Examination of Witnesses (Questions 780
THURSDAY 29 NOVEMBER 2001
STANTON, OBE, AND
780. I appreciate your point about not wanting
it to be a mini district hospital and there are problems there,
but I would have thought that in any comprehensive health centre
you would have to have access to a physiotherapist at the centre,
but I would not expect the whole range of therapeutical remedial
gymnasium equipment to be available. Essentially I would have
thought that services like physiotherapy must be available in
the Health Service and similarly dentistry. I wonder what the
thinking is in terms of where dentistry fits in to primary care
and the provision of health centres.
(Dr Stanton) Clearly dentistry is part of primary
care; that goes without saying. As a potential patient of one
of these places, what would I personally like to see? I would
agree with you that I would like to see physiotherapy available.
I should like to think that I could get my prescription dispensed
by a pharmacist on site but I am not personally necessarily convinced
that I would want to have dentistry on the site. I do not personally
find it any great hardship to go to a separate dental surgery.
Most of us before we go through the door know roughly what type
of service we want. There are occasional cross-over problems between
what might be a dental problem or what might be a medical problem,
but by and large patients know what toothache is. Yes, it would
be very nice, but it may well beand this is a personal
view . . . I am not sure that if I were a member of a local community
I would necessarily want that as my top priority.
781. If you were thinking from a child's perspective
or the perspective of a mother with a young child, would your
view be different?
(Dr Stanton) I am not sure that it would be on that
particular element. I think I could cope. Fortunately, it is not
a problem I am likely to encounter.
(Dr Fradd) Does this not come back to what I was saying
earlier about the tension between the community and the individual?
It is a balance between those two. Yes, of course there will be
differences according to your personal circumstances as to what
you would wish to see there, certainly you are going to want your
health visitors there if you have young children and you are going
to be going round there regularly for baby clinics. If you are
older then that is not going to be a big priority. There is a
tension in sinking all your funds into one centre, which may mean
other people are not using that centre because if you just have
one centre for the whole of PCT there are going to be transport
difficulties. There are tensions which have to come into it and
there has to be some sort of balance at the end of the day of
where you come down to on it.
(Mr Goldstone) May I make a point about services and
I absolutely defer on the clinical reasons about whether things
should be co-located or not? One of the things we make much easier
to achieve by having facilities which do provide a range of services
and by putting a number of projects together in a LIFT approach
and saying actually we want to deliver these five new facilities
or these eight and bundling projects together in that way, is
that we make it possible to deliver things which otherwise we
might not be able to deliver. It makes things more feasible and
more viable to deliver and it might be that we have a locality
where we can deliver a health centre and it has GP premises along
with social service provision or physiotherapy that the PCT commissions.
We may also have a need for some improved or relocated or new
dental facilities, which may be very difficult to deliver if we
try to deliver them standing alone. We may be able to get better
value in providing that if we integrated into the fact that we
are already delivering this big health centre. There may be some
clinical benefit or not and that is not my expertise to say, but
there certainly is a potential delivery benefit of being able
to achieve that through integrating it as part of the scheme.
If we encourage the localities to take that sort of holistic view
across what we need, we just may be more efficient and more able
to deliver the sort of facilities we require rather than looking
at everything in isolation.
782. Given that Dr Fradd tells us that we cannot
say what will happen, we can only predict outcomes, the Government
expects 40 schemes to be in place by the end of 2002. Is that
(Mr Goldstone) We expect to have 40 schemes under
way; that is the plan. It is an ambitious plan. We have some targets
in the NHS plan to try to achieve and contribute to, so yes, it
is certainly achievable that we can have 40 LIFT areas identified,
working up their local strategic plans and looking forward to
taking those into procurement and delivering on the ground.
783. Signature on the contract.
(Mr Goldstone) Signature on the contract on the first
ones, but not 40 at that point.
784. May we move on to value for money? This
is really the nub of the whole inquiry that we are doing. In relation
to hospitals, we have been told very clearly by the Government
that PFI is the best value and by the opponents that PFI is not
best value. It strikes me you are in an ideal situation if these
six pilot sites are allowed to work to conclusion before the other
40 come in. What we want to know is: what measures do you have
in place to assess value for money with these six pilot sites
that are going on? Best value, value for money, how are you measuring
(Mr Goldstone) The programme does not envisage a pause
whilst the first six go all the way through and are evaluated
785. I must say I think that is an awful shame
because we have had so many pilots in the past such as the resource
management initiative which people will remember, which started
and then was superseded. It would be superb to let the six pilots
really go through and see whether they worked. But that is not
going to happen.
