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Baroness Cumberlege: My Lords, I am aware that this is the first Bill the noble Baroness has taken through your Lordships' House as a Minister for Health. I congratulate her and thank her for her courtesy and her willingness to meet the improvements put forward with such skill and determination by the noble and learned Lord, Lord Brightman, throughout the course of the Bill. I hope that will become a pattern for the future. I should also like to thank my noble friends for their participation in the Bill, and particularly my noble friend Lady Anelay of St. Johns who has responded from our Front Bench.

I shall be brief because I know there is a long session before us today. But I cannot leave the Bill without making two points. The first concerns the definition of "clinical support services" about which there has been so much discussion. At Second Reading the Minister acknowledged that it was a "grey area". At Committee stage we were still in a fog, for the Minister told us that it was difficult to define those services in a way which was legally and professionally watertight. She described her discussions with officials as discussions which,

She told us that every attempt she had made had met with objections. But government is not about intellectual aerobics; it is about ensuring that those affected by legislation have a clear and precise understanding of the law. This issue sadly leaves your Lordships' House still unresolved. That is a great pity. We should not pass on our Bills with so little clarity, with so much ambivalence and so many grey areas, especially when, as the noble Baroness knows, there is no need for it.

We gave her the solution at the very beginning. Indeed, when we initially drafted the Bill we had thought through all the implications--for of course, in essence, this is our Bill. But like borrowed clothes it does not quite fit this Government, for this Government are of a different shape; they have a different philosophy which cannot always be disguised by borrowed clothes.

Our solution was very simple. It was simply to trust the local people. Unlike the Government, we believe that they should be in charge of their destiny. They know locally what works best. They are grown-ups and do not need nannying and central bureaucratic direction.

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The second issue that goes forward unresolved is the Government's review of PFI schemes. I feel sorry for the noble Baroness. She must take this legislation forward while there is a general review of PFI, a departmental review of PFI and, as the noble Baroness told us last Thursday, on top of a review of a review there is a third review taking place in London. The Minister was unable to tell us whether schemes in which private companies had invested huge sums and were being stopped mid-stream by the Government would receive compensation. Only this afternoon the Minister has informed us that out of 43 schemes 14 are to go ahead, with two that have been previously agreed. That leaves a large number of firms and companies disappointed. What is more, together they have invested millions which will prove to be abortive. The issue of compensation has not been addressed even this afternoon. That issue must be addressed. This bodes ill for the private/public partnership for the future. This matter must be speedily resolved if the Government are to maintain the private sector's confidence in PFI schemes and the NHS is to get its hospitals.

This is a simple, modest Bill, but despite the successful efforts of the noble and learned Lord, Lord Brightman--I again congratulate him on clarifying the wording--it goes forward with very ragged edges. I hope that it will return from the other place in better condition and that by then the Government will have decided what they want to do on these issues. We wait in anticipation.

Baroness Robson of Kiddington: My Lords, I am certain that all noble Lords hope that the passing of this Bill will be instrumental in getting at least some of the backlog of much needed hospital building off the ground. The Minister has just told us about the recent decisions on 14 schemes, two of which have been signed. I very much regret my inability to be present at the Committee stage of this Bill. I am grateful to my noble friend Lord Ezra for moving the amendment standing in my name.

I have the same concern about clinical services but looked at from a point of view different from that of the noble Baroness, Lady Cumberlege. In an amendment to subsection (5) we attempted to exclude clinical services from other services that might be provided by the private contractor. I regret that the Minister was unable to accept that, but I am grateful that she provided a definitive statement that at least pathology and radiology would be excluded. However, I should like to have that assurance on the face of the Bill because, however strong may be the present Government's commitment, it is no guarantee of the policies and actions of any future administration.

In his Budget Statement yesterday the Chancellor of the Exchequer announced that the Government had accepted Mr. Malcolm Bates's report in full and foreshadowed further legislation to implement the report. It is to be hoped that any further legislation that is introduced will provide us with further opportunities to clarify which services can be provided by private

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contractors. With those few words, I wish the PFI experiment--we must still look at it in those terms--success in the 14 schemes that have been approved.

