Select Committee on Health Memoranda

Table 5.4.13(a)

Scheme	Total No. of beds provided before new facility		Total No. of beds as proposed in the OBC		Total No. of beds provided by PFI solution
Gloucestershire Hospitals	Surgery	221	Surgery	216	Surgery	216
	Medicine	371	Medicine	389	Medicine	389
	ITU	5	ITU	7	ITU	7
	Total G&A Beds	597	Total G&A Beds	612	Total G&A Beds	612
	Children's/SCB	53	Children's/SCB	64	Children's/SCB	64
	Day Case	45	Day Case	54	Day Case	56
	Total Other Beds	98	Total Other Beds	118	Total Other Beds	120
	Total Beds	695	Total Beds	730	Total Beds	732
Nuffield Orthopaedic Centre	Total G&A Beds	144	Total G&A Beds	144	Total G&A Beds	144
	Other Types	6	Other Types	6	Other Types	16
	Total Beds	150	Total Beds	150	Total Beds	160
Totals		845		880		892

Table 5.4.13(b)

Scheme	Total No. beds at present		Total beds OBC		Total beds PFI
Southern Derbyshire	Total G&A Beds	1,215	Total G&A Beds	1,129	Total G&A Beds	1,129
	T&O Recovery	14	Community	53	Community	53
			Intermediate Care	90	Intermediate Care	90
	Total Beds	1,229	Total Beds	1,272	Total Beds	1,272
Blackburn	Adult Medical	221	Adult Medical	234	Adult Medical	238
	Surgery	223	Surgery	217	Surgery	252
	Paediatric	52	Paediatric	43	Paediatric	43
	Medical Rehab	73	Medical Rehab	73	Medical Rehab	73
	Total G&A Beds	569	Total G&A Beds	567	Total G&A Beds	606
	Maternity	66	Maternity	66	Maternity	66
	Mental Health	76	Mental Health	76	Mental Health	76
	Day Case	54	Day Case	64	Day Case	78
	Total Beds	765	Total Beds	773	Total Beds	826
Oxford Radcliffe (3rd Wave)	Paediatric Medicine & Surgery	96	Paediatric Medicine & Surgery	106	Paediatric Medicine & Surgery	106
	Neurology	28	Neurology	32	Neurology	33
	Neurosurgery & Neurology	46	Neurosurgery & Neurology	57	Neurosurgery & Neurology	57
	Ophthalmology	16	Ophthalmology	15	Ophthalmology	15
	ENT	26	ENT	20	ENT	18
	Plastic	18	Plastic	21	Plastic	19
	Total G&A Beds	230	Total G&A Beds	251	Total G&A Beds	248
	Day beds	15	Day beds	17	Day beds	28
	ITU/HDU	9	ITU/HDU	17	ITU/HDU	17
	Total Beds	254	Total Beds	285	Total Beds	293
Leeds Teaching Hospitals	Oncology	95	Oncology	142	Oncology	142
	Surgery	88	Surgery	96	Surgery	96
	Clinical Haematology	30	Clinical Haematology	40	Clinical Haematology	40
			Private Patients	10	Private Patients	10
			Young Adults	10	Young Adults	10
			Critical Care	16	Critical Care	16
	Total G&A Beds	213	Total G&A Beds	314	Total G&A Beds	314
	Day Case:		Day Case:		Day Case:
	Oncology	32	Oncology	52	Oncology	52
	Clinical Haematology	32	Clinical Haematology	44	Clinical Haematology	44
	Total Beds	277	Total Beds	410	Total Beds	410
Newcastle-upon-Tyne	Categories of G&A	1,582	Categories of G&A	1,582	Categories of G&A	1,661
	Total G&A Beds	1,582	Total G&A Beds	1,582	Total G&A Beds	1,661
	Other Types	133	Other Types	133	Other Types	153
	Day Case	90	Day Case	90	Day Case	108
	Total Beds	1,805	Total Beds	1,805	Total Beds	1,922
Central Manchester	Total G&A Beds	1,254	Total G&A Beds	1,244	Total G&A Beds	1,386
	Daycase	139	Daycase	172	Daycase	197
	Total Beds	1,393	Total Beds	1,416	Total Beds	1,583
Coventry and Warwickshire
(Walsgrave)	Total G&A Beds	899	Total G&A Beds	829	Total G&A Beds	916
	Maternity	80	Maternity	65	Maternity	68
	Critical Care	81	Critical Care	77	Critical Care	91
	Day Case	63	Day Case	66	Day Case	56
	Renal Dialysis	29	Renal Dialysis	30	Renal Dialysis	30
	Total Beds	1,152	Total Beds -In the scheme	1,067	Total Beds -In the scheme	1,161
	Off site intermediate care	0	Off site intermediate care	95	Off site intermediate care	95
	Total Beds	1,152	Total Beds	1,162	Total Beds	1,256
Barking, Havering and Redbridge	Categories of G&A		Categories of G&A		Categories of G&A
	Medical	381	Critical Care	94	Critical Care	124
	Surgery	281	Emergency	390	Emergency	420
	Paediatric	22	Paediatric	30	Paediatric	30
			Elective	90	Elective	90
	Total G&A Beds	684	Total G&A Beds	604	Total G&A Beds	664
	Maternity	82	Maternity	107	Maternity	107
	Day Case	83	Day Case	88	Day Case	88
	Total Beds	849	Total Beds	799	Total Beds	859
TOTALS		7,724		7,922		8,421

