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10.13 pm
Sir Geoffrey Johnson Smith (Wealden) rose--
Madam Speaker: Order. Has there been an agreement?
Sir Geoffrey Johnson Smith: Yes, Madam Speaker.
Madam Speaker: The Chair should always be informed.
Sir Geoffrey Johnson Smith: I apologise for that omission, Madam Speaker.
I congratulate my hon. Friend the Member for Tunbridge Wells (Mr. Norman) on raising this matter, and warmly support what he has said. My constituency abuts his, and the health authority that dominates the constituency pays some £5 million for special services from the hospitals to which he referred. There is clearly considerable collaboration between the health authorities concerned.
The Minister of State, Department of Health (Mr. Alan Milburn):
I congratulate the hon. Member for Tunbridge Wells (Mr. Norman) on his first speech in the House on health matters. The right hon. Member for Wealden (Sir G. Johnson Smith) gave him ample support. I welcome the hon. Gentleman's interest in the Government's programme to renew the national health service. I share his concern that the citizens of Tunbridge Wells--and, indeed, of every other constituency--should enjoy the best health care, delivered in the best facilities by the best clinicians. That is what the NHS sets out to deliver, and what the Government are determined to secure.
I also pay tribute to the staff of the hon. Gentleman's two local hospitals--one on the outskirts of town and the other in the centre--who deliver high-quality care, sometimes in difficult circumstances.
The hon. Gentleman has raised with me tonight and in correspondence his concern about the fact that the project to rationalise services of the Kent and Sussex Weald trust on to a single site at Pembury was not prioritised as a PFI project in July. I understand the hon. Gentleman's concerns, but it may be helpful if I briefly explain to the House precisely why prioritisation of PFI schemes was considered necessary, how schemes were chosen, and the implications for those such as Kent and Sussex that were not prioritised. I know that he wants to look to the future rather than rake over the past, but it is important that I address the issues that he has raised.
When the Government took office, we inherited from the previous Administration what I can only describe as a fantasy hospital building programme. Scores of hospital developments were trumpeted, with, as I remember well, capital values the size of telephone numbers and start dates that we were continually promised were just around the corner. We had been promised project signings at the rate of one a month. Unfortunately, not a single project materialised. Despite the promises of jam tomorrow, not a single hospital was built through the PFI process under the previous Administration.
The previous Government's overblown optimism about their hospital building programme was not matched by the private sector, which had invested much time and money in developing proposals that seemed to be going nowhere. There was confusion about the rules, uncertainty about the legislation, and an impossibly large number of potential schemes to manage and deliver.
The Government were elected on a mandate to sort out the mess that PFI had become. It was never going to be an overnight job, and the work continues today. I hope that the hon. Gentleman will acknowledge that we have made enormous progress. On taking office, the Paymaster General appointed Mr. Malcolm Bates to review the operation of PFI right across government, and he accepted every one of Mr. Bates's subsequent recommendations.
Meanwhile, the Department of Health undertook its own review. It was clear that, as a matter of priority, we had to secure the market for PFI, and we set about doing that in two ways. We prioritised the 43 major acute schemes in the pipeline, and we enacted legislation to clarify the powers of trusts to enter into PFI contracts.
As the hon. Gentleman rightly said, on 3 July I announced the outcome of prioritisation. I was able to announce 14 major new hospital schemes with a total
capital value of £1,300 million: the biggest new hospital building programme in the history of the national health service. That unlocked the gridlock. Most importantly, it secured the confidence of the private and public sectors in the ability of public-private partnerships to benefit patients by providing new services on the ground. That confidence was given a further boost on 14 July when the National Health Service (Private Finance) Act 1997 entered the statute book. The Government promise was delivered. Just a few weeks ago I was proud to be able to visit the Darenth Park project at Dartford and Gravesham. The trust there already has the builders at work and ahead of schedule. I have no doubt that the concrete proof there will be replicated throughout the country as schemes are brought to fruition.
I am pleased to note that the bond that has been used to finance a new hospital for the people of Carlisle, the first NHS/PFI scheme to be funded through the capital markets, will be launched tomorrow. I fully expect work to begin on that scheme by the beginning of next month.
Mr. Eric Martlew (Carlisle):
I invite the Minister to visit Carlisle when building work starts on the hospital. We have a split site, and we have been working for 20 years for a new hospital. The Minister's news will be welcomed in my constituency.
Mr. Milburn:
I pay tribute to my hon. Friend for being at the forefront of the local campaign to secure a new hospital for Carlisle. That long campaign has had a rich reward in the new development, and I should be delighted to accept his invitation to see progress when building starts.
In the context of Kent and Sussex Weald, I draw no comfort from the fact that many schemes have had to be stood down. I have no doubt that there is a demonstrable health service need for such schemes, and that the NHS would be improved if the projects were given the go-ahead. If it had been possible to deliver all 43 projects, I would have delivered them, particularly if that could have been done at an affordable price. However, I am afraid that arguments continued to rage in the constituency of the hon. Member for Tunbridge Wells about the affordability of the scheme in the lead-up to the prioritisation exercise.
