Examination of Witnesses (Questions 300
THURSDAY 8 NOVEMBER 2001
300. We have probably covered this area pretty
well, but there are one or two other things I want just to tidy
up before we move off it. But, before I do that, I was interested
in what Mr Rose had to say about not being a trade association;
does that mean you are just a public relations sort of thing,
or is there some other function that you carry out?
(Mr Rose) No. We are a policy forum and a think tank
for the big companies who are addressing the major Government
policies and responding to Government on behalf of the whole of
the business services sector.
301. Thank you. Looking at the evidence you
submitted to the Committee, there was talk about major changes
in the Glasgow Royal Infirmary contract, and, I am interested
a little bit, and I will maybe come to some others in a minute
or two, what happens when there is a contract that clearly is
unsatisfactory and there are quite big, major changes involved
in it, how these are negotiated and how quality is monitored?
And this was to do with a quote from your evidence, renegotiate
the contract for "all the hospital's services", and
as far as catering was concerned the contractor, and I quote,
"took the production of meals out of the hospital's kitchens
and into a (commercial) production kitchen." Now that is
a fairly major thing to do in the middle of a contract. I just
wonder if you know any more details of that, and to what extent
the Trust was involved in discussions before it happened, and
when it happened?
(Mr Rose) I would have to ask the company concerned,
and I know who it is, exactly what happened on that; but I do
know that that was done in discussion with the Trust and with
the Trust's agreement. The service was not up to the standard
that the private contractor wanted nor that the Trust wanted;
the contractor came up with an innovative way to do it, because
it is a very large contractor that has particular facilities,
it explained that in detail to the Trust, the Trust was very happy
to go down that line, and so the services were transferred and
performed in that way.
302. What would that do to the original contract,
would it mean financial adjustments, and so on?
(Mr Rose) There would be adjustments to the terms
of the contract, to the services to be delivered; there might
be some financial adjustment, it might actually cost less rather
than more to do it this way. Those things are taken on a case-by-case
303. Let us move into a more general area then.
What would you say the primary causes are of failure in service
quality, which might lead to this kind of change, in general,
first of all, and whether it leads to change or not we might speculate
(Mr Rose) The biggest cause of failure that we find
is a breakdown in a partnership relationship at local management
level. You start a contract with a clean sheet, because the contractor
comes in, what has gone before inevitably is a benchmark but there
is a clean sheet; if, at that stage, there is a bad relationship
between the Trust management and the contractor management, it
is a sure recipe for disaster, not that the contract would be
necessarily terribly bad but it will not be as good as it might
be, because there is antagonism between both sides. And that,
inevitably, would have some history to it, because the history
of CCT was not a good one for anybody, and most of us have managed
to put it behind us, but still it comes out and still there are
thoughts back to that. Sometimes the contract is wrongly drawn
up, what the contract says the client wants is not actually what
the client wants, we have to try then to work to rescope the contract.
Sometimes the contract is terribly prescriptive on inputs, so
that we have to do a whole host of things, whether or not they
are relevant, whether or not they are the right things, and we
have discussions then with the client about how we should go to
an output and particularly an outcome contract, the difference
being that outputs give us freedom to determine the way in which
a service is provided, the outcome says that the end user of the
service is satisfied; outputs without outcomes do not really work.
304. Do you have a preferred arrangement, management
arrangement, for managing these kinds of contracts, or is it interaction
with the Trusts?
(Mr Rose) We do, indeed. Where we have these major
contracts we will have a joint board, or joint committee, with
the Trust, where we will sit down on a very regular basis, frequently
on a weekly basis, to discuss what is happening in the contract,
how they, the clients, and how the patients view the services
being provided, what changes should be made, how we can bring
in innovation and how we can look at different ways of doing things.
It is, in that sense, a moderately labour-intensive work which
we do, but we believe it is worthwhile and valuable; and certainly
the experience we have back from the clients is that it makes
a tremendous difference to the way in which they perceive the
partnership arrangement working between us, how their staff then
view the interaction between us, as the private sector, and the
public sector employer.
305. I am interested in this contracting issue.
Obviously, your organisation has an overview of the experiences
of your members in various parts of the country. A lot of the
problems that have occurred have occurred in relation to local
negotiations and difficulties, as you have illustrated. Do you
feel that the Government should have more of a role, at the risk
of going in completely the opposite direction to that Alan Milburn
is going, he is talking about devolving, rather than this kind
of big, central control? But are we not wasting a lot of money
somewhere, public money and NHS money, on all the different difficulties
on these contracts at a local level, that might be resolved by
a different approach, if we are committed to a system that has
PPPs and contracting out services? Is there not a more sensible
way of avoiding all these local negotiations and arguments, if
the centre took a stronger role, and perhaps reducing the costs
of this process?
(Mr Rose) Chairman, at the risk of shocking anyone,
I think that we in the private sector would say, yes, we welcome
a slightly stronger central control. Devolved management and devolved
arrangements are good in the sense that they give flexibility,
but we end up reinventing wheels.
306. Can I put that to our colleagues from the
two Trusts. Would that kind of principle cause you concerns?
(Mr McGuire) Not really, I think. Could I just get
a bit more from you, in terms of what you mean by causing concerns?
307. What I was concerned about, if you were
negotiating local level contracts and specifications and the difficulties
arise around that, and a huge amount of your time must be spent
on that process as well as the contractor's time, which is reflected
in costs, are there not principles that can be established, in
a way that we have not done so far, that might avoid some of these
difficulties and costs?