Table 5.4.13(c)

PUBLICLY FUNDED SCHEMES

Trust	Previous No. of In-Patient Beds	No. of In-Patient Beds in Completed Scheme
Royal Berks & Battle
Adult Medicine	194	196
Elderly care	85	138
Oncology/Haematology	24	40
General Surgery/Urology	115	112
Head & Neck	26	22
Trauma & Orhopaedics	100	106
Obstetrics	71	75
Gynaecology	35	25
Paediatrics	38	54
Neonatal	30	30
ITU	7	8
Total	725	806

5.4  Long Term Capital Projects and PFI

  5.4.14  For each PFI scheme could the Department provide the estimates of the unitary fee and split between the availability and facilities management fee at outline business case (baseline year) and the actual cost of the unitary fee split as above on signing off the FBC? Could the Department comment on how any increases were funded? [4.8j]

  1.  Please refer to the answer provided for question 5.4.6

5.4  Long Term Capital Projects and PFI

  5.4.15  For each PFI scheme signed or given approval in principle, could the Department provide income and capital charges of Trusts which make up each PFI scheme prior to signing and income, availability fee and capital charges on retained estate for each scheme having signed, or estimates for those schemes which have not yet signed? [4.8k]

  1.  The tables below shows all NHS trusts with a PFI scheme above £10 million that has reached Financial Close.

  2.  Column A shows the income, depreciation and PDC Dividends shown in the audited annual accounts for 2000-01.

  3.  The depreciation, PDC dividends and unitary payment expected to be charged to the income and expenditure account in the first full year in which the PFI scheme is operational.

  4.  Information has not been provided on schemes that are yet to reach financial close. There are only broad indications of the likely level of the unitary payment. PDC dividends have been used as a proxy for the 6 per cent return.

Northern & Yorkshire RO

		A	B	C
		Pre PFI £000s Source—Audited accounts for 2000-01	Post PFI-Dryburn £000s First year in which scheme is fully operational	Post PFI C-L-S £000s First year in which scheme is fully operational
North Durham Health Care—Chester-le-Street	Income	100,140	114,250	121,850
	PFI		11,061	13,282
	Depreciation	4,715	2,500	3,682
	PDC Dividends	1,691	2,111	2,321

  Note: The first PFI scheme that becomes operational is the Durham DGH which has been reported on before the Trusts merged in April 1998 and the Chester-le-Street scheme reached financial close in May 2002.

