The building of the New Royal Liverpool Hospital, whose future was in question after the collapse of the construction firm Carillion, is to restart, the Government has announced.

Construction work had begun on the new hospital, part of The Royal Liverpool and Broadgreen University Hospitals Trust NHS Trust, under a private finance deal (PFI).

However, building had to stop once Carillion, the firm carrying out the work, went into liquidation earlier this year and the lenders funding the project pulled out.

Whitehall has agreed to support the trust’s recommendation that the PFI deal be ended and the work completed with public sector funding.

‘When I visited the new Royal Liverpool Hospital in May, I made clear the Government’s commitment to ensuring the construction of this state-of-the-art hospital was finished,’ said health minister Steve Barclay.

‘I am pleased to today confirm that the Government will step in and publicly fund the remaining work so that the hospital is completed, as it has also done with the Midland Metropolitan Hospital in Birmingham.

‘It is a central purpose of PFI that construction risk sits with the funders. This has also been at the heart of the time it has taken since January when Carillion went into liquidation, as the lenders commissioned detailed expert assessments of the previous construction work.

‘The trust’s board agreed yesterday that the PFI agreement should be terminated after the 30 September 2018, which under the contract is the latest acceptable date for the hospital to be completed. The Government has made clear it supports the trust’s decision.’

Aidan Kehoe, chief executive at Royal Liverpool and Broadgreen University Hospitals, said: ‘We would like to thank our Government colleagues, The Hospital Company and funders EIB and Legal and General for all their hard work over the last 9 months.

‘We have all strived to maintain the existing project agreement, but it has become clear to us that this will no longer be possible. Our board has now agreed that the existing project agreement should be terminated, and that the trust should complete the project.’