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Mr. Milburn: There are endless possibilities. The basic point is that if an EFDA has been given and a PFI deal has been certified, and subsequent to that, a component of the PFI deal comes adrift, the deal may need to be recertified. Frankly, that is not a major issue.
Part of the amendment is unnecessary, part is beside the point and the requirement to confirm finance before certifying the agreement would stop the hospital building
programme in its tracks. For those reasons, I invite the right hon. Gentleman to withdraw the amendment. If he does not, I invite the Committee to reject it.
Mr. Jack:
We have had an interesting insight into what we can prise out of the Minister when we propose a straightforward, simple and helpful amendment. We have discovered a new dimension to the potential granting of not just one certificate but subsequent certificates under various, perhaps obscure, circumstances in which the nature of the provision of parts of a contractual arrangement changes.
It would useful if the Minister were to consider publishing explanatory guidance, to ensure that those who read in Hansard the slightly uncertain explanation of the variations on those terms know exactly where they stand. I remind the Minister that the whole purpose of the legislation is to remove doubt about the legality of entering into financial arrangements. We have seen an interesting scintilla of what might happen if something went wrong.
The Minister said that the Secretary of State would not use the mechanism unless all the financial ducks were in a row, but, on the basis of experience, I think that the Secretary of State could derive added value and advantage from making it absolutely clear that, unless all the promises of finance were in place, a certificate would not be granted. It might happen the other way round: the bankers might say, "We will provide the money, subject to the Secretary of State's signing on the dotted line." We need further clarification.
I am, however, at least 75 per cent. satisfied that a final lock on the use of the legislation is provided by the Bill as currently drafted. Subject to the Minister's agreement to make a clear public statement about the second point that he raised, perhaps in a parliamentary answer--he nods; I am grateful to him--I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr. Brand:
I beg to move amendment No. 6, in page 1, line 15, at end insert
The Chairman:
With this, it will be convenient to discuss the following amendments: No. 7, in page 1, line 15, at end insert
No. 2, in page 1, line 15, at end insert--
No. 3, in page 1, line 15, at end insert--
Dr. Brand:
I have been told that I must not talk about my previous and current jobs, but I was delighted to hear the Government commit themselves to abolishing two-tierism in the NHS. I am, however, a little worried by the announcements that have been made about the PFI to date. There is clearly two-tierism in capital development in the NHS. Projects that are "PFI-able"--that, apparently, is a new term that we must all learn--can go on to their own list and climb up it, and if they are lucky and reach the top 14 they will succeed, but we have heard nothing about the assessment of other schemes within regions which are just as essential. Are those schemes being assessed? Are they being considered for public expenditure?
It is not just a case of finding the capital; it is running the service that will take up the resources that are so desperately needed, and if there is to be some sort of resource allocation system, account must be taken of future needs. We discussed that at length earlier.
We also spoke earlier about the need for a regional overview. It is no good allowing schemes to go ahead in one part of a region because the private sector is particularly interested in juicy ways of generating extra income for a particular trust, or for the erection of a particular set of PFI buildings. As I said earlier, there is also the question of the distribution of regional services, which should go where clinical need is greatest and not necessarily where the private sector believes that the PFI can generate more money.
We are not asking for something impossible. I am sure that the Minister already has this in mind, but I am a bit concerned that we have heard nothing from him about the effects that the PFI is having on other new services which need to be developed in the NHS.
Mr. Jack:
I hope that the Committee will not mind if I spend some time on our amendments in the group. I have some important points for the Minister. Our amendments provide a two-part check and balance on whether the deal that the Secretary of State is sanctioning, via the mechanism that is the subject of the Bill, fulfils his objectives.
Because of the importance of the PFI mechanism and its role in the health service, there is a need for the National Audit Office to become involved. To date, the Government have shown no reluctance to involve the NAO in some important issues. The Chancellor of the Exchequer used it to underpin some of his Budget assumptions, and if he is prepared to use it, the Secretary of State for Health might be tempted down that road.
