An agreement between a health board and two trusts to build a new children's hospital in Scotland was hailed last week as proof of a new climate of co-operation in the NHS.

Grampian health board, Aberdeen Royal Hospitals trust and Grampian Healthcare trust have agreed to pool estate receipts to fund the pounds22m project in Aberdeen.

Scottish secretary Donald Dewar hailed the move as a political triumph.

He said: 'I am delighted to see that, less than a month after the launch of our plans for a modern, dependable, co-operative NHS, boards and trusts are working well together.

'This new development would have been an impossible dream just a year ago, when NHS trusts viewed each other as competitors not colleagues.'

The project will comprise a new children's hospital costing pounds12m, a new outpatient department costing pounds5m and a day case surgery unit costing pounds5m.

The bulk of the money is being provided by Grampian Healthcare trust, from the sale of three redundant sites. Aberdeen Royal Hospitals trust is providing pounds5m from the sale of a site, and Grampian health board will provide pounds5m in total for the project, pounds1m of it from estate sales.

Jeremy Taylor, chief executive of Grampian Healthcare trust, said the government had lifted the 'arcane rules' to allow money from asset sales to be invested locally, instead of returned to the Treasury.

The new development will open in 2002-03 and replace the present Royal Hospital for Sick Children, which opened in 1929.

Alan Reid, public affairs director for Aberdeen Royal Hospitals trust, said: 'The hospital was constructed in six different buildings and later linked by covered walkways, which became long corridors. These are difficult to heat and force our porters and doctors to walk miles.

'The new hospital should be much cheaper to run and provide far better care. We are absolutely delighted.'

He said there was 'no doubt' that a 'new spirit of co-operation' had sprung up since the general election and helped to move the project forward.

But another Journal source said he felt it would 'have happened anyway' - the factor was the decision to put a special mechanism in place to allow money from estate sales to be used locally.