Department of Health: The Paddington Health Campus Scheme

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