| Previous Section | Index | Home Page |
7.9 pm
Mr. Stephen Timms (Newham, North-East): I apologise for being absent for much of the opening speeches. I was attending a meeting of the Treasury Committee. Indeed, I want to refer to evidence that it took on the private finance initiative in the health service. The debate on the Bill has revealed very deep confusion about the funding of the health service, not least on the part of Ministers responsible for it.
The Secretary of State gave evidence to the Treasury Committee on 4 March, to which reference has been made. My hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) said to the Secretary of State:
The Secretary of State said:
My hon. Friend then asked:
The Secretary of State replied:
My hon. Friend then read to the Secretary of State the schedule to the National Health Service and Community Care Act 1990, which confers that power on trusts. The Secretary of State said:
and accepted that trusts did indeed have the power to borrow.
In a later exchange at the same meeting, we talked about the extent to which it would be possible for the Government to control trusts' borrowing, given the fact that, under the Bill, the whole strength of the public sector will stand behind the trusts in their activities. The Secretary of State said:
He then talked a little more about the external financing limits. I asked him where the power to set those limits was set out in the National Health Service and Community Care Act. He said that he was not sure and that he would send the Committee a memorandum to explain the position.
The external financing limits came up again in the debate on the Bill last week, when the Minister said:
Today, I re-read the memorandum that the Department of Health sent to the Treasury Committee in response to the Secretary of State's commitment. It refers to guidance in the NHS trusts finance manual, and says that the trusts have three core financial obligations. First, trusts have
That is fine. Secondly, it says that trusts have
That is also fine. The third core obligation is
to which the Minister and the Secretary of State have referred.
The memorandum goes on to say of those core obligations--the third being the external financing limit--that
That is the confusion that has arisen in the debate. What exactly is the status of the external financing limit? Is it statutory or not? If, as the memorandum to the Treasury Committee said, it is not, how is the public purse safeguarded when trusts take on the new powers?
The problem is particularly severe because of the way in which the health service has been fragmented in recent years. In my area of east London, there has been a dispute--it has finished in the past few days--between East London and the City health authority and Newham Healthcare NHS trust. Both bodies were established by the Government, and all their members are appointed by the Secretary of State. The dispute was about funding and resulted in my constituents being sent away from Newham general hospital and being told that they could not be given dates for their operations. Given the autonomy of such bodies and the fact that there do not appear to be the necessary statutory controls to monitor their performance, great anxieties arise in the Bill about the risks being taken with the public purse in order to allow those large PFI hospital construction projects to take place.
Mr. Horam:
I commented during the speech made by the hon. Member for Strathkelvin and Bearsden(Mr. Galbraith), who I am glad to see back in the Chamber, that if he thought it sensible not to carry on his career as a medical man when he left the House, he might take up a career in finance. I withdraw those remarks in
Mr. Horam:
I shall not give way to the hon. Lady because I am replying to the hon. Member for Strathkelvin and Bearsden.
The hon. Member for Southwark and Bermondsey(Mr. Hughes) said, in a rather interesting speech, that the Bill was not theologically wrong and might be a good idea. I am glad to have that rather qualified support. He also said that there was not much accountability in it, but he forgot the role of community health councils, which are important. [Interruption.] They are important. When any major change takes place in local health provision, it has to be referred to the CHC, and, indeed, other representative bodies. The hon. Gentleman cannot therefore ignore all that.
Mr. Horam:
I have given way to the hon. Gentleman about five times. What I have said should be taken into account when one considers consultation and accountability.
The hon. Members for Blyth Valley (Mr. Campbell) and for North-West Durham (Ms Armstrong) made very understandable points about their local hospitals, which I shall read when I look at Hansard. In many ways, they were very fair points. They were both in essence saying that they wanted schemes to go ahead--there was no doubt about that--but with public sector cash. The hon. Member for Blyth Valley said precisely that. He hoped that there would be a Labour Government and that schemes would then go ahead with public sector cash.
The hon. Member for Sheffield, Attercliffe (Mr. Betts) will be surprised to know that, in some technical respects, he was actually quite correct, and I agree with him. [Interruption.] They were technical points. I am glad that he agreed with me on the fundamental point about savings being available through things such as compulsory competitive tendering and market testing in the health service. He may well know, since he is a student of those matters, that we have saved more than £1 billion through market testing in the NHS since we introduced it. In objecting to that process, the hon. Gentleman must realise that that gap would have to be filled by public sector cash.
The hon. Member for Rother Valley (Mr. Barron) made the point in his initial speech--at some length--that, in the final analysis, this is about the financing of hospitals and hospital improvements. The Government are bringing in private sector cash not only to build new hospitals, but to deliver better value for money. Labour certainly admits that it wants more hospitals, but if it does not use private sector cash to provide them, its only recourse is to use more public sector cash. That is the fundamental point that Labour must face, but it never faces up to it--it is a tax-and-spend party.
Labour's only alternative to the way in which we are providing funds via the private sector is to bring in public sector funding. It must increase public sector expenditure
even more and raise taxes to fund that increase, or it will not be able to build hospitals. That is the fact of the matter. Labour is fundamentally ashamed of its past, and silent about this matter. Its opposition to the Bill is wholly bogus.
Question put and agreed to.
Bill accordingly read the Third time, and passed.
The Minister of State, Scottish Office (Lord James Douglas-Hamilton):
I beg to move amendment No. 9, in page 1, line 7, leave out 'section' and insert 'sections'.
Madam Speaker:
With this, it will be convenient to discuss the following: Government amendment No. 15, in line 38, at end insert--
"Can you tell me, the trusts have the power to borrow, do they not?"
"No, that is incorrect."
"The trusts do not have the power to borrow?"
"The trusts do not have the power to borrow."
"I am open to correction"
"The trusts' power to borrow will be constrained by their external finance limit in the same way that it is now and it will be constrained for the same reason that it is now, namely in order to control the capacity of the pace at which trusts take on liabilities which the taxpayer stands behind."
"there are the external financing limits, which are agreed at the beginning of the year and monitored . . . quarterly. If anything is going wrong, it will be spotted quickly by the NHS executive. That is the effective managerial control that is in place, and it is backed by statute."--[Official Report, 24 April 1996; Vol. 276, c. 548.]
"to achieve an annual financial target of a real pre-interest return of six percent on their average relevant net assets".
"to break even on an Income and Expenditure basis".
"to meet, or come within agreed limits of flexibility, the External Financing Limit set by the NHS Executive",
"The second of these has statutory force, while the other two do not."
| Next Section
| Index | Home Page |