Wolverhampton-based construction giant Carillion begged the Government for £125 million to subsidise construction of the Midland Metropolitan Hospital, it has emerged.
Costs soared because critical design elements of the project were 17 months late and structural designs were poor, a new report by the National Audit Office has revealed.
Work on the 669-bed hospital, which will replace key services at City Hospital in Birmingham and Sandwell Hospital, was halted when Carillion collapsed in January.
The incomplete building is still standing empty on its Smethwick site - and health managers have warned that damage caused by exposure to the elements will add at least £10 million to the final cost of construction.
Ministers are expected to announce next week that they have at last found a way to ensure building work resumes. Health Minister Stephen Barclay has been working with West Midlands Mayor Andy Street, and with Sandwell and West Birmingham Hospitals NHS Trust, to find a solution.
But the National Audit Office (NAO) report reveals that the hospital project was in trouble even before Carillion collapsed.
Carillion was building the hospital and was due to provide management services for 30 years, as part of a private finance initiative (PFI) contract.
In December 2017, Carillion wrote to the Cabinet Office, a government department, asking for government cash to help it restructure.
The NAO report states: “It also asked for the Cabinet Office to provide up to £125 million to help fund the completion of the Midland Metropolitan Hospital PFI scheme in exchange for an equity stake.
“The Cabinet Office told Carillion it could not legally grant some of the company’s requests. Others were not quantified but could have had significant additional costs for the taxpayer.”
Carillion was due to lose £48 million in 2017 alone on the Midland Metropolitan Hospital contract, the NAO said.
And it was one of a number of PFI contracts the firm was losing money on.
“In 2017 Carillion faced estimated annual losses of £91 million on its joint venture project to build the Aberdeen bypass, £83 million on building the Royal Liverpool University Hospital and £48 million on building the Midland Metropolitan Hospital.”
The new hospital was originally due to open in October 2018, but this was delayed to spring or summer 2019 even before the collapse of Carillion.
Hospital mangers have said it is now unlikely to open before 2022.
The stalled £350 million project is already expected to cost an extra £125 million to complete.
But Toby Lewis, chief executive of Sandwell and West Birmingham Hospitals NHS Trust, warned in a letter to Sandwell councillors in May that costs were rising.
He said: “It deteriorates in the elements and some parts of the building will require re-work.
“The trust’s board has asked for a formal assessment of that cost during June. However, we know that the cost will be in eight figures. We also know that if we have not weather proofed the building by winter 2018 that cost will rise further.”
Mr Lewis has also previously warned that some services at City Hospital and Sandwell Hospital could deteriorate for as long as there is uncertainty about the Midland Metropolitan Hospital.