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7.6 pm
Mr. John Whittingdale (Colchester, South and Maldon): Labour Members' speeches consisted mainly of a combination of synthetic outrage and scaremongering.I exclude the hon. Member for Southwark and Bermondsey (Mr. Hughes) from that charge. His was a more reasoned critique of the private finance initiative, although I do not entirely agree with what he had to say.
The Bill is largely a technical measure but nevertheless one of some importance. It is necessary to ensure the continuing success of the PFI in the NHS. The PFI already greatly benefits the health service.
Before the autumn statement in 1992, hon. Members will recall that Treasury orthodoxy was implacably opposed to the use of private capital on public sector projects. Almost any suggestion immediately fell foul of the notorious Ryrie rules, which were almost designed to ensure that the conditions set for privately financed projects were impossible to meet. I pay tribute to my right hon. Friend the Secretary of State for Health who, as Financial Secretary, had the imagination to ignore the mandarins and break free of the rigid Treasury constraints.
It was perhaps unsurprising that, to begin with, attention focused on opportunities to use private capital for transport projects because it is easier to create a stream of income from tolling which would give private investors their return on such projects. For services that are specifically free to the user, such as the NHS, it is more complicated to ensure the return on capital. However, the advantages of private sector involvement in the financing of capital projects are the same as in every other area of public sector provision. They include the opportunity to take advantage of additional skills and expertise, to gain access to new sources of capital and to transfer risk. Private sector involvement allows the NHS to share overheads and benefit from economies of scale.
There is no reason why publicly funded health care has to be supplied by publicly financed and managed hospitals. When the NHS takes on the design and construction of new facilities, it is exposed to risks that can impose costs and reduce efficiency. Anybody who has been involved in a construction project will know that there are 101 things that can push up the cost or throw out the timetable. The result is that more money has to be diverted away from patient care. The PFI allows those risks to be reduced and to be transferred to a private partner.
Since 1992, the PFI has taken root with the establishment of the PFI database in the health service and the requirement that all capital projects be tested to determine their potential for private sector input. The database significantly speeds up the process of matching NHS and private sector organisations with mutual interests, as well as providing a much wider range of potential partners from which a trust can choose. It also allows trusts to draw on the experiences of others in the NHS who have dealt with the private sector, to ensure that their knowledge and expertise are shared.
Already, considerable interest has been revealed and a number of projects are up and running. At its most exciting, the PFI allows the provision for NHS trusts of complete new hospitals, or significant parts of hospitals, funded by the private sector. But opportunities for private sector involvement in health care are by no means limited to the financing of capital-intensive hospital building projects. Indeed, a report commissioned last year by the London Implementation Group recommended that the only way to get privately financed primary health care centres built quickly in inner London would be to allow private health providers to both build and operate them.
In the first instance, trusts may concentrate on those assets and services that are not core functions, such as car parking, waste incineration, energy management, patient accommodation and hotel services, but other schemes may involve direct patient services that carry a risk of uncertain revenue streams, such as dialysis, day surgery and domiciliary services. The past three years have seen a gathering momentum so that, having started at the back of the field, the NHS is now out in front in making use of the PFI. So far, 45 PFI projects have been approved by the NHS executive, with a total capital value of more than £160 million. However, by the end of next year projects worth more than £1 billion will have come forward for assessment and approval.
Under this Government, an enormous amount is being spent on the health service--not just in current spending on patient care, but on capital projects as well. My own constituency is served by two general hospitals, each of
which is seeing substantial investment in the expansion of facilities. My constituents in Maldon are served by Broomfield hospital in Chelmsford. I am pleased to see my hon. Friend the Member for Chelmsford (Mr. Burns) in the Chamber. He, too, takes a close interest in the progress of that hospital. When he and I visited it recently, we saw that work had just started on a £25 million development. This will include six new theatres, a 20-bed burns unit with its own operating theatre, a 20-bed children's ward and six adult wards for plastic surgery, orthopaedic and rheumatology services, not to mention a new pharmacy, a new hydrotherapy pool and a new medical records library.
