Supplementary memorandum submitted by
the National Audit Office
During its hearing on the National Audit Office's
Report "Innovation in the NHS: Local Improvement Finance
Trusts" (HC 28, Session 2005-06) on 17 October 2005, the
Committee asked the National Audit Office for additional information
and analysis which the Comptroller and Auditor General offered
to provide in a supplementary report. The following memorandum
provides the information and analysis requested by the Committee.
Question 57 (Mr Greg Clark): Primary Care Trust
Mr Clark asked witnesses about the extent of
subsidies paid by the Primary Care Trusts (PCTs) to tenants in
the NAO's six case studies (paragraph 2.14 of the Report). The
NAO offered to quantify the extent of subsidies paid in the six
LIFT case study areas.
In four out of six of the case studies, the
PCTs did not pay any subsidies to tenants or tenant organisations
to encourage them to take space in the LIFT developments. Two
did pay subsidies as follows:
(i) Ashton, Leigh and Wigan PCT has subsidised
Wigan Metropolitan Borough Council (the Wigan Council). These
organisations operate a joint financing pot for some joint initiatives.
The Wigan Council space in the Lower Ince development is funded
from the pot from April 2005 until March 2007. A subsidy of £839,000
will be paid by the PCT over this period. From thereon the Wigan
Council will pay for the space from its central funds. The PCT
agreed that the pot could be used to fund Lower Ince to encourage
the Wigan Council to take space in the building, which it otherwise
could not have afforded. Wigan Council was thus able to be involved
in the project from its inception with a two year window to find
the money that it needed to fund the tenancy.
(ii) Newham PCT in East London agreed to
give a subsidy of £7,500 per annum for two years to Care
Navigators to use space in the Manor Park centre. The Care Navigators
are employed by Newham University Hospital National Health Service
(NHS) Trust. They help people with long term health conditions
access a range of health, social and voluntary care services,
tailored to the individual's particular needs, to help them manage
their conditions. The Care Navigators also assist with referrals
around the various professionals located within the LIFT building.
Question 75 (Mr Jon Trickett): Recent primary
care developments and comparators to LIFT
Mr Trickett asked how LIFT compared with publicly
funded primary care facilities. No public sector comparators are
prepared for LIFT schemes. The NAO agreed to provide information
on schemes funded directly by the NHS for comparison with LIFT.
The NAO has produced the list below from the
most detailed available information held centrally by the Department
of Health (DoH). It gives information on comparable developments
(ie one stop primary care centre schemes) between 2000 and 2004,
prepared by the Estates division of the Department of Health,
and has analysed this by the different routes under which they
were procured. The funding route for many developments is not
known. The list shows that 31 out of 588 developments are known
to have been publicly funded.
A summary of the total developments for each
Strategic Health Authority and funding mechanism, where it is
known, is provided in Table 1.
TYPE OF FUNDING FOR PRIMARY CARE PREMISES
|Strategic Health Authority
||Total number of developments 2000-04
||Type of development ||
|North East London||8||0
|South East London||6||0
|North Central London||7
|North West London||11||0
|South West London||15||0
|Kent and Medway||1||0
|Surrey and Sussex||21||0
|Birmingham and the Black Country||28
|Coventry, Warwickshire, Herefordshire and Worcestershire
|Shropshire and Staffordshire||31
|Cheshire and Merseyside||33
|North and East Yorkshire and Northern Lincolnshire
|Cumbria and Lancashire||14
|Avon, Gloucestershire and Wiltshire||25
|Dorset and Somerset||14
|South West Peninsula||22
|Hampshire and Isle of Wight||19
|Leicestershire, Northampts and Rutland||22
|Northumberland, Tyne and Wear||34
|County Durham and Tees Valley||29
|Norfolk, Suffolk and Cambridgeshire||44
|Bedfordshire and Hertfordshire||16
1 Third party developments are those where a private contractor
develops primary care premises on behalf of GPs or PCTs.
2 Other & not known includes: (i) grants to owner-occupier
GPs who have borrowed to purchase, build or refurbish premises;
and (ii) improvement grants including for extensions and alterations
to comply with the Disability Discrimination Act.
The NAO asked each of the PCTs within the six LIFT case study
areas to supply details of comparable publicly funded primary
care facilities. None of the PCTs could identify any such developments.
The Sandwell LIFT scheme, however, was able to provide comparable
data between a third party scheme that was developed concurrently
with a LIFT scheme. The third party development known as the Lyng
Centre for Health and Social Care (the Lyng Health Centre) opened
in June 2005. It replaced the Cronehills Health Centre and is
a one stop primary care centre. The most comparable LIFT development
is the Oldbury Health Centre which is the largest of the three
first tranche LIFT developments in Sandwell.
A cost comparison of Oldbury Health Centre and the Lyng Health
Centre is shown in Table 2.
COST COMPARISONA LIFT DEVELOPMENT AND A NEARBY
THIRD PARTY DEVELOPMENT
Oldbury Health Centre (LIFT)
|Lyng Health Centre (Third Party Development)
|Capital construction cost (£ million)
|Rental charge £/m2||229
| construction and finance
| facilities maintenance1
| partnering/LIFTCo management2
| recovery of bid costs3
1 Maintenance in LIFT is inclusive of all maintenance across
life of building, whereas under a conventional lease only scheduled
maintenance is included.
2 Partnering and LIFTCo management costs relate to business
set up costs.
