Q11 Chairman: But I do not understand why you withdrew support. You had this estimated deficit of £10 million when you were prepared to go ahead with it and then when it is decreased to £3 million you pull the plug. Why?
Mr Bell: It is more than just the issue of the deficits. There were other conditions. The key condition that positioned us to withdraw support from the outline business case, not the scheme, was that there was no land available.
Q12 Mr Mitchell: This looks like a mess. It is manual of how not to do it, is it not, of how to have so many fingers in the pie that nobody is actually in control? Surely the main responsibility therefore rests with the Department of Health as the one body in overall control which is pushing trusts into developing PFI hospitals and leaving the responsibility to them. What position did the Department of Health take initially on the desirability of this Campus?
Mr Taylor: The proposal to go ahead with the scheme was approved within the Department of Health as a result of a process of prioritising a number of capital scheme proposals from the NHS; this was in the late 1990s. That was on the basis of the strategic outline case. The process of approving the outline business case was then delegated to the regional office of the Department. What that meant was that the Department supported the strategic vision set out in the original case and at that stage was looking then to the NHS to develop the schemes and bring them forward, first to outline business case and then to procurement phase. At that stage the Department did have a more hands-off approach than it would have now and did not really get involved in details till the final business case. If what lies behind your question is whether the Department should stay closer to big capital schemes of this kind, then the answer is yes and we now do.
Q13 Mr Mitchell: That would be my answer too, but why in that case did the partners believe that they had your strategic support, political support for the scheme? They believed they were God's chosen; you had put it high on the list of priorities presumably and it was their job to get on with it.
Mr Taylor: They put forward the scheme and it was approved. Of course we as a Department were briefed by our colleagues and subsequently by the strategic health authority on the progress of the scheme and ministers were seized of the potential that it had to improve services for these organisations. So it had support in that sense. But support is not absolute; it has to be conditional on there being an affordable case. The original OBC was qualified on the grounds that there were still issues to explore and in the end the Department would have had to have been persuaded that the revised outline business case was affordable. The Department's support was there for an affordable scheme as the NAO Report reports.
Q14 Mr Mitchell: In 2000 the London regional office said yes, go ahead and they supported it. So that carried implicit support for the scheme as it was then.
Mr Taylor: Yes, it did.
Q15 Mr Mitchell: Why was there no concern at that time, given the fact that you had had experience of other schemes over a substantial period by this stage, at the fact that there was no united control? Surely a big project like this needs one person, one authority, one body in charge of it. You could not even get the two trusts to merge.
Mr Taylor: There are two separate issues there.
Q16 Mr Mitchell: Yes there are, but I should like to muddle them up.
Mr Taylor: Let me deal with the issue of whether the Department should have allowed a partnership scheme to go forward. First of all, I accept the conclusions of the Report that leadership of these schemes is important and governance is important. The proposal here was for a partnership to develop a scheme, a PFI scheme, and we had delivered examples of PFI schemes which were partnerships.
Q17 Mr Mitchell: In those was there somebody clearly in control or were the partners still arguing?
Mr Taylor: The critical thing is to ensure that you have governance which sorts out any issues and since this experience and with more experience we have looked critically at scheme proposals which have involved partnerships and in at least two cases comparatively recently, as a result of some challenge that we put into the process on governance, we have pushed back on schemes which were proposing partnerships and they then reverted and have broken back down into their constituent parts and gone for single schemes. So we do take an active interest in this. In this case, we thought that the partnership arrangements, the arrangements for the trust to work in partnership under a single project management, in principle could have produced the right solution.
Q18 Mr Mitchell: The Royal Institute of British Architects thinks the arrangements were not adequate and needed much tighter centralised control. Indeed did the assessment by independent experts not say exactly that?
Mr Taylor: It is fair to say that we have been putting in stronger central controls and central governance over PFI schemes in more recent years. For example, we now deal with the OBC upstream and we have just at the moment called in all PFI schemes and are reviewing all PFI schemes over £75 million to test them against some of the recent policy developments which may or may not affect them. We would not accept that there should be a complete bar on moving forward with schemes where partnerships are proposed if they can be run forward successfully. There is a separate question which you raise, about whether we should have moved forward in a scheme where effectively there was a pre-condition against merger. That is a separate question and frankly, if you press me on that, I should say now that we should want to be much more questioning of that approach.
Q19 Mr Mitchell: It is true that you should have maintained a much tighter control over those which are partnership schemes just to see that the effective control is being maintained. But the Department itself kept changing its views on affordability and certainly there were changes in the numbers of beds that were deemed necessary, reductions in the numbers of beds that were deemed appropriate to the area. So your control was not consistent.
Mr Taylor: We were looking primarily to the local NHS to take a view on the right levels of capacity for the area. Our view on affordability was not changing in the sense that we were questioning affordability issues from the outset. I am not sure that I can go any further than that. I am not quite sure that I have understood the implication of your question.
Q20 Mr Mitchell: The estimates of the number of beds necessary in the health service have been falling, have they not, and that must affect a grandiose project like this if you start out with 1,000 beds and it gets reduced to 800 and then falls below that? If you do not have a consistent estimate of the number of beds you are going to need it is difficult to know about the finances of the thing.
Mr Taylor: It is true that when the scheme was launched it was at a time following the publication of the national beds inquiry when there was a lot of emphasis nationally on increasing capacity in the NHS and increasing the number of beds. There was no question about that. Since then and since capacity has been increased it is true that there have been revisions of the assessment of capacity in areas. That is primarily, with respect, for my colleagues in the local NHS, the commissioners and the strategic health authority to pursue. We would not necessarily want to second guess the local areas on that, particularly in respect of where they want capacity to be placed, that is whether it should be on this Campus or elsewhere.