Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 204 - 219)




  204. We did say earlier on we like some of the previous witnesses to come back to the table. I think in the interests of fairness and objectivity it may be appropriate if one of the witnesses from each of the groups that is with us now, can I suggest Miss Lemmon from the RCN and Mr Moss, as I assume you have the most knowledge, remain at the table. You may or may not wish to sit together, I do not know. Can I suggest that Mr Mason, Mr Rabin from Consort and Mr Flook, please. Can I suggest we run this for 15 minutes because we need to be away as well and you have certainly gone long over time. We are most grateful to you for your help. There are one or two issues that arose from the second session that are worth reflecting upon. Mr Flook, can I put to you the comments that were made by Mr Moss, who is sat next to you, although it was the chief executive's reference to the financial implication which, in a sense, reflected upon the point I made to you right at the start, it is only fair that you have the chance to briefly comment because, clearly, his thoughts in reference to the letter confirm some of the evidence I had put to me about the implications financially within your Health Authority area?

  (Mr Flook) I cannot recall the precise details of the letter, it is some time ago, but I am quite sure I had a hand in contributing to its draft. I will always defend my chief executive for being a tireless battler for extra resources for the local health economy, which is really what that was primarily about.

  205. You were using that as an negotiating position, is that what you are saying, would I be right in interpreting it that way.
  (Mr Flook) I would surprised if there was not an element of that.

  Chairman: I do not need to go any further on that.

Julia Drown

  206. It is very important we get this on the record. Was it a negotiating position when you wrote that because the financing stream was through PFI rather than a public sector scheme that the local Health Authority was going to have to find more money. You said earlier you did not think that was the case.
  (Mr Flook) I need to go back over the precise wording of the letter.

  207. Can we ask for a note on it?
  (Mr Flook) If that would be helpful.

  208. I would like general responses about communications, people not knowing where to go to, the fact there was no sensitivity about the fact that car parking charges would be imposed on staff and whether there lessons to be learned. Do you have any response you want to give to us?
  (Mr Mason) Car parking is always a very difficult issue, not just for staff but also for visitors to a hospital. In fairness the Trust was one of the last in the region to look at the imposition of car parking. To some extent the reason for that was that it was felt that it would be linked to the new hospital and therefore. Whether that was the right decision is debatable because unfortunately you then get the perception that car parking has been introduced on the back of a PFI hospital, where I think in fairness car parking would have been introduced in any event. If the hospital was publicly funded it would be charging for car parking as well. At the end of the day one of the problems we have is that despite creating extra car parking space on the site as a result of the new hospital there is always more demand for car parking than there is actually in terms of supply. Also, we have provided additional services in terms of security. They obviously need to be paid for. In terms of flexibility the honest answer is that if the Trust wanted to it could buy out the car parking charges, but the trouble with that is that you then lose that income stream which has either to be replaced with additional funding from the primary care groups or you have to reduce costs in another area. You come back to the difficulty, which is never capable of a straight forward answer, where do you want us to cut £325,000 from existing services to pay for the car parking?

  209. What about communication, about nurses not feeling involved in design, and so on, and they have nowhere to go?
  (Mr Mason) I was a bit saddened by some of the comments but in many ways it confirms the difficulties of making sure that everyone is aware of what is happening. I would ask you to consider the contrasting views that you have had.

  Chairman: With respect, it must be fairly challenging for any member of staff when all the senior management staff are there to give us a straight and honest answer. I think with respect I am not sure we got a full picture, do you accept that?

  Siobhain McDonagh: Both Andy Burnham and myself when everybody had gone we stayed behind and talked to nursing staff.


  210. I accept that.
  (Mr Mason) Invariably in an organisation of our size there are always going to be periodic issues about communication. I think if I put my hand on my heart I will say the way the car parking issue was handled could have been handled better. We were up against a very tight timescale and that meant there was limited consultation on the exact nature of the agreement. Memories differ about what was said by who and when. My recollection in answer to letters I had at the time as Finance Director that I was fairly honest about fact that car parking charges would come in. I accept the point has been made by a number of staff representatives in good faith. I am not saying they are saying something they do not believe is true, they are saying they were not communicated with adequately enough. I think with the benefit of hindsight we probably should have introduced car parking charges at the time everyone else did. Certainly the communication round the introduction could have been better than it was and undoubtedly there is a lot of ill-feeling that exists now, at the end of the day people do not like paying.

Andy Burnham

  211. That was the area I thought the sharpest disagreement was in between the two sides. Clearly in answer to the question I asked before, the outcome would have been the same, the PFI process had no impact. Obviously Mr Moss from UNISON said the opposite.
  (Mr Mason) The way I look at that is that I do not have the benefit of being here in 1994. My answer is obviously based on my perception of the situation since 1996. Robin may well be right, if it had gone ahead in 1994 there would have been a greater number of beds had it got public funding at the time. As far as I am concerned it did not get public funding at the time.

