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rising costs

Next years health capital budget will be raided because of ballooning costs of new children's hospital

Taoiseach Leo Varadkar said the new children’s hospital may cost even more than its latest €1.433 billion price tag.

THE GOVERNMENT WILL have to take €100 million from the 2019 Health Capital Budget as well as central government expenditure to fill the funding gap caused by the ballooning National Children’s Hospital budget.

Of that total, €50 million will come from the health capital budget next year and €50 million from central government. This is out of a total capital budget of €7 billion for 2019. 

Taoiseach Leo Varadkar told the Dáil today the new children’s hospital may cost even more than its latest €1.433 billion price tag. 

This cost represents a €450 million increase on what the hospital was projected to cost in April 2017.

Of that figure, €319 million is accounted for in the rise of construction costs, while €131 million is attributed to the direct cost of staff as well as contingency money and design fees. €50 million is accounted to VAT.

In order to fill that gap, the government has said there will need to be a reallocation of capital envelopes for other departments. 

What departments might lose out and what projects might be stalled will be determined by Finance Minister Paschal Donohoe, who is carrying out a review of where the money will come from. He is due to report back to Cabinet in January.

While €100 million will have to be found next year, a government spokesperson confirmed some €390 million will be needed from additional Exchequer funding for the overall project delivery, while it is expected €130 million will also come from additional philanthropic funding.

Draining the health budget next year in order to fill some of the €450 million shortfall has raised concerns about other projects which could now be under threat because of the runaway costs. 

It is understood the Taoiseach voiced his concerns at the rise in costs at today’s Cabinet meeting, while Health Minister Simon Harris said he would be keeping a “close eye” on the hospital’s budget going forward.

While Cabinet signed off on the substantial increase in the budget, it was also informed that a review of the existing oversight arrangements between all agencies is to be carried out to ensure there is adequate management and governance of the project.

The Department of Public Expenditure and Reform will also carry out its own review to determine what contributed to the overrun. There will also be an analysis of the design team as well as other issues so as to determine if there are outstanding matters that need to be dealt with. 

The Taoiseach faced questioning from Fianna Fáil leader Micheál Martin on the issue, who asked how the cost could have escalated from the figure of €983 million in September to €1.433bn now. 

He also said that the cost was estimated at €485 million at the announcement, and at €650 million in 2016, after planning permission was granted.

“In the space of about six weeks it has gone from less than a billion to €1.4 billion apparently, which is extraordinary stuff,” said the Fianna Fáil leader. 

Amid growing concerns over the runaway budget, Varadkar confirmed officials from the group overseeing the project will be made available for any Oireachtas Public Accounts Committee and the Oireachtas Health Committee. 

Varadkar said the new hospital will  be the “biggest-single investment in the health of our children ever”.

“It may turn out to be one of the most expensive children’s hospitals in the world but it is also going to turn out to be one of the best,” Varadkar said.

Following the sign off on the project’s continuation today, Minister for Health Simon Harris said it will enable the National Paediatric Hospital Development Board to instruct the current contractor for Phase B of the works.

“The new children’s hospital and the two outpatients and urgent care centres at Connolly Hospital and Tallaght University Hospital are long awaited and I am very pleased that the construction can continue now without delay. The hospital will facilitate the implementation of a new model of care that will have a profound impact on all paediatric services once the new hospital is open,” said Harris.

If the government finds the money from somewhere, when will the hospital be open to patients?

The main hospital construction is to be completed in 2022, while works at the Connolly care centre are on target for practical completion of the building in Spring 2019 with the opening scheduled for July 2019. Works at Tallaght satellite care centre are underway with a target handover date of July 2020.

These centres will provide urgent and outpatient care to children in the Greater Dublin Area, including Co. Dublin, Wicklow, Meath and Kildare, said the minister.

It is envisaged the main hospital at St James’s will have 380 single rooms all with en-suite bathrooms and a parent’s bed. There will be 93 daycare bays, 22 operating theatres and procedure rooms, and 122 consulting rooms in total.

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