Q131 Matthew Hancock: The people who build these-you mentioned a couple of companies already-deliver a lot of procurement across Government, not just to the Department of Health.
Peter Coates: Yes.
Q132 Matthew Hancock: So you are a large buyer and therefore have market power.
Peter Coates: In relation to dealing with suppliers to Government on a cross-governmental basis, we do work with Office of Government Commerce and Cabinet Office around dealing with those contractors and asking for reductions in overall fees.
Q133 Matthew Hancock: So did you see the 2009 McKinsey Report that showed that a two or three basis point reduction in cost would save £200 million if it could be delivered across 80% of projects?
Peter Coates: Is that in the cost of debt you're talking about?
Q134 Matthew Hancock: Yes, exactly. The cost of debt, were that then to be delivered up to the taxpayer.
Peter Coates: It seems to me it's a pretty mathematical calculation: the amount of money and the cost of debt.
Q135 Matthew Hancock: Sure. Similarly savings could be made if improvements could be made in the efficiency of running the projects that could then in part be delivered to the taxpayer, but you've only got four people working on this. In the new environment that we're all living in, what are you doing to make sure PFI isn't protected from having to find savings when non-PFI services across the public sector are having to find those savings?
Peter Coates: The McKinsey numbers relate to the procurement phase, and when the money's borrowed to build a new hospital. That is past, and we did lots of things at that time to reduce the cost of debt and the cost of those hospital schemes to the taxpayer.
Q136 Matthew Hancock: Although you could refinance them?
Peter Coates: Lots have been.
Q137 Matthew Hancock: Earlier you said there's no interest now in private sector refinancing.
Peter Coates: I don't think I did. It is difficult to refinance schemes now because of the credit crunch and relative cash in banks.
Q138 Matthew Hancock: That will hopefully work through.
Peter Coates: A lot of our deals are also bond financed and they are very difficult to refinance.
Q139 Matthew Hancock: Right, but I come back to this central point: whether through cost savings or through refinancing, what are you doing to make sure that through your market power, which you have both as a Department and also across Government, the taxpayer benefits from the efficiencies that everybody's having to make? Or are you just saying that the contract is the contract and we're not going to bother trying?
Peter Coates: What we're talking about here are the tendering processes of trusts, who are independent from the state, for hotel services within the Trust.
Q140 Matthew Hancock: Yes, however, the Report says that there isn't much support from the centre for trusts who are trying to do this sort of thing.
Peter Coates: I believe we provide proportionate support for the demand placed upon us by the trusts. The trusts say that they think the level of support we provide is adequate; it meets their needs and their requirements. I'm responding to their needs here.