(Mr Goldstone) That is not the plan as it is. I understand
the reason for taking pilots in that way and evaluating; there
is obviously a pressure to try to get some of this improvement,
address some of the deficiencies in the current estate and service
blockages that is causing which you heard about from colleagues
who have spoken earlier.
786. I had a slight comfort when you said they
were only going to start the preliminary negotiations. If those
could be slowed down to allow the pilots to finish we might get
(Dr Stanton) Let lethargy win.
787. How are you going to assess that it really
is value for money?
(Mr Goldstone) We have a number of levers in place.
This is a different scenario from the acute hospitals you were
talking about at the beginning of the question. First of all,
we have a competitive process in terms of who the partner is who
is going to come into the LIFT and it has been widely recognised
that competition is an important part of procuring value for money
in terms of protecting the public purse, in terms of that sort
of way of delivering. We shall have a competitive process. It
may be worth making the point that, it is something we were discussing
at the BMA yesterday, traditionally where GPs initiate and develop
primary care premises and their own surgeries, there often is
no competitive process and now it is often done through a deal
done directly between a GP practice and a developer without any
competition. In the sense that we are running a competitive process,
first of all to get the LIFT partner in and that is a starting
point and an important protection, there will also be competition
for who does the building works and the sub-contracts under that
partnership will also be subject to competition. So there will
be a level of competition for what in a PFI context you may see
as the main sub-contractors, but those will be competed periodically
throughout the life of the relationship. There is an important
protection now in primary care in that the rents which are reimbursed
to GPs are approved by the District Valuers with the statutory
red book scheme. That whole framework of protection of the public
purse will still be there; that is not going with LIFT and LIFT
works with that framework. There is an important protection which
is the key protector now and we shall have this competition for
partner and who is doing the principal sub-contracts throughout
the life of a LIFT. Those are the key protectors. The other thing
which is worth mentioning is that, as the diagrams drew out and
part of the complexity there, we are envisaging the public sector
being a shareholder, being a stakeholder in the company. That
means that we have access, we have full visibility and accountability
and the public sector gets a share of the profits which arise
from a company. We have a slightly more complex picture developing
in demonstrating value for money for what is a more complex environment
where we have multiple stakeholders, the ultimate procurers are
private organisations, they are independent contractor practitioners
in many cases. We are trying to build in protections at a number
of levels in that sort of way. The public shareholding is important.
It is something which is not seen in PFI, it is something which
gives a greater protection to the public purse about the profits
the private sector make out of this sort of scheme.
(Dr Stanton) We share your surprise that in a sense
pilots are not pilots. A range of departmental initiatives are
labelled pilots and are then rolled before they have ever been
evaluated, so we have the experience with personal medical service
pilots and common sense would suggest that it might have been
better to see the outcome of the first six before rolling out
(Dr Fradd) Having said that, we do have a problem
with investment in primary care premises. I can see a certain
dilemma that if you pilot it and then have a big pause, you then
have a backlog building up. We do not see just the one model of
NHS LIFT. Certainly the cost/rent scheme and national rent scheme
have served the Health Service and colleagues extremely well for
a number of years; there is no doubt about that. The problem we
had was that we had the devaluation of property which resulted
in a relatively small number of colleagues getting their fingers
very badly burned which has put off younger doctors from getting
involved in that. There are some very simple things, one in particular,
which could change the balance of opinion on that and that is
the basis of valuation of premises. The way that premises are
valued is on the basis that they are converted office blocks.
That necessarily holds the valuations falsely down. Nowadays we
are talking about very, very specialised buildings. It is not
surprising we need an organisation specialising in this sort of
development because they are so specialised. The only real way
of valuing those is on the replacement basis valuation. If you
do that, you protect both the outgoing partner from a capital
loss and the incoming partner to the extent that you then have
a relevant income stream against it and the banks are prepared
to lend against that. Interestingly that may be one of the reasons
why there was the comment about why we did not oppose this PFI:
it was because historically for some 35 years we were the only
PFI in existence and GPs were funding premises and providing the
service, which is the ultimate PFI. So for us it is not such a
major change. It would be a shame if we walked away completely
from the old system because it has served extremely well.
