Hospital construction faces uncertain future

26 January 2009

Britain’s hospital’s building programme could stall, according to a memo seen by the BBC.

A document leaked to the Conservatives raises concerns over projects funded through private finance initiatives, BBC on-line news reports.

In a meeting with Health Secretary Alan Johnson, senior NHS managers were told there is no plan B for when the banks cannot provide capital, the memo says.

But a government source said work was going ahead as planned.

The document summarises discussions on the impact of the credit crunch on the NHS in a meeting between Mr Johnson and Strategic Health Authority bosses which took place earlier this month.

There are liquidity and lending problems, which are particularly affecting people at the earlier stage Nigel Edwards, NHS Confederation

It suggests the hospital building programme - funded by billions of pounds raised under PFI - is particularly vulnerable.

It also predicts that NHS funds will be hit hard by the credit crunch and that 2010/11 "is going to get really tight".

Last week the construction industry warned MPs that the  credit crunch could hinder the government’s flagship £45 billion flagship Building Schools for the Future programme.

The government hopes that by 2011, at least 200 BSF schools will be opening every year. But the construction sector is struggling to find the capital for its work in Building Schools for the Future, according to a report in the Guardian on-line.