£1.3 billion legal battle over fallout from Midland Metropolitan Hospital project

ITV News Central Business Correspondent Mark Gough reports on legal battle surrounding KPMG and Carillion

A multi-million pound legal fight had started over what happened to the Midland Metropolitan Hospital and other projects when the builder, Carillion, went bust.

When the company collapsed four years ago, building work on the Midland Metropolitan Hospital halted.

The Wolverhampton-based firm had debts of £7 billion and the project encountered delays.

Now, documents lodged with the High Court by the official receiver allege that it was the design of the building itself, which led to those delays which pushed up costs.

It is alleged Carillion understated the project's costs in their accounts and their accountants, KPMG, failed to pick them up.

The official receiver is now suing KPMG for a total of £1.3 billion relating to several contracts.

In the High Court papers, the official receiver alleges there were delays to the project from an early stage due primarily to issues relating to the structural design of the new building.There was a significant increase in project costs and other costs had been either underestimated or overlooked during the tender process, the official receiver alleges.

In reality, the groups and the claimants - that's Carillion's - financial positions bore no resemblance to the reported results, and the financial statements were seriously misleading.

KPMG failed to detect or report the misstatements, they say.

Today, KPMG told us we believe this claim is without merit and we will robustly defend the case. Responsibility for the failure of Carillion lies solely with the company's board and management, who set the strategy and ran the business.

A spokesperson for the Official Receiver said: "The Official Receiver has taken this action in the interests of creditors who lost substantially in the liquidation.

"The decision is based on legal advice, which is that KPMG is answerable to Carillion’s creditors for a portion of their losses."The local MP, John Spellar said the people who are really suffering are the citizens of Sandwell and West Birmingham, who are waiting for their new hospital, and also the residents who are looking forward to working there as well, and making their contribution to the NHS.The Department of Health and Social Care said: "We are unable to comment on ongoing legal proceedings.

"We are delivering the Midland Metropolitan Hospital as part of our New Hospital Programme and are actively supporting the trust to see its completion."There is some work going on at the site now under a different contractor, but it now looks like this hospital, which was due to open in 2018, won't start accepting new patients until 2023, five years later than planned.