(Dr Dixon) I take the point about the safeguards being
the same as currently, but remember 80 per cent of premises presently
do not meet the red book safeguards so we are not actually monitoring
the same property at the moment The other thing I would say is
that where we have pilots we need independent appraisal. I would
say that we need an independent body asked to appraise this in
terms of value for money, in terms of whether the premises meet
the specifications and needs of the community, whether the service
charges are exorbitant or whether the services actually service
the properties as they need to.
788. Who would do that?
(Dr Dixon) You put that out to tender. In primary
care groups and primary care trusts, the King's Fund, HMSE in
Birmingham, there are plenty of people who would be prepared to
do that. For a relatively small output of money you would get
an independent disinterested reply.
789. We were thinking of the Audit Commission
perhaps scrutinising. Will there be any measures open to local
health economies if it goes badly? Is there any redress?
(Mr Goldstone) The cost/rent scheme and the existing
arrangements will still be available, so it is not that they will
have been thrown away because of LIFT. I would not want the impression
to be taken away that this supersedes the existing arrangements.
You mentioned the Audit Commission. The Audit Commission audits
local authorities and the local health bodies. To the extent that
those have contracted and gone into a LIFT structure, then it
will be absolutely open to the Audit Commission to audit those
as part of its work at that level. There will be that level of
audit scrutiny of the organisations which have gone into these
public bodies which are audited by the Audit Commission. That
will be there. Redress if it does not deliver. There are many
levels of redress. It is one of the things we are bringing in
which is new, which is slightly different from the way things
have been delivered in the past. First of all we are not envisaging
the tenant, the occupant of premises, paying a flat rent regardless
of what they receive which is typically what has happened in the
past. You entered a rental and buildings have or have not been
properly maintained, but the rental levels have been paid and
buildings have deteriorated. Because the specification will be
about a whole life condition, and there will be the redress to
not pay if buildings are not up to the required standard, there
is a very simple and first order redress of not paying, if you
are the occupant of a building which is leaking, the heating is
not working. That is one of the features we have drawn from PFI
because we were talking earlier about lessons drawn. The aspect
of saying we should only pay for the service we receive, not pay
regardless and that be determined by a suitable condition being
provided is something we have taken from PFI and are using so
that the individual occupant will only pay for the service which
is received to the extent the conditions are suitable. So there
is a level of redress for the occupant in relation to individual
premises. We can then also, because we are setting up a long-term
partnership in terms of that relationship, if there is consistent
failure on individual premises or there is some sort of material
default, ultimately terminate the agreement and the way that would
be done would be through forcing a sale of the shares in the company
and saying they have to be put out and a new partner found that
the local economy is satisfied with. So there is the ultimate
redress of kicking out the partner in the agreement.
790. Are the other satisfied with that?
(Dr Stanton) We have a degree of honest scepticism.
(Mr Goldstone) You are right. We have details that
we are only just working through and that has not all been shared.
It is quite right to have that. There is a lot more redress than
there has ever been in the past.
791. Could you also say a little bit more about
public sector shareholding? Is it policy or is there an expectation
that in high cost ,or perhaps high risk, areas of investment,
there would be a higher public sector shareholding? Or where you
wanted to attract private investors into areas of deprivation
is there any policy or expectation that there will be a higher
public sector shareholding there?
(Mr Goldstone) There is no set policy about it. We
have envisaged that the company will be predominantly private
sector owned so that it has commercial freedoms to deliver within
a framework of controls of the sort we have been talking about,
about securing value for money. What the precise level of shareholding
is, is variable. No, we have not made a policy of the sort you
792. In contrast to the wishes for pilot schemes,
what are the plans for practices in more affluent areas which
will therefore be at the bottom of the pile in terms of LIFT ever
getting to them? Within affluent areas where there are particular
pockets, perhaps a particular practice where because of the finances
of those GPs they are stuck in a building, what are the proposals
for those to be able to move out and get the modern premises that
other people are looking to provide?
(Mr Goldstone) Do you mean if it is not in a LIFT
(Mr Goldstone) There is nothing at the moment which
would enable a practice which is not in a LIFT area to access
the LIFT route other than by becoming one of the areas that LIFT
is working in. It may be important to say that there is no limit,
no cap nothing to say that in future any area which cannot take
forward a LIFT schemeand we referred to the planned 40
which we have been working to try to roll out over the next year
to 18 months as projects which are going forwardother localities
which are not in the 40 could not do it subsequently.
