Q61 Greg Clark: In relation to a PFI scheme. How do they interpret the potential impact of payment by results?
Mr Taylor: What I should expect them to do is, first of all, they have a business to run effectively and they will be making their own assumptions about it because they cannot operate in the current environment without making some estimation.
Q62 Greg Clark: That seems to be it. You are confirming that they basically have to guess themselves what the effect of the new government policy will be.
Mr Taylor: Secondly, they would be talking and being guided by the strategic health authority in their area who will be sharing, with local organisations and commissioners, the assumptions which are going to be made year on year about volumes and about the contracts which are going to be let through the commissioning process. Each of them will have forward business plans.
Q63 Greg Clark: Just on those business plans. Again, in answer to some of the Chairman's questions, you indicated the Department was going to take a closer look at the outline business cases in future, presumably in the light of this, but on page 37, paragraph 5.6, it says that the Department will no longer approve strategic outline cases. Is that correct?
Mr Taylor: That is because we are moving upstream to put more emphasis on approving the outline business case.
Q64 Greg Clark: So does the outline business case come before the strategic outline case?
Mr Taylor: No, it is the other way around.
Q65 Greg Clark: It is the other way around. So the strategic outline case is after the outline business case.
Mr Taylor: No. The strategic outline case comes first.
Q66 Greg Clark: You are not involved in that.
Mr Taylor: No, we are not involved in that.
Q67 Greg Clark: Why not? Surely the lesson from this study is that the Department should have been involved earlier and more deeply.
Mr Taylor: What it should have been involved in more deeply was what is called the outline business case, which is the point at which effectively the strategic decision is taken to move forward in detail with the scheme.
Q68 Greg Clark: I see. You now have this review and you referred to it, that you were expecting to reduce the PFI programme from £12 billion to between £7 and £8 billion. When do you expect to conclude this review?
Mr Taylor: We are moving on a case by case basis. I am not sure that I know the answer to that.
Q69 Greg Clark: When did you start the review?
Mr Taylor: We effectively started the review in January.
Q70 Greg Clark: January and you do not know when it will be concluded?
Mr Taylor: We have already looked at the first six cases, we have another eight cases that we are about to tackle. I am advised six months is how long we are expecting the review to take.