Examination of Witnesses (Questions 204
MONDAY 29 OCTOBER 2001
204. We did say earlier on we like some of the
previous witnesses to come back to the table. I think in the interests
of fairness and objectivity it may be appropriate if one of the
witnesses from each of the groups that is with us now, can I suggest
Miss Lemmon from the RCN and Mr Moss, as I assume you have the
most knowledge, remain at the table. You may or may not wish to
sit together, I do not know. Can I suggest that Mr Mason, Mr Rabin
from Consort and Mr Flook, please. Can I suggest we run this for
15 minutes because we need to be away as well and you have certainly
gone long over time. We are most grateful to you for your help.
There are one or two issues that arose from the second session
that are worth reflecting upon. Mr Flook, can I put to you the
comments that were made by Mr Moss, who is sat next to you, although
it was the chief executive's reference to the financial implication
which, in a sense, reflected upon the point I made to you right
at the start, it is only fair that you have the chance to briefly
comment because, clearly, his thoughts in reference to the letter
confirm some of the evidence I had put to me about the implications
financially within your Health Authority area?
(Mr Flook) I cannot recall the precise
details of the letter, it is some time ago, but I am quite sure
I had a hand in contributing to its draft. I will always defend
my chief executive for being a tireless battler for extra resources
for the local health economy, which is really what that was primarily
205. You were using that as an negotiating position,
is that what you are saying, would I be right in interpreting
it that way.
(Mr Flook) I would surprised if there was not an element
Chairman: I do not need to go any further on
206. It is very important we get this on the
record. Was it a negotiating position when you wrote that because
the financing stream was through PFI rather than a public sector
scheme that the local Health Authority was going to have to find
more money. You said earlier you did not think that was the case.
(Mr Flook) I need to go back over the precise wording
of the letter.
207. Can we ask for a note on it?
(Mr Flook) If that would be helpful.
208. I would like general responses about communications,
people not knowing where to go to, the fact there was no sensitivity
about the fact that car parking charges would be imposed on staff
and whether there lessons to be learned. Do you have any response
you want to give to us?
(Mr Mason) Car parking is always a very difficult
issue, not just for staff but also for visitors to a hospital.
In fairness the Trust was one of the last in the region to look
at the imposition of car parking. To some extent the reason for
that was that it was felt that it would be linked to the new hospital
and therefore. Whether that was the right decision is debatable
because unfortunately you then get the perception that car parking
has been introduced on the back of a PFI hospital, where I think
in fairness car parking would have been introduced in any event.
If the hospital was publicly funded it would be charging for car
parking as well. At the end of the day one of the problems we
have is that despite creating extra car parking space on the site
as a result of the new hospital there is always more demand for
car parking than there is actually in terms of supply. Also, we
have provided additional services in terms of security. They obviously
need to be paid for. In terms of flexibility the honest answer
is that if the Trust wanted to it could buy out the car parking
charges, but the trouble with that is that you then lose that
income stream which has either to be replaced with additional
funding from the primary care groups or you have to reduce costs
in another area. You come back to the difficulty, which is never
capable of a straight forward answer, where do you want us to
cut £325,000 from existing services to pay for the car parking?
209. What about communication, about nurses
not feeling involved in design, and so on, and they have nowhere
(Mr Mason) I was a bit saddened by some of the comments
but in many ways it confirms the difficulties of making sure that
everyone is aware of what is happening. I would ask you to consider
the contrasting views that you have had.
Chairman: With respect, it must be fairly challenging
for any member of staff when all the senior management staff are
there to give us a straight and honest answer. I think with respect
I am not sure we got a full picture, do you accept that?
Siobhain McDonagh: Both Andy Burnham and myself
when everybody had gone we stayed behind and talked to nursing
210. I accept that.
(Mr Mason) Invariably in an organisation of our size
there are always going to be periodic issues about communication.
I think if I put my hand on my heart I will say the way the car
parking issue was handled could have been handled better. We were
up against a very tight timescale and that meant there was limited
consultation on the exact nature of the agreement. Memories differ
about what was said by who and when. My recollection in answer
to letters I had at the time as Finance Director that I was fairly
honest about fact that car parking charges would come in. I accept
the point has been made by a number of staff representatives in
good faith. I am not saying they are saying something they do
not believe is true, they are saying they were not communicated
with adequately enough. I think with the benefit of hindsight
we probably should have introduced car parking charges at the
time everyone else did. Certainly the communication round the
introduction could have been better than it was and undoubtedly
there is a lot of ill-feeling that exists now, at the end of the
day people do not like paying.
211. That was the area I thought the sharpest
disagreement was in between the two sides. Clearly in answer to
the question I asked before, the outcome would have been the same,
the PFI process had no impact. Obviously Mr Moss from UNISON said
(Mr Mason) The way I look at that is that I do not
have the benefit of being here in 1994. My answer is obviously
based on my perception of the situation since 1996. Robin may
well be right, if it had gone ahead in 1994 there would have been
a greater number of beds had it got public funding at the time.
