Examination of Witnesses (Questions 40
- 59)
MONDAY 15 APRIL 2002
MR NIGEL
CRISP AND
MR PETER
WEARMOUTH
40. 13 per cent land, that is even higher. How
do you know that that land that you sell off now will not be needed
for a new hospital for example in 20 years' time when you will
have to go out and buy land probably at extortionate cost rather
than keeping it in a land bank when it would have been there?
(Mr Crisp) Let me answer the bigger question and then
on the specific technical point bring in Mr Wearmouth. We have
to have an estates strategy just as trusts do. We have to look
across the NHS as a whole and say where have we got our current
estate, where are we currently invested, what money are we going
to put in and what is the result that we are going to have coming
out at the other end. We have a number of targets on this part
of the Report such as making sure that we bring assets up to good
utilisation and high quality so that we do not have a huge backlog
maintenance bill. Our estates strategy is to do that, to dispose
of properties like the one on the front page of the Report, for
example, which no longer can be used effectively for what we want
to use it for. There is a big strategic set of questions there
about what we are trying to do with this huge asset. We have got
of £23 billion, and every individual decision needs to be
made in the context of that strategy and every individual decision
needs a business plan which demonstrates the answers. The answers
will be different in different cases. Take this property on the
front (which is not land) this property had effectively become
unuseable in terms of its use as a nurses' home or as residential
accommodation. The more sensible thing to do and what happened
here was the property sold and the money re-invested in local
services and, indeed, some more residential accommodation. That
would fit into this category. I do not think, unless Mr Wearmouth
corrects me, that we have a statement that the "foreseeable
future" is ten years or 15 years or 20 years. I think it
depends on the context.
(Mr Wearmouth) We do not have a statement in that
regard. I think it is essential and that is why every NHS trust
or trusts should have an estates strategy. What that tries to
look at is a five-year forward look at what property, be it land
or buildings, it would require to carry out its health care functions.
Also we have been involved with DTLR in looking at the new Green
Paper and how we can involve health more in planning decision,
so that when a development plan is put forward by a local authority
that health issues are included in that development plan so we
can allocate land for purposes in the future. We are working very
closely with local authorities. The trust itself develops an estates
strategy that feeds into that.
41. I will come back to that in a minute. On
Page 15, Paragraph 2.10, it is clear from that, as has been mentioned,
that a number of trusts certainly have not planned for the future
in terms of their disposal strategies and they appear to be being
criticised for it in the Report. Also in the Report many trusts
have not decided yet what are their most important or what are
their least important assets or surplus property that can be sold.
They seem to be being criticised for it. I personally would not
criticise them for that because my view is that if you make rash
decisions on getting rid of land or property you may well live
to regret it. What is the old saying? "It is eating no meat."
I do not think they should be criticised for that.
(Mr Crisp) May I take the alternative point because
I absolutely understand that and we have recently re-looked at
what we are saying is surplus to make absolutely sure that there
is not something there we can use for extra capacity. If you look
at something like Napsbury for which in the end we got £66
million, frankly, we were not going to turn it into something
of use to the Health Service in the foreseeable future, by anyone's
definition of the foreseeable future—
42. Let me explain why I have gone down this
track. As you are well aware, we have just had a new PFI university
hospital in Durham at a cost of something like £100 million.
For 20 years we argued with both governments that we should have
this new hospital and eventually persuaded them that there should
be one built. The main stumbling block all the time was where
this hospital should be built. They went to York University for
surveys, they went here for surveys, they went there for surveys
and greenfield sites came up on the agenda here and there. The
very site that they have built the new hospital is on spare land
on the existing site. What happens if they'd sold that off? We
would not be able to build there. We now have a situation where
on that site there is now a huge amount of land and I know the
trust will want to sell that land. I know that Tesco's have been
very interested in buying it. I want to come on to this in a minute
regarding planning. If that land has been sold or if this land
now is sold that debars you in the future from doing anything
else. You have a situation now where the hospital has not got
enough beds, frankly, and they may well need to expand in the
future. If they sell this land off where are they going to expand?
They may make £10 million selling it off but to buy extra
land eventually might cost a lot more than that.
(Mr Crisp) What you illustrate is that people have
to make decisions. The Napsbury example I gave you—
43. They have to be pressurised into doing something
that they are uneasy about.
(Mr Crisp) I hope and believe that trust boards in
this country are trying to get the best deal for their patients
locally and they are trying to use the assets for the best deal.
If you are responsible for something like Napsbury, then I think
in a sense it is a no-brainer as to whether or not you sell it
and reinvest it. The example you use, it sounds as if the decision
was made the right way round, they did not sell off the land.
44. That was not down to the management, it
was luck.
(Mr Crisp) I am not going to comment on individual
cases because I do not know about it. My point is that people
need to make decisions and we have a responsibility to get the
best out of the assets we have got and that is what I understand
you are holding me to account for.
