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Lord Clement-Jones: I thank the Minister for his frank response. My intention was not to divide the Committee but to elicit the frank response that he has given. Although it will not strike terror, it will cause some trepidation to those who are worried about the ultimate conclusion of PFI/PPP. The Minister said that there is a list beyond which the approval of Ministers will be required. I am not wholly familiar with that list; no doubt we shall familiarise ourselves with it.

However, we are into new territory here. The provision does not relate only to LIFT, as the Minister admitted. I should be happy if it were a matter of intellectual property--spin-off companies to exploit inventions or discoveries that have been made within the public sector--and so on. But we are talking about an extension. As originally conceived, various assurances were given about how far a PPP would go with regard to the provision of clinical services. We are clearly crossing another bridge here. I should be happy with that if the transparency were there; if the comparisons with the public sector were there. As a seeker after truth, I have considered every one of the PFI contracts and sought to calculate how the calculations about the transfer were made. I have had some co-operation with the department in that respect. I am baffled. The comparison between public sector financing and PFI is opaque. That worries me.

In the proposed system we are transferring services across to the private sector but the cost to the public sector is unknown. Whether the figure is calculated over 30 or 60 years, we seem to be on very tricky ground. It is an example of a creeping process of PFI/PPP. It is interesting that the Minister uses the phrase "exciting opportunities". That is the way in which Ministers have always talked about the PFI. It strikes terror into my heart since it has a certain naivety about it.

Lord Hunt of Kings Heath: I cannot let that remark pass. I said "exciting opportunities". The quality of primary care provision in rented accommodation in many inner city areas is often of poor quality. The opportunity to bring in both public and private capital to enhance those premises must surely be exciting. It is one which I believe that GPs and other primary care providers in such areas will welcome warmly.

Perhaps I may give an example. There are GPs who are locked into many years of a lease. It is difficult for them to get out of that lease and move into better accommodation. One of the purposes of NHS LIFT would be to enable that lease to be bought up by an

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NHS LIFT, and an appropriate rental scheme developed in new premises for those GPs. I think that those possibilities are exciting.

Lord Clement-Jones: The Minister uses the best example. If the terms of the clause were limited to ensuring that LIFT were to take flight (perhaps the expression should be to ascend), I would have no quarrel with that. As I said in my introduction, the majority of GPs are independent contractors who should be free to make contracts with the private sector in the way they see fit. If this system is designed to facilitate that, that is all right by me and these Benches.

There is a tendency in the Bill to take a power for one purpose and say, "We think that that is a useful power. We'll make sure that it is available for all kinds of other purposes". We saw that under the finance sections in Clauses 1 to 3. We now see it in Clauses 4 and 5. It is a recurring theme throughout the Bill. That is what worries me. If the power were purely for LIFT, I should have no objection. But we now see a real sea change in what could be possible under the PFI in terms of the provision of clinical services.

The Minister may say that there are some safeguards; the Secretary of State has to approve. But if the Secretary of State gets over-excited about PFI, as Secretaries of State under this Government have done historically, I can tell noble Lords the answer to the request for approval.

We have worries about the power. I think that it is a sea change in the way in which the NHS is organised. Straight commissioning from the private sector is more honest financially, politically and otherwise; that is what I should prefer, rather than this over-complicated scheme and the drawing of an opaque veil over the whole process.

If we have a further stage of the Bill--that is not known at this moment--we should wish to develop the argument further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 [Public-private partnerships]:

Earl Howe moved Amendment No. 27:

    Page 4, line 5, after "otherwise)," insert "or to issue (or procure the issue of) shares or other securities in the companies to any person,"

The noble Earl said: In moving the amendment, I shall speak to Amendments Nos. 28 and 32 to 35.

It is a pleasure to welcome in Clause 4 of the Bill an explicit acknowledgement by the Government of the value of the private sector in helping to deliver facilities and services to the NHS. As I said at Second Reading, we look forward to the arrival of NHS LIFT which holds the potential to bring much-needed improvements to GP premises but, equally important, to do so where there has been market failure in the normal commercial mechanisms for generating such improvement. That is where NHS LIFT will come into its own.

