Edinburgh Children’s Hospital will cost a further £90m

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Edinburgh Children's Hospital will cost a further £90m

The project to build a new children’s hospital in Edinburgh will cost a further £90m.

A new Audit Scotland report shows that £80m has been spent on “enabling and equipment works” at the site – beyond the deal with consortium IHSL.

A further £11.6m was given to IHSL to end a contract dispute over construction standards at the hospital.

The extra costs mean the lifetime price tag of the new hospital is set to top £500m.

NHS Lothian pulled the plug on the opening of the hospital in July and fears have been raised over its future.

The annual audit report for NHS Lothian – finished before the hospital’s opening was indefinitely delayed – also reveals that the health board is facing a “financial gap” of £25.9m this year with a shortfall in excess of £80m projected by 2021/22, according to figures supplied by NHS Lothian.

Health secretary Jeane Freeman has said work to establish the extent of problems with ventilation and drainage at the unused hospital is “on track” and has ordered a number of inquiries into the situation.

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The Royal Hospital for Sick Children had been due to open in autumn 2017

But Scottish Labour health spokeswoman Monica Lennon said: “The government has clearly known for some time about the serious issues around governance and problems with the progress of the contract for the new Sick Kids hospital Edinburgh.

“With the publication of today’s report, it begs the questions of why the health secretary hasn’t previously mentioned it and how the situation has been allowed to progress to this stage.

“Concerns raised by trade union officials that the new Edinburgh Sick Kids could be ripped down before it even opens are unthinkable, and a public inquiry must get under way.”

Legal settlement

The new Children’s Hospital cost about £150m to build, but its full price tag over the next 25 years, including maintenance and facilities management fees, will be £432m.

In 2017, a dispute between NHS Lothian and IHSL began over standards of construction in relation to drainage, heater batteries, and void fire detectors.

Image caption

The corridors of the new hospital will remain empty for some time

The Audit Scotland report states that the health board felt “the issues experienced were materially non-compliant with the original specifications” but a planned legal challenge against the construction consortium was dropped in favour of paying IHSL £11.6m to settle the outstanding issues – a move approved by the Scottish government.

NHS Lothian then took possession of the site from IHSL in February after it was signed off by an independent certifier and the monthly repayments – which would average about £1.4m a month – began in February under the Non-Profit Distributing (NPD) system, the Scottish government’s version of controversial private financing models such as PFI.

‘Taking a close interest’

Last month, a full safety review into the delayed Sick Children’s Hospital was ordered by the Scottish government. It also announced private consultants KPMG had been hired to establish the factors that led to the last-minute delay.

Caroline Gardner, Auditor General for Scotland, said: “We have continued to monitor events since the annual audit report was issued and will be taking a close interest in the NHS safety review’s findings and KPMG’s report on the governance of the project.”

NHS Lothian’s 2019/20 operational plan, drawn up before the latest delay to the new children’s hospital, outlines a financial gap of £25.9m but projections for subsequent years predict a shortfall of more than three times as much.

Audit Scotland points out that the gap is “largely in line” with the three previous years where the board has reached a break-even position, but it points out this was “thanks to an increasing reliance on one-off savings”.

The report concludes that “at this stage, there are no clear plans to close the financial gap on a recurring basis”.

NHS Lothian and the Scottish government have been approached for comment.

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