Troubled contractor Interserve will continue £25m Merthyr hospital scheme

(Title Image: BBC Wales)

In the last few weeks the heavily-indebted Carillion-style outsourcing company – Interserve – saw its share value plunge as it negotiates a rescue deal.

As Interserve is currently undertaking a £25million refurbishment of Prince Charles Hospital in Merthyr Tydfil on behalf of Cwm Taf health board – as part of a wider programme of improvements at the hospital – it was subject to a topical question this afternoon from Shadow Health Secretary, Angela Burns AM (Con, Carms. W. & S. Pembs.).

Angela had a number of specific questions: Does the Welsh Government agree with their Labour colleagues in Westminster that Interserve should be banned from bidding for public contracts? Were previous share price falls following the collapse of Carillion taken into account when awarding the Merthyr contract? Are there guarantees the work at Merthyr will continue uninterrupted?

Health Secretary, Vaughan Gething (Lab, Cardiff S. & Penarth) said that “challenges around the financial health” of a company bidding for government work is considered. He also said the contract was awarded long before the current problems.

“What we currently have though is that Interserve have already completed Phase 1A of the refurbishment in Prince Charles Hospital and this work is required because of a fire safety notice, so, undertaking that work and removing asbestos from the building. They’ve been awarded the next phase—phase 1B—and that was ordered several months ago before the concerns were as sharp or as highlighted as they are now.”
– Health Secretary, Vaughan Gething AM

He confirmed that not all of the money for the project has been paid upfront and there are monitoring arrangements in the contract which would allow a move to an alternative supplier “if the company fails to meet its obligations”.

Dawn Bowden AM (Lab, Merthyr Tydfil & Rhymney) asked whether the Health Secretary was satisfied there was no change in the risk levels from when the contract was awarded by the health board? He said he was satisfied and that the performance of the contract will be monitored, but any delay would “affect the ability for the NHS to meet its obligations as well of course as the workers and the uncertainty around their employment”.

Helen Mary Jones AM (Plaid, Mid & West Wales) backed Westminster Labour’s stance in barring the company from public contracts and asked whether the Health Secretary would issue further guidance to health boards to look into the background of outsourcing companies when awarding contracts?

The Health Secretary reiterated that this wasn’t a new contract and Cwm Taf health board have looked again at the potential risks of that contract, including cancelling it. However, when new contracts come forward he expects – as a matter of course – for public bodies to properly consider the finances of Interserve and any other potential contractor.

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