Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 160 - 179)



  160. It is a very useful tool.
  (Mr Crisp) It is helpful. It is not the purpose of this document, as you quite rightly say. It is a purpose for you to take oversight and to hold me to account financially.

  161. Are there any other areas of management which you think would benefit from an NAO report we have not prepared?
  (Mr Crisp) Certainly not.

  Chairman: I did not think you would answer that one. It would be very interesting information if you could tell us which assets of the Department the NAO should be investigating. I think we are unlikely to get very far on that. Mr Barry Gardiner.

Mr Gardiner

  162. Mr Crisp, could I ask you, the Oxford Brookes Report, which did a survey of 94 per cent of the trusts, has that given you a complete picture of the NHS assets and surplus assets in the country? Are you satisfied that you have as complete a picture as you are likely to get?
  (Mr Crisp) It slightly relates to the last point in that this is a Report prepared for you and that is a survey carried out on your behalf. We collect information also on the estates through the normal mechanisms. If I was looking for detailed information on some part of the estates I would be turning to Mr Wearmouth and see what information he has got, to which the Oxford Brookes Report might be something that he might refer. I would not see it as the definitive vehicle for us in any way.

  163. What I am concerned about, I hope I am not going to have to be concerned about it but I want to probe, is that you do have a central overview of where your property surplus is. Let me give it to you in economic terms. If you were looking at the economic management, the financial management of the trust, you would say that there was a prudent level of balances or reserves that should be carried. What I am wondering is do you have a prudent level of surplus land that at any stage the NHS should be carrying for future development?
  (Mr Crisp) We have a number of indexes that we are interested in such as, one I keep mentioning I am afraid, backlog maintenance. What is the state of it, how much of it is of a certain age, how much of it is fit for purpose according to certain categories. We do not have a figure that says for overall within the NHS we should have X amount of land that is surplus to current requirements. I think we have used quite a stringent definition of surplus to requirements so we have not got anything which says we should be carrying a certain amount of surplus. That is right, is it not, Peter?
  (Mr Wearmouth) Yes. We do collect information on a yearly basis from NHS trusts in their annual accounts and their estates performance data. What we do at the centre is we evaluate, for example, their building to land ratios and we produce a number of ten key indicators that look at space efficiency but also look at capital charges and the ratio of land to buildings to equipment and we compare these across the country with various trusts of a similar nature so it gives an understanding of how efficient a trust is actually undertaking its management of its estates. We look at its asset productivity, the quality of that particular estate, its deployment and what it costs us to actually run. We do carry that out at the centre. We have an idea at the centre of every NHS trust's ratios so we compare like with like.

  164. Yet you do not have, as it were, a reserves figure that you would apply locally?
  (Mr Crisp) A reserve figure in the sense of saying "We know that we are carrying 10 per cent of our property that we are not using and we think that is a sensible amount for us to be carrying" is that what you mean?

  165. Yes, that is right.
  (Mr Crisp) We do not, I believe, do that. I actually think that would be quite difficult to measure, to determine ten per cent of what, if you see what I mean. Are we talking here about land, are we talking here about reserve bed capacity?

  166. No, we are talking about land.
  (Mr Crisp) Talking about land, no we do not keep that figure.

  167. In the same way that, for example, the Department of Culture, Media and Sport is looking to produce a Doomsday Book that sets out all the capital assets that it has, that the nation has, as a bedrock for seeing where they should be investing and doing different things, you do not have that then for your estate assets? What you have is you have individual local views that you can amalgamate?
  (Mr Crisp) No, I think we do have what you just described but it does not include within it a statement that we are going to carry ten per cent of spare capacity. I do think we have a picture of what we need in Service terms.

  168. If I asked you to break down for me by local authority across the country a picture of the identified surplus land by each NHS trust in that local authority you would be able to do that for me?
  (Mr Crisp) We could get access to that data, could we not? Yes.
  (Mr Wearmouth) Yes.

  169. Thank you very much. Could I ask you to provide that to the Committee.
  (Mr Crisp) That might be a very large undertaking. Before I reply absolutely can I check how much work that will be to do and then come back to your Clerk.[2]

  Chairman: Absolutely.

  170. Can I take you to Annex 1 and Paragraph F it says "NHS Estates should work in partnership with other government departments on new initiatives to facilitate better inter-departmental guidance for local authorities." What I am interested in here is the very first part of that which talks about the inter-departmental working but not so much as it relates to guidance to local authorities. You will remember, Mr Crisp, that you were a member of one of the highest level series of witnesses we have ever had when we were studying an NAO Report into obesity. You were there, the Permanent Under Secretary for Education was there, as were a whole series of chief executives and so on. When you are looking at your assets in terms of which are surplus, is there any work that is done cross-departmentally on identifying where other departments might work with you where they have a need for land assets and where—and I am talking simply about inter-governmental sales here—those would specifically achieve targets which you in the NHS have? I am thinking very specifically about the obesity report. One of my colleagues, Mr Steinberg, referred earlier to the sale of school playing fields and the loss of those, which is proving not only a problem for the Department for Education but of course for your own Department in the tremendous rise in obesity that we have seen this country and which that particular Report has looked to. Have you discussed with the Department for Education ways in which land you have identified as surplus might be able to be used to provide playing fields and sports facilities for schools and other departments? Mr Wearmouth referred earlier to the fact that there is a group of priority purchasers and certain terms which we talked about for purchasers which include other government departments. Can you tell us about the mechanics of that and how it works?
  (Mr Wearmouth) We accept the NAO's Report that we should do more in relation to priority purchasers at a government level. We are proposing to introduce a clearing house with NHS Estates looking at large properties that would be of interest to other government departments. The reference was to should we have local playing fields and when hospitals are coming up for disposal should we be involved at local level. Of course, that discussion takes place with local authorities as part of the process that we have and the discussions that we have with them.

