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10.53 am
The Minister of State, Department for Education and Employment (Mr. Eric Forth): This debate has been light on Members and heavy on cant and nonsense, which I suppose is no surprise given its nature. I counted as many as six Labour Back Benchers crowding the Chamber for a debate to which they claim to attach such importance. I counted one hon. Member from the Scottish National party and one Liberal Democrat. I say that because--[Interruption.] I have touched a raw nerve with Opposition Members, and so I should. Anyone who takes the trouble to read Hansard might think that, given the amount of emotional claptrap that we have heard from Opposition Members, the debate concerns many of them. I want the record to stand: six Labour Back Benchers were present.
I experienced a brief moment of excitement when the hon. Member for Makerfield (Mr. McCartney) talked about Labour party commitments. He began with a rousing commitment and I made a note of his words. He said that, in contrast to the Government's response to the Select Committee report which we are discussing, his party, excitingly and dynamically, would
We are in exciting new territory in responding to all the problems that Labour Members have been ranting about this morning. The hon. Member for Makerfield said that he would list the Labour party's commitments in order to deal with all those problems. I am still waiting. I am being generous in saying that I counted one and a half commitments. The half that I identified was what I assume was a financial commitment--which I also assume the hon. Gentleman has agreed with the hon. Member for Dunfermline, East (Mr. Brown)--to increase training budgets. He did not put a figure on the commitment, so we shall have to hold our breath to see what will happen. We await a further episode to hear the commitments.
By the way, the hon. Member for Makerfield does not read his post very closely, because I wrote to him yesterday giving him the answer to the question that he reasonably asked about the providers of contracts for project work. I will not delay the House or use up even more of the very short time that I have available except to refer him to my letter of yesterday that gives him the information that he wants.
Uncharacteristically, the hon. Member for Birkenhead (Mr. Field) of all people made a rather infelicitous reference in which I am sure he said--we shall check the record--in passing that there had been an increase in unemployment in all our constituencies. That sparked me into looking at the movement of unemployment in the constituencies of this small but dedicated handful of Members who are present. I find that unemployment since
December 1992--[Hon. Members: "1979."] I did not hear the hon. Gentleman say 1979, but I shall happily talk about that. We all know that unemployment across Europe is significantly higher than in 1979 and that this country is performing a lot better. If I had more time, I would go into that at some length. I want the record to show that unemployment has fallen in Birkenhead by 1,300, in Makerfield by 1,300, in Leicester, West by 1,300, in Wallasey by 1,200 and in North Norfolk by more than 1,000.
The hon. Member for Wallasey (Ms Eagle) referred to increasing numbers of long-term unemployed people. That is also an inaccurate statement. I shall be charitable by referring to International Labour Organisation figures--hon. Members will not often hear me quoting them, but for this purpose I shall, since Labour Members find them more attractive--that show that long-term unemployment has fallen over the past year from 43 to 40 per cent. and the claimant count has fallen by more than 500,000 since the mid-1980s. The debate has regrettably been characterised by some inaccuracies from Opposition Members, on which I hope they want to reflect.
The hon. Member for Perth and Kinross (Ms Cunningham) trotted out the glib phrase about the concept of full employment which is frequently heard in these debates and on which we should dwell. Opposition Members have implied that, somehow, everybody could have a job if only the Government of the day did something different. There is no evidence from around the world to support that. Even in Japan, unemployment is 3 or 4 per cent. and rising. In the United States, it is 5 per cent. and steady, and in France, Germany and Italy, the countries most admired by Opposition Members--our partners in Europe whose models they would adopt--the unemployment rate is 11 or 12 per cent.
Mr. Ian McCartney:
Will the Minister give way?
Mr. Forth:
I cannot give way, because I am running out of time.
Opposition Members promote the idea of full employment without mentioning a number or a quantity. They should pursue that argument only if they are prepared to say exactly what they mean.
Mr. Frank Field:
What about the report?
Mr. Forth:
The hon. Gentleman should simmer down. I agreed to restrict my remarks to allow Opposition Members time to speak. That is what I have done. I am now replying to the points that were made in the debate. I know that is old-fashioned, but I thought that I would make an attempt.
