Public Accounts CommitteeWritten evidence from the Department of Health

Q157 Stephen Barclay: Just a quick point. Following on from our hearing last year, can you tell us where the Treasury pilot is currently trialling the scope for renegotiating PFI savings and how much it has identified in savings?

David Flory: I am afraid that I cannot. I would need to provide you with further information.

Q158 Stephen Barclay: You don’t even know where it is?

David Flory: In terms of the pilot?

Stephen Barclay: Where is it being run?

Sir David Nicholson: Barking, Havering and Redbridge is one. I would be happier to get the numbers, but it showed that not insignificant savings could be made.

Chair: I have to tell you, knowing a little about this, that what it showed is that if you cut the services, you save money. So they cut the services and have renegotiated the contracts on various services and have taken them out of those contracts and put them back on the trust, so I don’t think that it has been particularly successful.


Provided by Brian Saunders

The Treasury pilot, which concluded with the publication in July 2011 of the document Making savings in operational PFI contracts, was conducted at the Queen’s Hospital, Romford, which is part of the Barking, Havering and Redbridge NHS Trust. The pilot concluded that annual savings of around 5% of the annual unitary charge were achievable. Following the publication of the Treasury document, DH arranged information sharing sessions with other trusts with PFI schemes. The Department is currently following up these trusts the amount and extent of savings subsequently achieved in operational PFI projects.

Q159 Stephen Barclay: The specific issue that I am interested in is what impacts had been found in terms of life-cycle costs.

David Flory: I haven’t got that.

Sir David Nicholson: We’ll give you a note.

Stephen Barclay: You appreciate that life-cycle costs are the issue in terms of maintenance costs being charged up front for three whiteboards, because that is the duration of the contract, rather than one. It strikes me as such a bread-and-butter issue at the heart of PFIs. If you are running a pilot on an issue related to managing costs and it has been running for over a year, it seems a no-brainer not to address it.

Chair: I wish it had produced real savings. I don’t think it has. It is just so that you can cut services and save money.

Stephen Barclay: That’s not renegotiation.

Chair: It’s using renegotiation to cut services and therefore save money.


Provided by Brian Saunders

The Treasury pilot specifically considered effective management of existing contract terms, optimising the use of asset capacity and reviewing the specification of soft services, rather than life cycle costs. The report commented that life-cycle and maintenance costs of the property are bound up with the asset design, construction and management risk transferred to the Project Company at the outset—as such these costs are relatively inflexible without changes to the risk allocation of the project.

The department is however examining ways to look at this issue.

Q191 Stephen Barclay: This is a question that I have raised before. Could we have guidance from your Department that confidentiality clauses should have an express wording within them that they do not apply to whistleblowers? At the moment, although PIDA—the Public Interest Disclosure Act—means that you cannot enforce against whistleblowers, the legal risk of compliance within PIDA sits with the whistleblower. What is happening is that there is a chilling effect on whistleblowers, because they think that they cannot disclose and it is for them to prove that they fall within PIDA. I think it would be very helpful if we could have some clear guidance from the Department such that confidentiality clauses expressly exclude whistleblowing.

Sir David Nicholson: I am pretty sure that we have already done that, but I will send you a note.


Provided by Tracey Eckersley

The Department’s policy on this has been clear for a number of years. Health Service Circular 1999/198: The Public Interest Disclosure Act 1998—Whistleblowing in the NHS, issued on 27 August 1999, stated: “Gagging clauses in employment contracts and severance agreements which conflict with the protection afforded by the Act will be void”. It also went on to state that: “Every NHS Authority … should prohibit confidentiality ‘gagging clauses’ in contracts of employment, and compromise agreements which seek to prevent the disclosure of information in the public interest”.

The Department reiterated this on 11 January this year, in a letter from Sir David Nicholson to Chief Executives and HR Directors of NHS Trusts, PCTs and SHAs, titled Compromise Agreements and the Public Interest Disclosure Act 1998. In the letter specific reference is made to HSC 1999/198, and the letter also states that: “Our view is that where an agreement is reached that an individual will withdraw or agree not to make a complaint about a specific matter to certain bodies, the compromise agreement should make clear the right to make a protected disclosure is not affected. It is unacceptable to require an employee not to make any ‘further’ complaint or grievance.”

“If any further complaint or grievance were in fact a protected disclosure, then any provisions within a contract or compromise agreement purporting to prevent that would be deemed void under the Public Interest Disclosure Act. Our concern however, is about the potential deterrent effect of including such clauses in either contracts or compromise agreements.”

“I would therefore ask you to satisfy yourselves that your organisation’s policies are in line with HSC 1999/198.”

A similar reminder was sent to NHS Foundation Trusts by Monitor.

1 October 2012

Prepared 31st October 2012