Smethwick Midland Metropolitan Hospital will cost £588m

The hospital is expected to open in October 2018

A long-awaited new West Midlands hospital will cost at least £588m over a 30-year contract, the BBC can reveal.

A contract was signed on Friday to build the 670-bed Midland Metropolitan Hospital on land in Smethwick.

The capital costs for the building will be £340m but it is being built under a PF2 private finance deal with an annual charge of £19.6m.

The trust said it was "value for money" as an outline business case in 2014 had anticipated a £27m annual payment.

'Imperative'

Sandwell and West Birmingham NHS Hospitals Trust will run the hospital, funding for which was confirmed in the Autumn Statement.

It is expected to open in October 2018.

The facility will replace large parts of Sandwell Hospital and City Hospital in Birmingham, such as their accident and emergency departments which are due to close. Some services will remain at both sites.

Under PF2 guidelines the taxpayer takes a share of up to 49% in new projects with the rest coming from private investors.

The trust said: "All analysis undertaken by HM Treasury, ourselves and others shows that this represents the value for money solution in this case.

"The Department of Health has committed £100m which includes both an equity stake held by Infrastructure UK (IUK) and a public dividend capital contribution paid to the Trust.

"The balance of funding will be provided through equity and senior bank debt including the European Investment Bank."

Trust chief executive Toby Lewis added: "A new hospital for half a million people locally in 2018 is imperative if we are to improve outcomes of care and make the local NHS a fantastic place in which to work."

Sandwell Council's Labour leader Darren Cooper said it would be a "catalyst" for other regeneration.