Examination of Witnesses (Questions 40-59)
DEPARTMENT OF
HEALTH, PARTNERSHIPS
FOR HEALTH,
PARTNERSHIPS UK AND
DR KOHLI
17 OCTOBER 2005
Q40 Ms Johnson: Just switching a
little bit, I want to ask you about the non-executive chairmen
you are appointing. The Report is indicating that there is a problem
with recruitment and at one stage one of the LIFTCos did not actually
have a chairman. What is the problem about recruiting somebody
to be a LIFT chairman?
Mr Johns: I do not think there
is so much of a problem. When the Report was written by the NAO,
there was certainly one area which had not appointed a chairman
of the LIFTCo and that changed afterwards. They have had a chairman.
The task for the LIFTCos is to make sure that they get a chairman
who has the appropriate skills to balance the public and the private
sectors on the boards of LIFTCos to make sure that fair play is
seen for both sides. I think the Report notes that inevitably
a lot of hard work was put into place to get the LIFTCos established
in individual areas and to get the individual schemes closed.
People's attention focused more on that and they did not focus
attention on getting chairmen. Since then we have chairmen of
both the LIFTCos and strategic partnering boards across the country.
Q41 Greg Clark: The funds committed
by central government are in the region of £195 million to
kick-start the initiative as I understand it. Why are they needed?
Mr Coates: First of all there
is the very simple incentivisation point to encourage economies
to think of new ways of doing things and one of the most successful
ways of encouraging change is to provide funding to help that.
More importantly, these things often require strategic change
and major investment at the beginning of the process to allow,
for example, land to be bought to build new facilities on. It
is as simple as that.
Q42 Greg Clark: If it is for land
for facilities to be built on, then it is not kick-starting, I
assume that would be the case in any rollout of a LIFT.
Mr Coates: I accept that point,
but I think the point I am trying to make is that when you have
a new initiative you do tend to meet similar obstacles around
why things cannot be done and one of them is that they do not
have the money to do X, Y or Z. So we try to anticipate that by
making sure money is available to help these changes happen.
Q43 Greg Clark: This is an important
point about the sustainability, is it not? This is kick-start
funding, then there may be a case to provide some funds to publicise
it, to get people to know about it. If the funds are actually
needed to buy the land to make it viable, then why can we assume
that this will not be necessary in any future rollout of the programme?
Mr Coates: The wave we have just
announced, the fourth wave, does include the same degree of enabling
money as the first three waves. The thing which has changed, perhaps
to get underneath your question, is that when we started the new
LIFT initiative the tendency was to keep central funds for these
things in terms of very large central budgets to facilitate change.
Since then these budgets have now all been devolved out to the
NHS and if similar programmes were envisaged we would expect local
economies to fund much more of the enabling work and our money
would be much more around the edges rather than the core of making
things happen.
Q44 Greg Clark: You changed the terminology
from "kick-starting" to "enabling". Does this
accept that actually these programmes are going to need funding
for the purchase at least of the sites on an ongoing basis?
Mr Coates: I personally do not
see any difference between "kick-start" and "enabling".
Q45 Greg Clark: There is no difference
between them.
Mr Coates: No. In my own terminology
it is to make things happen.
Q46 Greg Clark: If it has been kick-started,
it is now enabled and there is no reason at all for changing.
Mr Coates: I am sorry, I do not
see a difference. In my terminology enabling money is a way of
kick-starting initiatives.
Q47 Greg Clark: So it is all the
same.
Mr Coates: Yes, in my terms.
Q48 Greg Clark: Does the kick-starting/enabling
money continue then for the full rollout of the programmes as
far as you see it or is it just for these early phases?
Mr Coates: Just the early phases.
Q49 Greg Clark: According to the
Report you expect to get the money back.
Mr Coates: When we started the
process we did reserve the right to take money back to prevent
silly use of it all and unnecessary use of enabling money, but
the reality is that only a very, very small amount of money had
been taken back from the PCTs. The only one I am aware of is that
£½ million was taken from Newcastle, who said they had
no need for the money, and reallocated to Plymouth.
