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Public Accounts Committee

Oral evidence: New Hospital Programme, HC 1754

Thursday 7 September 2023

Ordered by the House of Commons to be published on 7 September 2023.

Watch the meeting

Members present: Dame Meg Hillier (Chair); Olivia Blake; Sir Geoffrey Clifton-Brown; Mr Mark Francois; Ben Lake; Anne Marie Morris.

Health and Social Care Committee Chair present: Steve Brine.

Gareth Davies, Comptroller & Auditor General, National Audit Office, Tom Phillips, Director, National Audit Office, and David Fairbrother, Treasury Officer of Accounts, were in attendance.

Questions 1-117

Witnesses

I: Shona Dunn, Second Permanent Secretary, Department for Health and Social Care, Natalie Forrest, Senior Responsible Owner for the New Hospital Programme, DHSC, Amanda Pritchard, Chief Executive, NHS England, Julian Kelly, Chief Financial Officer and Deputy Chief Executive Officer, NHS England, and Professor Sir Stephen Powis, National Medical Director, NHS England.

Written evidence from witnesses:

– [Add names of witnesses and hyperlink to submissions]


Report by the Comptroller and Auditor General

Progress with the New Hospital Programme (HC 1622)

 

Examination of witnesses

Witnesses: Shona Dunn, Natalie Forrest, Amanda Pritchard, Julian Kelly and Professor Sir Stephen Powis.

Chair: Welcome to the Public Accounts Committee on Thursday 7 September 2023. This is a prearranged session of the Committee to examine the New Hospital Programme, which was established in 2020, after an announcement that 40 new hospitals would be built in England by 2030. As the National Audit Office Report highlights, however, the programme has already experienced delays and is now expected to deliver only 32 hospitals. It aims to be ambitious, however, intending to transform how NHS healthcare works and to standardise hospital design, creating a new Hospital 2.0, which we will examine in today’s session.

Since the Report was written, we have had the RAAC issue, although the Report covers RAAC in hospitals. Previously, we have looked at RAAC in schools and in July we had a visit to hospitals. In the past couple of weeks, however, there has been an awful lot of discussion of reinforced autoclaved aerated concrete in buildings, so we will touch on that at the beginning.

I first thank enormously colleagues who hosted us at their hospitals in July. Jo Churchill, MP for Bury St Edmunds, welcomed us to the West Suffolk Hospital, which is a fully RAAC hospital, although it has a greenfield site that the trust hopes to rebuild on. She is championing that hard. We thank her for highlighting her concerns to the Public Accounts Committee.

Jonathan Djanogly, the Member for Huntingdon—a member of this Committee, but unfortunately unable to be here today—hosted us at Hinchingbrooke Hospital, where again we saw some eye-watering examples of what RAAC is doing to patient care and the challenges that staff working there have. On behalf of the Committee, I pay tribute to the staff of both those hospitals—and others, but specifically those we met on our visit—who are doing amazing work to mitigate RAAC. It is costing millions of pounds, of course, but they are mitigating the problems of RAAC so that the hospitals can still operate and support patients.

Before we go any further, do any Members have declarations of interest to make?

Sir Geoffrey Clifton-Brown: I declare that I am a fellow of the Royal Institute of Chartered Surveyors, as in my entry in the Register of Financial Interests.

Q1                Chair: Thank you, Sir Geoffrey.

I am pleased to welcome Steve Brine, MP, who is the Chair of the Health and Social Care Committee and is guesting with us today. We will continue to work together on this issue across our Committees.

Before we get into the main session, I should introduce our witnesses. We have Shona Dunn from the Department of Health and Social Care, who is the second permanent secretary; Natalie Forrest, a new witness before the Committee who is the senior responsible owner for the New Hospital Programme, which I just mentioned; and from NHS England, Amanda Pritchard, the chief executive, whom we welcome back; Julian Kelly, the chief financial officer; and—we are delighted to welcome—Professor Sir Stephen Powis, the national medical director, who will have thoughts about how the new hospitals will work for patients. We will direct such questions to you, Professor Powis.

Thank you for your letter, Ms Dunn, about the discovery of reinforced autoclaved aerated concrete in NHS hospitals. You highlighted that you have discovered a bit more, and that you will be alerting those hospitals to the situation. Will you give us an update, perhaps talking through what you have written to us about for the record?

Shona Dunn: I will start, but I will also pass to Mr Kelly briefly, given that this is work we do closely together. The content of the letter was simply to ensure that the Committee had information about the trusts that are already in the national programme that the Department and NHS England put in place some years ago to identify and to take action to mitigate RAAC where it was found in hospital buildings. The letter simply sets out the latest number of trusts in that programme and the state of play on those trusts, and it identifies the further work that we are now undertaking. Mr Kelly might have some detail.

Julian Kelly: We have had a well-established programme since 2019, when some of the first problems were identified. We have 24 schemes where we have full understanding of the issues—those done, those with mitigation plans in place, and those with eradication plans either in development or fully developed. In most of those schemes we aim to have eradicated RAAC by 2030. The ones that are likely to hit up against the 2030 date are those where we require a full rebuild of the hospital.

Chair: Which we will come on to.

Julian Kelly: Most of the others will actually be eradicated before then. In six of those sites identified over the last year, we have mitigation plans fully in place and eradication plans are in development. As we have said, we have recently gone out to all NHS trusts again following an update to the Institution of Structural Engineers guidance and asked people to confirm again if they are confident if they do or do not have RAAC. A number of trusts have come forward and said they think that they potentially have RAAC. I say “potentially” because, even in some of the initial surveys we did, for some of those we identified that they did not have RAAC; we are working quickly with those trusts to ensure that we have done full, proper structural site surveys and all mitigation plans are in place. They will be getting on with developing plans for eradication.

Q2                Chair: Could you confirm the number of hospitals that you are now looking at in addition to the ones that are already in the programme that you sent to us?

Julian Kelly: I do not want to say now the precise number, because that is moving about from day to day.

Q3                Chair: A ball park. It is tens, not hundreds, I think.

Julian Kelly: Yes.

Q4                Sir Geoffrey Clifton-Brown: The NAO Report says that there are 23 trusts with 41 buildings, plus the ones that we heard of in the letter. What is the Government’s latest date by which they propose to eliminate all that? What is the furthest date?

Julian Kelly: There has been a commitment to eradicate them all by 2035.

Sir Geoffrey Clifton-Brown: Including these new ones.

Julian Kelly: Including these new ones, but as I said, in all of those we have not done full structural surveys to properly identify the total scale and level of the issue that people are dealing with. In many cases, it is quite small. It can even be an unused boiler house, or it could be a couple of wall panels in one office. It is just a question of us ensuring that we fully understand it and then fully developing eradication plans. Given that it is new, I do not want to absolutely say, “We know by when it will be done,” but there is a commitment to do it by 2035. At this point, there is nothing to lead me to believe that that is not possible.

Q5                Sir Geoffrey Clifton-Brown: I have one further question. At Huntingdon in particular, we saw that the situation can be fine one day and then the next day you suddenly get a collapse—that is the same wherever it is. It is the same issue with schools. For all these sites, when do you expect to have a full survey done so that at least a mitigation plan can be put in place?

Julian Kelly: We aim to have full surveys done in a matter of weeks. As I said, I do not want to absolutely confirm the timing on that, because we are just ensuring that we have the resource.

Q6                Chair: Can I just ask something about the resource? Yesterday in the House, the Secretary of State for Education said that they are now working with eight structural engineering companies—before that, it was three. Do you therefore have the resource in the NHS and can you call on it to do this work, or is it all being hoovered up in the school estate?

Julian Kelly: We are calling on the resource. Clearly there is demand for it. I cannot tell you precisely what the levels of demand are in schools relative to hospitals, but we are working—

Chair: You are fishing in the same pool.

Julian Kelly: Yes, but we are working to ensure that we have secured dedicated resource for the extended period of time to ensure that we can do—

Chair: Can I just be clear? Are you fishing in the same pool? You have schools needing surveying done and—

Julian Kelly: Undoubtedly it will be the same firms. There is a limited number of these specialist engineers, so we will all be talking to the same firms. That has to be true.

Q7                Chair: Asbestos and RAAC sometimes go alongside because of the time that these buildings were built. Do you have an analysis of where there are particular challenges with finding asbestos around RAAC, and if that will add to your costs and delays? Obviously it will add to cost, but have you done an analysis of that yet?

Julian Kelly: At sites where they have done a full structural survey, they will understand that issue. The plans, particularly to eradicate RAAC, clearly become more complicated because of the measures you have to take to protect people when you are having to move and change planks and panels, and there might be asbestos. So they make it more complicated. At sites where they have done a full structural survey, they will understand that. For those we are investigating at the moment, I do not have a full analysis as we sit here today.

Q8                Chair: I want to move on. We visited one of the seven hospitals that are fully RAAC in July. We know it is costing £685 million for remediation of those hospitals. That runs out at the end of 2025, which will be well before they are scheduled to be rebuilt because they are in cohort 4 of the New Hospital Programme. Perhaps Ms Dunn is holding the purse strings on this for the NHS. Is there going to be enough money to fund ongoing remediation of RAAC in those hospitals after 2025?

Shona Dunn: Chair, I have no reason to believe that that will not be the case. As you will understand because we have these conversations regularly, that is for the next spending review period, and we will have that conversation as we go into it.

Q9                Chair: It seems to me that the answer has to be yes, so this is an ongoing spending commitment even if it has not been agreed in the spending review.

Shona Dunn: Exactly. As you say, we have received £685 million already. Actually, more than that has been spent because some additional funds have gone in from other sources.

Q10            Chair: Are the sources from the hospitals themselves or from the Department?

Shona Dunn: Some from NHS England and some from trusts’ operational capital, so we know that more has gone in.

Q11            Chair: Do you have a total figure for what has been spent?

Shona Dunn: I do not have a total confirmed figure.

Q12            Chair: If you could write to us on that, that would be helpful. We will ask the NAO to have a look.

Shona Dunn: I am more than happy to. It is not an order of magnitude larger; they are top-ups. We have received what we needed to take the action we sought to take, and I have no reason to believe that we will not get what we need to do that in the future. Of course, the advent of the funding envelope for the New Hospital Programme itself makes a substantial contribution to that.

Q13            Chair: We are going to get on to that in more detail. The RAAC hospitals themselves can be an average of £1 billion to fix. There is not that much money in the New Hospital Programme budget, and they are in cohort 4. You are supposed to be rebuilding them by 2030. It seems that the timelines and money just do not stack up.

Shona Dunn: As you say, I am sure we will come on to the intentions with the New Hospital Programme and the envelope and so on. Initial estimates for the full replacement of the RAAC hospitals have been discussed and the numbers are of the scale that you talk about, but we have to go through the process of putting together the business cases for them, of applying Hospital 2.0 and so on. We will come to that, but that commitment is there and it is firm. It will make a substantial impact on the RAAC position, as will the mitigation programme and the wider operational capital.

