How Carillion collapse stymied two state-of-the-art hospitals

Two years ago work stopped on two £350m hospitals being built by the government contractor Carillion. The firm had suffered financial collapse, since described as a story of “recklessness, hubris and greed”, and the sudden disappearance of its services disrupted more than 400 contracts across almost every area of government, from prisons to school dinners.

The Royal Liverpool University Hospital, and the Metropolitan Midland, outside Birmingham, were Carillion’s two most high-profile contracts.

The National Audit Office will publish a report on Thursday into the cost to taxpayers of ensuring that the two hospitals are finally delivered.

Related: Carillion collapse: two years on, 'government has learned nothing'

Conceived as start-of-the-art modern medical facilities, the hospitals were to be funded via PFI, the controversial model involving the state teaming up with private companies.

The projects were supposed to bring much-needed improvements in healthcare to two of the UK’s largest cities, improving patient experience and helping alleviate mounting pressure on stretched NHS services. Instead, the giant buildings have stood virtually untouched for months while government officials have scrambled to come up with new plans to get them finished.

Each of the hospitals should have been treating patients by now. Both have now been delayed until at least 2022.

On the eve of the NAO report’s release, the Guardian spoke to people from the communities the hospitals were supposed to serve.

Liverpool’s mayor, Joe Anderson, was acutely aware that the city was crying out for a replacement for the Royal Liverpool University Hospital; he was booked in for a minor operation there on Thursday, two years after work ceased on its state-of-the-art successor. “It’s very difficult to encapsulate the anger and frustration,” he said. “We’ve had so many false dawns.”

After the financial implosion of Carillion the new hospital was delayed until at least autumn 2022, five years after the original completion date.

Construction costs have spiralled from £350m to at least £720m after serious defects with Carillion’s work were uncovered. Cracks in concrete beams had rendered the structure unsafe, and steelwork was being installed under the supervision of the new contractor, Laing O’Rourke.

In the latest setback the building was found to have been fitted with external cladding considered unsafe following the Grenfell Tower fire in London.

“If anything sums up the failure, it’s that,” said Anderson. “You just wouldn’t have thought it could happen after Grenfell.”

For at least two-and-a-half more years, patients and staff will have to make do with the existing Royal Liverpool, a creaking and poorly laid-out structure prone to power failures and flooding.

Anderson praised the NHS staff running the hospital but said he feared the building was increasingly unfit for purpose. “It’s incredibly depressing but there is no other choice.”

Mark Murray, 39, waiting outside the Royal Liverpool for a friend, was rather less circumspect. “It’s a craphole. The building definitely needs ripping down.”

Cladding and structural defects aside, the new building was on the verge of completion when work stopped. Now the past and present incarnations of the Royal Liverpool are both visible, in sharp relief.

The old building resembles a Soviet ministry, a giant slab of grey concrete with narrow windows. Inside, signs are faded and fittings worn, while the lifts are cramped and often shut for maintenance. There used to be a countdown clock marking time until the new hospital opened its doors, but that was quietly removed in the aftermath of Carillion’s collapse.

Next door, the new building gleams, sleek and new, apparently every inch the ultra-modern upgrade Liverpudlians were promised. It will have 646 beds, fewer than the existing hospital, a factor that has raised concerns about capacity in already stretched NHS services.

But officials said they hoped the improved design would mean smoother provision of healthcare, and that every patient would be in a private room with en-suite facilities, potentially aiding their wellbeing.

Local dignitaries were shown a fully fitted ward when Carillion was running the project, complete with operating theatres and brand new medical equipment. But that equipment is now gathering dust somewhere. It had to be stripped out when it emerged that at least three floors required major structural work.

Rob Barnett, a GP in the Mossley Hill area of Liverpool, said that the delay was affecting the city’s overall healthcare strategy. The Clatterbridge Cancer Centre, in Wirral, was to move into the new development and would now have to do so before the hospital intended to support it was open.

There has also been discussion about sharing more services between the under-pressure Aintree hospital and the Royal Liverpool. Barnett said: “This cannot easily take place when one facility is in a state of disrepair. Inevitably this won’t aid patient care when there are doctor and nurse staff shortages.”

Nor was he optimistic about the revised completion date. “If it is sorted by 2023 it will be miraculous.”

One hospital visitor, who asked not to be named, had been supporting her father through cancer treatment for 13 weeks. He could see the new building, dotted with patches of scaffolding, from his bed in the old building.

“We’re watching it getting built and it’s probably not going to open for another two years,” the visitor said. The blame, she said, lay with politicians and businessmen. “I think it’s disgusting. They whitewash everything and nobody’s ever culpable for what they do. They hired people who were incompetent and now they’ve had to start from scratch at double the money.”

Anderson was also in little doubt about where the blame lay. “The accountability had to be with central government. The warnings they had about Carillion were simply ignored.”

Rising from empty land bordering a canal and derelict warehouses stands the Midland Metropolitan hospital, in Smethwick, just three miles from Birmingham city centre.

About 700,000 people should have been able to access maternity, children’s and emergency services here from autumn 2018, with access via a fifth-floor reception housed in a prominent glass winter garden. But work at the West Midlands’ flagship hospital ground to a halt when work abruptly stopped on 15 January 2018 as Carillion, based a 40-minute drive away in Wolverhampton, went into liquidation. At the time the project was two-thirds complete but already about a year behind schedule.

Thus began 23 months when very took little place at the 670-bed development, beyond weatherproofing the shell and adding glass to the winter garden.

Balfour Beatty became responsible for those updates as part of an early works contract signed in December 2018. A contract to complete construction was signed in December and 90 workers are now on site, rising to 900 by November this year.

“Between 15 January 2018 and 11 December 2019 was clearly a very protracted period,” acknowledged Toby Lewis, chief executive of the Sandwell and West Birmingham Hospitals (SWBH) trust, which said the cost of the project was now £420m. “I wish that it could have been done quicker.”

Lewis said he was proud that works had now begun, but was annoyed by the impact of the delay on providing emergency services, currently split between Sandwell and City hospitals.

“I’m frustrated that we aren’t able to get our staff, who are working across two hospitals, working in one. It certainly means that there is a quality of care gap, not a safety gap, between what we want to be able to achieve and what our layout allows us to do.” It had also made it harder, he said, to recruit doctors and nurses to work across both sites.

Yvonne Davies, leader of Sandwell council, said local residents had paid the price for Carillion’s collapse. “You have to have facilities which fit the world of today. The people of Sandwell needed it three years ago.”

The delay to Midland Metropolitan also meant a new neonatal unit was needed at City hospital, a site which first opened in 1897.

“We clearly couldn’t magic up a new hospital ... and we received investment to make sure IT and old buildings were suitable to get through until 2022,” said Lewis.

Sandwell and West Birmingham Hospitals trust now plans to open the doors ahead of the Commonwealth Games, to be hosted by Birmingham in July and August 2022.

Lewis said the Games formed an important deadline: “We’re not just moving one hospital, we are amalgamating two, and to do that in the midst of an NHS winter is to be avoided. Linked to that, running a huge infrastructure event like the Commonwealth Games, all our emergency services, across the city need to be focused on that. What we don’t want is an overlap between the two projects.”

Not that this deadline seems to mean much to locals. “Commonwealth Games are more about saying being look how good we are. They want to be ready to show off to people coming in the area – [it’s] not beneficial to the people living here,” says said Sally Wagstaff, a mother attending a parent and baby class with her six-month-old son – and who had hoped to give birth at Midland Metropolitan’s new maternity unit.