By Richard Digard
HOW much government can the island of Jersey afford? No, it’s not a trick question but one triggered by the frankly alarming report from the Deputy Jonathan Renouf review panel’s detailed examination of the £710m Overdale hospital project, which has found multiple deficiencies in the scheme.
Just how serious these are has been underscored, in my view, by the initial response to the report by the Minister for Health and Social Services, Deputy Tom Binet, who said, “…it is clear that the report is likely to cause a good deal of unnecessary concern”.
What? Before we unpick this unhelpful reaction to a forensic assessment of the case for new healthcare facilities, which also draws heavily from external, independent experts, the whole point of the review is to draw attention to an impending train-crash of a project.
Why is it a catastrophe-in-waiting? For the simple reason that those behind it don’t know what they’re doing, haven’t thought it through properly and don’t have a handle on future costs. And you, Mr and Mrs Jersey taxpayer, will be left picking up the pieces long after Messrs Binet and Co have collected their OBEs and ridden off into the sunset.
Before we get into the detail of why we can be so emphatic that any concern caused is very necessary and long overdue, there’s something obvious to state at outset: this is a massively complex project.
At close to three-quarters of a billion pounds, just coming in on budget would be an achievement. Guernsey, which has a track record of overspending on much lesser infrastructure projects, routinely adds 15% contingencies to forecast costs.
For you, any overrun of that scale would mean finding an extra £100m. And that’s before you start paying to operate the facility, factoring in the cost of future health developments and treatments, and meeting changing staffing requirements.
Just coming in on budget – which you won’t – would be a tremendous achievement on its own. Guernsey’s Health president faced calls for his resignation a while back when it was disclosed that our own hospital modernisation programme was slated to cost an additional £30m before they’d even started. That was attributed to material shortages caused by the Ukraine conflict and rising inflation, neither of which look likely to disappear soon.
What makes this even more alarming is the absence of preparation for the project, according to the review panel’s work. As it puts it: “There is no reconciliation between the designs for the new hospital at Overdale and the expected capital cost of the building, which means it is impossible to tell if the new acute hospital can be built within the funding envelope.”
The panel’s own external experts go further. In the view of Currie & Brown, a world-leading provider of cost management, project management and advisory services, the scheme demonstrates multiple deficiencies:
“It does not adequately make the case for the scale, and associated capital costs, of the proposed new healthcare facilities at the Overdale Acute Facility at Overdale, Phase 1 of the Ambulatory Care Centre at Kensington Place, Phase 1 of the St Saviour Health Village and St Ewolds. It does not demonstrate that the revenue cost projections for the preferred option are robust or affordable.”
These are significant and material accusations. Taken at face value, they mean that the biggest single government-funded capital project in the history of Jersey has pretty much been set up to fail. So you’ll see why I think Deputy Binet’s response about “unnecessary concern” is so poor.
In all, the panel identifies eight major deficiencies and the headline one for me is that the outline business case – the starting point for any capital project, especially taxpayer-funded – “does not come close to meeting the standard that Islanders have a right to expect”.
This lack of financial scrutiny extends to the whole New Healthcare Facilities Programme (NHFP), “which means that it is impossible for the panel, the States or Islanders to properly examine and understand the implications of what is being proposed”.
This means that Treasury oversight of the entire NHFP appeared to be weak, with very limited internal challenge to the hospital team. As Deputy Renouf notes: “It should not be left to a Scrutiny panel to expose fundamental weaknesses in the business case for the new healthcare facilities.”
Among the other frightener in the panel’s findings is this: “The ongoing revenue costs of running the new healthcare facilities seem to have been considerably understated, particularly for example the staff costs of a larger hospital. This calls into question the long-term affordability of the Island’s future health estate.”
Well, let’s cut the Health Minister some slack here. If this damning assessment is correct, you, as taxpayers and potential users of the healthcare facilities, are well and truly in the soup because the other finding is that the underlying lack of a healthcare strategy means Islanders have no idea whether the new healthcare facilities will match the future health needs of the Island.
In other words, you could be paying huge amounts for something that doesn’t work and is way more expensive than you were told.
This is one of the most blunt, damaging and emphatic critiques I’ve seen of a government project, so forget being concerned. If I were a Jersey resident, I’d be terrified of what the Island’s potentially getting into.
Which means Health and Social Services, the Council of Ministers and Treasury should have what even Houston would recognise as a problem.
It’s fair to say, I think, that some Scrutiny reports are pretty loaded and wish to make political points. That’s not the sense you get from this one. And, in any event, that’s not how Deputy Renouf works.
So can Deputy Binet and Health rubbish the findings of the panel and its external advisers? Hard, at this stage, to see how they can. Especially as there is no health strategy and no adequate business case. And the minister’s immediate reaction stopped far short of saying the report was baloney.
So what do those holding the purse strings do? Use other experts to validate the report and then address the already-identified deficiencies? Accept the findings and plug the gaps? Or take it on trust that Deputy Tom knows what he’s doing and crack on?
Pause and review is tricky. As the panel itself notes, there is considerable public fatigue over the whole hospital saga (and, I would say, all the millions so far wasted on it). More importantly, there is a pressing healthcare need. “The existing hospital in Gloucester Street continues to deteriorate and despite the best efforts of a dedicated workforce it is becoming harder and harder to provide safe care in an ageing, patched-up group of buildings,” said the panel.
Any further delay will exacerbate that existing risk to hospital users and, by extension, increase costs, so I doubt that there will be much appetite for delay. Add to that the other finding, that Health is in the driving seat on this one with little effective challenge from Treasury, and my guess is the panel’s report will be largely ignored.
Well, that’s the thing with advice. You can always ignore it if you don’t like it. But that doesn’t make it wrong – or absolve you from the consequences of doing so.
In short, despite the best efforts of Deputy Renouf’s panel colleagues, you’re about to build a new hospital and healthcare facilities on the fly with no real knowledge of costs or how much it will take to run simply because it’s expedient to do so.
Ah well, perhaps you will be able to take comfort when it’s all over that not only was this Jersey’s most expensive States project, but the post-implementation review will also show it was pretty much guaranteed to be the worst-managed too.
Richard Digard is a former editor and director of the Guernsey Press and Star and retired chairman of Guernsey Post Ltd. He has been a Douzenier of the Vale Parish in Guernsey since 2016 and is a consultant and media commentator