I have no apologies about the outcome of prioritising, because not all the schemes could have been delivered. A preferred bidder had not even been selected for Kent and Sussex Weald when prioritisation took place. As I think the hon. Member knows, more generally, resources were spread too thinly, expertise was lacking, and precious NHS cash was spent trying to breathe life into schemes that were just not ready.
The NHS spent a total of £30 million in management consultancy fees alone desperately trying to get PFI schemes off the ground, and there was not a single hospital project to show for it. I was not prepared to allow that waste to continue. Instead, we took the decision to prioritise on the basis of three criteria: health service need, project status and PFI-ability. We did that openly and objectively, and the results were published in full. Again I make no apology for that, because in my view health service need should always be the key determinant in progressing NHS schemes.
The hon. Member for Tunbridge Wells was right to point to the advantages that would have accrued to the Kent and Sussex Weald trust if its project had been
prioritised. As he rightly said, the trust currently operates on a split site--on the outskirts of Tunbridge Wells and in the centre of town--and the operational and training difficulties that that creates have been well documented. He alluded to them.
It is perhaps a sad indictment of the recent history of the NHS and of the hon. Member's party's mismanagement of it that in terms of health service need, Kent and Sussex Weald, despite pressing needs, was a considerable way down the list and below other potential projects whose need was greater. For health service need, Kent and Sussex Weald scored three out of a possible five where five represents greatest need. In the categories of PFI status and PFI-ability, the project scored only one out of five and nought out of five respectively. It was therefore considered extremely unlikely to reach financial close within 18 months, not least because the support of local health care commissioners was likely to depend on a more affordable, and therefore restructured, proposal.
The question then, as the hon. Gentleman rightly said, is what happens to the schemes that were not prioritised for the first PFI wave. The answer is that schemes that were not prioritised for the first wave are eligible for consideration by the capital prioritisation advisory group within the NHS executive. The group will consider the merits of eligible schemes, including, specifically, their health service need. In future, the key determinant of where capital projects take place in the NHS will be a simple one: whether those projects are most needed.
As configured under the previous Government, the PFI system did not take NHS need into account as the key determinant of where capital projects were to be developed. Instead, the philosophy of "let a thousand flowers bloom" meant that a thousand flowers did not bloom. Unfortunately, no flowers bloomed. Instead, the NHS wasted precious resources, precious time and precious skill trying to conjure schemes out of nowhere. The consequences were clear for all people to see: it failed. This prioritisation exercise, where NHS need will be the determining driver, will ensure that the most needed capital developments take place quickly.
I hope that the hon. Gentleman will support that approach. He asked for sensible long-term planning, and that is what he will get through this route. The group will work closely with the Treasury task force in making its recommendations, and it will be for Ministers ultimately to decide which schemes should go ahead. Work is
already under way to prepare for scheme selection, and I expect to be able to announce the next tranche of PFI schemes in the spring.
The hon. Gentleman asked what the best thing to do was. The best thing to do for his trust, for himself and for the right hon. Member for Wealden is to alert the regional office to the needs of their constituents, and to try to persuade the office that this is a much needed scheme. The office may therefore decide that this is the sort of project that it would like advanced for national prioritisation.
The benefits will be clear for all. In particular, the private sector will know that schemes selected on that basis have every prospect of success. We anticipate considerable competition to deliver them. Needless to say, the bid that succeeds will be the one that offers best quality and value for money. Those schemes that are not considered PFI-able--and there may be some--may be considered for available public sector capital.
I do not expect the hon. Gentleman to agree that his local trust should not have been prioritised, but I hope that he will acknowledge that, since the announcement on 3 July, the trust's perspective has changed. The fact that the trust did not appeal against my decision when it could have done is a sure sign of its realism about the poor status of its previous PFI bid.
More positively, and looking to the future, I understand that the trust is now working on a collaborative agenda with Mid-Kent Healthcare NHS trust, and that it is likely that any future project proposal will take account of collaboration on site strategy, and possibly involve all three major sites--at Maidstone, Pembury, and Kent and Sussex. I have no doubt that, if a successful partnership can be forged to effect a strategy for the whole region, the hon. Gentleman's constituents can only benefit.
The Government also believe in co-operation and in partnership. We will continue to pursue our successful strategy of public-private partnerships, of which the PFI is one model. Our review of the PFI in the NHS continues, with a review of the procurement process and of the PFI product. We want deals to be quicker, better value for money, high quality, even more innovative, but, most of all, driven by that key determinant of NHS need. The NHS, taxpayers and, most important, local patients will benefit from that approach. I look forward to receiving the full support of the hon. Gentleman and of the right hon. Member for Wealden in that endeavour.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Ten o'clock.
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