As far as I am concerned it did not get public funding at the
212. Just on that point, health guidance from
the Department of Health at that time were telling you different
things about bed numbers, not because the PFI route whittled it
out because of the nature of PFI?
(Mr Mason) I believe the answer I gave to you is the
correct one in terms of the position. From 1996 onwards the bed
model would have been the same in terms of the evaluation of the
business case because you have to look at the existing guidance,
existing measures of performance and model it through. There is
no reason why you would say that a publicly funded hospital would
be any different to a privately funded hospital in terms of actual
bed numbers. I accept what Robin says though, that if in 1994
approval had been given at that time it may well have been that
the outlined business case would have improved the bed numbers.
The fact is that it was not and since I have been with the Trust
since 1996 there has never been the prospect that that outline
business case would be funded it developed from that to the full
213. We heard something about affordability
and 33 beds being lost during the process?
(Mr Moss) There are a number of things that happened
as a result of affordability. We would argue that there were pressures
on bed numbers and the bed modelling schemes as a result of that.
What I did say very specifically was because of financial pressures
at that time the hospital which was designed to have 50 single
rooms was downgraded to something like 25 per cent.
(Mr Mason) I know that time is of the essence so I
will try and be as brief as possible, the position of the business
case is very complicated because if you go back to 1996, when
I joined the organisation, it had a very large financial imbalance,
it was in deficit to the tune of £4.5 million and it was
over committed on capital. That had nothing to do with the business
case but everything to do with the development of services that
were not fully signed up to by the Health Authority and that resulted
in a poor working relationship. When I joined the Trust as Finance
Director the first unfortunate task I had was to the highlight
that it had the problem. We then had to do something about it
and there were significant changes that occurred. Certainly the
largest single reduction in nursing staff occurred at that point
in time in response to a financial situation that could not carry
on indefinitely. When you looked at that financial imbalance and
you projected it through into the business case that effectively
meant that the business case had to show a level of savings that
was, first of all, to eliminate the financial deficit and then
to pay for the higher cost associated with it. Those costs are
high whether you have a publicly funded hospital or a privately
funded hospital and in that sense I am in disagreement with the
expert that was brought along at the end.
214. Did you make extra savings because of the
private sector borrowing?
(Mr Mason) The key issue really is in terms of the
economic cost to the NHS which is the same over a 60 year period.
There is an issue in terms of how those figures appear in the
accounts on an income and expenditure basis. There is a difference
between how you account for things in the straightforward economic
analysis and that does mean that PFI is more expensive in terms
of the charge to the income and expenditure in the early years.
We were one of the first schemes to benefit from national smoothing
money and we got £750,000 to allow for that difference. In
that sense we were held neutral because we were part of the first
215. Is that smoothing money really just extra
money or is that taken out?
(Mr Mason) We get it over the life of the contract.
It is not repayable, it is a benefit to the organisation so to
some extent that allows for the different accounting issues between
the PFI scheme and a publicly funded one. The important test is
the economic cost to the NHS, and that was assessed as the same
under the rules that apply.
216. We heard that there are staff shortages
which have resulted in at least 10 empty beds in the hospital,
obviously the Trust is not getting value-for-money, never mind
best value. Interestingly, it raises the question of retained
risk, who is actually paying for the fact that because of staff
shortages you cannot make use of those beds and those services?
(Mr Mason) The easiest answer would be where we do
not have the staff available to provide safe levels of care we
have to close beds, which is the only reason we do so. Obviously
that is the Trust's responsibility and you would pay for that
with a PFI hospital and you would pay for it with a publicly funded
hospital, it is no different. One of the things that concerned
me was that a lot of the comments I have heard in the second session
have confused the situation because you are really looking at,
is the hospital under pressure? Yes. Are those pressures acute
in terms of staff? Yes. They are because of the demands being
placed on the Trust not because we have a PFI hospital.
217. Does the use of smoothing money beg the
question and mean that PFI is more expensive when you add the
smoothing money in?
(Mr Mason) No, because you need to look at the economic
costs and the economic evaluation and when you look at that they
have the same costs to the NHS. What you do not want to do is
look at complicating factors in terms of how do these figures
appear in the accounts.
218. I am trying to simplify it.
(Mr Mason) You need to look at the economic costs,
that is the key driver, and then how is it accounted for flows
from that. You should make the decision based on economic analysis,
and that is what was done. We had a tie in terms of economic analysis,
there was then an assessment of the PFI, which from a trust management
and local population point of view was the overriding factor,
we needed a new hospital.
219. They then had to give you extra money to
make it possible?
(Mr Mason) Smoothing money does not affect the economic