Carillion announcement: What does it mean?

Questions and Answers: The Midland Metropolitan Hospital

19 January 2018

What stage of construction is the Midland Metropolitan Hospital at?

The new Midland Metropolitan Hospital, on Grove Lane, in Smethwick is about two thirds complete. The main external work has been completed and the building is weather proof and secure. The remaining work is to complete the internal fit-out of the building so that it can be handed over to the Trust and we can install furnishings and equipment.

Has construction work stopped?

There are some workers still on site and we’ve ensured the site is safe and secure. Our focus now, and since the news of Carillion’s liquidation, is on ensuring we have alternative arrangements in place as quickly as possible to complete this vital NHS acute hospital. Inevitably there will be some delays but we are doing all we can to limit those.

What have you been doing since the announcement about Carillion to ensure the new hospital continues to be built?

The Hospital Company is the Single Purpose Vehicle (SPV) who hold the contract to deliver the Midland Metropolitan Hospital. Since the announcements about Carillion we have been working closely with The Hospital Company Board members, PwC and government officials to seek alternative arrangements to complete the building. We welcome the assurance from PwC about payment for Carillion colleagues and future payment for subcontractors. We also welcome the commitment from government that the new hospital will be completed.

Who is ultimately responsible for securing alternative arrangements?

The Hospital Company hold the contract to build the Midland Metropolitan Hospital. They are sourcing alternative arrangements and we are working closely with them on these arrangements.

What options are you looking at to continue the build?

The Hospital Company are working hard on a small number of options to secure completion of the Midland Metropolitan Hospital. That includes contracting a new lead supplier to take the place of Carillion, putting in place a new management arrangement to direct the build and continue the work with existing and future contractors.

Should one of these options not be successful we may need to look at arrangements that are outside a private finance regime. That could mean that the Trust or a public sector partner organisation takes on the cost for completing the build as one-off capital rather than the current PFI arrangement where we pay back the costs of construction over a 30 year period.

Will the new hospital get completed?

There is no doubt that the new hospital will be completed. We are pleased with the commitment from local politicians, government officials and ministers who recognise the importance of the Midland Metropolitan Hospital in providing essential NHS services to the Sandwell and West Birmingham population. This new hospital is at the heart of the Birmingham and Black Country Sustainability and Transformation Partnerships to ensure sustainable, high quality health and social care services for the region for decades to come.

Will there be delays?

Inevitably, the news about Carillion’s liquidation mean that there will be some  delay although we are working hard to limit this. Our focus now is on securing the right arrangements so that the hospital gets completed and we have certainty for employees and subcontractors. The Carillion workforce are a part of our local community and we want to do all we can to support them at this difficult time.  

When do you expect the alternative arrangements to be in place?

We are working hard with The Hospital Company, PwC and government officials to put new arrangements in place as soon as possible. Our focus is on getting the right arrangements set up to secure completion of the hospital with limited delays. We will ensure that the new arrangements are communicated to the public when they are established.

Who pays for the additional costs associated with any delays or the status of Carillion?

We don’t believe that the local taxpayer should have to fund any additional costs relating to the Midland Metropolitan Hospital. We are working closely with The Hospital Company and partner organisations to put in place alternative arrangements to ensure that the hospital is completed with minimal delays.

Is the Midland Met contract one of the reasons Carillion went into liquidation?

We don’t believe so. We know that we got a good price for the new build but are unaware of the balance of impact of Carillion’s losses in the UK as against losses abroad as the firm expanded and acquired others.  There is no “client side” overspend, because we have not changed what we bought.  Our work now is to ensure that private lenders and national bodies work together to resource completion of the hospital. 

Why is the new hospital so important for the local population?

The Midland Metropolitan Hospital will, of course, provide fantastic, up to date facilities from where we can provide modern, high quality health care for our patients and a pleasant environment for visitors and our staff. But what is more important is that the new hospital will provide better acute and emergency care bringing together two stretched emergency departments onto a single site as well as complex surgery and our main inpatient wards. That also allows us to run our services over seven days a week and improve the way our teams work together to improve care services.

What will be the impact of delays to building the new hospital on existing health and social care services?

When the new arrangements are in place we will be well-placed to understand the impact on our current models of care for Sandwell and West Birmingham and whether that needs to be extended until we are able to complete the new hospital.