THE DECISION to cancel a £464m hospital, which was to have unlocked plans for a world-class pharmaceutical and healthcare cluster at Wynyard, was condemned today as “100% disastrous” for the construction industry and the wider economy.
The new North Tees Hospital - the first major capital development in 20 years to be built outside the Private Finance Initiative (PFI) system, where the Government borrows money from the private sector now to build public infrastructure projects in return for part-privatisation later, was axed yesterday as part of the Coalition’s £2bn bonfire of programmes greenlighted in the dying months of Labour.
Ironically, the hospital may have stood a better chance of survival had it been agreed under such a capital funding partnership.
Instead, the full cost was to come out of the Department of Health’s already overstretched budget. While developers were expecting delays, health secretary Andrew Lansley’s decision to scrap the plan came as a shock to owners of the 750-acre Wynyard site, which was to have been home to a ground-breaking work/life community including up to 2,000 eco friendly homes and a medical cluster designed to attract some of the world’s leading healthcare providers.
It is understood the Primary Health Trust had already started discussions with key industry leaders on using the hospital as a focus for research and development.
The scheme was being worked up by North-east-based -space architects for landowners Wynyard Park, a consortium of developers including JC Musgrave, led by Teesside entrepreneur Chris Musgrave. Mr Musgrave was understood yesterday to be calling urgent meetings to decide on its next course of action.
In a statement this morning, Wynyard Park said it was disappointed by the news.
“We understand that the Trust is now evaluating the decision with the view to exploring other funding avenues for the project.”
Wynyard Park is one of the region’s “key employment locations”. Since the consortium took control of the site less than five years ago it has attracted more than £250m of private investment with 55 companies now employing more than 1,000 people.
The company behind the park said it was “committed to continuing to work hard to build on this success and progress our plans”.
But, with cash for speculative development tight and no anchor for the site, it is unclear how that could happen.
Although no prime contractor had been appointed for the hospital development, its cancellation was nevertheless a crushing blow for the construction industry, which would have benefited to tune of thousands of jobs.
Douglas Kell, head of the North-east Civil Engineering Contractors Association, said: “It’s 100% disastrous for contractors in the North-east. We were already on a downward trend. We had lost in civil engineering 25% of the workforce. There are a few contracts that are steady, but once those are finished there are no more in the pipeline.
“I honestly cannot see how employment in our sector can continue. We were all expecting cuts but the amount and size and severity and stringency has been dramatic.
“They are going to have to rely on the private sector (to fund infrastructure projects), but has the private sector got the confidence?”
More than half of civil engineering contracts are generated by the public sector. Members of the CECA alone directly employ 112,000 with double that number working for them at any one time.
Civil engineers Lumsden & Carroll, which had been engaged by the Primary Care Trust to carry out preparatory work on the site, declined to comment.