BRITAIN’S oldest hospital may be broken up “by stealth” if the Government adopts a preferred strategy to agree only the first phase of a £1.15 billion redevelopment programme.

Patricia Hewitt, the Health Secretary, is expected to announce plans for the future of Barts and the London NHS Trust, which includes St Batholomew’s Hospital, that have been delayed amid concerns about the cost.

It has now emerged that the Government may decide to give the green light to half the programme, a private finance initiative, and defer funding on the second half.

The second phase of the project involves 50 per cent of the redevelopment of Bart’s, including all cardiac services, as well as refurbishment of the dental hospital and outpatient buildings at the Royal London Hospital. Ms Hewitt has consistently denied that the project will be broken up.

Doctors believe that such a strategy will destroy the project, which has taken more than six years to develop, and bring chaos to cancer and cardiac services for East London. It has also been suggested that the change of direction contravenes European Union regulations on fair tendering. The Government ordered a last-minute review of the proposed redevelopment by North East London Strategic Health Authority, which suggested that it serves an essential clinical need.

The review was ordered by the Government amid fears of a cash crisis in the NHS. Delays to the Bart’s project, which was ready to begin in December, are currently costing an estimated £500,000 a day. Skanska Innisfree, the PFI partner, has also threatened a £100 million claim against the trust if the deal does not go through.

A thousand doctors signed an open letter to The Times last month in which they urged the Government to press ahead with a project that serves a population equivalent to that of Wales. They argue that the two hospitals provide “some of the most ethnically diverse and deprived [people] in the country”, and that both will play an important role in the future, catering to East London’s fast-growing population.

John Ashworth, the chairman of Barts and the London NHS Trust, said that the latter phases of the development could not be postponed. The deferral of funding for the latter phases is one interpretation of a recommendation by the health authority that the funding structure needs to be flexible enough to adapt to changing conditions.

“Removing upfront funding for the latter stages would throw the scheme into doubt and almost certainly increase the cost burden to the NHS,” Mr Ashworth said.

Chris Gallagher, the clinical director of cancer services at Bart’s, added: “The history of the health service is that, whatever the assurances at the time, so-called ‘phase-two’ projects very rarely materialise. All the elements of the modernisation rely on one another; any attempt to unravel them would be disastrous.”

Under PFI, private companies build and run hospitals, with NHS trusts then repaying them over 25 to 40 years. But there has been growing concern about the ability of trusts to bear these huge annual costs, especially when the Government’s new payment-by-results policy means that hospitals no longer have a guaranteed income.

The problem was highlighted last month, when it emerged that the Queen Elizabeth Hospital NHS Trust in Woolwich, South London, a PFI scheme that was completed four years ago, had become technically insolvent because its fixed interest rate debt will rise to a predicted £100 million by 2008-09.

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