Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 80 - 99)



  80. What they are saying is that you take ages to sell your property because you have to get a valuation price, agree a price, and then the person with the money drags their heels and keeps the money in a bank account, gets the interest, and gets an asset that has appreciated over time. This is the fear, is it not?
  (Mr Crisp) If I take you further down that page, what the Audit Office is actually reporting is that there is no evidence one way or the other that if you had sold it quicker you would have got more money for it. If you look at that bullet point three-quarters of the way down it says: "This would have brought forward receipts of some £80 million, assuming that doing so would not depress the prices achieved", because we do not want a fire sale either.

  81. Do you think it is rather strange, given the state of the property market, that in only one in three cases (32 per cent) are more than the pre-sale valuations, when there is often a big gap between the valuation and sale? Do you not think that is rather bad value for money contrary to the rather strange conclusion here?
  (Mr Crisp) That sounds to me like you are making a comment on the valuations being made by the district valuer. What other mechanism can we have?

  82. You misunderstand me. At the time the district valuer makes the valuation that is a fair valuation, I agree that, but I am saying if it is sold down the line, because of these delays we have seen in Table 13, I am surprised we do not then achieve a higher price in more than one in three cases in a rising market.
  (Mr Crisp) Firstly, we ought to be clear that 90 per cent of these properties are sold on the open market and are therefore competitive as well, so that is the other mechanism.

  83. Why do you not use the competitive tender? Why not use an auction like we did for the spectrum mobile phone wave lengths, that made loads of money, did it not?
  (Mr Crisp) We do with some.

  84. If you do an auction over time you would escalate the price rather than fixing it.
  (Mr Crisp) Sometimes they are sold by auction. What, again, this document says is that we use different mechanisms within an overall arrangement depending on what the local circumstances are and what the properties are.

  85. Finally, is there any evidence of any corruption or collusion at a local level between local estate managers who are negotiating these sales and basically organisations that are buying them? Have you pursued any investigations or do you just assume nothing is going wrong?
  (Mr Crisp) No, no. This is part of the point using the district valuation office to make sure that we know what price we should be getting for things but maybe Peter could pick that point up.
  (Mr Wearmouth) Yes. The 32 per cent you referred to was the average increase in income we received from the pre-valuation. The pre-valuation is only a guide price so we have received an extra 32 per cent, we did not actually lose 32 per cent. There was an extra 32 per cent received in income.

  86. I thought in 32 per cent of cases the price exceeded the pre sale valuation?
  (Mr Wearmouth) It did, that is right.

  87. 32 per cent increase in value, I am talking about 32 per cent of cases the price was more than the valuation, the others were the same or less.
  (Mr Wearmouth) 95 per cent of sales by value exceeded the valuations. In 32 per cent—

  88. The same or exceeded 95 per cent.
  (Mr Wearmouth) The same or exceeded.

  89. 32 per cent exceeded.
  (Mr Wearmouth) 95 per cent by value met or exceeded the valuations, the pre-sale valuation for sales. 32 per cent was the average increase in value between pre-sale valuations and sale price.
  (Mr Crisp) It was not the number, it was the average increase. Have we got time to just answer the point on corruption?
  (Mr Wearmouth) Again, it is down to the controls assurance of NHS trusts to ensure that the correct processes are followed. Also the district valuer does carry out a valuation of properties over five million to ensure that the correct valuation has been achieved.

  Mr Rendel: Mr Crisp, may I just start by reminding you, as I always do, that my wife is a GP and also a member of a PCT. She is on the board as an executive.

  Chairman: I think, Mr Rendel, that you are a man of the highest integrity and you do not need to repeat this every time. We know your wife is a GP.

  Mr Rendel: As long as you are happy, I do not mind.

  Chairman: There is no question about this.

  Mr Gardiner: You keep declaring it, mate.

Mr Rendel

  90. Mr Wearmouth, I think you said earlier that we try to sell property as fast as we possibly can and Mr Crisp said earlier in relation to the question of the £600 million worth of retained property still unsold that part of the reason for that is that it is unsold in order not to flood the market and it is sold according to a plan, so much each year. Those two statements seem to me to be slightly in conflict. It cannot be both going as fast as possible and going according to a plan not to flood the market, which is correct?
  (Mr Crisp) I understand the point you are making. Part of the reason, as I said also, was to do two things, to stage the sales but also part of it was because some of the land was still being used.

  91. I understand that. If it is staged, you cannot be doing it as fast as possible, can you, which appears to be what Mr Wearmouth is saying?
  (Mr Wearmouth) If you take the Treasury guidance it clearly states that if land has become surplus to operational requirements we need to dispose of it as quickly as we possibly can. There are instances where we may not dispose of a particular piece of property because we may not have the right planning permission or it may be still occupied or there may be other instances where we cannot do that and that is the view in terms of being staged. Treasury guidance is quite clear on this.

  92. Staging is surely rather different from waiting until you have planning permission. Maybe I misunderstood Mr Crisp but what I understood Mr Crisp to be saying was that in order not to flood the market you deliberately did not sell some things which you could sell or were ready to sell, you did not sell them in order not to flood the market.
  (Mr Crisp) I think I did say that and I think actually Mr Wearmouth is giving you the correct representation which is that actually it is mostly for reasons that you can only do it at a certain pace so I think I ought to withdraw that statement.

  93. That has got that clarified. What further incentives for sales are going to be introduced? You talked about the possibility of incentives to enable trusts to keep some of the money, are there further incentives?
  (Mr Crisp) The one significant one was the point made, the ability to reinvest locally going up to £5 million.

  94. That has been introduced?
  (Mr Crisp) That is being introduced.

  95. Are there further incentives?
  (Mr Crisp) I think there will be some others that are looked at but at this moment I am not aware of any that we are specifically doing on that.

  96. The slight worry I have about this is that if people know that they are going to get better incentives in a year or two's time, there is an incentive not to sell until the incentive to sell has been introduced.
  (Mr Crisp) I understand that. Again, if I may just go back to the point about the estate strategy. This is actually about making sure that we do develop a plan for doing this and actually if you are keeping surplus property you are incurring charges while you are doing it so people do have to make decisions as they go on. People have a capital charge against land or property that they are not using and increasingly we need to come under scrutiny by you and others for making sure we use it.

  97. Do you accept that in practice it will be best for all concerned if you say just what incentives are going to be introduced and introduce them as quickly as possible rather than saying "If you wait a bit, you do not know, you might get a bit more for yourself. Okay, you may have to pay property charges meanwhile but you will have to judge whether that is worth it or not in terms of holding off and perhaps getting more for yourself later on"?
  (Mr Crisp) I understand that but, again, let me come back to the point that actually the big asset sales are on the retained estate or where we are replacing a hospital. Small asset sales are generally pretty small beer. They are not the biggest issue for us in asset management.

  98. They may not be the biggest issue for you but do you accept that if you are going to introduce incentives then you ought to introduce them as quickly as possible and not say "They may be coming in two years down the line"?
  (Mr Crisp) In a sense we are not actually even saying that, we are saying that in answer to questions it may be possible that we can look at other incentives. We are not actually saying at this moment, that I am aware of, that we are introducing any new incentives in two years' time. I am telling you a very straight forward answer which is that in looking at a system where we are trying to devolve as much responsibility locally as possible, all kinds of issues may be looked at in terms of that. People may then speculate and all the rest of it, and there is a lot of speculation, as you well understand. We are saying what we are doing.

  99. Figure nine on page 17 does seem to indicate a lot of sales coming in in the last month of the year.
  (Mr Crisp) Yes.

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