Q121 Stephen Barclay: There was an Adjournment debate on PFI and Hereford and the MP Jesse Norman's spoken on this. There are concerns with the maintenance costs, the fact that just getting a TV aerial in the consultants' room costs the best part of a grand. To do that work required a 12-week notice because it's a change to a contract. So there are issues with what I call the older contracts and I don't get a clear sense that anyone is gripping that within the Department. Can you reassure us on that?
Peter Coates: Well I think we do look at this and I think we should try not to confuse minor changes to the building, such as putting television aerials in, and deciding when you replace the windows, when you replace the roof and when you replace the boiler.
Stephen Barclay: Absolutely.
Peter Coates: You are tied into that kind of contract but how you make minor changes to the building of the type described there is open for negotiation by the trusts.
Q122 Stephen Barclay: So in terms of the new contracts, going forward, do you, at least, have a minimum threshold so that some of these very small changes could be made by an odd job man?
Peter Coates: Yes.
Stephen Barclay: So we are not going to have this issue with the new contracts.
Peter Coates: There is a de minimis already. I'll give you a note but I'm certain there is a de minimis threshold now that says that we just do it.
Q123 Chair: Are there new contracts?
Peter Coates: I know at least one trust is out to tender at the moment, if not two. Alder Hey and one other.
Q124 Stephen Barclay: So they would say work below £500, or whatever it is, doesn't have to-
Peter Coates: I don't know, I can give you a note.
Chair: It's left to them.
Q125 Stephen Barclay: Just finally, on the new contracts, the partnership and efficiency savings that are referred to, the Report says "The Department should work with Treasury ... to explore ways in which standard PFI contractual terms can be adapted to best encourage partnering and efficiency savings." Again, how is that being factored into the new contracts?
Peter Coates: Partnership working is a very difficult area it seems to me because it's a relationship point as opposed to a contractual point. I think it's true to say in the early days of PFI, the private sector and public sector found it very difficult to work together in a way that put aside the contract, you might say, and said what was best for the patient and best for the hospital. There are examples in the Report where partnership working has happened and happened to the benefit of the Trust. My personal view is that I think these will increase over time as trusts get to know and understand and work their contracts better. That's a thing it does seem to us they are going to have to own; if they don't own it then things won't improve.
Q126 Matthew Hancock: You said earlier, to one of the questions, that there are four people that currently work on PFI.
Peter Coates: Yes.
Q127 Matthew Hancock: And that a potential PFI club might have about half a million, did you say?
Peter Coates: There are about 100 trusts with PFI schemes; I'm saying the average fee to join this, to make it worthwhile, is £5,000.
Q128 Matthew Hancock: So half a million. Given the size of the financing that goes through PFI, it strikes me as a rather small number, only four people. I know these are at the centre and I understand entirely your point that, especially foundation trusts, but all hospitals run their own organisations as well. Nevertheless the state is a monopoly buyer, more or less, of hospitals in this country and so has market power. It isn't as if this is a market with a very large number of buyers and sellers. So, what are you doing to try to get PFI providers, who are increasingly oligopolistic, to understand the financial constraints the whole country's living in and through finding savings, whether they're in the contract or not, to be able to deliver those savings up to the taxpayer?
Peter Coates: To a certain extent our market leverage reflects where we are in the procurement cycle. When we are just starting the procurement our market leverage is the highest and we did use it. Now we are at the point where we are fixed into contracts that by and large only allow scope around the hotel services and we are focussing our attention to try and get the best value for these things.
Q129 Matthew Hancock: But you're about to procure a few more contracts.
Peter Coates: I think two are in the market at present
Q130 Matthew Hancock: So there are future contracts?
Peter Coates: Yes.