trust.

The Trust added that with the earlier payments it made, the total cost to the public sector of the new hospital will be lower than envisaged when the project agreement was signed.

The new arrangement means the lenders to the original PFI deal will lose a “substantial proportion” of the funding they have advanced, while the equity funders (Carillion Private Finance and Pensions Infrastructure Platform) will lose all their investment.

Paul McNerney, director at Laing O'Rourke said: “Laing O'Rourke is 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.”

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