Q14            Chair: Mr Kelly, you indicated earlier that it is hardest to eradicate RAAC when you have an entire hospital, for all the reasons that we know—service continuity, scale and so on—but you have this timeline to deliver it by 2030. Do you think you will actually achieve that?

Julian Kelly: I think we have identified a priority to get on and do the rebuilds for the hospitals that have RAAC. Within the programme, that is identified as a priority. It is why the Government made the decision to put them into the programme. We will work as fast as we can with those hospitals, in a sensible way, to give us the best opportunity to do it to that timetable. We see that as imperative for patients and for staff.

Q15            Chair: We are going to come to the New Hospital Programme. But if most of them are in cohort 4, that relies on Hospital 2.0 being bottomed out. It relies on all the planning and service configuration issues. And we know that the first hospital under this programme won’t be delivered until—well, I think the first one is under way for 2024, but the second one won’t be until 2025, and there are still then 30 more to go. Given the timelines, you are sounding a bit hesitant. I suppose that is what I am saying.

Julian Kelly: We are setting a goal to have done these by 2030. I think it is really imperative we get on and do them as quickly as we sensibly can. In all experiences of doing any major programme, make sure you get the design right, to the right level, because it’s when you go too early and you haven’t got your design right that actually it always ends up taking you longer. So let’s get the design right, and if we can do that, we are still confident that we can do it by 2030. But it is a major programme. We will have, no doubt, challenges along the way.

Chair: We understand. You have a lot of caveats in there. We will come to those as we go through the hearing. I want to bring Anne Marie Morris in now.

Q16            Anne Marie Morris: Ms Dunn, what help are hospitals getting to actually identify whether they have RAAC?

Shona Dunn: Just to return to some of the things that Mr Kelly said, most hospitals of course will have their own estates teams, resources in-house, as well as expert resource from outside. They have been going through a process of onboarding into the national programme, fully surveying—first visually and then intrusively, using full structural surveys—the areas of the hospitals that may have RAAC, and then being supported to determine what the appropriate mitigations are.

Q17            Anne Marie Morris: RAAC was not something that anybody was expecting to find. For your local hospital team responsible for maintenance, structure and so on, this was not a usual thing to be expected to look for. Are they getting any specialist help so that they are putting in place the right sort of instruction to, presumably, an external surveyor, to make sure this problem is identified?

Shona Dunn: You are quite right: this is a highly technical, highly specialist area. They have had—Mr Kelly might want to come in on the detail of this—guidance and advice for a number of years, from 2019. That conversation has been ongoing between NHS England and the trusts, and certainly I am not aware of any trust being concerned that they don’t have the appropriate technical and specialist input to be able to make the judgments that are being made.

Julian Kelly: It is worth saying that we have a specialist technical engineer who is a permanent part of our team. He is one of the people we send out as soon as anyone has identified they think they might have a problem, to at least do the initial visual survey and say, “Yes, potentially”, or no. Then we work with those trusts to make sure they source the right technical engineering support to both complete the survey and make sure we have proper mitigation plans in place, and to develop the eradication plans.

Q18            Anne Marie Morris: Two things. First, that’s expensive. Is the central Department paying for it or is it something that the hospital are having to absorb? Secondly, it sounds like it’s a fairly reactive process, as it requires the hospital to flag up to you that there might be a problem. Where is the obligation and the certainty that you need that they have actually done whatever it was they needed to do to know whether they needed to at least wave the red flag?

Julian Kelly: It is the board and the trust that have responsibility for the way they manage their estate and the way they manage the risks within that, which they are doing across a whole range of areas every single day. We have made available, as I have said, specialist technical engineering support in this area where they think they might have an issue.

Q19            Anne Marie Morris: But are they paying for it or are you paying for it?

Julian Kelly: It is being paid for out of the money provided for the mitigation and—

Q20            Chair: The £685 million.

Julian Kelly: Yes.

Q21            Anne Marie Morris: What about the Health and Safety Executive? What role do they have in all this, Ms Dunn?

Shona Dunn: The Health and Safety Executive are effectively the part of the regulatory landscape within which this issue is considered. Because this is, as you pointed out, such a specialist area, they take account of the technical and expert advice of the Institution of Structural Engineers. So it is the guidance and advice of the Institution of Structural Engineers that we have and pay close attention to. We engage very closely with them to make sure that, if there is any change to the way they see this issue and appropriate approaches to it, we respond to that.

Q22            Anne Marie Morris: Do they have any requirement that the hospital trust must review the state of its buildings every four or five years? Is there a process that the Health and Safety Executive mandates the hospital, local authority or trust to put in place to ensure that a building is safe?

Shona Dunn: Mr Kelly might know the answer to this question, but I do not. If you don’t know, Julian, we will come back on that.

Julian Kelly: There is an expectation of something regular. We can confirm outside, but I think that it was to do a regular, full survey of the state of the estate every three or four years. There is a base expectation that that is done. When the RAAC position was first identified, we asked everyone to go and look at their buildings. After that initial round, other trusts have come forward. As I said, we recently did another request that everyone go and check, and another group of trusts has come forward.

Last week, or this week—I have forgotten my days of the week—we wrote to every board to ask if they can ensure that their estates team has given them a proper account of the work that they have done to reassure themselves about whether they do or do not have a problem. We are exploring how we would use the specialist resource that we have to go and do some sampling and check where we know that people do not think they have a problem, but we know that it is an estate in the age range of buildings that are of concern. We might do some sampling, but right now we are focusing our specialist engineering resource on ensuring that we have fully understood the problems where they have been identified.

Q23            Olivia Blake: Further to the conversation about mitigations, you said that you have the funding needed to take the action you seek to take, but is that action adequate?

Shona Dunn: The trusts in the programme have, as Mr Kelly said, either worked through their plans, had advice on the appropriate mitigations and had those mitigations put in place, or they are developing those plans and those mitigations will be put in place. As with any issue of this type, you must ensure that you work through the appropriate steps. It is certainly the case that the programme is designed to ensure that all the hospitals onboarded into it have mitigations in place that maintain the safety of their buildings until the RAAC can be eradicated.

Q24            Olivia Blake: During our visits to hospitals, we heard directly from staff that they are having to conduct daily monitoring of RAAC and that, as Sir Geoffrey said, there could be an incident. That seems not to have changed and it is having an impact on the clinical work. We saw a ward that had to close urgently. We heard about matrons being on speed dial to property management, just in case anything goes wrong, and about the managing of admissions based on weight as they cannot have too many people with all the equipment that they need on the first floor. Do you think that the clinical changes that are having to be made are acceptable? What more support could you give to clinical staff to help them deal with the issues?

Chair: Is that question to Ms Pritchard or Ms Dunn?

Olivia Blake: I will hear from both, if that is okay.

Shona Dunn: Shall I start? It is clear, and it would not be sensible to deny, that of course where measures are having to be taken in a clinical space, that will have some impact. I am also conscious that with certain categorisations of RAAC planks, regular monitoring is an appropriate mitigation, and therefore there will be some environments where part of the mitigation plan is to regularly monitor the position, rather than to move to anything more invasive to start off with. There will be a number of different scenarios of that type.

Of course, it is everybody’s ambition to ensure that we get to that point, and it is part of the ambition of the New Hospital Programme to ensure that we have clinical environments that are not affected by these issues. RAAC is one of the issues that we take account of when we think about how we deal with where operational capital is prioritised and how you deal with the backlog of maintenance. There are other issues as well, as I know you saw in Hinchingbrooke. This is an ongoing programme, and not everything can be resolved straight away. Things have to be prioritised and categorised.

Amanda Pritchard: It is worth saying, exactly as has been done, that the management of RAAC can be really burdensome for local teams. It can put a lot of pressure on teams, not least as has been described in terms of enhanced monitoring arrangements. At the moment, we are really clear that within the NHS we are following the Institution of Structural Engineers guidance, and that has not changed. It is still what we are working to. They would say—and we would be clear—that of course even doing all of that enhanced monitoring and mitigations does not and cannot completely eliminate the risk from RAAC. That is why the eradication plan is so important and why we were really pleased that the seven hospitals that require a full rebuild have now been brought into the remit of the New Hospital Programme.

Q25            Olivia Blake: If eradicating entirely RAAC hospitals is so important, is it or should it be sensible to move them forward where they have plans? I know that a lot of them have plans already that they have developed ahead of 2.0, so that they could come earlier in the programme instead of waiting for 2.0.

Shona Dunn: I imagine that we will come back to this in the NHP part of the discussion, but it is undoubtedly the case that everybody would want to move to replace the RAAC hospitals as quickly as possible. In part, turning to what Mr Kelly said earlier and what we will come to with the NHP, actually replacing those hospitals, given the scale of them, even where they have some previously developed plans, by 2030 is not a generous timescale. Under normal circumstances and from historical examples, you would expect hospitals of that scale to take considerably longer than that to get from the start of planning through to welcoming patients through the door. We would all like to do it faster. As Mr Kelly said, I think that doing it by 2030 is going to challenge the programme anyway.

Q26            Olivia Blake: Amanda Pritchard just said that the advice has not changed. The advice seems to have changed for the DfE. Have they provided evidence to you of why they have made that decision to change, or do you feel that your response is still adequate?

Shona Dunn: The Government have been quite clear on this point. Effectively, the information that the Department for Education has been working on is being shared and considered. What is really important is the Institution of Structural Engineers guidance. This is such a technical issue. It is really important that we continue to follow the guidance with respect to the context we are dealing with. I will not comment on the context the DfE is dealing with, but the institution’s guidance has not changed, and our context continues to support us following the approach we are following.

Q27            Olivia Blake: So you are confident that it is safe for hospitals to remain open?

Shona Dunn: As Ms Pritchard just said, for an issue like RAAC, it is widely documented that you can never be 100% certain, but in terms of the levels of risk, we are following the appropriate specialist advice and guidance and acting accordingly.

Chair: There seems to be a difference between the school estate and the NHS estate. I will turn to our deputy Chair, Sir Geoffrey Clifton-Brown, who is also a qualified surveyor. He might be able to drive this home.

Q28            Sir Geoffrey Clifton-Brown: Good morning, Ms Dunn. You say on page 2 of your letter to us that you have ruled out RAAC on further hospitals upon further visual inspection. Mr Kelly referred to this earlier. As we all know with RAAC, it is not good enough just to have a visual inspection. We could inspect this ceiling, if it had been built between the ’30s and ’50s—before people get excited, it was built 150 years ago—and if there were RAAC in the rafters above it, a visual inspection would reveal nothing. If you were lucky, you could take out a panel in the middle, get a camera and survey the whole ceiling; if you were unlucky and there were beams in the way, you would have to take the whole ceiling down.

As we saw at the West Suffolk Hospital in Bury St Edmunds, those sorts of invasive works are incredibly disruptive. They were having to move wards about, and people who were very sick were having to be moved to a different part of the hospital. How is that invasiveness to be done? You cannot be sure until you have done those proper invasive surveys that there is no RAAC or no RAAC deteriorating. How is that to be managed within hospitals so that it does not cause huge disruption?

