KINGSWAY HOSPITAL

Plans to redevelop the site of Derby's only psychiatric hospital have been thrown into doubt after funding for the £14m scheme collapsed. It means that the futures of 100 mentally ill patients and 400 staff currently based at Kingsway Hospital are in limbo. The £14m plans involve demolishing the old Victorian building to make way for smaller purpose-built units which would take up two-fifths of the current site. Already, 150 patients have been moved into the community since closure plans were announced in 1998.

Building work was supposed to be completed and all the remaining 100 patients moved out by July, 2004. The plans were given the go-ahead by the Trent Strategic Health Authority. The authority has now revealed, however, that its budget for such work is oversubscribed. Projects in the region had been given approval for more money than the authority had in its purse.

Rachel Webster, spokeswoman for the authority, said, "The Department of Health used to approve projects on a regional basis. But we have discovered that, because capital schemes take a long time to develop, they were approved on the assumption that some wouldn't go ahead." The authority has now advised Derbyshire Mental Health Services NHS Trust that it should be seeking money from the business sector through a private finance initiative (PFI).

A PFI is where a private company funds a project and leases it to a trust for a set number of years. After that, ownership reverts back to the trust. The authority estimates that a private partner can be found within about nine months. If one is not found, the closure will be delayed indefinitely until public finances become available.

The remaining three-fifths of the land, which is supposed to be developed into housing and a business park according to the local plan, is owned by NHS Estates, so the trust cannot gain cash from the sale. Michael Walsh, the chairman of Derbyshire Patients' Council, which represents the patients, said, "It's very frustrating. Everything's in limbo. It will put pressure on the service-users because they've got the idea that they're going elsewhere to more modern facilities."

The trust says that one of the benefits of applying for a PFI is that a scheme to establish community-based resource centres, which are currently not planned until 2006, could be brought forward. Trust chief executive Mike Shewan said, "While it's disappointing to have to change course at this late stage, the decision also creates the opportunity to bring forward the whole mental health strategy, which will contribute to the much-needed modernisation of services in the area."

He added that the jobs of 400 staff should be secure in a privately-financed development, even though the buildings would not be owned by the trust. The trust's strategy also includes the closure of Aston Hall Hospital in Derby Road, Aston-on-Trent. Work to close and redevelop Derby's Kingsway Hospital, which has housed mentally ill people for 114 years, was due to start last month and be completed by next year.

Plans for the closure were first announced in 1998 and, when a public consultation produced little opposition, the process of shutting the institution began. The hospital housed about 250 patients when the closure was first announced. Derbyshire Mental Health NHS Trust is planning a £14m construction programme on the Kingsway site. Its community services would also be expanded.

Two-fifths of the hospital site would be used to house units for people needing specialised, usually short-term care. The intensive care unit, a low-security unit that also houses people who have been in the criminal justice system, will be retained, but the trust intends to build two new "high dependency" units for 22 people. One anomaly would be the retention of Cherry Tree Close, a row of bungalows providing long-term housing for 20 people. These plans were given informal approval by the Trent Strategic Health Authority before Christmas.

The organisation has now refused to fund the project. It is not known what will happen to the rest of the site, owned by NHS Estates, which is subject to Derby City Council's Local Plan. The plan states that 33.3 hectares of the Kingsway/Manor site will be allocated to a mixture of "opportunities", which include a maximum of 200 homes and a business park. A public inquiry is due to be heard this year.

In September, 2002, plans to build up to 850 homes on the site were submitted to Derby City Council by NHS Estates. Private Finance Initiatives (PFIs) were first introduced in the early 1990s by the then Conservative government. Under PFIs, instead of producing cash up front for a new hospital or school, the Government agrees to pay a private firm an annual fee to take on the entire construction and management of a project.

The reasoning behind them is said to be that the firm makes a profit while the Government avoids administrative hassle and costs. Some economists claim that they save money in the long run. More than 80% of new hospitals are being built using private finance, including Derby's superhospital, which is due to be completed by 2008. The Government gave the £123m PFI scheme the go-ahead in 1999.

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