Why KGH has ruled out building hospital on new site

A huge shortfall in funding and "crazy" interest charges are preventing KGH from rebuilding on a new site, the hospital's boss has revealed.

Last night (Tuesday) KGH unveiled their plans to develop their Rothwell Road base into a hospital fit for providing 21st century care, with £396m from the Government so far.

They've pleaded for more cash, needing at least £765m in total to get to the end of the third phase out of five in their overall plan.

Many people think the hospital should build from scratch on a new, bigger site out of town.

But KGH group chief executive Simon Weldon ruled it out because they haven't got anywhere near enough in funding and because interest repayments on the funding could leave any hospital on a new site a "white elephant".

He told the Northants Telegraph: "Would a greenfield site be a good idea? Yes, because you can design a hospital from scratch, you could create a completely integrated set of buildings.

"The first problem though is the capital problem. How much does it cost us to rebuild on a greenfield site?

"The amount that we think it would cost is about £1.2bn. We've only got £396m so we are about £800m short of what we need in order to rebuild on a greenfield site.

"The second problem, even if somebody waved the magic money tree in our direction, is the capital repayment - the interest payment - which would be £64m, which is nearly 20 per cent of our current turnover.

"We simply wouldn't be able to afford to staff the new buildings that we had just created because we would be spending so much money paying back the interest, so you'd have these white elephant buildings.

"You'd have a beautiful building and you wouldn't be able to afford to put the staff in it."

Like having a mortgage, the trust has to pay for the capital it borrows and the annual payment has to be paid from the overall hospital budget.

If it cannot be afforded KGH could go into financial deficit and they say it is important to make sure they don't borrow more than it can afford to pay back.

The amount they repay is affected by the capital charge rate set by the Government but there have been indications that the Government is considering reducing the rate, which would mean KGH could potentially borrow more money to make further developments to the hospital site.

Mr Weldon said it seems "crazy" to charge the NHS so much, adding that "it looks like you're giving with one hand and then taking away with the other".

He said: "When people see £396m and think that's such a large amount of money...it is a huge amount of money but of that £396m we will be spending something like about £30m servicing the debt on it.

"The way in which we have to service that debt is by making savings and eventually those savings trickle down to frontline care, so it's more complicated than people think."

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