Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 340 - 359)



Dr Naysmith

  340. Can I ask just a quick factual question. Is not one of the barriers to that that sometimes, say, the cleaning contracts, the staff are not dedicated to the National Health Service, they can be cleaning an office one day and cleaning somewhere else the next day, and then doing a hospital? That does happen occasionally, does it not, or am I completely wrong about that; I have heard it said it does?
  (Mr Rose) It will only happen if we have a particular shortage in the contract, or if people are moving, but if we are running a contract, however many services, we will have a dedicated team of people from blue-collar right up to management, who we hope will be there for the length of the contract, unless they are promoted onto other jobs.

  341. Just to make clear what I am saying, in the National Health Service at the moment there are cleaners and ward assistants of various sorts who tend to be assigned to one particular ward or an area of the hospital; is that not true?
  (Mr McGuire) It would be the ideal, but, again, because of the recruitment difficulties that we have got, it is often the case that we move people round, and there is inconsistency in the teams, particularly in clinical areas. That would be the ideal.
  (Mr Turner) We do not have the same recruitment problems in Bradford, so, more or less, the domestic on the ward is there permanently and part of the ward team, but we do not have the same problems that they have in Leeds with recruitment.

Sandra Gidley

  342. A question to Mr Rose. You appear to rule out extending the TUPE type provisions to new staff unless the costs are built into the contract price. Now that might suggest that you can only get efficiency improvements from staff conditions and changes, you will not be able to get the delivered returns if you carry on with the cheaper provisions. Where are your efficiency savings going to come from?
  (Mr Rose) Can I make it clear that the comment about the costs being included in the contract is making it clear that the client has to accept that going down that route, which we are more than happy to accept, may result in a change to the overall pricing of the contract, for every bidder, it is not just one company, it is every bidder, because there are going to have to be different costs built in than the client at present prescribes. We are paying local rates, it is because the client wants that in the contract, not because we do it for our own benefit. The efficiencies; the way we want to show that we can do things better, the way we want to prove we can do things better, is through introducing efficiencies through different practices, that is ways of service delivery, through different techniques which we are developing, through innovation which comes, which we have found maybe in another country in the world, where we can bring it into a particular Trust. And we believe that we can continue to contract with the public sector and to bring those efficiencies, against the background of paying staff at those rates. We do not want to win contracts on the basis that we do not pay, because that is not our basis.

  343. You talk in very vague terms, it sounds like an NHS consultation document, I have to say; you cannot argue with any of that, there are no specifics there. Have you got some specifics as to the sort of efficiency savings and innovative thinking that has resulted from this? Because it is all sounds very fine, but what does it actually mean in practice?
  (Mr Rose) Chairman, apart from the fact I do not have the information on me, because of the large number of contracts with which my member companies are involved, it would mean that you did not get a break at lunchtime, because I could go on for hours talking about the different things we do, and in the back of the evidence, as you know, I highlighted three instances where that has happened. This is the standard that we like to adopt in all the contracts which we have in the public and the private sector, both in this country and in up to 70-odd countries worldwide. We have the ability, as very large companies, to draw on that expertise and to apply it to whatever size of contract we are involved in, and that may be five people providing food in a hospital, or ten people cleaning a ward, or it may be 2,000 people who transferred to us in a major PFI. It depends on the circumstances of the contract, it depends what the client would like us to do, because the client still has the dominant position in this; we can propose things, but if the client does not want it it will not happen. And there are lots of instances; and if, Chairman, you wish a further supplementary paper, giving some of those, I am more than happy to get it from member companies, because we have lots of examples of the different ways in which we have changed service provision and improved service provision within particularly longer-term contracts.


  344. It might be helpful, if it is not too much trouble?
  (Mr Rose) Yes, I will do that.

  Chairman: Thank you.

