"I am delighted to be able to say that we have signed the legal agreement that will terminate the original new Royal contract and enable construction work on the new Royal to be restarted as soon as possible."
This agreement was reached in principle at the end of September, after the Trust Board agreed to terminate the PFI contract.
The agreement will take effect immediately. It means we are now responsible for completing and operating the hospital, and The Hospital Company will now transfer their contracts to the Trust, which include Laing O’Rourke as Management Contractor.
"Our priority now is for Laing O’Rourke to get construction 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. We expect to see some work on site from November, with the new Royal expected to be completed in 2020."
The new Royal will now be publicly funded. Support for the remaining construction work identified to date is being provided by the Department of Health and Social Care, through Public Dividend Capital funding.
Under the terms of the original contract, the funders will receive a termination payment from the Trust (provided as above, by the DHSC), which has been agreed at £42m, as well as funding held by The Hospital Company at the time of its winding up.
This is required to cover PFI unitary 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 which will now fall to the Trust.
Taken together with earlier payments made by the Trust, the total cost to the public sector of the new hospital will be lower than envisaged when the project agreement was signed.
In line with the risk transfer arrangements agreed in the original contract, the lenders will lose a substantial proportion of the funding they have advanced. In addition, the equity funders (Carillion Private Finance and Pensions Infrastructure Platform) will lose all their investment
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.
We will continue to work closely with the Government, and regulator NHS Improvement to ensure construction work restarts as soon as possible. The Government is finalising details of the funding package that will enable the Trust to complete the project.
"I would like to thank all our colleagues, partners and 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."