Published: 16/09/2004, Volume II4, No. 5923 Page 8

Uncertainty surrounding payment by results could undermine the development of the Paddington health campus, the NHS's largest private finance initiative scheme.

A joint review of the troubled project to merge St Mary's, Royal Brompton and Harefield hospitals with the National Heart and Lung Institute of Imperial College was undertaken earlier in the year and finally released in full last week.

It says that the original outline business case for the PFI - which saw the predicted cost rise from£360m to around£800m - was rushed, had a construction contingency 9-11 per cent below the level likely to be required and a recurring annual revenue gap which increased from£5m in the original OBC in 2000 to£48m.

The report, conducted by the National Audit Office, the Treasury and the Department of Health, also adds: 'The PHC partners believe that the uncertainty regarding payment by results and its implication for PHC income levels could, if unchecked, continue to undermine the ability of the project to complete a new, viable OBC.'

Speaking after the publication of the report, St Mary's chief executive Julian Nettel said: 'We have an affordability position that we can describe and explain under the old funding regime, but the new funding regime does present a new set of issues that need to be resolved - not just locally, but on a national [level] as well.'

North West London strategic health authority director of strategy and planning Steve Peacock described the report as 'positive'.

He said: 'It gives us the go-ahead to develop the new business case... and points out some shortcomings in the past, many of which we have already addressed.'

But Jean Brett, chair of Heart of Harefield, which is campaigning against the scheme, disagreed, describing the report's criticism of the project as 'severe to the point of being caustic'.

The revised OBC is expected to be considered by the DoH before the end of October.