New wing at Fife's Victoria Hospital to cost £520m

Published: 16 Jul 2009 09:173 comments

NHS Fife will be paying over £17 million a year for 30 years - a total of almost £520 million - for the new PPP Victoria Hospital wing in Kirkcaldy.

The Press obtained the sky-high figures for the annual payback - described as 'value for money' - through a freedom of information request.

With the whole project for the new build priced at £170 million, it means the health board will be paying back over three times the actual cost of the work.

NHS Fife said the payback was £17.303 million per year, which would run from 2011-12 until 2041-42.

Health campaigners said they must have struck a bargain as they feared the total payback would have been nearer £900 million.

And Dunfermline and West Fife MP Willie Rennie said it could be 'good news' for Dunfermline"s Queen Margaret Hospital, which is due to be refurbished after the Kirkcaldy project is completed in 'late 2011'.

The fear in West Fife had always been that the health board would be forced to pay such a crippling cost over 30 years that there would be little or no money to refurbish the Dunfermline hospital and retain as many services for patients as possible.

Under the Right for Fife proposals, the Kirkcaldy hospital will become Fife"s acute hospital with QMH "downgraded" to more of a day hospital.

Mr Rennie said, 'It seems an awful lot of money but it could be good news for West Fife if they"ve managed to get a good deal.

'We want to ensure NHS Fife can keep QMH as a thriving hospital, with a new midwife-led unit, diagnostic and treatment centre and all the services we can get, so if they have more money to do this, so much the better.'

John Winton, of Local Health Concern, said, 'The biggest surprise was that the payback over 30 years is much less than expected.

'I couldn"t quite understand it compared to the two Glasgow PFI new-builds at Stobhill and Victoria, which cost £200 million with a payback of £32 million a year over 30 years.

'I know it was signed a couple of years back but you get the feeling, especially as the Treasury offered cash to bail this project out a few months back, that the Scottish Government have really been trying to push the price down.'

He added, 'It"s three times the initial cost whereas it"s four and a half times the initial cost in Glasgow.

'We"d always thought it would be around £30 million a year and £900 million in total so to my mind there"s been an intervention somewhere.

'It sounds like a good deal for Fife but has the Scottish Government been involved in getting a better deal or did Gordon Brown get involved when he saw the project was in danger of going pear-shaped?'

The public private partnership (PPP) deal, also known as private finance initiative (PFI), is with Consort, an arm of developer Balfour Beatty, and was signed in May.

The contract had looked in doubt in March when the Treasury named it as one of 110 projects that weren"t going forward because private firms couldn"t find the necessary finance due to the recession.

And in May the health board said that they wanted to make even more savings in 2009-10, up from £2.5 million to £4 million, because of the 'increased cost of the annual service payment' for the new Victoria wing.

Mr Rennie said, 'There is a special fund to assist with PPP projects that are or were struggling and I know this because it was available to the replacement Forth crossing project too, so they may have applied for that.

'I know they"ve said the financial side is costing more initially but they hope to recover money over the period of the contract.'

A statement from NHS Fife said, 'The PPP contract with Consort covers the construction of the new build and maintenance of the building for the 30 year contract period.

'This includes providing power and water as well as looking after the fabric of the building including internal and external decoration.

'Services known as "soft services" eg cleaning, catering, portering, telephone services and car parking remain the responsibility of NHS Fife.

'The project has been rigorously assessed by the NHS Fife Board and Scottish Government so that it remains value for money.'

And the statement added, in reference to the PPP deal in Glasgow, that 'it would be inappropriate for us to comment on other boards'.

The Victoria extension, currently the largest construction programme in Fife, will boast a new accident and emergency (A&E) department, maternity and children"s services and specialist surgery and medical wards.

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  • Dunfermline observer
    Unregistered User
    Jul 18, 09:36
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    At least the NHS Fife comment is correct. Appalling reporting to suggest that the £520m total bill covers the same scope as the £170m construction cost. It doesn't - the £520m covers construction and then maintenance and operation for 30 years, so it's ignorant reporting to try to make any comparison between the figures.

    Recommend?   Yes 3     No 1

  • Bonesy
    Unregistered User
    Jul 20, 10:17
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    Well done the person who pointed out that this report is badly written. As someone who works with PPP contracts, it is immensely frustrating to see PPP painted as merely covering construction. You are getting c.30 years maintenance as well.

    I am surprised that Mr Rennie does not know that this was in fact bank funded and had nothing to do with the Treasury fund. This information is readily availble in the public domain. Something the Press could have easily found out as well.

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  • Andy
    Unregistered User
    Aug 12, 09:36
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    This project would have cost NHS Fife a lot less if they hadn't made such a mess of it and it had stuck to the original programme (which should have seen building start about 2 years ago). Their choice to subcontract the site preparation works to a seperate contractor (who then subcontracted out again), their frequent change of mind on design and their general inability to make commercial decisions saw the costs rise by about £1m per month due to construction inflation and funding increases.

    There should be an independent inquiry as to why the project was delayed and those responsible held to account as we've all ended up paying more due to incompetence. How much did NHS Fife spend on external advisors and consultants and yet still make a mess of things?

    This is sloppy reporting as usual blaming the private sector and not looking any deeper.

    Recommend?   Yes 0     No 0