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6.47 pm
Mr. Simon Hughes (Southwark and Bermondsey): The debate is prompted and motivated, and the Bill has been introduced, for two obvious reasons. There is the theoretical, academic reason, explained probably six times by the Secretary of State for Health in his speech. It is that the Secretary of State of the day might not pick up the tab if a trust were to be dissolved and left with debts. The real reason, however, is that the problem came to light once the Government started going at much greater speed than ever before down the private finance initiative road. That was the explanation. The Secretary of State was honest about it. The current law allows discretion for the Secretary of State to say, "No, sorry--I am not picking up the tab."
Clearly, dealing with the "not picking up the tab" point is important. In the part of the world from which I come, the South Thames training and enterprise council went to the wall a year and a quarter ago. The Secretary of State for Employment, as he then was--he is now Secretary of State for Defence--suddenly wound it up, and a number of people who had traded with it in the belief that it was an agent of Government were left whistling for their money: training providers, local colleges and local firms. Many never received their money.
The Government did the dirty. They claimed their entitlement, saying, "We are the preferred creditors, so we shall take our money first even if others must suffer."I know all about agents, or agencies, of Government that claim to be supported by the Treasury or other Departments, but are eventually shown to be other than what they claim. With members of the other main parties, I went to see the Secretary of State, and he told us that the same applied to local councils. If a council went to the wall, the Government could say, "Sorry, but we will not bail you out." A council could be declared bankrupt, but the Government would not be obliged to support it.
I believe that the Government should be responsible for Government agencies. Theoretically, therefore, I am happy for the law to be amended. But this is not just a theoretical issue--it is a practical issue. We are having this debate because the Government have clearly said that they cannot sign the PFI contracts--as emerged in the Select Committee on 4 March, none has yet been signed--unless assurances can be given that people will never be left whistling for their money. The reason is clear: the private sector partners will not play ball. I understand why they do not want to find themselves in bigger difficulties than they would otherwise.
That raises a general question that I have raised in the House before. When and where did Parliament decide that the national health service should become dependent on the private finance initiative in regard to capital projects?
Unless I missed it, or it was written in invisible ink, nothing to that effect was included in the manifesto on which the Conservatives fought the last general election and, under our funny electoral system, won the election despite the fact that most people voted against them.
Since then, there has never been a formal statement of Government policy telling us that, in future, the capital building programme of the NHS will be funded by the private sector. The Government have allowed the PFI to creep in. They have said that they intend to rely on it in more and more ways, but they have not been so straightforward with the House. It is clear--this, too, emerged in the Treasury Select Committee--that, according to the original proposal put to Parliament by different Departments, the PFI was a way of raising extra money: it was not intended to serve as an excuse for substituting private for public money.
As was clear from the public expenditure statements made to the House at the end of November, there will be a 12.7 per cent. reduction in next year's publicly funded NHS capital programme. The Secretary of State confirmed that fact to the Select Committee. Although he did not say so explicitly, he was honest enough to accept that in reality the PFI is unlocking private money to make up for the fact that the Government are not committing public money to the hospital building programme.
My colleagues and I have no theological objection to the use of the private sector to supply public services. That is done every day of the week by, for instance, education authorities buying books for schools. We do, however, object to discovering suddenly that the proposition on which we had relied--that the hospital building programme, and other NHS capital projects, would be publicly funded--has been replaced by a proposal to cut public funding and replace it with private finance. I shall not vote for that unless we have tested to our satisfaction the proposition that we are to get better value for money--a proposition which, as recently as a year ago, was not supported by the Treasury. A year ago, the Treasury was still advising the Department of Health that the PFI would probably prove more rather than less expensive.
Let us suppose that a private sector consortium was commissioned to build a hospital. Let us also suppose that it was assumed that the private sector would use the hospital for 50 years, and that a 50-year rental agreement was drawn up. According to previous Treasury advice, even if the hospital was transferred to the public sector at the end of those 50 years for no more than the rental payment, the payments spread over that period would amount to more than would be involved in borrowing to spend now. We all know why that is: it is cheaper for the Government to borrow money than for anyone else to do so, because they are the most secure of all borrowers. It had always been assumed that they were the best borrower, because they obtained the best rates. If the Government were going to borrow to fund an NHS capital building programme, that was the cheapest way of providing the service.
When I have seen the evidence that proves what the Secretary of State now asserts, which is contrary to Treasury advice given less than a year ago--that it is cheaper for the private sector to build hospitals in Amersham, Scotland, the east end of London, on the south bank of the Thames and in Carlisle, for instance--I shall find it difficult to argue that that is not in the interests of
the taxpayer and the consumer. But it has not been proved, and yet again we are putting the cart before the horse. We are cutting NHS capital expenditure. There is no argument about that: the Secretary of State has admitted that there is to be a 12.7 per cent. cut next year, and according to the Chancellor's Red Book over the next few years we shall see the largest relative reduction in expenditure on the health service capital programme since 1948.
The Parliamentary Under-Secretary of State for Health (Mr. John Horam):
No.