  171. With respect, that is the wrong person on the whole for it to take place with because with the devolved management to schools local authorities and the Department for Education are often not responsible now for those sorts of decisions for secondary schools within their catchment. Within my own authority there are only two secondary schools that you would be dealing with through the local authority, all the other 13 you would not. The reason I asked Mr Crisp to prepare that information about the breakdown for this Committee is because I believe it is important in looking at how we responded to the previous obesity report, that we are able to use this to do exactly that sort of matching. I think it is important that Parliament can see where objectives which this Committee has clearly identified in different reports might be able to be matched and come together. Whilst I appreciate it might be a body of work and it might be quite costly to do it, I think the benefits of it could be quite substantial if we were able to do some matching.
  (Mr Crisp) I will see how easily we will be able to do that. I hope we will be able to do that. I understand the point. I echo Mr Wearmouth's point about the strategic health authority, level which is the bigger level, looking for example at North West London.

  Chairman: You will do what you can to help.

  172. In response to Mr Rendel you disavowed your remarks that sales were staged to stop the flooding of the market and hence depression of prices. What I thought Mr Rendel was going to go on to say is what are you doing to ensure that you do not depress prices by flooding the market? I think it is a fair question to ask you that.
  (Mr Crisp) Again, I am going to turn to Mr Wearmouth. Let me be clear that the normal Treasury arrangement is that we should dispose of surplus property within three years. That is the arrangement that we should live within. That gives you a little bit of scope for making sure that you get your timing right within that, but in general we have to sell it as quickly as possible. Mr Wearmouth, I do not know if you want to respond in more detail?
  (Mr Wearmouth) We do follow Treasury guidance. I am not aware of any instances where we have depressed property prices within any of our disposals.

  173. So what you are saying is that so far the problem has not arisen. What it would be fair for this Committee to ask you then is what policy or strategy do you have to check that it does not arise?
  (Mr Wearmouth) As we mentioned, if we had a true test of valuations to the market-place and the market was depressed and we did not receive value for money, we do have a second valuation undertaken by the district valuer when the prices for the property in disposal have been opened.

  174. I am having difficulty hearing you.
  (Mr Wearmouth) We have a process where when we seek competitive tenders for property disposals the tenders are reviewed not only by ourselves but by the advisers and by the district valuers themselves or an independent valuer to ensure that we have got value for money.

  175. Let's not misunderstand one another. What the valuer will do is tell you that in a current market situation that is the price you are likely to achieve for that particular sale. Of course, that will take account of how much property is available in the market. What I am asking you, though, is what strategy do you have to make sure that the price the valuer is giving you, which may well be correct, is not depressing the market? I understand that it may be the correct price given the flow- throughs onto the market at that particular time the laws of supply and demand being such, but what we are trying to establish is that you are not supplying too much to make sure the price goes down.
  (Mr Wearmouth) If we had a number of large sites like this the guidance is quite clear, we want to discuss this with our colleagues. What we could do is look at developing parts of sites rather than the whole site and releasing it on a phased basis.

  176. Finally, I thought that Mr Rendel's wife might not be a doctor but a dentist because he eventually extracted from you that March payments if delayed would attract a penalty. I just want to check that there is not a chink we are going through here and that we are not misunderstanding one another. Could you confirm whether sales completed in different months have different lengths of time before final payment is made on them? For example, perhaps it would be standard in most months of the year that, let's say, 80 per cent of the contracts concluded stipulated that it had to be within three months. Can you confirm that when it is a March final payment that does not drop below the standard percentage of 80 per cent down to 60 per cent so that what we are looking at is a genuine like-for-like over time and there are not extended credit facilities built into contracts that conclude in March. That was not something that you specifically answered.
  (Mr Wearmouth) If a contract had been delayed and completion had been delayed then we would expect extra monies. The issue for us is that when a number of contracts are exchanged or there are a number of sites taking place, there are different circumstances and what the NAO said is that there are different requirements at different stages.

  177. Do not misunderstand me. I understand that if the contract is delayed there will be penalty payments. What I am asking you to confirm is that contracts where final payments are due in March are not concluded on a substantially different basis to contracts where final payments are due at any other time of the year, such that at any other time of the year you might have three months until final payment whereas when it comes in March it might be four months. I am wanting to know that the contracts are concluded on a like-for-like basis throughout the year.
  (Mr Wearmouth) Yes, they are.

  178. So your response is that they are the same and there is no differential in the time before final payment for contracts that are concluded in March?
  (Mr Wearmouth) Value for money has been achieved on all sales whatever time of year they have been sold. Actually, are you talking about timescales or value for money here? This is what I am slightly confused about.

  Mr Gardiner: I am not quite satisfied here. I thought I had got a definitive answer from you. Please let me just be clear that it is a definitive answer. That is that all contracts are concluded on a like basis when it comes to the period between signing the contract and final payments such that any contract that is concluded throughout the year will always have, let us say, three months between signature and final payment so that there is absolutely no difference from one contract to another. Is that correct? I am not saying it is three months.


  179. Do you understand the question and can you answer it?
  (Mr Wearmouth) Yes, I do understand the question, Chairman.

2   Ev 23, Appendix 1; and Ev 29, Appendix 1, Annex A.  Back

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