Select Committee on Health Minutes of Evidence


Examination of Witnesses (Questions 780 - 799)

THURSDAY 29 NOVEMBER 2001

DR MICHAEL DIXON, DR SIMON FRADD, DR TONY STANTON, OBE, AND MR DAVID GOLDSTONE

  780. I appreciate your point about not wanting it to be a mini district hospital and there are problems there, but I would have thought that in any comprehensive health centre you would have to have access to a physiotherapist at the centre, but I would not expect the whole range of therapeutical remedial gymnasium equipment to be available. Essentially I would have thought that services like physiotherapy must be available in the Health Service and similarly dentistry. I wonder what the thinking is in terms of where dentistry fits in to primary care and the provision of health centres.
  (Dr Stanton) Clearly dentistry is part of primary care; that goes without saying. As a potential patient of one of these places, what would I personally like to see? I would agree with you that I would like to see physiotherapy available. I should like to think that I could get my prescription dispensed by a pharmacist on site but I am not personally necessarily convinced that I would want to have dentistry on the site. I do not personally find it any great hardship to go to a separate dental surgery. Most of us before we go through the door know roughly what type of service we want. There are occasional cross-over problems between what might be a dental problem or what might be a medical problem, but by and large patients know what toothache is. Yes, it would be very nice, but it may well be—and this is a personal view . . . I am not sure that if I were a member of a local community I would necessarily want that as my top priority.

  781. If you were thinking from a child's perspective or the perspective of a mother with a young child, would your view be different?
  (Dr Stanton) I am not sure that it would be on that particular element. I think I could cope. Fortunately, it is not a problem I am likely to encounter.
  (Dr Fradd) Does this not come back to what I was saying earlier about the tension between the community and the individual? It is a balance between those two. Yes, of course there will be differences according to your personal circumstances as to what you would wish to see there, certainly you are going to want your health visitors there if you have young children and you are going to be going round there regularly for baby clinics. If you are older then that is not going to be a big priority. There is a tension in sinking all your funds into one centre, which may mean other people are not using that centre because if you just have one centre for the whole of PCT there are going to be transport difficulties. There are tensions which have to come into it and there has to be some sort of balance at the end of the day of where you come down to on it.
  (Mr Goldstone) May I make a point about services and I absolutely defer on the clinical reasons about whether things should be co-located or not? One of the things we make much easier to achieve by having facilities which do provide a range of services and by putting a number of projects together in a LIFT approach and saying actually we want to deliver these five new facilities or these eight and bundling projects together in that way, is that we make it possible to deliver things which otherwise we might not be able to deliver. It makes things more feasible and more viable to deliver and it might be that we have a locality where we can deliver a health centre and it has GP premises along with social service provision or physiotherapy that the PCT commissions. We may also have a need for some improved or relocated or new dental facilities, which may be very difficult to deliver if we try to deliver them standing alone. We may be able to get better value in providing that if we integrated into the fact that we are already delivering this big health centre. There may be some clinical benefit or not and that is not my expertise to say, but there certainly is a potential delivery benefit of being able to achieve that through integrating it as part of the scheme. If we encourage the localities to take that sort of holistic view across what we need, we just may be more efficient and more able to deliver the sort of facilities we require rather than looking at everything in isolation.

  782. Given that Dr Fradd tells us that we cannot say what will happen, we can only predict outcomes, the Government expects 40 schemes to be in place by the end of 2002. Is that achievable?
  (Mr Goldstone) We expect to have 40 schemes under way; that is the plan. It is an ambitious plan. We have some targets in the NHS plan to try to achieve and contribute to, so yes, it is certainly achievable that we can have 40 LIFT areas identified, working up their local strategic plans and looking forward to taking those into procurement and delivering on the ground.

