Public Accounts Committee Press Notice

9th PAC Report 2006-07

The Paddington Health Campus scheme

Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:

“The collapse of the ambitious Paddington Health Campus project after five years was the direct result of appalling planning and forecasting of costs by the NHS Trust partners; rows between them over the way forward; and uncertainty over the Department of Health’s degree of support for the scheme, which was lukewarm at best. 

“The Department, in effect, left this £900 million construction project to local NHS staff who were rapidly out of their depth and floundering.  Their amateurism and incompetence in this field compounded the consequences of bad decisions made at the outset.

“The lessons arising from this sorry story are many. Certainly, the Department of Health, faced with a hospital building programme estimated to cost £4 billion more than the approved costs, must crack down on those NHS Trusts where the costs of schemes are forecast to rise by more than ten per cent and demand full reappraisals. The Department must look long and hard at whether its Private Finance Unit is really up to the task of supporting local NHS Trust procurement teams. And the Department’s hands-off attitude towards large-scale capital investment projects must be abandoned in favour of closer and sustained scrutiny.”

Mr Leigh was speaking as the Committee published its 9th Report of this Session which, on the basis of evidence from the Department of Health and NHS, examined two main issues: the way in which the local NHS developed the Campus scheme and the role of the Department.

The Paddington Health Campus Scheme was a complex and ambitious attempt to build a world class healthcare facility which would replace three run-down hospitals (St Mary’s, the Royal Brompton and the Harefield) and address problems with the configuration of specialist services in north-west London. However, after five years and £15 million spent trying to develop a robust business case, the Paddington Health Campus scheme collapsed.

In 2000, the approved Outline Business Case estimated that the redevelopment would cost £300 million (£411 million in 2005 prices), with completion by 2006. By May 2005, projected costs had risen to £894 million and the expected completion date had slipped to 2013. Reasons for the delay and cost increases include the fact that Campus partners had failed to secure adequate land for the scheme, and disagreements about the content and affordability. Whilst St Mary’s NHS Trust approved the revised business case in May 2005, the Royal Brompton and Harefield NHS Trust declined to recommend it for approval and consequently, in June 2005, the Department cancelled the scheme.

The Department of Health is currently reconsidering the scale of its £13 billion capital investment programme and expects to reduce its level of investment to £7-9 billion, following a review of each scheme’s affordability. Whilst the circumstances that led to the collapse of the Paddington Health Campus Scheme were unique, there are lessons for all NHS capital investment schemes.

The Committee found that the Campus partners were imprudent in submitting an Outline Business Case in 2000 which was manifestly inadequate. At that stage they had not consulted their own doctors and nurses as to the required clinical content of the Campus and were thus unable to determine with any degree of accuracy the land requirements and the likely cost. The eventual collapse of the scheme can be traced directly to the ill-informed decisions taken at the outset by the NHS in north-west London. When the scale of the cost increases became evident in 2002-2003, there was a lost opportunity either to put a stop to the scheme or to require a new outline business case. Overall, the scheme was simply too ambitious for the capacities of those responsible for delivering it.

Many of the failings seen in the Paddington scheme are familiar from past examinations of major capital projects. The Department and the NHS in north-west London repeated many of the mistakes that the Committee identified in its 1999 report on the Guy’s Phase III project. The Department failed to provide effective critical challenge when it approved the Paddington scheme in 2000 and thereafter failed to hold the scheme to account against its own guidance in its Capital Investment Manual. 

The Department believes there are no more ‘Paddingtons’ elsewhere in the hospital building programme and that its current review of pre-contract schemes will identify affordability problems if they exist elsewhere. There has, however, been too little control of the capital investment programme as a result of the Department’s ‘hands-off’ approach, and forecast costs are some £4 billion above approved outline business case costs. The Department now plans to scale the programme back to £7-9 billion through a one-off review, but it remains to be seen whether this action will be sufficient to get a grip on a programme, which continues to be managed by the NHS locally.

Notes for Editors

1. Contact details for requests for further comment from Mr Edward Leigh are provided below. ISDN facilities are available for broadcasting purposes.

2. The full text of the Committee’s Conclusions and Recommendations is attached to this press notice.

3. This report can be accessed via the internet from around 11.00 am on the day of publication.

All media enquiries to:

Luke Robinson
Select Committee Media Officer
Tel: 020 7219 5693
Mobile: 07917 488549