Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 1080 - 1092)



Julia Drown

  1080. There are still some A business case, which runs to thousands of pages, does not help the public to understand what the difference might be between the two options. You mentioned previously how you are keeping confidential the public sector comparator, I assume that is only until you get the bids in. What steps are you taking to try and make the process more transparent so that people can understand the difference in terms of risk transfer and understand what risk has been transferred so that they can understand the differences between the different options and so they can see what is being offered to them as future patients of their local hospital?
  (Mr Milburn) I think two separate things are necessary. First of all, I think it is already true to say that when a hospital is built through the PFI there is more openness and more transparency than there is as if the hospital were built through the exchequer route, more publication and more information, some of it, as you say, running into many hundreds of pages. Remember the SOC, the Strategic Outline Case, the OBC, the FBC, all of these, have to be made available, they are all placed in the local library, they are all given to the local health council, they are all given to the House of Commons library, and so on and so forth. Point one, transparency there is. Point two, understanding, probably there is not. I think it would be hard to sustain an argument that somehow the PFI is a secretive process. I think it is far from secretive, it is tremendously open actually and there is a lot of information published. When we came into office we insisted that a lot more information be published than had been the case in the past. The issue is much more about what the public understand about PFI. There, I think, there is a real job of work to do. Frankly I think we have been at fault in government in allowing arguments to go by default and allowing some of the ideologues under the pretence of objectivity frankly to adhere pretty subjective an erroneous view as to what the PFI means. I think we should engage in the argument, as we are now, and win the argument with the public about this. That should happen not just at a national level but at a local level too.

  1081. I have asked a number of witnesses who have said that it should be perfectly possible to put on a page of A4 some of the basic arguments. Would it not be helpful for the public to see that if you were transferring risk the public sector comparator would most often be cheaper? That admission is true in most of the House of Commons' documents that we see, that is the case. Then the public would see what they know to be true, that borrowing through the private sector is more expensive than borrowing through the public sector. It is only when the other things come in that the real advantages come through. Being honest and open and more transparent about that might get through some of the muddy waters that we have seen in our inquiry.
  (Mr Milburn) Peter will correct me if I am wrong about this, but I do not think there has been any lack of transparency about the fact that obviously Government can borrow more cheaply than the private sector, can we not, Nick?
  (Mr Macpherson) We certainly can.
  (Mr Milburn) But there are compensatory factors and the risk transfer and some of the issues that we have been discussing around maintenance and time overruns and cost overruns and so on and so forth make the PFI a better deal. I think it has not been the lack of transparency. We have allowed ourselves and allowed the whole PFI process to be transparent, and by "we" I include the private sector because I think the private sector has got to get involved in this too because it does not do the private sector any good to have various organisations erroneously publishing, frankly, rubbish in newspapers and elsewhere about new hospitals in Carlisle and Durham and so on and so forth. I think there is a real argument to be engaged in and all I would say at this stage is that is something certainly I will be doing and I think more generally we will be doing in conjunction with our private sector colleagues.
  (Mr Coates) We did try this process once at Norfolk and Norwich where we produced a summary of the contract rather than the contract itself with in layman's terms what each clause meant and we were unfortunately accused of being secretive because we did not release the contract, we released just a summary. Whatever you do you seem to upset somebody.

  1082. You could release both.
  (Mr Coates) Yes, perhaps we could release both.

  Chairman: We have got a vote at some point in the future, I hope we can cover a few more areas before then.

