01 July 2005
The collapse of ambitious plans to redevelop northwest London's health care casts a long shadow
In the end, the news was expected, but the impact of the decision to scrap the £1.1bn Paddington Health Campus Private Finance Initiative scheme was substantial, nonetheless. The abandonment of the ambitious plan has not only set back the modernisation of health care in northwest London, possibly by years, but some campaigners claim it could have far-reaching implications for other large PFI projects.
On June 21 an extraordinary board meeting of the North West London Strategic Health Authority decided to withdraw the outline business case for the campus, which would have brought together the Harefield, St Mary's and Royal Brompton hospitals on the Paddington Basin residential and retail development in west London. An independent review into the affair will now be launched.
The project had been plagued with problems for the past seven years, including falling foul of Department of Health regulations on the space between beds. It has also been the target of a campaign against the removal of the world-famous Harefield hospital from the borough of Hillingdon. But the final straw was a disagreement between the trusts' boards over the viability of changes in the outline business case and the impact of payment by results.
The case was submitted to the DoH in December and amended in February when Westminster City Council suggested an alternative land deal, which the SHA believes would have increased the scheme's value for money significantly.
The St Mary's Trust board backed the deal, noting that it would improve its financial standing in future years. However, the Royal Brompton and Harefield board rejected the deal, partly because it was worried that the scheme's viability could be compromised by a fall in demand for hospital-based services. It also feared there would be an affordability gap, which would be felt acutely by St Mary's under the payment by results regime. Without the Brompton's support, the SHA felt it could not continue.
In public at least, there has been no finger-pointing. The SHA and St Mary's were dismayed but vowed to redouble their efforts to develop local health services.
'I am very proud of the huge amount of work and effort put into trying to bring it to fruition. This will not be wasted,' said SHA chief executive Gareth Goodier. 'There is now more hard work to be done on the alternative options for the future of health services in northwest London.'
St Mary's said it would forge ahead with a new plan: 'Our attention is firmly fixed on the future of our hospitals and plans for new accommodation for the nationally renowned services that we host.'
Royal Brompton and Harefield chief executive Robert Bell said the decision was a 'milestone' in the trust's development. 'I believe it signals great opportunities for us to focus on our immediate needs as well as on our long-term future. We are committed to the enhancement of both of our hospital sites,' he said.
However, John Lister, information director at pressure group London Health Emergency, said the inquiry should investigate how much time and effort were wasted on the doomed project, which is believed to have cost £14m in fees for lawyers, PR firms, architects and planners.
Many of the newer PFI schemes are large 'bundled' projects like Paddington Basin, for example, Liverpool's £1bn scheme. The thinking is that larger projects attract bidders and make best use of the limited capacity in the construction industry. But Lister insists they are unworkable.
'The Paddington project seems to sum up the one-way dynamic of second and third wave PFI schemes, which have also reached stratospheric cost levels without identifying how such prodigiously expensive infrastructure can be affordable within an NHS funded on the basis of payment by results and standardised reference costs. These schemes should be axed before more time and money are wasted,' he said.
The DoH has rejected suggestions that Paddington shows larger PFI projects don't work. A spokesman said all schemes were rigorously assessed and went ahead if they were realistic and affordable.
Nevertheless, the failure highlights a problem facing all PFI schemes.They need to show bankers and the DoH that they have the income streams to service PFI payments – but Patient Choice and payment by results render such assumptions virtually meaningless.
In the end, history might view the scrapping of the Paddington scheme as the first PFI casualty of the new health care market.
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