The public will fund work to complete the Royal Liverpool Hospital after a private finance deal was scrapped, NHS bosses say.
Work on the £335m hospital stalled in February following the collapse of construction giant Carillion.
The hospital trust said “the PFI project is no longer viable” so the scheme will be publicly funded.
The Department of Health and Social Care said it is committed to getting the hospital built.
It is understood that the government will be footing the bill for the additional cost of completing the hospital, which Liverpool Mayor Joe Anderson said was in the region of £100-120m.
The 646-bed hospital was originally set to open in March 2017 with funding secured under a Private Finance Initiative (PFI).
Work is not expected to be finished until the middle of 2020, chief executive of the Royal Liverpool and Broadgreen University Hospitals NHS Trust, Aidan Kehoe said.
“What we’ve decided today is that the PFI project is no longer viable. Therefore this will become a publicly funded scheme,” he said.
Following a meeting of the trust’s board, he said “a managed termination” of the contract with original funders will take place over the coming weeks and will “help us speed up the whole process” of rebuilding.
Under PFI, companies provide money for new hospitals and then charge annual fees.
The building, which is about 80 to 90% complete, cannot be opened until a new contractor is appointed.
The cost of fixing the problems left by Carillion, including repairs on beams in the structure, have spiralled.
Liverpool Riverside MP Louise Ellman said “only the government that can really work out how to inject more funds” into the project.
Liverpool Walton Labour MP Dan Carden has previously said the hospital should be brought into public ownership.
“Really now the only solution is for government to step in and deliver a publicly-owned, publicly-run hospital for Liverpool”.
In August the government pledged £300m towards completing Midland Metropolitan Hospital in Smethwick.
In February, Carillion filed for compulsory liquidation with debts of about £1.5bn with local MPs calling on the government to intervene.
Birkenhead MP Frank Field described the incomplete hospital as a “creaking monument to… greed” following a damning report into the “rotten corporate culture” at Carillion.
The company was accused of “greed” at this week’s Labour Party Conference in Liverpool.
Dave Prentis, the leader of Britain’s second largest union UNISON, said the Royal had become “an epic monument to failure”.
‘Minimises further delays’
NHS bosses have also revealed the new hospital was built with unsafe cladding that does not meet fire safety regulations.
Mr Kehoe said the cladding problem had only recently come to light, in part due to new building standards following the Grenfell Tower tragedy.
Subject to government approvals, the trust intended to terminate the PFI agreement from 30 September and later transfer contracts for construction, supply chain and facilities management to the trust, he said.
A review of the final cost and timescale to complete the Royal Liverpool project was expected to finish by the end of October, the trust spokesman said.
A Department of Health and Social Care spokeswoman said it was working with all parties involved to find a solution “which minimises further delays and ensures value for money” and expects to have an update on the next steps on Wednesday.