HC Deb 25 January 1999 vol 324 cc134-6W
Mr. Swinney

To ask the Secretary of State for Scotland what NHS properties have been sold to Consort Healthcare and for what amounts; who carried out the valuation of the properties and at what sums they were valued; what Government body or bodies were involved in the transactions; what assessment he made of the advantages of selling the properties on the open market and for what reasons he decided not to; if he will publish details of the transactions; and if he will make a statement. [65519]

Mr. Galbraith

[holding answer 18 January 1999]: Throughout the PFI process our guiding principle has been to ensure the completion of proper economic appraisals and assure the delivery of value for money at all stages of this project. Furthermore through our openness policies we have ensured that as much information as is commercially possible has been put in the public domain.

The disposal of excess sites by the Royal Infirmary of Edinburgh NHS Trust has been done in such a way as to ensure that the Trust has received the proper value for the sites based on independent valuation and has been safeguarded against development gains.

In accordance with our guidance, the Trust will in due course be publishing an Addendum to their Full Business Case setting out changes between FBC approval and financial close and summarising the commercial contract in plain English. That document will detail the land values and the contractual arrangements agreed to safeguard the Trust against overage.

The sites at the City Hospital, the Princess Margaret Rose Orthopaedic Hospital and the Dental Hospital were included as a prepayment in the Private Finance Initiative (PFI) deal with Consort Healthcare. Planning restrictions reduce significantly the area of developable land at the City and Princess Margaret Rose Hospitals. The values bid by Consort were as detailed in the following Table:

Site Value bid £ million
City Hospital 6.640
Princess Margaret Rose Hospital 3.725
Dental Hospital 0.500

The values due to the Trust will be different since the values bid for the City and Princess Margaret Rose Hospitals will be subject to an inflation uplift from August 1996 until the date on which the sites are transferred to Consort Healthcare and potentially there may be reductions in the value of the Dental Hospital due to asbestos decontamination and Section 75 planning conditions.

The estimated total value of the City and Princess Margaret Rose Hospital sites after a 3 per cent. inflation uplift is almost £12 million.

Furthermore the Trust has entered into Overage Agreements whereby additional payments will be made to the Trust if, in the case of the City and Princess Margaret Rose Hospitals, the construction of houses is in excess of the anticipated number or the use of any part of the site is changed from residential to retail or business use; and, in the case of all three sites, if any undeveloped part of the site is sold for profit.

The values bid by Consort Healthcare were considered by the Trust to compare favourably to the values prepared by the District Valuer and the Trust's property adviser (Ryden International). The District Valuer and Ryden International's values are detailed in the table.

£ million
Site District valuer Ryden International
City Hospital 6.25–7.25 6.80
Princess Margaret Rose Hospital 3.25–3.70 3.70
Dental Hospital 0.50–0.55 0.35

The disposal of surplus sites within a PFI deal is the responsibility of the Trust. It is a generally accepted principle of PFI that such sites are included in the PFI deal. The average time taken to dispose of surplus NHS property is about 16 months. Where a site is not sold prior to becoming vacant the NHS has to bear the continuing costs of security and maintenance. I am content that when considered alongside the risks transferred to Consort Healthcare and the reduction in interest charges generated by the prepayment, the Trust has, as demonstrated in the Full Business Case approved by The Scottish Office and HM Treasury, achieved best value for money.