Mr. Hughes:
Yes, we shall. Since 1948, public expenditure on the health service has grown regularly, year on year. It has gone up and down, but the overall graph has risen. Over the next few years, as projected by the Chancellor, we shall see the greatest slowdown ever in the commitment of public capital expenditure to the NHS, and in its expansion. I can show the Minister the figures, which are in the public domain.
I shall not vote for such action, because I believe that the case must be proved before we sign up to it--and I will not sign up to action for which the motivation is driven not by accountancy or a desire for value for money, but by the approach of a general election which must be preceded by the delivery of tax cuts. The Chancellor delivered tax cuts last November; we opposed them, Labour abstained and the Government voted for them. He wants to deliver tax cuts next November; I assume that we shall again vote against them, Labour will again abstain and the Government will again vote for them. The only way in which the Chancellor can do that is by keeping down public expenditure, which means that he must transfer not just the risk but the cost to the private sector. A year ago, the Treasury said that that was the more expensive option, and I do not believe that those advisers have suddenly changed their minds.
I would be very happy with a procedure whereby the Treasury and Health Select Committees and the House took evidence from everyone concerned and subsequently decided whether the PFI was cheaper for hospital building, the provision of clinical services or a mixture of the two. That is what good legislation and policy should mean. But I am certainly not happy to sign up to something that says, "Last year it was bad news; this year it is good news." We have seen no evidence to show that anything has changed. I am less happy because, while the national health service is supposed to be run democratically, trusts meet and take decisions in secret and are accountable to nobody in the public whom they serve. They are accountable only to civil servants and the Secretary of State for Health.
The decision-making process to select the consortium to which a hospital project will go is not out in the open. Nor will a privately financed project be demonstrably cheaper--over 50 years, it may be more expensive. No one has agreed to that process apart from people who meet in secret behind closed doors. The public have not agreed to it. The Secretary of State told the Select Committee that financial deals with the private sector would not be approved unless those involved on the clinical side agreed. Who is to say to how many people, and to whom, the Government will talk? I have had plenty of experience of the Secretary of State talking to people in the health service and saying that they have agreed when they have not or when some have agreed and others have disagreed. That is why there is a risk.
I have a practical suggestion about how we should proceed. I do not want a system that tells me after the event whether a project is good value for money but one that tells me that before the event. I do not want a civil servant, the accounting officer, to report privately to the chief accounting officer, the chief executive of the NHS, through documents that the public cannot see and say whether a project is good value for money. I would be happy for an independent person such as the Comptroller and Auditor General to do that job. If his office said, "Right, go ahead, it is cheaper, and you can go ahead because it is better value for money," the project should go ahead. However, until and unless publicly accountable independent people, not employed by the Government of the day, give that advice so that the public can see and hear it, we are being asked to sign up to an unacceptable proposition.
The Minister will know of the example of the proposals before the Guy's and St. Thomas' NHS Trust because it serves many of his constituents. Surprise, surprise--the trust has got a bit of a private finance initiative idea. The hon. Member for Peckham (Ms Harman) made the point well that the PFI is being used an excuse for further delaying things that were about to go ahead. South of the river, we were about to go ahead with an outline business case that had been worked out by the trust. We were told that it was ready to be the final business case, but it never quite saw the light of day.
It was a bit like snakes and ladders. Just as we were about to move off the square, we were told, "Sorry, you've got to down the snake marked private finance initiative." We have to go back to the beginning to find whether the proposal that was worked up as part of trust's public sector plan could be done more cheaply in the private sector. It may be true, as was said earlier, that there had been no development for six years at Norwich hospital, but the PFI means having to go round an extra loop, which may take a year or two, before getting back to where one started. There is no guarantee that anything will have been achieved because it may prove that it would be more expensive to use the PFI than to use the original public route. The real issue about capital programmes and capital spend in the health service is ensuring that there is an accountable way of getting value for money irrespective of whether projects are in the public or private sectors.
I was delighted when the right hon. Member for Horsham (Sir P. Hordern), the Chairman of the Public Accounts Commission, told me last Monday that the Comptroller and Auditor General will investigate what has been happening south of the river, where a building project for Philip Harris house and associated works that were originally to have cost £56 million are now scheduled to cost £157 million. They were originally due to be finished in 1993; now, if we are lucky, they will be finished in 1997. That is the sort of question that I want answered.
The Government commissioned a building which, three years ago, they called the flagship building of the national health service. Why we are now told that we shall have to spend another £112 million on a new building on another site to do work for which the building on which we have just spent £150 million is specially built and equipped? Those are the questions that my constituents
want answered. I am delighted that the Comptroller and Auditor General is to investigate them. I wish that he had been monitoring the system all through and made sure that projects, once money has been committed to them as being the best value for money, are seen through and that Government and officials behind closed doors do not suddenly change their minds about how to use buildings.
We will win the argument and prove that Philip Harris house should be used for its intended purpose. We will show that it will still be better value for money to use the building on which the money has been spent and not commit another £112 million somewhere else. I hope that the Government also realise that unless they agree, they will be throwing extra public money after that which they are already committed to spend.
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