Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 20 - 39)



  20. It must cost quite a lot to just maintain them over the years you have been waiting to get rid of them?
  (Mr Wearmouth) That is true, that is why we attempt to sell the property as fast as we possibly can.

  21. You do not know how much of a cost there has been maintaining these £600 million worth of retained estate?
  (Mr Wearmouth) On average the actual costs of consultancy and maintaining them runs at around £35 million a year. Of the £600 million we have disposed of £200 million of that in the last two years and the remaining £400 million is in a one off sale as identified in the NHS plan and we are on the disposal of it at the present time.

  22. If I could turn to another issue. I am correct in saying one of the incentives you give to trusts to dispose of property is that they get to keep some of the proceeds of the sale, that is correct, is it not?
  (Mr Crisp) For part of the estate. There is a bit of the estate which is surplus which then passes to the Secretary of State but the bit which is retained by trusts, you are quite right.

  23. If one of the reasons why the NHS has to constantly juggle its assets is because of changing health needs of the country and the changing health practices, one of the changes will be demographic changes. We are all familiar with the arguments about Central London hospitals for example. Is there not a danger that if you are letting the trust retain the money, does that not defeat the object of trying to allocate the resources elsewhere in the health service?
  (Mr Crisp) There are two points. On the retained estates, which is the £600 million we were talking about —

  24. Yes.
  (Mr Crisp) — that is all within the Secretary of State, that is national.

  25. I understand.
  (Mr Crisp) In terms of local money, trusts can sell property up to a million pounds without permission. Over a million pounds they have to put a business case to us suggesting how the money should be reinvested so that we have to agree that. Now the money is not automatically reinvested, the money can be moved elsewhere.

  26. In paragraph 2.19 of this Report, it talks about your "earned autonomy" trust.
  (Mr Crisp) Yes.

  27. "If sales net more than £5 million then these top performing Trusts will retain £5 million and the surplus will be available for use within the health economy, subject to submission of a business case. This is expected to act as an incentive...". Do you see the point I am getting at? There are various empty properties precisely because there are not the same health needs in the area. You dispose of them, you get a lot of money and you are just ploughing them into an area which does not have the health needs but it has the cash.
  (Mr Crisp) I understand the point entirely and anywhere where you shift incentives you shift behaviour a bit. Let me just put it in context. The context is that land sales each year are of the order of £350 million and capital investment is of the order of £3 billion. Actually, whilst we may be shifting incentive and behaviour on a proportion of that £350 million, it is a small proportion of the overall capital investment. I do understand the argument "Why should wealthy X place retain something when actually we have a need elsewhere". That is why on, whatever that is, 85 per cent of capital investment, we take the view on a national perspective. There is some local incentive but national otherwise.

  28. You referred, I think it was you, I cannot remember, in the opening questions from the Chairman to the organisational changes in the NHS which may have delayed the implementation by some trusts of their plans.
  (Mr Crisp) Yes.

  29. Do you have any figure you can put on how much that might have cost the NHS, the delay in getting these plans into place?
  (Mr Crisp) No, that is not a question that I have asked. If I take the current position, we have a number of new organisations which came into existence at the beginning of this year. They will not be able to say that they have got an estate strategy in place in the sense that we are talking about until they have worked through that strategy of their predecessors and had it signed off by their boards. Now actually they have probably inherited the estate strategy of their predecessor, do you see what I mean? It is the same point that I think Mr Wearmouth has made that actually 97 per cent of trusts have given reports to their boards. You will inevitably have a start up period of a few months before everything has gone through the board in the appropriate fashion. I do not think we will see anything significant in terms of sales delayed by that.

  30. It says in paragraph 2.11 that nine NHS trusts in response to the NAO survey "... volunteered information suggesting that pending mergers would delay improvements to their strategies." Then if you look on the opposite page you can see various projections of the cost of not having an estate strategy in certain trusts. For example, one is looking at paragraph 2.7, a cost of £116 million in the first bullet point and £102 million.
  (Mr Crisp) Yes.

  31. There might be a cost to the organisational change but maybe an unpredicted cost in the implementation of estate strategy.
  (Mr Crisp) If you look at page 15, which is the one with 2.10 on it, the bottom right hand corner, there are nine NHS trusts without a strategy "... did not say when they would achieve an exemplar strategy". I am not sure if those are exactly the same nine but I have asked about those nine and I am told that five of those trusts no longer exist, three have strategies and one is in the process of developing a strategy. That is just an example of where the questioning throws up the fact that trusts are about to go out of existence.