Julia Drown

  345. Is that not an admission though that you are going to pay staff less, if you are saying that to keep new staff on TUPE conditions it would cost the NHS more; because you could keep all your staff and bring on new staff with the same pay rates as the TUPE staff, so the new rates are the same ones as the transferred NHS staff, and do all the innovation that you have been talking about?
  (Mr Rose) There are two issues, Chairman, which are raised here; one is the current position and one is the Government proposed position. Currently, as those bidding for contracts, we are expected by the client to pay new staff at the going rate, or above, locally; sometimes this is below the NHS rates, on many occasions it is above the NHS rates, and we are obliged to pay those rates. In certain parts of the centre of London, and as Stephen Weeks knows, we are very, very much above the rate, and, indeed, on a couple of contracts in London we are not even paid to pay that rate, but it is the only way we can get staff because of the shortages. Government has expressed a concern, and the trade unions have expressed concerns, about the fact that there is this, or what they see as, different pay rates. Within NHS Trusts, and I mean individual Trusts rather than groups of Trusts, there are, to my certain knowledge, up to five or six different sets of pay rates operating because of the way Trusts have come together because of the way staff are employed; so there is not a unitary rate across many Trusts in the UK. And, of course, the Whitley rates are changed by local agreement, so that Trusts are paying at different rates anyway. What we have said, and what we believe is, that it is possible to continue to bring value to the public sector by agreeing that new staff being taken on, either with the agreement of the Trust, or, indeed, preferably by Government policy, will be taken on at broadly equivalent rates to those in the public sector. That has to be something that is done by the Government and then passed down to the client in order that the playing-field remains level, or else you will find that one or two bidders do it on that basis and somebody who wishes to get the job comes in and does not, and we get into an even worse position where people feel they have really been short-changed. And at the present moment we in BSA are working with the TUC, with DTLR, with the Treasury, and with DoH, on ways in which we can address this, and you have a paper as part of the evidence showing what we have done; and we are working very closely with all those bodies on it, and it is proposed that the TUC and BSA have a joint working party to make recommendations to Government very soon.

  346. Just quickly, you would only be saying that this might cost the NHS more in those areas where at the moment the market conditions are such that you can pay people less; in other areas of the country where at the moment you are paying broadly comparable or greater rates then this new suggestion would not have an impact on the costs, and therefore on the contracts?
  (Mr Rose) It would not, in those circumstances. It might have, I think is the answer, a financial impact where the current market rate is less, but we do not know; because there are stories and there are instances of where the attrition rate in employees is high within a contract, there are others where at the end of a three- or five-year contract 80-odd per cent of the staff are still there, because they enjoy the relationship, and a lot of the ones who have left have left because they have been promoted within the company.

  347. The Retention of Employment Model, you have outlined a series of problems, in your memorandum, that you have with that. Those problems, in the way your document is written, saying things like "having seconded employees and private contractor employees would lead to a `them and us' culture, would destroy team spirit in working relationships, could make communication more difficult and complicated, has the potential to lead to mixed messages and misinformation, and that the private contractor employees would be treated differently from seconded workers", does not seem to be in the same spirit of partnership that you were talking about earlier, in terms of a ward sister being in charge of your staff?
  (Mr Rose) Chairman, to respond to that question, the Retention of Employment Model was one which was agreed between UNISON and the Secretary of State for Health, and which was then delivered to us in the private sector with no prior consultation at all. There are a large number of issues within it which have not yet been explored, either by the Department or by Trusts, or, indeed, so far as I am aware, by the trade unions, certainly in consultation with us, and these are the issues which we have raised in a memorandum to Alan Milburn, of which you have a copy; they need to be looked at. These are not issues of non-partnership, we are simply saying that, realistically, if we go down this line, it is going to introduce, or we believe it has the potential to introduce, a "them and us" culture, which we have fought for the last ten years to get away from.

  348. Why is that different, a "them and us" culture, from the culture within existing PFI contracts?
  (Mr Rose) We do not have a "them and us" culture in existing PFI contracts, to my knowledge, we have a culture where we all work together to achieve the ends which we have agreed mutually. We are looking here at a proportion of staff, possibly 85 per cent of staff, remaining in the public sector, but at managers and supervisors moving across into the private sector under TUPE. It means that people are going to have two sets of bosses, one of whom pays, one of whom manages. All of us know, from our own experience, if there are two we will play one off against the other, it is simply human nature; we do not want to have problems, in the way that services are provided, where we are asked to come in and help to provide those services by the client.

  349. But is not that just the same as the example we were going over earlier, where the ward manager is managing your domestic staff but you are paying them?
  (Mr Rose) No, it is not, because there we have a clear division as to who is employing and paying whom, and we can work very closely in partnership there. This is an area which needs a lot of work, and we do not believe enough time has been given to the major issues of the operation of this policy, as opposed to the political desirability of the policy, and we are seeking to work with Government in relation to the three pilot projects at present, and we are working closely with them and the Trust to iron out those issues. And the purpose of that memorandum was to indicate a number of the issues that we believe need to be addressed before this issue is taken further.

  350. But you are not ruling out the possibilities of it, and PFI could still be attractive to your members, under the Retention of Employment Model?
  (Mr Rose) Certainly not, we would be stupid to do that, because if that is the way that the market is going to go we will work with it, and in certain single-service, shorter-term contracts we already have experience of working with seconded staff, and that can be successful, but there are always tensions between the staff and where their loyalties lie.