Lord Donaldson of Lymington: My Lords, for a variety of reasons I was prevented from attending the House on the previous occasions when this Bill was considered. For this reason I hope that I may be permitted to say a few words in support of it. I do so with greater enthusiasm because it seeks to remove actual or perceived uncertainties in the law, which is one of the primary objectives of the Financial Law Panel of which I am chairman. It does so simply and neatly. It declares, bluntly, that NHS trusts have power to enter into externally financed development agreements. Although such agreements are not expressly defined, their nature is clear enough from Clause 1(3). So far so good.

The Bill then rightly recognises the difficulty with which a person providing the financial assistance may be faced in ascertaining whether the main purpose of the agreement or agreements is in fact and in law the provision of facilities in connection with the discharge by the trust of any of its functions. The Bill takes that head on. It meets the problem by providing a system of certification. If the agreement or agreements are certified by the Secretary of State to be externally financed, ipso facto they are agreements that an NHS trust is empowered to enter into. Furthermore, Clause 1(3) gives the Secretary of State a margin of appreciation. Although others may have doubts, within that margin of appreciation the view of the Secretary of State prevails. But--this is the problem--surprisingly the Bill fails to contemplate the possibility that the Secretary of State may have misdirected himself in law, or may have taken account of an irrelevant consideration, or that he may have ignored a relevant consideration.

What then? Probably no one will object, so the answer is that nothing will happen. But if someone does object, as indeed he may, the courts will have to consider whether the certificate should be set aside. It does not follow that if the Secretary of State has been mistaken in one respect or another the courts will set aside the certificate. They will have to take account of the public interest in deciding how their undoubted discretion should be exercised. But if the worst comes to the worst and the Secretary of State's certificate is set aside, it will be upon the basis that the agreement was not in fact or in law an externally financed agreement within the meaning of the Bill, or that there have been serious procedural irregularities. The likelihood is that it will be because the agreement is outwith the powers of the NHS trust and that the Secretary of State should never have certified it.

I do not suggest that this is a likely contingency but it is a possibility. Where does that leave the external financiers? It leaves them in a wholly unenviable position, and one to which in my view they should not be exposed bearing in mind that they will have relied on the validity of the Secretary of State's certificate.

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My noble and learned friend Lord Brightman raised this issue at Committee stage by moving a somewhat complex amendment (col. 1366 of the Official Report of 19th June). The amendment was taken from the terms of the Local Government (Contracts) Bill. I understand fully his reasons for adopting that course, but the structure of that Bill is somewhat different from this.

The noble Baroness the Minister rejected it upon three grounds. First, she said that local authority contracts were bilateral whereas NHS contracts were multilateral. I am not entirely certain that that is correct but I am quite sure that it is immaterial. Secondly, she said that the amendment would validate an ultra vires contract, which I agree would be a quite unacceptable concept. However, it would do nothing of the sort. It would provide compensation for innocent third parties who were the victims of an invalid contract.

Thirdly, she said that the Bill was designed to remove uncertainty as to the validity of PFI contracts and it could not be seen to contemplate that there might still be some uncertainty; in other words, one should not frighten the horses. But the plain fact is that it is a very sophisticated bunch of horses that is well capable of evaluating the risk such as it may be. I do not doubt that that is a factor when the price structure is being formulated.

An objection based on not frightening the horses shows an ostrich-like mentality. Everyone involved is aware that Ministers are not infallible, even if on the basis of experience of the previous administration it can fairly be said that some Ministers were more fallible than others.

In my judgment, expressly contemplating that possibility cannot increase or create uncertainty. If the certificate is set aside and not reinstated upon further consideration, as could happen, it would not be right for the external providers to be left out in the cold. Nor would it be right that they should be in exactly the same position as though the agreement was performed. What would be right, fair and reasonable is that they should be compensated on exactly the basis on which they would have been compensated if at that moment the National Health Service trust had voluntarily repudiated the contract.

I welcome the Bill. It is a good Bill. I hope that it will be made a very much better Bill in the other place on the lines that I have suggested. It would be simple to draft a clause to give effect to my suggestion.

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