Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 220 - 239)



  220. What is holding up the 15 that are ready to go?
  (Mr Douglas) I do not think there is anything holding up those 15 that are ready to go. I have not got the details of the 15. Some of those will already be under construction; this is just that there are 15 that are between the point of the contract being signed and the hospital being up and operational, so they will be in various stages.

  221. Industry tells me that you are not awarding any PFI contracts at the moment until these discussions with the trade union are over, so tell me when you last let a contract.
  (Mr Douglas) I have not got the date with me of when we last let a contract. We have not agreed any of the major contracts since we have been piloting this scheme and that was deliberate. Until we have decided how this is going to work, then we would not want to sign contracts again.

  222. So, if my information is correct, it has been held for some months and industry tells me it is likely that it is going to be held for some months more. That must have an effect on the hospital building programme, must it not? That is what industry again is telling me.
  (Mr Douglas) We are still aiming to meet the targets that we set ourselves for delivering the hospital building programme.

  223. Well, industry tells me that, unless you let contracts fairly quickly, no new hospital—no contracts that are awarded—will open in the lifetime of this Parliament. Are they right?
  (Mr Douglas) I am not totally sure that is the case—

  224. That is pretty worrying.
  (Mr Douglas)—But it is probably likely. I am trying to think of the build period for a hospital. For a major hospital you are talking quite a long build period.

  225. I know that. That is exactly what industry is saying to me: if you do not get your finger out, you will not see new hospitals getting off the ground.


  226. Perhaps we could have a note on where you have got to with this?
  (Mr Douglas) Yes.[4]

Mr Cousins

  227. I have some concern about this because a major hospital redevelopment, one of the very biggest, is in my constituency. It was in the first tranche of announcements after 1997 and not a brick has been laid, although some precursor schemes have, in fact, been carried out using conventional finance. Now, you have just told my colleague, Mr Mudie, that while you are piloting the secondment of staff rather than the transfer of staff, you are not letting any—
  (Mr Douglas) The new ones are not being signed. This will be resolved very soon.

  228. How long has this been going on?
  (Mr Douglas) I believe we started negotiations in September/October.

  229. And how long could you expect it to go on?
  (Mr Douglas) Again, personally, I do not think I have the information to be able to tell you.

  230. Has this been reported to Parliament?
  (Mr Douglas) It was discussed, I understand, extensively at the Health Select Committee with the Secretary of State.

  231. Just very recently?
  (Mr Douglas) The Health Select Committee did an inquiry into the use of the private sector in the NHS so I assume this was picked up on within that.

  Mr Cousins: I would appreciate more detail on all of this.

  Chairman: We would like to hear from you perhaps in a note where we have got to on the procurement side, but let us now turn to the Gateway review programme.[5]

Mr Beard

  232. As a result of those questions, is the problem negotiating with the trade unions or negotiating with the contractors on these terms?
  (Mr Douglas) First of all, I would not necessarily like to talk about a "problem" here. What we are trying to do is create a structure that works which partly involves discussions with the unions, partly with the private sector, and partly involves bringing those two together and getting a management of the contract structure that actually works.

  233. I understand that is the aim but is it the position that the contractors are saying that they are not willing to sign on the dotted line if those are the conditions?
  (Mr Douglas) No, it is not. Industry has generally been very supportive in trying to help us design this scheme.

  234. So that is not the case?
  (Mr Douglas) Yes. They have been very helpful in trying to help us design it. They are not being difficult with us.

  Chairman: We must move on to the Gateway programme.

Mr Beard

  235. You say in your submission that NHS Estates are using the Gateway review process and will apply lessons learnt from this experience. How many reviews have been undertaken?
  (Mr Douglas) They have done, I think, 20 Gateway reviews and have helped the OGC in working on those reviews.

  236. Alongside DHSS?
  (Mr Douglas) Yes.

  237. What sort of lessons have emerged?
  (Mr Douglas) There are two elements: one is the clarity of accountability at a senior level within the organisation—the point Duncan made earlier on—making sure that procurement and major investments are focused on at board level and you have someone responsible at board level. The other area where we have not probably done as well in the past as we should have done is in post-project evaluation, making sure that after the event we have a proper, full and formal evaluation.

  238. You mean passing the message on from performance?
  (Mr Douglas) Learning the lesson. Saying, after the event, "Look at what we did right. Did we achieve all the objectives?". It is always written in formally, but we have probably not been as rigorous in that as we should have been.

  239. That does not say much on the likelihood that the lessons are passing from your department to others, does it?
  (Mr Douglas) I think what we are doing in all of this is learning how to do things better all the time. We are not saying that nobody ever did anything on this or we never learnt any lessons; we are saying that the formal standing back and the formal look at it was not done as well as we thought.

4   See Ev 63-68. Back

5   See Ev 63-68. Back

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