Orthopaedic hospital PFI a step closer after affordable housing rollback

The Royal National Orthopaedic Hospital Trust in Stanmore, north London, last month got permission from Harrow Council to sell some of its estate for housing. Only 10 per cent of these homes would be designated “affordable”.

Documents obtained by HSJ reveal that the £21m the trust hoped to make from the sale was only considered achievable if the council did not impose its standard requirement of 40 per cent affordable housing on the development. The trust needs the money to reduce the cost of its planned PFI redevelopment.

A report last month by the now dissolved NHS London strategic health authority said the trust’s “base case” assumed it would make a £16.4m “bullet payment” toward the PFI, funded by the land sale receipts. This would cut the annual “unitary payments” the trust needed to make to the PFI provider by £1.24m.

It continued: “The £21m sale receipts are only considered achievable by the trust’s advisors, Drivers Jonas Deloitte, if planning policy requiring all residential developments to include 40 per cent affordable housing isn’t applied.”

Harrow Council granted planning permission for up to 356 “residential units” on March 21.

A report from the local authority said: “The 10 per cent affordable housing offer is justified as the provision of further affordable housing on the site would render the scheme unviable and undeliverable.”

The trust is now hoping the Department of Health and the Treasury will allow it to make a £19m-£21m “bullet payment” from the land-sale.

The specialist trust, which forecasts income of £123m in 2013-14, is waiting to hear if the DH and the Treasury will sign off its £75m rebuild.

Decisions are expected in April and May respectively.

The trust has long complained of dilapidated buildings and believes the rebuild will significantly increase the amount of activity it performs, as smaller district general hospital trusts stop performing complex activity.

The NHS London report said: “The trust is continuing to see more specialist activity coalesce around the specialist centres. Evidence of this is in preliminary discussions with North West London Hospitals Trust and The Hillingdon Hospitals Foundation Trusts over provision of a RNOH outreach on their sites to cover spinal surgery.”

It added: “The trust’s long-term financial model projects annual growth in volume and case mix… aris[ing] from the likely impact of increased market share from the shift to specialist centres.”

In 2011 the construction press reported interest had been shown in the scheme by Balfour Beatty, Skanska, Bouygues, Laing O’Rourke, Interserve, Kier, Vinci and Bovis Lend Lease – but since May 2012 the trust has been in competitive dialogue with Balfour Beatty and The Bouygues Consortium.