Shona Dunn: Mr Kelly will confirm, but I think that where it has been said that a visual survey has ruled out the presence of RAAC, that will only have been said where that is strictly true—where it is clear that the area in question is available to visual inspection, without any of the invasive surveys of the type you referred to. Where it has been ruled out will only have been where it was possible to do that through that type of survey. If there is any doubt, we will proceed to a full structural survey with invasive methods.

One of the things about some parts of the hospital estate is that, although you are right that it can be very disruptive and difficult for healthcare settings to manage, often in these buildings there is the scope to do at least temporary decanting, or to close areas for short periods while the survey is undertaken, managing the disruption in a way that minimises the impact on patients and staff. But that is not to say that it is not deeply frustrating for everyone. I know that that is how the NHS approaches such work, and has done for some time. To go back to the point that Mr Kelly made, this is not new in the NHS; this is a well-established programme that has been in place for a number of years. Hospitals have been undertaking that work in that way.

Q29            Sir Geoffrey Clifton-Brown: In answer to the Chair’s question, you referred to the very tight timescale for getting these seven hospitals done by 2030. They are, in effect, in cohort 5, which now seems to be going to jump the queue. The Chair referred to this, and Ms Forrest might want to come in on it, but in the whole programme you are also hoping to introduce the standardisation model 2.0 and the net zero requirements by 2040. The 2.0 designs are not even finished yet. The team that is designing them will need to recruit several hundred. The earliest that will be fully designed is 2024. If we are to use 2.0, I do not see how that possibly gives you enough time to rebuild those seven hospitals by 2030.

Shona Dunn: I am very happy for Ms Forrest to come in, if you would like to.

Natalie Forrest: You are absolutely right that it is a challenge. However, Hospital 2.0 is not just about the design of the hospital; it is about the whole end-to-end process. It is the business case process, the design, the construction, the operating model and the maintenance, which is equally important, in particular in light of this conversation.

We have spent a lot of time looking at how we can reduce the time taken on all those components of the development of the hospital. We anticipate going from an average of about 11 years, which is what we see currently, to about six years, sufficiently compacting the whole business case process, which we can already be doing in parallel with working around the design of the hospital specifically. We can do the work we need to do to engage clinicians, the public and the trusts in their service requirements.

You are absolutely right to say that the design specifically is a challenge to standardise the whole process, but it is not an absolute either. As we produce aspects of Hospital 2.0 design, we will put them into the plans for the hospitals.

Q30            Sir Geoffrey Clifton-Brown: This is a question for either of you. Given the seriousness of the issue and the need to get it done by 2030, is there not a strong case for just doing it under the old method? Let us forget 2.0 and net zero; on these seven hospitals, let us just get a design out there, which will be adequate for a new hospital, so we can just get the contracts let and the project built as quickly as we can.

Natalie Forrest: That would take us back to the traditional way of doing things—absolutely—and we know that that will take longer. Standardising will allow us to manufacture those component parts at pace, as opposed to the traditional on-site construction process.

Q31            Sir Geoffrey Clifton-Brown: The first ones of a new system are always going to take longer. I cannot see how it could possibly be done more quickly through this new system than it could if we reverted back to the old system.

Natalie Forrest: We are absolutely challenged to do something new, but we know that the traditional method will take longer. 

Sir Geoffrey Clifton-Brown: I find that slightly—

Chair: We do not have the new model yet.

Sir Geoffrey Clifton-Brown: We do not even have the model; how it can be quicker I am not entirely sure. Let us just pass on. If I could take you to—

Shona Dunn: Do you mind if I finish up on that?

Sir Geoffrey Clifton-Brown: Yes, of course; please do because it sounds illogical.

Shona Dunn: It is important to note that the model that the programme is working to is based on an evidence base that has looked at the length of time it has taken to build hospitals in the past. I fully appreciate the point you are making. The information that the programme holds about those hospitals at the moment would suggest that we can do this faster, but we are more than happy to set that out in more detail post-session.

I also want to come back on the recruiting to complete Hospital 2.0. We can come to this in more detail later, but that recruitment has already been done so—I know this has been a concern of the Committee—we are not still waiting to recruit those people; they are in place.

Q32            Sir Geoffrey Clifton-Brown: Thank you for that further explanation. The Chair has already referred to the Member of Parliament for Bury St Edmunds, Jo Churchill, and West Suffolk Hospital, which I know well because I was born within three miles of it. She asked me to ask you whether, given that the whole hospital plans are at such an advanced stage—they have an alternative greenfield site, so they do not need to have an impact on the existing hospital with a new building project—that project could be accelerated and used as a test case for the other six projects.

Natalie Forrest: That is absolutely the right approach. We are working specifically with West Suffolk to look at what we can do to learn and accelerate. West Suffolk have had an investment of circa £10 million already to make sure that we are progressing its business case. We are in the process of assessing its strategic outline case along with our NHS colleagues right now.

Q33            Sir Geoffrey Clifton-Brown: Thank you for that answer. I am sure she will be pleased to hear that. Could I take you to figures 17 and 18 on pages 62 and 63 of the Report? It is not immediately obvious to me why building a new RAAC hospital is more expensive than building any other hospital. It looks to me more or less as though a non-RAAC hospital of a similar size would cost about £1 billion but a RAAC hospital it looks as though it would cost £1.5 billion. Why is building a replacement RAAC hospital inherently more expensive than building a non-RAAC hospital?

Shona Dunn: Obviously, an awful lot sits behind these figures and it is worth saying up front that these figures are estimated cost bands. They will be refined as the work on each of the business cases for each of the schemes progresses and part of the benefit of the New Hospital Programme and Hospital 2.0 is to apply standard baseline assumptions, which will hopefully make sure we get best value for money.

The thing about RAAC hospitals is of course that they are the entire site being rebuilt. For some of the others where the band is smaller, it may only be part of the site that is being rebuilt. It may be a substantial whole clinical service but a new clinical service as part of an existing site. Within each one of these descriptions, there is a lot of detail that drives that; it is not intrinsically—colleagues can correct me if I am wrong—the fact that it is a RAAC hospital, it is the scale of the rebuild that drives the cost differential.

Q34            Sir Geoffrey Clifton-Brown: To come to you, Ms Forrest, I would like to talk about Hospital 2.0. Could you describe exactly where you are at the moment and exactly when you expect to have completed those designs so that we can then move on from there to actually, whether it is RAAC hospitals or other hospitals in the programme, starting to use them? Will it deliver the expected savings that the NAO Report predicts?  

Natalie Forrest: We have already released the first set of standards for Hospital 2.0 and the hospitals are working on those right now. They are a mix of clinical standards, adjacencies that we would expect to see and some room designs. We anticipate the next release being in the spring and that will be the majority of what is needed for us to develop those schemes at pace.

In relation to making the savings around Hospital 2.0, the overarching standardisation is about reducing the amount of variation. If I can give you an example, because we have been looking at all components across the hospital build, when we looked at the number of door types across cohort 2, there were 27,000 different ones. We have been able to bring that down to 700. That means that by working with suppliers to deliver just a standard set of doors that work for everyone, capacity for them to be able to produce more doors is increased so that we can go faster. It also reduces the cost.

Q35            Sir Geoffrey Clifton-Brown: Paragraph 3.6 on page 39 states that if 2.0 could be fully implemented the hospitals “would cost 25% less and take 20% less time to build”. Those are very big claims on an £18 billion project, given that it appears from the report that you have not had a great deal of discussion with the industry, which is why I am slightly sceptical on the timetables on the RAAC rebuilding. Are these actual savings real evidence or is that somebody who has just plucked some numbers out of the air? These are really big claims.

Natalie Forrest: We have absolutely worked with industry. In particular, we have looked at other Government major programmes, like the prisons programme where they have the exact same model around standardisation and using the same components and modern methods of construction that we plan to do. Those are the savings that they are seeing as well. We have also seen it in industry around more simplified buildings; office buildings, for example, where they have taken the same approach. Although it has not been tried in hospitals, it is very much established in other infrastructure.

Q36            Sir Geoffrey Clifton-Brown: That moves me neatly on to the next question. This is a massive project and the report says that there are only likely to be four contractors able to build hospitals over £600 million, which in itself is likely to be a constraint and an inflationary cost. Do you have any proposals to build up? It is going to need a huge increase in capacity to build these pre-manufactured components. Do you have any proposals, like the Government did during the covid vaccine, of actually investing in facilities to be able to manufacture and store more of this stuff in the regions where it is needed? It is all very well having a factory in one part of the country but you need it in another. When we went to west Suffolk, Jo Churchill made the point that she was looking for a regional facility for East Anglia to be able to do this.

Natalie Forrest: Absolutely, Sir Geoffrey. That is exactly how we anticipate increasing the market capacity. If we try and ask for suppliers to just build more hospitals, that is simply not possible. That is the whole point of the change in design of Hospital 2.0 in order to allow us to manufacture those component parts as opposed to constructing on site so we can increase capacity.

Q37            Sir Geoffrey Clifton-Brown: Just to be clear, therefore, the Government during the vaccine—Ms Pritchard and Ms Dunn will know this—actually invested in the facilities to scale up manufacture of the vaccines quickly. Is that what you envisage doing with manufacturing these pre-manufactured components that are going to be needed for 2.0?

Shona Dunn: The commercial strategy and the approach, as Ms Forrest has described, focus on one of the bespoke arrangements we need to be able to support those component providers to scale up. Standardisation, as Ms Forrest has said, is an important part of that. It is within the strategy that if there are specific market interventions that may be needed to support that, we will look at that. We don’t have to answer your question directly, Sir Geoffrey. We don’t have a budget for investing in certain things, but what we do have is a clear commercial strategy with those component parts, which, as this develops, will allow us to look at where those market interventions may be needed. We can then discuss them individually with the Treasury.

Q38            Chair: We have had evidence on that lack of certainty. It means that you will struggle to get contractors to want to buy into this.

Shona Dunn: The programme has a well-developed commercial strategy, and quite an active programme of engagement with both main contractors and component providers.

Q39            Chair: I don’t doubt that, but with the money from the Treasury dribbling out in small amounts, it is not like there is a long-term, certain funding plan yet.

Shona Dunn: It is certainly our responsibility to ensure that, in working with our commercial partners and the marketplace, we are giving some certainty around the pipeline, and the speed of coming to market and so on. That is part of the plan.

Q40            Sir Geoffrey Clifton-Brown: I think the Chair’s question is absolutely apposite. Can I suggest that you write to us? Given the short timetable of the building plan with 2.0, particularly with the RAAC hospitals but also all the other ones that are supposed to be built by 2030, it seems that, rather than just thinking about it in your head, you are going to need to have some real concrete plans developed with the manufacturers to find out where the shortages are. I don’t mind if that letter takes six months, but I think we need to have that on the record.

Shona Dunn: That will be developing very rapidly over the next few months. We are very happy to write to you with lots more detail on that.

Q41            Sir Geoffrey Clifton-Brown: Yes. Perhaps, Professor Powis, I could talk about the standardised hospitals for a second. There are fears about them. One is that the whole NHS model is going to produce hospitals that are too small to meet the existing and future need, with us all ageing. Would you like to address that point please?