3 LIFT bid costs reflect that an exclusive contract for 25
years has been awarded to the LIFTCo. The rules on the number
of schemes over which bid costs could be spread mean there will
be no bid costs from scheme 7 onwards. This cost could otherwise
be spread over developments for 25 years.
It is not possible to generalise from one example but the
comparison demonstrates some interesting points. In this case
construction and finance costs were 15% less per square metre
in the LIFT development than in the third party development. The
rental charge, adjusting for lifecycle maintenance costs which
are not included in the Lyng development, was around 7% higher
than in the third party development. Some differences between
the LIFT Lease Plus Agreement (LPA) and a conventional lease could
not, however, be taken into account in the above analysis. Unlike
a conventional lease, LIFT rentals include all maintenance and
repairs and can only be increased annually by the Retail Price
Index (RPI). The capital costs associated with maintaining LIFT
premises are, therefore, spread evenly over the 25 year contract
Comparisons between rental costs under conventional leases
and the Lease Plus Agreement in LIFT are also problematic because
of the different risk profiles. For example, in LIFT the tenants
enjoy a greater degree of sanction against the LIFTCo than they
would against a third party developer. In the event that the LIFTCo
fails to carry out maintenance, the tenants can carry out the
necessary work themselves and deduct the costs from the rent.
Similarly, if an area of the building is unavailable for use the
tenants are able to make deductions from the rent for that period.
Moreover under a conventional lease, the tenant takes on the risk
that defects appear in the building and that maintenance is more
expensive than predicted.
Question 93-97 (Mr Richard Bacon): Population information
Mr Bacon referred to the PCT population data provided in
Appendix 2 (p 38) of the Report by the Comptroller and Auditor
General. This data refers to the total number of patients registered
with the PCTs in the LIFT case study areas, as set out in their
initial Strategic Service Development Plans. Mr Bacon asked whether
the NAO could also supply for each case study scheme details of
the number of patients registered with LIFT General Practitioners
Data from the LIFT case studies (broken down by individual
PCTs within the scheme where applicable) as at January 2005 is
presented in Table 3.
REGISTERED PATIENTS PER LIFT SCHEME
|Patients registered with GPs in|
Tranche 1 LIFT premises
|% of patients served by GPs in Tranche 1 LIFT premises
|East London LIFT||752,924
|Tower Hamlets PCT||230,000
|City & Hackney PCT||210,000
|East Lancashire LIFT||504,602
|Burnley, Pendle & Rossendale PCT||252,132
|Hyndburn & Ribble Valley PCT||115,000
|Blackburn with Darwen PCT||137,470
|Ashton, Leigh & Wigan LIFT||301,419
|West Bromwich & Wednesbury PCT||121,445
|Oldbury & Smethwick PCT||110,801
|Rowley Regis & Tipton PCT||88,102
|Barking & Havering LIFT||418,518
|Barking & Dagenham PCT||171,000
1 While both Tower Hamlets and City and Hackney PCTs were
partners in the East London LIFT scheme, the initial development
was one building in Newham.
2 The Birmingham Road scheme and the Whiteheath schemes in
Sandwell relocated a single handed practitioner and a small practice
both of which had smaller patient list sizes than other case studies.
The focus of these schemes was less on GP provision and more on
provision of wider primary care services.
Question 97 (Mr Richard Bacon): Cost of LIFT accommodation
relative to total PCT funds for primary care accommodation
Dr Kohli, a GP working in the Manor Park LIFT building in
Newham, East London, was invited by the Committee to appear as
a witness following concerns he expressed to members of the Committee
during a visit to the health centre about the affordability of
LIFT developments. Dr Kohli submitted to the Committee a written
statement and an analysis of the estimated 2005-06 cost of rents
in LIFT premises per registered LIFT patient and rental costs
in other primary care buildings per registered patient, based
on information provided by Newham PCT (Ev 17-18).
Mr Bacon asked the NAO to prepare an analysis on a similar
basis for all the case studies covered in the Report. Table 4
sets out comparable information for 2004-05 as it was difficult
to obtain estimated 2005-06 information for the other PCTs.
AVERAGE ANNUAL PRIMARY CARE RENT PAID PER PATIENT VERSUS
AVERAGE RENT PER LIFT GP PATIENT
Actual PCT funding for primary care accommodation 2004-05 (£)
Average annual cost per patient (£)
PCT funding for GP premises in LIFT buildings in 2004-05 on a annualised basis (£)
Average annual cost per LIFT
GP patient (£)
|East London ||10,708,000
|East Lancashire ||2,815,000
|Ashton, Leigh & Wigan ||2,081,000
|Barking & Havering3||3,432,000
2005-06 figures for Newham provided to PAC by Dr Kohli4
1 Patient numbers are derived from Table 1 of the C&AG's
memorandum, Ev 19.
2 Column D details the annualised PCT funding of GP accommodation
for tranche one LIFT buildings for 2004-05. The LIFT funding has
been annualised as, in some instances, the buildings only opened
during 2004-05. LIFT funding is comprised of the annual rental
charge payable by the PCT for premises and forms part of each
PCT's overall primary care accommodation funding as detailed in
3 In 2004-05 the Barking & Havering LIFT building was
fully occupied by PCT staff providing clinic services.
4 Dr Kohli provided the Committee with 2005-06 figures for
Newham after discussion with the PCT (paragraph 3.1 above). The
PCT revised those figures in the light of more up to date information.
It is difficult to draw conclusions from the above analysis
as LIFT premises are new, purpose built and in excellent condition
and generally provide more useable space than the existing stock
of PCT premises, which are typically much older and in poorer