Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 220 - 232)

MONDAY 15 APRIL 2002

MR NIGEL CRISP AND MR PETER WEARMOUTH

Chairman

  220. Can you provide a full note to the Committee as quickly as possible?
  (Mr Crisp) I will provide a note on what the Private Partnership arrangement is and why it will provide, we believe, better value for money.[5]

  Mr Williams: A full and detailed note!

Chairman

  221. The Committee would like to know where is the private sector risk in this arrangement?
  (Mr Crisp) Okay.

  222. Do you want to answer that now?
  (Mr Crisp) If you would like that put in the note, we will put that in the note.

  223. Well, I think it would be quite interesting to have your comments now.
  (Mr Crisp) The private sector risk in this is the fact that they are putting assets into this.

Mr Williams

  224. What?
  (Mr Crisp) They are purchasing this from us as has been described.

  225. At what price?
  (Mr Crisp) And using their expertise. At the price we might get on the open market now. The point about this is to get better value for the NHS from this arrangement.

  Chairman: We are still trying to understand the risks that they are undertaking. It is not entirely clear to us.

Mr Gardiner

  226. If you refer to Paragraph 3.33 it says that the average cost of sale across all disposals was two per cent of average prices. Of course, what we would have to be able to see is that the PPP arrangements that you are instituting mean that the average cost of sales is going to cost the Department less than two per cent of those sale prices. Certainly from the remarks that Mr Williams and the Chairman have made, it is very difficult to see where that will come and where the risk element that the private sector is bearing here lies.
  (Mr Wearmouth) We could provide a full and frank account of this. There have been a number of option appraisals undertaken by international, professional property advisers on what would be the best option to proceed. We are following the best option to proceed and in relation to town and country planning permission, the NHS and NHS trusts are no different to any private sector organisation when it goes to attempt to get town and country planning permission.

Chairman

  227. There is a full series of studies?
  (Mr Wearmouth) Yes.

  228. Have these studies been shared with the National Audit Office?
  (Sir John Bourn) Not yet but it is a subject which we intend to examine. The whole of this PPP will be one of the subjects we shall be examining.

  Mr Williams: On a point of order, Chairman, in view of the unbelievably unsatisfactory and nebulous answers we have received from the witnesses, I hope the Committee will reserve the option of calling them back again if we think it is appropriate when we receive this note, rather than waiting until it has all been set up and happened and we then get a post-dated detailed examination by the NAO. So you may be back here in couple of weeks' time, gentlemen.

Chairman

  229. We certainly look forward to seeing this note. I am sure Mr Crisp is very happy to assist us in any way he can. There is one last question which is perhaps a bit easier than the last from Mr Geraint Davies, which is a good line of questioning from his constituency point of view and a London point of view about leasing land in London and the ever rising value of land in London. He asks why do not you lease land in London for 20 years so you do not lose it forever?
  (Mr Crisp) You mean leasing to other people land which we regard as surplus, whether it is better to dispose of it on a long lease?

  230. Do you want to answer that now?
  (Mr Crisp) I am not sure I can give you a straight answer—an immediate answer on that.

Chairman

  231. We only want straight answers! Mr Wearmouth?
  (Mr Wearmouth) If we carry out any PFI transaction the land is normally leased on a long lease to the PFI provider, which is the hospital. If we are undertaking any developments that may have future use in the NHS, for example some of the residential accommodation refurbishments that the NAO looked at in the Report, we may retain the long leasehold of the land there as well. It is all down to the specific case on whether we retain it or not.

  Geraint Davies: Can I suggest to Mr Crisp that he does look at that option in the future because of the problems we have already discussed in this Committee.

Chairman

  232. I think that concludes a very interesting session. The press gallery and public gallery are hardly heaving with people but the fact is this is a very important subject. The NHS is a hot political potato. All we ask in this Committee is that you abide by your own guidelines and you maximise the benefits available to the NHS for all of our benefit. I think it has been a very useful session. We are very grateful to you for coming.
  (Mr Crisp) I trust we will be able to reassure you when we return with a paper on the PPP.





5   Ev 24-28, Appendix 1. Back


 
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