Memorandum by HealthWatch, the Community
Health Council for Central Manchester (PS 5)
LACK OF OPENNESS AND PUBLIC ACCOUNTABILITY
IN THE PRIVATE FINANCE INITIATIVE SCHEME FOR THE REPROVISION OF
CHILDREN'S AND ADULT SERVICES ON THE CENTRAL MANCHESTER HEALTHCARE
1.1 Community Health Councils should be
able to expect to receive key information about Private Finance
Initiative schemes under general provisions for openness in the
NHS and specific operational guidance on PFI schemes.
1.2 Central Manchester Community Health
Council was denied access to a variety of "project"
and "strategic" boards discussing the Central Manchester
PFI on the grounds that all important operational and strategic
issues were discussed at the relevant NHS Trust Board.
1.3 Information given to the private sector
and Health Authorities in April 2001, which led Manchester Health
Authority to doubt the affordability of the Central Manchester
scheme, was known to executive and non-executive members of NHS
bodies but not made public.
1.4 There are concerns that the suppression
of the information and lack of proper discussion in public may
have led to long term problems for the affordability of NHS services.
2. LACK OF
2.1 On 14 January 1999 Community Health
Councils in England were issued, for information, with a copy
of an operational guidance role on making PFI documents publicly
available, by Peter Cockett of the Private Finance Initiative
and Capital Branch of the NHS Executive. This specified that only
certain documents should be publicly available, and that certain
information could be excluded.
2.2 A copy of the Outline Business Case
for the Central Manchester PFI Scheme was lodged at the CHC's
office in September 1999 prior to the OBC's eventual approval
by Manchester Health Authority at a meeting on 25 November 1999.
Manchester Health Authority and other health authorities involved
raised some issues on the affordability of the scheme. Some of
these were left to be resolved later.
2.3 The Community Health Council received
some information about changes and developments to the Outline
Business Case through attending meetings of the Central Manchester
Healthcare Trust Board. Requests to send observers to the Joint
Project Board involving that trust and the Manchester Children's
Hospitals Trust, where these issues were discussed in more detail,
were refused by both Trusts.
2.4 In May 2001 at the meeting of the Board
of the newly formed Central Manchester and Manchester Children's
University Hospitals Trust (which resulted from a merger of the
two separate Trusts) the project's structure was discussed and
the Trust's new Chair, Mr Peter Mount, agreed to CHC observers
attending the Project Board. In practice, however, that Project
Board was discontinued and we were told that all major issues
relating to the scheme would instead be discussed at the Main
Trust Board meeting.
2.5 On 25 May 2001 the CHC wrote to Mr Keith
Wright, the Director of Finance at the NHS Executive North West,
welcoming the Trust's decision to invite CHC observers onto the
Project Board and asked for observer status at a Strategic Board
which the Regional Office co-ordinated. We understood that the
Strategic Board would be looking at the wider impact of the scheme
on the local health economy and felt that it was important that
these wider issues should be known to observers representing a
wider public interest.
2.6 Mr Wright responded to the CHC on 27
June 2001 and replied that he had put our request to the members
of the Strategic Board at their meeting of 19 June 2001, and said
"Their conclusion was that they could see no direct benefit
in you and colleagues attending this meeting because there are
no decisions made or issues raised which do not go to the Trust
Board. It was agreed at the meeting that given you attend Trust
Board meetings CHCs will be fully aware of both local and strategic
developments". Mr Wright also added that "The Trust
would, however, be happy to extend an open invitation" to
the CHC to attend the Project Directors Forum where all stakeholders
were updated on progress.
2.7 The CHC responded to Mr Wright on 6
September 2001 outlining concerns that had been raised by CHC
members at their July meeting. These concluded concerns that the
Trust Board did not seem to discuss wider issues of the overall
revenue implications of the scheme for Greater Manchester Health
Authorities or the implications for other services around the
conurbation. We therefore asked him to reconsider the decision.
2.8 On 19 September the CHC found at a meeting
with officers from the Trust's PFI Project Office that the "Project
Directors Forum" to which we had been extended an open invitation
had not met since early 2001 and it had effectively been "wound
up". We therefore wrote to Mr Wright on 20 September pointing
2.9 At the meeting on 19 September we were
also told of major changes which had been incorporated into the
scheme since the Outline Business Case was published. We were
updated on the Final Invitation to Negotiate (FITN) document which
had been published to the three private sector bidders for the
scheme on 30 April 2001 and to local health authorities and Primary
Care Trusts. We were told that there were unresolved pressures
on the scheme, not agreed with the Manchester Health Authority
amounting up to £30 million per year following completion
of the scheme in 2008. This issue had not been raised in reports
to the Trust Board at any of its meetings held in public.
2.10 On 20 September 2001 the CHC was approached
by the BBC's North West Health Correspondent and asked to comment
on a Health Authority "briefing" for Health Authority
Board members on the affordability of the planned redevelopment.
This paper, from Mark Wilkinson, the Health Authority Director
of Finance and Performance Management, was dated 27 April 2001,
and had not been discussed at any meeting of the Authority in
2.11 In the briefing the Health Authority's
members were told that with the issuing of FITN document, "Although
formal commissioner support is not required until the Full Business
Case (FBC) is produced next year, this is a key stage in the process.
It will be difficult to make major changes to the scheme later
(and may leave the Trust open to claims from the private sector
for financial damages for wasted effort)." The areas of concern
identified included "a recurrent financial deficit of £12.9
million over annum on the scheme, ie an additional sum to be found
by all commissioners when the scheme is complete in 2008".
It also identified possible future changes and "Adding in
these less certain costs lead to . . . potential recurrent call
on NHS development funds (at current prices: )"of between
£25.7 million and £31.7 million.
2.12 The document then concluded that "The
children's reprovision must proceed, but the rationale around
adults services may be less strong".
2.13 The change in anticipated revenue costs
to Health Authorities from the OBC to FITN stage is significant.
The OBC outlined anticipated savings of £2.16 million pa
to Health Authorities as a result of the scheme, rather than a
deficit of £12.9 million or above.
2.14 The Community Health Council has agreed
to meet on 2 October 2001 to discuss the FITN documentation, with
which it has now been supplied, and the Health Authority's briefing
paper. The CHC members are concerned that significant changes
affecting the local health economy have been made but not reported,
and that by their not being discussed in public have potentially
"locked in" the NHS to an unaffordable scheme.
3.1 There is no justification on the grounds
of "commercial confidentiality" for concealing the revenue
costs of PFI schemes to the NHS. Discussions on the strategic
impact of PFI schemes should be held in public.
3.2 Significant changes to PFI schemes between
formal stages should be reported in public and agreed by the relevant
NHS bodies. FITN documentation outlining the type of bid required
from the private sector should be made public as a matter of course.
3.3 NHS boards and directors should be issued
with clearer guidance on their responsibility to openness and
be held accountable if they suppress information in a way which
leads to unaffordable costs to the NHS and reductions in services
as a consequence.