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Gov to spend £16m buying Kensington Place for hospital project

Gov to spend £16m buying Kensington Place for hospital project

Tuesday 29 November 2022

Gov to spend £16m buying Kensington Place for hospital project

Tuesday 29 November 2022

The Government plans to spend £51.5m next year to get its new multi-site hospital vision off the ground - including £16m on buying the Kensington Place site off Andium Homes.

Two weeks before their spending plans for 2023 are debated, Ministers have published a proposed amendment, which in effect, shuts down the budget for the previous Our Hospital Project.

If successful, the amendment finalises spending on the £804.5m single-site option – which the new Government wants to shelve - at £77.1m. 

The £51.5m that the Government plan to spend next year is made up of three elements: 

  • £7m will be spent on continuing the development of the former Les Quennevais School into a health and care facility, to initially house most of the services currently provided at Overdale.

  • £16m has been set aside for buying Kensington Place off Andium Homes. This is the market value of the site, which includes the £7.8m purchase price from the site’s former owner, work that has already gone on to demolish the hotels, and the cost for Andium of having to build social houses elsewhere.

  • £28.5m has been earmarked for developing the new scheme, which includes “updating feasibility studies to deliver a new delivery framework and programme with better time and cost uncertainty.”

In total, the amendment sets aside £60.3m for the revised hospital plans in 2023: the £51.5m plus £8.8m, which has been spent this year repurposing the old Les Quennevais School.

The Council then intends to return to the States Chamber next year for more money, when they have a firmer idea of what its plans for a multi-site hospital will cost.

A recent review overseen by Infrastructure Minister Tom Binet concluded that the Our Hospital plan was no longer affordable because it was already up to £115m more than the £804.5m budget approved by the Assembly last October.

In that time, rising interest rates and consequential borrowing costs also make the old proposal unaffordable, the Government argues. 

The amended plans also seek approval for borrowing up to £90m next year, which includes the £51.5m together with £40m which has already been borrowed this year for ongoing work.

The £90m will come out of the Strategic Reserve, which will be reimbursed from borrowing drawn down from the Revolving Credit Facility, which the past Government secured from a group of local banks to pay for its pandemic response.

With rising inflation and interest rates, the cost of financing the project increases from £3.2m budgeted in the last Government Plan to £4.3m in 2023, which includes expected borrowing for capital work next year and borrowing to conclude work on the Our Hospital project up to the end of 2022.

In the report accompanying its amendment, the Council says: “The single-site Overdale scheme, as proposed, is no longer affordable within approved budget limits.

“The Council of Ministers and the States Assembly have an opportunity to adopt a prudent risk management approach to deliver a more affordable project through a different financing model, and by spreading commitment to spend over a longer period, rather than progressing a single large-scale and high-cost scheme with cost estimates for construction outside the forecasts within the Outline Business Case.

“As the Minister for Infrastructure put forward in his review, it is time to put aside the public discord of the past and progress at pace, alongside a constructive dialogue with healthcare workers, clinicians, Scrutiny, Assembly Members and all Islanders, including neighbours and interest groups.”


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