  783. Signature on the contract.
  (Mr Goldstone) Signature on the contract on the first ones, but not 40 at that point.

Dr Taylor

  784. May we move on to value for money? This is really the nub of the whole inquiry that we are doing. In relation to hospitals, we have been told very clearly by the Government that PFI is the best value and by the opponents that PFI is not best value. It strikes me you are in an ideal situation if these six pilot sites are allowed to work to conclusion before the other 40 come in. What we want to know is: what measures do you have in place to assess value for money with these six pilot sites that are going on? Best value, value for money, how are you measuring it?
  (Mr Goldstone) The programme does not envisage a pause whilst the first six go all the way through and are evaluated before the—

  785. I must say I think that is an awful shame because we have had so many pilots in the past such as the resource management initiative which people will remember, which started and then was superseded. It would be superb to let the six pilots really go through and see whether they worked. But that is not going to happen.
  (Mr Goldstone) That is not the plan as it is. I understand the reason for taking pilots in that way and evaluating; there is obviously a pressure to try to get some of this improvement, address some of the deficiencies in the current estate and service blockages that is causing which you heard about from colleagues who have spoken earlier.

  786. I had a slight comfort when you said they were only going to start the preliminary negotiations. If those could be slowed down to allow the pilots to finish we might get somewhere.
  (Dr Stanton) Let lethargy win.

  787. How are you going to assess that it really is value for money?
  (Mr Goldstone) We have a number of levers in place. This is a different scenario from the acute hospitals you were talking about at the beginning of the question. First of all, we have a competitive process in terms of who the partner is who is going to come into the LIFT and it has been widely recognised that competition is an important part of procuring value for money in terms of protecting the public purse, in terms of that sort of way of delivering. We shall have a competitive process. It may be worth making the point that, it is something we were discussing at the BMA yesterday, traditionally where GPs initiate and develop primary care premises and their own surgeries, there often is no competitive process and now it is often done through a deal done directly between a GP practice and a developer without any competition. In the sense that we are running a competitive process, first of all to get the LIFT partner in and that is a starting point and an important protection, there will also be competition for who does the building works and the sub-contracts under that partnership will also be subject to competition. So there will be a level of competition for what in a PFI context you may see as the main sub-contractors, but those will be competed periodically throughout the life of the relationship. There is an important protection now in primary care in that the rents which are reimbursed to GPs are approved by the District Valuers with the statutory red book scheme. That whole framework of protection of the public purse will still be there; that is not going with LIFT and LIFT works with that framework. There is an important protection which is the key protector now and we shall have this competition for partner and who is doing the principal sub-contracts throughout the life of a LIFT. Those are the key protectors. The other thing which is worth mentioning is that, as the diagrams drew out and part of the complexity there, we are envisaging the public sector being a shareholder, being a stakeholder in the company. That means that we have access, we have full visibility and accountability and the public sector gets a share of the profits which arise from a company. We have a slightly more complex picture developing in demonstrating value for money for what is a more complex environment where we have multiple stakeholders, the ultimate procurers are private organisations, they are independent contractor practitioners in many cases. We are trying to build in protections at a number of levels in that sort of way. The public shareholding is important. It is something which is not seen in PFI, it is something which gives a greater protection to the public purse about the profits the private sector make out of this sort of scheme.
  (Dr Stanton) We share your surprise that in a sense pilots are not pilots. A range of departmental initiatives are labelled pilots and are then rolled before they have ever been evaluated, so we have the experience with personal medical service pilots and common sense would suggest that it might have been better to see the outcome of the first six before rolling out others.
  (Dr Fradd) Having said that, we do have a problem with investment in primary care premises. I can see a certain dilemma that if you pilot it and then have a big pause, you then have a backlog building up. We do not see just the one model of NHS LIFT. Certainly the cost/rent scheme and national rent scheme have served the Health Service and colleagues extremely well for a number of years; there is no doubt about that. The problem we had was that we had the devaluation of property which resulted in a relatively small number of colleagues getting their fingers very badly burned which has put off younger doctors from getting involved in that. There are some very simple things, one in particular, which could change the balance of opinion on that and that is the basis of valuation of premises. The way that premises are valued is on the basis that they are converted office blocks. That necessarily holds the valuations falsely down. Nowadays we are talking about very, very specialised buildings. It is not surprising we need an organisation specialising in this sort of development because they are so specialised. The only real way of valuing those is on the replacement basis valuation. If you do that, you protect both the outgoing partner from a capital loss and the incoming partner to the extent that you then have a relevant income stream against it and the banks are prepared to lend against that. Interestingly that may be one of the reasons why there was the comment about why we did not oppose this PFI: it was because historically for some 35 years we were the only PFI in existence and GPs were funding premises and providing the service, which is the ultimate PFI. So for us it is not such a major change. It would be a shame if we walked away completely from the old system because it has served extremely well.
  (Dr Dixon) I take the point about the safeguards being the same as currently, but remember 80 per cent of premises presently do not meet the red book safeguards so we are not actually monitoring the same property at the moment The other thing I would say is that where we have pilots we need independent appraisal. I would say that we need an independent body asked to appraise this in terms of value for money, in terms of whether the premises meet the specifications and needs of the community, whether the service charges are exorbitant or whether the services actually service the properties as they need to.