Professor Sir Stephen Powis: Yes. I know that Natalie and the team are very focused on ensuring that we have right size of hospitals. That is a core component of the work that is being done. Clearly, there is merit in standardising the approach, as Natalie has outlined, but it is also important that each hospital has a local alignment with the particular clinical service model in use on that site. That will be different depending upon the location and the type of facility.

There is extensive work going on with clinicians. Over the programme as a whole, there have been over 50 meetings with royal colleges and other professional groups. Many hundreds of clinicians are involved in discussions around the design. That involves clinical teams in local hospitals on the development programme. As I said, when developing the hospital, understanding and marrying it to the local clinical service model that will be in use is a really important part of that next step beyond standardisation.

I am confident that clinical engagement is going on, including engagement with myself. I meet regularly with Natalie and the hospitals team. One thing I have been pursuing in particular, which I spoke about with the Health and Social Care Committee in 2021, is moving across the board to single rooms and away from the more open ward areas that we have traditionally had in the past. There are three reasons for that. One is privacy and dignity. The second is infection control. A lesson we have learned from the pandemic is the difficulty of maintaining infection control in open areas. The third is inflow. When we are cohorting patients, which we had to do for covid but we also do it based on gender and other infections, we end up with void beds that cannot be used because there is not a match between the number of patients who need to be cohorted and the number of rooms.

Natalie and the team have done extensive work on operational flow and efficiency. That is an important component. For instance, you asked a question at the start about right sizing. It turns out that when you move to that sort of model, you can improve the efficiency and the productivity of hospitals. You end up with a different answer in terms of the size of the hospital compared with the traditional way we have used clinical spaces. I am sure Natalie can give you the detail on that, but it is one example.

Q42            Sir Geoffrey Clifton-Brown: I think other colleagues will want to cover other aspects of these new hospitals. I want to come back to you, Ms Forrest, to talk about the numbers in the building programme. Has building started on any new hospitals since the NHP was formed in 2021?

Natalie Forrest: Yes, two hospitals have gone into construction since the start of the programme.

Q43            Sir Geoffrey Clifton-Brown: Which are?

Natalie Forrest: The National Rehabilitation Centre and—

Chair: That is the one near Loughborough.

Natalie Forrest: Yes, that is right. And Moorfields Eye Hospital in central London.

Q44            Sir Geoffrey Clifton-Brown: Were they in cohort 2, or were they pre-planned, in cohort 1?

Natalie Forrest: No, one was in cohort 1, but it was an outline business case. The National Rehabilitation Centre was in cohort 2—you are right.

Chair: I have to say, as an MP in a constituency neighbouring the Moorfields main site, and with a Moorfields site in Hoxton in my constituency, that Moorfields has been planning a major bit of work for some time. Maybe, technically, that is under the programme, but it is a bit of a squeeze to say that—it was not starting from a blank sheet of paper, for sure.

Q45            Mr Francois: You are not talking about the Defence and National Rehabilitation Centre.

Natalie Forrest: It is right next door.

Mr Francois: Because that has been going for years and years.

Natalie Forrest: This is a new hospital, which will be for the NHS, alongside the defence hospital.

Professor Sir Stephen Powis: It was always part of the plan to co-locate an NHS hospital close, on the same site—

Mr Francois: Hang on, I know the history of this. It was and it wasn’t, and then it was and it wasn’t. It took the NHS years and years to commit to it. So let’s not change history.

Chair: But also, if it was a long plan, again, this was not a blank sheet of paper from the beginning. I think that is the point, isn’t it?

Mr Francois: I know all the background to that.

Chair: Thank you. We know that you know these things on defence.

Q46         Sir Geoffrey Clifton-Brown: Ms Forrest, we have some really important questions now around costs and the different cohorts. Going back to our old favourites figures 14, 15, 16 and 17, and adding up the totals, cohort 2, which is the relatively small hospitals, which we are told have to be started in 2024-25, is £1.45 billion. Cohort 3, which is the eight relatively larger schemes, is £10 billion. Cohort 4, which is 14 larger schemes, is £19 billion. Cohort 5, which has now become RAAC, is estimated to cost £7.5 billion. Adding up 2, 3, 4 and 5 brings us to £37.95 billion, while the NAO Report has a figure, I think, of £31 billion. So can this programme be built? Where is the gap coming from, between the £18 billion you have been granted and whatever the figure is—whether it is the £31 billion the NAO says it is or the £37 billion we get from adding those schemes up? It seems to me that there is a massive black hole in terms of getting these cohorts done, isn’t there?

Shona Dunn: Shall I start on this? The first point to note is that, of course, as part of the announcement in May that brought the remaining five RAAC hospitals into the programme—

Sir Geoffrey Clifton-Brown: There was going to be a cohort 5, irrespective of RAAC.

Shona Dunn: Precisely. But we also announced at that point that there would be a rolling programme going forward. We expected some of what were previously cohort 4 hospitals to complete after 2030. So the envelope that has been announced, and that we are working with, will include the early works on those, but it is not expected to include the full cost of those that go beyond 2030. That will explain some of the gap, Sir Geoffrey. Natalie, did you want to carry on?

Natalie Forrest: Absolutely. The important point around the announcement was the commitment to fund those hospitals beyond and to create that rolling programme and pipeline, which is so important for market engagement. You are quite right that the current funding up to 2030 does not include those hospitals that will complete beyond 2030.

Q47            Sir Geoffrey Clifton-Brown: The original programme, when it was announced in 2020, was to have 40 new hospitals built by 2030; it has now been scaled back to 32. But given the funding—

Chair: It is perhaps worth saying that the National Audit Office highlighted it is 32—

Sir Geoffrey Clifton-Brown: Yes, that was the National Audit Office’s methodology. Given the funding constraints, and even the building constraints, Ms Dunn, how many hospitals—I don’t mind whether it is in cohorts 2, 3, 4 or 5—will be built by 2030?

Shona Dunn: The team is working to develop the full business case that will cover all the hospitals that were in the announcement in May. As you rightly say, Chair, the NAO made the point that the cohorts in the 40 that were announced in May start from a different place from those cohorts in the 40 that were announced previously. I expect that the full business case that we are developing will cover those that were announced in May.

We have been working on, and will work on intensively as we produce the full business case, the more detailed articulation of the costs of the individual schemes, and how we get them in that envelope. We are working with the minimum viable product baseline assumptions. We think that is achievable, but we will confirm that as part of the full business case process.

Q48            Sir Geoffrey Clifton-Brown: That was quite a long answer. Simplify it for me, because I am a simple person. How many hospitals will be built by 2030?

Shona Dunn: The 40 hospitals that do not exist at the moment that fall within the definition of a new hospital will be built under the programme by 2030, under current plans. As I say, that is to be determined as part of the full business case. That is the intention; that is what we are working towards. That is what the full business case will develop. That was what was announced.

Q49            Sir Geoffrey Clifton-Brown: That is quite a bold announcement. The NAO figure of £31 billion is quite big, but I think if you add up the figures in the tables, it is £37 billion. Given that you want to include all those hospitals in the programme, it looks as though there is a huge black hole in the funding allocated. What discussions are you having with the Treasury on this? At this moment, as you sit here, where do you think the final funding figure is to get all the hospitals in the programme built?

Shona Dunn: Obviously, we have had a lot of discussion with the Treasury over some considerable time. The envelope that was announced in May is one that we think we can work with.

Q50            Sir Geoffrey Clifton-Brown: The 18 point something billion?

Shona Dunn: The announcement was over £20 billion. That is the envelope that we are working with, and that we are developing the full business case for. We think it should be doable, but we need to confirm that through the full business case process.

Q51            Sir Geoffrey Clifton-Brown: I put it to you that I think even the figures in the tables do not contain an element for inflation. They do not contain any Treasury contingency—P50, P70 or whatever it is. They do not show realistically whether these savings will be produced by 2.0 or not. They do not reflect inflation in the market resulting from the fact that relatively few contractors will be able to build these hospitals. I get increasingly worried about the shortfall in funding. I wonder whether you have been having realistic discussions with the Treasury about what these 40 hospitals will cost.

Shona Dunn: I can feel Mr Kelly’s eyes boring into me from the left. We think about these things very carefully, and our conversations with the Treasury have absolutely included all the things you mention. We operate, as a major programme, on best practice principles. We would not have conversations with the Treasury that do not take account of optimism bias, inflation and so on. Those things are built into our discussions.

Chair: To illustrate the point, if you look at figures 8 and 9 on pages 31 and 33, only one hospital’s budget is lower than it was in 2020. Some budgets have gone up by a staggering amount; the budget for the women and children’s hospital in Cornwall has a 103 percentage point increase. The budget for the Derriford emergency care centre in Plymouth has had a 137 percentage point increase. These are staggering sums of money. They don’t get cheaper.

Q52            Mr Francois: Part of the challenge of this is definition. To be clear, Ms Dunn, you have said today that we will have 40 new hospitals by 2030. If you look at page 4 of the NAO Report, headed “Key facts”, so far, you have built one hospital that falls within the definition: the Dyson Cancer Centre in Bath. In three years, you have built one and you are now telling us that you are going to build all the other 39 within seven years. On your progress to date, you are not going to get anywhere near it, are you?

Shona Dunn: As I say, the 40 that were announced in May—you are quite right that the 40 that were announced previously will not all be built by 2030. There are 40 hospitals that were announced in May where the programme is developing the full business case to deliver those hospitals by 2030. I am not saying that the 40 hospitals that had previously been announced will be built by 2030; I am saying that the hospitals that were announced in May are what we are developing a full business case for, with the intention of delivering those by 2030.

Q53            Mr Francois: Forgive me, but let me say, as an MP with 22 years’ standing, that there is sophistry here. It seems to me that you are deliberately trying to mix up apples and oranges because you know you can’t meet the original commitment. I am looking at the NAO’s Report, which says that the “forecast operational date of the first new hospital that counts towards the 40 new hospitals commitment” is late 2023, and the “forecast operational date of the second new hospital that counts towards the 40 new hospitals commitment (Shotley Bridge Hospital, County Durham)” is late 2025. That will be two hospitals in five years, and you are still saying 40 in 10. It just defies logic, doesn’t it?

Shona Dunn: I entirely accept that the NAO is reviewing the position against the 40 hospitals in the original announcement. Ms Forrest can talk in more detail about where we are against the hospitals that we referred to in the May announcement. It is those 40 hospitals—

Q54            Mr Francois: I will hand back to the Chair, but in simple terms, you are playing a game of smoke and mirrors this morning. You have one list of 40 and then, oh, it’s a different list of 40. Everybody can see you are way off track, it is far too slow, it is far too bureaucratic—it is classic DHSC, in other words. You are not going to get anywhere near it, are you?

Shona Dunn: As I say, we are working, as I think you would expect us to, to the Government’s announcement in May and the hospitals that were included in that announcement. That is the list of hospitals that we are planning for and preparing to build.