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NHS LIFT is an acronym. I thought that the Minister said--I may be wrong--an "anacronym" which conjures up all kinds of pejorative connotations. The Minister's reply to the last group of amendments was helpful. However, there are still many gaps in our knowledge. We have only the barest outline in terms of how the new systems will operate.

One of my main concerns relates to the absence of any specific provision for parliamentary scrutiny. The companies which are set up to handle these activities will undertake very significant financial commitments. One has only to think back to recent history and the sad saga of the New Millennium Experience Company to realise the damage that can be done by, some would say, excessive secrecy when public money is being spent. Instead of shielding Ministers, that secrecy can expose them to an unending series of questions from the press and Parliament. It would be highly desirable if Parliament, as a matter of routine, were to have a statement from the Secretary of State when the powers in Clause 4 are first exercised and then annually so that the financial and other commitments made by the Secretary of State can be monitored properly.

I recognise that there are issues of commercial confidentiality here. I respect that completely. That is why Amendment No. 34, which inserts a new clause after Clause 5, refers to the laying of a written statement "as soon as reasonably practicable".

It is also important to provide for an annual report and accounts to be laid before Parliament in those cases where a company is publicly controlled or where there is any public stake. Those companies will not be non-departmental public bodies. If they were, the laying of accounts would be automatic. However, Clause 4 tells us that the Companies Act will define the rules for preparing the accounts. Therefore we need to create that link with Parliament.

Subsection (4) of Amendment No. 35 grants access rights to the Comptroller and Auditor General. That is consistent with the report prepared in February of this year by the noble Lord, Lord Sharman, entitled The Review of Audit and Accountability for Central Government. In that report, the noble Lord, Lord Sharman, recommends that the Comptroller and Auditor General should be entitled statutorily to audit publicly owned companies. I believe that my proposal fits in with the spirit of what the noble Lord suggests.

In Amendments Nos. 27 and 32 I have raised a separate and somewhat technical matter. In Clauses 4 and 5 the Government give themselves the power to form companies, but not to issue shares in those companies to a private partner. I recall that a specific provision was thought necessary to do that in the context of NATS. Is the same true here?

Amendments Nos. 28 and 33 were prompted by a political concern. I welcome the introduction of the new powers, but they are only powers. They would not have to be used by any future Secretary of State who was less open-minded than the present one obviously is on the suitability of the private sector as a vehicle for bringing about improvements. The thought that I should like to plant in the Minister's mind through the

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amendments is that the Secretary of State should have an obligation to consider in all such cases whether the private sector offers an appropriate means of delivering the desired outcome. I do not believe that the Secretary of State should have an excuse for ignoring the private sector option merely because he is ideologically hostile to it.

I conclude my remarks with a few questions for the Minister on the clauses. Clause 5 gives a power to form companies that in one way or another will work to the benefit of the health service. What will happen to the current terms and conditions of service of employees of the health service who are asked to go and work for one of those companies? Will TUPE rules apply to them?

Secondly, will the Minister provide some concrete examples of how the powers in Clause 5 are likely to be used? Will he expand on his reference to intellectual property? I am probably not alone in finding the Explanatory Notes slightly less than helpful here. In particular, will he lay to rest a current canard on anonymised patient data? There is a rumour going about that once the copyright for the information can be controlled by the Secretary of State, as Clause 67 provides, it is only a short step away from being vested in him. Once that happens, the information will be ripe for commercial exploitation by the Department of Health. I hope that that is an unfounded rumour, but it would be helpful to hear the Minister repudiate it.

Lastly, if the Government take only a minority stake in a company, as I understand is the intention with NHS LIFT, what leverage will they have to ensure that investment is channelled to where it is most needed? Where there is market failure in the normal mechanisms for attracting investment or loan finance, how will NHS LIFT ensure that those deprived parts of the country receive the money that they have been unable to generate elsewhere? I beg to move.

3.30 p.m.

Lord Hunt of Kings Heath: I am grateful to the noble Earl, Lord Howe, particularly for his general welcome for what is proposed and the benefits that he sees in NHS LIFT. I shall try to respond to the points that he has raised.

