Shropshire Star

Substantial cost rise of Future Fit hospital shake-up 'out of the trust's control'

The substantial rise in cost of the Future Fit shake-up of hospital services in the county was ‘out of the trust’s control’, health bosses have been told.

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Princess Royal Hospital in Telford

The Department of Health and Social Care approved £312 million of funding for the project in 2018, based on the capital value included in a draft strategic business case two years earlier.

But in revised documents in 2019 the funding requirements had increased to £533m, mainly due to increases in government inflation rates.

The scheme will see Royal Shrewsbury Hospital house the county’s main A&E, with Princess Royal Hospital in Telford due to take over planned care and get an ‘A&E Local’.

Bosses are finalising the initial business case for the project, now known as the hospitals transformation programme, which is expected to be complete by the end of July.

Interim strategy and planning director Chris Preston told Shrewsbury and Telford Hospital NHS Trust’s board during a meeting on Thursday that the reasons behind the rise in the expected cost of the project were “outside of our direct control but that does represent an affordability challenge which we need to address”.

He said: “One of the things I didn’t quite believe when I first arrived was the size of that inflationary increase.

“What we need to understand is the timings that were associated with the development of the original strategic outline case and then the revised ones.

“When the original one was done, that was at the time of the crisis in government infrastructure spending and projects which resulted in the collapse of several organisations.

Compound

“What we’re required to do in strategic outline cases is use some prescribed indices for that inflationary expectation and they are government published indices.

“At the time when we did the original strategic outline case in 2016 those inflationary indices for construction prices were zero per cent.

“There was no inflationary assumption that was put in to take the project forward.

“This is a project that will be delivered over a number of years so that has a compound effect over the life of the project.

“If you are putting zero in there’s no compounding effect at all.

“It just stays at the current value of today’s pound.

“When we re-presented the case in 2019 the construction industry had gone through that period and what had happened is there had been a correction and significant increase between 2016 and 2017 in prices and then a continuing increase as we move forward.

“That increase when you compare the two curves amounts to the 43 per cent increase that is attributed to inflation on the base price.”

Programme director Neil Nisbet said the indices are produced by the Royal Institution of Chartered Surveyors on behalf of the government and the calculations took into account all the capital developments that were progressing across the public sector.

He said at the time there were little or no projects progressing, but the institution also published a statement showing concern that the figure could be seen as unreliable.

Since then, Mr Nisbet said the volume of schemes has grown again and there is now a more reliable indicator of where inflation is going.

He added: "There was no choice at that time about choosing another index. You had to use that index."

Mr Nisbet said lessons learned during Covid would be taken into consideration in the plans when developing the business case for the project.

The project's medical director Andrew Tapp said the scheme will address A&E waiting times, length of stay and multiple ward transfers for patients, among other benefits.

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