Examination of Witnesses (Questions 160
- 179)
MONDAY 15 APRIL 2002
MR NIGEL
CRISP AND
MR PETER
WEARMOUTH
160. It is a very useful tool.
(Mr Crisp) It is helpful. It is not the purpose of
this document, as you quite rightly say. It is a purpose for you
to take oversight and to hold me to account financially.
161. Are there any other areas of management
which you think would benefit from an NAO report we have not prepared?
(Mr Crisp) Certainly not.
Chairman: I did not think you would answer that
one. It would be very interesting information if you could tell
us which assets of the Department the NAO should be investigating.
I think we are unlikely to get very far on that. Mr Barry Gardiner.
Mr Gardiner
162. Mr Crisp, could I ask you, the Oxford Brookes
Report, which did a survey of 94 per cent of the trusts, has that
given you a complete picture of the NHS assets and surplus assets
in the country? Are you satisfied that you have as complete a
picture as you are likely to get?
(Mr Crisp) It slightly relates to the last point in
that this is a Report prepared for you and that is a survey carried
out on your behalf. We collect information also on the estates
through the normal mechanisms. If I was looking for detailed information
on some part of the estates I would be turning to Mr Wearmouth
and see what information he has got, to which the Oxford Brookes
Report might be something that he might refer. I would not see
it as the definitive vehicle for us in any way.
163. What I am concerned about, I hope I am
not going to have to be concerned about it but I want to probe,
is that you do have a central overview of where your property
surplus is. Let me give it to you in economic terms. If you were
looking at the economic management, the financial management of
the trust, you would say that there was a prudent level of balances
or reserves that should be carried. What I am wondering is do
you have a prudent level of surplus land that at any stage the
NHS should be carrying for future development?
(Mr Crisp) We have a number of indexes that we are
interested in such as, one I keep mentioning I am afraid, backlog
maintenance. What is the state of it, how much of it is of a certain
age, how much of it is fit for purpose according to certain categories.
We do not have a figure that says for overall within the NHS we
should have X amount of land that is surplus to current requirements.
I think we have used quite a stringent definition of surplus to
requirements so we have not got anything which says we should
be carrying a certain amount of surplus. That is right, is it
not, Peter?
(Mr Wearmouth) Yes. We do collect information on a
yearly basis from NHS trusts in their annual accounts and their
estates performance data. What we do at the centre is we evaluate,
for example, their building to land ratios and we produce a number
of ten key indicators that look at space efficiency but also look
at capital charges and the ratio of land to buildings to equipment
and we compare these across the country with various trusts of
a similar nature so it gives an understanding of how efficient
a trust is actually undertaking its management of its estates.
We look at its asset productivity, the quality of that particular
estate, its deployment and what it costs us to actually run. We
do carry that out at the centre. We have an idea at the centre
of every NHS trust's ratios so we compare like with like.
164. Yet you do not have, as it were, a reserves
figure that you would apply locally?
(Mr Crisp) A reserve figure in the sense of saying
"We know that we are carrying 10 per cent of our property
that we are not using and we think that is a sensible amount for
us to be carrying" is that what you mean?
165. Yes, that is right.
(Mr Crisp) We do not, I believe, do that. I actually
think that would be quite difficult to measure, to determine ten
per cent of what, if you see what I mean. Are we talking here
about land, are we talking here about reserve bed capacity?
166. No, we are talking about land.
(Mr Crisp) Talking about land, no we do not keep that
figure.
167. In the same way that, for example, the
Department of Culture, Media and Sport is looking to produce a
Doomsday Book that sets out all the capital assets that it has,
that the nation has, as a bedrock for seeing where they should
be investing and doing different things, you do not have that
then for your estate assets? What you have is you have individual
local views that you can amalgamate?
(Mr Crisp) No, I think we do have what you just described
but it does not include within it a statement that we are going
to carry ten per cent of spare capacity. I do think we have a
picture of what we need in Service terms.
