NHS Leicestershire County and Rutland ripped up its contract with Modcon UK Ltd last summer following delays with the contract to build a new endoscopy and day care unit at St Luke’s Hospital in Harborough.

Modcon was building the centre with prefab units imported from the United Arab Emirates.

But some of the modules were understood to have been damaged in transit causing delays and a dispute with the client.

The NHS client brought in local contractor JH Hallam to finish the job in a move which added £880,841 to the original budget.

Documents seen by the Harborough Mail show the original building budget was £1,853,191.

But health chiefs had already paid out £1,588,705 to Modcon before the dispute.

The trust then paid JH Hallam £1,145,327 to complete the job, bringing the combined cost of the project to £2,734,032 – £880,841 more than was budgeted for.

Catherine Griffiths, chief executive of the Leicester, Leicestershire and Rutland Primary Care Trust Cluster, said: “The situation is deeply regrettable and I would like to take this opportunity to restate our apologies.

“The project has been subject to thorough internal investigations, independent audit and views from NHS Counter Fraud and police. I firmly believe we have identified what went wrong and put in place appropriate measures to address the issues we found.”