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6.2 pm
Mr. Horam: I beg to move, That the Bill be now read the Third time.
The Treasury Committee's verdict on the private finance initiative is that it is an imaginative and laudable innovation. It will bring forward the rebuilding and re-equipment of our major hospitals on a scale hitherto believed impossible. The last two projects that we announced--Swindon, which would have cost£90 million, and Norwich, which would have cost£170 million--will probably be built five years earlier than anticipated.
Mr. Barron:
That is outrageous.
Mr. Horam:
No, it is perfectly true, and I shall explain why. Until now, all schemes--however good and in spite
As the House knows, in the past 10 years only one scheme worth more than £25 million went ahead each year--which is still better than the last Labour Government's record. Now, no fewer than 25 schemes, each worth more than £25 million, will go forward. If even half of those schemes are completed--I suspect that we shall complete more than that--other much desired projects will come forward at a much faster rate.
Mr. Horam:
No, I shall not give way. I have given way to the hon. Gentleman several times today.
More hospitals will be built, and they will be built better. It is no longer a matter of build and forget. The private sector will not only build the hospitals but be responsible for their on-going maintenance. That will provide the incentive to build them well and thus minimise maintenance costs--which is a good thing.
As the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) said, hospitals will be built more flexibly. Ownership of hospitals in the private sector will provide the incentive to ensure that they do not become white elephants within 10 years. Hospitals will be built using flexible designs that can be adapted to new uses as clinical measures develop. For example, the new Jimmy's hospital in Leeds is being built in such a way that it can be used for other purposes. There will be better hospital designs. I recently attended a conference of the Royal Institute of British Architects and architects' enthusiasm for the new design culture that we are bringing to the health service was evident. That is very heartening.
There will be less risk for the public sector. As I have said during today's debate, the risk to the private sector will increase because it will bear the burden of commercial risk which is borne by the taxpayer at present. For example, the taxpayer had to meet the cost overruns associated with the building of the Chelsea and Westminster hospital. The public and private sectors will be in partnership, a partnership that we encourage. The Opposition claim that they also support such a partnership--although they do not seem to do so in this case.
Mr. Barron:
The Bill has only one purpose: it is an attempt to breathe life back into the Government's failed private finance initiative in the health service.
In general terms, we know that the private finance initiative is being used not as a supplement to, but as a replacement for, public provision. Opposition Members have argued consistently that, if the PFI has a role to play, it is in supplementing the existing Government capital expenditure budget for the national health service. We know that the PFI is a twisted and a distorted attempt to mirror the properly thought-out joint partnerships between the public and private sectors which have been suggested by the Opposition.
In health terms, Ministers have tried desperately to kick-start the PFI as the Government's years of neglect of the national health service have come home to roost. The Bill is the result of that. Ministers know that, in the period before the general election, they need to show the voters that foundations are being dug and bricks are being laid and that alleged new hospital projects are under way. We heard that again from the Minister tonight.
The groundwork has already been done, but only in the minds of Ministers. Successive Ministers have been announcing for years the same so-called new hospitals, yet not a single brick has been laid. In his speech tonight, the Minister had the audacity to mention Norwich and say that the new hospital that is badly needed will be built five years ahead of plans because of the private finance initiative.
Let us look at the truth about Norwich. The former Secretary of State for Health, now the Chancellor of the Exchequer, was first off the starting blocks when he announced the go-ahead for a new £100 million hospital in Norwich. That was in 1990. On 3 April this year, the current Health Secretary announced that he had "given the go-ahead today" for a new hospital in Norwich.
Mr. Henry McLeish (Fife, Central):
Perhaps there will be two hospitals.
Mr. Barron:
Two hospitals may have been promised, but no bricks have been laid on any of the sites. The second audacious announcement was made when we debated the Bill on Second Reading.
In December 1993, the then Secretary of State announced that he had approved a project to replace the Princess Margaret hospital in Swindon. On 3 April this year, the current Secretary of State issued another press release headed "Approval announced . . . for Swindon hospital". Health Ministers constantly claim to be building hospitals, but those hospitals exist only in their minds. Norwich and Swindon are just two examples of the cynical ploys that Ministers adopt in their efforts to look good on health matters.
