Landmark hospital project led to rows, controversy and resignations

Internal links

PM and unions in 'privatisation' peace talks

Critical report provides cover for Blair to press ahead with his big idea

When the Government announced plans for a new Royal Infirmary of Edinburgh (RIE), it was hailed as a milestone on the exciting new road of public-private partnerships.

At an initial cost of £184m in August 1998, the Government promised that it would create "the largest new hospital to be built in Scotland in the 50-year history of the NHS".

The past three years, though, have proved contentious. The project has drawn fierce criticism from the British Medical Association (BMA), Unison, the Scottish National Party (SNP) and numerous rank and file members of the Scottish Labour Party, all concerned at the prospect of private industry making profits from the public purse. The BMA has calculated the real cost of the RIE at £720m over 25 years, and claims that the total cost would have been £180m if the project had been financed by a one-off payment from the public purse. Dr Brian Potter, the Scottish secretary of the BMA, even called for a moratorium on the scheme, insisting that it would saddle Scotland's Parliament with a 30-year debt.

The SNP has led public opposition to the sale of the original RIE site for £30m to a consortium including the Bank of Scotland, Taylor Woodrow Capital Development and Kilmartin Property Group. Alex Salmond, the former SNP leader, condemned the RIE project by claiming "private consortia are ripping off the public purse by using public assets for private profit".

In 1999, the SNP initiated a Scottish Parliament investigation into the RIE project, hoping to turn it into an important issue in the Scottish Parliamentary elections. At the same time Labour's Scottish treasurer, Bob Thomson, claimed the scheme was causing revolt within the party.However, the Scottish Executive remains committed to the scheme, insisting that it will deliver value for money despite continued rumblings in Labour Party ranks and bitter opposition from Unison.

Three private-sector companies, Balfour Beatty Construction, Morrison Construction and Haden Young, will replace the 119-year-old Edinburgh Royal Infirmary with a new facility at Little France in south-east Edinburgh.

The new RIE, boasting 869 beds and 24 operating theatres, will be completed in two phases; the first scheduled for completion in October with services for women and children opening next March. The final phase is due to open in the summer of 2003. It will be managed and administered for 30 years by Consort Health Care. All hospital ancillary staff will be transferred from NHS employment to a commercial company, Haden Health Care, which is part of the Consort group.