Examination of Witnesses (Questions 80
MONDAY 15 APRIL 2002
80. What they are saying is that you take ages
to sell your property because you have to get a valuation price,
agree a price, and then the person with the money drags their
heels and keeps the money in a bank account, gets the interest,
and gets an asset that has appreciated over time. This is the
fear, is it not?
(Mr Crisp) If I take you further down that page, what
the Audit Office is actually reporting is that there is no evidence
one way or the other that if you had sold it quicker you would
have got more money for it. If you look at that bullet point three-quarters
of the way down it says: "This would have brought forward
receipts of some £80 million, assuming that doing so would
not depress the prices achieved", because we do not want
a fire sale either.
81. Do you think it is rather strange, given
the state of the property market, that in only one in three cases
(32 per cent) are more than the pre-sale valuations, when there
is often a big gap between the valuation and sale? Do you not
think that is rather bad value for money contrary to the rather
strange conclusion here?
(Mr Crisp) That sounds to me like you are making a
comment on the valuations being made by the district valuer. What
other mechanism can we have?
82. You misunderstand me. At the time the district
valuer makes the valuation that is a fair valuation, I agree that,
but I am saying if it is sold down the line, because of these
delays we have seen in Table 13, I am surprised we do not then
achieve a higher price in more than one in three cases in a rising
(Mr Crisp) Firstly, we ought to be clear that 90 per
cent of these properties are sold on the open market and are therefore
competitive as well, so that is the other mechanism.
83. Why do you not use the competitive tender?
Why not use an auction like we did for the spectrum mobile phone
wave lengths, that made loads of money, did it not?
(Mr Crisp) We do with some.
84. If you do an auction over time you would
escalate the price rather than fixing it.
(Mr Crisp) Sometimes they are sold by auction. What,
again, this document says is that we use different mechanisms
within an overall arrangement depending on what the local circumstances
are and what the properties are.
85. Finally, is there any evidence of any corruption
or collusion at a local level between local estate managers who
are negotiating these sales and basically organisations that are
buying them? Have you pursued any investigations or do you just
assume nothing is going wrong?
(Mr Crisp) No, no. This is part of the point using
the district valuation office to make sure that we know what price
we should be getting for things but maybe Peter could pick that
(Mr Wearmouth) Yes. The 32 per cent you referred to
was the average increase in income we received from the pre-valuation.
The pre-valuation is only a guide price so we have received an
extra 32 per cent, we did not actually lose 32 per cent. There
was an extra 32 per cent received in income.
86. I thought in 32 per cent of cases the price
exceeded the pre sale valuation?
(Mr Wearmouth) It did, that is right.
87. 32 per cent increase in value, I am talking
about 32 per cent of cases the price was more than the valuation,
the others were the same or less.
(Mr Wearmouth) 95 per cent of sales by value exceeded
the valuations. In 32 per cent
88. The same or exceeded 95 per cent.
(Mr Wearmouth) The same or exceeded.
89. 32 per cent exceeded.
(Mr Wearmouth) 95 per cent by value met or exceeded
the valuations, the pre-sale valuation for sales. 32 per cent
was the average increase in value between pre-sale valuations
and sale price.
(Mr Crisp) It was not the number, it was the average
increase. Have we got time to just answer the point on corruption?
(Mr Wearmouth) Again, it is down to the controls assurance
of NHS trusts to ensure that the correct processes are followed.
Also the district valuer does carry out a valuation of properties
over five million to ensure that the correct valuation has been
Mr Rendel: Mr Crisp, may I just start by reminding
you, as I always do, that my wife is a GP and also a member of
a PCT. She is on the board as an executive.
Chairman: I think, Mr Rendel, that you are a
man of the highest integrity and you do not need to repeat this
every time. We know your wife is a GP.
Mr Rendel: As long as you are happy, I do not
Chairman: There is no question about this.
Mr Gardiner: You keep declaring it, mate.
