Updated at 5.12pm 

The government on Tuesday sent a termination letter to Steward Health Care, informing it that it is stepping in immediately to run the three state hospitals it had administered.

In doing so, the government is effectively giving notice that it is rejecting the termination conditions which Steward sought to impose when it announced last week that it would be quitting Malta.

The healthcare giant was served with a notice that the government will be carrying out a "control step-in". It means the government will start running the hospitals with immediate effect.

However, it will do so on Steward's behalf for the next two weeks, with the facilities only formally returning to the government once that transition period elapses.

Nothing will change for all hospital workers, medical staff and contractors. They will continue to receive the same salary and work according to the same conditions, the government said.

Speaking in parliament later, Health Minister Chris Fearne confirmed the move.

"Today the government made their conditions known to Steward of how they should exit. Today the government took over the operation of Gozo Hospital, Karin Grech and St Luke's. Today they are operated by the government," he said. 

Sources within the government say the move is intended to safeguard its legal position in its upcoming legal battles with Steward.

The move also gives the government a stronger legal footing should it decide to sue the company for damages, sources said.

It is also aiming to avoid a €100m payment that Steward wants to enforce for having its deal to run the hospitals cancelled early.

A court last month annulled the concession agreement through which Vitals Global Healthcare and later Steward took over the management of the hospitals.

Steward has appealed that verdict, arguing that it was defrauded by the Maltese government and punished by a biased court.

Fearne told parliament that he would safeguard all jobs and honour all contracts to people currently providing services to the hospital.

He also said that he had spoken to the Dean of Barts Medical School and that it will continue to operate in Gozo.

"We need to consolidate the leadership of the hospitals and we will start with our plans for bettering our hospitals," he said, adding that the government plans to start a discussion with stakeholders on plans for modernising Gozo Hospital and Karin Grech. 

"We learned our lesson from this story and we still have yet to learn from it," he said. 

Appeal to Labourites

Addressing Labour voters directly, he said that there will be those for whom this case has "darkened their hearts" but that there is no one bigger than the party and no one bigger than the country. 

"We will not defend what is wrong," he said, insisting that the party is a "force for good". 

Fearne then addresses the political crisis sparked by the arrest of businessman Yorgen Fenech in connection with the murder of Daphne Caruana Galizia in 2019 which resulted in the resignation of former prime minister Joseph Muscat.

"Four years ago the Labour government went through a very difficult time that lead to a change in the government," he said. "It could have broken us but because we were united, we came out stronger."

He said the government is now looking to the future and to " a health service for all that will continue to get better".