168. If I asked you to break down for me by
local authority across the country a picture of the identified
surplus land by each NHS trust in that local authority you would
be able to do that for me?
(Mr Crisp) We could get access to that data, could
we not? Yes.
(Mr Wearmouth) Yes.
169. Thank you very much. Could I ask you to
provide that to the Committee.
(Mr Crisp) That might be a very large undertaking.
Before I reply absolutely can I check how much work that will
be to do and then come back to your Clerk.[2]
Chairman: Absolutely.
170. Can I take you to Annex 1 and Paragraph
F it says "NHS Estates should work in partnership with other
government departments on new initiatives to facilitate better
inter-departmental guidance for local authorities." What
I am interested in here is the very first part of that which talks
about the inter-departmental working but not so much as it relates
to guidance to local authorities. You will remember, Mr Crisp,
that you were a member of one of the highest level series of witnesses
we have ever had when we were studying an NAO Report into obesity.
You were there, the Permanent Under Secretary for Education was
there, as were a whole series of chief executives and so on. When
you are looking at your assets in terms of which are surplus,
is there any work that is done cross-departmentally on identifying
where other departments might work with you where they have a
need for land assets and where—and I am talking simply about
inter-governmental sales here—those would specifically achieve
targets which you in the NHS have? I am thinking very specifically
about the obesity report. One of my colleagues, Mr Steinberg,
referred earlier to the sale of school playing fields and the
loss of those, which is proving not only a problem for the Department
for Education but of course for your own Department in the tremendous
rise in obesity that we have seen this country and which that
particular Report has looked to. Have you discussed with the Department
for Education ways in which land you have identified as surplus
might be able to be used to provide playing fields and sports
facilities for schools and other departments? Mr Wearmouth referred
earlier to the fact that there is a group of priority purchasers
and certain terms which we talked about for purchasers which include
other government departments. Can you tell us about the mechanics
of that and how it works?
(Mr Wearmouth) We accept the NAO's Report that we
should do more in relation to priority purchasers at a government
level. We are proposing to introduce a clearing house with NHS
Estates looking at large properties that would be of interest
to other government departments. The reference was to should we
have local playing fields and when hospitals are coming up for
disposal should we be involved at local level. Of course, that
discussion takes place with local authorities as part of the process
that we have and the discussions that we have with them.
171. With respect, that is the wrong person
on the whole for it to take place with because with the devolved
management to schools local authorities and the Department for
Education are often not responsible now for those sorts of decisions
for secondary schools within their catchment. Within my own authority
there are only two secondary schools that you would be dealing
with through the local authority, all the other 13 you would not.
The reason I asked Mr Crisp to prepare that information about
the breakdown for this Committee is because I believe it is important
in looking at how we responded to the previous obesity report,
that we are able to use this to do exactly that sort of matching.
I think it is important that Parliament can see where objectives
which this Committee has clearly identified in different reports
might be able to be matched and come together. Whilst I appreciate
it might be a body of work and it might be quite costly to do
it, I think the benefits of it could be quite substantial if we
were able to do some matching.
(Mr Crisp) I will see how easily we will be able to
do that. I hope we will be able to do that. I understand the point.
I echo Mr Wearmouth's point about the strategic health authority,
level which is the bigger level, looking for example at North
West London.
Chairman: You will do what you can to help.
172. In response to Mr Rendel you disavowed
your remarks that sales were staged to stop the flooding of the
market and hence depression of prices. What I thought Mr Rendel
was going to go on to say is what are you doing to ensure that
you do not depress prices by flooding the market? I think it is
a fair question to ask you that.
(Mr Crisp) Again, I am going to turn to Mr Wearmouth.
Let me be clear that the normal Treasury arrangement is that we
should dispose of surplus property within three years. That is
the arrangement that we should live within. That gives you a little
bit of scope for making sure that you get your timing right within
that, but in general we have to sell it as quickly as possible.
