Examination of Witnesses (Questions 240
- 259)
THURSDAY 1 DECEMBER 2005
SIR NIGEL
CRISP, MR
JOHN BACON,
MR RICHARD
DOUGLAS AND
MR ANDREW
FOSTER
Q240 Dr Taylor: I know that the local
one has a 12% surcharge when the bed occupancy rate goes above
90%, which seems an extraordinarily short-sighted contract to
have agreed to when you knew there were fewer beds. If that is
so across all six, the expense from a badly agreed contract is
absolutely amazing. I would like to make sure that other ones
in the future do not have that sort of contract.
Mr Douglas: I am sorry to have
to provide you with a note again, but I will have to.
Dr Taylor: Above 90% occupancy and there
is a surcharge which I am told is at the rate of 12%.
Q241 Dr Naysmith: There is another
interesting little figure in the response about PFI and that is
it shows the share of NHS capital spending to be financed via
PFI as 29.4% in 2006-07 and it is going to decline to 23.5% the
following year. Does that mean that there is going to be a downturn
in the importance of PFI funding?
Mr Douglas: No, it has nothing
to do with a downturn in the importance of PFI funding.
Q242 Dr Naysmith: What does it mean
then?
Mr Douglas: It may well be something
to do with the build up of spend on the capital side of the national
programme for IT. These numbers can change quite significantly
from year to year as proportions. There is no planned decline
in there.
Q243 Dr Naysmith: It will reflect
some decisions that have already been made for future expenditure?
Mr Douglas: Yes.
Q244 Dr Naysmith: Possibly on IT,
you are saying?
Mr Douglas: It may be on IT, I
would have to check.
Q245 Dr Naysmith: Some of that is
PFI as well, is it not?
Mr Douglas: Sorry?
Q246 Dr Naysmith: Is none of the
IT PFI?
Mr Douglas: The national programme
for IT is not.
Mr Bacon: One or two of the earlier
PFI schemes included IT as part of the PFI but we have moved away
from that now. The national programme is all pure public capital.
Q247 Dr Naysmith: Perhaps you could
just check that, if it is possible, and let me know if it is IT
spending or if it is projected future building costs.
Mr Douglas: The PFI capital spend
continues to increase, it is just the extent to which it is a
proportion of the total capital spend. I will look back at the
figures.
Dr Naysmith: Thank you.
Q248 Chairman: Just a few questions
more, not long now. How much of the NHS capital programme will
be financed by the Credit Guarantee Finance in future?
Mr Douglas: We have got two schemes
at the moment where we are piloting Credit Guarantee Finance,
which is Leeds Oncology and Portsmouth. The Credit Guarantee is
part of a cross-government Treasury led initiative. Until the
results of those two have been evaluated across government I could
not say whether that will extend further than that or not. It
has been done as a pilot, we are looking at how it works with
the Treasury and a decision will be made after that.
Q249 Chairman: Given that we are
led to believe it is much cheaper than private finance, presumably
if the pilots do not show anything untoward it is likely that
this could be a way of increasing investment in capital in the
NHS?
Mr Douglas: That will be a decision
for the Treasury. It is a Treasury led scheme that we are operating
two pilots on.
Chairman: I cannot tempt you down this
road at all, Mr Douglas. There are many other questions that flow
from this in terms of public finance.
Q250 Anne Milton: Can you explain
what it is, I am afraid I do not fully understand it?
Mr Douglas: Effectively, what
happens is the public sector, or the Department, lend money to
the private sector. So we lend part of the money for the scheme
to the private sector. We lend it to them at rates they would
face in the market, so they do not get a benefit from it, but
we can borrow the money at lower rates through the Treasury. In
effect, the private sector does not get the benefit from it, we
get the benefit from it. Actually, the Treasury gets the benefit
from it.
Q251 Chairman: The Treasury may get
the benefit from one or two Parliamentary Questions on and around
this subject. I realise it is not for you. I understand you are
about to make some form of statement later today about the issue
of deficits, is there anything you would like to tell the Committee
now?
