PART FIVE The way ahead is challenging for all parties

5.1  Both NHS Trusts continue to need substantial investment to redevelop or refurbish their hospital estates to make them fit for purpose. The 2004 OBC quantified the combined cost of bringing both the St Mary's and Royal Brompton Hospitals' estates to modern standards at £759 million. Both Trusts are working on revised development plans which take account of the demand and capacity work the Strategic Health Authority has conducted during the latter half of 2005. At this point in time the exact nature of future capital development requirements for both Trusts has yet to be established.

5.2  The cost of construction in the public sector has increased at above the cost of inflation while the scheme was in development. This means that it will be some 37 per cent more expensive to build replacement facilities now than it would have been in 2000, before allowing for general inflation. A worked example of the impact of delay is at Appendix 4. Such a delay does not represent cash spent or wasted on this scheme and nor is it an argument for simply building schemes more quickly, irrespective of the business case for investment. It demonstrates that redevelopment now will be markedly more expensive than in 2000.

5.3  The North West London Strategic Health Authority in July 2005 announced that it would carry out a sector strategy review to determine its capacity and service requirement and investment priorities. It is unlikely that all three hospitals - St Mary's, the Brompton and Harefield - can be rebuilt or refurbished as required in the light of available capital resources.

5.4  In September 2005 the Department issued new guidance on the business case approval process for major capital schemes. The principal changes were that

■  the Department would no longer approve Strategic Outline Cases. These would now only require Strategic Health Authority approval; and

■  OBCs for schemes with a capital cost of £75 million or more will require Departmental approval before a scheme can advertise in OJEU. This would follow Strategic Health Authority approval of the OBC.

5.5  The changes reflected a re-prioritization of Departmental resources away from reviewing Strategic Outline Cases as experience had shown they were very difficult to assess conclusively. The intention of the pre-OJEU review is that it ensures Departmental resources are focused on more fully developed cases to check that capacity and service assumptions fit with national policies, affordability assumptions are robust, the scheme represents good value for money and the scheme is ready for OJEU.

5.6  The Department, in the context of the Our health, our care, our say11 White Paper on health and social care services in the community, is reconsidering the current capital investment programme. It expects to reduce the scale of the programme from £12 billion to £7-9 billion after a reappraisal of the affordability of the programme and individual schemes within it in early 2006. It will also, as part of this exercise write to Strategic Health Authorities with practical guidance on applying the experience of previous procurements, both in the NHS and in wider government.

5.7  Since the end of the scheme, Imperial College has advanced plans to refurbish the National Heart and Lung Institute building on the Royal Brompton Hospital Campus. This current modernisation is expected to be completed by early 2008 at a cost of around £10 million.

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11  Our health, our care, our say: a new direction for community services, Cm 6737, Department of Health, January 2006.