Q55            Mr Francois: Yes, but you have to deliver it. My point is that on the current rate of progress, you are not even going to get close.

Chair: It is optimistic.

Shona Dunn: As I said at the outset, this is a very big and complex major Government programme that is not just building 40 buildings; it is attempting to shift the way in which we build hospital infrastructure. I therefore completely accept, Mr Francois, that there is a period of time at the outset of that major programme where we are developing Hospital 2.0 and changing the approach to the delivery of that infrastructure. You are quite right that we rely on that change of approach being successful in order to build to these timeframes. What I am saying is that the recent past needs to not be an indicator of what happens over the next seven years, and that is why Hospital 2.0 and the approach in the programme is so important in order to get to that 2030 point.

Mr Francois: This is even worse than the MOD, and that truly is saying something.

Q56            Sir Geoffrey Clifton-Brown: Ms Dunn, given what I and Mr Francois have been questioning you on, and I do not mind if you take your time over it, but we do need a detailed written note, please, of exactly what hospitals in what cohorts at what price are going to be built by what date. We can then get the experts to look at that and see whether it is realistic.

Shona Dunn: I was going in any case to ask Natalie whether she wanted to add anything in terms of what we expect to be built, what is already built, what is already receiving patients and what is already in commissioning and so on. Natalie, I don’t know if you want to add some of that detail now.

Chair: Is this since the NAO Report was published? Is there an update?

Natalie Forrest: We have two hospitals that are now complete and commissioning, expecting to take patients in a very short space of time.

Q57            Sir Geoffrey Clifton-Brown: Which are those, please, Ms Forrest?

Chair: Dyson Cancer Centre in Bath?

Natalie Forrest: No. It is the trauma centre in Manchester and the first phase of the CEDAR development in the north.

Sir Geoffrey Clifton-Brown: With respect, those are very small projects.

Chair: And they are not in the 40 programme, are they?

Q58            Sir Geoffrey Clifton-Brown: Some of the other ones we are talking about in cohorts 3 and 4 are really big projects, which will take much longer, will they not?

Mr Francois: Are they apples or oranges?

Chair: Please continue, Ms Forrest.

Natalie Forrest: I completely appreciate that physical construction of a hospital is what looks like progress, but in fact all the schemes that we have been talking about are developing their business cases. As we alluded to earlier, Chair, that takes years of development, so there is progress going on.

Chair: I used to represent Whipps Cross University Hospital. It is part of a trust that covers some of my constituency, though it is not in my constituency, and it has been trying to be redeveloped since I was first representing it in 2000, and we are in 2023. So these are not all brand-new projects; they have been knocking around for a while. I will bring in Sir Geoffrey just to finish off some points on Hospital 2.0 before we move on.

Q59            Sir Geoffrey Clifton-Brown: Just to illustrate the point to both of you, there is a hospital in cohort 3 that was part of the original HIP in 2019, Epsom and St Helier, which says on its website: “Some of our buildings pre-date the NHS itself. Wards are shut down because the foundations are sinking, lifts” are not working, and “Our patients and our staff deserve better.” That is not until cohort 3. It seems that we have some really serious cases out there that cannot expect to have anything done for a number of years.

Natalie Forrest: May I talk to the cohorts?

Sir Geoffrey Clifton-Brown: Yes.

Natalie Forrest: I think there is perhaps a conception that the cohorts are in sequence, and that is not necessarily the case. From our perspective, they describe the archetype of the hospital at the time that the programme was set up. We would describe cohort 2, for example, as schemes that were small and agile and that are able to be delivered at pace. We would describe cohort 3 as schemes that already have plans in place that we need to work very closely with to make sure that we are not starting afresh and taking them back, but that we are certain that we are going to provide value for money and that we are building the right thing for the future. Of course, if plans have been set out many years ago, things have changed significantly, we have a lot of learning and we need to overplay that. Cohort 4 are schemes where we are starting afresh, in effect.

Q60            Sir Geoffrey Clifton-Brown: I come back to my letter, Ms Dunn. Could we have a fairly detailed letter? Reading this Report, I think the public would expect that you get cohorts 1 and 2, and then 3, 4 and 5. If that is not to be the case, as you are now indicating, please could you set that out in a letter, so that people—the public out there—can have a fairly clear idea of where their particular hospital is on the list and what the cost is likely to be? You say the envelope is £21 billion; I actually thought it was £18 billion in the NAO Report, but maybe there is a difference and you were given some extra money somewhere along the line. Could you set all that out fairly clearly for us? I am very concerned that we have a huge black hole here.

Can I come back to you on 2.0? It seems to me that, rather like I was requesting you to do with West Suffolk on RAAC—do it on the old system, if you need to, to get it done quickly—you need to set out one exemplar on whatever 2.0 you are going to come up with next year, and get that built. That will demonstrate to everybody—yourselves and everybody else—exactly what the cost is and what the savings are. This is a very big scheme, and it is no good just blithely going out there and saying, “It’s going to produce a 20% saving and it’s going to be built 25% quicker,” until you have actually proved it. Could I have your reaction to this suggestion? Get 2.0 designed fairly quickly and then get out there into the market, design a hospital fairly quickly and build one exemplar hospital to prove what can be done.

Shona Dunn: Sir Geoffrey, you are completely right, of course. To the point that Ms Forrest made before, we are always looking for opportunities to accelerate. As Ms Forrest also mentioned, part of Hospital 2.0 is not just about the build; it is about how we accelerate the processes in advance of the build as well. Absolutely, as we proceed we will be looking for any opportunity that exists to do as you say.

Sir Geoffrey Clifton-Brown: I will leave it there for now.

Q61            Anne Marie Morris: Can I come back to Ms Forrest on the question that was originally posed by Sir Geoffrey to Professor Powis? It was about the 2.0 hospitals—the size of them and the underpinning assumptions. I am concerned that there seems to be an assumption that these small hospitals will be adequate. You are assuming a 1.8% reduction in capacity needed year on year, because fewer people are going to need to go to hospital. You are assuming that you are going to be able to keep people in hospital for 12% less time, and that you are going to be able to work at 95% efficiency. I will leave to my colleague Mr Brine the clinical challenges that that poses, but for me it is about the efficiency, effectiveness and doability.

With regard to the assumption of a 1.8% reduction in demand, given the current pressure on social care, the bed-blocking challenge, which has still not been resolved, the fact that we have fewer beds by head of population than any other comparable country, and that it is not consistent across the United Kingdom, how on earth can you base the size of hospitals on an assumption that there will be less demand on them? It seems to me that it is going to go up with the population and with migration. Are you going to review that assumption, because it simply does not stack up?

Natalie Forrest: We are very clear that we have to do very detailed demand and capacity modelling for every single organisation. In the traditional fashion, that is done by individual organisations procuring support from technical expertise. The New Hospital Programme has built its own demand and capacity model using NHSE and Department colleagues to set out the correct assumptions to be made around demand.

Q62            Anne Marie Morris: Let me stop you there, Ms Forrest. Why do you think that that is still the right assumption? I appreciate that you are not—

Natalie Forrest: I don’t think that is the right assumption. We are all very clear that demand is going to increase. What we need to be clear on is where the demand is coming from, so that we design the right services and the right beds.

Q63            Anne Marie Morris: So we are still not at a point where we know what the size of the new hospital is, because you recognise that the assumption on which you based your current concept is wrong.

Natalie Forrest: We are in the process of going through each organisation to set out exactly what the size of the hospitals is. We do not currently know. We have based our assumptions on a baseline, so that we are comparing apples with apples—to use the phrase—because, currently, everyone uses different data to set out what their demand is.

Q64            Anne Marie Morris: Effectively, what you are telling me is that the assumptions are wrong—you recognise that. It also absolutely gives energy to what Sir Geoffrey has been saying: how on earth can you be sure you are going to have the design sorted in time to be able to roll out this programme when we are even questioning the assumptions on which those new modular hospitals are built? Let me move on, because time is pressing.

Shona Dunn: Well, Ms Morris, I think the point is that there is a distinction here between a like-for-like comparison of how you would use beds today and how you will use beds in the future, and then, separately, the question of demand. It is not so much that the underpinning assumptions are wrong; it is that they are one part of the picture that needs to be created for each hospital.

Q65            Anne Marie Morris: Ms Pritchard, given that you have oversight of all this, are you a bit concerned about this assumption? At the same time, could you address the issue about single bed occupancy? I hear what Professor Powis says about infection and so on, but surely if you cannot see the patient having a heart attack because they are all in single rooms you have got a real problem. I am a bit concerned that, in terms of efficiency and effectiveness, you still have to get people in and out of rooms, and you can’t see, so maybe there are some clinical issues. Do we really think these assumptions stack up?

Amanda Pritchard: I should probably clarify that I do not have oversight for the programme in the current governance, but one of the things that the NAO Report highlights is that there is a change of governance currently being worked through, which would separate the sponsorship of the programme, which is currently all with DHSE, and the delivery would then come over to NHSE as part of that change. At the moment, as Professor Powis said, obviously there is a lot of joint working, particularly around Hospital 2.0 and the level of clinical engagement.

You would expect me to say this, but it is really important to me, running the NHS part of this, that whatever we design in Hospital 2.0 is fit for purpose and has been thoroughly tested. I think we all share an ambition to ensure that patients are only in hospital for the absolute minimum amount of time that they need to be, and therefore the corresponding services that need to be available in the community, primary care and social care will be critical parts of the model of care that is being designed.

Anne Marie Morris: You are absolutely right. I would love to see that, but you and I know that it is not the case now, and it will not be the case any time soon. Let’s get real: let’s build these modular hospitals on the basis of reality, not on the basis of a pipe dream, because that will be bad for patients and bad for clinicians. At this point, it is probably appropriate that I ask Steve Brine—if I may, through you, Chair—to deal with some of the clinical concerns that we both share and I suspect Professor Powis may wish to address.

Q66            Steve Brine: I think this is extraordinary. Some members of today’s panel should expect an invitation from my Committee quite soon, because we will want to follow up on some of these issues and the clinical assumptions made here. Following on from what Anne Marie Morris said, Ms Forrest, isn’t the bottom line that you are working on assumptions that you are not in control of? That is a dangerous place in politics, business and healthcare planning.

If you look at social care assumptions and the 1.8% reduction that Anne Marie Morris talked about, Care England wrote to me this week as Chair of the Health Committee and talked about a fast-changing political landscape. Care England is in the process of producing a road map for adult social care, setting out the sector’s immediate, medium and long-term priorities across funding, workforce and integration. It has asked me to back its road map, which of course I am happy to do, to move the sector towards a sustainable future over a five-year period, because of the failure of the Johnson Government—let us be honest—to bring forward a long-term plan for social care and the 1% national insurance rise that was implemented but then cancelled. We are no further forward on that, so that is an assumption that you are not in control of.

Care England also says that NHS England told the NAO in its report that a lot of the 1.8% reduction assumption depends on the next spending review. Your assumptions are dependent on a social care plan that does not yet exist and is not yet funded, which Care England itself expects to be brought forward within a five-year period of the next Government of whatever colour, and a spending review of a Government that has not yet been elected. Is that right?

