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Mr. Horam: No, that is not the case--we are not removing the market risk in any way. The Bill says that a contract properly entered into will be honoured by the NHS trust or by the Secretary of State in the final analysis. That is a perfectly normal practice and it means that the NHS will not welsh on its debts. However, the market risk will still remain. I cannot continue repeating this--it is absolutely clear to me.
Mr. Barron: Will the Minister further explain what political risk he is underwriting? Is it the possibility that there may be a change of Government in the not too distant future?
Mr. Horam: The hon. Gentleman is not rising to the level of the occasion. Political risk is perfectly plain: under the previous situation, the Secretary of State could walk away from his debts--that is, when a trust ceased to exist or was merged, he could decide not to honour its liabilities. He is simply saying that, in future, he will not be able to do that. That is an honourable and straightforward position. It has always been the case;it would always be the case. We are simply putting it into law.
I described that as political risk. It would be wrong for a commercial organisation to accept that political risk, because a commercial organisation is not the right body to accept that type of risk.
Mr. Galbraith:
I am becoming more confused as the debate progresses.
Let us suppose that, 25 years ago, a PFI had been entered into with a health authority or trust to build a tuberculosis hospital, but that the disease was not as prevalent as it used to be and the hospital was no longer needed. Is the Minister saying that, if the hospital had been built--perhaps managed--under a PFI initiative but the trust did not want it, or if it had been agreed with the health authority but the authority did not want it, the Government would be liable to pay the necessary capital and running costs for that hospital for 25 years, even if, after five years, it was no longer needed? If so, we are building lack of flexibility and obsolescence into the system.
Mr. Horam:
No, that is not the case. All the Bill does is to make what is de facto de jure, by saying that
Ms Ann Coffey (Stockport):
He cannot want us to agree.
Mr. Horam:
The hon. Lady served on the Committee and sat through three or four sittings. If she does not understand the simple point of the Bill now, I am afraid that I cannot begin to explain further.
Mr. Barron:
Let us get away from the issue of political need. It is unprecedented for any Secretary of State not to meet a public sector debt, and contractors and suppliers of the national health service have been content in that knowledge for decades, so why do we have the Bill? Who insisted on it--the Secretary of State for Health or the private sector?
Mr. Horam:
The hon. Gentleman knows the answer, because my right hon. Friend gave it to him on Second Reading. The hon. Gentleman has had it once; he does not need to have it repeated. In this specific case, it was unreasonable to expect the private sector to take on risk that it was not equipped to adopt. That is the simple position, and this is an extremely simple Bill, which does precisely that.
Mr. Simon Hughes:
I want to clarify two last things. The Minister says that the simple and single purpose of the Bill is to prevent an agency--a part of the Department of Health--from walking away from its financial liability by dissolving itself, and that therefore the Bill will provide a guarantee that the Department of Health will pick up the tab.
How many times in the past has the Department of Health or an area health authority, regional health authority or NHS trust not paid its bills? Has it ever happened in the history of the Department of Health, since the creation of the NHS?
Mr. Horam:
I am afraid that my memory does not go back quite as far as that, but, off the cuff, subject to the usual reservations, the answer is no--there has never been a case where properly entered into liabilities have not been honoured.
The hon. Member for Edinburgh, Leith (Mr. Chisholm) was worried about the Stonehaven example, but he should recall that, at the moment, that is still only a proposal. There are three bidders for the contract, one of which is the NHS trust. Indeed, in a sense there is no likelihood that clinical services will be privatised, because all the medical services--the core services and the wider group--will be provided in the usual NHS way. That is not yet an example of privatisation, and it may never be an example of privatisation in the way the hon. Gentleman means.
Finally, I shall reply to the points made by the hon. Member for Rother Valley and make some comments about the new clauses tabled by the hon. Member for Strathkelvin and Bearsden.
Auditors of trusts are required to confirm that the accounts give a true and fair view of the state of the trust. All borrowing within a year and loans outstanding at the end of the year are disclosed in accounts.
The Comptroller and Auditor General scrutinises and summarises the accounts of the trust sector as a whole, and lays them, with his report on them, before both Houses of Parliament. That is the conventional accounting system between Parliament and Government.
The Treasury Select Committee recently recommended, in the context of the PFI especially, that an annual report shall be prepared by the private finance panel, reporting on projects undertaken. The Committee also asked for details of the process that the Treasury plans to set up to monitor the revenue commitments of the PFI. Those two things came out of the Treasury Select Committee. I am glad to say that the Treasury has already said that it will set up a monitoring system; no doubt it will cover that in its formal response to the Treasury Select Committee.
The National Audit Office plans to conduct value for money investigations into PFI schemes. As I was a member of the Public Accounts Committee for three years, I know how searching such investigations can be; if there are any problems with the PFI, they will certainly be thrown up by those investigations.
I agree with the hon. Member for Strathkelvin and Bearsden that this is a proper matter for Parliament. It is appropriate that he, as a Back Bencher, should make that proposal, because the scrutiny and control of expenditure in this way is a matter that it is certainly legitimate for Parliament to consider.
As I have shown by citing those examples, the hon. Gentleman is pushing at an open door. In future, not only will there be the traditional methods of considering Government expenditure but, as a result of the Treasury Select Committee's recommendations and what was said by the National Audit Office, new methods will be used to add to that stringent scrutiny. In those circumstances,I hope that he will agree that Parliament is moving sensibly to scrutinise and control that expenditure. I therefore believe that the hon. Gentleman's new clauses, although well-meaning, are unnecessary.
Mr. Galbraith:
Having heard the Minister, I am convinced that the public finance initiative is a shambles. The more I hear about it, the more confused I become and the more I realise that I am not the only one who is confused. The Government will regret the monster that they have set running, especially in the national health service.
I return to my example of the privately funded tuberculosis hospital. I only take that as an example--obviously it is obsolete nowadays.
If a private finance initiative were to set up a hospital, in my view it would provide that hospital--the Minister also envisages that it must run the services and manage it as well because that is how it makes its money. In my view, the private company should set up the hospital and run it and say, "There you are, we will run this for you and the cost will be so much per year"--the normal yearly contracts.
However, because that would involve an element of risk for the company, it requires us to remove that risk absolutely and locks us into a contract for 25 years, to which we are committed and for which the Government will now pick up the tab irrespective of what happens. We are now locked into a contract that ensures that the private company has no risk. The wee bit of risk associated with it--never mind the delivery risk, which I did discuss--should be a usual part of business anyway. Instead, it will lock us into a contract involving no private risk.
If the company were to have risk, it would be a year-on-year contract, because that is the nature of medicine. That would be the correct thing for the health service to determine. Medicine moves swiftly. Diseases become obsolete; diseases move off. For a long time, cardiac surgery fell away because rheumatic heart disease had fallen; the complications of valvular disease were no longer around. We did not need cardiac surgery, and a number of units were closed, but then the incidence of coronary heart disease increased again--variations occur. Through the PFI, the Government have prevented us from being able to move with the variations; we are locked into a contract for a hospital that we have guaranteed and we have removed all the risks from the private sector. The Government have also shifted capital moneys into revenue account--that is how it will appear. With finesse, they have massaged the figures once again.
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