| COSTS OF SALE
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| C&AG's Report, para 1.50
| 43. Excluding VAT, the Authority's advisory costs, comprising work on option appraisal, management and organisational development and advice on the disposal process, totalled £870,000. These costs were high in relation to the estimated proceeds of £3.1 million to £5.1 million.
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| Q 20
| 44. Given the rather disappointing financial return in the disposal, our predecessors asked the NHS Executive whether the Authority's advisory costs represented value for money. The NHS Executive said that the costs were high but defensible. They attributed about half of the costs directly to the disposal project. The other half, pre-dating the process, had been spent on essential management and organisational development, which would have been necessary even if there had been no disposal, because of the impending abolition of the Authority and the need to redefine SWift's relationship with its health authority and NHS trust customers.
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| Q 30
| 45. The NHS Executive also said that as the disposal took place at a time when the Authority were reducing staff from 650 to about 130 people, the Authority had lacked in-house expertise. Our predecessors asked the Executive whether the task of management and organisational development, which broadly tripled from its initial estimate, might have been done as well and at lower cost by the appointment of a capable in-house manager, particularly if there had been an appointment when regions were initially asked to consider the future provision of their non-core services in 1989.
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| Qs 31, 32 and 53
| 46. The Executive said that this had not proved possible by the time the Authority decided to dispose of SWift. They accepted, however, that if given a longer time and perhaps if the time between 1989 and 1993 had been better used to deal with managerial and organisational development, this might have been possible and said that there had been examples where such appointments had been successful elsewhere in the Health Service.
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| 47. Given that SWift already had service agreements in place with customers, our predecessors asked the NHS Executive why they could not simply have expected the purchaser to take these over rather than have them substantially strengthened before the disposal by an external adviser.
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| Qs 133 and 134
| 48. The NHS Executive said that this had been a critical task carried out at a time when the Health Service was changing substantially. The existing agreements had provided an inadequate commercial basis for agreements between EDS and SWift's customers. Advisory assistance had been contracted to assist in tightening these agreements to ensure success in the disposal.
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| Conclusions |
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| 49. We note that the level of costs in the disposal were £870,000 (exluding VAT) and that the NHS Executive consider that these costs were high but defensible. Given the doubts about the appropriateness of the method of sale and about the adequacy of the sale proceeds, we are not, however, persuaded that the Authority can demonstrate that they obtained best value for money from these high advisory costs.
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| 50. We are particularly concerned that the costs of improving SWift's management and organisation tripled from their initial estimate. We note that the NHS Executive considered that the tasks involved in this work, which they considered necessary even if there had been no disposal, might have been achieved at lower cost if an in-house manager had been appointed to attend to these problems when regions were asked to consider the future provision of their non-core services in 1989.
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