THE cost of building a new children’s hospital in Edinburgh will be a further £90 million with the total spend set to reach £520m, a report has revealed.

According to a report commissioned by Audit Scotland, NHS Lothian paid the consortium £80m for “enabling and equipment works” over and above the £150m bill for the hospital’s construction.

It comes amid mounting controversy over the long-delayed project, which is currently lying empty after its July opening was cancelled over ventilation problems. 

NHS Lothian has already paid an extra £11.6m to the consortium building the delayed hospital to
fix drainage problems and void fire detectors after being advised that it was too risky to sue the group in court. 

READ MORE: Watchdog: NHS Lothian's £11.6m hospital payment 'less risky than suing'

The annual audit report for NHS Lothian – finished before the hospital’s opening was indefinitely delayed – also reveals the health board is facing a “financial gap” of £25.9m this year, with a shortfall in excess of £80m projected by 2021/22, according to figures supplied by NHS Lothian.

The public spending report was due to be published next month but was brought forward due to “high levels of interest” in the Royal Hospital for Children and Young People (RHCYP).

It details how the health board first raised the threat of legal action in relation to the troubled project in September 2017. 

The report said NHS Lothian had “identified a number of issues that it believed were non-compliant with the original contractual requirements” for the RHCYP.

However, in May 2018 NHS Lothian eventually opted against legal action following expert advice. Instead, it reached an agreement to pay £11.6m to the consortium in charge of the hospital project, IHSL Ltd, in exchange for carrying out works required to complete the facility. 

The payment was signed off jointly by the Scottish Government and NHS Lothian in 2018.

The Audit Scotland report noted the payment was intended to resolve three technical problems, in particular, relating to “a drainage solution, heater batteries, and void fire detectors”. 

The watchdog stressed the “extensive analysis and resources” were committed to “weigh up the pros and cons” of different scenarios before the decision was taken to settle the dispute out-of-court. 

READ MORE: Sick Kids: Contractor behind three crisis-hit hospital builds

It added: “NHS Lothian has consistently maintained its position that the issues experienced were materially non-compliant with the original specifications and raised concerns over the facilities for patients, visitors and staff (relating to aspects such as function, safety, adequacy and future capacity).

However, expert opinion did not give the board sufficient confidence the likely benefits of pursuing resolution through the courts outweighed the qualitative and quantitative implications of such a route.”

The details emerged in Audit Scotland’s annual summary of NHS Lothian’s finances, which predicts the health board will face a funding shortfall of £26m in 2019/20 rising to more than £80m by 2021/22. 
However, the report was completed in June before the latest delays to the opening of the new children’s hospital. Plans to begin admitting patients from July 9 – more than two years later than originally planned –were axed after a last-minute inspection found fault with the ventilation systems in critical care. It has also been blighted by drainage problems. 

Health Secretary Jeane Freeman has commissioned a safety review which is expected to conclude in September, while private consultants KPMG are investigating the project’s governance. 

It is unclear when the hospital will open. 

READ MORE: Edinburgh Sick Kids: Clinicians ‘pressured’ to sign off flawed hospital plan

A Government spokeswoman said: “As part of this year’s audit, Audit Scotland commissioned Scott-Moncrieff to carry out a high-level review looking specifically at arrangements around the settlement agreement between NHS Lothian and the contractor. 

“The report notes that NHS Lothian sought professional advice and provided evidence of detailed evaluation of the available options before proceeding with the settlement agreement and that provision of a safe facility remained the board’s priority at all times.

“The results of this review will be considered as part of the independent audit of the overall governance arrangements for the new hospital that KPMG are conducting, at the Cabinet Secretary’s request, to provide an external and impartial assessment of the factors leading to the delay.”

Despite not being able to use the facility, NHS Lothian is also paying around £1.4m a month to IHSL Ltd in maintenance and management fees as part of a 25-year deal. 

A spokesman for Brookfield Multiplex, the contractor for design and build, said if any modifications to the hospital are necessary it “will provide such assistance as may be required”.