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Mr. Dorrell: The hon. Lady is wrong on both points.
First, section 10(2) of the 1990 Act says:
That is a clear power, which I could use to give EFLs the statutory backing if it were demonstrated to be necessary. The hon. Lady must demonstrate that it is necessary, and she has not done so.
Secondly, the answer to the question, does the Bill provide a basis of guarantee or allow a lender to a trust access to the assets of the trust, is no, it does not; and the bar on the pledging of assets of trusts remains in place because it is in the statute.
I have answered both questions the hon. Lady asked me directly and in the negative. They are irrelevant to the key question that the House must address today, which is not whether the controls are adequate--although I should be very happy to debate that. If the House wants to demonstrate the need for extra controls on NHS trusts, it must be demonstrated that existing controls are inadequate. The hon. Member for Peckham has not done that. Whether the controls are adequate or inadequate does not alter the fact that I believe that NHS trusts and the NHS as an institution should meet the financial obligations that it properly takes on. That is the Bill's only effect.
Mr. Simon Hughes:
The Secretary of State has, as yet, left two questions unanswered. The hon. Member for Peckham asked whether he agrees that it is open to trusts to borrow without his approval. The second question, which has not yet been asked, is why the original power in the 1990 Act is a power of discretion--either to pick up the tab or not to pick it up? What reasons was the Secretary of State given by his civil servants for the fact that the Bill, as originally drafted, gave him a discretion that is no longer thought to be appropriate?
Mr. Dorrell:
The answer to the second part of the hon. Gentleman's question--I have asked that question myself--rests on the proposition that the same principle was carried forward from the 1977 Act. There are currently not many people advising me on the drafting of the legislation who remember the precise arguments that went on nearly 20 years ago. I have no intention of ever using that discretion, as I have already made clear to the House, which is why I am in favour of getting rid of it.
On the question about the nature of controls on trust borrowing, that is set out in the financial regime of trust financial control. If it were shown that the regime was in some sense flawed and that trusts were not living within the controls set out in this document, I would be the first to argue--as one would expect of a former Treasury Minister--that we need to take effective action to ensure that trusts live within their financial obligations.
Trusts can borrow without my specific consent, but they must first show that they are borrowing in a way in which good value is delivered. The overwhelming scale of trust borrowings--[Interruption.] They do because they have a statutory obligation, which I have read out to the House, to trade in an effective, efficient and economical manner. A trust that borrows expensively when a cheap alternative is available would very quickly and quite properly find itself before the Public Accounts Committee, with its accountable officer sitting besideMr. Alan Langlands, the accounting officer for the NHS, explaining why it was borrowing expensive money when cheap money was available in the public sector.
The hon. Member for Peckham, however much she may throw up dust and fog around this issue, has failed to obscure the central question of whether the NHS will stand by its liabilities. That is the only question that the House is being asked to decide today. I assure the House that if the trust financial regime is shown to deliver inadequate control on trusts, we shall of course address that inadequacy. I have given that assurance three times now. She has not, however, shown that the trust financial regime is inadequate.
The hon. Lady has spoken to many people on this subject, and I look forward to hearing what she has to say in the debate. If she plans to argue that we need extra controls on trusts' financial obligations, she will have to demonstrate that they are not staying within the existing financial regime, which provides all the controls that could possibly be required.
Mr. William O'Brien (Normanton):
The issue of the trusts is central to the Secretary of State's argument. He has raised the issue of the trust walking away from its responsibilities. As all trusts are approved by the Secretary of State and are responsible to him, will he tell us how a trust will be able to walk away from its liabilities?
Mr. Dorrell:
The Bill's purpose is to provide that trusts and the NHS as a body cannot walk away from their liabilities. I do not think that a public sector body should have that freedom, which is why I am proposing to withdraw from the Secretary of State the discretion in the current law to reorganise a trust without providing for its liabilities.
The answer to how much a trust can borrow is the amount set out in its external financing limit.
Mr. Dorrell:
The hon. Lady says that the amount that trusts can borrow is £5 billion. That is perfectly true. The amount that one trust can borrow is set out in its EFL, or in the amount that is provided for in the figure underlying its EFL.
The Bill does not change any of those controls, and no evidence has been produced to suggest that the controls are inadequate. As has already been revealed in this debate, the fact is that the Bill changes--[Laughter.]It changes nothing, because I have not the slightest intention of using the discretion that it removes. Therefore, the Bill will have no practical consequence--unless one believes that the members of a successor Government want to protect for themselves the freedom to walk away from NHS liabilities that have been properly entered into. That is the Bill's only effect and it introduces only that change. It changes nothing unless one believes that a successor Government want the freedom to walk away from NHS liabilities.
The proposals in the Bill cannot be answered by talk about the approvals process, as that would be a red herring. I am quite happy to defend the approvals process, but that is not the question before the House. The question is whether a debt, once entered into by the NHS, should be paid. If we believe that the answer to that question is yes, we should vote in the Aye Lobby at the conclusion of the debate. If we believe that the answer is no--
Mr. Spellar:
Will the Secretary of State give way?
Mr. Dorrell:
I shall give way in a moment. I have plenty more to say; I am not finished yet.
If the answer to that question is no, we are entering a quite extraordinary world, in which the first element will be a completely new definition of stakeholding. Opposition Front Benchers are now defining for us their belief that, should someone be a creditor of the NHS under Labour, he will no doubt hold a stake in it, but he cannot be sure of being paid. He would be given a piece of paper that was of as much value as a voucher issued by the Tsarist railway system. Opposition Front Benchers want to retain the freedom to walk away--[Interruption.] I am absolutely on my place. They want to retain the freedom to walk away from liabilities, in the manner of a tinpot third-world country, which is exactly the type of behaviour we condemn when it is unearthed in the darker fringes of the corporate sector by investigative journalists.
I should have thought that Opposition Front Benchers would want nothing whatever to do with such a practice. That is the type of shyster trick beloved of smart Aleck lawyers, who pay attention to the small print without recognising the liability that every taxpayer who pays for the NHS wants us properly to respect. Nye Bevan must be turning in his grave at the way in which Opposition Front Benchers are demeaning the name of the service that he established. They want to preserve for themselves the freedom that they condemn in the dark fringes of the corporate sector.
Mr. Dorrell:
I have excited the hon. Member for Warley, West (Mr. Spellar), and I give way to him.
Mr. Spellar:
The Secretary of State has been slightly confusing. Stripping away all the rhetoric, he has given a very interesting redefinition of risk management and risk assessment in the health service and under the PFI. Is he saying that the PFI will be reckoned as guaranteed by the
Mr. Dorrell:
I am saying no such thing. All that I am doing is removing from a private sector trader dealing with the health service--whether a PFI partner or the famous potato dealer--the risk that a Secretary of State might walk away from a properly defined liability on the health service. The whole point of the PFI--which I shall address later and which I am sure that the hon. Member for Peckham will want to touch on in her speech--is that it defines a series of risks that do not rest on the health service or the public sector and are therefore not liabilities of the public sector which are dealt with in the Bill. Those risks are taken by the private sector partner--that is the point of the PFI.
"It shall be the duty of every NHS trust to achieve such financial objectives as may from time to time be set by the Secretary of State with the consent of the Treasury".
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