  351. And can I just ask Mr Weeks, in your papers you seem to be supporting the model that most of the staff do stay with the NHS but the external company does employ the managers of the service. Is not that just as divisive as any other division?
  (Mr Weeks) I think I would actually refer you back to what the paragraph actually says, which is: "UNISON, whilst remaining opposed to PFI and the use of private sector management, welcomes the new approach." We, in principle, still believe that PFI itself is wrong and that the involvement of the private sector is not the right way to go, but we want to work with the Government, the Government has made a very significant proposal which we welcome, and so we are prepared to go to those discussions with a positive attitude and try to make it work.

  352. So your ideal would be for the managers to stay within the NHS as well?
  (Mr Weeks) Our ideal would be not to have PFI at all, but in a PFI contract for all services and their management to remain within the NHS, and a number of Trusts have successfully gone down that route. But the Government has said that they believe that there are gains from involving private sector management, in relation to innovation and other issues, and so we have said we are prepared to engage with that discussion.

  353. And the same argument, I imagine, you would say for maintenance engineers, that you might accept in existing PFI contracts that maintenance engineers might have to go to the private sector, but other staff might stay within the NHS under the Retention of Employment law?
  (Mr Weeks) We will continue to make the argument for maintenance, but we understand why the Government has chosen to draw that distinction between ancillary services and those services they regard as connected with the building; we do not agree with it, but we think there is an internal logic to it. I do just want to comment, very briefly, on the questions that were raised about the Retention of Employment Model. I do not want to appear unconstructive, but it is not actually true to say there has not been detailed discussion around all of these practical issues. The initiative was actually launched in June; we have yet to agree, formally, with the Government about how the pilots will work, precisely because we have been working out the detail, and the Department has consulted with all parties involved. Obviously, the Government made the decision to make that proposal, and they consulted on how it will work, not whether it should go ahead. Now, we have worked very positively within those discussions, and we hope that it will be possible to find a workable model very, very shortly. And just finally on the "them and us", I think that there may be issues when you have different people employing as compared to managing, but the NHS is currently pursuing a wide range of initiatives involving partnerships, a service is managed by one person and employed by another. General practice has always had that arrangement. We do not believe they are insurmountable. And we would say the industrial relations implications of transfer are the ones that have actually led to conflict; you only have to look at the historical record of what issue has led to conflict around PFI; if we can address that issue, we will move forward on a partnership basis.

  354. Finally, you said there that your ideal was to have no PFI; in your memorandum you said you would like to see a moratorium on the use of PFI, pending the independent review of the existing schemes. And given these schemes are 25, 30 years, what, in your view, is a reasonable time period before that review could take place?
  (Mr Weeks) The review is about whether PFI is the right route for public finance, so I think the review can actually take place right now; and, I think, the model that the National Audit Office adopted in relation to Dartford and Gravesham, they may not necessarily be the right body but they were asking the right questions. And so I think the review is about whether PFI is a choice.

  355. The review of the business case is not about what it delivers for patient care over 20 years?
  (Mr Weeks) I think there are functioning schemes now, so we have got some historical, some practical examples to look at; so I would think you could run the review of how it has worked as delivery of service at the same time, and we would be happy to talk to the Government about the terms of such a review and how it would work in the timescale. But we want to establish that principle.

John Austin

  356. Could I just raise another issue, about savings and reduction in costs. We talked about in terms of the service contracts, but with falling interest rates there is a potential for refinancing PFI schemes. I know the Public Accounts Committee has suggested that some of that benefit, if it does occur, should go to the Trust. I am not sure whether that is enforceable guidance or not, but is it right that the private sector contractor should be able to refinance, if there are lower rates, and accrue the benefits themselves, or should part of that benefit go to the NHS?
  (Mr Rose) Chairman, before I answer that question, I would draw attention to the fact that the National Audit Office will be publishing a report on the 29th of this month, which is a major review of PFI projects over the last four years. I have seen the final text of it and it is a very interesting document, and I am sure they will be delighted to release it to you in advance, for the benefit of your discussions. And coming on to Mr Austin's comments, there is already a protocol in place with the NHS that where there is refinancing the gains will be shared on a 50/50 basis between the private sector and the public sector. Initially, there was not a thought that projects in PFI would be refinanceable, because it was a brand-new area and the market was very jittery, and so, inevitably, initially, there were some reasonably high rates of finance; as the market has become more attuned to what is happening, rates have gone down, or rates of return rather, interest in PFI, however, has gone up, and therefore there is a refinancing gain which can be brought. Clearly, there are a couple of high level cases where the private sector is alleged to have made many millions of pounds out of it; before that happened, and I think it was two years ago, a protocol was put in. The Office of Government Commerce and PUK, Partnerships UK, are conducting an exercise now, reporting in December, on refinancing and new guidelines, which Government will put out across the whole of the public sector, to make sure that there is an equitable sharing of gains which come from any future refinancing of PFI projects. And, remember, what is refinanced now may become very much more expensive in the future when interest rates change, and we may find that it is becoming rather difficult for the private sector to keep the rates which are there at present.
  (Mr Weeks) Obviously, UNISON takes a quite different view. In view of the time, I think it would probably be best if we submitted our paper around refinancing directly to the Committee; but we take a completely different view, as outlined in our evidence. I just would point out that the NHS did act somewhat more speedily than some other Government Department in introducing its own guidance on the sharing out of refinancing gains, and, although we are not completely happy with that, we would say that they have made some moves in the right direction. We are still worried, however, about the very first wave of PFI that was approved before the guidance came out, I think, in December 1999; though none of them have actually gone out to refinancing, any one of them could do so, and, as far as we are aware, there will be no claw-back for the public sector in those schemes, and we do not regard that as an acceptable product of public policy.

