Department had concerns over hospital project two years ago, files show

Cost of children’s hospital could exceed €2bn, ‘which would make it the most expensive hospital in the world’

Fine Gael TD Kate O’Connell raised concern on Thursday about why a senior official in the Department of Public Expenditure and Reform, who was also a prominent member of the hospital’s development board, did not raise concerns about the escalating costs. Photograph: Eric Luke

Fine Gael TD Kate O’Connell raised concern on Thursday about why a senior official in the Department of Public Expenditure and Reform, who was also a prominent member of the hospital’s development board, did not raise concerns about the escalating costs. Photograph: Eric Luke

 

The Department of Public Expenditure and Reform (DPER) raised concerns nearly two years ago about governance arrangements for the development of the planned new national children’s hospital, official files suggest.

The department said it had been assured by the Department of Health that there were “sufficiently robust” arrangements in place to oversee the construction of the hospital, which is now at the centre of controversy over a massive cost overrun.

Official files show that when the DPER was informed late last year that the costs had increased by €450 million or 46 per cent, it said: “Are we now looking at a project that will cost over €2 billion which would make it the most expensive hospital in the world?”

In one document sent to the Department of Health on November 20th last, an assistant secretary in the DPER said: “As you know in the past we voiced serious concerns in relation to governance of the children’s hospital project, and were assured that the arrangements in place were sufficiently robust.”

Governance issues

Informed sources said the DPER had contacted the Department of Health in early 2017 regarding its concerns about governance issues, particularly in relation to the roles and responsibilities of various parties including the Department of Health, the HSE, the hospital development board, and the Children’s Hospital Group.

Sources said the Department of Health had set out specific assurances and clarifications about how all these different groups would operate in the development of the new facility in a memo to the Cabinet in the summer of 2017.

The official files show that on hearing of the overrun in November 2018, the DPER suggested that funding for other health development projects which were at a very early stage could be used to offset the growing costs of the children’s hospital.

“It appears to us that the €700 million of the health allocation over 2019-22 is as yet uncommitted – relating to these early stage projects. What is your assessment of the amount of the funding requirement for the national children’s hospital that can be met by reprioritisation within the existing health allocation to 2022?”, one document read.

Responsibility

The files, seen by The Irish Times, also show the DPER sought to highlight the responsibility of the Department of Health for the children’s hospital project.

It said the memo brought by Minister for Health Simon Harris to the Cabinet had said the accounting officer of his department was responsible for the overall governance of the project.

It said, given the temporary nature of the project development board, “the Department of Health is required to robustly assess the development board documents and ensure that the risks are managed on behalf of the taxpayer”.

However, at a Dáil Public Accounts Committee hearing on the cost overrun on Thursday, Fine Gael TD Kate O’Connell raised concern about why a senior official in the DPER, who was also a prominent member of the hospital’s development board, did not raise concerns about the escalating costs.

Excessive inflation

At the hearing, senior officials of the Department of Health conceded that the overall cost of developing the children’s hospital could increase beyond the current estimate of €1.7 billion.

The Government is now conducting a study to look into what effect excessive inflation would have on the final price.

The secretary general of the Department of Health, Jim Breslin, said the Government would be “fully open” if it transpired that the cost of the project was more than the current estimated figure of €1.73 billion.

Labour TD Alan Kelly said he had concluded, from the evidence to the committee, it was now “highly unlikely” that the final cost of the hospital would be less than €2 billion.