Siobhain McDonagh

  1083. Looking at staff transfer, it seems to me from our visits that the biggest controversy, and we can all talk about financial policies and we can get justification for our view about PFI from those, but at the heart of it for large numbers of people in the public is the distrust about transferring into the private sector of some support services. It was those elements that I think caused an awful lot of trouble for Carlisle and Durham in their local press and all the rest of it. I want to ask about progress that has been made on three pilot schemes on the Retention of the Employment Model at Mandeville, Roehampton and Havering. How is it going?
  (Mr Milburn) Well, it has started. It is incredibly difficult. I think I said to the Committee last time that this was not an easy process, which has been going on for some months now, for six months or more. Where we have got to is the union representing most of the support staff, UNISON, agreed in principle with the Retention of Employment option back in November in outline. We are going to apply it to five groups of staff, to portering staff, cleaning staff, catering staff, laundry staff and security staff. I think there are different views about it. I do not think necessarily the private sector, and you will have heard from Norman Rose and others, is wholly comfortable with it, nonetheless they are prepared to engage with us on it and we are doing it as a tripartite process between Government, the unions and the private sector to try to make the thing work. Peter has been leading it and so far, so good, but it is pretty difficult.
  (Mr Coates) We have drafted the contractual terms to enforce the change and it is envisaged that we will oblige the contractor to apply all NHS terms and conditions to all seconded staff on behalf of the trust as an agent of the NHS. We have had the initial comments back from the private sector in terms of what it means to them in terms of changing their risk profile and there is obviously going to have to be a bit of boxing and coxing now between what they say they would like and what we say is a reasonable claim. They will then go out to get price bids, I should think, by the end of January, beginning of February, and by the end of March we will know for sure that it is going to work in terms of value for money incentives to the NHS.
  (Mr Milburn) If it does work, if on the basis of the three, and there is another one we have added, Waldesgrave in Coventry, largely because its timetable for procurement comes hard up against the Retention of Employment pilots, so there are four rather than three, if we can make it work then our intention is to apply that as a matter of principle to all PFI deals in the future.

  1084. Mr Rose came to the Committee and said that he was not involved in the negotiations on it and that his organisation had been excluded. I wonder, if that is true, why that was the case? How would you counter his argument that such a model would in itself be divisive in that people would have two sets of bosses: one who manages and one who pays?
  (Mr Coates) I cannot understand why Norman would say that he was not consulted. The day after the trade unions accepted the package I met with Norman and representatives of the trade from all the private sector bodies in a large meeting in London and Norman was able to put his views across to me very forcibly.

  1085. I think he might have envisaged being in before the agreement between the Government and UNISON.
  (Mr Coates) I am not sure I accept that either. We consulted closely with the private sector on all forms and Norman may feel he was not at the centre setting policy but he was certainly consulted about the way we would implement policy.
  (Mr Milburn) I think the BSA had a rather different policy in mind, it just does not happen to be the policy that we decided to adopt. Nonetheless, I think the relationships are cordial and they are involved. Indeed, if the thing is going to work it has got to be on the basis of agreement with the private sector and the unions as well.

  1086. What about his concern about the issue of divisiveness between the two sets of managers?
  (Mr Coates) There is that. I feel it is an area that is manageable within the contract. What we are saying to the private sector is we understand they have concerns about how they manage the risks in the contracts and one of the problems with UNISON, in fact, was about what is a manager because it is key to the whole process of who manages the risks in the contract. There is a difference of view between the private sector and UNISON as to what is a manager but essentially we have agreed with the private sector that to manage the risks in the contracts they must employ all those who manage those risks and that, generally speaking, means those of supervisory grade and above. They will then be transferred across to the private sector to be employed by them. It seems to me that they have to have a very clear understanding of who their boss is. As far as the staff are concerned, in reality there is no difference between what they were before the contract was signed and afterwards because the same manager they had before the contract was signed will be in place afterwards because all the staff are in effect staying doing the same contract. I see no insuperable obstacle to making it clear who managers who. I think the trick will be making sure when disciplinary action is being considered against any employee that both the private sector and the trust know exactly what is going on and the prognosis for that action so that nothing can go on and be a surprise to the trust if, for example, the worst case comes about and the decision is taken to dismiss an employee. That prognosis is a very important part of the relationship to be built up with the private sector in terms of what is happening in the disciplinary code, how the people are to be managed, are they being fairly managed and what are we doing about discipline and other written and verbal warnings.

  Chairman: Can we turn to LIFT and try and touch on one or two issues that we want to raise there.

