Examination of Witnesses (Questions 180
- 189)
THURSDAY 2 NOVEMBER 2000
MR COLIN
REEVES CBE, MR
BILL MCCARTHY,
MR DAVID
WALDEN, MR
HUGH TAYLOR
CB AND MR
PETER COATES
180. Are you running a sort of audit between
a typical Treasury-funded new hospital and a PFI hospital, to
see whether there are big variations in the cost in delivering
services to that hospital?
(Mr Coates) At the moment, no, we are not, but we
are working on proposals for a form of best value in the NHS that
will require us to benchmark all services in the NHS, in order
to determine whether services provided both in state-funded hospitals
and private-funded hospitals are the best value for money.
181. And are you going to compare them directly
without putting in some sort of risk transfer factor that nobody
understands but always comes out in favour of whatever you thought
of in the first place?
(Mr Coates) The risk transfer factor is a different
calculation.
182. Yes, I know. It is a striking bit of .
. . But you are not going to put in a sort of magic figure when
you do the comparison?
(Mr Coates) It will be difficult to do, because if
you look at a hospital that was built in the 19th century and
one that is built in the 21st century, there is—
183. No, I said comparative new hospitals, some
built under PFI and some built under Treasury funding, there should
be some about, just to check that we are not being ripped off.
Because, clearly, I am very concerned for the public purse, and
it strikes me that we have been handing over very lucrative contracts
to people, with very little hold over them?
(Mr Coates) I was not trying to avoid your question.
I was simply saying, yes, we will be doing that, but it will be
very difficult because of all the different criteria that are
involved.
184. Life is bound to be difficult, that is
why we complain so much.
(Mr Reeves) Can I make one point, and it just adds
to what Mr Coates said as well, and that is about, in a way, you
have a PFI consortium and they represent various elements, there
are bankers, there are construction people, there are architects,
there are facilities managers, and I do not want the Committee
to think that everything we sign in the PFI contract is very,
very long term. As Mr Coates quite rightly says, for instance,
regarding the facilities management, there are short-term contracts,
reviewable, at various break period of times.
185. But, your first point, surely you were
right, because we were quite specifically told that there were
60-year contracts with a 30-year break clause, and you were in
the hands of Mr Tarmac rather than an NHS Trust.
(Mr Reeves) The point I was going to make was, we
always have been in the hands of Mr Tarmac, whether it be Exchequer-funded
or PFI, and the loan debt that we were talking about before, this
trust debt remuneration, whether it be interest-bearing debt or
public dividend capital, is a reflection of Exchequer capital,
we have borrowed to fund Exchequer capital schemes over the past;
and that has been debt payable over 60 years, so in terms of timescale,
that is long term as well.
186. I am sorry, Mr Reeves, I thought the whole
point of PFI, and the only reason why it got out of the public
borrowing requirement rules, was that it was a package that included
a service, and that that service was provided by the people that
produced a package. So you are, effectively, tying yourself in
to a service provider, and the thing that concerns me is that
the pattern of service that is provided within a hospital will
change, certainly within five years, and, well, 30 years, it is
ridiculous?
(Mr Reeves) I still come back to what I say. The unitary
payment, you are absolutely right, is a reflection of various
components, that is the funding of the capital to build the hospital
and also the operational and the service content of running the
hospital, and I accept that is in the unitary payments. But that
is why we have an initial concessionary period and a secondary
concession period, because the first 30 years is effectively funding
the capital, the remaining 30 years is the ongoing situation in
terms of the service contracts. But even given that fact, the
point I have just made is, the operational service side is still
reviewable at regular intervals, in exactly the same way, so in
other words, if St Mary's Hospital on the Isle of Wight wanted
to get rid of somebody, they can do so under an Exchequer scheme,
they can also do so under a PFI scheme. That does not breach necessarily
the fundamental arrangements between the overall consortia and
the individual trust, it reflects a sub-component within that
arrangement.
Mrs Gordon
187. Is part of this equation the pay and working
conditions of the staff who transfer to a PFI hospital? We are
in precisely this situation, the bids are in now, they will be
transferring from the old hospital to a PFI hospital in four or
five years' time, and I am concerned about the people who will
move and how they will be treated?
(Mr Coates) The pay of people who transfer across
from the NHS, indeed, all their terms are protected under the
TUPE regulations.
Dr Brand
188. For a few years?
(Mr Coates) No, for ever. TUPE is without limits.
And we insist in the contract that the contractors recognise TUPE
and honour all terms and conditions that are transferred, that
the employer had, and are transferred across to the new employer.
TUPE does not cover pensions, however, and there we have separate
provisions that insist that the provider gives a broadly comparable
pension scheme to the NHS pension scheme, again, for all employees
who transfer across, and again for the entire life of the contract.
Chairman
189. Are there any points any of you wish to
add? You have agreed to follow up on a couple of points.
(Mr Reeves) No; thank you.
Chairman: Can I thank you all, gentlemen, for
a very interesting session. We are most grateful for your co-operation.
Thank you very much.
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