Chair: Ms Dunn, you are the accounting officer.

Shona Dunn: That is precisely why with each of these schemes, as we go through the process of producing the business case for each, we will review the position at that moment in time. What you are referring to there is the baseline assumptions that have been plugged into the MVP. Those are planning assumptions; they help to guide our work and will be reviewed rigorously as we proceed.

Q67            Steve Brine: They are planning assumptions that Ms Forrest just told us you no longer stand by.

Natalie Forrest: They are assumptions that we set out as a baseline so that we can test each organisation against them. For example, we would look at each model of care shift and we would ensure that it was costed and funded before we allowed it to be taken into account, so we would not make an assumption on bed reduction; we would do that with the organisation itself.

Q68            Steve Brine: Let us take another assumption. The New Hospital Programme assumes that building future hospitals with only single-bed rooms, which Anne Marie Morris touched on, instead of open wards will enable them to run at 95% occupancy. That is becoming the norm, but that is pretty hot. That is hospitals running quite hot.

Chair: It is better than you want on the NHS, isn’t it, Ms Pritchard?

Steve Brine: The average patient stay is reduced by 12%. England already has one of the highest occupancy bed rates, as my colleague has said, and you want to reduce that. On ensuring that new hospitals are fit for the future, published written evidence to this Committee from NHS Providers, led by the excellent Julian Hartley, states: “Operating hospitals at 95% occupancy may not be sustainable”—that is an understatement—“and doesn’t give sufficient flexibility for hospitals to be able to cope with fluctuations in demand”. This is a key point: “Trusts acknowledge that we cannot afford to get this wrong and expect government to heed the warnings set out in the NAO’s report”. Is the assumption of 95% occupancy one that you stand by or not?

Natalie Forrest: I think you are absolutely right to describe 95% occupancy as hot in a current hospital where there are no single rooms. That relates to the challenges that Professor Powis described around having beds that we cannot use because we do not have the right bed for the right patient, and we also might have beds closed because of infection control issues. The 95% takes into account the fact that having single rooms increases the availability of current beds to be able to manage patients through the hospital. As an example, we have seen a reduction in the length of stay from the beds that have opened in Liverpool. They have seen a 12% reduction in their length of stay already and they have single rooms. That is without all of the other design components that we are hoping to support.

Q69            Steve Brine: Super-quick final one for Professor Powis. We have talked about single rooms and that privacy and dignity, infection control and flow are the three good things in their favour. When we were at a Bury St Edmunds hospital, we say that they have a new ward that is very much the apple of the eye of the New Hospital Programme. They have big doors that close on them and they probably do achieve the things that you are talking about, certainly on privacy and dignity and infection control, but the staff said to us that the staffing resource implications are greater for them because they have less line of sight. Have I missed something?

Professor Sir Stephen Powis: You are quite right that the clinical model of care needs to adapt when you work in an environment with single rooms. I don’t accept that you cannot adapt that clinical model to make it safe. Single rooms are the standard in many other countries, and in some countries I understand there is a legal requirement for single rooms. Those are countries that I think we would all agree have very well developed health systems—I am talking about developed countries—and high standards of clinical care. So it is possible to provide the monitoring and the oversight, but it does absolutely require the staff to work in a different way. It also requires technology, for instance, to be used.

Q70            Steve Brine: And more people.

Professor Sir Stephen Powis: Potentially. A different clinical model might include different mixes of people. It depends on the environment and whether it is an elective ward or an acute ward, but that is exactly the work that Natalie and the team are doing. The point she has made also is that we have examples where there are single rooms. You have pointed to one and Natalie has pointed to another in Liverpool, so we are able to test some of these assumptions around efficiency. And of course we have international comparisons to look at as well. So I don’t accept that we cannot develop a clinical model, because those clinical models are in use, but I do accept that there will need to be a change in clinical modelling in terms of staff mix and sometimes, yes, staff numbers in certain circumstances.

Q71            Steve Brine: It just feels to me that you are working on lots of assumptions and I wonder whether NHS England shares them with the New Hospital Programme. You are also trying to change models completely so that you are in a place to move forward and realise those assumptions. It is like a football team playing in the premier league completely rebuilding the team while being expected to challenge for the title at the same time.

Professor Sir Stephen Powis: There is no doubt that in moving to single rooms, adaptations need to be made. Another point often made is around the sense of camaraderie that patients have in an open area and the ability to talk to each other. That works in some circumstances. Any patient who has been in a hospital at night where there is a lot of movement will know that being disturbed at night is a downside of that. And there is potentially a sense of isolation, so you have to adapt the clinical model and the way that you work with patients in a ward environment to mitigate that. The move to single rooms does require change, but we have examples and learning from those examples. There are many countries around the world—in fact, the majority of developed countries—already on this model. It is a standard of care in many other places.

Q72            Steve Brine: Do you concur that 95% is hot?

Professor Sir Stephen Powis: The point is that we need to do the analysis and the modelling and then test it, as Natalie has said, in those environments that have moved to single wards. But you would expect as a Committee that in building new hospitals the demand point is absolutely right and that we should look at improvements and efficiencies in the way that beds are used. One of those efficiencies is in flow. It is absolutely correct that as occupancy increases, flow through the hospital becomes harder because you are working on a smaller base of free beds. One of the things that predominantly single rooms does is remove those void beds that are often the reason that we see that—

Q73            Steve Brine: With respect, Stephen, you know me well enough to know that I asked you a straight question. Do you concur with the 95%? Because anything that is not at 95% requires the New Hospital Programme to go back to the Treasury and ask for more money.

Professor Sir Stephen Powis: I am confident that the team have done the detailed modelling, because I asked them to do it. Obviously, that modelling needs to continue, and it needs to be tested in environments where we have single wards, which is why I am particularly interested in, for instance, what we are learning from Liverpool.

Q74            Chair: Ms Prichard, the NHS says that you are aiming to be at 92%, and that is pretty hot. Are you confident about this?

Amanda Pritchard: As Professor Powis says, the 92% figure is based on the current estate, so I agree entirely with what has just been said about the need to test and work with those places that have moved to single rooms to ensure that we really are confident in some of the assumptions that are built into the 2.0 model.

The thing I would add to some of the points made is that there is no doubt from talking to colleagues working in those hospitals that they would not go back from a single room model—and, I think, nor would the patients. So for all the reasons that Stephen said, the importance of building—

Q75            Chair: I think we get the patient dignity point. It is just about this 95% to 92%.

Amanda Pritchard: The “however”, I think, is that there is also a clear clinical and infection control benefit as well from having single rooms, but the point about having the headroom to flex when you have peaks of demand which are unexpected—we have had a global pandemic in the last few years—is clearly something if you are planning to run as hot as 95%. The other thing that is incumbent on the health system as a whole is to have thought through how you would respond collectively to completely unexpected peaks in demand.

Q76            Chair: But also how you would respond to the social care discharge, the bed-blocking issue.

Amanda Pritchard: Absolutely.

Q77            Chair: And how you would deal with a room being out of commission. A small problem could take a percentage out quite easily, because you lose a whole room or a whole floor. That happens in the current situation. It seems like your figures and Hospital 2.0 do not match up. When we were looking at this, we were quite worried that you are seeing numbers move around—there is the 1.6 assumption, the 12% assumption and the 95% assumption—in order to reach the financial envelope of the hospital.

Steve Brine: The fixed price.

Chair: Yes.

Shona Dunn: I completely understand the questions and why they are being asked. I would say that the development of the minimum viable product and the assumptions within that are designed to give us the ability to test like for like on a consistent and standardised basis. They were not designed as a—

Q78            Chair: Talking of testing, before I go to Mr Francois, very briefly, when we went to Denmark, they had built a theatre on the edge of the old hospital—we went to new sites and sites that they were redeveloping—and they got each surgical team to go in and use that theatre in real time so that they could see what was working and what was not, so that they could try to build it to work for all types of surgery. Ms Forrest, are you looking at doing any similar prototypes on these modular hospitals so that, before you start building a whole new hospital, you can build in the lessons learned from clinical teams? Perhaps Professor Powis would also like to add to that.

Natalie Forrest: We have already built some very basic prototypes in order to get the size and shape of rooms. We have not run any clinical services through them, because they were not built in an appropriate fashion, but they were very much built so that clinicians could stand in an actual room and be satisfied that it met their requirements, with there being enough space for them to deliver care safely and to be able to move patients safely within those environments. That is absolutely a model that we would continue to use.

Q79            Chair: Will you be doing a real-time live clinical exercise in a module?

Natalie Forrest: It is not something that we have in our plan currently, but we are definitely looking at using organisations that already have new facilities—you have talked about a couple of them—if we can, because it certainly reduces the cost.

Q80            Chair: In Denmark, they managed to reduce the complexity of what they were building. Basically, I think they had three different models of a theatre that they could build, rather than the many others that they would have had.

Professor Powis, you must have some thoughts on testing from a medical perspective.

Professor Sir Stephen Powis: In terms of the flexibility of use, yes. It is important that, as I think Ms Prichard said, we build flexibility into designs as well, and not just because of surge requirements. One of the unknowns is technology and how medicine will develop over the period of this programme and beyond.

Q81            Chair: You are a medical director—you are there to make sure that the patient care is right. I am sure that everyone has patient care at heart, but essentially that is your bag. We know with all of these schemes—I once spent nine weeks living in what was supposed to be a modern hospital and you could see all the problems. If you have clinicians testing it, you can make sure that that is built in, but at the very late stage often things are pruned and changed, which can have a really big impact on the ability of medics and other health professionals to do their job. How will you make sure that your interests in representing the health professions in a clinical sense are defined?

Professor Sir Stephen Powis: As I said earlier, the key is to involve clinicians in the design and there are many clinicians involved in advising on the hospital programme in general but also on the specific local sites. That is key and that is why the clinical model that underpins the local services is so important to play into the adaptation of Hospital 2.0 to the local environment. 

However, for all the reasons that we have been discussing, over the lifetime of these hospitals there will be change in clinical practice, some of which we might be able to predict and some of which will be harder to predict. It is important that, wherever possible, we build in the flexibility to be able to take account of that.

Q82            Chair: Moving walls and things like that, so you can adapt?

Professor Sir Stephen Powis: That is the sort of thing to look at, because even I can’t predict what advances we will have in clinical medicine in 20 or 30 years.

Chair: If even you can’t do that, there is no hope! [Laughter.]

Professor Sir Stephen Powis: I am sure there will be some.

Q83            Mr Francois: Very quickly, the Defence Committee spent six months looking at what is wrong with defence procurement; I chaired the sub-Committee. One of the fundamental mistakes is when you keep changing the requirement, you keep changing what it is you want. Forgive me, but it is very evident to me that you are making exactly the same mistake. You are three years into a 10-year programme. You said that to speed it all up you want a standardised design—that makes sense—but you still keep changing the standardised design. How can you possibly build it when you don’t even know what you want?

