Only a few days ago, what was probably the most important decision of this government was voted. After years of development and several false starts, after approving the site and the services needed, the Assembly needed to agree on the budget necessary to build our new hospital and how to finance it. Somehow, the Future Hospital Review Panel charged with the scrutiny of the project, having decided that the budget was somehow too large, decided unilaterally to shrink the project by one third and proposed an amendment to that effect.
This started the most surreal debate of this term of office with half of the Assembly trying to explain that £804 million was not too much to pay for a hospital and the other half trying to argue that cutting one third off the budget would have no consequences whatsoever on the project. I don’t think many were swayed by the long speeches but eventually, a small majority defeated the wrecking amendment with just 26 votes against. With that avoided, the financing proposition itself benefited from a 32 votes majority as fewer members wanted to be seen to directly oppose the project itself.
It is quite clear that £804 million is an eye watering amount of money and that our new hospital will be the largest development in Jersey for more than a hundred years but that wasn’t really the question. The questions were firstly, what size hospital do we need? The 65,000 square metres determined by our clinicians and specialists? Secondly, how much would that actually cost to build? The £804 million calculated by a large team of professionals from within and outside the government and including a healthy contingency? And thirdly, how we could finance it? By issuing two £378 million bonds at some of the lowest interest rates ever seen in history and by repaying interest and capital with the steadfast proceeds of our, now £1 billion strong Strategic Reserve?
The Jersey Alliance cannot stress enough how important it was to avoid stopping the project. This extraordinary financing option which basically allows us to “have our cake and eat it” is only possible while the interest rates are low and the total cost remains reasonable. It is a golden window of opportunity that will only last a few months. Now £804 million may not sound very reasonable, but it is more affordable than £1 billion or £1.2 billion, which are the sums we are looking at if we delay the project further.
Large construction projects are seeing an incredible inflation post Covid and the companies able to undertake them are booked for years. Whilst we waited fruitlessly for the opportunity of building a cheaper project, our existing hospital would have necessitated so much money to repair and keep running that we would have ended up spending the funds needed for the new one. Not to mention the impact this might have on the quality of service we provide for patients and the working conditions our excellent frontline staff would have to work in. We could have missed our one chance in a generation.