Q131 Mr Davidson: Why was that the maximum?
Mr Forden: That was the guidance at the time of the voluntary code.
Q132 Mr Davidson: That was the guidance under a voluntary code. Why was that the maximum?
Mr Forden: I think maybe Mr Coates will want to add to that but as a trust we are not allowed to set the trend for PFI deals for the whole of the NHS; we have to follow the guidance.
Q133 Mr Davidson: Have you no ambition? If you had been able to get even more of the share of the benefits you would have been even happier. Who knows, your bonus might have been even higher. I just cannot understand why you self-limited yourself in this way.
Mr Forden: As a Trust we were not able to go any higher.
Q134 Mr Davidson: Explain to you me why you were not able to-because the Department would not let you; is that what you are saying?
Mr Forden: The Department had very clear engagement with the trust in trying to deal with the refinancing. We were very much advised by the Department, quite rightly, as to what we should be able to achieve. We were able to achieve the maximum on the extension at 50-50 and 30% on the re-financing.
Q135 Mr Davidson: That was because that was what the Department was telling you was the maximum?
Mr Forden: That is because all of the guidance in the voluntary code which had been agreed between the Treasury and the-
Q136 Mr Davidson: And you regarded yourself as bound by that?
Mr Forden: Yes.
Q137 Mr Davidson: And you had no ambition to get more of it?
Mr Forden: We had a great deal of ambition to get as much as we could. The other way of looking at it is we certainly did not get less than what we were told the maximum was.
Q138 Mr Davidson: I understand that and can I just clarify that Mr Coates. It seems to me that you were tying hand and foot the trust in terms of what the limits of their expectation ought to be. That displays, surely, a poverty of ambition on your part because here we have a PFI organisation which was making less than they expected under the existing financing arrangements and they were going to move to a situation where they were going to get triple what they were expecting. I would have thought in those circumstances you really ought to have been able to strike a better deal.
Mr Coates: It is important to look at this in the context of what was happening at the time. The first deal that went through under the voluntary code did not meet the code's requirements in the sense that we could not persuade the private sector to accept a discount rate of 18.9%. So we had to make compromises so although the code was voluntary and was signed it had not been fully adhered to in the market.
Q139 Mr Davidson: By the private sector?
Mr Coates: By the private sector, yes, so we had to approach it in a way of trying to force the code through. Rather than being ambitious we had to try and make the provisions of the code stick. In this sense this is the first deal in the NHS where the code stuck and they had to adhere to it.
Q140 Mr Davidson: I bet it was. If I were in the position of John Laing and I had the opportunity here to renegotiate something that will give me 60% profit or I stay in a position where I am earning less than the expected rate of return, and some gullible guy from the Health Service comes along and says, "Look, I will strike this deal with you, you have got to limit yourself to 60%," I would say, "Thank you very much, I will bite off your arm."
Mr Coates: What John Laing said to us was, "When we make losses you do not come to us and say here is a load of money to compensate for our losses"; so why should we give you money when we are making a profit-