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NAO to probe handling of Carillion hospital contracts

8 October 2019 | By Neil Gerrard

The National Audit Office (NAO) is to examine the way in which Carillion’s Midland Metropolitan hospital and Royal Liverpool University hospital contracts were handled.

Both hospitals were funded by private finance initiatives (PFI) and were under construction when Carillion collapsed in January 2018.

Neither project was able to attract private refinancing and in mid 2018 both PFI contracts were cancelled and the Treasury was forced to step in to fund their completion.

The NAO said it would examine the government’s contingency planning for the hospital projects before the Carillion collapse and its response afterwards, the termination of the PFI contracts, and the subsequent letting of the new contracts. It is also expected to assess the eventual costs of the two hospitals.

A report following the NAO’s investigation into the government’s handling of the Carillion collapse in June 2018 noted that in 2017, Carillion expected losses of over £120m on the two hospitals.

Laing O’Rourke has since taken over the contract to complete the Royal Liverpool University hospital and has already removed parts of the cladding and exterior of the hospital to fix structural defects. In September, it started to install 165t of structural steelwork to secure the building.

Meanwhile, the NHS Trust in charge of the Midland Metropolitan hospital is hopeful that Balfour Beatty can begin works to complete the £267m building in December.

Comments

PFI Contracts are the bane of Trusts life. It ties holders down for years and Contractors laughing all the way to the bank (except Carillion) I believe the Government backs the lending anyway so the tax payer will always pick up the tab if things go wrong. When it's not your money who is accountable and who cares!!

Stewart Craven, 8 October 2019

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