Trent, Eastern, London and North West RO's

  5.  No new schemes to add.

South East RO

		A	B
		Pre PFI £000s Source—Audited accounts for 1999-2000	Post PFI £000s First year in which scheme is fully operational
Newbury PCT*	Income	n/a	72,000
	PFI	n/a	2,639
	Depreciation	n/a	400
	PDC Dividends	n/a	n/a
Nuffield Orthopaedic Centre	Income	49,468	50,248
	PFI	0	5,212
	Depreciation	1,418	1,045
	PDC Dividends	2,445	1,824

  * Newbury PCT established on 1 April 2001

South West RO

		A	B
		Pre PFI £000s Source—Audited accounts for 1999-2000	Post PFI £000s First year in which scheme is fully operational
Gloucestershire Royal	Income	93,182	102,104
	PFI		3,299
	Depreciation	3,244	3,258
	PDC Dividends	3,680	3,390
Mid Devon PCT	Income
	PFI	see note
	Depreciation
	PDC Dividends

  The PCT was established in April 2001 and so does not have this data.

West Midlands RO

		A	B
		Pre PFI £000s Source—Audited accounts for 1999-2000	Post PFI £000s First year in which scheme is fully operational
Royal Wolverhampton Hospitals	Income	119,254	150,873
	PFI		2,588
	Depreciation	5,160	6,894
	PDC Dividends	6,331	8,976

5.4  Long Term Capital Projects and PFI

  5.4.16  What sums of money have been raised by PFI consortia from selling off NHS assets such as medical equipment and furniture that were handed over to them when they took over responsibility for hospital buildings and equipment? Were these sums taken into account during negotiation of the contract, and in the costings of options presented in the Full Business Cases so far approved for major PFI schemes?

  1.  NHS assets which may be transferred to Project Co in PFI deals are primarily land and equipment, which may include medical equipment (furniture is difficult to separately identify and is rarely included due to its relatively small value; we did not therefore ask Trusts about this category). Information on land and medical equipment is therefore provided in the tables below. We have collected information from the 12 major PFI schemes in England which are operational.

Land

  2.  Surplus land is included in PFI schemes to reduce project finance costs and therefore the unitary payment paid to the private sector partner. Where a reduction in future payments forms the benefit, the net present value of the reduction in the value of the annual service payments must be greater than or equal to the Open Market Value (OMV) of the asset as valued by the District Valuer. NHS Trusts also need to consider whether overage arrangements are necessary. The affordability of the scheme, for the purposes of FBC approval, should be based on the minimum underwritten value of the land.

  3.  In the Value for Money (VFM) analysis for the Public Sector Comparator (PSC), land is included as a negative cost in the year it is to be sold. For the PFI option, as long as the present value of the unitary charge reduction as a result of land being included in the deal is greater than the present cost of the land being sold then VFM is achieved.

Trust	Value of Land involved in PFI contract (£m)	Overage Arrangements	Additional income realised from surplus Land
DARTFORD	22	The Trust sold the West Hill site to ASDA as part of the PFI; proceeds for the benefit of the PFI project were £2.5m. This was based on residential use; if ASDA obtained planning permission for a new supermarket then the Trust could receive extra proceeds.	The Trust is still in contact with ASDA but as yet no formal application has been made by them to Dartford Borough Council. The timing of the planning applications is a matter for ASDA.
CARLISLE	No Land involved	—	—
SOUTH BUCKS	4	Agreement provides for guaranteed contribution from sale of surplus sites with 50:50 share on any increases in value.	—
NORFOLK & NORWICH	No Land involved	—	—
NORTH DURHAM	3	Agreement provides for additional benefits to the Trust should planning permission for the site be obtained.	Project to have proposals for private housing but have not yet obtained planning permission.
GREENWICH	13	Agreement provides for guaranteed contribution from sale of surplus sites with 50:50 share of any increase in value.	The capital contribution agreed for the contract was £13.2m. Project Co in fact sold the surplus land for a total of £12.74m.
CALDERDALE	No Land involved	—	—
SOUTH MANCHESTER	No Land involved	—	—
BARNET & CHASE FARM (Wellhouse)	8	—	Land has been sold but Trust is not aware what the actual proceeds were.
WORCESTER ROYAL	4	Overage positions should planning gain be made within eight years.	Property developer has proposals for the residential and commercial use but planning permission not yet obtained.
HEREFORD HOSPITALS	No Land involved	—	—
SOUTH DURHAM (Bishop Auckland)	0.345	Where the consideration paid by the third party exceeds the base figure, the Trust will receive a sum equal to 50 per cent of the excess.	The surplus Land is to be used for private housing; planning permission has not yet been obtained.

