Laing O’Rourke to restart £333m Royal Liverpool Hospital

Laing O’Rourke is set to restart work on the stalled Royal Liverpool Hospital next month, with a view to completing the scheme in 2020, nearly three years after the project’s original completion date.

A contract has been signed by the Royal Liverpool and Broadgreen University Hospitals NHS Trust, The Hospital Company Liverpool, and the project’s lenders, the European Investment Bank and Legal & General, to terminate the original project agreement.

This will allow Laing O’Rourke to restart construction on the site, which stalled following the collapse of Carillion in January this year.

Under the terms of the original contract, the funders will receive a termination payment from the trust of £42m, as well as funding held by the Hospital Company, the PFI vehicle for the scheme.

This will cover the PFI payments that The Hospital Company will no longer receive, and deducts the cost of the remaining construction work, and the projected cost of maintaining the hospital. Both of these responsibilities will now fall under the NHS trust.

The project’s lenders have supplied £180m of funding to the project, and will lose what the trust described as “a substantial proportion” of the funding they had advanced. The equity funders, Carillion Private Finance, and the Pensions Infrastructure Platform, will lose all their investment.

The trust is now targeting construction work to restart next month, with the hospital to complete in 2020. This will be nearly three years after its original completion date of March 2017.

Consultant Arup undertaken a review of the development but this has unearthed a series of issues, including the cladding, along with structural problems.

Adrian Kehoe, chief executive of the Royal Liverpool and Broadgreen University Hospitals NHS Trust, said: The agreement provides significant savings to the public sector and represents good value for money for the taxpayer. All parties have worked extremely hard to resolve the issues caused by the collapse of Carillion. The lenders in particular have shown considerable goodwill in reaching this agreement.

“I would like to thank our local politicians who have continued to support our aims to get the new Royal restarted. In particular, I’d like to thank our local MP Louise Ellman for her tireless and invaluable efforts, often behind the scenes, to ensure the new Royal is delivered.

“Our priority now is for Laing O’Rourke to get work restarted as soon as possible. We hope to be able to continue working with the existing subcontractors so that work can be completed quickly.”

Paul McNerney, director at Laing O’Rourke added: “Laing O’Rourke is delivering the Clatterbridge Cancer Centre next door to the new Royal and had been working closely with the team there already. The business now looks forward to partnering with the Trust directly to re-start this important works for the local community.”