Sandra Gidley

  1087. LIFT. Something obviously had to be done to improve the physical, as much as anything, stock of the surgery, particularly in inner city areas. There have been six pilot schemes. What I certainly found quite alarming when we were taking evidence was that there has been no evaluation, in effect, of those pilot schemes, indeed some of them were ended before the further LIFT projects were initiated. What is the point of a pilot scheme if you are not going to evaluate and improve for the future?
  (Mr Milburn) They are not pilots. In fact I have announced the second wave today of 12 further initiatives. We are just getting on and doing this. The reason is, as you quite rightly say, primary care in too many parts of the country, particularly the poorest parts of the country, is appalling. 40 per cent of GP surgeries are purpose built, virtually the remainder are either adapted houses, residential buildings, or adapted shops, and we expect modern primary care to be carried out in those circumstances. 80 per cent of the accommodation is too cramped to meet modern requirements now. There is a very simple option round this, what we can do is continue to dole out penny packets of public sector cash, which is rising year by year, big investments going in, or else we can do what we are doing through NHS LIFT, which is an attempt to lever through cooperation with the private sector enormous sums of cash into deprived inner city communities, like Newcastle and Bradford. The ones that I have announced today are places like Barking and Havering, Birmingham and Solihull, Bradford, Cornwall and the Isles of Scilly, there are huge problems there, Coventry, East Lanarkshire, Hull, Leicester, Liverpool, Sefton, West Kent, North Staffordshire, Redbridge and Waltham Forest. If that is the choice then we are going to go for the latter option. Already I know from my own visits in Newcastle the ground clearing work is producing results. There is quite a lot of enabling going into these schemes, allowing old surgeries to be knocked down and land to be acquired. In Newcastle and North Tyneside alone, which is a very small city of 300,000 to 500,000 people we are going to be spending somewhere in the region of £25 million to £30 million on new primary care infrastructure alone, that is a huge investment going into an area that frankly has not had the quality of primary care premises that it needs. That would not happen were it not for cooperation with the private sector. I am not saying that you are saying this at all, this sort of fallacy that one sometimes hears, and you will have heard during your hearing, about all things public being wonderful and all things private being dreadful is, I am afraid, not borne out by the facts. What we need is more of a relationship between the public and the private sector in order to get better care, improved premises and shorter waiting times available for more NHS patients.

  1088. I cannot argue with the aims. Certainly I think we were all under the illusion they were pilots schemes. How are the schemes going to be evaluated so that if there is anything wrong we can quickly make sure? I am still slightly alarmed that we may not have got it right and we need a little bit of time to make sure we get it better.
  (Mr Coates) The first schemes will be slightly novel and contentious. The first step will be sharing those with our Treasury colleagues. The assessment will be a standard business case assessment that will look at both the numbers and the quality so that ultimately the prime test will be what numbers come out and are they providing value for money for the taxpayer. We will also look at the softer areas and the qualitative areas around how much money is levered in and how we improve if there is a step-change in the local quality of accommodation rather than gradual increase and does it increase and improve the mobility to attract GPs to the area. Obviously in inner city areas they do have problems attracting GPs. All of those factors are taken into consideration in looking at the business case.

  1089. Some inner city areas find it difficult to attract GPs, how will schemes in these high costs or risky areas where you get your windows bashed in frequently—and we have to admit there are areas like that—be dealt with? Maybe there is a reluctance on the part of the private sector to take on the risk in those schemes and there is a balance between wanting to provide something and people there who are willing to provide it at the right price.
  (Mr Milburn) The evidence thus far is, certainly the enabling works I saw in Newcastle, which has its fair share of problems as an area, were in part at least about better security grills, and heaven knows what, around health centres and surgeries, and so forth. In terms of the relationship between NHS LIFT and PPP round improving primary care premises and primary care recruitment I think there is a very strong relationship indeed. If you are asking GPs to go and work in difficult areas in any case and then asking them to work in cramped, dirty, out of date accommodation then your chances of doing so are practically zilch. Very often through the current arrangements what we also do is compound the felony by asking GPs to then enter into very long leases with the current private sector owners of the premises. One of the beauties about NHS LIFT is we will able to offer, particularly younger GPs in inner city areas, more favourable and more short-term leases. As we discussed in the committee in the past there is a behavioural change that is affecting not just primary care doctors but I think it is happening in the whole of the public sector where people no longer want to make commitments for life, they want to change careers midway through their 30s, 40s, 50s, or whatever, and the idea that we can ask them to be bound into a contract for life, a lease for life, it just does not fit with what we need to achieve in terms of recruitment. One of the real benefits of NHS LIFT would be better leases, more flexible leases, more favourable leases precisely in order to attract GPs into the areas where they are needed most.