  212. Just on that point, health guidance from the Department of Health at that time were telling you different things about bed numbers, not because the PFI route whittled it out because of the nature of PFI?
  (Mr Mason) I believe the answer I gave to you is the correct one in terms of the position. From 1996 onwards the bed model would have been the same in terms of the evaluation of the business case because you have to look at the existing guidance, existing measures of performance and model it through. There is no reason why you would say that a publicly funded hospital would be any different to a privately funded hospital in terms of actual bed numbers. I accept what Robin says though, that if in 1994 approval had been given at that time it may well have been that the outlined business case would have improved the bed numbers. The fact is that it was not and since I have been with the Trust since 1996 there has never been the prospect that that outline business case would be funded it developed from that to the full business case.

Julia Drown

  213. We heard something about affordability and 33 beds being lost during the process?
  (Mr Moss) There are a number of things that happened as a result of affordability. We would argue that there were pressures on bed numbers and the bed modelling schemes as a result of that. What I did say very specifically was because of financial pressures at that time the hospital which was designed to have 50 single rooms was downgraded to something like 25 per cent.
  (Mr Mason) I know that time is of the essence so I will try and be as brief as possible, the position of the business case is very complicated because if you go back to 1996, when I joined the organisation, it had a very large financial imbalance, it was in deficit to the tune of £4.5 million and it was over committed on capital. That had nothing to do with the business case but everything to do with the development of services that were not fully signed up to by the Health Authority and that resulted in a poor working relationship. When I joined the Trust as Finance Director the first unfortunate task I had was to the highlight that it had the problem. We then had to do something about it and there were significant changes that occurred. Certainly the largest single reduction in nursing staff occurred at that point in time in response to a financial situation that could not carry on indefinitely. When you looked at that financial imbalance and you projected it through into the business case that effectively meant that the business case had to show a level of savings that was, first of all, to eliminate the financial deficit and then to pay for the higher cost associated with it. Those costs are high whether you have a publicly funded hospital or a privately funded hospital and in that sense I am in disagreement with the expert that was brought along at the end.

  214. Did you make extra savings because of the private sector borrowing?
  (Mr Mason) The key issue really is in terms of the economic cost to the NHS which is the same over a 60 year period. There is an issue in terms of how those figures appear in the accounts on an income and expenditure basis. There is a difference between how you account for things in the straightforward economic analysis and that does mean that PFI is more expensive in terms of the charge to the income and expenditure in the early years. We were one of the first schemes to benefit from national smoothing money and we got £750,000 to allow for that difference. In that sense we were held neutral because we were part of the first scheme.

  215. Is that smoothing money really just extra money or is that taken out?
  (Mr Mason) We get it over the life of the contract. It is not repayable, it is a benefit to the organisation so to some extent that allows for the different accounting issues between the PFI scheme and a publicly funded one. The important test is the economic cost to the NHS, and that was assessed as the same under the rules that apply.

Dr Naysmith

  216. We heard that there are staff shortages which have resulted in at least 10 empty beds in the hospital, obviously the Trust is not getting value-for-money, never mind best value. Interestingly, it raises the question of retained risk, who is actually paying for the fact that because of staff shortages you cannot make use of those beds and those services?
  (Mr Mason) The easiest answer would be where we do not have the staff available to provide safe levels of care we have to close beds, which is the only reason we do so. Obviously that is the Trust's responsibility and you would pay for that with a PFI hospital and you would pay for it with a publicly funded hospital, it is no different. One of the things that concerned me was that a lot of the comments I have heard in the second session have confused the situation because you are really looking at, is the hospital under pressure? Yes. Are those pressures acute in terms of staff? Yes. They are because of the demands being placed on the Trust not because we have a PFI hospital.

Dr Taylor

  217. Does the use of smoothing money beg the question and mean that PFI is more expensive when you add the smoothing money in?
  (Mr Mason) No, because you need to look at the economic costs and the economic evaluation and when you look at that they have the same costs to the NHS. What you do not want to do is look at complicating factors in terms of how do these figures appear in the accounts.

  218. I am trying to simplify it.
  (Mr Mason) You need to look at the economic costs, that is the key driver, and then how is it accounted for flows from that. You should make the decision based on economic analysis, and that is what was done. We had a tie in terms of economic analysis, there was then an assessment of the PFI, which from a trust management and local population point of view was the overriding factor, we needed a new hospital.

  219. They then had to give you extra money to make it possible?
  (Mr Mason) Smoothing money does not affect the economic analysis.

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