45. Okay. I did not think I was going to last
15 minutes but I am told I have two minutes left. The one question
I want to go back to is the planning issue. This is where I find
it a little difficult to accept what the National Audit Office
is saying. As I interpret what they are saying, they seem to be
saying "Go along to your local authority and have a little
fiddle there. Get the heads together and see what you can do".
Clearly that is not how you do planning, surely, is it? For example,
the one in Durham, the local authority clearly told the trust
"Get lost, there is no way that we will give permission to
build a bloody supermarket on the site of this land" which
might be worth £12, 13 or 14 million. There is no way I would
expect the local authority to capitulate on that. I hope this
Report is not suggesting that the trust should go along and have
this cosy relationship with local authorities where planning could
be given for virtually anything they want because it happens to
be the National Health Service which wants it.
(Mr Crisp) That is not how we have interpreted it.
We have interpreted it as being appropriate liaison with the local
authority and not turning up at the last minute with a planning
application which they have not heard of and they do not understand
and which may have an impact on their local infrastructure and
so on. May I just apologise, I quoted you a wrong figure. I quoted
you 71 per cent for mental institutions, that is a percentage
of hospitals sold, it is not a percentage of the total property
sold. Can I just correct the record on that.
46. Can I ask the National Audit Office: what
does the Report really mean in terms of this liaison with local
authorities?
(Sir John Bourn) It meant what Mr Crisp has said.
47. That is the first time, Sir John, I have
ever had such a short answer. You would expect any organisation
or any individual who is wanting to build something or develop
to talk to the local planning authority. You would not expect
a special relationship, that is open to criticism and corruption,
surely?
(Sir John Bourn) Yes, but we are not suggesting a
special relationship of a kind that could be regarded, as you
say, as cosy or as the harbinger of corruption, of course not.
Both sides need to know enough about what they are concerned with
in order to meet and come to some sensible view of the way forward.
48. What do you mean by sensible?
(Sir John Bourn) What I mean by sensible is that it
is important the local authorities should know about—
49. The local authority would have a local plan
and within that local plan certain developments can take place
whether it is National Health Service or not the National Health
Service. You are not saying the National Health Service should
have some sort of priority.
(Sir John Bourn) No.
50. Because it is the National Health Service.
(Sir John Bourn) No, but I am saying they should be
there and their concerns should be fully understood by the local
authority and within the local authority's discretion properly
recognised, that is what I am talking about. I am talking about
sufficient sharing of understanding and knowledge, I am not talking
about some overbearing of the law or some underground or underhand
set of arrangements, of course I am not recommending that.
51. Thank you, Sir John. Sorry.
(Sir John Bourn) No. Fine.
Mr Davies
52. Value of the asset base in terms of land
lies around trust estates is worth £23 billion, that is correct,
and you spend something like £47 billion, do you not, in
the NHS. Do you feel that the basic ratio between asset value
and turnover is the right balance or have you got any sort of
idea how large that asset base should be given you are selling
it off at something like £700 million a year, is it not?
(Mr Crisp) £350 million a year is what we are
selling off. We have been looking at this in estate strategy terms
not in terms of a financial ratio but in terms of getting an estate
that is fit for purpose for the Service so we do not actually
have a financial ratio, I do not believe, that we are aiming for.
53. Tell me, the overall asset management strategy,
is the idea, in basic terms, to sell off those assets so the assets
you end up with and reinvest are disposable assets which then
could be reconverted into land or do we run the risk, as has already
been mentioned by other Members, of selling off land once and
for all?
(Mr Crisp) There are three steps. The first one is
to make sure that we understand absolutely what we have got and
the condition of what we have got. The condition is a very important
point. We have actually had a rising bill for some years of repairs.
54. I am obviously short of time. What I am
getting at, when we sell off the £350 million per year of
land—
(Mr Crisp) Land and buildings.
55.—that money is reinvested.
(Mr Crisp) Yes.
56. Are local trusts in a position where they
can buy back land or basically is this a once and for all sale?
(Mr Crisp) It depends on particular conditions but
trusts can also purchase land. This is only looking at surplus
land but we may well want to purchase lands.
57. Are the proceeds from the sale of the assets
reinvested in assets which then can be liquidised to buy land
or are they just used up in depreciating assets, machinery and
the like, and we end up with less value and no ability to repurchase
land to enlarge facilities?
(Mr Crisp) The present use value of the land is £23
billion, of what we have got, and even though the land area has
reduced by 20 per cent in five years, the value has increased
by 8.5 per cent. We have actually been investing in higher value
land and facilities.
58. We have been losing the amount of land.
Obviously the amount of land, that value would be a lot more because
land is going up very quickly, is it not?
(Mr Crisp) It depends on the use for the land. It
depends on the planning permission.
59. Can I just ask you about the regional distribution
of asset management, if you like. My understanding of this is
we are moving from a centralised approach to giving trusts the
right to sell land and then to reinvest it, that is correct, is
it not?
(Mr Crisp) They have always had that right up to a
certain level.
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