Q151 Matthew Hancock: 30% of the trusts say it's inadequate. Doesn't that upset you?
Chair: I think the real issue is not they don't do it, it's should they do it.
Stephen Barclay: The PFI support club is a recognition that it should be done.
Q152 Chair: But it is this local/central issue. I have been told that we will shortly be called for a vote, so it is a matter of whether you want to come back afterwards.
Matthew Hancock: I want to listen to Austin.
Austin Mitchell: Hancock's point is exactly right. Jesse Norman, the MP for Hereford, says companies should be asked for a rebate. I would suggest prayer. I should add that Mr Coates' four staff are dealing with, I see from the Semperian brochure-if it's pronounced that way-137 highly experienced staff on its management team for 12 hospitals. The odds are pretty much against you. Sir Bob gave us the guarantee that his staff were on top of the situation, and I would suggest that he could only give it really because, of his 50 contracts, half of them have been cancelled or are under review, so there is far less contract work to do. I just want to ask one final question about costs. We were told last month that, because the banks were screwing more money out of the Government, the cost of interest payments rose by three percentage points and that is between £500 million and £1 billion extra cost on PFI contracts. Now, do you expect interest rates to come down and are the banks going to keep on screwing you in the way that they have been doing up to now?
Chair: Let Bob Kerslake take that. I am just trying to divvy it up.
Sir Bob Kerslake: I wasn't going to engage in forecasting interest rates.
Q153 Austin Mitchell: Yes, but we are shoving money into the banks and they are screwing the Government in this.
Matthew Hancock: Bond market rates for gilts are at their lowest rate since the war.
Austin Mitchell: Yes, that is true.
Sir Bob Kerslake: I think the question I can answer is one about resources that you asked.
Q154 Chair: I'll tell you what I'd like you to answer actually, if I may say so. Are you screwing down the contractors who have the PFI contracts, or the ones that you are negotiating, to eke out the extra value that Mart's talking about?
Sir Bob Kerslake: I think the answer is our particular role is in relation to the procurement process and we play a strong role there. We have four people in the CLG team, we have seven in the HCA, plus the commercial transactors who play a role. We have quite a lot of a capacity and we will hold that capacity for as long as we need to do so, basically. We will make the savings elsewhere if we have to. The second point I'd make is, as I said earlier, the PFI projects are one part of local authorities' total housing portfolio. They have an ability to compare and contrast with their other management arrangements, and I think that gives them much more ability to challenge on cost when they don't think it is appropriate.
Q155 Chair: I am conscious of votes; are there questions on the Housing PFI Report that people would like to ask beyond where we've got to? I only had one. The delays are outrageous. You have said that you have got things better, but the delays are outrageous and the cost implications of the delays are outrageous. I wanted to know what that meant for leaseholders. For them the costs of the final contract will then go up; they'll have to ruddy well pay it. What regard have you had to that?
Sir Bob Kerslake: A couple of points. First of all I accept that we need to do this quicker and that is why we have put a lot of effort into doing so; the impact of delays is principally on the tenants in the housing. On the leaseholder side, leaseholders are a challenge in any of the housing schemes, whether it is PFI or Decent Homes. I have to say on PFI, probably their circumstances are slightly better if anything because there are statutory controls on the amount they have to pay towards it and there are other safeguards in the way PFI will rise.
Q156 Chair: They can't control the overall cost of the contract.
Sir Bob Kerslake: No but they can control what they put in towards the costs of the schemes. There are controls on that. I think there are safeguards in the way it works for leaseholders that don't leave them in any worse position as far as I am concerned.
Q157 Ian Swales: I would just like a reaction to one line. On page 7, where I think a lot of the real meat of it is, there's a line in paragraph 9 that says, "There was broad agreement from local authorities, providers and advisers, that PFI procurement can be excessively costly and generally takes too long relative to other routes." That is a very stark statement that to me says, "Why don't we stop doing it?" It is only 2% of what you do, let's just abandon the whole approach and get back to public financing. Why keep on with it?
Sir Bob Kerslake: Because while it's true that some schemes have taken too long and some have cost more than you would ideally want, I think the outcomes that we have achieved through PFI have been significant. PFI works in certain circumstances where the other funding approaches wouldn't have done as effective a job. Yes, it takes longer sometimes. Yes, it is a more complex process on top of what is already a challenge. From personal experience doing housing schemes is tough. But the outcomes in certain circumstances justify it. For us PFI wasn't the only game in town; it was one tool in the toolkit and we think it is worth keeping that tool where the circumstances are right.
Q158 Ian Swales: Surely there must be some alternatives. If local authorities, providers and advisers are saying this, that we're spending money and so on, you can't be saying that there is no other way of financing.
Sir Bob Kerslake: No, I am absolutely not saying that. What I am saying is that PFI works well for certain circumstances and is worth keeping for them, particularly for the big transformational projects. As we go forward in the new financial regime following the Spending Review it will be a direct like-for-like comparison.
Q159 Ian Swales: And you could define exactly where you think it is appropriate in terms of type of project versus the rest?
Sir Bob Kerslake: I think we have a very clear idea of where it works best and that is how we steered the round 6 schemes. We think it works best in situations where you have significant transformational change needed in an estate that has high levels of deprivation and where you need to achieve a result that goes beyond the Decent Homes bog standard.
Q160 Mr Bacon: Mr Coates, could you send us a list of all PFI hospital projects that are extant; not ones that are in negotiation-you mentioned two-but the ones that are currently extant, and include for each of them: the name of the hospital; the value of the annual unitary charge payment; the start date; how many years it runs; the total cash value of the payments over those years going forward; the net present value; plus the owner of the contract.
Peter Coates: Yes.