Ministers are to step in to bail out Liverpool's new £335m ‎NHS hospital, nine months after the collapse of construction giant Carillion left the project in crisis.

Sky News has learnt that the government will make an announcement within days that it is terminating the Royal Liverpool Hospital (RLH) private finance initiative (PFI) deal and taking it into full public ownership.

The trust responsible for the hospital is due to hold a board meeting on Tuesday, with a statement from ministers potentially timed to coincide with it.

Private sector contracts relating to the project are due to expire before the end of the month, meaning the announcement has to be made by the weekend, according to industry sources.

Matthew Hancock, the health and social care secretary, is understood to have ordered officials to end the impasse surrounding the construction of the hospital, which had been due to open last year.


Although it leaves taxpayers facing an additional financial burden from Carillion's demise, the decision should expedite the delivery of a flagship new hospital in Merseyside.

The government's decision to take temporary charge of the hospital's construction - with new contracts being tendered in the coming months - is likely to refuel the intensifying political debate about the role of private sector outsourcers in the delivery of essential public services.

An announcement about the future of the RLH could come ahead of the Labour leader Jeremy Corbyn's speech to the party's annual conference in Liverpool, in which he is expected to continue his sustained attack on public-private partnerships (PPP).

Mr Corbyn described Carillion's liquidation in January as a "watershed moment" for public services in Britain, and demanded that they be run "for the benefit of the many, not the profits of the few".

A number‎ of other Carillion's major construction projects also remain unfinished, while the Midland Metropolitan Hospital in Smethwick has already been taken into public control.

If ministers do opt to take over the RLH, the decision will leave its private sector lenders - Legal & General (L&G) and the European Investment Bank (EIB) - ‎nursing multimillion-pound losses.

L&G and the EIB had committed £180m in debt to fund the construction phase of the project, with Carillion and the Pension Investment Platform, a private sector vehicle, funding the equity.

The demise of Carillion left the RLH without a contractor to finish the building work or an operator and maintenance provider for it.

Sources said that L&G and the EIB had proposed a new financing package that would have enabled work on the 646-bed Liverpool hospital to recommence.

However, an engineering assessment commissioned from Arup, the consultant, discovered major structural defects in the work already carried out by Carillion.

Sources said there would be substantial additional costs associated with rectifying existing problems with the building, although they refused to quantify them on Monday.

The RLH has already become a politically toxic symbol for the government, which has scrambled to demonstrate a tougher approach to boardroom stewardship by announcing a series of corporate governance reforms.

In July, Dan Carden, the MP for Liverpool Walton, described the hospital as "a monument to corporate greed" and demanded that ministers step in to rescue the project.

The Treasury declined to comment on Monday evening, while the Department of Health and Social Care said in a statement: "‎We are committed to getting the new Royal Liverpool Hospital built as quickly as possible for the benefit of patients across Merseyside.

"We have been working closely with all parties involved to find a solution which minimises further delays and ensures value for money.

"The Trust's board is meeting on Tuesday 25 September to review the situation, and we expect to have an update on the next steps thereafter."