Select Committee on Health Minutes of Evidence

Memorandum by Royal Berkshire and Battle Hospitals NHS Trust (PS 51)



  1.1  The Royal Berkshire and Battle Hospitals NHS Trust provides acute services for the residents of West Berkshire and surrounding areas from two hospital sites situated three miles apart in central Reading, The Royal Berkshire Hospital and the Battle Hospital. The population served is ca. 500,000.

  1.2  In 1989, following a strategic review by the Oxford Regional Health Authority (ORHA), an option appraisal exercise to determine the future location of acute services within West Berkshire was concluded by West Berkshire Health Authority (WBHA). This resulted in the selection of a single site acute hospital based on the Royal Berkshire Hospital site. Proposals for the scheme, then known as Prospects III, were submitted to, and rejected by, ORHA in 1993.

  1.3  Following the creation of the Royal Berkshire & Battle Hospitals NHS Trust in 1993 the scheme was renamed "The Consolidation Project". A strategic review of the scheme was carried out and a revised proposal was developed and agreed, at "Concept" stage, by ORHA in the same year.

  1.4  A Full Business Case (FBC) was submitted in June 1994.


  2.1  Between 1994 and 1997 the Trust investigated the possibility of private finance. In 1994 (the very early years of PFI), and acting on the advice of the Private Finance Panel, the Trust appointed consultants to search for private finance for the whole consolidation scheme.

  2.2  Twenty financial institutions and two FM operators responded however, only one organisation, the London Financial Group, made a proposal which appeared to satisfy Treasury requirements for value for money and risk transfer. On further investigation by the Anglia and Oxford Regional Office the proposal was rejected as failing to meet the necessary standards.

  2.3  In investigating the option of private finance for the whole scheme it was noted that the private sector was generally unwilling to invest large sums of money on the refurbishment of an existing and badly run down site. So, rather than try again for the whole project it was decided, by the Private Finance Unit, that various discrete elements of the scheme should be identified for PFI testing, but the body of the scheme would be publicly funded.

  2.4  Following a successful search the Trust selected the Proteam 2 Consortium in April 1995, to develop proposals, which encompassed car parking and offices, with a revenue stream from private patient facilities, retail facilities and a health and leisure club. Approval to the FBC was granted in May 1995, on the assumption that it would include private finance for these elements.

  2.5  After two years of negotiation with Proteam 2, a final proposal was received and rejected on the grounds that:

    —  it failed the value for money test and was unaffordable;

    —  the facilities offered were below specification in both quantity and quality;

    —  risk transfer was not proven;

    —  the income streams were not firm.

  2.6  An addendum to the original business case was subsequently submitted, in July 1997, asking for public funding. The addendum was approved in November 1997 and forms the basis for the current project.


  3.1  Since the inception of the Consolidation project in 1994, the Trust has built in review periods to ensure that opportunities exist to make changes consistent with altered national and local requirements. This has been achievable largely as a result of the phased nature of the project (see section 4). There have been a number of revisions to the original scheme content as a result of:

    —  Layout changes to incorporate and maximise the benefits of PFI proposals;

    —  Hospital process redesign;

    —  Changes arising to accommodate the needs recognised in the Trust's strategic review in 1996;

    —  A further "Whole System" review completed in 1999, which confirmed increased requirements for acute Medical, Oncology and Haematology beds.

  3.2  The 1997 FBC was supported by Berkshire Health Authority on the proviso that a further review of requirements was undertaken prior to final confirmation of acute Medical bed numbers.

  3.3  Following the "Whole System" review bed numbers were increased from 722 to 806. The forecast of activity levels, and bed numbers was agreed by the whole healthcare system, and took into account the need for the system to provide additional facilities and schemes in the community, to ensure efficient usage of Trust acute beds.

  3.4  The Trust is currently operating with ca. 780 beds, and continues to experience significant difficulties as a result of delayed transfers of care.


  4.1  The nature of the RBH site is such that a phased redevelopment programme is required to enable completion of the scheme. The project is a combined new build and refurbishment with a programme of works as follows:

1997-98 Contract 1

  Refurbishment of Maternity block, undertaken to enable early decanting of surgical wards, to meet compliance with junior doctor's hours targets.

1998-99 Contract 2A

  Development of multi-storey car park to free up land in the centre of the site.

1999-02 Contract 2B

  New build centre site development comprising six new wards, Radiology department, four new theatres, outpatient support services, new Accident and Emergency department and main entrance block.

1999-03 Contract 2C

  Phased refurbishment of the South Wing and Eye Block to provide outpatient facilities, additional and modernised theatres and a day bed unit.

  This phase has been delayed as a result of the failure of Christiani and Nielsen, who were JV partners on the originally tendered contract. The Trust repudiated their contract in August 2000, re-tendering the contract in three phases to mitigate loss of time.

2002-04 Contract 3

  The demolition of existing buildings on the north end of the site to allow a new build programme providing seven new medical wards, a Cardiac Care Unit, Oncology/Haematology unit and a Therapy centre.

2004 Sale of Battle Hospital

  On completion of Contract 3 the Trust will transfer all services currently located in the Battle Hospital to new or refurbished accommodation on the RBH site. Thereafter the Battle site will be sold.

  The Trust has been granted planning permission for the redevelopment of the Battle Hospital site for retail and housing. Since 1999 the Trust has been investigating the options for an advanced sale of the property and has begun to discuss possibilities with developers.

  4.2  The approximate percentage split between new build and refurbishment is 58 per cent: 42 per cent based on floor area.


  5.1  Since approval in May 1995 the gross scheme cost has increased from £59.3 million (£56.3 million construction plus £3 million land and property) to £105.5 million for the following reasons:

Initial scheme cost
Functional content changes
Inflation uplifts
Accounting adjustments
Repudiation of contract 2C
Current scheme cost

Land sale proceeds

  5.2  The above costs are offset by the sale of the Battle Hospital site, originally assumed to be valued at £13 million, and now valued at £35 million.


  6.1  In 1989, when the original option appraisal was undertaken, the cost of locating and building on a "Greenfield site" (at Battle Hospital) was estimated at ca. £94 million.

  6.2  In order to verify the findings of the earlier option appraisal a review of "Greenfield" site costs was undertaken in 1996. This confirmed that forecast costs had increased to £196 million. Current costs are estimated at £282 million (MIPS 325).


  The Royal Berkshire and Battle Hospitals NHS Trust Consolidation Project is to see the Trust's acute services (consolidated) onto one site, the Royal Berkshire Hospital site, enabling the sale of the Battle Hospital site.

  It is a substantial, complex capital project with a current cost of £105 million and will be completed in late 2004. The sale of the Battle Hospital site is expected to contribute about £34 million to the capital cost, but the remainder of the scheme is funded from public capital. Between 1994 and 1997 the Trust negotiated to find a PFI partner but the final proposal was rejected on the grounds that:

    —  It failed the value for money test and was unaffordable.

    —  The facilities offered were below specification in both quantity and quality terms.

    —  Risk transfer was not proven.

    —  The income streams were not firm.

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