£1bn may be needed for new hospital and Covid

Sir Peter Crill House, General Hospital. Professor Ashok Handa, who specialises in vascular surgery and Medical Director of the Our Hospital project Picture: ROB CURRIE

The newly published Our Hospital Business Case confirms that ministers are considering taking out two bonds, repayable over decades, later this year to fund the planned new facility at Overdale.

If the move goes ahead it would mean government borrowing of more than £1 billion for the first time. Hundreds of millions are also likely to be borrowed to pay for the Covid-19 crisis, while a £254 million debt already exists from a bond taken out to fund social housing in 2014.

The medical director of the Our Hospital project, Professor Ashok Handa, has said the £800 million figure translates to £3.51 per person a week by spreading the cost over a population of 110,000 over a 40-year period, adding that the largest-ever capital investment in the Island’s history equates to less than a meal deal.

Under current plans, the borrowed money for the hospital would be placed in the strategic reserve, known as Jersey’s ‘rainy day fund’, from where it would cover the project costs until the planned completion date in 2026.

The business case was published to support a proposition due to be lodged for debate in September, requesting that the States approve the funding for the new facility.

It claims that the new hospital could still be built within its £804 million original budget, after facing some delays this year.

The project had fallen three months behind schedule, according to a government report last month, with more than £14 million earmarked for 14 existing government projects deferred by a year and redistributed to the proposed new hospital. These delays were caused by an ‘unplanned’ States Assembly debate brought about by an amendment, the report claimed, although this was rejected by the Future Hospital Review Panel, which has also expressed concern over the costs of the project.

The business case states: ‘The proposition will, when completed, set out in detail the options that have been considered in relation to funding the Our Hospital Project and the Government of Jersey Treasury recommendation.

‘For the purposes of the Our Hospital Outline Business Case, the following assumptions have been made but the ultimate decision on funding will be made by the States Assembly when the proposition is debated in September 2021.

‘£800 million could be funded via at least two separate public-rated Sterling bonds: Bond A is likely to have a tenor of 40 years with a value of £400 million. Bond B is likely to have a tenor of 30 years with a value of £400 million.’

Last year it was forecast that Jersey could end up with debts of more than £300 million this year due to spending on Covid-19. However, recent figures showed that pandemic costs were £60 million lower than expected.

A government statement says that the development of the new hospital will save the Island money in the long run by removing the cost of refurbishing existing health facilities.

Senator Lyndon Farnham, chairman of the Our Hospital Political Oversight Group, added: ‘The business case has clearly demonstrated that our new hospital can be achieved within the budgeted cost and in time to be fully operational by 2026.

‘At the same time, it will provide a health facility that is greatly improved on the previous iterations of the project. The main hospital building will consist of four hospitals in one – general, acute, ambulatory, and maternity and children’s, together with a knowledge and training centre and mental health facility. It will be supported by a modern and highly efficient energy centre, and entirely set within landscaped gardens and parklands, in an elevated and peaceful location.’

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