Examination of Witnesses (Questions 200
MONDAY 15 APRIL 2002
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
(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
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.
(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.
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 pointand 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 thisin
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 themyour colleague
said it is going to be soldwill 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
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