What we looked at 

In March 2024, after Welsh Government approval, Velindre University NHS Trust (the Trust) agreed a long-term contract with a private consortium, ACORN, to design, build, finance and maintain the new Velindre Cancer Centre (nVCC) in Whitchurch, Cardiff. We examined whether the Trust and the Welsh Government can demonstrate a sound basis for key decisions on the nVCC taken so far. 

We focused on developments around and since Outline Business Case (OBC) approval in March 2021, including the procurement process, approval of the Full Business Case (FBC), and the agreed contract. We have not examined progress with construction, although we touch on related matters, the model of care delivery, or choice of location for the nVCC. 

Why this is important 

The Trust’s existing cancer centre in Cardiff, serving around 1.7 million people, is no longer deemed fit for purpose. Improving cancer services is a key priority for NHS Wales and the nVCC supports national and regional healthcare objectives. It is a central part of the Trust’s wider Transforming Cancer Services programme for south-east Wales. 

The nVCC will be funded, in part, by the Welsh Government’s Mutual Investment Model (MIM). Through the MIM, ACORN will build and maintain the nVCC in return for an Annual Service Payment (ASP), payable for 25 years. 

To date, the nVCC is the only NHS project to use the MIM. The project has already attracted a lot of public interest, including around its location, the model of cancer care, the use of the MIM, and the appointment of ACORN. The significant long-term costs make a sound basis for decisions even more important. 

What we have found 

Cost estimates have evolved over time but delays in the latter stages of the nVCC project’s development increased its exposure to price inflation. The most significant cost is the MIM contract with ACORN (the nVCC contract) which is projected at £885 million over 25 years. Within this, the contracted construction cost of £321 million appears reasonable given the Trust’s benchmarking and other advice. 

As well as the nVCC contract, there are other costs to bring the nVCC into operation and manage it. These costs are expected to be at least £765 million over 25 years. 

However, we estimate that continuing to manage and maintain the existing centre would otherwise have cost at least £600 million over 25 years. This would also have been without any additional benefits the nVCC offers. 

Overall, the governance arrangements supporting key decisions provide assurance that they were properly made. The Trust followed well-established business case and project management processes satisfactorily enough, and there has been appropriate scrutiny and expert and stakeholder input. The procurement process followed the regulations in place at the time, informed by extensive legal advice. 

While we have identified areas for improvement in the parts of the process we examined, we do not consider that they undermine the overall integrity of the final decisions to proceed with the nVCC contract. For example: 

• Because the Welsh Government chose the MIM approach early on, other ways to fund the project were not fully explored at later stages. Aspects of the approach used to justify that the MIM offers value for money in this case are also open to challenge. 
• More generally, we think key documents could have provided greater assurance on the application of the sustainable development principle. However, we are satisfied that this has been a relevant consideration throughout the process. 

Whether spending on the nVCC delivers value for money will depend on whether it delivers the expected benefits over time and in a changing environment for cancer services. It will also depend on whether provisions in the nVCC contract to protect the public purse stand strong. 

What we recommend 

Our work has looked back over decisions made and the processes followed. However, we have made four forward looking recommendations. These include recommendations for: 

• the Welsh Government – around improving business case guidance, and working with other public bodies to learn and share lessons from the nVCC project; and 
• the Trust – around how it assures itself of value for money in the event of changes under the nVCC contract and demonstrating how outcomes from the nVCC project support its wider strategic objectives.