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Mr. Stevenson: I am particularly interested in the local point made by the hon. Gentleman. What does he say about the situation in my area in which a PFI scheme that has had the support of the district health authority, the community health council, the trusts and the local community has been held up for four years? How can that be top-down consultation--surely it must be bottom up? The project has been held up because of the system that the Bill is designed to expedite.
Mr. Hughes: The hon. Gentleman makes a good point. We have tabled an amendment to the Bill to provide consultation with and approval by both the public and the authorities. I do not know the details of the scheme that he mentioned, but he said that such consultation has occurred. Once it has crossed that threshold, the scheme should get off the starting blocks.
If the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) will bear with me, I will also tell the House how we can better fund schemes in the constituencies of all hon. Members, because the Liberal Democrats have an answer. I am not speaking in the debate only to be critical without providing a constructive option. My right hon. Friend the Member for Yeovil(Mr. Ashdown) has said that the Liberal Democrats are "the constructive Opposition", and today we will oppose constructively.
We must, however, ensure that schemes--regardless of which hon. Member's constituency they are in--are priorities in the larger scheme of things. Perhaps the scheme in the constituency of the hon. Member for Stoke-on-Trent, South is a very good one, but--in a time of limited health resources, even with private finance--it may not be the most important one in his county, district, borough or region. We must consider that factor. My colleagues and I believe that schemes must pass also the test of being regionally and strategically important before being considered a priority.
The Minister said that the PFI process is the best method of getting money into the health service. My hon. Friends and I disagree with him on that point and think that, if he conducts his review openly and honestly, he, too, will reach a different conclusion. We do not believe that there is evidence to support his conclusion. Until very recently, even those at the Treasury said that they did not believe that the PFI was the best way to accomplish that goal.
Mr. Milburn:
On a point of information for the hon. Gentleman, I said that our PFI review would examine a variety of means of establishing public-private partnerships, of which the PFI is certainly one possibility. We will look beyond the PFI, and we are certainly not wedded to the Tories' version of the PFI. I should make that clear to him now.
Mr. Hughes:
The Minister knows that I welcome that statement. One of the burdens of our case is that there should have been such consideration before the general election. The Labour party should have reached a view on establishing a better scheme. The Liberal Democrats think that a better scheme--I will be honest about it, and it is not a secret, a perfect answer or even terribly original, although I hope that the Government will consider it in their review--would be a capital-funding bank for health service projects, which can be organised both regionally and nationally. Parallel organisations, although in a different context, are regional development agencies.
The Minister and other hon. Members will know that such a move has been advocated most recently by the King's Fund as a way in which to ensure that one agency provides both public capital funding and private capital funding. Such an agency would be better because everyone would apply at the same time and with the same criteria. We could do away with variable interest rates, and people would not have to operate by different timetables. We would also be able to pool resources by using that method of obtaining private finance. There would be many benefits.
I will not pretend--as I did not pretend in debates on charging or on rationing in the health service, which will come regardless of what we pretend--that we will be able to manage the health service without private money. We never have and we never will operate the NHS without private money, and the question is only one of how we will do so. Liberal Democrats believe that rather than arranging such finance on a local and ad hoc basis, we should arrange it more strategically, both regionally and nationally.
Mr. Maples:
If the hon. Gentleman is suggesting that there should be some type of bank that contains private and public money, is he aware that all the money spent
Mr. Hughes:
No, that consequence would not follow; it is a separate matter. The hon. Gentleman knows enough about the health sector to know that a separate debate is occurring in which the Treasury is very defensive--we all know the score--about what constitutes public sector borrowing. He knows also--because it was his predecessors' idea--that the PFI scheme was his predecessors' method of getting round that problem and that accounting criterion.
A very odd accountancy fiction--it is no secret; it is the argument--is that spending money on lease payments for health services, like hire-purchase payments on a car, does not constitute public expenditure, whereas buying services or a car outright does constitute public expenditure. No one in the real world believes that there is a difference in the types of payment, because it is all money going from the public purse into a private pocket.
The former Financial Secretary might believe that there is a difference in leasing. The issue, however, is how we define what is public expenditure and what is not. As he knows, the Treasury's position in that debate is under attack and is no longer generally accepted.
Mr. Jack:
Perhaps the hon. Gentleman will first tell the House how accounting financial reporting standard 5 relates to his comments. Secondly, will he tell us, in the mechanism of repaying that private capital as some type of lease payment, where the money will come from? Thirdly, is it not the case that that private money would attract a greater rate of return or interest than the public money that goes with it? Therefore, by definition, that money would be more costly in terms of public expenditure. Perhaps he will deal with those three points.
Mr. Hughes:
I cannot deal with the first point, because I have not a clue about it. I can, however, deal with the second and third points. The first issue--it is not only a health service issue--is how one defines public expenditure. It has to do with the public-private financing of, for example, the railways and public transport. It has to do with whether or not we take capital receipts for housing purposes as public expenditure. The same debate on spending crosses Government Departments. The Treasury has always defended its position that certain things count as public expenditure and others do not.
When the previous Government were in power, and when the right hon. Member for Fylde (Mr. Jack) was a member of it, they pursued private sector finance because they believed it would not count towards public expenditure totals. I understand why they did it, but I support the current Minister's view that we need to consider afresh whether there are better ways of producing, at low cost to the public purse, the same gearing or ratio of public to private sector investment.
I cite another obvious example. When the previous Government set about establishing city technology colleges around the country, the theory was that 80 per cent. of the money would come from the private sector and 20 per cent. from the public sector. In broad-brush terms, the reverse happened--20 per cent. came from the private sector and 80 per cent. from the public sector
because, in the end, it was not seen as a saleable proposition. We have to examine not only what maximises public investment in the health service, at the lowest cost to the taxpayer, but what maximises private investment.
There are two other substantive reasons why my colleagues and I believe that the Bill is inadequately drafted. It is a bit rich for the Government to proceed as they are, given that in opposition they went hammer and tongs at the Tory Government about the threat of privatising the NHS and, in particular, clinical services. I remember the right hon. Member for Islington, South and Finsbury (Mr. Smith), who was then the shadow Secretary of State for Health, going on about the privatisation of clinical services during Question Time after Question Time, and seeking assurances that they would not be included.
If clinical services are not to come under the PFI, they should not be included in the Bill. It is no good the new Government saying they are terribly sorry, they will not include clinical services but they will be left in the Bill. I understand the semantic argument that there is a grey area in respect of back-up services, but whose Bill is it? The answer is that it is a Tory Bill, not a Labour Bill at all. It was taken off the shelf at Richmond house--I saw it there before the election.
Mr. Milburn:
If the hon. Gentleman thinks that he has a solution to this thorny problem, perhaps he will give us a list now of clinical and non-clinical services. Let him give us a list if he thinks it is as easy as that.
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