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THERE has been a ‘fundamental change’ in the financial assumptions underpinning the Our Hospital project, according to the Infrastructure Minister.
Deputy Tom Binet made the comments shortly after announcing that the current plans to build the £804 million hospital at Overdale were ‘no longer feasible’, and that his ongoing review into the project – which is examining alternative options – was now a ‘necessity’.
The news prompted criticism from the former political leader of the Our Hospital scheme, Deputy Lyndon Farnham, who said that abandoning the approved plans ‘makes a mockery of our democratic process’.
In a statement, Deputy Binet reiterated his position: ‘Firstly, there’s been a fundamental change in the financial assumptions that underpinned the project and, due to various and unforeseen global events [such as] the invasion of Ukraine, the imminent recession, UK inflation of over 10%, and the cost-of-living crisis.
‘We are no longer in the situation where the strategic reserve is likely, certainly in the short to medium term, to achieve a consistent 4.5% return.’
He added: ‘The fact is that in the current year, the reserve may well see a loss of £15 million. In addition, borrowings were quoted at 2% and are now running somewhere between 3% and 3.5%; these are likely to rise. This puts us in a position where, even if we wanted to proceed with the current plans as currently proposed, we cannot. The cap of £804 million has already been exceeded. This situation has been confirmed unanimously by the Council of Ministers.’
Deputy Binet continued: ‘No assumptions have been made and neither I nor the Council of Minister have any pre-conceived ideas of what the outcome of that review should be. What has been, and remains, vitally important to us is that the current hospital remains fit for purpose for the foreseeable future, which we estimate to be somewhere in the region of five years, and that the health service itself is given top priority to ensure that it is improved as soon and as much as possible.’
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