Will the Minister tell us whether the latest announcements promising new hospitals will ever materialise? Perhaps he will tell us the difference between his assurances today and, for example, that given by the former Secretary for Health about Norwich, that
That year might ring a bell with hon. Members, as it was an election year.
Will the Minister and the Secretary of State be promising that the construction of the new hospitals that they have promised will start in the next 12 months--in advance of the next general election? Who does he expect will believe him? Multiple announcements of so-called new hospitals do not treat patients. Press releases are not pain relievers, however much Ministers would like to think otherwise.
The Bill shows that Ministers will go to any lengths in their attempts to persuade the electorate that theirs is a caring Government, but the electorate and the House know that that is not so. The Bill breaks the most basic principles of the PFI. It opens up the possibility of the private sector closing down parts of the health service to further profitability. It denies Parliament a proper role in scrutiny and removes any notion of accountability.
The basic principles of the PFI are unequivocally stated in a NHS executive letter of 20 March 1995, which states:
The Bill does exactly the opposite. It commits the Secretary of State to guaranteeing totally and absolutely all the risks that are supposedly transferred to the private sector. It removes not one risk from central Government, yet it gives central Government virtually no role in assessing the risks that they have assumed.
It is universally acknowledged, even by the Secretary of State, that private sector services cost more than public sector ones. The right hon. Gentleman said that in his speech to the Royal College of Physicians. In the same speech he said:
I am asking the Minister to consider two identical projects. In each case, the risk falls entirely on Government, but the capital costs of one are more expensive. A normal, right-thinking person would choose the cheaper alternative, but the Bill creates circumstances in which the only possible option will be the more expensive one--the private sector project. Perhaps the Minister will explain the logic that he uses to conclude that that is the best possible future for the health service.
How can there be any justification for spending more money on the PFI alternative when it produces no benefit in terms of reduced risk? Clearly, there is no justification, unless, as we all suspect and Ministers occasionally let slip, PFI is a step on the road to the privatisation of our national health service and the Bill is designed to ease that route.
Already, the road to the NHS privatisation is clear. First, the Government starve a service of funds. The national health service capital programme has been cut by nearly 20 per cent. Secondly, pressure is applied to consider alternatives. All trusts have had to go through the entire process of testing major projects against private sector finance, regardless of the urgency of those projects. Thirdly, the pressure is racked up. In health, the fine line is continually blurred between what may or may not be possible targets for market testing, contracting out and privatisation.
On Second Reading, I complained that the Secretary of State had not responded to my letter of mid-February asking him to identify those services that would be exempt from PFI. I had the opportunity to ask the same
question in Committee, as it is important that we are clear about the scope of the PFI. The reason for that is illustrated by what my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) said about the hospital in Scotland where everything is being put out to tender. Although the Minister's defence seemed to be that one of the three bids being considered was from the NHS, we understand that every service is being put out to tender.
The Secretary of State is still reluctant to define clinical services. He knows that he has promised to protect such services from privatisation, but he does not want to do that. He knows that, if he has to list which services are clinical, he will be limiting the scope of privatisation. That would place question marks over the bids for Stonehaven hospital.
When an answer to my letter finally arrived--unfortunately, the day after the Committee stage had ended--it was not particularly helpful. The Secretary of State wrote:
What can local clinicians hope to make of the Government's attitude? How can they hope to work within boundaries that the Secretary of State has blurred almost beyond distinction?
The Bill is being proposed to smooth the jangling nerves of potential PFI contractors. The Government hope that more of them will propose new PFI projets in the health service. However, about a fortnight ago the Financial Secretary to the Treasury told us on "Newsnight" that the PFI will replace public expenditure.
The blurring of choices means that local clinicians and other health service professionals are faced with a stark choice--private money or no money. One way to guarantee that a clinician will ultimately agree to the PFI is to starve him of funds to improve the services that he wants to give his patients. That is how it is being achieved; it is driven by withholding from clinicians the vital investment that they need to improve health care. It is a pity that the Secretary of State is not here, but I must tell him and the Minister that that is not the way to treat health professionals or issues of public health. I call on the Minister this evening to list all the clinical and clinical support services that he can guarantee will be free from the risk of privatisation.
