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12.43 pm

The Minister of State, Scottish Office (Lord James Douglas-Hamilton): I congratulate the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) on securing a debate on this important subject. I should like to say straight away that there have certainly been no cuts in specification for the new hospital.

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I am extremely encouraged by the recent good progress towards securing the new facility, and I am delighted that more locally based, responsive health services will in the future be available for the people of East Ayrshire. I have listened carefully to the hon. Gentleman's description of his concerns and those of his constituents, and I hope that he will be reassured that we are well on the way to delivering this important new facility.

I shall turn to the details of the development in its local context in a moment, but it is important to place the new East Ayrshire community hospital in a national context. The scheme that has been developed for East Ayrshire is an excellent practical example of the projects that we are encouraging and that will be supported by the initiatives in the White Paper "Ready for the Future".

The White Paper's main themes are an emphasis on prevention; better information for the public and access to services; greater responsiveness to patients' needs; effective continuity of care; and excellence in clinical and management practice. The positive features of the new East Ayrshire community hospital will translate each of those into action.

Most obviously, the convenient siting of the hospital at Cumnock will provide the easiest access for the greatest numbers of the people whom it will serve. Transportation links to the site were a key consideration for the trust. For both in-patient and out-patient treatment, as well as for longer-term continuing care, the hospital meets head on the challenge to ensure that patients have access to care locally wherever possible, and can avoid travelling to facilities many miles further from home.

The improved services and facilities will meet patients' needs better, tackle the particular health problems prevalent in the area, provide effective continuity of care and foster clinical excellence. The location of the new facility in Cumnock will offer new opportunities to develop new and effective strategies to improve the health service's action in preventing disease.

The development provides a first-class example of a primary care-led NHS. There will be accessible and locally provided services, and patient care will be properly planned and well co-ordinated between the primary and secondary care sectors. A broader range of services will be available locally, with access to a network of specialist support services.

Ayrshire and Arran health board has had very clear criteria about the objectives of the East Ayrshire community hospital project since its inception. It wanted high-quality, innovative, cost-effective services delivered locally for the people of East Ayrshire. I am delighted that we are getting closer to delivering exactly that.

Mr. Foulkes: When?

Lord James Douglas-Hamilton: I shall say in the course of my remarks.

The hon. Gentleman will, I am sure, be the first to recognise the particular importance of the project. East Ayrshire contains areas of considerable socio-economic deprivation and unemployment, and relatively poor health. All the parties involved with the project have recognised from the outset that the development of health

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services in the area must take proper account of that. Health care must target resources on the areas of local need. The new community hospital will therefore be sited at Cumnock in order to provide the easiest possible access to the largest possible proportion of the area's population.

The proposals are built on the concept of locally provided, patient-centred care, in terms of both service delivery and building design. It will be a primary care-focused service, offering integrated care for the locality. The hospital will include a 24-bed general practice unit--doubling the current complement in the area--24 day hospital places, out-patient services, and 50 continuing care and respite care places.

People will be able to receive the care that they need as close to their homes as possible. That is a model for future NHS services: local people deciding how best to meet local needs, and working in partnership--both public and private--to produce innovative and imaginative schemes. I therefore welcome this opportunity to pay tribute to all those who have played a part in bringing this project so close to fruition.

Mr. Foulkes: When will that be?

Lord James Douglas-Hamilton: I am just coming to that.

As I have said, good progress has been made. The hon. Gentleman will be aware that, in the autumn of 1995, the health board selected Ayrshire and Arran Community Healthcare NHS trust to take forward its proposals for the new community hospital. Having advertised for bidders, narrowed down a shortlist, and examined the resulting tenders, the trust selected a private partner with whom to explore funding the project under PFI in June 1996.

The hon. Gentleman has made clear his concern that the process of exploring PFI has taken longer than it should. He will be aware that several months of delay were caused by the refusal of the then Cumnock and Doon Valley district council to grant planning permission for the new facility. Although that problem was eventually resolved, the resulting delay of more than four months was frustrating for those keen to make progress. It was in no measure the fault of the trust, the health board, or the PFI process.

Since then, much progress has been made. A full business case was received in the autumn of 1996, and subsequent negotiations between the trust and the bidder have been extremely fruitful in making the PFI option even more attractive. As with many PFI projects, a great deal of negotiation has been necessary to ensure that the project is affordable and that the taxpayer gets the new hospital at the best possible price.

I am glad to say that those issues are now largely concluded in the case of East Ayrshire, and I would expect negotiations to be concluded very shortly. However, I am bound by election rules since the declaration of the Prime Minister. I would not expect the trust to sign the contract until after the general election, in the light of advice from the Treasury and the Cabinet Office that no further decisions should be made or actions taken that are of a continuously binding or long-term character. However, I expect negotiations to be concluded this month.

The new East Ayrshire community hospital is not the only development to benefit from the private finance initiative. Some 18 health projects, with a capital value of

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nearly £56 million, have already been completed. They include: Ferryfield house, a 60-bed nursing home in Edinburgh that is now up and running; hospital information support systems at the Law hospital, Perth and Kinross Healthcare and Yorkhill NHS trusts; and a new £3.8 million community hospital in Stonehaven.

Thirteen more projects, with a total value of nearly £600 million, are beyond the point of being advertised as PFI schemes; a further nine projects, with a value of £250 million, are preparing to advertise in the near future. Projects are coming to fruition rapidly.

In the past few weeks, Lanarkshire health board has given formal approval for the building of two new district general hospitals under the PFI to replace Law and Hairmyres hospitals. Lothian health board has approved a scheme for the new royal infirmary. A promising design has been proposed for the redevelopment of the Western general hospital in Edinburgh. All the trusts concerned will be working with the consortia on the final stages of contract negotiations before submitting final proposals to the Scottish Office.

This huge investment programme could not be funded from the public capital programme. Demand far outstrips the availability of public capital. However, the PFI brings many other tangible benefits. The evidence so far is that it gives very good value for money, and only projects that offer value for money are allowed to proceed. It provides an ideal opportunity for the private sector to offer innovative solutions, while enabling projects to go ahead well in advance of the time scale that would apply if public capital alone were used.

PFI contracts also give the private sector an incentive to deliver on time and maintain services to a high standard. Quality of service is a recurring theme. The PFI is about delivering services rather than assets, and payments for the services are based on results. Capital and management skills are provided by the private sector, while the service remains under public control. Finally, risks previously borne by the public sector are transferred to the private sector through PFI deals. In particular, the risks of technical obsolescence, upgrading and residual value of equipment are borne by the supplier.

Those points are well documented, and I suspect that most Opposition Members would accept them, despite their initial reluctance wholly to embrace the PFI. It is worth remembering that these are all benefits that will improve health care services provided to people, including now those in East Ayrshire. I know that the hon. Member for Carrick, Cumnock and Doon Valley will welcome that.

Mr. Foulkes: I am conscious of what the Minister said about Treasury rules and the Cabinet Office instruction about not making decisions until after the general election, which is right and understandable. However, that would suggest that no decision can be taken until well into May, which means further delay for East Ayrshire hospital. If the Government decided to go ahead with the traditional public funding method using public capital, and if my hon. Friend the Member for Hamilton (Mr. Robertson) concurred, would it not be possible to make a decision now?

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