Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 200 - 219)



  200. That is why they are getting rid of you.
  (Mr Wearmouth) I would refer you to the five year quinquennial review of the NHS Estates Agency. What came out of the quinquennial review is that NHS Estates should focus on the core activities of delivering health care and ensuring that buildings were fit for purpose in delivering that health care.

  201. You have been talking about a public-private partnership and I am asking why it needs to be in that form.
  (Mr Wearmouth) It also suggested that we look at the public-private partnership for NHS Estates' trading activities, which were predominantly operationally based to deliver services to NHS trusts. Therefore our agency was looking two ways. Firstly, it had a responsibility to deliver policy, set standards and guidance and hold the system to account and, secondly, to offer operational consultancy services to the NHS. What the public-private partnership is about is moving those particular staff where their skills would be best served in delivering it through a private-public partnership.

  202. I am sorry, it is not about moving staff, it is about £400 million of portfolios. What is it going to do that you could not do more cheaply by other means?
  (Mr Wearmouth) If I move on to the second point—

  203. I was hoping you would get round to the main point.
  (Mr Wearmouth)—Which is the £400 million sale of assets. There are a number of arrangements which you could arrive at with the private sector, and this is a complex transaction that is going to involve a joint venture where we bring to the table the expertise of the Health Service and our private sector partners, as they have always done in the past, bring private sector expertise to the table and develop our sites with us.

  204. You are putting £400 million of capital in. What are they putting in?
  (Mr Wearmouth) They are going to purchase the properties and there will a clawback arrangement in place where we will share in the benefit of the added value that the private sector can bring to property disposals.

  205. Okay they buy it, if they then sell it, who gets the proceeds of this money?
  (Mr Wearmouth) There has been an open marketing period to bring forward bidders for this particular process. The actual sale of the property will be no different to the sales that take place at this time.

  206. Will the subsequent sale be a private sale or will it be an NHS sale?
  (Mr Wearmouth) The subsequent sale will be a private sale because—

  207. Why do we need a partnership? What on earth is the partnership for? Mr Crisp, this is a policy issue, it is not fair for Mr Wearmouth to answer this.
  (Mr Crisp) The reason for the partnership, as you say, is that we had £400 million of land to sell and there are a number of options for doing that. Having worked through all those options, the view that was taken was the one that Mr Wearmouth is describing, which was to set up a body which managed those sales on our behalf. As you say, they become private sales but we also retain an interest in the income that comes from them.

  208. How?
  (Mr Crisp) Because that is the contractual arrangement between us and our partners.

  209. What will the terms be?
  (Mr Crisp) As far as we are concerned—

  210. I am astonished that here we are dealing with the management of surplus property in the NHS and you have got a nebulous scheme that the Committee cannot understand (or at least I cannot) from the description that I have had from either of you that is now going to be taking over responsibility for £400 million of public assets. I want a full and comprehensive report on this to this Committee and I want it within time, none of your three months' wait for a reply. We want a reply within two weeks. What is it going to cost?
  (Mr Crisp) Let me come back and give you a full report if that is what you want.[4] We have looked at the different options for doing this and this is the option that provides best value for money in our view to the NHS, and we can go through all the arrangements of that. The reason that we are being partly vague on this is that the terms are being negotiated, but I think the principles are clear, the principles are that the NHS will benefit from enhanced value for these sales as a result of setting this up.

  211. There is one further point—and I am sorry, Chairman, I realise I have slightly overrun but I think you will agree the witness has not exactly been terribly forthcoming or has been rather circuitous in getting to answer this—in what position will this Private Public Partnership stand as compared with, say, a trust when it is looking for planning permission in relation to property? When it is sold to them—your colleague said it is going to be sold—will everything already have planning permission or is it going to be sold to this partnership without planning permission?
  (Mr Crisp) The mechanisms will be the same as we employ today, it depends on the particular piece of property.

  212. Yes but you see at the moment the trust technically owns the property and therefore gets the planning permission so are you saying now that this Public Private Partnership, nebulous beyond description at the moment, will have this property and will assume it at values based on value with planning consent or without planning consent?
  (Mr Crisp) I am not being obtuse, this depends on the individual piece of property. The point about the relationship is that if planning permission is subsequently achieved then the NHS benefits from that as well.

  213. This is a final point, it is very important. The whole process of privatisation of hospitals and NHS land has involved an implicit corruption of the planning process. I had a nurses' home sold in my own constituency, a placed called Park Beck, associated with my biggest hospital. The Welsh Office issued a circular, which I assume was identical to the one that went out here in England. It said that trusts were to seek to sell whatever property they could. Where possible they were to get funding but seek to sell with planning permission. In the event of their failing to get planning permission from a council they were expected to appeal to the Welsh Office, the same party which is going to judge the planning appeal. That is effectively what we have here but now we have got in the middle of it some strange animal, this PPP. We do not know yet what is going to happen to the incremental value but they are going to be in the middle of benefiting if you have not extracted all the incremental value before you enter into the PPP, is that correct?
  (Mr Crisp) We have got two steps on that. The first one is what you have described. The second one is precisely because it is a partnership the NHS will benefit from any subsequent increase in value before it is sold on.

  214. All of it?
  (Mr Crisp) The NHS has two bites.

  215. 100 per cent?
  (Mr Crisp) Not 100 per cent.

  216. 70 per cent?
  (Mr Crisp) That is part of the negotiations.

  217. 60 per cent?
  (Mr Crisp) That is exactly the position we are in now.

  218. 50 per cent?
  (Mr Crisp) It is exactly the position that we are in now, is it not, when we sell to anyone. If then they subsequently sell on at a higher value we need to be able to negotiate with them "Are we having 50 per cent of the places".

  219. Your job is to ensure they cannot sell it on at a higher value if possible because you are supposed to have got the proper price in the first place.
  (Mr Crisp) You know that there are plenty of places where people have got, by all standards, the proper price and then two years further something odd happens in the property market and people get more for it.

  Mr Williams: Chairman, this is an unbelievable shambles and I want a full note on this for the Committee, and I want it as quickly as possible please. Thank you, Chairman.

4   Ev 24-28, Appendix 1. Back

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