Failed hospital project in Leicester costs £11m

A decision to cancel a massive hospital rebuilding project in Leicester has cost taxpayers £11m in compensation.

The Private Finance Initiative project, abandoned in 2007, involved rebuilding three hospitals.

Almost £23m had been spent on the project to upgrade the Royal Infirmary, Glenfield Hospital and Leicester City Hospital when the plans were dropped.

Triskelion consortium agreed to accept £11m from University Hospitals of Leicester and the Department of Health.

The Department of Health said the original claim for wasted bid costs from the consortium, which included construction giants John Laing, Laing O'Rourke and Serco, was £26m.

The Pathway project was shelved by the University Hospitals of Leicester Trust (UHL) when the £711m projected cost rose by £200m.

The plans included creating a new women's hospital at Glenfield and revamping children's facilities at Leicester Royal Infirmary as well as refurbishing existing buildings.

University Hospitals of Leicester NHS Trust Chief Executive Malcolm Lowe-Lauri said: "The new board supports the decision to settle this claim.

"Cancelling the Private Finance Initiative was a brave decision - had my predecessors continued with the scheme, we would now be locked into a contract costing £90m a year placing substantial extra pressures upon our finances beyond the current efficiency savings."

The planned new hospital complex was one of the most ambitious NHS-private finance construction projects in the country.