Q50 Greg Clark: How much money has
been taken back so far?
Mr Coates: £½ million.
That was re-allocated to Plymouth from Newcastle.
Q51 Greg Clark: Over the maturity
of the projects what percentage do you expect to be taking back?
Mr Coates: None. Having gone,
it has gone. We are not going to take it back at the centre.
Q52 Greg Clark: But you have taken
£½ million back to recycle.
Mr Coates: Yes, that was in 2004-05.
At the end of each year we do an application of funds test, how
much money has been spent, and at the end of 2004-05 Newcastle
volunteered that they had funds they could not expend on enabling
work. That money was re-allocated to Plymouth on the basis that
they had a need, but there is no programme to recover these funds
and now they have gone out to the NHS they will stay there.
Q53 Greg Clark: Just thinking about
the PCTs' additional rent subsidy, what is the total value of
subsidy paid by PCTs to LIFTs so far?
Mr Coates: I am afraid I cannot
answer that question. I do not have the information with me and
if you want it I shall have to give you a note I am afraid.
Q54 Greg Clark: Is it in hundreds
of millions, tens of millions, thousands?
Mr Johns: When you say "paid
in subsidies to LIFTCos"—
Q55 Greg Clark: Yes, paragraph 2.14
of the Report says that PCTs have sometimes had to subsidise occupants
of the LIFT premises in order to persuade them to go in.
Mr Coates: I think this is in
relation to pharmacies in particular. This is not a particular
power for LIFT, it is a power PCTs have generally to allocate
funds to support pharmacies in areas. I have no idea, and I am
not sure we collect the information centrally, how much is actually
paid out by PCTs in this area.
Q56 Greg Clark: Sir John, did your
investigators put a figure on this? This is a significant use
of public funds.
Ms Leahy: No, we looked at six
case studies in detail and in some of them subsidies were given,
though I am not sure that we knew at the time exactly how much
would be given. It was a decision in principle. My recollection
is that it was relatively small amounts of money compared with
the overall total.
Q57 Greg Clark: How big? How much
is "small" in these circumstances?
Ms Leahy: I do not have any specific
figures though I am sure that I could go and find them.
Sir John Bourn: We could, with
the witnesses, let the Committee have a note on that.[3]
Q58 Greg Clark: We have a situation in
which, in order to make the schemes work we need funds from central
government, kick-starting/enabling funds. We sometimes need funds
from PCTs to subsidise the operations, but we do not know how
much, all of which come from health expenditure totally. We have
a situation in which GPs, according to the Report and according
to Dr Kohli here, are not always enthusiastic about the costs
of the premises; they need to be persuaded to go in them. In fact
paragraph 2.14 of the Report seems to have quite an extraordinary
approach. It says "There is a common perception from these
groups of prospective tenants that the higher cost of LIFT, compared
to current rent payments, outweighs the benefits". But then
the next line takes us into a strange realm. The response to this
seems to be "The Department worked hard to address this through
creation of GP champions for local areas and by hosting forums
for GPs to understand the issues". Could it not be the case
that actually GPs do understand the issues and they do not think
these are terribly good value for money? Appointing champions
is not the way to address it: we need more effective scrutiny
of these costs.
Mr Coates: If GPs generally feel
that these facilities are too expensive, I think the result would
be that we would find it impossible to find tenants for the properties
over time. The evidence is that once negotiations open between
GPs and the PCTs about the benefits of a location and co-location,
GPs are persuaded that any additional cost is worth the investment.
Q59 Greg Clark: Is not the truth
that the reason they are persuaded is that they have to be bribed
in effect, using health funds which might be spent on waiting
lists. My own PCT has long waiting lists for various procedures
and I should be alarmed if this was actually being spent persuading
GPs to make a rational assessment of the costs, to decide that
the rent is unaffordable, that these limited funds are being used
to persuade people to go into bright shiny buildings rather than
getting tests for people who are on waiting lists.
Mr Coates: I do not see this as
a bribery issue; I see it as a case for enabling the health economy
to make changes.
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