  1090. What I am not really clear on is what is the criteria for deciding which areas have them. There are some affluent areas where there are pockets which are more deprived but they often seem to miss out. All of the areas you described are what I would describe as commonly thought of as being more deprived areas.
  (Mr Milburn) We have looked at the issues round deprivation, we have looked at the issues round GP coverage and the issues round the existence of the primary care premises and we basically came to decisions on that basis. The first six were Newcastle, Bradford, Manchester and Barnsley, Sandwell, Camden and Islington, East London and the City, which were very much the hard-core as far as the state of primary care premises were concerned looking at those sort of factors. The next 12 also have problems round recruitment and the current state of primary care. Then we will move on to further areas in due time. Overall we are hoping that the PPP will lever in about 1 billion of investment so that we can modernise 3,000 GP surgeries and build about 500 new health centres. I think in the latter category there will be an enormous gain for patients. What I hope we can do is that rather than having the optician in one place, the dentist in another, the social worker in a third place and finally the GP we will have them all under one roof. Remember, the patients who are going to take advantage of these services very often live in inner city derived communities and do not have their own means of transport, and making four or five bus journeys is the last thing we want them to do. I think this is a very important development. I also think it is a very important part of the argument about the modern relationship between the private sector and the National Health Service being for the benefit of NHS patients, and being precisely for the benefit of the poorest NHS patients.

Andy Burnham

  1091. Again I think there is a danger here that the private sector will gravitate towards the areas which Ms Gidley raises, the more prosperous areas and the areas where there is more deprivation they may not want to naturally locate. Will PCT have the freedom to be able to galvanise a catalyst to initiate a LIFT scheme so they can bring together different primary care providers on an individual site or do they need to work through the Department?
  (Mr Milburn) NHS LIFT is a national project which is precisely designed to address the inequalities in provision that we all know about. The existing way of providing primary care premises and providing primary care positions, GPs, has been to gravitate more and more resource crudely to the leafy suburbs and less to the inner cities. We know that the biggest health needs are in the latter rather than the former. The leafy suburbs do pretty well out of the existing arrangements, which are partly private sector led. What this is all about is trying to address the balance and making sure, again through innovative PPP arrangement, we get more resource and more capacity into those parts of the community which need the most.

  1092. Can you envisage a situation where NHS capital would be made available to health park type schemes, where you are bringing in a different range of providers into a new range of premises? Will there be a budget available to PCTs.
  (Mr Milburn) PCTs will have that. I know in my own local area the GP practice is building bang opposite my office in Darlington a new PFI health centre, surgery, and they are doing that in conjunction with the local health authority. Remember that PCTs are going to get direct access not just to revenue but to capital resources too and it will be for them to decide. If they want to develop a PPP to build new health centres and new GP surgeries then that is a matter for them. I do not think what we will be doing is providing penny packets of cash for particular areas in the way that maybe you are thinking about.

  Andy Burnham: Just finally, I think the LIFT scheme is extremely important and I think it is a way of making new facilities available to the public very quickly given that they are far less complicated than hospital buildings.

  Chairman: We will have to adjourn at that point. Can I thank you and your colleagues for a very helpful session. We have a series of questions we have not asked, perhaps we can write to you in due course. We are very grateful for your co-operation. Thank you very much.

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