Health centre plans hit by credit crunch

5:19am Wednesday 23rd April 2008

The global credit crunch has hit Bingley's long-awaited replacement health centre.

The Royal Bank of Scotland has withdrawn the terms it had offered to finance the £12.4 million project.

The RBS informed its client, Bradford and Airedale Care Partnerships Ltd, late last week that changes would have to be made to the banking terms due to economic pressures in the lending market.

Since then there have been negotiations between the two to find a way forward.

The unexpected move came as health chiefs were hoping to give stage two approval to the scheme at a board meeting of Bradford and Airedale Teaching Primary Care Trust yesterday.

Instead of granting this approval the board was forced to defer its decision to enable RBS and Bradford and Airedale Care Partnerships time to agree a solution.

John Chuter, chairman of the Trust, said: "This has come as an unwelcome harpoon from the side."

However, he said from his understanding the move was a "glitch" rather than a "hurdle" to be overcome and said the public of Bingley should not lose confidence in the project.

"It is regrettable but it is something that is out of our hands," he said.

The Partnerships is the district's Local Improvement Finance Trust (Lift) - a partnership between the Department of Health, local health and social care organisations and the private sector.

The Lift programme aims to provide new or refurbished premises for health services to ensure that they can be provided close to the patient's home in the most appropriate setting.

It has already successfully delivered two groups of schemes, encompassing six individual developments which are all operational.

The new Bingley building is needed to replace services currently provided at Bingley Health Centre and Bingley Hospital. Three practices - Springfield Surgery, Priestthorpe Medical Centre and Drs Jennings and Robson - will move in to the new centre in Kingsway at Ferncliffe.

Rhys North, finance director of the Trust, said he was confident a solution would be found before the end of the week to enable financial close to be achieved by next month as planned.

This will allow building work to being in June with a target completion date of December 2009 before becoming operational in January 2010.

Shaun Hallett, chief executive of the Partnerships, said he fully supported the Trust's decision to defer approval while negotiations with funders continued.

He said: "The Lift company is confident that the issues can be overcome and that we can progress to financial closure in May."

A spokesman for the Royal Bank of Scotland said: "We continue to be in negotiations with all parties involved in the deal."

Yesterday, RBS - Britain's second biggest banking group - asked its shareholders to pump in £12 billion of new capital following billions of pounds of investment write-downs in what is the biggest rights issue in the UK's banking history.

The group is also considering offers for its insurance arm, which includes Direct Line and Churchill Insurance and could raise as much as £5 billion.

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