Q11 Chairman: As it happens, Mr Bacon and I, on behalf of the Committee, visited one of these schemes in Newham last week and it was very interesting. There is no doubt that the facility we visited was a superb facility, but we did encounter there some people on the ground and I should like to call forward now Dr Kohli, if I may, who works at the Newham centre. He seemed to intimate to Mr Bacon and me that whilst it was a superb facility and very popular with doctors, he had some worries about how much money was being drained off other services in Newham. This is your chance, Dr Kohli, just to give the same answer to this Committee now that we are meeting formally in the House of Commons that you gave to us informally in Newham last week and give us your impressions of what financial consequences there might be of this scheme in Newham.
Dr Kohli: I prepared a short document which I circulated to you earlier today.1 The buildings are fabulous, there is no doubt about it, but the cost is of concern. For instance, just to give you a figure, the cost of the two new LIFT buildings which have been completed in Newham now, which cover 8% of the population, the total spend from our total premises expenditure budgets for all GP surgeries for 310,000 patients who are registered, is 33% of the budget spent on 8% of the buildings. I personally have no objection to spending money because I like the idea of working in a great new building. My concern is for the practices which do not have that opportunity because at the end of the day the NHS does have a limited pot to work with. To illustrate it further, we have done a pounds-per-patient calculation. The average pounds-per-patient spend on non-LIFT buildings, on premises costs, divided by the list size, patients registered in that practice, is £8 per patient. For the two LIFT buildings which have been completed it has come out at £43.40 per patient. In my world and having had a little bit of experience of managing NHS budgets, having been involved in commissioning and chairing a PCT executive committee not too long ago, these are significant cost burdens to take on board. I am not opposed to these buildings: I am just concerned about the cost. The other concerns I have around it are any variations. Traditionally in general practice when you want to make alterations or make improvements, which are inevitable, no building can be built perfectly for the next 20 years, you are able to go to an open market, get three quotes and the PCT finance department will approve the cheapest quote as long as it meets their quality standard. In LIFT you are living with a landlord who has a monopoly provider status for all alterations, be they small or large. There is no competition, it is a monopoly and it is for 20 years. So my concern around that is that we may stop doing the small alterations because we are worried about the cost which will have an effect and consequence on patients and patient services. Those are the two concerns I have.
Chairman: Thank you for that view from the grassroots. It is always quite important for this Committee occasionally to get those views. Thank you very much.
Q12 Kitty Ussher: I have a couple of broad questions and then some which I have drawn from the experience of a LIFT building which is going up in my part of the world which is Burnley in Lancashire. It looks splendid at the moment. First the general ones. Could you just explain from first principles why doing projects in this way is preferable to direct funding from national government?
Mr Coates: The first thing to say is that what we are doing is trying to improve a market which is there already. We are not saying this is instead of public funding: public funding is still there. What we are trying to do in LIFT is improve the way that the private sector currently allocates and provides primary care property. We are not trying to take out public sector money, we are not trying to replace GP-owned developments, we are looking at a particular sector, which is third-party developers, which we believe could offer better value to the taxpayer if done differently.
Q13 Kitty Ussher: You said that has not been proven in terms of value for the taxpayer. Is that right?
Mr Coates: What I said was that in all these long-term investments you will not have proof positive that it is value until you have gone some way down the path. If we look at the indicators we have so far, these indicate that what we are doing is value for money.
Q14 Kitty Ussher: When will that finally be proven or not?
Mr Coates: We have some work in hand around benchmarking and long term learning which is an essential and integral part of LIFT and an integral part of the recommendations in the Report, which we accept.
Q15 Kitty Ussher: So you believe that in the medium term it will be value for money for the taxpayer.
Mr Coates: I personally believe that in the short term and the long term it will be value for money.
Q16 Kitty Ussher: I understand that the LIFTCo effectively has a monopoly on the provision for five years. Is that right? Then the PCT can market test it.
Mr Coates: It is not quite as simple as that. How it works in terms of services is that the contract allows for partnering agreements to be set up which are long-term agreements whereby you have an agreed list of suppliers providing services to the LIFTCo. What is a monopoly is the agreement that all primary care contracts which the PCT wants to let which are partnering in nature go through the LIFTCo. If the PCT, for example, wants to develop mental health facilities or acute facilities, then there is no obligation to use LIFT. Indeed if the LIFTCo cannot demonstrate value for money to the PCT then the PCT is free to go elsewhere.
Q17 Kitty Ussher: Do you accept that there is a monopoly for certain types of services?
Mr Coates: The partnering services certainly. If you want to partner a contract through that company which is using the supply chain provided by the LIFTCo, then there is a monopoly.
Q18 Kitty Ussher: How long does that last for?
Mr Coates: Five years?
Mr Johns: The overall partnering arrangement lasts for 20 years, that is the partnering agreement. The LIFTCo, which is not just the private sector of course it also includes the public sector, it is a public-private partnership, has the right, indeed obligation, to respond to PCT requests for new capital schemes during that period. I think perhaps what you may be referring to is that in the first five years the LIFTCo is able to demonstrate value for money by using benchmarking of costs of schemes without having to go to market testing, out to competitive tender, but after five years it cannot use the same supply chain using benchmarking to demonstrate value for money, it is obliged to go out to competitive tender. To reiterate what Mr Coates said, any scheme which is developed by the LIFTCo has to demonstrate value for money and if it fails to do so, the Primary Care Trusts or local authorities are free to use any other supplier it chooses.
Q19 Kitty Ussher: Thank you for that clarification. The point I am probing is if it is the snazziest outfit in town, which it often appears to be, how can you do a proper competitive market appraisal, whether it is benchmarking or market testing? Has there been an analysis of that?
Mr Johns: In terms of the market testing the important thing is that the LIFTCo is made up essentially of three partners: one private sector partner and two public sector partners. It is that public-private partnership company which has the exclusivity. Beneath that public-private partnership is a raft of supply chain members, whether design, architects, construction contractors, maintenance providers and so on and the LIFTCo can choose from the raft of providers to provide the particular service on a particular building. It may choose one contractor for a very large building and a different local contractor for a small building. The exclusivity does not mean the individual contractors are set in stone for the next five years.
Q20 Kitty Ussher: That is extremely useful; thank you. Might I turn to issues which have arisen locally? I have to say, so that people can understand, that we have a building powering up in the centre of my constituency which is a health and leisure centre and people are amazed by how good it looks as though it is going to be. However, some specific issues have arisen. I have four specific ones. The first one is on design and architectural design where about two weeks before the contractor was due to start digging the hole huge concerns were raised by CABE, the Commission for Architecture and the Built Environment, which is the national body to look at architectural standards. I felt that there were some last minute modifications made to the design as a result of that, but I suspect that had those come sooner there would have been more substantial revisions, to be honest. How can we make sure this situation is avoided in future?
Mr Johns: Partnerships for Health have collaborated with CABE since the very start of LIFT and indeed we invited them to comment and they did comment on the original technical specification for LIFT. They also provided design enablers on a number of the schemes which were the original schemes to be developed. They are working with us on the fourth wave of LIFT, again providing design enablers, but they have limited resources, so they are not able to provide an enabler for every scheme. The most important answer to your question is that we are now working with CABE and DoH Estates to undertake a design review of all the LIFT buildings which have been developed to date. The intention of that design review is actually to provide lessons for designs for architects for future schemes. That is how we are systemically addressing the design issue.
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