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4.46 pm
Mr. Robert G. Hughes (Harrow, West): The hon. Gentleman called for all-party support. I am on my feet to disappoint him. He went to great lengths to reassure us about how restricted the Bill's scope is but Conservative Members know that if Labour councillors are given new powers, they will abuse them. Labour councils have foreign policies and increased or newly invented allowances for Labour councillors. They run political campaigns on taxpayers' money. Council after council uses double accounting in respect of council nursing homes. It costs more to run, but they are able to put in their books that they charge less for those places.
Of course Labour councillors would welcome the Bill, as they would any extension of their powers. Consider their record. They have failed to spend money wisely; they cannot control expenditure; they cannot collect their council tax; they will not collect their rents; they charge as much council tax as they can get away with; they saddle their communities with debt; and they run measurably worse services. No wonder the hon. Gentleman attacks the Audit Commission, which is what measures how badly Labour councils perform. Now they and the hon. Gentleman want more freedom to wreck their communities.
Labour has always dreamed of councils with the power to do everything, provide any service, and ride roughshod over private providers. Labour simply cannot understand that it is fundamentally wrong for council tax payers to subsidise speculative commercial activities. It would not be the councillors who took the risk, but the council tax payers. When such activities go wrong, as they clearly would, those working in the businesses that the council has done its best to destroy will pick up the bill, having already faced unfair competition, as council tax payers are the lender of last resort.
What is Labour's track record that leads to the Bill's introduction? What would be in its prospectus? Would it be Bradford, where the direct labour organisation paid people who were not even on the payroll? They worked for free for the managers' favourite rugby league side. Presumably to keep everybody quiet, the senior managers were the highest paid in any metropolitan council.
Would it be Darlington, where Labour built a model train with enough bricks to build 44 large houses? Would it be in Goole, where the clerk of a small town council with a budget of little more than £1 million was paid more than a Cabinet Minister? Or would it be Kirklees, which has refined its time for recruiting housing officers to six months, of which I am sure it is proud. Or would it be Lancashire, where sick leave cost £12 million last year alone? Instead of spending money on poorer people,it spent £100,000 on a so-called anti-poverty unit. That money would have paid for more than 16,000 hours of home help. What people in Lancashire will get is hot air rather than home helps.
In Birmingham, even a Labour councillor has been forced to admit that the council's budget
That is real Labour in power--real power, real abuse.
The hon. Member for Pendle has, if I may say so,a special place in local government. Before he went to Lancashire, he was in London, where, as leader of Hammersmith and Fulham council, he invented the crazy notion of using debt swaps to expand trading. The point is not that debt swaps were not used before, but the way in which the hon. Gentleman and his council used them--trying to fund extra spending with junk bonds.
Of course, it all went wrong, and probably cost Hammersmith and Fulham council tax payers £97 million. The hon. Gentleman clearly does not like to keep good ideas to himself, as he has shown today. As a Labour party employee, he so enthused other councils with the idea that the total loss in the country probably exceeded £500 million. What a marvellous record for one person.
Before we take the proposal of the hon. Member seriously, we should look at where his previous good ideas have taken us. The Bill is so silly an idea. The House has better things to do, so we should simply let him carry on with it and just ignore him.
Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and agreed to.
Bill ordered to be brought in by Mr. Gordon Prentice, Mr. Peter L. Pike, Ms Joan Walley, Mr. Thomas McAvoy, Mr. Neil Gerrard, Mr. Roy Beggs, Mr. David Rendel,Mr. Eric Illsley, Mr. James Wallace, Mrs. Helen Jackson and Mr. Calum Macdonald.
Mr. Gordon Prentice accordingly presented a Bill to allow local authorities to trade and compete with private sector providers: And the same was read the First time; and ordered to be read a Second time upon Friday 10 May and to be printed. [Bill 119.]
Mr. Sam Galbraith (Strathkelvin and Bearsden):
I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker (Mr. Michael Morris):
With this, it will be convenient to discuss new clause 3--Annual report on effects on public expenditure--
Mr. Galbraith:
The more I consider the Bill, the more I am worried, not only about its operation but about its consequences. My new clause would involve the Treasury right from the start of the process. Important consequences for the national finances are hidden in the Bill. The private finance initiative is basically all about Government bodies borrowing money, but not having it set against the public sector borrowing requirement. That position is untenable and my new clause would reverse it.
When the Bill was first proposed, the Secretary of State for Health tried to maintain that it was merely a technical measure, which he would never have to use. That is a slightly odd position to adopt, because he was in part forced to introduce the Bill. Those who wanted to become involved in the PFI thought that there was a possibility of failure in hospital trusts and other health service facilities, so they wanted a guarantee.
Although the Secretary of State felt that the power might never be used, that was not the view of the financial institutions, construction companies and other private firms involved. Indeed, the more I considered the matter, the more I realised that there were risks of failure in NHS-run projects. It may not be a large district hospital that is affected, although that could happen. It is more likely to be a smaller institution, a facility for caring for
the elderly, a laboratory or a piece of capital equipment. The question then is: on whom does that liability fall? That is not yet clear in my mind.
Part of the reason for the difficulty is that the PFI involves a large number of differing projects with different relationships. We have trouble sorting them out, because the initiatives and contracts involved are secret. None of us knows what they are or who is liable. For that reason, the Treasury must be consulted and must consider laying the liability against the national finances.
If the PFI--which was first developed by the National Economic Development Council in the early 1980s--was about anything, it was to ensure that the private sector adopted all the risk. The cheapest option had to be chosen, and the private sector alone accepted the full risk. That clearly was not acceptable, and the Ryrie rules were changed and were eventually dropped completely. In 1992, the then Chancellor of the Exchequer, the right hon. Member for Kingston upon Thames (Mr. Lamont), reintroduced the concept of the PFI which, under the Ryrie rules, originally dealt with nationalised industry. The right hon. Gentleman reintroduced the concept for other Departments, but again on the basis of some risk being accepted by the private companies.
The right hon. Member for Kingston upon Thames said at the time that the PFI
But he reiterated that the private sector must generally assume some risk. That again proved to be unworkable, and the position was gradually changed. Today, the private sector will get involved in the PFI within the health service only if it carries no real risk. If it carries no real risk, the NHS will carry the risk and any capital involved should therefore be set against the public sector borrowing requirement. The basis for my new clause is to ensure that that becomes part of the process.
There are some risks involved for the private sector. For example, those involved claim that they must deliver on time. I must say that anyone in business who does not accept the necessity of delivering on time probably should not be in business in the first place. There is the risk of obsolescence, and that is a real problem. As an example, I shall refer to Takare, the company involved through the PFI in Greater Glasgow health board. The company looks after the care of the elderly, and we are locked into a 15-year lease. Some of that model is now obsolete, but we are stuck with it. We can either break the contract--with the risk then falling on us--or persist. Although there is a risk, once again the health service is carrying it.
There is a risk in terms of volume. In other words, the amount of work contracted for might not be available later. Again, the health service will be faced with the risk, not the private sector. If the hospital that has been built does not have enough work to sustain it, we can either close it down and accept the risk or continue with an obsolescent institution.
"is operating in many ways like a slush fund."
'The Secretary of State shall prepare and lay before the House of Commons a report, in respect of each financial year or part thereof, on the exercise of his duty under section 1 and section 2, with particular reference to any resulting charges on the Consolidated Fund or on moneys provided by Parliament.'.
"would remove the unnecessary obstacles to private sector investment in Britain's infrastructure."
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