1 The role of local management in
the Paddington Health Campus scheme
1. The Paddington Health Campus scheme was an ambitious
attempt to replace and renew the estate of two large run-down
NHS Trusts. The original vision for the scheme was strong with
significant commitment from the trusts involved. The goal was
to build state of the art clinical accommodation and research
facilities which would address the need for clinical and academic
reconfiguration and concentrate specialist services in north-west
London at a reduced number of sites. However, the Campus partners
were never able to persuade the Department that they had an affordable
scheme to match this vision.[2]
2. The 2000 Outline Business Case had an estimated
capital construction cost of £300 million (£411 million
at 2005 prices) but the full valuation for the scheme was £894
million in 2005. In 1999, our predecessors said it was a disgrace
that the Guy's Hospital Phase III project cost £115 million
against an approved original estimate of £35.5 million and
looked to the Department to ensure that priorities were based
on realistic cost estimates. The Campus partners accept that the
2000 Outline Business Case was inadequate but it was still approved
by the Department.[3]
3. The Campus partners now accept that they submitted
what they describe as a 'highly unusual and high-level' business
case to the London Regional Office of the Department. It was only
after the Regional Office approved the scheme (Figure 1)
that the Campus partners engaged with their doctors and nurses
to determine the clinical content the scheme would require.
[4]
4. The original vision was to use the St Mary's site
in Paddington for the Campus with clinical content requirements
determining the land required. As the details of the clinical
content requirements emerged and their impact on the Campus were
better understood, the inadequacy of the available land and the
impact of planning constraints became evident. The Royal Institute
of British Architects told us that early and thorough testing
of a design brief could have been used to test the capacity of
the land at an earlier stage. St Mary's NHS Trust acknowledged
that not understanding the full scale of the task at the approval
stage in 2000 had hampered the scheme from the outset.[5]
5. The Campus partners also recognised from the start
that they did not have the skills necessary to develop a robust
scheme on the scale of the Paddington Health Campus without the
support of expert advisers. The 2000 Outline Business Case was
developed with the assistance of experienced management consultants.
As the scheme progressed it became clear that the first Project
Director, appointed in October 2000 lacked the skills to do a
job of this magnitude. In October 2002, therefore, after two years
of disappointing progress in meeting project milestones his contract
was terminated by mutual consent. Further experts were engaged
to give advice on specific aspects of the scheme at a cost of
£7.8 million, with advice on procurement of consultants and
property advice from Partnerships UK from November 2002 onwards.
Overall the Campus partners spent £14.9 million on developing
the scheme (Figure 2).[6]
Figure 2: Expenditure on developing the Paddington
Scheme
Source: Note to Q 92
6. The resources available for development of the
Outline Business Case were capped by the capital value of the
approved Outline Business Case at approximately £6.3 million.
This sum was insufficient to develop a scheme of this scale and
inadequate funding handicapped the scheme's management capability
throughout the planning phase. Only £4.9 million development
funding from the co-sponsor of the scheme, Partnerships UK, allowed
the scheme to be developed further. Even then, in 2004 the scheme
opted to defer implementing embedded risk management on what was
by then a £900 million scheme because it could not be afforded
at the same time as developing a new Outline Business Case.[7]
7. When the original Outline Business Case was submitted
in 2000 the Department approved it, with reservations, but now
recognises that the scheme should arguably not have gone ahead
at that stage. The Campus partners also agree that the scheme
should have been either cancelled or resubmitted in early 2003
when costs had doubled and there was no planning permission for
the scheme. Following a critical report from the Department, the
Treasury and the National Audit Office in October 2004, further
consideration was given to stopping the project. But, at all of
these points, the Campus partners continued with the scheme believing
that the vision was worth the effort, although the Department
accepts that, with hindsight, the process went on too long.[8]
8. In October 2003 the Treasury requested a new Outline
Business Case to replace that drawn up in 2000. A new Case was
submitted by the Campus partners in December 2004, with assumptions
on balance sheet treatment and affordability that were not acceptable
to the Department. The Campus partners resolved to cancel the
scheme but, with the consent of the Department, accepted an offer
from Westminster City Council to assemble a package of land for
the site. They believed that such an offer could turn the economics
of the scheme upside down and therefore felt it ought to be considered.[9]
9. The Campus partners could not agree on the affordability
of the final scheme in May 2005. While the scheme was more affordable
than the December 2004 Outline Business Case, the constantly changing
forecasts of revenue, based on evolving Departmental guidance,
and the cost of the land deal undermined the confidence of the
North West London Strategic Health Authority and Royal Brompton
and Harefield NHS Trust Board in the financial robustness of the
scheme. The Department told us it had expressed very significant
reservations about the affordability of the scheme in January
2005, after receiving the December 2004 revised Outline Business
Case.[10]
10. The immediate cause of the collapse of the scheme
in May 2005 was the failure of the two NHS Trusts to agree on
an Addendum to the December 2004 Outline Business Case. The principal
difference between the Trusts was Royal Brompton and Harefield
NHS Trust's concern that there was inadequate land available for
the scheme, given planning constraints, and that without land
the required facilities could not be built. This left the scheme
dependent on Westminster City Council and the property developer
who owned the land required.[11]
11. The scheme originally planned for 1,000 beds
in 2000, then 1,200 by November 2002, 1,088 in October 2003 and
835 NHS beds in May 2005. The North West London Strategic Health
Authority was responsible for bed capacity planning at a strategic
level but the Strategic Health Authority and St Mary's NHS Trust
were using different planning assumptions. The Department took
the view that it was up to the local NHS organisations to make
their own assumptions in planning capacity, even though they had
no track record on which to base their assumptions. [12]
2 Qq 2, 9, 13, 21 and 116, C&AG's Report, para
5.1 Back
3
C&AG's Report, para 3 and Appendix 5, Qq 5, 76 Back
4
Qq 133-134 Back
5
Qq 9, 48, 127-135, C&AG's Report, para 1.5 Back
6
C&AG's Report, paras 2.9 and 2.24; Q 86-92 and Note to Q 86 Back
7
C&AG's Report, paras 22, 2.14-2.21, Q182 Back
8
C&AG's Report, Appendix 1, Qq 1, 25-26, 93-104, 143-145 Back
9
C&AG's Report, para 3.2, 3.9-10, Q1 Back
10
Qq 141-143, 154, C&AG's Report, para 17 Back
11
C&AG's Report para 3.1 and Q117 Back
12
Qq 20, 27-34, 56-59, 176-178, C&AG's Report, para 3.27 Back
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