Q171 Mr Bacon: Mr Taylor, plainly it was not the only factor, because indeed paragraph 3.8 says that the Department's view of the premium over open market value that would be paid to PDCL was excessive. It is also true that the extra cost of keeping it on balance sheet was one of the reasons why it was considered unaffordable. In fact you said as much yourself.
Mr Taylor: Yes.
Q172 Mr Bacon: Could you say, if a scheme like this were to go ahead off balance sheet, who ultimately would be paying the annual unitary charge in a PFI scheme?
Mr Taylor: Ultimately it is the taxpayer.
Q173 Mr Bacon: Right; the taxpayer. That is what I thought. If the scheme is on balance sheet and thus in your terms unaffordable-although there are other reasons why it might be unaffordable-who ultimately pays the cost of an on balance sheet scheme?
Mr Taylor: The taxpayer.
Q174 Mr Bacon: So either way, whether it is on balance sheet or off balance sheet, it is ultimately the taxpayer who picks up the tab.
Mr Taylor: That is correct.
Q175 Mr Bacon: Yet one is affordable and another is unaffordable. This is what I find it difficult to get my head round. At the end of the day, if it is the same person paying, either they can afford it or they cannot. Sir John, in paragraph 16 of the Report there is a reference to an opinion you had expressed. The Report says: "The Comptroller and Auditor General has expressed his concern that the need to have transactions off balance sheets was inappropriately distorting decision making". It is quite unusual to read an opinion like that from you in a report like this. Could you say what you mean by "inappropriately distorting decision making"?
Sir John Bourn: I mean by it the kind of account we have heard this afternoon, where you have a scheme and whether it is on balance sheet or off balance sheet the taxpayer pays for it. However, if it is on balance sheet and therefore counts against a capital allocation, in terms of the capital allocation it may be unaffordable, whereas if you pay for it, not by capital up front, but by a series of payments over a period of time, then it is okay. This is an accounting requirement driving management decisions, which is entirely the wrong way round. As you will recall, this is something we have argued against and continue to do so. It is not entirely logical to run together economic concepts with accounting concepts in this way.
Q176 Mr Bacon: Dr Goodier, whose job is it to plan bed capacity? Is it correct that it is the job of the strategic health authorities?
Dr Goodier: It is. The strategic part of that is for the strategic health authority. The local trusts have to work out their own capacity issues and it is usually a dialogue between the two.
Q177 Mr Bacon: And you talk to each other?
Dr Goodier: All the time.
Q178 Mr Bacon: Why was St Mary's using different bed planning assumptions to the strategic health authority when it is your job, as the SHA, to plan capacity?
Dr Goodier: The use of that methodology was fairly new to the planning of the capacity of the NHS. Therefore what we found was that we were using different technical approaches to achieve these numbers. That only came to light in October 2004.
Q179 Greg Clark: Just on the point of being a champion, I have some sympathy with the Department's problem here and I do think that it is unreasonable to expect the Department both to be a champion for a scheme and also the scrutineer of that scheme. What I think is important is that that scrutiny is engaged in quickly, effectively and thoroughly and the concern for me here is some of the delay. It strikes me from this hearing that most PFI schemes, most campaigns for new hospitals, have a huge degree of community support. However, it is clear in this case that not only was a large proportion of the staff opposed to it, but there was a very strong campaign in the heart of Harefield which was especially effective. Is that right?
Mr Bell: Yes.
Q180 Greg Clark: How did they campaign? How did they make their importance felt in this process?
Mr Bell: They are very effective in many ways: they attend board meetings; they certainly present us with detailed briefs; they communicate directly with the media as well as with the community in question; they are very much present and hold us accountable.