Hospital Project Faces Contractor Uncertainty
Health trust leaders in Northumberland have moved to reassure the public that work on a £35 million community hospital will continue uninterrupted despite the main contractor filing for administration. The development comes after Merit, a Cramlington-based construction specialist, submitted a notice of intention to appoint administrators last month.
Contractor's Financial Challenges
The company, previously celebrated as North East Company of the Year, found itself in financial difficulty after being served a winding up notice by HMRC. Merit has since been granted an extension while it explores options with business advisors. The firm attributed its cashflow problems to delays on certain customer projects that placed significant pressure on their finances.
Merit had been responsible for constructing Berwick's new £35 million community hospital, having secured the contract from Northumbria Healthcare NHS Foundation Trust in 2021. The company was also working on the Medicines Manufacturing Centre at Seaton Delaval, another significant healthcare project in the region.
NHS Response and Continuity Plans
A spokesperson for Northumbria Healthcare NHS Foundation Trust confirmed ongoing discussions with the troubled contractor. "This is a very unfortunate situation and we appreciate that this will be a very difficult time for all involved," the trust stated. "We have robust plans in place to ensure construction work continues to progress both the Berwick Community Hospital and Medicines Manufacturing Centre at Seaton Delaval."
The trust emphasised its commitment to delivering both projects as planned and maintaining ongoing dialogue with all relevant parties to ensure continuity and minimise disruption. While Merit has maintained some presence at the Berwick site, the project has already experienced complications with subcontractors.
Subcontractor Withdrawal and Payment Issues
Approximately 50 specialist subcontractors were pulled from the construction site following a payment dispute. Recruitment firm AE Partners, which supplied the workers, emailed contractors marked 'urgent' advising them not to return to site, citing outstanding payments from Merit.
In communications seen by BusinessLive, AE Partners told workers: "Unfortunately, due to the outstanding balance and the fact that the payment we were promised has not yet been received, we were unable to accept any timesheets from Merit this week." The agency assured workers it was working tirelessly with Merit to resolve the situation and ensure everyone received payment.
One affected worker, who requested anonymity, revealed the personal impact: "I've been working up there for a few months through AE Partners and I got an email from them one Sunday saying don't go back to work Monday, Merit haven't paid us. I'm owed hundreds of pounds and have a family to feed so we're not happy about this situation."
AE Partners clarified that they had informed Merit five to six weeks earlier that they could no longer supply contractors. The company had made pro forma payments for an additional two weeks to keep workers on site but ceased when payments stopped arriving. The recruitment firm confirmed they had paid contractors for all processed hours up to that point from their own funds.
Merit declined to comment on the situation when approached by journalists. The NHS trust maintains that contractual agreements are being adhered to and remains focused on completing both healthcare facilities as scheduled, despite the challenges facing their main contractor.
