Examination of Witnesses (Questions 120-139)
NATIONAL HEALTH
SERVICE
26 MARCH 2008
Q120 Mr Davidson: The way in which
the spoils have been divided is just a manifestation of sheer
unadulterated greed, is it not?
Mr Nicholson: General practice
is based on independent businesses. They are not private; they
are part of the NHS.
Q121 Mr Davidson: What do you mean
"they are not private"? Of course they are private.
Mr Nicholson: For example, GPs
have access to the NHS pension scheme, so they are part of the
system, although the practices are independent businesses.
Q122 Mr Davidson: Private.
Mr Nicholson: They are not outside
of the NHS, they are an important part of it and there are lots
of examples around the country where the kind of public service
values that we would aspire to are absolutely aspired to by those
practices.
Q123 Mr Davidson: This is still sheer,
unadulterated, naked greed as far we can see, is it not? That
is a reasonable assumption.
Mr Nicholson: No, I do not accept
that it is unadulterated, naked greed.
Q124 Mr Davidson: Slightly adulterated
naked greed.
Mr Nicholson: No, I do not agree.
Q125 Chairman: Three times now you
have denied, to Mr Mitchell, to me and now to Mr Davidson, that
this has cost us £1.7 billion more. Would you please look
at page 7 and Figure 3? I must make this point. You have there
on the first line that the Department originally thought it could
deliver the contract for the amount shown under Gross Investment
Guarantee. You see that listed there, do you not?
Mr Nicholson: Yes.
Q126 Chairman: We now find that is
based on a wrong estimate and we see on the third line that the
Actual Spend by PCTs was £1.762 billion higher than the guarantee.
We can also see on the second line that in view of the higher
spend the Department allocated more, but even that was overspent
by £406 million.
Mr Nicholson: Yes.
Q127 Chairman: One can have as much
smoke and mirrors as one likes about this but this figure seems
to me to back up what the NAO have persistently told us, that
this cost you £1.76 billion more than you expected. It is
laid out there in Figure 3.
Mr Nicholson: It cost £1.8
billion more than we estimated. The estimate was based on incomplete
information. It is not that we spent £1.8 billion more than
the taxpayer was already spending. We spent £400 million
more than the taxpayer was already spending.
Q128 Chairman: Who made the wrong
estimate in the first place?
Mr Nicholson: Officials in the
Department.
Q129 Chairman: You.
Mr Nicholson: Officials in the
Department made the judgment but it is one of the arguments for
having a new contract because it was almost impossible to get
to the bottom of the old contract to understand what was happening
until way after the event and that is why we got ourselves into
this particular position here.
Q130 Mr Bacon: The Chairman has really
asked my first question about this £1.7 billion. My first
question was going to be: who is responsible for the miscalculation?
Mr Nicholson: I am the accounting
officer.
Q131 Mr Bacon: But when the miscalculation
was made were you the accounting officer?
Mr Nicholson: No.
Q132 Mr Bacon: Who was?
Mr Nicholson: Nigel Crisp.
Q133 Mr Bacon: When we look at Figure
12 on page 22, again a summary of the same figures as in Figure
3, we have the Gross Investment Guarantee and the Gross Investment
Guarantee is described in paragraph 2.7 as "... the minimum
that the Department had promised doctors it would spend on GP
services". That is what the Gross Investment Guarantee is
"... the minimum that the Department had promised doctors
it would spend on GP services". In Figure 12 we see that
over the three years the Gross Investment Guarantee is £18.740
billion, whereas the amount actually spent was £20.502 billion,
a difference of £1.762 billion. You seem to be saying that
£1.4 billion or so of that £1.762 billion was being
spent already. Is that what you are saying?
Mr Nicholson: Yes.
Professor Colin-Thomé:
One of the things where we did not have a good grasp is that 40%
of GPs are on a local contract called PMS. It was in those areas
where we had difficulty in ascertaining how much had been spent
on those contracts.
Q134 Mr Bacon: Why did you have difficulty?
Professor Colin-Thomé:
Because they were dispersed around the country and we did not
have a systematic way of picking that up until we did the review.
Q135 Mr Bacon: The PMS contract was
via the PCTs presumably, was it?
Professor Colin-Thomé:
Yes.
Q136 Mr Bacon: Simply because you
had PCTs dispersed around the country you could not ask each PCT
how much they were spending on their PMS contracts.
Professor Colin-Thomé:
Yes. We did that then and that is when we came up with the correct
answer; that is when we found the extra allocation of £1.4
million, because we realised we had spent it already.
Q137 Mr Bacon: Billion. People keep
saying million when they mean billion.
Professor Colin-Thomé:
Sorry, yes, £1.4. billion. We had spent that already on PMS.
Q138 Mr Bacon: The NHS spends, what
is it now, about £90 billion a year? What is the budget of
the NHS now?
Mr Nicholson: Yes, just over £90
billion.
Q139 Mr Bacon: Even for an organisation
with £90 billion, £1.4 billion is quite a lot of money
to lose, is it not?
Mr Nicholson: Yes. We did not
lose it. It was being spent on primary care.
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