Sir Nigel Crisp: Yes, thank you
for that. I thought it might have come up earlier. In answer to
a Freedom of Information request we will be publishing a list
at the half year position this year, the six month position, of
the forecast for end of year by every organisation in the country.
The position is showing something of the order of a £600
million projected deficit at the six months' position, that is
about the same as where it was last year, and you will see the
distribution with all of that being in 30% of the organisations.
I will also be saying something I did say earlier today, that
in those organisations that have the biggest difficulties we will
be putting in more support and help in terms of getting them sorted
out. I just did not want that to go by without actually mentioning
that to the Committee.
Mr Burstow: Are we allowed to ask some
questions about this little statement we are now having? I appreciate
the figure has been mentioned, and that is very helpful, but not
to be able to ask anything about it is rather puzzling.
Chairman: I am not saying that at all.
If Nigel is comfortable with that, he can answer.
Q252 Mr Burstow: Maybe we need the
nudge and the wink. Certainly two or three weeks ago we asked
for the reports that you receive from SHAs so that we could get
ourselves that information, so it is useful that it is coming
out of Freedom of Information. You said that 28% of organisations
at the end of the financial year were in deficit. What proportion
of organisations on the basis—
Sir Nigel Crisp: About the same.
Q253 Mr Burstow: It is still 28%.
It has ballooned to £600 million, has it?
Sir Nigel Crisp: It is almost
exactly the same position as it was this time last year. In our
experience, forecasts are always pessimistic. It is looking at
about that level. It is paying back the £250 million from
last year and it is also dealing with the overspend from last
year.
Q254 Mr Burstow: Part of it is this
accumulative deficit, but on top of that there is another £300
or £400 million.
Sir Nigel Crisp: That was the
rate that it was spending at before. It is about the same position
as last year.
Q255 Mr Burstow: The other thing
you say in response to the PEQ is that you have improved the monitoring
arrangements and you are very cognisant of the fact that NHS organisations
tend to be very pessimistic in-year about what is happening. Given
that you have been fine tuning and trying to improve the monitoring
to avoid that, are you therefore able to say that this is a harder
figure? Presumably you will have been working harder to get a
better fix and surely this is a harder figure than last year's
figures?
Sir Nigel Crisp: I think it probably
is, yes.
Q256 Mr Burstow: So this is a more
realistic assessment compared with last year.
Sir Nigel Crisp: Mr Douglas might
comment on that.
Mr Douglas: What we try to do
in terms of the monitoring is focus down very much on bringing
in the individual strategic health authorities and really going
through the figures with them in some fine detail. The £600
million forecast reflects what individual NHS Trusts and PCTs
will be putting into our system. It is individual organisations
saying that. We have a conversation with the strategic health
authorities and at that point you get behind the numbers a lot
more and understand better what action could be taken to bring
them back. There is a degree of pessimism always at certain times
of the year, particularly people will tend not to declare surpluses
early on because the history they were used to years ago was that
someone would take the surplus back off them if they did. Although
it may be a harder figure than last year's figures, we still expect
to get this £600 million down to something no worse than
the position we ended last year in.
Q257 Mr Burstow: So you think you
will end up with a deficit of no more than £250 million still?
Is that what you are telling us at this stage six months in?
Sir Nigel Crisp: What we agreed
earlier in the year, again on the same basis that we talked about
before about the pace of change, was we would agree with organisations
control totals for what they would have to achieve at year end,
which was either zero or, in some cases, a higher figure. Our
current expectation on plan is to be £200 million in deficit
which would be covered by savings elsewhere.
Q258 Dr Taylor: Does this statement
you are going to make give us any idea of the number of trusts
that have to make plans so that they are in balance in 2006-07?
I am sure this must be higher than the 28% because there is a
huge threat to community hospitals, for example, around the whole
country.
Sir Nigel Crisp: All trusts have
to be in balance in 2006-07.
Q259 Dr Taylor: How many are having
to make plans to save £20 million or £30 million, like
the two that I know of?
Sir Nigel Crisp: Everyone has
to make plans and in some cases those plans may seem tougher than
in other cases because you have got to achieve balance by the
end of the year.
| 