  32. I will ask the NAO if they are the same nine?
  (Dr Robertson) Yes.

  33. The nine in the diagram are the same nine in 2.11? "Nine NHS trusts in our survey volunteered information suggesting that pending mergers would delay improvements to their strategies".
  (Dr Robertson) Yes, they are.
  (Mr Crisp) Undoubtedly they will be affected by organisational change.

  Mr Osborne: No further questions.

Mr Steinberg

  34. I have only got one or two questions, I am not going to take up my 15 minutes here simply because I am not really in sympathy with the Report at all. I am a little uneasy about it all to be quite honest. The Report is written from the perspective of the National Audit Office who are auditors, who are out to make as much money as they can for the Government and for the taxpayer but I look at it a different way. Clearly the National Audit Office in the Report and yourself want to see the maximum sale of surplus property and surplus land. You want to see the receipts coming in because you believe that is an asset that is there to be sold. I can remember in the 1980s and the 1990s when there was a rush to sell off playing field land and local authorities were forced to sell off their land and ten years, 15 years later, there are some nice housing estates around but there are no playing fields and kids if they go to a secondary school no longer have the privilege of being able to play football or rugby or whatever on fields because they are no longer there, it has happened in my area. I have this great worry that this could be happening here. My question is not only to you Mr Crisp but also to the National Audit Office. How can you persuade me that it is to the benefit of the British taxpayer that we actually do sell all this land without thinking what the everlasting problems might be or what the situation might be in the future?
  (Mr Crisp) Which one first?

  35. Either?
  (Sir John Bourn) The first point to make of course is that the Auditor is not concerned with policy, it is the policy of the Government to do this. It is then for me to look at how well they do it. The second point that I would make here is that we are not in our Report advocating that people should sell off what they might really need. What we are saying is that you should have a proper examination of the property that you own, decide if there is any property that is surplus to your requirements that you are not using, that you cannot see a use for, and then see how that can be released into other economic sectors, thus bringing into the National Health Service the money that is raised. So rather than keep assets in a form that you are not using and do not anticipate a use for, better, given the fundamental purpose of the National Health Service, to translate those assets into resources that you can use for front-line care. That is really from those two points of view how we have looked at this matter.
  (Mr Crisp) I agree with that. That is how we have looked at it as well. The key point here is "surplus to requirements". There are a couple of figures I could give you that would reinforce it and Mr Osborne may think it is a reply to his question as well. 71 per cent of sales have been mental institutions and 27 per cent have been replacement hospitals, where we have built a new one and sold off the other, and only two per cent have been others. The sales of land over a five-year period have been very concentrated in those policy areas. We have not been selling off the core and there is an argument that we should be looking more closely at our asset utilisation, as Mr Osborne has said, in that. That is how we have been looking at it. This money is then all re-invested.

  36. I appreciate that. Sir John seemed to say that what the Report is saying is that land that cannot be foreseen to have a use in the near future is the land that is envisaged should be sold, but what do you mean by the "near future"? I am not sure you used that phrase.
  (Sir John Bourn) No, I did not!

  37. What were you actually saying?
  (Sir John Bourn) What I am saying is of course that if you think that there will be a use for it, even if you —

  38. What is the timespan of whether there is a use for it or not? 10 years, 20 years or 30 years?
  (Sir John Bourn) I do not think it is for the external auditor to try and lay down these timespans. What the external auditor can do is say think about this. If there is uncertainty and the possibility of using it within a reasonable period—and it is not for us to say what would be reasonable because we do not know the circumstances of individual cases—what we have said is think about this, think about it carefully because you may have a lot of resources tied up in something that is producing no benefit for the National Health Service. So it is really an encouragement to thought, care and planning.

  39. Mr Crisp, how do you judge, if that is the case, what land may be needed in the near future or far future or whatever? How do you judge that? You were talking about mental hospitals but what about surplus land? In the Report there was a pie chart (I am not sure which page it was on) which gave you a percentage of buildings and land and land was approximately ten per cent.
  (Dr Robertson) Open land 7 per cent and 13 per cent "other land and buildings."

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