The £804.5m hospital at Overdale is officially off the table because the island can no longer afford it, the Infrastructure Minister has said.
The Government has said that the project as previously envisaged, and given planning permission for, is no longer viable and will not be built.
The key features of the Our Hospital Project was to create a ‘health campus’ at Overdale, including a large 64,705m2 five-storey main block, two-storey Knowledge Centre, single-storey Mental Health Centre and five-level multi-storey carpark.
Last year, the States Assembly agreed borrowing of up to £756m to fund the £804.5m project.
But that plan has been officially scrapped, although what smaller and cheaper alternative will replace it has not yet been determined.
The Government has, however, already instructed Andium Homes to halt work on developing around 100 homes on Kensington Place, behind the current Gloucester Street site, and will be imminently taking ownership of it.
Pictured: The Government has given an official instruction to Andium Homes to stop development at Kensington Place to save the land for the potential expansion of the current Gloucester Street hospital site.
The news that the former Our Hospital Project has been shelved was made by Infrastructure Minister Tom Binet, who is leading a review to determine what hospital Jersey can now afford.
“The foundation of this review is that, as an island, we can no longer afford an £804.5m hospital. No one is at fault; it is simply down to global events.
“There was, perhaps, some slightly optimistic thinking on the funding mechanism that was put in place by the last government.
“The last project could never have been fixed at £804.5m, simply because no contractor – when you have 10% or 11% inflation – is going to sign up to pick up those costs. You are in an open-ended situation.
Pictured: The Infrastructure Minister said the £805m approved Overdale plan - for which land in the area has already been purchased - was too expensive and could not go ahead.
“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."
He added: “It doesn’t take a genius to realise that to embark on the scheme, as passed, would be an act of folly.”
Today, the Government announced the “scope and process” behind Deputy Binet’s review.
They also revealed that negotiations were taking place to cancel the contract between site owner Andium Homes and developer Dandara to build 106 flats in Kensington Place where the now demolished Stafford and Revere hotels once stood.
This would allow the next-door current hospital to expand into the site, should the review support an extension of the Gloucester Street hospital there.
The Government said the review will:
Assess the affordability of the current project,
Consider the state of the existing hospital and associated heath and care facilities,
Consider measures currently being undertaken to improve and transform Jersey’s health service during this period,
Examine various options from “a scope, operational efficiency, cost, programme, and local economic impacts perspective, including, but not limited to all existing sites, which include Overdale site; Gloucester Street site, including adjacent sites, such as Kensington Place; opportunities for a longer-term phased development at Overdale or Gloucester Street; and the opportunity to use secondary sites to complement the delivery of health and care from a primary hospital location.”
Joining Deputy Binet on his review team is Health Minister Karen Wilson and Assistant Health Minister Rose Binet.
They will be supported by an as-yet-unnamed ‘Principal Expert Adviser’ who has “extensive experience of large-scale capital projects in health and care”.
The previous Our Hospital Interim Project Director, Richard Bannister, has now left the project, having always agreed to work until planning permission was granted.
His deputy, Jessica Hardwick, is now Acting Project Director. Ms Hardwick, who was previously a Client Project Manager in the Infrastructure Department, has worked for the Government for more than a decade.
Operational advice will be provided by Associate Managing Director of Health and Community Services, Michelle West.
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Well done Mr. Binet that is why you were elected and your colleagues to bring some sanity back to the government.
I struggle with somewhat amiable statement 'No one is at fault; it is simply down to global events'.
We have lost over £100M considering all spendings behind the various, strange ideas for the new hospital. Lots of well paid jobs, analyses, reports, events, super expensive clinical director paid £278.000 until Aug 2021 (FOI; not clear how much he has been paid until now) - recommended by Kim Hodgson's technical analysis. We have lost valuable time of all the clinicians and others involved in endless planning meetings. I do believe that we have other government bodies or courts to decide if anyone was at fault with such big loses. There were hundreds of opinions and voices telling the previous government that we could not afford £800M or in total £1.4B inclusive of the optimistic interest rates. People responsible for our public finances are accountable for the decisions they make, they should follow conservative, prudent principles assessing such huge capital projects. Assuming 2% rates over 40 years was at best a daydreaming. There were numerous professional opinions and benchmarks in public domain indicating that a hospital of our size should not cost more than £300-400M inclusive of 'Jersey premium'. Whoever agreed to the 805M against all the evidence, against the clear voices from public debate should be held accountable for the public money squandered. We keep repeating slogans about 'accountability' but these are empty words. We do need a new hospital, it has to provide the right capacity (we will need more beds as per the original Business Plan modelling and change of the JCM/ strategy) at an affordable price benchmarked to other geographies. We need real experts with clear track record of leading hospital building projects to be put in charge.
The FULL States Assembly passed the hospital project ~ are we now in a situation where someone can override such decision ?
More money down the drain.
It is a great shame that people making the current decisions, had always been against the previous agreement.
I had hoped for a "brain in" Government, shame we didn't get one.