Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 40 - 59)



  40. 13 per cent land, that is even higher. How do you know that that land that you sell off now will not be needed for a new hospital for example in 20 years' time when you will have to go out and buy land probably at extortionate cost rather than keeping it in a land bank when it would have been there?
  (Mr Crisp) Let me answer the bigger question and then on the specific technical point bring in Mr Wearmouth. We have to have an estates strategy just as trusts do. We have to look across the NHS as a whole and say where have we got our current estate, where are we currently invested, what money are we going to put in and what is the result that we are going to have coming out at the other end. We have a number of targets on this part of the Report such as making sure that we bring assets up to good utilisation and high quality so that we do not have a huge backlog maintenance bill. Our estates strategy is to do that, to dispose of properties like the one on the front page of the Report, for example, which no longer can be used effectively for what we want to use it for. There is a big strategic set of questions there about what we are trying to do with this huge asset. We have got of £23 billion, and every individual decision needs to be made in the context of that strategy and every individual decision needs a business plan which demonstrates the answers. The answers will be different in different cases. Take this property on the front (which is not land) this property had effectively become unuseable in terms of its use as a nurses' home or as residential accommodation. The more sensible thing to do and what happened here was the property sold and the money re-invested in local services and, indeed, some more residential accommodation. That would fit into this category. I do not think, unless Mr Wearmouth corrects me, that we have a statement that the "foreseeable future" is ten years or 15 years or 20 years. I think it depends on the context.
  (Mr Wearmouth) We do not have a statement in that regard. I think it is essential and that is why every NHS trust or trusts should have an estates strategy. What that tries to look at is a five-year forward look at what property, be it land or buildings, it would require to carry out its health care functions. Also we have been involved with DTLR in looking at the new Green Paper and how we can involve health more in planning decision, so that when a development plan is put forward by a local authority that health issues are included in that development plan so we can allocate land for purposes in the future. We are working very closely with local authorities. The trust itself develops an estates strategy that feeds into that.

  41. I will come back to that in a minute. On Page 15, Paragraph 2.10, it is clear from that, as has been mentioned, that a number of trusts certainly have not planned for the future in terms of their disposal strategies and they appear to be being criticised for it in the Report. Also in the Report many trusts have not decided yet what are their most important or what are their least important assets or surplus property that can be sold. They seem to be being criticised for it. I personally would not criticise them for that because my view is that if you make rash decisions on getting rid of land or property you may well live to regret it. What is the old saying? "It is eating no meat." I do not think they should be criticised for that.
  (Mr Crisp) May I take the alternative point because I absolutely understand that and we have recently re-looked at what we are saying is surplus to make absolutely sure that there is not something there we can use for extra capacity. If you look at something like Napsbury for which in the end we got £66 million, frankly, we were not going to turn it into something of use to the Health Service in the foreseeable future, by anyone's definition of the foreseeable future—

  42. Let me explain why I have gone down this track. As you are well aware, we have just had a new PFI university hospital in Durham at a cost of something like £100 million. For 20 years we argued with both governments that we should have this new hospital and eventually persuaded them that there should be one built. The main stumbling block all the time was where this hospital should be built. They went to York University for surveys, they went here for surveys, they went there for surveys and greenfield sites came up on the agenda here and there. The very site that they have built the new hospital is on spare land on the existing site. What happens if they'd sold that off? We would not be able to build there. We now have a situation where on that site there is now a huge amount of land and I know the trust will want to sell that land. I know that Tesco's have been very interested in buying it. I want to come on to this in a minute regarding planning. If that land has been sold or if this land now is sold that debars you in the future from doing anything else. You have a situation now where the hospital has not got enough beds, frankly, and they may well need to expand in the future. If they sell this land off where are they going to expand? They may make £10 million selling it off but to buy extra land eventually might cost a lot more than that.
  (Mr Crisp) What you illustrate is that people have to make decisions. The Napsbury example I gave you—

  43. They have to be pressurised into doing something that they are uneasy about.
  (Mr Crisp) I hope and believe that trust boards in this country are trying to get the best deal for their patients locally and they are trying to use the assets for the best deal. If you are responsible for something like Napsbury, then I think in a sense it is a no-brainer as to whether or not you sell it and reinvest it. The example you use, it sounds as if the decision was made the right way round, they did not sell off the land.

  44. That was not down to the management, it was luck.
  (Mr Crisp) I am not going to comment on individual cases because I do not know about it. My point is that people need to make decisions and we have a responsibility to get the best out of the assets we have got and that is what I understand you are holding me to account for.