(Mr McGuire) I think we are starting to do that, we
are starting to share good practice.
308. But you are doing it on your own initiative,
this is not coming down from Government then?
(Mr McGuire) No. There are more national imperatives
now, the national cleaning standards, for example, there is a
move towards national catering standards that will be incorporated
within catering contracts. I would like to see catering specifications.
I think we are moving that way. And I think, generally, we would
welcome more of a national steer, but still with flexibility at
a local level to tailor a package, or a number of packages, to
our local circumstances.
309. So it is something we could look at.
(Mr McGuire) We would generally welcome that.
310. It might be something that the contractors
(Mr McGuire) Yes.
(Mr Turner) I would support that, Chairman. One of
the things that has happened recently is the national cleaning
standards; that will give a framework that is set nationally,
but will allow us local flexibility in implementing those cleaning
standards, and I think that is to be welcomed.
311. I just was going to move on and ask, after
I had asked Mr Rose, if there were any figures to compare the
costs of management with in-house contracts, with the kind of
contracts he is talking about, and then ask Mr Turner, who has
had experience of both?
(Mr Rose) I think the general evidence, Chairman,
is that the management costs in the private sector are less, because
we have a different approach to management, a much more flexible
approach, and indeed sometimes a much more hands-on approach from
a low level up, so we have fewer grades of management, we have
a much flatter structure, we have a much greater involvement in
what goes on, and we believe that we have a different rapport
with the staff, so that we are on top of it, because we do not
have these gradings, we do not have these hierarchies, to deal
with. And certainly we have found that the staff have responded
well to this.
312. So you are saying you have got fewer layers
of management and probably fewer managers?
(Mr Rose) Yes.
313. But there is more involvement, in that
they are more involved with the staff, and that means they pop
round and see them more regularly, or something like that?
(Mr Rose) Oh, they do. I can tell you that the senior
directors in companies will know intimately the contracts for
which they are responsible and will go round regularly to make
sure that they know what is happening, that is national managers,
far less regional and divisional managers.
314. Is that your experience, Mr Turner, and,
remember, you are protected by Parliamentary Privilege here?
(Mr Turner) With respect to my colleague, that is
clearly not my experience at all, and one of the real issues for
us is the issue of management of local contracts. It is not my
experience that people at national levels, i.e. sales directors,
etc., know intimately the contract at all, and they certainly
do not know the staff that work in the hospitals. But, I have
to say, this is my experience in Bradford, I cannot talk about
315. How about making it a bit wider, how about
Stephen, do you have any thoughts?
(Mr Weeks) I would not want to make a generalisation,
because different companies do have different approaches, but
the issue of not feeling that the senior management are involved
is one that has come through to us; but, to be fair, if you have
fewer layers of management, to expect the most senior ones to
be able to come round all the time may be an issue, so I would
not necessarily say that is a main criticism. But the NHS structures
are not cast in tablets of stone, they have been changing, and
partly they are a product of the undermanagement of those services
in the NHS, and some Trusts at local level have taken quite a
radical view on that and restructured their own services, so it
is not necessarily that it can only be done through the involvement
of the private sector.
316. Just a final question, to finish off. We
started off talking about major changes having been introduced
in the middle of a contract; presumably, one of the major drivers
for that would be impacts on patient care. I just wonder if Mr
Weeks has any examples of how PFI has impacted on patient care,
and the others can comment as well, of course?
(Mr Weeks) I do not want to go over ground which we
have already covered. Obviously, the number of PFI schemes that
are actually up and running is relatively small, and we have highlighted
our concern in relation to those; and that continues to be our
serious concern, about the direction PFI is going in. And we continue
to believe that the inclusion of staff in those schemes is not
the correct route, and we continue to work with the Government,
on a daily basis at the moment, about alternatives to that.
317. Just briefly, as we are coming to the end
of this section, to Mr Turner in particular. The discipline on
the private contractors is the loss of the contract, and that
is the incentive, I presume it keeps them on their toes. You obviously
made a decision in Bradford about the quality of the services
you were getting, obviously made a decision you could get better
value for money, as a combination of price and quality, doing
it yourself. What mechanisms do you now have to ensure that that
remains the case?
(Mr Turner) Exactly the same as if it was a private
contractor; I run the in-house contract exactly the same. I have
a project board, I have user groups, we have regular quality monitoring,
we have quality monitoring on wards and departments which
318. Sorry. Have you replicated the contracting
procedure, e.g. have you literally given yourselves a specification
and you monitor that in exactly the same way?
(Mr Turner) Yes. The in-house team that bid for the
work, which was led by my managers, bid for the work on the specification
that everybody bid for, and what I now do is to monitor that against
the specification, in exactly the same way as I would monitor
contracts. And the in-house team are absolutely clear, if they
do not deliver the service then the ultimate sanction can fall
on them as well, the service can go back outside.
Dr Taylor: Can I just come in, very briefly.
One of the distressing things that we found in Carlisle was that
we got quite different pictures from managers and the unions.
Can we assume, as here we only have managers, that if we had got
Chairman: We have got a union here as well.
319. We have a union representative; can he
speak for the unions n Bradford and Leeds, to say that they are
in agreement with what we have heard about the satisfactory state
of relations in Bradford and Leeds?
(Mr Weeks) Broadly speaking, yes.