• Building work was halted on the £335m hospital earlier this year, following the collapse of Carillion
  • HSJ understands that funding support will be provided by the Treasury, although the details of this are not yet clear. 

The PFI contract for the partly-built new Royal Liverpool Hospital is set to be terminated after the Treasury confirmed it would provide funding support.

Building work was halted on the £335m hospital earlier this year, following the collapse of Carillion, the lead contractor.

Negotiations have been ongoing for the last nine months over the future of the project, involving Royal Liverpool and Broadgreen University Hospitals Trust, the Treasury, investors Legal and General and the European Investment Bank, and PFI firm The Hospital Company (Liverpool).

HSJ understands that funding support will be provided by the Treasury, although the details of this are not yet clear.

Under the terms of the original contract, the trust will be required to make a payment to the lenders to take account of the work done to date. But in line with the risk transfer arrangements agreed in the original contract, this payment will not cover all the funding that the lenders have provided to date, ministers have said.

Aidan Kehoe, the trust’s chief executive, said in a statement: “All parties have been committed to getting an agreement that enables construction to restart as soon as possible.

“Today our board of directors agreed that this could not be achieved within the existing PFI agreement and that this agreement should be terminated after the 30 September ‘long-stop date’.

“Subject to detailed government approvals, and legal agreements being finalised, we intend to have a managed termination process after 30 September, by which the benefit of the analyses and pre-works discussions by the lenders will be transferred to the trust.

“This will see The Hospital Company (Liverpool) hand over its contracts for construction, supply chain and facilities management, to the trust, over the course of the next few months.

The Department of Health and Social Care said in a statement: “Despite very constructive engagement from the lenders who have funded the project to date, they have concluded they will be unable to complete and operate the hospital under the original terms.

“The government has now backed the trust’s proposal to end the current PFI deal, and complete construction work within the public sector as quickly as possible, and open the hospital to patients in 2020.”

It has previously been reported that discussions had been taking place with construction firm Laing O’Rourke about taking over from the failed contractor.

Updated on 26 September with a statement and additional information from the Department of Health and Social Care