Sir Thomas Arnold (Hazel Grove):
I am grateful for the opportunity to debate the sixth report of the Treasury Committee on the private finance initiative. Let me begin by thanking my hon. Friend the Financial Secretary to the Treasury for his recently published response. I welcome the fact that he has taken a number of the points that we raised very much to heart.
It may be for the convenience of the House if I briefly explain the background to our report. The private finance initiative was launched in 1992. Its early progress was slow and in our report on the 1994 Budget we noted that it had failed to encourage significant private investment and expressed concern that it was unclear whether it was intended to supplement or to replace public expenditure. When conducting our inquiry into the 1995 Budget we recognised that our concerns had not altered, which led us to decide to undertake a short inquiry into the PFI.
The Committee identified six issues: additionality, the control of public spending, obtaining value for money, the bidding process, the transfer of risk and accountability. I shall deal with each in turn.
It is clear that at the start of the PFI spending was regarded as additional not substitutional, but its substitutional character has increasingly come to the fore. That has raised a number of important questions. For example, if a scheme expected to be funded under the PFI failed to attract sufficient funds, would the deficit be met from the public purse? How would the priority of the projects be determined--by an assessment of need or by the availability of funding?
A key feature of the PFI is that the public sector contracts to buy services rather than assets. That reduces capital expenditure in the short term, but increases current spending available to purchase services in the longer term. It raises a considerable worry over the control and monitoring of public expenditure in current and future years. There is no central control over the PFI commitments being entered into by a diversity of public bodies. That was a matter of considerable concern to the Committee.
The Government's response shows that our concern has been taken seriously and I welcome that. As I understand it--the Minister may wish to comment further on this--the Treasury will publish in the Red Book the aggregate level of public expenditure implicit in PFI deals and will monitor and control commitments under the PFI as they develop.
The Committee identified the need for greater clarity in exactly how perceived value for money benefits accrue. For instance, it identified the relative importance of different cost savings. The Government's response identifies particular areas where value for money benefits accrue.
The process of competitive bidding is fundamental to the success of the PFI. There was, however, a series of criticisms--at times conflicting--from private sector
firms about the nature and cost of the process. Some contractors felt that the specifications for projects were insufficiently defined--although broad specifications were intended to encourage innovative bids--while others were concerned that the rigid definition of specifications prevented the scheme from operating effectively. A common concern was that tendering should be encouraged only for projects that had a high probability of materialising and should not be undertaken as a mechanical exercise, even when a PFI option is unlikely to be suitable. I am pleased to report that the Treasury has already acted to address these concerns.
According to the Treasury, an important feature of the PFI is that it allows the proper allocation of risk so that those most able to manage the risk are responsible for it. Evidence presented to the Committee suggested that, in the past at least, that has not always been so. I invite my hon. Friend the Minister to comment on that.
The House takes accountability very seriously. Although the PFI aims to encourage private investment in sectors previously funded by the public sector, the PFI does not eliminate public spending. On the contrary, the vast majority of PFI projects will involve some form of public expenditure. It is one of the important jobs of Parliament, through a range of mechanisms, to scrutinise that expenditure. During our inquiry, we were informed that details of PFI projects might be suitable to the constraints of commercial confidentiality. The Committee found that unacceptable, and commented:
We propose that a demonstration of cost savings on specific projects should be provided to show how the higher cost of capital in the private sector was offset. The Government's response shows that, typically, operating savings of 14 per cent. and construction savings of 7 per cent. can be achieved compared with a publicly funded alternative.
"give a...more adequate response".
That is new Labour with knobs on if ever I saw it.
[Relevant documents: Sixth Report from the Treasury Committee of Session 1995-96 on The Private Finance Initiative (House of Commons Paper No. 146), and Fourth Special Report from the Committee containing the Government's Reply thereto (House of Commons Paper No. 513).]
11 am
"We do not think that the House would or should sacrifice its rights to see any details of Government spending it sees fit."
I conclude by referring in particular to the final paragraph of the report, where we make a series of proposals and recommendations, including the following: that a breakdown between PFI projects funded via user charges and those funded by leasing charges and future public expenditure should be published, and whether it remains appropriate for private finance options to be tested in all projects or whether some might be excluded from the outset. The Government's response outlines a series of circumstances in which the PFI might prove inappropriate.
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