Medical Equipment

  4.  Existing Medical Equipment transferred to Project Co is treated in two ways in a PFI scheme:

(i)  Equipment which is transferred to Project Co. but which is not ascribed a value under the contract and is treated as a disposal and written off; and

(ii)  Equipment which is ascribed a contract value on the same basis as land (ie reduction in the unitary payments paid to Project Co.) and treated as a deferred asset (also like Land).

  5.  Information from the 12 operational Trusts shows:

Trust	Medical Equipment Transferred
DARTFORD	No Medical Equipment transferred to Project Co.
CARLISLE	No Medical Equipment transferred to Project Co.
SOUTH BUCKS	No Medical Equipment transferred to Project Co.
NORFOLK & NORWICH	No Medical Equipment transferred to Project Co.
NORTH DURHAM	No Medical Equipment transferred to Project Co.
GREENWICH	No Medical Equipment transferred to Project Co.
CALDERDALE	No Medical Equipment transferred to Project Co.
SOUTH MANCHESTER	No Medical Equipment transferred to Project Co.
BARNET & CHASE FARM (Wellhouse)	Medical, office and other equipment worth £3.5m was transferred to Project Co in return for reduced unitary payments; none of the items have been sold.
WORCESTER ROYAL	Medical and office equipment transferred to Project Co for book value of £1.4 million in return for reduced unitary payment. Residual equipment transferred in consideration for earlier than planned replacements in the first three years of the contract; approximately £100,000 was raised at auction by Project Co. for this residual equipment.
HEREFORD HOSPITALS	No Medical Equipment transferred to Project Co.
SOUTH DURHAM (Bishop Auckland)	No Medical Equipment transferred to Project Co.

5.4  Long Term Capital Projects and PFI

  5.4.17  Could the Department provide information on capital costs in the current year of PFI schemes which are actually completed such as the Norfolk and Norwich Hospital and the Worcestershire Royal Hospital, on a basis that allows comparison with capital costs in non-PFI hospitals. We would also like any preliminary information on bed numbers actually in use in these schemes and revenue costs per bed.

  1.  It is not easy to directly compare capital costs alone between PFI and conventionally funded hospitals because PFI proposals are structured and priced to deliver an integrated service, ie building for two or three years, maintaining the new facility for 30 years and in many cases providing ancillary support services for the same period. However, officials recently compiled a table which compared the most directly relevant revenue costs for the operational schemes at Worcester, North Durham and Carlisle to what the theoretical estimates for capital charges and other like-for-like costs would have been if these hospitals had been built from public funds. This was done for inclusion in a response to an article which appeared in the British Medical Journal in May this year (the full response is a letter of 19 June from Peter Coates, Branch Head, Private Finance and Investment Branch, which was published on the BMJ's website). This provides a helpful proxy guide for the relative costs of raising finance, construction costs and maintaining the finished building. The figures in the table are from the article itself—which uses a mixture of data submitted to the Health Select Committee last year—and theoretical figures and data collected by officials directly from the relevant Trusts specifically for this table.

  2.  The table is reproduced below.

	Worcester	N Durham	Carlisle
Annual cost if publicly funded (excluding depreciation and maintenance)	6.8	6.4	5.9
Depreciation	1.1	1.1	1
Maintenance	1.9	2.1	2.8
Actual estimated public cost to Trust	9.8	9.6	9.7
Annual cost of PFI	9.3	11.3	9

  3.  Explanations of the rows are as follows:

(i)  "Annual cost if publicly funded": figure from the BMJ article—theoretical calculation using a figure of 6 per cent of construction cost of new hospital plus capital charges on retained estate (from data submitted last year to the Health Select Committee by officials).

(ii)  "Depreciation": this is a theoretical calculation by officials which must be included in any estimate of the "Annual cost if publicly funded"—it is the second element of the capital charges costs which was omitted from the table in the BMJ article. Straight line depreciation over 60 years is used. It is assumed equipment and retained estate costs are the same for both options.

