Bernard Durkan (Kildare North, Fine Gael)
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Question 105: To ask the Minister for Health and Children the degree to which her hospital co-location programme has been put in place; the extent to which the administrative issues including title have been completed; the cost to date in 2010; the value of commitments entered into; the extent of discussions under way; the likely cost implications for the future; and if she will make a statement on the matter. [10545/10]

Mary Harney (Dublin Mid West, Independent)
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The Renewed Programme for Government re-affirms the Government's commitment to the current co-location programme. Preferred bidders have been selected for six co-located projects at Beaumont, Cork University, Limerick Regional, St. James's, Sligo and Waterford Regional Hospitals. Project agreements have been signed for the Beaumont, Cork, Limerick and St James's projects. Planning permission has been granted for the first three of these projects. Planning permission has been granted by the local authority for the St James's project The grant of planning has recently been appealed to An Bord Pleanála. Two other projects are at earlier stages of the procurement process.

The co-location programme is a complex public procurement process. It is a matter for each successful bidder to arrange its finance under the terms of the relevant Project Agreement. The co-location initiative, like other major projects, has to deal with the changed funding environment. The HSE is continuing to work with the successful bidders to provide whatever assistance it can to help them advance the projects.

The HSE is required to undertake a rigorous value for money assessment of each co-location project. Projects, in order to proceed, must meet a rigorous value for money test which accords with a Public Sector Benchmark. This test is then verified by the National Development Finance Agency (NDFA) which acts as advisor to the Department of Health and Children. The HSE and NDFA have confirmed that the tenders received for the six projects where preferred bidders have been selected accorded with the Public Sector Benchmark. As they proceed the projects must continue to demonstrate value for money. There is a requirement on each of the preferred bidders to pay a non-refundable deposit to the HSE on the signing of the project agreement. The intention of this requirement is to allow the HSE to recoup the expenses that it has incurred in this context.

The Finance Act 2009 provides for the termination of the schemes of capital allowances for private hospitals and certain other health facilities, subject to transitional arrangements for projects already in development. Provided that a hospital project conforms to the requirements of these transitional arrangements, and otherwise satisfies the general requirements of the scheme of capital allowances, the tax relief will apply. This includes co-location projects should they wish to arrange their financing on the basis of the capital allowances scheme.

No tax expenditure has been incurred so far and none will be incurred until construction is completed and services are opened. The value of the tax relief in each case will depend on the level of qualifying capital expenditure. I would add that additional revenues will accrue to the Exchequer from the extra activity generated by the construction of the hospitals, the employment arising and the related services provided on which taxes will be paid.

Under the Project Agreements agreed with the HSE, the land on which the Hospitals will be built by the successful bidders, are subject to a 65-year lease from the State at full market value. The intention is that no land will be sold to the successful bidders. This efficient utilization of public resources means that the State will receive an income for land over the 65 year period.