30 June 2006
University Hospital Birmingham Foundation Trust might be punished after allegations emerged that it had committed to spend more than £100m on construction before it was authorised by the Treasury.
In April, the Department of Health and the Treasury gave the green light to the trust's £559m Private Finance Initiative to build a 1,200 bed 'super hospital'. Although the Treasury backed the deal, it has now emerged that it had concerns about the trust's governance arrangements.
Des Browne, then chief secretary to the Treasury, wrote to the DoH alleging the trust had pre-empted the Treasury's approval process (which is required for all PFI schemes worth more than £100m) by committing itself to more than £100m of construction work on the new hospital.
The department passed the matter to Monitor, the foundation trust regulator, which has powers to step in to resolve the breach, including issuing a warning notice and requiring action from the board. In extreme cases, it can remove or suspend board members and even dissolve the foundation trust, although it is thought this is unlikely in this instance.
In a statement to Public Finance, Monitor confirmed that it had asked the trust for an explanation and had received a response that it was now considering.
The trust added: 'We have sent a submission that sets out all the facts and we believe this will bring the matter to a close.'
However, it would not be drawn on the contents of its reply.
PFjun2006