(iii)  "Maintenance": these figures were collected by officials directly from the relevant trusts—they are the costs associated with maintaining the fabric of the building (commonly referred to as "Hard FM"). Again, these were omitted from the calculation of "Annual cost if publicly funded" in the article in the BMJ: they must be included in a like-for-like comparison with the PFI availability charge, as the latter includes the cost of building maintenance.

(iv)  "Annual cost of PFI": figure from the BMJ article—this is the capital charges on the retained estate plus the annual PFI availability charge and is compiled from data submitted last year to the Health Select Committee by officials.

BED NUMBERS IN USE AND REVENUE COSTS

Bed Numbers

  4.  The fourth column in the table below shows the number of beds currently delivered in the 12 operational PFI hospitals in England compared to those set out in the PFI solution at the time of FBC approval and which were submitted to the committee last year.

Revenue Costs

  5.  The NHS does not have a formal statistical definition for revenue costs per bed. Clearly, many different factors could be included or excluded from such a definition, such as operating expenses or employee costs. However, the "Income from Activities" entry from a Trust's accounts is analogous to the revenue generated by the organisation from providing clinical services. Figures are therefore provided in the attached table for those PFI hospitals which have a year's operational accounts.

Scheme	Type of Beds	PFI solution in FBC	Beds operational Aug. 2002	Trust Income ("Income from activities" from audited accounts 2001-02)
DARTFORD	Total G&A beds	362	362
	Maternity	40	40	£73,443m
	Total Beds	402	402
CARLISLE	Medicine	216	216
	Surgical	144	144
	ITU/HDU	9	8	£114,478m
	Total G&A Beds	406	405
	Maternity	38	37
	Total Beds	444	442
SOUTH BUCKS	Acute	331		£92,16m
	General	158
	Total G&A Beds	489	492
	Maternity	53	53
	Total Beds	542	545
NORFOLK & NORWICH	Intensive	33
	General & Acute	833
	Total G&A Beds	866	903	PFI hospital not open for a full year
	Maternity	67	50
	Total Beds	953	953
NORTH DURHAM	Total G&A Beds	443	452
	Maternity	33	33	£107,619m
	Day Case	48	48
	Total Beds	524	533
GREENWICH	Total G&A Beds	447	447
	Maternity	37	37	PFI hospital not open for a full year
	Mental Health	87	87
	Total Beds	571	571
CALDERDALE	Surgical	116	110
	Medical	122	121
	Elderly	149	154
	SCBU	14	14
	ITU/HDU	16	8
	Total G&A Beds	417	407	£102,519m
	Mental Health	78	78
	Women/Children	74	74
	Day Case	35	37
	Private Patient Beds	10	0
	Total Beds	614	598
SOUTH MANCHESTER	Adult Medical	213	316
	Surgery	286	335
	Paediatric	60	47
	Total G&A Beds*	559	698
	Additional surgical	60
	Maternity	37	47	£155,826m
	Medical Rehab	33	44
	Mental Health	77	77
	Unallocated	91	32
	Day Case	74	49
	Total Beds	931	947
BARNET & CHASE FARM (Wellhouse)	Total G&A Beds	429	429	PFI hospital not open for a full year
	Maternity	30	30
	Total Beds	459	459
WORCESTER ROYAL	Acute	400	439
	Geriatric	25	56
	Total G&A Beds	425	495	PFI hospital not open for a full year
	Maternity	49	49
	Total Beds	474	544
HEREFORD HOSPITALS	Acute	266	266
	Geriatric	53	53
	Total G&A Beds	319	319	PFI hospital not open for a full year
	Maternity	21	21
	Total Beds	340	340
SOUTH DURHAM (Bishop Auckland)	Medicine General	138	138
	Elderly	69	69
	Surgery	72	72
	Total G&A beds	279	279	PFI hospital not open for a full year
	Maternity	25	25
	Day Case	43	43
	Total Beds	347	347

  Note—There was an arithmetical error on last year's return—this showed the total G&A beds under the PFI solution as 659 where it should have been 559, bringing the total to be provided to 931, as opposed to 1031. However, the opened scheme has a total of 947 beds, which compares to the OBC figure of 948.

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Prepared 17 February 2003