  45. Okay. I did not think I was going to last 15 minutes but I am told I have two minutes left. The one question I want to go back to is the planning issue. This is where I find it a little difficult to accept what the National Audit Office is saying. As I interpret what they are saying, they seem to be saying "Go along to your local authority and have a little fiddle there. Get the heads together and see what you can do". Clearly that is not how you do planning, surely, is it? For example, the one in Durham, the local authority clearly told the trust "Get lost, there is no way that we will give permission to build a bloody supermarket on the site of this land" which might be worth £12, 13 or 14 million. There is no way I would expect the local authority to capitulate on that. I hope this Report is not suggesting that the trust should go along and have this cosy relationship with local authorities where planning could be given for virtually anything they want because it happens to be the National Health Service which wants it.
  (Mr Crisp) That is not how we have interpreted it. We have interpreted it as being appropriate liaison with the local authority and not turning up at the last minute with a planning application which they have not heard of and they do not understand and which may have an impact on their local infrastructure and so on. May I just apologise, I quoted you a wrong figure. I quoted you 71 per cent for mental institutions, that is a percentage of hospitals sold, it is not a percentage of the total property sold. Can I just correct the record on that.

  46. Can I ask the National Audit Office: what does the Report really mean in terms of this liaison with local authorities?
  (Sir John Bourn) It meant what Mr Crisp has said.

  47. That is the first time, Sir John, I have ever had such a short answer. You would expect any organisation or any individual who is wanting to build something or develop to talk to the local planning authority. You would not expect a special relationship, that is open to criticism and corruption, surely?
  (Sir John Bourn) Yes, but we are not suggesting a special relationship of a kind that could be regarded, as you say, as cosy or as the harbinger of corruption, of course not. Both sides need to know enough about what they are concerned with in order to meet and come to some sensible view of the way forward.

  48. What do you mean by sensible?
  (Sir John Bourn) What I mean by sensible is that it is important the local authorities should know about—

  49. The local authority would have a local plan and within that local plan certain developments can take place whether it is National Health Service or not the National Health Service. You are not saying the National Health Service should have some sort of priority.
  (Sir John Bourn) No.

  50. Because it is the National Health Service.
  (Sir John Bourn) No, but I am saying they should be there and their concerns should be fully understood by the local authority and within the local authority's discretion properly recognised, that is what I am talking about. I am talking about sufficient sharing of understanding and knowledge, I am not talking about some overbearing of the law or some underground or underhand set of arrangements, of course I am not recommending that.

  51. Thank you, Sir John. Sorry.
  (Sir John Bourn) No. Fine.

Mr Davies

  52. Value of the asset base in terms of land lies around trust estates is worth £23 billion, that is correct, and you spend something like £47 billion, do you not, in the NHS. Do you feel that the basic ratio between asset value and turnover is the right balance or have you got any sort of idea how large that asset base should be given you are selling it off at something like £700 million a year, is it not?
  (Mr Crisp) £350 million a year is what we are selling off. We have been looking at this in estate strategy terms not in terms of a financial ratio but in terms of getting an estate that is fit for purpose for the Service so we do not actually have a financial ratio, I do not believe, that we are aiming for.

  53. Tell me, the overall asset management strategy, is the idea, in basic terms, to sell off those assets so the assets you end up with and reinvest are disposable assets which then could be reconverted into land or do we run the risk, as has already been mentioned by other Members, of selling off land once and for all?
  (Mr Crisp) There are three steps. The first one is to make sure that we understand absolutely what we have got and the condition of what we have got. The condition is a very important point. We have actually had a rising bill for some years of repairs.

  54. I am obviously short of time. What I am getting at, when we sell off the £350 million per year of land—
  (Mr Crisp) Land and buildings.

  55.—that money is reinvested.
  (Mr Crisp) Yes.

  56. Are local trusts in a position where they can buy back land or basically is this a once and for all sale?
  (Mr Crisp) It depends on particular conditions but trusts can also purchase land. This is only looking at surplus land but we may well want to purchase lands.

  57. Are the proceeds from the sale of the assets reinvested in assets which then can be liquidised to buy land or are they just used up in depreciating assets, machinery and the like, and we end up with less value and no ability to repurchase land to enlarge facilities?
  (Mr Crisp) The present use value of the land is £23 billion, of what we have got, and even though the land area has reduced by 20 per cent in five years, the value has increased by 8.5 per cent. We have actually been investing in higher value land and facilities.

  58. We have been losing the amount of land. Obviously the amount of land, that value would be a lot more because land is going up very quickly, is it not?
  (Mr Crisp) It depends on the use for the land. It depends on the planning permission.

  59. Can I just ask you about the regional distribution of asset management, if you like. My understanding of this is we are moving from a centralised approach to giving trusts the right to sell land and then to reinvest it, that is correct, is it not?
  (Mr Crisp) They have always had that right up to a certain level.

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