Department of Health: The Paddington Health Campus Scheme

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part three3.1 The Royal Brompton and Harefield NHS Trust Boarddecided in May 2005 that it could not recommend theAddendum to a new OBC to replace the 2000 OBC unlessand until three concerns were addressed to its satisfaction.The concerns were:nnnthe current absence of certainty about a suitable landdeal and its acceptability;the affordability gap for the Campus and in particularfor St Mary’s NHS Trust under the Payment by Resultsregime, after transitional funding has ceased, withpotentially serious implications for the strategiccoherence and original vision of the Campus; andthe work being undertaken in north west Londontowards improving efficiency of service deliveryraises fundamental issues about the capacity andconfiguration of services in the sector with furtherpotential implications for the Campus asoriginally envisaged.This part of the report considers the build-up ofthese problems.The Campus partners were unable tosecure adequate land for the scheme3.2 The NHS did not own enough land to make theCampus work within Westminster City Council’s planningpolicy. It therefore needed additional land. Much of2003 was spent exploring the possibility of acquiringadditional space beside the Campus site – The Pointbuilding. This was an office building on the other sideof the Paddington Basin from the St Mary’s site. With thestrong encouragement of the Strategic Health Authority,which also took an active role in securing Primary CareTrust agreement to the affordability of this option, theCampus partners prepared a Full Business Case for theprocurement of The Point. This was approved by theStrategic Health Authority on 4th November 2003which then submitted it to the Department for approval(Map C in centre page map section, page 28).3.3 A month earlier, the Chief Secretary to the Treasurywrote to the Department expressing concern about thescheme’s escalating costs and setting out that before hecould consider approving any expenditure on the Pointhe required:nna new OBC for the Campus scheme; andan independent review of the process that led tothat situation.the Paddington Health Campus scheme23
part three3.4 Once the Joint Project Board was orally briefedon the interim findings of the independent review inFebruary 2004, it stopped work on developing the schemeas the review highlighted fundamental weaknesses(Map D in centre page map section, page 28). TheDepartment authorised work on a new OBC, as requestedby the Chief Secretary, in July 2004, following asubmission from the Campus partners in April 2004.3.5 In April 2004, Paddington Development CorporationLimited (PDCL), the developer of the Paddington Basinsite, approached the Campus partners with a proposal thatthe Campus use land to the north of the Paddington Basin(Map E in centre page map section, page 28 ). The Campuspartners immediately referred the offer to the Departmentwho approved testing its feasibility.3.6 In October 2004 Westminster City Council’s Leaderand chair of its planning committee met with the Campuspartners and informed them that the then current proposalwith hospitals on both sides of the Paddington Basincould not be recommended for planning permission. TheCampus partners recognised that this would mean theycould not build the Campus as they did not have sufficientland available to meet the Council’s concerns. Theytherefore decided to exit the scheme, anticipating that itwould take four weeks to make the arrangements beforemaking a public announcement.3.7 Three days after this decision, Westminster CityCouncil re-iterated that it would support use of part ofthe North Westminster Community School site, due tobecome free in 2006, to accommodate all clinical activityat the hospitals on the north of the Basin. The Campuspartners, with Departmental consent, immediatelydecided to explore the Council’s offer. This would havefreed the main St Mary’s site as well as the Brompton andHarefield sites for disposal, more than funding the costs ofacquiring the land on the north of the Basin, albeit with adelay before disposal receipts could be received.3.8 In December 2004 the Campus partners thoughtthey had found a solution which involved the purchase ofland from PDCL and Westminster City Council. Howeverthe Department considered that the proposed land dealwas unacceptable because it meant the land purchasewould appear on its balance sheet, and so would countagainst its annual spending limit for capital projects,which it could not accommodate. The Department alsoconsidered the £62.5 million premium over open marketvalue that would be paid to PDCL excessive, althoughthe District Valuer confirmed that, in his view, the landtransaction represented fair value. The Departmentmade clear in January 2005 that it would reject theDecember 2004 OBC on the above grounds.3.9 The Campus partners therefore decided inJanuary 2005 that, in the light of the Department’sreaction to the 2004 OBC, they had no option butto exit the scheme.3.10 Westminster City Council did not want to see thescheme fail because of a lack of land as, in planningpolicy terms, it had made clear since 1987 that it viewedthe retention and improvement of St Mary’s hospital as astrategic priority for the Council. Therefore, in February2005, with the agreement of the Department, and thesupport of the Campus partners, but without any writtenbrief, the Council commenced negotiations with PDCLon behalf of the Campus partners (Map F in centre pagemap section, page 28). The Campus partners were notpresent at these discussions although the Departmentheld a number of bilateral meetings with the Council overthis period. On this basis the Campus partners decidedto draw up an Addendum to the 2004 OBC. This wouldconcentrate on the financial implications of the potentialnew land deal.3.11 The Department stipulated four conditions for theland deal for the Campus scheme. These were that:nnnnThe agreement on land for the Campus scheme hadto be with Westminster City Council only, not PDCL,as the Department did not believe PDCL shouldreceive anything more than fair open market valuefor their land.PDCL was not to be involved in the disposal ofsurplus sites.No overage was to be paid to parties other thanWestminster City Council.No premium over open market value should be paidby the NHS on land it acquired.24the Paddington Health Campus scheme
Page 1 and 2: department of healthThe Paddington
Page 3 and 4: DEPARTMENT of healthThe Paddington
Page 5: Part 3The Campus partners were unab
Page 8 and 9: summary8 While the Campus partners
Page 10 and 11: summary21 Ultimately, in addition t
Page 12 and 13: part onePart oneThere was a strong
Page 14 and 15: part oneThere were strong clinical
Page 16 and 17: part twoPart TwoThe way the Campus
Page 18 and 19: part two2.6 Securing planning permi
Page 20 and 21: part twoRisk management2.14 The NHS
Page 22 and 23: part two2.28 Public support for the
Page 26 and 27: part three3.12 The PDCL negotiator
Page 28 and 29: part three3.24 All Campus partners
Page 30 and 31: part threeThe changing proposals fo
Page 32 and 33: part three6A comparison of capital
Page 34 and 35: part fourAccountability for the sch
Page 36 and 37: part four4.8 Some of the advice and
Page 38 and 39: part five5.1 Both NHS Trusts contin
Page 40 and 41: glossaryLondon Regional OfficeMemor
Page 42 and 43: appendix oneAppendix oneChronology
Page 44 and 45: appendix one2004 (continued)JulyChi
Page 46 and 47: appendix two7 It was the view of th
Page 48 and 49: appendix fourAppendix fourThe oppor
Page 50 and 51: appendix fiveDepartment of Health:

Department of Health: The Paddington Health Campus Scheme

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