794. Would any other witnesses like to suggest
any ways in which some of those problems could be addressed?
(Dr Stanton) We do have tried and tested ways of developing
surgery premises under existing arrangements.
795. Why are so many practices stuck in old
(Dr Stanton) For a very simple reason that a previous
administration thought it necessary to introduce cash limits on
the expenditure which could be placed into these projects. A PCT
has a cash limited pot of money available for carrying through
cost/rent and improvement grant schemes. A very simple way of
using some of the munificent extra £1 billion might be to
target some of that into the GMS cash limited pot.
(Dr Fradd) It is slightly odd that notional rents
and true rents are not cash limited and cost/rents and improvement
grants are. Obviously there are cost consequences, but it does
seem a slightly bizarre way of taking it forward when that is
how you are constantly improving and developing the service.
796. The whole thing is quite unwieldy really.
The NHS has always been accused of being over bureaucratic but
it occurred to me that an NHS trust can carry through a multi-million
PFI with one partner. Why when we are looking at the primary care
sector do you need Partnerships UK, LIFT and a private sector
partner for what is by comparison a relatively simple project?
(Mr Goldstone) At the local level there will be one
partner of a different sort to the one in a PFI context but one
partner in the same sort of way with a contractual relationship.
In that sense, it is not very different. The reasons why that
one partner would have more than one ownership structure or elements
of ownership is to provide some of the protections for the public
purse and for the public interest about what is going to be. In
a PFI scheme you have a contract about typically building one
very large new facility and then managing it over a long period
and certainly the NHS hospital programmes have been about new
and replacement hospitals, individual very large new facilities,
specified up front, clearly defined to be delivered by that partner.
Here we are going to have a structure where we are talking about,
in capital and financing terms, relatively small facilities individually
certainly in handfuls of millions of pounds and sometimes less
than that, about a programme which can deliver lots of them over
time and can be a long-term partner. Therefore to have a structure
which gives a greater level of public sector involvement and public
interest involvement, is seen as beneficial.
797. I cannot see why. The hospital PFI projects
seem to me to be designed to evolve over time. I still cannot
see the difference between primary care and the other.
(Mr Goldstone) The difference is that we are not going
to know on day one.
798. Surely you should do.
(Mr Goldstone) No, because the nature of primary care
is that it is a dynamic sector which changes and the requirements
change over time. The decision to build a hospital here and that
we want this hospital to this sort of design specification on
this site is agreed before a PFI contract is signed. What we are
going to have in a LIFT proposal is a small number which are agreed
like that, but we are having an arrangement which says over time
we are going to agree to deliver some more health centres, some
more improved GP surgeries and premises and resource centres which
we have not specified and defined all up front on day one when
the agreement was entered into. That is why the answers about
value for money were about repeating the competition and about
certainty of pricing in that way, that it is value because it
is not all defined up front and a simple comparison of what, if
we did it another way, the costing would be. It is a difference
in terms of the certainty of what is actually going to be delivered.
It is not all going to be defined up front. The other difference
is that you mentioned one partner in a PFI scenario. There is
also typically one procurer, there is a NHS trust which is procuring
a partner. Here we have the range of interests locally on the
public or the Health Service side in terms of PCTs and in many
cases more than one PCT, local authorities and the independent
practitioners, whether that is GPs or the dentists and pharmacists.
A whole range of interests are in effect independent procurers
of facilities locally. Both on the purchasing side and on the
what-is-going-to-be-provided side there is a less clearly defined
relationship than in a PFI contract for a trust procuring a partner
to build a hospital.
Sandra Gidley: Would anyone else like to comment
on that because I am not entirely convinced. It sound to me like
an extra body which is just creaming off vast profits, if I were
799. Dr Stanton, are you reserving your position
again on this?
(Dr Stanton) Yes, I suppose I am. What can I say?
It is not our scheme. It was announced in the NHS plan. It is
therefore a Government intention. We are still struggling with
the other announcement in the NHS plan that £1 billion was
going to be invested in the provision of better primary care premises
and yet the departmental funding to facilitate NHS LIFT seems
to be £195 million. I am still trying to get from £195
million to the £1 billion but I have always had difficulty
with arithmetic. I share Ms Gidley's confusion, but perhaps things
will become clearer in time.