Hospital budget to go back to the States

Tuesday 20 September 2022

Jersey's Chief Minister has confirmed the amount of money to be spent on a new hospital will need to be agreed once again by the island's politicians.

Earlier this month, it emerged that Ministers believed the agreed project couldn't now be delivered within the budget set by the States of £805m.

Speaking at the time, Infrastructure Minister, Deputy Tom Binet said: “The funding mechanism is broken. Having met with the finance team last week, it was plain that the last scheme relied on the Strategic Reserve achieving a 4.5% interest rate, averaged out over 40 years, and borrowing costs of 2%.

“A lot of people thought that was ambitious at the time and, in short order, it has been proved to be completely out of the picture. 

“The facts are the Strategic Reserve may even lose a bit of money this year. If you lose half of one per cent, instead of making 4.5%, that is a big difference. And borrowing costs are up at least one percent, and possibly increasing by another half a percent on top of that."

Deputy Binet is currently leading a review into the hospital project. 

In the States Assembly this morning, the Chief Minister, Deputy Kristina Moore confirmed that the previously agreed budget - dubbed "the financial envelope" -  couldn't now be met, meaning States Members would be asked to agree a new one.

"The financial envelope has now broken the barrier that the previous assembly agreed upon, and therefore we will have to return  to this assembly for a reconsideration of that financial envelope following the finding of the review."

When that happens, it will be the third time that a new hospital budget and funding mechanism has been debated and agreed by the States. 

In December 2017 they agreed a budget of £466m, which included borrowing of £275m. 

Then in October 2021 they agreed the budget for the Overdale 'health campus' of close to £805m, with borrowing of up to £756m.

The results of Deputy's Binet's review of that project will be the next step in the long-running saga, and may clarify whether the island's senior politicians will persevere with the Overdale plans, or as expected, revert to a 'two-site' model, using the existing site on Gloucester Street and land earmarked for development by Andium.

Pictured: Andium had wanted to build more than 100 homes in Kensington Place, but work has been halted in case the land is needed for the expansion of the hospital.

Either way, the funding plan will have to come before the States Assembly for a third time. 

Currently, the States have agreed the new facility will be open by 2026.