Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



  60. Yes.
  (Mr Crisp) For those who get earned autonomy, we are going up from one million to five million pounds which is not a huge sum.

  61. Have I got this right: you enable trusts to sell a bit of land for up to a million pounds without a business plan, you said that earlier, that has been redefined to five million?
  (Mr Crisp) For those who get earned autonomy, and it is not without a business plan but it is without our authority. They have to have a business plan, nevertheless, and be subject to audit in the normal way.

  62. Right, that is slightly worrying. What if they get the land worth between two or ten million pounds and split it into two so there are two lots, before we know it, it is going through on the nod on a business plan?
  (Mr Crisp) They will have corporate governance arrangements and audit which will be there to identify something that is a fiddle if it is a fiddle, if I can put it that crudely. If they are breaking the rules then they have got auditors who should be holding them to account.

  63. In terms of the increasing use of land, no doubt you know there are some very steep projections for population growth in London and property prices are growing accordingly.
  (Mr Crisp) Yes.

  64. Clearly if land is sold in London then the price of rebuying that land is more and, secondly, if population growth is going up the health needs are rising. Have you got a strategic solution to this of selling off some of the assets elsewhere in Britain and reinvesting them in London?
  (Mr Crisp) This Report only deals with half of the equation, it deals with sales, it does not deal with investment.

  65. Yes, but what I am getting at, is there a facility for sales in the regions to go to another region?
  (Mr Crisp) Yes.

  66. What is that? It seems to me it is all ring fenced.
  (Mr Crisp) Capital investment each year is about £3,000 million. £350 million of that comes from land sales, so land sales is about 12 or 13 or 14 per cent of the total investment and only that 13 or 14 per cent is directly subject to local decision in the way that we are talking about.

  67. What percentage?
  (Mr Crisp) £350 million out of £3,000 million, but the other £2,650 million is subject to decisions effectively from the centre. Some of it is for routine maintenance across the country which is spread differentially across the country and some of it is for investment. That is why, for example, we are able to invest in heart surgery in the North West where we need it.

  68. Have you brought land nett in London given that there is a projected increase in population and that we will need more land?
  (Mr Crisp) The only property I am personally aware of is the London Heart Hospital which you are looking into which is not land but expensive property in the centre of London. I am not sure as to whether we have purchased land apart from some land swaps around Paddington of which I am aware.

  69. At a time we know the population is growing and we also know from Page 24, Footnote 10 at the bottom of the page, which is very illuminating, that not only is there an escalation in the price of land generally but particularly in London, and since the current Government have moved forward on the use of brown field sites, it is obvious that in the future the price of land will go up and up and up and instead of holding back and selling at a higher price, which would be a rational maximisation strategy, we are selling if off cheap in the knowledge that we will want more because the population is going up. This Report seems to suggest that we are managing the assets sensibly. It seems to me that it is dire.
  (Mr Crisp) Let me answer that two ways. Firstly, this Report does not attempt to look at purchases and therefore I am not briefed on the question so do not take it from me that we have not been buying land in London—

  70. Can I ask your colleague. I assume I am right in saying that in London there is not a net purchase of land at this time? You could buy land and you could sell it down the road much more sensibly.
  (Mr Crisp) We are also not allowed to speculate. You ought to understand that as well.

  71. It is not about speculation, it is about sensible financial management. Mr Wearmouth?
  (Mr Wearmouth) All NHS trusts in London should have an estates strategy. They look at their five-year forward projection of what land and property requirements they need. Within that, if they need to purchase any land that is put forward. There has been a compulsory purchase of land, for example, to build the UCLH hospital but this is included within the trust's five-year strategy. It is for NHS trusts themselves to identify what their building and land needs are and to come forward with proposals. Any land that was sold off, as Mr Crisp has said, was predominantly large mental institutions. When we do sell land off such as mental institutions, we discuss with the local trust and the local authority any land requirements that would be needed within the five to ten-year period within the trust strategy or the development brief.

  72. I understand that, yes, but my central point is that still we are selling off land when the price is going up when we know that we will need more, which does not seem a sensible strategy. Can I turn you towards this particular point to which you may not have an answer. I understand that the North Wales Hospital used to be a mental institution Denbigh way and was sold off for peanuts—
  (Mr Crisp) I am only responsible for England.

  73. I will not pursue that any further. There have been suggestions by the Government that in the case of trusts being mismanaged that they are then handed over to the private sector or others and alongside that will be the facility to sell off land and the like more flexibly. Perhaps you can illuminate me briefly on that. Are there greater freedoms given to privatised trusts to sell off land once and for all leading to net provision for local people?
  (Mr Crisp) Firstly, there are not any privatised trusts and, secondly, the proposal is only to buy in management—

  74. Not to give them greater freedom to asset strip?
  (Mr Crisp)—In the same way as we might buy in other services. The freedoms that trusts that earn autonomy have will apply to whatever trusts they are. If you have private sector management in any organisation, you would only be willing once it had proved itself sufficiently—

  75. What are the extra freedoms to asset strip, whether it is private or non-private?
  (Mr Crisp) There is no freedom to asset strip, let me be clear.

  76. To sell off land.
  (Mr Crisp) The freedom potentially to sell assets for re-investment in the business plan within their territory is up to £5 million as opposed to up to £1 million.

  77. That is very worrying. In terms of this issue about the cosy deals with planning, I am not quite with this. Is the idea that the health authority goes along to the planning authority and says, "Look, we are thinking of selling this land and we are all together in the public boat. Give planning permission for housing on this, will you, and we will get a load more money"? Is that it?
  (Mr Crisp) No. It is that the Health Service is a very big property owner locally in every local authority area I would guess and it is very sensible for that property owner to be talking to its planners about what is possible, to be looking at the fact that if we develop something it will put a strain on the roads, and to think about ways you can get the most benefit out of selling something.

  78. When you answered the question by the Chairman, you used the example given by another Member where the value went up from £10 million to £66 million. Presumably that was because planning permission was given by the local authority and the NHS said, "We were not told about this, we want some more money." It was implied that there was some sort of cosy deal.
  (Mr Crisp) No, what happened there is the NHS put in for planning permission, it was refused by the local authority, we took the local authority to appeal (not in the least cosy) and as a result got the planning permission that we wanted through the appeals mechanism and as a result the value of land went up from £10 million to £66 million which was then re-invested in the NHS, which is a sensible activity by the NHS.

  79. Excellent answer. On Page 24, Table 13, at the bottom of the page Footnote 10 again mentions the reality (that we are all aware of) of a massive escalation of land and property values in London and elsewhere. It is obviously the case that if a buyer of your land agrees a price and you set the valuation at the beginning of the year and then you end up selling it at the end of the year, there is an appreciation and there is a danger that he wins more money. Against that, you have got various clawback facilities. Do you feel the fact that only in 32 per cent of cases the valuation was exceeded by the price illustrates that you are not really getting value for money in the environment of a rising market-place?
  (Mr Crisp) Let me just check that this was sales over a period.
  (Mr Wearmouth) This is months to completion of sale.

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