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Jersey will face higher building and borrowing costs - and potential competition with the NHS in securing contractors - if the new hospital project is delayed any longer, according to the Assistant Treasury Minister.
Deputy Lindsay Ash’s warnings came just a month before the States Assembly is due to debate the Government’s funding proposals for the £804.5m project at Overdale.
Speaking to the Future Hospital Review Panel, which is currently scrutinising the business case for the new hospital, Deputy Ash was unable to directly answer questions from the panel members about the proposed budget and funding, but, alongside Our Hospital Political Oversight Group member Deputy Rowland Huelin, stressed that the project must not be pushed back.
One of the questions raised by the Panel was whether a budget of £804m - including contingency funding - was appropriate for Jersey. They said that none of the submissions they had received had been supportive of the figure.
Deputy Ash assured that £658m (as a build cost) was the “going rate” for the type of hospital the Government is looking to build, adding that the Treasury team is “very, very keen” for the project not to exceed this amount, a case which they made “as strongly as they possibly could” to the team in charge.
“To get the ball going this time, this is the going rate,” he said, addressing queries as to why the budget had doubled since the plans to build the hospital on the Gloucester Street site.
“It’s a very different offering to Gloucester Street; Gloucester Street had no mental health facilities, this one is going to have everything in one place. Costs have moved up substantially since last time.”
Deputy Ash then said that if the ‘Our Hospital’ project was delayed by a further four years, it would be even more expensive, citing inflation on building costs and difficulties in finding contractors “after they have been let down twice."
Pictured: Deputy Ash said it would be difficult to find building contractors if the project is delayed.
“We say it’s very important we do this now, and we fund it as soon as we can because interest rates are at a low level,” he told the Panel.
“If we don’t, something that is worth considering is, we are ahead of the NHS on this game at the moment. They are planning to build huge numbers of hospitals very, very shortly, we are just, not enormously, but we are certainly months ahead of them, if we delay this project we will be running into traffic with the sort of building requirements that they have, which will make it even more difficult to revisit.”
Following questions from Deputy Inna Gardiner about the minutes of the Clinical Users Group – the group of medics that has helped the project team draw up the design specifications for the hospital – Deputy Huelin couldn’t say whether they had even been recorded or not.
“I am confident that clinicians have been engaged at every single level, I don’t know why [the minutes] haven’t been released and I don’t know if they were taken, so I can’t comment,” he said.
When asked what evidence he had seen to feel confident that clinicians support the project, he said he had never had any reason to doubt it and had done his “due diligence behind the scenes."
Pictured: It is unclear whether minutes of the meetings of Clinical Users Group were ever recorded.
Neither Deputy Ash or Huelin could explain why the Outline Business Case didn’t include a comparison with a ‘mid-range’ hospital, as required by HM Treasury Green Book - a key document setting out how governments should approach large-scale public investments.
“Why would you want to compromise what has been from the beginning a clinically-led project and build something might be medium or average?” Deputy Huelin said.
Later on in the hearing, Panel members questioned how the Political Oversight Group had made their funding decisions, but the answers were not forthcoming.
Deputy Ash justified borrowing as the best solution due to the currently low costs involved, before stressing again how further delays would affect the project.
Treasurer Richard Bell warned that if the States Assembly does not approve the Government’s proposition, the project will be put at risk and put on hold “until such a time an alternative funding strategy has been approved."
Deputy Ash then added that if the project does not move forward, it will cost millions annually to maintain the current hospital.
“It’s generally been suggested, to us as the Political Oversight Group, that the costs of keeping the current hospital open from 2026 will be £50m and that’s just keeping it in the current state.”
Professor Ashok Handa, the Clinical Director for the new ‘Our Hospital’ project, previously warned the Panel that the current hospital will not be usable after December 2026 as the operational daily risks and the clinical risks would then be so significant.
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