Chairman

  788. Who would do that?
  (Dr Dixon) You put that out to tender. In primary care groups and primary care trusts, the King's Fund, HMSE in Birmingham, there are plenty of people who would be prepared to do that. For a relatively small output of money you would get an independent disinterested reply.

Dr Taylor

  789. We were thinking of the Audit Commission perhaps scrutinising. Will there be any measures open to local health economies if it goes badly? Is there any redress?
  (Mr Goldstone) The cost/rent scheme and the existing arrangements will still be available, so it is not that they will have been thrown away because of LIFT. I would not want the impression to be taken away that this supersedes the existing arrangements. You mentioned the Audit Commission. The Audit Commission audits local authorities and the local health bodies. To the extent that those have contracted and gone into a LIFT structure, then it will be absolutely open to the Audit Commission to audit those as part of its work at that level. There will be that level of audit scrutiny of the organisations which have gone into these public bodies which are audited by the Audit Commission. That will be there. Redress if it does not deliver. There are many levels of redress. It is one of the things we are bringing in which is new, which is slightly different from the way things have been delivered in the past. First of all we are not envisaging the tenant, the occupant of premises, paying a flat rent regardless of what they receive which is typically what has happened in the past. You entered a rental and buildings have or have not been properly maintained, but the rental levels have been paid and buildings have deteriorated. Because the specification will be about a whole life condition, and there will be the redress to not pay if buildings are not up to the required standard, there is a very simple and first order redress of not paying, if you are the occupant of a building which is leaking, the heating is not working. That is one of the features we have drawn from PFI because we were talking earlier about lessons drawn. The aspect of saying we should only pay for the service we receive, not pay regardless and that be determined by a suitable condition being provided is something we have taken from PFI and are using so that the individual occupant will only pay for the service which is received to the extent the conditions are suitable. So there is a level of redress for the occupant in relation to individual premises. We can then also, because we are setting up a long-term partnership in terms of that relationship, if there is consistent failure on individual premises or there is some sort of material default, ultimately terminate the agreement and the way that would be done would be through forcing a sale of the shares in the company and saying they have to be put out and a new partner found that the local economy is satisfied with. So there is the ultimate redress of kicking out the partner in the agreement.

  790. Are the other satisfied with that?
  (Dr Stanton) We have a degree of honest scepticism.
  (Mr Goldstone) You are right. We have details that we are only just working through and that has not all been shared. It is quite right to have that. There is a lot more redress than there has ever been in the past.

Julia Drown

  791. Could you also say a little bit more about public sector shareholding? Is it policy or is there an expectation that in high cost ,or perhaps high risk, areas of investment, there would be a higher public sector shareholding? Or where you wanted to attract private investors into areas of deprivation is there any policy or expectation that there will be a higher public sector shareholding there?
  (Mr Goldstone) There is no set policy about it. We have envisaged that the company will be predominantly private sector owned so that it has commercial freedoms to deliver within a framework of controls of the sort we have been talking about, about securing value for money. What the precise level of shareholding is, is variable. No, we have not made a policy of the sort you describe.

  792. In contrast to the wishes for pilot schemes, what are the plans for practices in more affluent areas which will therefore be at the bottom of the pile in terms of LIFT ever getting to them? Within affluent areas where there are particular pockets, perhaps a particular practice where because of the finances of those GPs they are stuck in a building, what are the proposals for those to be able to move out and get the modern premises that other people are looking to provide?
  (Mr Goldstone) Do you mean if it is not in a LIFT area?

  793. Yes.
  (Mr Goldstone) There is nothing at the moment which would enable a practice which is not in a LIFT area to access the LIFT route other than by becoming one of the areas that LIFT is working in. It may be important to say that there is no limit, no cap nothing to say that in future any area which cannot take forward a LIFT scheme—and we referred to the planned 40 which we have been working to try to roll out over the next year to 18 months as projects which are going forward—other localities which are not in the 40 could not do it subsequently.