The Government are driving towards privatising the NHS, and are stepping up the pressure to achieve their aims. The Bill makes matters worse. It is not just this Bill that is adding to the Government's PFI woes. The private sector is getting increasingly annoyed about it, despite all the concessions that the Secretary of State is prepared to offer it. Earlier today, the Minister said that the Treasury was involved in the PFI. John Laing Construction was recently reported in the Financial Times as having described the PFI regime as
Laing is one of the leading bidders for health schemes, so its opinion must be taken seriously.
Martin Laing, the company chairman, said that there is
of PFI targets being met
Another PFI specialist, a City banker, is quoted in the same report as saying that the PFI needs
We already know that the public do not trust the Government on the PFI, and that clinicians and health service staff do not either. It now transpires that even the private sector does not trust the Government on the PFI.
The Secretary of State will have big problems if he intends to put all his NHS eggs in the PFI basket--but that is what he is doing. He is betting everything on the Bill and on its option of guaranteeing liabilities over which he has no control. The Bill solves none of the problems of the PFI and probably creates a whole new set of its own.
Still, I have little doubt that this Secretary of State will eventually get his way and that the Bill will be passed. After it has been railroaded through the House, he will be able to go back to the private sector contractors who demanded the Bill and tell them that it is safely through and that the Secretary of State has underwritten the risks that most people thought went with the contracts. I only hope for the right hon. Gentleman's sake that the contractors do not come back to him with yet another problem to solve. If and when they do, I hope that he will not cave in to them as easily as he did with this Bill.
The House deserves a better explanation of a Bill than the one we were given on Second Reading. It was disgraceful of the Government to talk about technicalities without telling us the public expenditure implications.
The next problem may arise in the context of information technology. The Department is already creating a shambles because of its unwillingness to get a grip on strategic provision. The recent trauma over hospital information support systems was just the latest in a long line of failures. Now we hear that the entire PFI growth area of information technology is under threat from the VAT man. PFI-led IT projects may turn out to be not just more risky and expensive than publicly funded alternatives: they may have an extra 17.5 per cent. VAT dropped on the final invoice too.
Many of the projects that the Minister has said are in train at the moment include small information technology units. Now there is a debate between the Treasury and the Inland Revenue about whether, as they will not be owned by the trusts, they ought to attract VAT. Ludicrously, the Government consistently say that they are in control of the PFI, but as soon as people are ready to sign contracts, all of a sudden 17.5 per cent. VAT is dropped on them. How can anyone have faith that the Government know what they are doing?
Perhaps, as the Secretary of State has already gerrymandered the PFI rules once, there will be another sweetheart deal for the private sector in health. Perhaps he will siphon off more NHS money to pay the contractors' VAT bills. The Opposition will not let this issue go away. It may be deemed the concern of the Treasury, but it affects public health, and we shall ensure
that the matter is not dropped. I only hope that the Government will introduce some coherence to what is happening with information technology under the PFI.
We are witnessing a long slide into confusion--a slide that the Minister cannot control, because the Bill gives him few or no powers, except to accept the consequences. The Minister has started down a slippery slope that may cost taxpayers billions of pounds, and there may be no end to the slope. The Bill represents a fundamental error of judgment. The Minister has been weak when a secure future for the health service required him to be strong. He has pandered to the private sector instead of supporting the best interests of Britain's health care.
The Bill offer gilt-edged returns to the private sector but does nothing for patients, nurses, doctors or health care. It merely bails out the Government's drive to privatise the health service. The Bill offers Parliament no openness, no accountability and no scrutiny. Contracts for up to 70 years will be signed--70 years of private sector risk but no parliamentary say in the matter. Who in his right mind, looking at developments in the NHS of the past decade, would allow that to happen? We are signing up to 70 years of public liability without a debate in the House on the daily innovations in the health service aimed at improving it.
"construction is expected to start in 1992."
1 May 1996 : Column 1188
"A fundamental principle of the PFI is transfer of risk to the private sector."
"I am strongly in favour of testing public and private sector solutions and adopting the approach which offers best values."
"The requirement to include clinical support services as part of the testing of the PFI options are matters for local determination and cannot be decided without the support of local clinicians."
"farcical and leading to growing frustration among contract bidders".
"virtually no chance"
"unless there is a really big shake-up in the way the Government handles PFI projects".
"to overcome the inertia and lack of expertise that reign supreme in most departments".
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