The NAO submitted a memorandum to the Select Committee on the Treasury when it considered the private finance initiative. I shall quote briefly from that to give weight to our amendment. It states:
The National Audit Office has already demonstrated the role that it can play and it has been consulted by Departments in the recent past on the matters that we are debating. The Minister has said that he is planning some substantial changes to the way in which the PFI operates. He spoke about what he called new public-private partnerships. He is thinking about new mechanisms and I appreciate that at this stage they may be only a small glint in his eye. However, a glint means that he has an idea and perhaps he can say whether those mechanisms would come under the definition of externally financed arrangements and would be subject to the amendments.
The Minister has shown that he attaches great importance to the private finance initiative. In Library research paper 97/88 the Minister is quoted as saying that
Amendment No. 2 interlocks with amendment No. 3 in saying that the use of the procedure that we have outlined depends on all of us having a clear idea of the criteria that will be deployed to achieve the Bill's stated aims and other relevant issues. The Minister placed in the Library a document entitled "Review Criteria". I wanted to find out a little more about how he was going to approach the question of what would or would not be a PFI arrangement and, by means of a parliamentary answer, he confirmed to me:
Paragraph 10 of the document discusses "service need". It leads us to probe carefully what criteria the Minister and the Secretary of State for Health will follow in
determining the way in which the PFI operates. In listing a number of factors that the Minister will take into account, why has he not distinguished in any way, shape or form the statistical weighting that he attaches to these criteria? From the way in which he has laid out the document,
On quality of services, I have asked the Minister questions in another context about the word "quality". So far, quality is not a statistically defined word or term that the Minister has been prepared to use, but, if we are going to have stated criteria, as our amendment suggests, we need to have this information published and in considerable detail, so that we may follow the matter more closely.
The same could be said of other items here. I could go through them in detail, but I will not. I want to pick out just one or two things that are particularly important. "Improved strategic fit" of services is mentioned. Liberal Democrat Members may be interested in probing that subject as it goes to the heart of the matter. How exactly will the Minister's new mechanism to determine future PFI projects--the ones that are the subject of his further representations and of further PFI arrangements, and which may ultimately be the subject of public capital arrangements--fit into this wonderful phrase "improved strategic fit" of services? Bearing it in mind that the Minister has brought back in-house the whole question of the way in which hospital investment will operate, he owes it to the Committee to let us into the secret of what "improved strategic fit" means.
The projects on the Minister's winners list are very interesting. North Yorkshire, the north-east, north Durham, Bishop Auckland and south Tees are all winners and, I am sure, worthy projects, but they are awfully close to each other. The Minister may wish to correct me, but my understanding is that an independent consultants' report asked some searching questions about whether the Bishop Auckland project was viable. The Minister may say that subsequent to the health authority receiving that report, the project was amended and became viable. What we do not know is how Darlington hospital, in the Minister's constituency, now fares with the arrival on the winners list of Bishop Auckland.
Does the Minister intend to use some sort of Paretean criteria in deciding future winners in his strategic overview? A case could be made that worthy as north Durham, Bishop Auckland and south Tees are, until we have a better insight into what the wonderful phrase "improved strategic fit" means, we shall have no idea of the criteria and whether they will lock on to a good private finance initiative project.
Will the Minister publish a Green Paper which would allow all of us to contribute our views to the debate that he wants on the grand strategy that he is now devising?
Will he publish a White Paper laying down in clear, unequivocal terms, not only what "improved strategic fit" means, but what
It is also extremely important to look at another phrase,
I refer the Minister to section 10 and to schedule 2 (6)(1) of the National Health Service and Community Care Act 1990, which provide that NHS trusts should obtain value for money. Later in the debate, my hon. Friend the Member for Stratford-on-Avon (Mr. Maples) will deal with the matter of clinical services. What will happen in a situation, however, in which the Minister has defined all the criteria that will guide his decision-making process but in which a consortium submits a bid that does not comply with his criteria and yet demonstrably provides the best value for money, perhaps by including a range of clinical services?