  357. While we are on PFI, the attraction of particular types of PFI, one of the issues, which was perhaps the contentious issue, is the issue of clinical services, and perhaps I could put the question to Mr Rose and ask him what obstacles he sees to clinical services being included in the PFI?
  (Mr Rose) I do not think there ought to be any objections in principle to at least some clinical services being involved in PFI, and indeed they are at present. A number of my member companies already provide agency nurses into NHS hospitals because there are not enough nurses there; there are instances of dialysis units and intensive care units being provided by the private sector, and indeed being used far more intensively than often they are within the public sector. Clearly, the issue of clinicians being outsourced is an emotive one, though, as Stephen Weeks said earlier, we have it already in relation to GPs, who are private operators who get a fee from the Government for the services they provide. And, indeed, clinicians, certainly at consulting level, seem to spend a lot of time in private hospitals, and to make a lot of money in private hospitals, because they make themselves available there; and I am not making any comment on that, there is a need, they are available and they go there.

  358. You are not suggesting, are you, that the NHS benefits from that?
  (Mr Rose) We would like to see far greater use of clinical facilities in the NHS, beyond that which is currently available. We have operating theatres which are used for so few hours in the day that it is a waste. We could have operating theatres which operate 16, 18, 24 hours a day, we could have outpatients departments which operate similarly, which would make far better use of the facilities, which would be far more beneficial to the population and the patients, some of whom work during the day, want to come in the evening, some of whom work in the evening, want to come during the day, people who have children; that is not possible at present. We therefore think that there is a great possibility to work alongside clinicians who are within the NHS, to make better use of NHS assets and to give a much higher level of service to the local community, and therefore to reduce the costs, the waiting lists and the discomfort of people. So, from an ideological point of view, I think that there should be no reasons why there could not be a working together to make the service better, using bought-in, shall we say, or outsourced, services alongside those which remain at present. Because, clearly, clinical services is an emotive issue, and I would doubt if we would ever see it going out to the private sector, not least, I do not think there is private sector capability to deal with it at this stage. And you do not make a market in such an important service, you develop an existing one.
  (Mr Turner) I struggle with this concept of theatres working short days. Trusts have targets to meet in terms of waiting times and waiting activities; theatres in my Trust work seven days a week for 12 hours a day, so I struggle with that concept. Likewise, with outpatients; our outpatient clinics do not stop at 5 o'clock, because simply if they did we would not get the activity levels through the clinics. I do not know what scope there is to put clinical services into PFIs, but I would just like to say that theatres do work full capacities, as do outpatients, in a lot of areas.

  359. There has been a limited number of design, finance and build operations in the NHS, although they exist elsewhere. Is there any attraction for your members, Mr Rose, in competing for PFI contracts which were just the building and the maintenance of the building, without the other support services?
  (Mr Rose) Yes, because we provide the hard services as well as the soft services, and we provide the building maintenance services. We believe, as the Department does, that there are added benefits in including soft services, added benefits and value for money and whole-life costing for the NHS, and thus for us, as taxpayers; but if projects come out simply with hard services then we have a great interest and we continue to bid for them.
  (Mr Weeks) Obviously, we just have to record our position to any suggestion of the involvement of mainstream clinical services in PFI. Rather than rehearse the arguments, I think it might be helpful if I could submit to the Committee some research evidence we commissioned of the Australian experience, where some States in Australia have gone down this route within a publicly-funded system, and we believe it has been shown not to work, aside from our overall opposition to it in principle. So perhaps if I could share that with the Committee that would be helpful.

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