Conclusions and recommendations
1. The Paddington Health Campus scheme, as
proposed by the Campus partners in 2000, was based on an inadequate
Outline Business Case, constructed without the benefit of input
from doctors and nurses as to the required clinical content.
Incomplete or inadequate business cases should not be approved
until all material issues, including sufficient design work, have
been addressed.
2. The Royal Brompton and Harefield NHS Trust
and St Mary's NHS Trust had unreconciled organisational, clinical
and financial interests and in the end the two Trusts took incompatible
views of the way ahead. Capital schemes
in the NHS should only proceed with more than one partner when
there is a clearly identified single sponsor.
3. It took several years after the initial
outline business case for the Campus partners to reach a clear
position on the clinical content of the Campus, the land required,
the planning constraints and the likely cost and affordability
of the scheme. The scheme's development
was also handicapped by insufficient manpower and capability.
NHS Trusts taking forward building schemes should have early external
assessments, for example by the Department's Private Finance Unit,
of their capacity to deliver complex schemes and firm timetables
against which they can measure progress.
4. The North West London Strategic Health
Authority failed to manage effectively the development of the
scheme by the Campus partners. The local
responsibility for monitoring the scheme fell initially to the
Kensington and Chelsea Health Authority and, after March 2002,
the North West London Strategic Health Authority. The Strategic
Health Authority should have either cancelled or fundamentally
reassessed the scheme in early 2003. Instead it strongly encouraged
the Campus partners to pursue additional accommodation for the
scheme. New Strategic Health Authorities should establish clear
criteria for monitoring each scheme's progress and take decisive
action when schemes go off-track.
5. The bed capacity required by the scheme
to meet patients' healthcare needs—and thus its cost and
affordability—fluctuated as it was being developed, largely
for reasons beyond the control of the Campus partners.
Planned bed numbers ranged from 835 NHS beds to 1,200 across the
five-year development of the Campus, and St Mary's NHS Trust was
using different planning assumptions to the North West London
Strategic Health Authority. Bed numbers, or at least an upper
capacity, should be fixed as part of the Outline Business Case
approval process.
6. The hospital building programme in the
NHS was estimated to cost £4 billion more than the approved
costs. The Department's Capital Investment
Manual requires a full reappraisal if costs on a scheme are forecast
to rise by more than 10%. The average rise above approved costs
is 117%, more than doubling the cost. The Department should enforce
the requirement for compliance with its guidance and agree with
Trusts who breach these guidelines an action plan to bring projects
under closer control, especially where they forecast cost-overruns
above approved expenditure levels. It should develop and disseminate
to NHS bodies details of the factors that will trigger intervention.
7. Forecast cost increases over all current
schemes exceed the 40% maximum addition to forecast capital costs
which is allowed to correct for optimism bias.
The allowance does not therefore adequately reflect Trusts' over-optimism
on the costs of such schemes. To introduce a proper perspective
on the likely affordability of schemes, the Department and the
Treasury should agree on the appropriate level of optimism bias
for NHS capital schemes, based on experience to date.
8. The Department was not adequately aware
of the state of the Campus scheme because it viewed scheme development
as a local issue. As a result it was slow
to respond to the failure of the scheme to make progress. The
Department should benchmark the capacity of its Private Finance
Unit against similar Units in other Government Departments and
against relevant Treasury guidance, to ensure that it has the
capacity to provide sufficient support to procurement teams.
9. The Campus partners believed that the Department
lacked clarity in its role and objectives.
The Department acted as both champion and challenger for the scheme,
causing uncertainty and confusion in the Campus partners. The
Department, through its Private Finance Unit, should develop flexible
and transparent criteria with a greater emphasis on affordability,
value for money and viability of projects. It should concentrate
on the role of challenger and satisfy itself that hospital building
schemes are compatible with these criteria and with other relevant
NHS objectives and guidance.
10. At one stage the on-balance sheet treatment
of the land deal supporting the 2004 Outline Business Case was
deemed to render the scheme unaffordable.
The Campus partners were therefore going to leave the scheme.
While the Department said it had no requirement that the scheme
or supporting land deal be off-balance sheet, the accounting treatment
influenced the affordability of the supporting land deal. The
Department should confirm to trusts that in evaluating affordability,
value for money should drive decisions, and not balance sheet
treatment.
11. The Department has not been close enough
to the development of capital investment projects in the NHS.
While it has a one-off programme to review
all pre-contract capital investment schemes valued at over £75
million, there needs to be sustained scrutiny of large projects
(over £200 million) by the Department so that NHS Trusts
procure these assets within shorter timeframes and with improved
value for money.
Figure 1: The principal
organisations involved in the Paddington Health Campus
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