Mr Wearmouth, I do not know if you want to respond in more detail?
(Mr Wearmouth) We do follow Treasury guidance. I am
not aware of any instances where we have depressed property prices
within any of our disposals.
173. So what you are saying is that so far the
problem has not arisen. What it would be fair for this Committee
to ask you then is what policy or strategy do you have to check
that it does not arise?
(Mr Wearmouth) As we mentioned, if we had a true test
of valuations to the market-place and the market was depressed
and we did not receive value for money, we do have a second valuation
undertaken by the district valuer when the prices for the property
in disposal have been opened.
174. I am having difficulty hearing you.
(Mr Wearmouth) We have a process where when we seek
competitive tenders for property disposals the tenders are reviewed
not only by ourselves but by the advisers and by the district
valuers themselves or an independent valuer to ensure that we
have got value for money.
175. Let's not misunderstand one another. What
the valuer will do is tell you that in a current market situation
that is the price you are likely to achieve for that particular
sale. Of course, that will take account of how much property is
available in the market. What I am asking you, though, is what
strategy do you have to make sure that the price the valuer is
giving you, which may well be correct, is not depressing the market?
I understand that it may be the correct price given the flow-
throughs onto the market at that particular time the laws of supply
and demand being such, but what we are trying to establish is
that you are not supplying too much to make sure the price goes
down.
(Mr Wearmouth) If we had a number of large sites like
this the guidance is quite clear, we want to discuss this with
our colleagues. What we could do is look at developing parts of
sites rather than the whole site and releasing it on a phased
basis.
176. Finally, I thought that Mr Rendel's wife
might not be a doctor but a dentist because he eventually extracted
from you that March payments if delayed would attract a penalty.
I just want to check that there is not a chink we are going through
here and that we are not misunderstanding one another. Could you
confirm whether sales completed in different months have different
lengths of time before final payment is made on them? For example,
perhaps it would be standard in most months of the year that,
let's say, 80 per cent of the contracts concluded stipulated that
it had to be within three months. Can you confirm that when it
is a March final payment that does not drop below the standard
percentage of 80 per cent down to 60 per cent so that what we
are looking at is a genuine like-for-like over time and there
are not extended credit facilities built into contracts that conclude
in March. That was not something that you specifically answered.
(Mr Wearmouth) If a contract had been delayed and
completion had been delayed then we would expect extra monies.
The issue for us is that when a number of contracts are exchanged
or there are a number of sites taking place, there are different
circumstances and what the NAO said is that there are different
requirements at different stages.
177. Do not misunderstand me. I understand that
if the contract is delayed there will be penalty payments. What
I am asking you to confirm is that contracts where final payments
are due in March are not concluded on a substantially different
basis to contracts where final payments are due at any other time
of the year, such that at any other time of the year you might
have three months until final payment whereas when it comes in
March it might be four months. I am wanting to know that the contracts
are concluded on a like-for-like basis throughout the year.
(Mr Wearmouth) Yes, they are.
178. So your response is that they are the same
and there is no differential in the time before final payment
for contracts that are concluded in March?
(Mr Wearmouth) Value for money has been achieved on
all sales whatever time of year they have been sold. Actually,
are you talking about timescales or value for money here? This
is what I am slightly confused about.
Mr Gardiner: I am not quite satisfied here.
I thought I had got a definitive answer from you. Please let me
just be clear that it is a definitive answer. That is that all
contracts are concluded on a like basis when it comes to the period
between signing the contract and final payments such that any
contract that is concluded throughout the year will always have,
let us say, three months between signature and final payment so
that there is absolutely no difference from one contract to another.
Is that correct? I am not saying it is three months.
Chairman
179. Do you understand the question and can
you answer it?
(Mr Wearmouth) Yes, I do understand the question,
Chairman.
2 Ev 23, Appendix 1; and Ev 29, Appendix 1, Annex
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