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Government officially writes off £8m after changing hospital plans

Government officially writes off £8m after changing hospital plans

Wednesday 10 May 2023

Government officially writes off £8m after changing hospital plans

Wednesday 10 May 2023


The Government has written off £8m due to its abandonment of plans to build a single-site hospital at Overdale.

The ‘impairment’ – which is an accounting term for a permanent reduction in the value of an asset – features in the States of Jersey accounts for 2022, which were published recently.

The total amount spent on the Our Hospital project up to the end of last year was £84m. This was to build a ‘health campus’ at Overdale, including a 31m-high main building and separate mental health unit, training centre and multi-storey carpark.

That plan received planning permission last May, after receiving support in the Bridging Island Plan.

However, the new Government, elected last July, has changed direction, preferring to build ‘healthcare facilities’ over several sites.

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Pictured: The plan for the New Healthcare Facilities includes the purchasing of land at Kensington Place.

The audited States Accounts conclude that, of that £84m, £35m was spent to acquire properties and land, so that remains an asset on the balance sheet.

The remaining £49m included £8m of costs for ‘demolition and design’ which are also “likely to be reused”.

The accounts concede that “the balance of £41m of Overdale-specific costs are at risk of being written off.”

However, they add: “A judgement has been made that 70-80% of the £41m can be reused – this does not equate to 70-90% of the floor area or building size.

“A central estimate of 80% of the £41m being reusable has been used so an impairment of £8m (20%) has been recognised.”

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Pictured: Treasury Minister Ian Gorst said that it is "too early to say" whether there will be greater write offs in the future.

Treasurer Minister Ian Gorst said: “It is always inevitable when you change course that some costs may not be usable. It is not beyond the realm of possibility that there will be greater write offs in the future, depending on when the projects start, but it is too early to say.”

Because 2022 straddled two governments, £12.1m was spent on the Our Hospital Project last year. Both it and its successor received £27m of borrowing from a £500m bond issue, the bulk of which was used to settle pension past service liabilities.

This year’s Government Plan allocates £51.5m to be spent developing the ‘New Healthcare Facilities’ project this year, including £16m to buy a plot in Kensington Place.

An attempt by former Our Hospital Project head Deputy Lyndon Farnham to delay this purchase until a full cost analysis was completed was rejected by States Members last month. 

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