The aim of the clauses is to enable the Secretary of State to enter into public/private partnerships to deliver services to the NHS or for the purpose of income generation. The noble Earl has raised some important points, but they are covered. Amendments Nos. 27 and 32 would enable the Secretary of State to issue shares or other securities in a company to any other person or company. That is unnecessary because any company established under the powers in these clauses could issues its own shares. We would not want a power to allow the Secretary of State to issue those shares. The aim of the clauses is to allow the Secretary of State to participate in establishing a company as part of a public-private partnership. We do not envisage the Secretary of State setting up a wholly owned company and then issuing shares at a later date.

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The noble Earl asked what leverage the Secretary of State would have if he had a minority shareholding in such an organisation. Any companies so established would focus on NHS activities. If the Secretary of State was unhappy with the progress of a company and its policies, he could walk away from it. The credibility of such partnerships rests on the NHS having confidence in the arrangements.

I shall resist Amendments Nos. 28 and 33 because they would return us to the days when all proposals for capital investment had to be subject to testing for private finance. As part of our aim to decentralise decision-making to local level, we are not insisting on a rigid approach on that. The noble Earl will probably recall the Sackville pledge under the previous government. Testing of all investment for PFI led to a huge amount of bureaucracy and real problems in making progress. We require the NHS to ensure value for money in all proposed investments. Current guidance is clear that all procurement that would involve capital expenditure should normally consider PFI, but if an NHS trust considers that a project has very little chance of attracting private finance--for example, if it is a very small scheme--the interests of the NHS would not be served by testing for PFI and PPP. In those circumstances, the trust is exempted from a requirement to consider PFI. Each project is considered on its merits. It is best to leave that decision to individual NHS trusts.

The noble Earl asked about TUPE. It would apply either as a matter of law or under Cabinet Office guidance. I hope that that gives him the assurance that he requires.

I have come across an example of a spin-out company, which the noble Earl asked for. The Royal Marsden is developing what is called a PET scanner. A new company has been formed to develop that machine, but at the moment the Royal Marsden cannot take shares in that company. The NHS is integral to the development of new machines in such cases and it would be a matter of great regret if it were not allowed to enjoy the fruits of the work that had been undertaken.

I assure the noble Earl that any company formed under Clauses 4 and 5 will be required under Companies Act regulations to produce annual reports and accounts. It is our intention that all the companies formed under Section 96C(1) of the 1977 Act will be public companies. That means that a report and accounts must be filed with Companies House within seven months of the end of the financial year. The Secretary of State will ensure that the published reports and accounts are placed in the Libraries of both Houses promptly following publication.

To answer the noble Earl's specific point, the Department of Health's annual report will in future include a section providing details on all investing activities. It will include information on audited bodies, such as the name of each company, the purpose for which it was formed, the percentage of each class

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of share held by the Secretary of State, the amounts invested and the details of loans or guarantees provided.

Those reporting requirements will be in addition to the statutory reporting requirements with which the companies will be required to comply. Statutory reporting requirements will include the following: any share held by the Secretary of State or his nominee will be disclosed in the Department of Health's resource accounts, which will be published in compliance with the Government's resource accounting manual; and, in the case of Clause 4 for health authorities or primary care trusts and Clause 5 for NHS trusts, any investment will be disclosed in the annual accounts, which are required to be published under the National Health Service (Primary Care) Act 1997.

I come to the interesting point which the noble Earl raised with regard to the Comptroller and Auditor General. At present, the Comptroller and Auditor General does not have that power. However, the scope of his remit is currently being considered by the Government. We have already said that, under the review of companies which is being conducted by the Department of Trade and Industry, we shall consider the possibility of legislating to make the Comptroller and Auditor General a Companies Act auditor.

The noble Earl is right to say that that was recommended by the noble Lord, Lord Sharman, in his recent review of audit accountability for central government. I can assure the noble Earl, Lord Howe, that, if the recommendations of the review by the noble Lord, Lord Sharman, are accepted, clearly they will apply to any PPP. At this stage I cannot prejudge either the outcome of the review or the Government's response. However, I hope that the noble Earl will accept that we wish to ensure that that information is placed in the public domain.

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