After 13 years, £200m already spent and an 11th-hour scramble to sign the Overdale contract, Jersey’s spending watchdog has launched a probe to examine whether the latest hospital project is built to succeed… in the same week that the Health Minister criticised it for making last-minute demands that he said had put the signing of the key contract in jeopardy.
Express explores…
Just weeks after the Government signed the long-awaited main construction contract for the new hospital at Overdale, Comptroller and Auditor General Lynn Pamment has now announced a wide-ranging audit of the £710m programme, examining everything from oversight to financing to risk management, value for money and whether lessons have truly been learnt from previous failed schemes.
It comes after Health Minister Tom Binet revealed last week that signing the contract only days before the election had come “by the narrowest of margins”.
It’s understood that concerns around due diligence and queries from the C&AG prompted an emergency Council of Ministers meeting in the final days of the previous administration.
Although Senator Binet declined to discuss the specific issues when contacted by Express, he has already called for a formal “lessons learned” review.
“Everybody came good in the end, but there are definitely lessons to be learned because this could have easily extended the 12 or 14 years that we have taken to get to this point,” he said.
However, the office of the Comptroller and Auditor General stressed that the recent release of an ‘audit specification’ – which sets out the terms of its forthcoming inquiry – was already in the pipeline and had nothing to do with the minister’s comments or the fact that the contract with lead contractor Bouygues UK was signed last month, just two days before the election.
At first glance, it appears this issue could be one of expediency versus process. On Monday, Senator Tom Binet said that the contract to build the £710m acute hospital at Overdale was almost derailed by last-minute demands for more information from his own side.
Later, he went further, saying that Comptroller and Auditor General Lynn Pamment had “intervened heavy-handedly” and he had come under “intense pressure” to provide information which he believes was not necessary and could have scuppered the signing of the contract.
In the end, it is understood that a review clause was added to the contract with the UK arm of the French construction giant.
Remind me… where are things up to with the new hospital?
It is now more than 13 years since the States first instructed ministers to bring forward plans for a new hospital.
During that time, more than £200 million has been spent on successive hospital projects – including land purchases, professional fees and preparatory works, including the full demolition of the previous Overdale outpatients site – yet construction of a new acute hospital has still not begun.
FULLTIMELINE: How Jersey’s hospital saga unfolded over more than a decade…
The States Assembly has approved expenditure of up to £710m for the New Hospital Facilities Programme, which was due to include both the acute hospital at Overdale and progress on other healthcare facilities, including a ‘health village’ in St Saviour.
The programme finally reached a milestone last month when Bouygues UK signed the main works contract for the acute Overdale hospital – more than six months after they had been named as the preferred contractor.Demolition works have already taken place at Overdale (GoJ)
The Health Minister had previously estimated that the Overdale works would be completed by the end of 2027, while a new facility would be built in Kensington Place, adjoining the current General Hospital, by 2031.
However, with ground yet to be broken at Overdale, those deadlines seem unlikely – but no new timescales have been provided yet.
Earlier in the year, the Health Minister had also admitted that a proposed Ambulatory Facility at Kensington Place may need a rethink.
The area previously occupied by the former Stafford and Revere Hotels – which was bought by government from Andium for £16m – has been empty for several years now and plans for the area remain unclear.
What’s the point of the watchdog review? Will that delay things?
Rather than being announced publicly, news of the audit emerged this week when its specifications were quietly posted on the C&AG website.
Rather than seeking to establish what to build, where and how, the spending watchdog’s review is all about keeping an eye on whether the project is being managed correctly… and, importantly, whether taxpayers’ cash is being spent properly on it.
Among the questions Ms Pamment’s audit team plan to examine are:
- Is the programme properly governed?
- Is the financing strategy appropriate?
- Are costs and timescales realistic?
- Are risks being identified and managed?
- Are there effective controls over changes?
- Has Government genuinely learnt from previous hospital failures?
The review will also follow up recommendations made after previous investigations into Jersey’s hospital programme and other major capital projects.
The audit by Ms Pamment will “assess the extent to which the governance structure and control environment established for the New Healthcare Facilities Programme are enabling and will enable value for money to be delivered”.
It will start this month and is expected to take up to three months to complete.
£168m already committed
Government accounts show that £168 million is already recorded as ‘assets under construction’ across Jersey’s various hospital schemes.
That includes almost £75 million relating to the abandoned ‘Our Hospital’ project and almost £88 million linked to the current New Healthcare Facilities Programme.
The overall programme has a budget of £710 million, with £523 million expected to be funded through borrowing.
To deal with any potential volatility of interest rate risks, Ministers had decided to use what is known as a ‘Revolving Credit Facility’ – a kind of temporary ‘super-overdraft’. They had agreed with the banks that this would be up to £300m, with a potential extension to £500m. This arrangement is in place until 2028, with the option to extend to 2030.
What happens now?
Auditors will begin work this month, reviewing documents and interviewing key officers and stakeholders before reporting on whether Jersey’s latest attempt to build a hospital is equipped to avoid the mistakes that have dogged previous schemes.
Ms Pamment’s review is unlikely to be the only form of scrutiny.
During the previous States Assembly, a dedicated New Healthcare Facilities Review Panel – chaired by Deputy Jonathan Renouf – was set up to assess the progress and delivery of the project.
The chairs of Scrutiny panels have now been appointed, and Beatriz Porée has been appointed to lead Health. However, whether another specific review panel for the hospital project will be established remains to be seen.
In the meantime, with a contract now signed, the government has said that “ongoing assurance” will taking place in the coming weeks before any further announcements are made.
