April 13, 2024
Health

Cost of national health campus increases six-fold to £3.2bn


A trio of big-name contractors could walk away from a major health security project amid substantial delays and ballooning costs, according to a National Audit Office (NAO) report.

The treasury first approved Public Health England’s (PHE) outline business case for a £530m health security campus in Harlow, Essex, in 2015. The campus, which will replace ageing laboratories at Porton Down and Colindale, was expected to open in 2020.

But the estimated cost of the project has spiralled to £3.2bn – six times the original estimate – and the opening date has been pushed to 2036 at the earliest.

Kier, Wates and VolkerFitzpatrick were appointed to the project by PHE in 2018 on a two-stage contract. Although all three have completed “significant enabling works”, the UK Health Security Agency (UKHSA), which superseded PHE in 2021, suspended the contracts in March 2022 due to a lack of funding.

The new NAO report states: “With continued uncertainty around the programme, a key risk that UKHSA is currently bearing is that key suppliers do leave the programme or there is a failure in the construction supply chain.”

The government has already spent £400m on the project – around three-quarters of the original budget – including £65.5m on construction and £91m on design.

Gareth Davies, NAO comptroller and auditor general, said: “In 2006, government determined that replacing and modernising its high-containment laboratories was critically important to ensure the UK has the capabilities to identify, study and respond to the most dangerous pathogens in the world.

“In the 18 years since, it has made very little progress at significant cost. Unrealistic cost estimates, uncertainty over scope and location and escalating forecast costs have undermined both the UK’s future resilience to public health emergencies and value for money.”

PHE first revised its cost estimate to £888m in late 2015 to account for inflation and other contingencies.

The government purchased a former GlaxoSmithKline site in 2017 for £30m to host the new facilities. Despite significant design and enabling works at the site, the full business case for building the scheme at Harlow has not yet been approved.

In 2020, PHE more than doubled its estimated cost to nearly £2bn. The £1.1bn increase was attributed to £248m in maturing risk analysis, £183m due to better estimating accuracy, £174m from irrecoverable VAT and £157m in inflation.

A revised business case in 2023 put the cost at £2.9bn, incorporating £360m in design changes brought about by new regulation, technological advances and future-proofing. Pausing and restarting the programme has cost £185m, while the project racked up an extra £325m due to inflation and £150m in VAT.

The project has been paused since 2022, with no decision on how it will proceed. The treasury has indicated it is only willing to fund the project up to £2bn.

A spokesperson from UKHSA said: “The Covid-19 pandemic and subsequent creation of UKHSA has required a review of the best way to deliver the specialist laboratories needed for the UK.

“This has considered a range of options including the Harlow scheme and the potential use of existing sites.

“We will continue working with DHSC [Department of Health and Social Care] to ensure that we have the right infrastructure in place to protect people from a wide range of health threats.”

Kier, Wates and VolkerFitzpatrick have been contacted for comment.



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