Select Committee on Health Appendices to the Minutes of Evidence


APPENDIX 2

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 SITE

1.  EXECUTIVE SUMMARY

  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 OPENNESS AND PUBLIC ACCOUNTABILITY IN THE CENTRAL MANCHESTER PFI SCHEME

  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 this out.

  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 public.

  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.  CONCLUSIONS

  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.



 
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