Examination of Witnesses (Questions 140-159)
DEPARTMENT OF
HEALTH, PROFESSOR
PETER HUTTON
AND DR
ANTHONY NOWLAN
26 JUNE 2006
Q140 Mr Bacon: May I start by asking
the Treasury Officer of Accounts how much the Treasury has now
agreed to pay towards the National Programme? How much has been
irrevocably committed in terms of funding?
Ms Diggle: I have to turn to the
NHS and ask Sir Ian for that.
Q141 Mr Bacon: It is the Treasury
which is supplying the money, is it not?
Ms Diggle: As part of the overall
settlement to the NHS, yes.
Q142 Mr Bacon: How much has been
committed irrevocably to the programme so far?
Mr Granger: I do not have that
exact figure right now.
Q143 Mr Bacon: You do not know? You
do not know? We have been told that this programme is going to
cost £2.3 billion, we have been told it is going to cost
£6.2 billion, we have been told it is going to cost £6.8
billion and we have been told it is going to cost £12.4 billion
or £12.6 billion. Lord Warner, the Minister said only three
weeks ago on 30 May that it was going to cost £20 billion
and you still cannot tell this Committee how much has actually
been committed to it.
Mr Granger: We have under-spent
by approximately £700 million.
Q144 Mr Bacon: That was not my question.
My question was not: how much have you spent? My question was:
how much have you committed? How much is there in terms of secure
funding?
Mr Granger: I am sorry. I now
understand the question. You have said it would cost £30
billion; if we want to add another number.
Q145 Mr Bacon: If you would concentrate
on answering my question rather than saying what I have said,
that would be very helpful because we do have a limited amount
of time. What I am interested in is how much secure funding there
is.
Mr Granger: The committed expenditure
for the programme is just over £12 billion as set out in
the NAO's Report.
Q146 Mr Bacon: So as far as you are
concerned the Treasury has committed to that £12 billion.
Mr Granger: Some of that money
is committed through contracts—approximately £9 billion—and
the balance is committed through core NHS funding.
Q147 Mr Bacon: How much has actually
been spent so far?
Mr Granger: Approximately £1.5
billion.[11]
Q148 Mr Bacon: What is the difference
between the £654 million which is referred to in paragraph
1.22 and the £1.5 billion you have just mentioned?
Mr Granger: Some of that is central
administration cost, some of that is forward payments to contractors
covered by an instrument I am sure you are familiar with, letters
of credit from their banks and so on.
Q149 Mr Bacon: Is it possible you
could send us a breakdown of that £1.5 billion with its major
headlines, so to speak?[12]
Mr Granger: I should
be delighted to do that.
Q150 Mr Bacon: Particularly of the
difference between the £654 million referred to in the Report
and the £1.5 billion you have just mentioned. That would
be very helpful. Sir John is it fair to say that you regard one
of the central strengths of the whole contracting process as the
fact that there is no payment unless there is delivery, so there
is no advance payment; it is really payment by results, to coin
a phrase? Is it fair to say that you regard that as a main strength?
Sir John Bourn: Yes, that is fair.
Payment should be by results achieved.
Q151 Mr Bacon: Mr Granger you would
presumably basically agree with that.
Mr Granger: Yes.
Q152 Mr Bacon: So you would not make
advance payments.
Mr Granger: There is a difference
between an advance payment which is covered by a letter of credit.
Q153 Mr Bacon: Do you mean a letter
of credit from a bank?
Mr Granger: Correct.
Q154 Mr Bacon: So you would not make
any payments other than those covered by a bank so you were guaranteed
by a commercial bank that the money would come back to you?
Mr Granger: Correct.
Q155 Mr Bacon: Mr Shapcott, you mentioned
at the press conference the week before last when the Report was
published that you had seen a cost benefit analysis of each part
of the programme which analysed all the different aspects and
that there was a gap between the identifiable costs and the identifiable
benefits. I am not sure whether it was done by you, but it was
probably done by the Treasury. How big was that gap?
Mr Shapcott: Yes, investment appraisals
were carried out for all the big contracts produced by the Department
of Health for the Treasury.
Q156 Mr Bacon: How big was the gap?
Mr Shapcott: I do not have the
exact figures here.
Q157 Mr Bacon: How big was the gap?
Mr Shapcott: Certainly substantial.
Q158 Mr Bacon: How much: £10 million,
£100 million, more than £1 billion, £2 billion?
It was the Treasury's analysis was it not?
Mr Shapcott: They are the Department's
papers.
Q159 Mr Bacon: Sir Ian, what was
the gap?
Sir Ian Carruthers: May I ask
Mr Jeavons?
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