  794. Would any other witnesses like to suggest any ways in which some of those problems could be addressed?
  (Dr Stanton) We do have tried and tested ways of developing surgery premises under existing arrangements.

  795. Why are so many practices stuck in old buildings then?
  (Dr Stanton) For a very simple reason that a previous administration thought it necessary to introduce cash limits on the expenditure which could be placed into these projects. A PCT has a cash limited pot of money available for carrying through cost/rent and improvement grant schemes. A very simple way of using some of the munificent extra £1 billion might be to target some of that into the GMS cash limited pot.
  (Dr Fradd) It is slightly odd that notional rents and true rents are not cash limited and cost/rents and improvement grants are. Obviously there are cost consequences, but it does seem a slightly bizarre way of taking it forward when that is how you are constantly improving and developing the service.

Sandra Gidley

  796. The whole thing is quite unwieldy really. The NHS has always been accused of being over bureaucratic but it occurred to me that an NHS trust can carry through a multi-million PFI with one partner. Why when we are looking at the primary care sector do you need Partnerships UK, LIFT and a private sector partner for what is by comparison a relatively simple project?
  (Mr Goldstone) At the local level there will be one partner of a different sort to the one in a PFI context but one partner in the same sort of way with a contractual relationship. In that sense, it is not very different. The reasons why that one partner would have more than one ownership structure or elements of ownership is to provide some of the protections for the public purse and for the public interest about what is going to be. In a PFI scheme you have a contract about typically building one very large new facility and then managing it over a long period and certainly the NHS hospital programmes have been about new and replacement hospitals, individual very large new facilities, specified up front, clearly defined to be delivered by that partner. Here we are going to have a structure where we are talking about, in capital and financing terms, relatively small facilities individually certainly in handfuls of millions of pounds and sometimes less than that, about a programme which can deliver lots of them over time and can be a long-term partner. Therefore to have a structure which gives a greater level of public sector involvement and public interest involvement, is seen as beneficial.

  797. I cannot see why. The hospital PFI projects seem to me to be designed to evolve over time. I still cannot see the difference between primary care and the other.
  (Mr Goldstone) The difference is that we are not going to know on day one.

  798. Surely you should do.
  (Mr Goldstone) No, because the nature of primary care is that it is a dynamic sector which changes and the requirements change over time. The decision to build a hospital here and that we want this hospital to this sort of design specification on this site is agreed before a PFI contract is signed. What we are going to have in a LIFT proposal is a small number which are agreed like that, but we are having an arrangement which says over time we are going to agree to deliver some more health centres, some more improved GP surgeries and premises and resource centres which we have not specified and defined all up front on day one when the agreement was entered into. That is why the answers about value for money were about repeating the competition and about certainty of pricing in that way, that it is value because it is not all defined up front and a simple comparison of what, if we did it another way, the costing would be. It is a difference in terms of the certainty of what is actually going to be delivered. It is not all going to be defined up front. The other difference is that you mentioned one partner in a PFI scenario. There is also typically one procurer, there is a NHS trust which is procuring a partner. Here we have the range of interests locally on the public or the Health Service side in terms of PCTs and in many cases more than one PCT, local authorities and the independent practitioners, whether that is GPs or the dentists and pharmacists. A whole range of interests are in effect independent procurers of facilities locally. Both on the purchasing side and on the what-is-going-to-be-provided side there is a less clearly defined relationship than in a PFI contract for a trust procuring a partner to build a hospital.

  Sandra Gidley: Would anyone else like to comment on that because I am not entirely convinced. It sound to me like an extra body which is just creaming off vast profits, if I were being cynical.

Chairman

  799. Dr Stanton, are you reserving your position again on this?
  (Dr Stanton) Yes, I suppose I am. What can I say? It is not our scheme. It was announced in the NHS plan. It is therefore a Government intention. We are still struggling with the other announcement in the NHS plan that £1 billion was going to be invested in the provision of better primary care premises and yet the departmental funding to facilitate NHS LIFT seems to be £195 million. I am still trying to get from £195 million to the £1 billion but I have always had difficulty with arithmetic. I share Ms Gidley's confusion, but perhaps things will become clearer in time.


 
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