Chair: I think that is a rhetorical question, partly, but—

Mr Francois: No, seriously, it’s fundamental to the whole point.

Shona Dunn: You’re right: it is a very important point and therefore a very important question to answer. That is, for me, the importance of making sure that we take the time to get Hospital 2.0 right at the outset. Now, that doesn’t mean to say that an individual hospital in a—

Mr Francois: I’m sorry, but to save time—

Shona Dunn: You are completely right that—

Q84            Mr Francois: When will you agree your final standardised design for Hospital 2.0? You have a 10-year programme—and forgive me, but you have already completely failed to convince us that you will hit it—so when will you finalise the standardised design for Hospital 2.0? Give the Committee a date, please.

Shona Dunn: There have already been quite a number of drops within that. There are elements of it that already exist. The final elements of it—the complete package—will be in existence by May next year.

Q85            Mr Francois: So, next May?

Shona Dunn: Yes.

Chair: Okay. We have that date, thank you, and we will hold you to that.

Q86            Anne Marie Morris: Can we turn now to the impact of all this on maintenance? Clearly, with the challenges you have with the up-front capital building costs, there will be an impact on maintenance and on the maintenance backlog. Particularly given the uncertainty as to what will actually get built when, which I think this Committee now sees as a big question mark, will the maintenance backlog get adversely affected, or will it be positively affected by this programme?

Shona Dunn: Shall I start? This will inevitably firm up as we go, but at the moment our estimation is that about a third of the reported backlog in maintenance sits within a site that will be redeveloped or replaced by a site within the New Hospital Programme. The New Hospital Programme and the new investment through the New Hospital Programme is an important contribution to addressing the backlog in maintenance. 

Q87            Anne Marie Morris: Does that mean that the maintenance won’t be done because, in theory, you believe that that hospital will be replaced? But if it isn’t replaced, because the money isn’t forthcoming, you will be in a much worse problem in that hospital.

Shona Dunn: Mr Kelly might want to come in on this. Inevitably, systems will make use of the operational capital that they have locally, as they normally would, to prioritise their backlog in maintenance and to make sure that their estate continues to be operational and continues to provide services. I can’t tell you in detail what choices local systems might make knowing that the investment of the New Hospital Programme is coming down the line, but I don’t think it changes the fact that they will take those prioritisation decisions in the meantime.

Q88            Anne Marie Morris: Mr Kelly, I get the impression that in some cases, in theory, the maintenance backlog will be better and cheaper, and in other cases it will be worse, but nobody knows which right now.

Julian Kelly: In the long run, given you are building hospitals to last for 60 years, it will definitely be better because you have flagged hospitals with significant estates issues—and I don’t just mean RAAC. You were talking about the issues at Epsom and at Whipps Cross, so we absolutely need to get on and replace those buildings. In the long run, it will be better. In the meantime, those hospitals will be making decisions to maintain estate so that they can be sure they can continue to operate. Clearly, in some circumstances, and we have talked about RAAC, and in instances of having to deal with all sorts of issues and inconveniences—I say “inconveniences” but that is probably a soft word—they will be making those decisions based on how far advanced plans are for replacement. It is undoubtedly true that we are going to be spending money on maintaining buildings that we want to get on and—

Q89            Anne Marie Morris: And they are then going to be knocked down.

Julian Kelly: Yes.

Q90            Anne Marie Morris: So effectively we are wasting money.

Julian Kelly: I would just say that, given the circumstances, they are going to be making decisions that they just have to make to maintain patient and safety care.

Q91            Anne Marie Morris: Ms Pritchard, aren’t you a bit worried that hospitals are going to be struggling to have to decide whether to maintain or not and whether to spend the money or not when there is no certainty that these hospitals are going to be built according to the current plan if everything we have heard today is true?

Amanda Pritchard: The NAO Report very clearly sets out the level of backlog maintenance in the NHS: £10.2 billion as set out on the key facts page. It is worth saying—you have highlighted this already—that one in eight, so about 15%, of the NHS estate is older than the NHS. About 30% is older than 50 years. In that context, the investment that is being made in the New Hospital Programme is hugely welcome and really important, as is the commitment made to a rolling programme that was particularly reinforced in May and, indeed, the further commitment that was set out in the long-term workforce plan for continuing and ongoing investment in the wider physical estate, including equipment. If what we want to have, ultimately, is not just buildings that are not dealing with some of the backlog maintenance challenges but, as we have discussed, buildings that are capable of providing modern healthcare, digitally enabled and meeting needs around equipment, we are going to need that continued investment.

Q92            Anne Marie Morris: We all want this paradise, but there is a reality problem here in that not only do we not have a plan for delivering it at the moment, we also do not have the money committed. That then takes me to the next piece, which is: where are we with the Treasury? At the moment you have four-year funding, but what is going to happen after that? I appreciate that the way the system works is that the funding effectively gets chunked—agreed in chunks. But in the real world, have you had any representations, Ms Pritchard, whether officially or unofficially from the Treasury that this is going to be delivered and that if more money is required, particularly given inflation, you will get it and we will get these hospitals by 2030?

Amanda Pritchard: Again, it is set out clearly in the NAO Report, but there has been a clear recognition that there has been under-investment in capital within the NHS over a previous period. Therefore, the commitment to NHP, the commitment to a rolling programme and the commitment to that ongoing investment in the estate, in digital, in equipment and so on has clearly been hugely welcome and will be critical going forward. It may be that in terms of detail, that is something Ms Dunn wants to pick up.

Shona Dunn: Indeed. Ms Morris, I certainly would not say that the fact that the programme is still developing the full business case, which you would expect them to be doing given the announcement in May, means there is not a plan. To Sir Geoffrey’s point, we will write and set out what the current plan is for each of the schemes in the programme and our current expectation of exactly the points that Sir Geoffrey asked, including when we would expect those to get under way in a visible form as best as we are able.

I would dispute slightly the notion that there is not a plan for delivery by 2030. There absolutely is. It is still under development, but it is there.

Q93            Anne Marie Morris: Hold on: there is a strategy and there is a plan. You might have a strategy. A plan is something that is concrete, costed and you absolutely know you can deliver. I am not sure you have that.

Shona Dunn: Those details will be absolutely nailed down through the full business case process which, as the NAO Report mentions, we are going through, but we can provide the sorts of details that Sir Geoffrey has asked for, and will do so.

Q94            Anne Marie Morris: I assume, given inflation and many other issues, you expect the number you will need to deliver to go up.

Shona Dunn: Again, in response to Sir Geoffrey, I reassured the Committee that factors such as inflation have been part of our discussion with Treasury. Of course, as ever with something like this, if circumstances continue to change, we will see new pressures and new upsides and downsides, and we will have to take account of those.

Q95            Anne Marie Morris: What indication has the Treasury given you that it understands inflation and will accept a higher demand?

Shona Dunn: The Treasury is managing countless demands at any point in time. The conversations that I have had with Treasury are exactly the sort of conversations that I would expect to have with Treasury, which is an indication of an envelope that we will work towards—it and the Government are committed to that. We will keep on having those conversations as spending review periods come around, but Treasury absolutely understands the basis on which the numbers have been put together and are committed to the delivery of the programme as announced. I expect that conversation to happen.

Anne Marie Morris: I hear what you say, Ms Dunn, but it rather sounds to me that we have an envelope and what you say is a plan, and that the chances of the pair of them meeting are infinitesimally small. I will leave it there, however, Chair.

Q96            Chair: Thank you. I turn to you, Ms Dunn, as representing the accounting officer here today. Five years ago, this Committee raised concerns about the encouragement for hospitals to turn capital into revenue or resource—£4.3 billion was moved from spending on hospital buildings or equipment into resource spending. As a Department, do you now regret that decision?

Shona Dunn: I find it quite hard to answer for colleagues who made those decisions at the time—

Q97            Chair: Okay. If you were in the hot seat now, do you think that is a good practice?

Shona Dunn: Those colleagues who were in the seat at the time have said subsequently—I would endorse and repeat this—that they recognise that it is not something that we would want to do as part of normal financial management. It is certainly not something that we now do. As part of normal financial management, we would only undertake cap/rev switches where there was a precise and targeted reason to do so. Certainly, that is not something that we would want to return to, Chair.

Q98            Chair: Ms Pritchard or Mr Kelly, what has been the impact?

Julian Kelly: At the time, I think the decision was that, in a world where resources were constrained—revenue budgets had been constrained over a period of about 10 years—and there were operational pressures and rising demand, in order to continue to deal with the real operational pressures at the time, when people were making tough decisions, the right prioritisation call was to maintain the budget going into day-to-day operations. I was not here at the time, but I think that was the basis on which the decisions were made.

Q99            Chair: It is difficult, but the question is: would you make that decision now? You are a finance professional, or have that finance hat—both of you.

Julian Kelly: I cannot answer for whether I would make that decision back then. I can explain the rationale of the people responsible—

Chair: We were here, remember—we were questioning them at the time. The key thing is—

Julian Kelly: As we are sat here today, we are absolutely seeking to maintain the increase in investment in capital that has been made available, because we understand that for the medium to long term, with some of the immediate operational pressures that are generated by the level of backlog maintenance that we have, we need to maintain the investment in capital.

Q100       Chair: The point is that you two—Ms Pritchard to an extent as well—have Ministers whom you advise, and I can see the pressure on a politician to think, “Well, we will find a way of dealing with today’s problems now”, but as finance professionals, we know that that is not best practice—it is pretty bad practice, I would say. The finance director at my own Homerton Hospital at the time said that he refused to do it, because he thought it was not a good thing. Because it was a small hospital, I think the money was left alone and we did not do it at the Homerton. It is bad practice, and yet this is advice that Ministers took, which is now causing problems later on. As finance professionals, will you now tell me that, first, you will not do that again? Mr Kelly.

Julian Kelly: I am saying that as I am sat here today, looking at the plan now with the resources we have, given all the pressures—we are balancing how we maintain, recover and improve today’s performance and how we keep an eye to the medium-to-long-term—we are absolutely seeking to maintain and protect the level of capital we have identified today. No doubt we will be arguing for sustained levels of capital investment into the future for all the reasons we have been discussing in Committee today.

Q101       Chair: On the capital funding you have now, a lot of it is in the NHP. Compared with before the spending review, have you got more or less on day-to-day capital spending?

Julian Kelly: In total, which is not just the NHP, because we are investing in increased diagnostic capacity and increased capacity to protect elective care, the amount we are giving to systems for their day-to-day operations is slightly higher than it was in 2019-20. It is basically flat at the moment.

Q102       Chair: Ms Dunn, there is the issue of the list of hospitals. Paragraph 9 lays it out very clearly—I don’t need to read it out. We have previously had you in front of us about poor record keeping during covid. This is a shocking example. I am amazed that 32 schemes were announced, and then some were removed. Seven were removed and they were replaced with 14 others. Actually, I think it probably is worth reading out from the NAO Report, as some people might not have followed it in detail. “Officials have told us that the final selection of schemes involved choices and judgements for which no further documentation is available.” How could the Department of Health and Social Care sit atop a decision process that has no proper record of decisions made about where major capital funding is going on new hospitals? What has gone wrong, and what are you doing about it?

