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Wednesday 23rd May 2018

PFI scheme collapse

30th January 2007

01052006_construction1.jpgIncompetent managers caused the collapse of a £900m PFI scheme, say ministers.

The verdict comes from the Public Accounts Committee, which has called for closer scrutiny of current large-scale building projects, worth a total of £13bn. In particular, they advise reviewing any programme where costs had risen by more than 10%.

The Paddington Health Campus scheme aimed to replace three run-down London hospitals, but the costs spiralled to £894m, almost three times its original budget, and cost £15m when it was finally abandoned in 2005.

Arguments between the NHS trusts involved in the scheme also added seven years on to its expected completion date of 2006.

The report into the Paddington project also criticised the trusts for failing to create an adequate business plan, or consult their staff over the new facilities.

The former North West London Strategic Health Authority were condemned for failing to halt it earlier, while the Department of Health was culpable for not being sufficiently involved, leaving local managers to flounder and make ‘bad decisions’.

The government said it now formally approves expensive schemes at outline stage, has tightened up checks and introduced independent risk assessments.

The DH is now reviewing £13 billion of PFI schemes, to save up to £6bn.

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