Q31 Helen Goodman: And I asked you the average and you could not give me that, so I took the number you did give me. Could you tell me what the change in the number of patients was that underlay this change in the number of beds you estimated?
Dr Goodier: The total number of beds for the Paddington Health Campus scheme was over 1,000 beds and it reduced to 800 and something and it varied. It was not simply just plain length of stay by condition that was driving that. It was the anticipation of the recent White Paper, where there was a move to more ambulatory care given into community facilities.
Q32 Helen Goodman: No, it was not a change of 200 beds. If you look at paragraphs 3.27 and 3.29, you can see that at the outset you were forecasting an increase in the number of beds needed to the tune of 1,200 and by the end of the period, you were saying you needed 600 fewer beds in the area. That is a 1,800-bed change in your forecasting.
Dr Goodier: I am sorry, I thought you were talking about Paddington Health Campus, but if you are talking about the whole area, the whole of north-west London, then that would be a different quantum that is for sure. The point being that we focused a great deal on comparing north-west London with the rest of the NHS in similar hospitals and trying to achieve the same level of efficiency and productivity and using that as the benchmark for which we aspire in north-west London. That was partly for planning purposes but also partly because north-west London has historically been an area which had large deficits. It was a review of that efficiency and productivity which was driving some of these assumptions.
Q33 Helen Goodman: So you think this really rather large swing in the number of beds needed in the forecasting within a five-year period is absolutely to be expected. It does not alarm you that your forecasting might not be all it ought to be.
Dr Goodier: It alarms me that there was such a large anticipated increase. I can really only give the detailed understanding of what currently exists and what north-west London bed numbers and capacity look like when compared with the NHS today and going forward.
Q34 Helen Goodman: Mr Taylor what are you doing to ensure that bed forecasting around the country is slightly more accurate now than it was in this period?
Mr Taylor: In relation to the whole process of forward planning in the NHS, we now, through the local delivery planning process, take a more strategic view, area by area, of proposed growth across a strategic health authority area, for example at the time when local delivery plans are put in. So, for example, at the moment, we shall be looking quite critically at the plans for the forthcoming year which will take into account the amount of capacity that is forecast in the system and that is subject to some pretty intensive modelling interrogation within the department. For the future, one of the things that we shall be doing is applying that kind of critical analysis to outline business cases as they come forward and indeed to the review of the over £75 million PFIs that we are looking at at the moment. While it is always a matter for the local health area in the end to decide where it is going to put its capacity, how to balance it out, we shall be challenging assumptions about capacity as we go along.
Q35 Helen Goodman: Another of the risks which the NAO Report identifies is changes in policy over the period and one thing which seems to have been a problem was the reorganisation in the NHS. Are you confident that capital projects that are being undertaken at the moment across the NHS will not be similarly impacted by the current round of reorganisations?
Mr Taylor: Yes, we are reasonably confident about that. The fact is that we were, over the time when this PFI was going forward, able to take a number of schemes forward to take them through to final business case approval, so the policy and other risks, which the NAO quite properly refer to in their Report here, were managed; it was not just this one scheme facing those risks, it was other schemes as well.
Q36 Helen Goodman: If you look at paragraph 2.30, it is not what it says. This Report gives the impression that there was a large number of policy uncertainties. Are you telling me that policies on choice, policies on payment by results and the movement of care away from acute hospitals to primary care sector are now very well modelled and the Department knows exactly what the impact is for future hospital build?
Mr Taylor: No, I did not quite say that. Let me make two separate points. The first is that in the last six months, five of the biggest PFI schemes that we have brought forward, worth a total of £2.5 billion, have had business case approval and they have been managing the risks which are set out in this document. They have had to work through those risks and we have been working with those PFI schemes to ensure that the risks are as well balanced as they can be. Second, we have, since the announcement in particular of the White Paper on a shift of emphasis away from the acute sector to community services as part of that overall development, announced in January this year that we are going to review all the schemes currently operating over £75 million to take a look at how they are faring against what we agree is a challenging set of policy issues. That is not to say that we think that should freeze all PFIs or stop them going forward: quite the reverse. However, we are looking at each of them in turn. We have started with the ones which are closest to closure and we are looking against things like the capacity modelling and what sensitivity factors they have looked at for PFI. Broadly speaking, as a general benchmark, what we are saying is that we are looking at long-term affordability, using a ratio, not as a straitjacket, of 15% unitary charge to trust income as a benchmark. We are looking at how they measure up to that kind of benchmark and then seeing whether there are ways of reducing costs. One of the things we are trying to do is to set a new envelope effectively of £7 to £9 billion for PFI schemes against what was around £13 billion. We are cognizant of the risks which are referred to in the NHS report and are trying to tighten up our arrangements to manage them.
Q37 Helen Goodman: Are you aware that when your predecessor gave evidence to us a few months ago, he told us that, for example, on the introduction of patient choice the extra capacity needed across the NHS would be something between 10% and 15%? Have you built that into the capital programme?
Mr Taylor: Yes, that is one of the things that we are taking into account as we look at those schemes.
Q38 Chairman: Dr Goodier, you have to try to give Mrs Goodman a better answer and try a bit harder. I shall give you one more go. You knew in 2004 that this scheme had marginal affordability. You knew that there were already too many beds in your strategic health authority area, why did you not cancel it at that stage?
Dr Goodier: It was not simply a question of how many beds for north-west London, it was a balance between the old fabric and old stock in the hospitals around north-west London; in other words we needed to have some new fabric. In fact so much of the hospital stock was old, 48% was pre World War II, that we needed to have a considerable number of new beds. The challenge was really the configuration of where those new beds were and what the clinical services were.
Q39 Mr Bacon: Mr Pringle, as the President of the Royal Institute of British Architects, we can safely assume you study projects and project failure probably more closely than most. This particular project seems to have such a large number of risks which were basically ignored. What do you think could have been done to have minimised the risk?
Mr Pringle: A number of things could have been done and a lot of them are obviously identified in the Report, such as the client structure and the management structure. I should not like to focus on those. I should like to look at some of the areas that we have been looking at more generally to do with PFI. Although it is said in the Report that as this project did not reach PFI bidding stage there are no implications for PFI, that is not actually the case, because the run-up to the project, the building of the brief et cetera and the outline business case is predicated on a PFI model. So you have to look at it in the round and one of the things that we are observing generally and which this might be an example of, is one of the failures or the weaknesses of PFI, though there are plenty of strengths of PFI and we are not knocking the system entirely. You have a system in PFI where it is assumed that virtually all of the design is going to be done by the PFI consortia and so design is pretty much abstracted from the client side of the equation. We are seeing that briefs which need to be tested by looking at early designs, whether this will work for us in this way, whether there is not a better way of doing it, briefs which could be tested by affordability if an outline design were done at an earlier stage, briefs which could be tested for their suitability to a site, even getting an outline planning permission, is not being done in PFI projects to their detriment.
Q40 Mr Bacon: Are you basically saying there is something in the nature of the process itself that actually inhibits the preparation of a robust outline business case?
Mr Pringle: Yes. At the moment the PFI mechanism does inhibit initial design exemplars being done to the site and we believe that these could be done to the benefit of that. Indeed the Treasury now believes that this is the case and the latest advice from the Treasury is that more upfront designs should be done in order to develop the briefs, test the briefs and to minimise the risks; minimise the risk to the whole project, minimise the risk to the bidding consortia.