News Release

8th July 2002

NATIONAL AUDIT OFFICE THROWS DOUBT ON FUNDING FOR NEW LICHFIELD HOSPITAL

The National Audit Office in London has written to Conservative Councillor Fiona Royle following probing letters from her concerning the funding of the proposed new hospital in Lichfield. In their letter to her, they say "Part of the uncertainty revolves around the funding of the project....... However, the Department of Health has told us that the amount of NHS capital being requested is not currently available".

Michael Fabricant says: "I am surprised by this news. Assurances had been given before the election that this project is definitely going ahead and that funding was in place. The National Audit Office set up by the Conservative Government to be independent of politicians and to audit the work of Government has revealed that this is now not the case.

"I will now be contacting ministers at the Department of Health as a matter of urgency to find out when funding will be made available. My fear is that with the economic slow-down, funding will not be made available. I know the views of the Burntwood, Lichfield and Tamworth Primary Care Trust who are managing this project - and I agree with them. They are keen not to go down the route of a Private Finance scheme - a sort of hire purchase - which will deplete the budgets available to pay for staffing and other running costs of the hospital. I congratulate Councillor Royle for her tenacity in finding out this shocking news."

The full text of the letter from the National Audit Office now follows:

from NATIONAL AUDIT OFFICE 157-197 Buckingham Palace Road London SW1W 9SP

Dear Councillor Royle,

Thank you for your letter of 28 March 2002, which has been passed to me as Director of Health Value For Money work in the National Audit Office. You asked about the stage reached in planning for the new hospital, and we made enquiries with South Staffordshire Health Authority and with the Department of Health to find out the latest position.

As you may be aware, there have been some developments since your letter, though unfortunately uncertainty remains. An outline planning application was submitted to the District Council on 27 May 2002. This includes the proposed use of two strips of land on the site of the new hospital build, to be used for residential development (40-50 housing units). I understand that the planned occupation date is not now Spring 2003 but Autumn 2004 but that there is a question mark over even this later date.

Part of the uncertainty revolves around the funding of the project. The Burntwood, Lichfield and Tamworth Primary Care Trust and the hospital Trust involved would prefer the funding to come from a combination of land sales income and public capital. However, the Department of Health has told us that the, amount of NHS capital being requested is not currently available. The scheme is at outline business case stage but further progress is dependent upon the funding route being resolved. As a result, the full planning application is in abeyance pending resolution of the funding route and NHS approval of the outline business case.

I am sorry that I cannot be more definitive about when the proposals will be taken forward, but I hope this letter is useful in providing an up to date picture. Thank you again for writing to us.

Yours sincerely JAMES ROBERTSON Director, Health Value for Money Studies