Under the new criteria, what would the Minister or the Secretary of State do to comply with those provisions of the 1990 Act? Would such a bid be in or out? If the Minister is to achieve his objective of making more effective use of resources, he will definitely have to answer those questions.
As amendment No. 3 states, risk transfer will be a very important criterion. As the Minister knows, risk transfer is very much to do with putting health care provision in the hands of whichever part of the health care equation can best handle it. More specifically, the design risk of a hospital, for example, would be best handled by the private sector partner. In his reply, I hope that the Minister will tell us whether there will be any changes to the already published PFI documentation, which provides clear guidance on risk transfer. Does he propose to maintain that guidance, to change it or to put different mathematical weightings on the risk that he thinks should be transferred?
'and
(c) in his opinion the agreement is compatible with the fair distribution of capital and revenue spending within a regional strategic framework.'.
'and
(c) the agreement has been subject to a public and published report by the Audit Commission who shall give their assessment of the value for money provided.'.
'(3A) The Secretary of State shall not give a certificate under this section unless he is satisfied that the agreement meets the criteria published pursuant to subsection (3B) below and the National Audit Office has confirmed that those criteria have been met.'.
'(3B) The Secretary of State shall publish details of the criteria which must be met before an externally financed development agreement is certified under this Act, including criteria relating to--
(a) value for money;
(b) risk transfer;
(d) adequate prior consultation;
(e) such other relevant considerations as he may think fit.'.
"Although the NAO's investigative work on PFI projects has just begun, it is quite clear that a key issue will be the way PFI projects handle risk: who bears what risks, how much risk traditionally borne by the public sector is transferred to the private sector, and at what price."
That issue is central to many of the proposals that will be implemented through the private finance initiative which is certified by the mechanism with which the Bill
deals. Our amendment seeks to qualify the way in which the certificates should be issued and shows the importance that we attach to such matters in the context of risk and risk transfer.
"the truth is that when there is limited public capital, it is PFI or bust."
The "or bust" bit worries me because is shows a cavalier desire to achieve his objectives come what may. That is why our amendment sensibly suggests the checks and balances that the NAO would provide. That would make sure that the Minister did not go too far down the road of becoming bust. The benefit of the NAO's views would add value to the proceedings.
"The criteria for measuring health service need is expected to be similar to that used to assess service need in the recent Private Finance Initiative prioritisation exercise, copies of which have been placed in the Library."--[Official Report, 10 July 1997; Vol. 297, c. 577.]
I was grateful that the Minister did that because it gives a clear insight into some of the reasons why we have tabled the amendment.
"improved clinical quality of services"
carries precisely the same weighting as
"improved strategic fit of services".
Will we get a more detailed explanation of exactly what all these factors mean? What exactly does "improved" mean in
"improved clinical quality of services"?
Improved relative to what? Will the Minister publish data that will enable us to come to conclusions?
"provide better access to services"
means? That is an important point in relation to the criteria which are the subject of our amendment. Does
"provide better access to services"
mean--to go back to my hon. Friend the Member for Hexham (Mr. Atkinson) who, sadly, is not in his place--more Hexhams, where we reduce the distance people have to travel to acute NHS hospitals? Does it mean removing services from regional centres and spreading them around so that people can get easier access? Or does it mean having fewer district general hospitals, but with better services so that access to them therefore provides better access to services? It is that sort of vague phraseology that needs to be tied down if, when devising new criteria, the exercise is to be more transparent--to pick up on the Minister's words--and be seen to be what it is. It is extremely important that we have that information.
"make more effective use of resources."
What would be the Minister's reaction, in the context both of risk valuation and of getting better value for money by making more effective use of resources, if in his new world he were to receive non-compliant bids from organisations which had been invited to compete for private finance initiative projects?
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