Billion-pound Barts deal fails to convince sceptics

PFI lawyers are proceeding with caution, despite the UK Government last week finally giving the green light to the £1bn Barts and Royal London Hospital project.

The green light came as Lovells and Pinsent Masons closed the latest in a long line of NHS PFI projects, the £65m Hull and East Yorkshire Hospital NHS Trust Oncology and Haematology project.

Pinsents projects head Michael Boyd said he expected increased scrutiny and potential delays to future hospital PFI projects.

"The number of projects will probably be reduced. A number of big projects have been done, but there are only so many big hospitals that the UK requires," Boyd said.

The review of the Barts and Royal London project saw the lease extended to 35 years instead of 30, and constructor Skanska, Clifford Chance's client, had its annual fee reduced from £117m to £97m.

Barts and Royal London was one of three projects called in by Health Secretary Patricia Hewitt for a review of costs, and the project only received the green light after a number of cost-cutting measures were implemented.

Allen & Overy (A&O), Ashurst, Clifford Chance and Scottish firm Tods Murray join Lovells and Pinsents in the list of firms with big NHS PFI projects on the line.

Other projects waiting for the go-ahead include the £500m Birmingham Hospital scheme, with A&O (funders) Pinsents (NHS Trust) and Tods Murray (construction) waiting to proceed. The £250m St Helens Hospital is also on hold, with Lovells and Clifford Chance understood to have secured the key roles on that project.