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A group of politicians is pushing to cap the budget for the new hospital at £550m – a quarter-of-a-billion less than what the Government says it needs – and is suggesting a redesign to help cut costs.
Ministers say that building the new health facility at Overdale is likely to cost £804.5m – including contingency funding – and plan to finance it by borrowing.
Once these are repaid, the island will have spent more than a billion on the project.
Pictured: The Future Hospital Review Panel want the Government to borrow less.
But the Future Hospital Review Panel say they have not seen enough evidence to justify the cost.
They also want the Government to borrow less – instead of two bonds of £400m each, the panel is suggesting capping borrowing at £400m, and funding the rest with existing public money.
In a report explaining their counter-proposals for hospital funding, they referenced a recent survey by Express in which around 800 people (80% of respondents) said they did not want the Government to borrow £800m.
The Panel instead suggests that Treasury looks at alternative funding sources like “the windfall payment of approximately £40 million resulting from JT’s sale of its IoT business.”
The Panel have also recommended that the design be “revisited”, in particular:
“Building size: Reduction in overall size of the hospital building, the Panel has received contradicting calculations of this, ranging from 65,000 to 69,000 m2.3
Reduction in wards: Such as private healthcare provision, benefits for which are, at this stage, anecdotal.
Building design: Removal of atriums, reduction in beautification.
Knowledge Centre: Potential for delay until it can be afforded through existing Government funding.
Multi-story car park: Reduction in size.
Highways works: Reduce ambition for road alterations."
Pictured: Deputy Chief Minister, Senator Lyndon Farnham, has political responsibility for the hospital project.
Deputy Chief Minister Senator Lyndon Farnham, who has political responsibility for the project, has previously said that construction costs should be in the region of £500m, and that the rest of the costs associated with the project were for "contingency" and "optimism bias".
In its report, the Panel argued that "reducing costs elsewhere will then reduce the contingency required."
If any more than £550m is needed, the Panel argues that Ministers should have to seek approval from the States Assembly before spending more.
Overall, the Panel said their motivations for bringing proposals to change the funding plan were three-fold:
"To scale back the project cost and borrowing exposure so that the risks are reduced
To ensure that affordability is considered at every level of the project
To allow more time for a measured and transparent approach to running costs to be achieved by reducing the specification."
Pictured: Senator Kristina Moore chairs the Future Hospital Review Panel.
Senator Moore commented: “The Panel’s early findings in its review of the Outline Business Case of the Our Hospital Project have identified that it does not provide the evidence needed to justify the scale of the project. In addition, when asking members of the public if they believed the budget of £804m was appropriate, the answer was no.
“With the lack of justification and wider reluctance to commit the people of Jersey to such a large budget, the Panel has lodged this amendment in order to allow the States Assembly to impose budgetary restraint and calls on the project to be revisited to fit a smaller budget.
“Following the proposed reduction in project budget the Panel has agreed that a reduction in borrowing is sensible. The Panel is of the opinion that leveraging wider States of Jersey income will also negate the need to fully fund the project by committing to a potential bond and the associated costs.”
The proposals are due to face a vote in the States Assembly on 5 October.
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