Improvement in health construction following Budget

Spending on health construction projects is expected to improve this year as more money comes into budgets from central government, and procurement moves forward on major schemes.

In his March Budget, the Chancellor Rishi Sunak promised a £6 billion funding settlement for the NHS and Glenigan forecasts that more than £2.2 billion-worth of health construction projects will start on site this year.

Major health construction schemes already on site or about to start include a £70 million cancer centre at the Royal Marsden Hospital in Sutton (Glenigan Project ID: 18432217) and the £65 million Douglas Bennett House mental health scheme in London (Project ID: 16071636).

Glenigan’s economics director Allan Wilén says: “The outlook for the health construction is brightening, with promised increases in NHS capital funding expected to lift project starts over the next two years.”

Major projects

The government had pledged to fund half a dozen new hospitals by 2025 before the budget, but has expanded that number to 40. The initial half a dozen hospitals, which will cost an estimated £2.7 billion, are moving forward.

A bidders day will be held on one, the £500 million expansion of Leeds General Infirmary expansion plan, on March 24 and an invitation to tender will be issued in October (Glenigan Project ID: 18366238). “Whilst capital investment in NHS facilities can deliver efficiency improvements and better health outcomes, it will take time to bring forward new building projects,” said Mr Wilén.

Expressions of interest have already been requested for another of the six priority projects for a £900 million redevelopment of Whipps Cross Hospital in east London.

Another of the six major schemes, a £100 million redevelopment of Princess Alexandra Hospital at Harlow in Essex (Glenigan Project ID: 19342019), is still at the planning stage.

Smaller and faster

Last year, the government pledged to supply £100 million in funding to another 34 hospitals to start developing projects and Glenigan’s construction market research shows a host of other smaller schemes moving through the procurement process.

Applications to tender have just been received for a £15 million multi-storey modular ward proposal at Mount Vernon Hospital in Hillingdon, north London, and construction will start next year (Glenigan Project ID: 20073486).

Tenders have been returned for a £13.7 million multi-storey car park at Northwick Park Hospital (Glenigan Project ID: 14283129). Once a contractor is appointed, work should begin on site after the summer.

Tenders have also been returned for a £14.6 million redevelopment of the emergency department at Manchester Royal Infirmary, but a start has been pushed back until November (Glenigan Project ID: 18322461).

Others hospital schemes already have a contractor in place. Kier, for example, is expected to start work in July on a £17 million extension of Torbay Hospital in Devon (Glenigan Project ID: 19342532).

Rosy future

With government money starting to kick start projects, the future for the health construction sector is increasingly healthy.

Mr Wilén explains: “Looking ahead the sector will benefit from the promised additional Government funding. The scarcity of projects currently in the development pipeline is expected to limit initial sector growth to just 3% this year.

“Starts are subsequently forecast to gather momentum during 2021, rising by 8%, as NHS trusts develop and implement their investment programmes.”