Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 152 - 159)




  152. Can we start the second part of our session. Can I thank our witnesses. I am sorry that the GMB were invited but have not been prepared to come today, they must have their reasons for not being here. Can I briefly ask our witnesses to introduce themselves.
  (Mrs Lemmon) My name is Jan Lemmon, I am an RCN steward in the Trust. I work as a staff nurse on the surgical unit.

  (Mrs Bottrill) My name is Pat Bottrill, I am Chair of RCN Council and a council member for the northern region for the Royal College of Nursing and I have previously worked in the Newcastle Hospitals NHS Trust.

  (Mr Weeks) My name is Stephen Weeks, I am a national officer with UNISON. I have overall responsibility for UNISON's work on PFI. As part of the UNISON team we invited David Price from University College London on Public Policy as to act as an adviser on one of question areas you may be asking us on.
  (Mr Moss) I am Robin Moss, I am UNISON's head of health for the Northern region and I am also the full-time officer that looked after this Trust for the past six or seven years during this project.

  153. Can I express our thanks to you for your written evidence. Perhaps I can begin by asking a general question which I put to the previous group of witnesses, that is that impact of the PFI route on the wider health economy. I do not know whether you were in when I asked the first question to our colleagues from the Health Authority, it has been put to me that within primary care within the health authoritys there are concerns that the resources in primary care have been affected by the PFI route chosen for the two major schemes in the Health Authority area. Is that an issue that has been picked up by your two organisations?
  (Mr Weeks) If I can begin with that, it is an issue that UNISON has been concerned about for some time. It is an issue not just in this Trust but in a number of Trusts, most recently in Central Manchester. The important point is we have concerns about it but we are not particularly singling out this Trust. We do have what we believe is documented evidence of the impact of the costs of a PFI scheme on the overall health economy in the area, and Robin might want to add to that.
  (Mr Moss) This is from the horse's mouth, Ken Jarrold, who is the Chief Executive Officer of the County Durham and Darlington Health Authority went public in so far as the letter was published in the local press two years ago drawing attention to the impact of having two major PFI schemes within the County Durham area and was making a plea for additional funding because of the impact of the two schemes within the local health economy. That is not just us drawing attention to that fact, I can make a copy of that letter available if necessary.

  154. That would be helpful. That is a slightly different response from the one we got from Mr Flook. This is two years ago and it may be the situation is different now. You would substantiate that concern from the information that you have.
  (Mr Moss) The letter is dated 2nd December 1998 and page 3 of it says, "nevertheless the financing arrangements for PFI schemes will create long-term pressure on available revenues resources and this will disadvantage the authority relative to other authorities in the development of patient services". It ends by saying, "we ask that regional office, amongst a number of things, to support the case that the revenue pressures created by our reliance on two major PFI schemes should be recognised by additional waiting within the revenue resource allocation form". I have other quotes, even more recent, health authority documentation that talks about the pressures that the PFI schemes are creating on the local health economy.

  Chairman: You are willing to copy those for the Committee?

Dr Taylor

  155. In your opinion, the Union's opinion, could the Trust have obtained funding for this hospital without using PFI?
  (Mr Weeks) That, as they say, is the £250 million question. Without being privy to the decisions that the regional office takes about allocation of resources for capital expenditure as opposed to revenue expenditure it is not possible to answer that question in that way. Clearly we heard in previous contributions from the Health Authority their expectation was that they would not have had the available public capital for this scheme. I think we would answer the question in the other way, in the sense of, if what the government says that public sector comparators are only proceeding with schemes on the basis of value-for-money is correct, and we take them at face value on that, then money should have been available for this scheme had a publicly funded alternative been shown to be the most effective. We obviously appreciate from the perspective of individual Trust managers things may be seen in one way and PFI may be seen as the only game in town. If the government is proceeding on a value-for-money basis then public money should be available. In terms of the wider question of whether the government as a whole can afford public capital development, obviously that is a wider debate, but the most recent authoritative review of that by the Institute of Public Policy Research in their Public/Private Partnership Commission in relation to the first wave the government could have afforded those schemes without breaching its overall economic policy. We can obviously have a wider discussion about government economic policy outside this discussion.
  (Mr Moss) By way of an addendum to that, virtually every major capital scheme within the region in the last five or six years has been PFI funded with the exception of one. There was A major scheme in Sunderland which did get public funding. This whole question was a major question of resentment for the Trust management at the time, the outline business case for building a 565 bed hospital was approved in January 1994, the full business case would have been approved at the end of that year with public money and a start building the scheme would have been made with public money but then in October 1994 PFI became the only game in town. Had it been a matter of a few more months this scheme would have been built with public money. Both of the chief executives involved and a large number of other people I have spoken to within the Trust would have preferred that to have been the option.

John Austin

  156. You mentioned the figure of 565 beds in the outlined business plan, the Trust mentioned a figure of 507.
  (Mr Moss) We are relying on the analysis that we had done of the business plans by the UCL unit that David Price belongs and when the business plans were eventually made available to us and the original outlined business case had a figure of 565 in, as I understand it.
  (Mr Weeks) It is on that 565 figure, that is the figure the Department of Health centrally had shared with UNISON in terms of overall lists of figures. As with any definition of bed numbers there may be some debate round the edges of that. I do not think anybody is disputing the overall trend. We can share that with the Committee.
  (Mr Moss) The key point is, had it been built with public money at that time it would have had more beds and it could have been built with public money had it not have been for the imposition of the PFI scheme.

Dr Taylor

  157. That is not at all what the previous people told us. They said quiet clearly that the number of beds were worked out before the idea of PFI came in and the same number would have been produced with public money as with private money. You obviously do not agree with that.
  (Mr Moss) That is a very interesting way, if not a specious way of putting things. Let us get the historical context correct, there was an option appraisal done in the earlier 1990s and that option appraisal had 798 beds in it. By the time 1993-94 came about, when the outline business case was produced, it had 565 beds in. I listened with interest and I have heard this statement from Mr Mason on a number of occasions that it would not have made any difference whether it was a publicly funded option or a privately funded option. I think that is specious, in the sense that we all know that once PFI intervenes there has to be a level playing field, you cannot have one scheme building 565 beds and another scheme building 450. In order to get a like for like comparison for value for money purposes they have to be on the same level playing field. That is the sense, I think, which Mr Mason means that the public sector scheme would have produced 454 beds whereas, in fact, had public sector money been injected and used in 1994 it would have been built, I think, with 565 beds because that was the outline business case.

Siobhain McDonagh

  158. So I understand completely what you are saying, what you are saying is that the number of beds in this hospital reduced directly as a result of PFI and had nothing to do with Department of Health guidance about number of beds that were required.
  (Mr Moss) We think that is partially the case.

  159. What do you mean by partially?
  (Mr Moss) Certainly the original scheme going back to 1992 for a district general had 798 beds in. In between then and 1993-94 the whole process of capital charging was imposed on the Trust so that Trusts which had previously got their capital free suddenly had to start paying six per cent every year for their capital costs. In deciding bed numbers, therefore, what you have is the coming together, this is the evidence in our—

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