90. Mr Wearmouth, I think you said earlier that
we try to sell property as fast as we possibly can and Mr Crisp
said earlier in relation to the question of the £600 million
worth of retained property still unsold that part of the reason
for that is that it is unsold in order not to flood the market
and it is sold according to a plan, so much each year. Those two
statements seem to me to be slightly in conflict. It cannot be
both going as fast as possible and going according to a plan not
to flood the market, which is correct?
(Mr Crisp) I understand the point you are making.
Part of the reason, as I said also, was to do two things, to stage
the sales but also part of it was because some of the land was
still being used.
91. I understand that. If it is staged, you
cannot be doing it as fast as possible, can you, which appears
to be what Mr Wearmouth is saying?
(Mr Wearmouth) If you take the Treasury guidance it
clearly states that if land has become surplus to operational
requirements we need to dispose of it as quickly as we possibly
can. There are instances where we may not dispose of a particular
piece of property because we may not have the right planning permission
or it may be still occupied or there may be other instances where
we cannot do that and that is the view in terms of being staged.
Treasury guidance is quite clear on this.
92. Staging is surely rather different from
waiting until you have planning permission. Maybe I misunderstood
Mr Crisp but what I understood Mr Crisp to be saying was that
in order not to flood the market you deliberately did not sell
some things which you could sell or were ready to sell, you did
not sell them in order not to flood the market.
(Mr Crisp) I think I did say that and I think actually
Mr Wearmouth is giving you the correct representation which is
that actually it is mostly for reasons that you can only do it
at a certain pace so I think I ought to withdraw that statement.
93. That has got that clarified. What further
incentives for sales are going to be introduced? You talked about
the possibility of incentives to enable trusts to keep some of
the money, are there further incentives?
(Mr Crisp) The one significant one was the point made,
the ability to reinvest locally going up to £5 million.
94. That has been introduced?
(Mr Crisp) That is being introduced.
95. Are there further incentives?
(Mr Crisp) I think there will be some others that
are looked at but at this moment I am not aware of any that we
are specifically doing on that.
96. The slight worry I have about this is that
if people know that they are going to get better incentives in
a year or two's time, there is an incentive not to sell until
the incentive to sell has been introduced.
(Mr Crisp) I understand that. Again, if I may just
go back to the point about the estate strategy. This is actually
about making sure that we do develop a plan for doing this and
actually if you are keeping surplus property you are incurring
charges while you are doing it so people do have to make decisions
as they go on. People have a capital charge against land or property
that they are not using and increasingly we need to come under
scrutiny by you and others for making sure we use it.
97. Do you accept that in practice it will be
best for all concerned if you say just what incentives are going
to be introduced and introduce them as quickly as possible rather
than saying "If you wait a bit, you do not know, you might
get a bit more for yourself. Okay, you may have to pay property
charges meanwhile but you will have to judge whether that is worth
it or not in terms of holding off and perhaps getting more for
yourself later on"?
(Mr Crisp) I understand that but, again, let me come
back to the point that actually the big asset sales are on the
retained estate or where we are replacing a hospital. Small asset
sales are generally pretty small beer. They are not the biggest
issue for us in asset management.
98. They may not be the biggest issue for you
but do you accept that if you are going to introduce incentives
then you ought to introduce them as quickly as possible and not
say "They may be coming in two years down the line"?
(Mr Crisp) In a sense we are not actually even saying
that, we are saying that in answer to questions it may be possible
that we can look at other incentives. We are not actually saying
at this moment, that I am aware of, that we are introducing any
new incentives in two years' time. I am telling you a very straight
forward answer which is that in looking at a system where we are
trying to devolve as much responsibility locally as possible,
all kinds of issues may be looked at in terms of that. People
may then speculate and all the rest of it, and there is a lot
of speculation, as you well understand. We are saying what we
99. Figure nine on page 17 does seem to indicate
a lot of sales coming in in the last month of the year.
(Mr Crisp) Yes.