The hon. Member for Peckham (Ms Harman) referred to the Governments's hospital building programme as castles in the air. Those projects are no castles in the air--they are in train and will soon be available for patient care. When it is completed in two years' time, clinical space at Broomfield will be increased by more than50 per cent.
Mr. Simon Hughes:
I do not doubt what the hon. Gentleman says. My brother, who is his constituent, will no doubt be grateful for the hon. Gentleman's work. However, can he say with his hand on his heart that he has been shown evidence to prove that over the whole of the costing and the payback of the project--or any other project--it is unarguably considerably cheaper than any other route that might have been followed?
Mr. Whittingdale:
I am interested to learn that the hon. Gentleman's brother is my constituent. I shall regard it as a specific challenge to persuade him to vote for me. I would be happy to have greater analysis. I believe that the private sector is capable of building and running hospitals more cheaply than the public sector. There is already some evidence to support that. However, it is early days with the PFI and I should be happy to see more work done to try to establish the precise facts. We are still in the early stages of private sector involvement in the building of hospitals for the NHS. I hope that there will be greater analysis in the coming months. I believe that it will show that the private sector is capable of building hospitals more cheaply and efficiently than the NHS.
It is not only my Maldon constituents who are benefiting from new capital facilities in the NHS. At Colchester general hospital, which covers the other end of my constituency--
Madam Deputy Speaker:
Order. Before the hon. Gentleman continues, I must reiterate a point that I made earlier: hon. Members' remarks must be related to the Bill and not be simply a general survey of the NHS in an hon. Member's constituency.
Mr. Whittingdale:
I entirely take that point, Madam Deputy Speaker. However, at Colchester general hospital in particular, it is the PFI that allows the project to go ahead and therefore benefit my constituents in future. Without the provisions of the Bill, I believe that there would be a threat to the continued success of the PFI, which then might result in such projects not proceeding.
At Colchester general hospital, work is far advanced on a new obstetrics, gynaecology and orthopaedics unit. The next part of the £30 million development programme is
the re-provision of acute care for the elderly and rehabilitation facilities. That is being undertaken under the PFI at a cost of about £9 million. It should be in place next year. In due course, we can also look forward to a brand new cancer unit in Colchester.
For years, my constituents have lost out because resources have been sucked away from north Essex and into London. As a result, we have suffered from some of the longest waiting lists in the country. At last, that problem is now being addressed and this year the North Essex health authority has been given a £11.5 million increase over and above inflation. However, the real proof of the Government's commitment to the NHS in north Essex is the creation of, in effect, two new hospitals in Colchester and Chelmsford.
Despite the enormous amounts that are being devoted to health care, demand for new facilities is growing continuously. Improvements in medical technology and increasing demand for health care from an aging population mean that resources will always be under pressure--and when budgets are squeezed, it is usually the capital programme that bears the brunt. The PFI can increasingly relieve the NHS of the burden of capital expenditure. This Bill, by clarifying the legal and constitutional status of NHS trusts, will remove one of the last inhibiting factors which may hold back private investors from taking advantage of the PFI.
What is extraordinary is the attitude of the Opposition to the Bill. In the past, they have said that they support the use of private finance for public sector projects. Indeed, as we have heard, they have even attempted to claim that they originally suggested it. The right hon. Member for Sedgefield (Mr. Blair) is on record as saying that they have supported the PFI and, in many ways, have been advocating it. It therefore comes as something of a surprise to find that they are opposing the Bill.
The hon. Member for Peckham may not have caught up with the policy of her own party. Like the internal market, the purchaser-provider split, trust hospitals and, apparently, even general practitioner fundholding, she has not realised that it is another area where the Labour party is being forced to muzzle its previous opposition because of the obvious success of and support for those policies. It is certainly possible that she may not have understood the evolution in Labour party thinking, for on the very same day as her leader was expressing his support for the PFI, she was on the "Today" programme saying that the PFI was a new trick to privatise the NHS.
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