Shona Dunn: Certainly, in engaging with the Report, it is disappointing that we did not have the record available from that period of time. I entirely accept that.

Q103       Chair: I was a Minister. You couldn’t breathe or be on a telephone call without a junior private secretary taking a note of everything. Even if you thought it was not being taken, you found out later than it had been, when you asked for information on something. How is it that this meeting, or whatever it was, was not recorded?

Shona Dunn: There were a lot of documents that supported a lot of discussions. I have spoken to my predecessor and people who were around at the time who recall those conversations, and they were satisfied that those decisions were made on an appropriate basis.

Q104       Chair: But why were they not recorded?

Shona Dunn: The gap in the record keeping is extremely disappointing. I completely agree, and you and I have discussed this before. Obviously, this is historic, and I would sincerely hope it would not be the case today.

Q105       Chair: In covid, at the time we had a special adviser—now Minister—and we were comparing notes in preparation. There had been a discussion in another Department where special advisers were in the room and were intervening between official advice and what went to Ministers, removing and adding projects to a particular grant scheme. Can you tell me whether special advisers were involved in decisions to remove seven shortlisted schemes and replace them with 14 others?

Shona Dunn: What I can tell you is that my predecessor certainly felt that the process by which the decisions were made was an appropriate process that took account of the right criteria and resulted in a rational decision. There are no concerns about the appropriateness of the decision or the process that was gone through—it was a record-keeping issue. I completely accept that, and I am as frustrated and disappointed as you are.

Q106       Chair: Do you know who was in the room?

Shona Dunn: I do not know who was in the room, but I do know that my colleagues who were there at the time were in the room and part of the discussion and do feel that the decisions were taken on an entirely appropriate basis.

Q107       Chair: I do not doubt the integrity of civil servants, but if you were in that room and a decision was made that was more political than it ought to have been or was intervening for a particular Minister or special adviser’s interest in a way that was not appropriate, it would be quite hard for a civil servant in the Department of Health and Social Care to call that out.

Shona Dunn: You know my predecessor in this role and I am pretty confident that if he were in that room he would be pretty confident in calling that out. To reiterate, I accept the record-keeping point. It is frustrating and disappointing. You know I have done work on that in the Department.

Q108       Chair: It will not happen again, is what you are saying?

Shona Dunn: I sincerely hope it would not happen again. It is a continuous process making sure that practices are properly adhered to, and I keep very closely in touch with that. But I can reassure the Committee that my predecessors are clear that those decisions were made on an appropriate basis.

Chair: We are seeing a bit of form here—the culture fund, the towns fund, now this. It is a bit of a worrying agenda. I hope the Department of Health and Social Care holds the ring hard on this and makes sure it does not happen again.

Q109       Mr Francois: On consultants, page 4 of the Report—“Key facts”—states that 62% of “the New Hospital Programme’s central team (223 out of 361)…were filled using consultancy services in February 2023”. Consultants often have a valuable role to play; you normally want a good core team and then bring in some expert consultants around the edges to fill in the gaps. But in this programme the consultants outnumber the permanently assigned people two to one. Why is that?

Shona Dunn: I will start, if that is okay, Mr Francois—

Mr Francois: We are tight for time, so—

Shona Dunn: I shall be brief. The programme absolutely has an operating model that it is aiming for, but inevitably, at the start of any major programme, where you are both determining what you need and going through recruitment processes, it takes some time to reach that point. We can either start extremely slowly, just with those individuals that we can recruit, or we can start with a larger cohort of external support and then transition to the operating model.

Q110       Mr Francois: But with respect, you are not at the start. You are a third of the way through. The programme was described to me by one person privately as “a total consultant-fest”. Some of these consultants have no doubt got—

Chair: We should be clear that when we are talking about consultants, those are not consultants in the medical sense.

Mr Francois: Yes, sorry. I am in no doubt that some of these people have done very valuable work, but some people have got very rich on this very quickly, and still you have built only one out of 40 a third of the way through.

Shona Dunn: Obviously there is a variety of different types of work that the consultants are doing, and, as you say, many of those consultants would always be necessary in a programme of this type. The gap—the delta—has been filled by external support while the programme, first of all, got its scope completely firmed up and then starts to recruit towards its operating model.

Mr Francois: I will hand back to the Chair, but let me say quickly that this programme is clearly in deep, deep trouble. I cannot pre-empt the Committee’s report, but I suspect that it will be very unflattering.

Chair: Well, I think the witnesses can wait for the report to be published. I am going to turn to Olivia Blake MP.

Q111       Olivia Blake: I want to ask about the seven hospitals that were removed from the list, which are mentioned in the footnote on page 22 of the Report. What is happening there?

Just to give two examples from my own area, Doncaster and Sheffield are not in the scheme any more. In the last week of August, a hospital ceiling collapsed in Doncaster, and it was reported in the HSJ yesterday that the hospital was in fact possibly going to be at risk of enforced closure. I understand that local leaders are making it very clear that they believe that that hospital does need to be included in the programme. Clearly, this is more evidence for that, but what are you doing to ensure that those seven hospitals, and back-up support—if you look at Doncaster and Sheffield, they would be relying on each other’s resources if something went wrong—have the resilience in the ICB areas to ensure that, if a building failure does happen, they have the support to make sure that the care that is needed can be delivered?

Shona Dunn: You make a very important point about the fact that the New Hospital Programme is not the only source of investment or support for those hospitals. I wonder whether Mr Kelly wants to come in on the support they receive.

Julian Kelly: As Ms Pritchard was saying, we know that there has been a huge increase in backlog maintenance—the £10.2 billion that is included in here—

Q112       Olivia Blake: But they were in the programme and then they were taken out, so why were they taken out?

Julian Kelly: Well, I don’t think they were—well, I am not going to answer for the decisions about what was taken in and out; I wasn’t part of that decision making. To the question of what support we are providing, we are continuing to work with all trusts. We think that the commitment to a rolling programme for hospitals like Doncaster, East Kent and several others on this list is going to be a really important part of how we deal with the major long-term problem that we now have and that we have to deal with. We will certainly be arguing that we are going to have to increase investment in backlog maintenance as we head into the next Parliament.

Q113       Olivia Blake: What if an enforced closure happens? What are the plans? Is that decision going to be reviewed? What are the implications of that for people in South Yorkshire?

Julian Kelly: I’m sorry, I didn’t quite—

Olivia Blake: Sorry. What would be the implications if an enforced closure happened, what resilience plans do you have in place, and how would you support the local area in South Yorkshire if that were to come to fruition—or if any of these seven had a failure of that kind?

Julian Kelly: As exemplified by the issue in Doncaster, but I could mention other hospitals, we have hospital teams that are managing these sorts of issues day in, day out. We have examples of managing fire risk and flooding. A lot of this is because we know that we have seen a big increase in backlog maintenance and we know there was a pause in investing in new hospital infrastructure; that is why the NHP is so important and why we will continue to argue for increased and appropriate investment in backlog maintenance. While we get on with refreshing the hospital estate, and we are really grateful for the commitment to do that, we are going to have to deal with these issues. This is what trust teams are dealing with day in, day out. We will continue to find ways of supporting them and, where we need to, putting in additional specific funds to deal with specific circumstances. 

Q114       Olivia Blake: But do you have the funds for such a contingency if an enforced closure was to happen? I am not clear on that.

Julian Kelly: I am not sat here saying that I have the funds to replace it, but we have examples all the time where hospitals are having to shut units and decant patients into other spaces, and where we are losing theatres because of fire risk, which limits our capacity to treat patients. This is happening day in, day out, and it is why we will continue to make the case for increased investment in backlog maintenance and, even if not in wholescale hospital rebuilds then in the capacity we need to maintain services. That is why the close to £2 billion we are spending in increasing elective capacity right now is so important.

Q115       Chair: So there is a bid there, and it sounds like you have laid out your stall very firmly. Can I just go back to the hospitals that were removed from the programme? Were you at the NHS consulted when they were removed? Were you in that room that was mysteriously not recorded?

Julian Kelly: I can only speak personally. I was not in a room where this was being done. Back in October 2019, I know that my former boss, before this Committee—

Q116       Chair: You mean Lord Stevens?

Julian Kelly: Yes, Lord Stevens. When he was asked in October 2019 whether he was happy with the list of hospitals that were then part of the hospital infrastructure programme, he set out the criteria upon which those had been assessed and judged and said he was happy with the list and that he thought there was a good case—the right case—to rebuild those. But as he said at the time, “But look, there are plenty of others that we are going to have to come to in due course,” and I think that is what discussing here today.

Chair: That was diplomatically put. I think we get the picture. 

Q117       Sir Geoffrey Clifton-Brown: Ms Dunn, I do not want to be unkind, but paragraph 3.24 of the Report says: “The IPA found a lack of capability and expertise in NHP’s leadership, with a need for large-scale programme management and construction expertise.”

To be fair, it did go on to grant the NHP an amber rating, but much more concerning is paragraph 3.26: “Based on the second version of NHP’s programme business case government’s MPRG identified a number of issues, including: serious concerns about the ability of the programme to build 40 new hospitals by 2030; difficulty securing approval for sufficient funding from HMT in order to deliver new hospitals to the MVP specification; and the potential disruption of having to include five additional entirely RAAC hospitals within NHP.”

I have been on this Committee for a long time, and this is one of the most worrying hearings since I have been on this Committee. What is your next step?

Shona Dunn: The next step, Sir Geoffrey, as I have described—having had the announcement in May, which made the scope of the programme very clear and made the funding envelope that the Treasury is considering very clear—is to complete the full business case, take that back to MPRG as soon as possible and then move forward.

I appreciate that the programme has been in place for some time, but the announcement in May was absolutely critical in getting certainty, stability and a way forward. That is obviously quite a recent development. The description in paragraph 3.26 is of the view of the MPRG the last time it considered it, which was before that point in time. So that is our collective next step.

Sir Geoffrey Clifton-Brown: Thank you very much. We look forward to your note, which will no doubt receive quite a lot of scrutiny.

Chair: I thank our witnesses very much indeed for their time. It has been a very interesting session, if I can put it politely.

There was a political announcement made in October 2020 about this programme. I think that officials, frankly, have been having to scrabble to pull together a programme to match that announcement, which is something that we have seen on this Committee before. But as it stands, we have a New Hospital Programme with a model 2.0 that is not yet delivered—we do not have a model yet. We do not have the money; there is some money set aside by the Treasury, but that is a small amount compared with what is needed. There is an overall backlog in capital investment. I think it is worth observing that, in its day, RAAC was a standardisation model that was awarded and built a lot of hospitals. I am sure you are all alert to make sure that we do not have standardisation that will cause problems for those hospitals in 20, 30 or 40 years’ time.

Thank you very much indeed for your time on this hot day. Our transcript—thanks to our colleagues at Hansard—will be published on the website uncorrected in the next couple of days. We will be producing a report on this in due course, but it will be after the conference recess.