HC Deb 12 February 1985 vol 73 cc169-76 3.36 pm
The Secretary of State for Wales (Mr. Nicholas Edwards)

With permission, Mr. Speaker, I wish to make a statement in view of a large number of wild allegations that have been published on the subject of the defects at the University Hospital of Wales, known as the Heath hospital.

The hospital was planned in the 1950s by the board of governors of the United Cardiff Hospitals. Messrs S. W. Milburn and Partners were appointed architects and Messrs W. S. Atkins and Partners engineers in 1961. F. G. Minter and Sons Ltd. were appointed principal contractors for the main works in 1966.

The hospital was constructed between 1966 and 1972. Some faults, mainly arising from work carried out in the period 1966 to 1969, began to become apparent in December 1973 and in 1974. In the meantime, the hospital had been handed over to the Welsh Hospital Board in October 1970 and became the responsibility of the new South Glamorgan area health authority on reorganisation in 1974. The rights and liabilities of the Welsh Hospital Board passed to the Welsh Health Technical Services Organisation at the same time. The architect signed the final certificate in November 1975.

The issue of this certificate was an event of crucial significance, as it precluded claims against the contractors in contract or in tort in respect of defects patent at the time. At that stage, WHTSO took no specific steps to protect its legal position and that of the taxpayer. Counsel notes that the AHA and WHTSO had become much concerned with the state of the concrete by 1976. In February 1977, a general property survey by the South Glamorgan health authority also led to concern at the condition of the mosaic cladding. WHTSO commissioned Ove Arup and Partners to carry out a survey. While that report was awaited, the only legal action that was in hand was the defence by WHTSO of a claim by F. G. Minter Ltd. and subcontractors Drake and Scull Ltd., who were seeking to recover finance charges under the terms of their building agreements. Consideration was given to the inclusion of the mosaic defects as a counter-claim against Minters' finance charges claim, but counsel advised in July 1977 that such a counter-claim could not be sustained. Under the traditional conventions, which have been strictly observed, I have no means of knowing what consideration my predecessors gave to the problem of the Heath, but I have been informed that no other legal action was taken before 1979 to protect the interests of the taxpayer.

Ove Arup's first report was received in November 1978, and having reported defects in the concrete during the course of its mosaic study it was further commissioned to carry out remedial and survey work on the concrete. The full extent of the mosaic defects having now been clearly identified, WHTSO commissioned Bickerdike Allen Partners in January 1979 to advise, and they reported in April 1979.

That report identified for the first time a possible claim against the architects. The first reference to counsel was on 12 July 1979 when, among other matters, the question of limitations was considered. Following that meeting with counsel, Bickerdike Allen prepared a further report that was received in November 1979 and was concerned with responsibilities and liabilities. Meanwhile, counsel had been instructed in October to settle a draft writ and statement of claim against the Milburn partnership, and in the instruction to counsel the need for urgency was emphasised. Counsel settled notices of arbitration and an endorsement for the writ by telex on 17 December 1979 and the writ issued the same day.

Allegations have been made that the writ was out of time. The limitation period for a claim in contract was and is 12 years and the writ was clearly in time in that respect. The limitation period for a claim in negligence was and is six years. At the time of issue of the writ, that six-year period was regarded as running from the date when damage was discovered or was reasonably discoverable by the plaintiff, and on that basis the writ was in time for the claim in negligence also. The Pirelli decision of December 1982 moved the commencement of the six-year period back in time to the date of occurrence of damage, regardless of the date of discovery, and on that basis the claim in negligence would have failed if it had been pursued.

I turn now to the outcome of the legal action, details of which were given on 6 February in an answer to my hon. Friend the Member for Cardiff, Central (Mr. Grist). I shall deal with the allegation that there has been some kind of cover-up and the suggestion that in settling the action at about £300,000 the taxpayer has been negligently left with a liability for work costing £4 million—or, as is further alleged, as much as £8 million. The total cost of remedial works is about £4 million, of which about £2.8 million is attributable to structural defects other than the mosaic cladding. The Department's accounting officer reported to the PAC as long ago as 14 November 1983 counsel's advice that legal action about that should not be pursued. He had previously been cross-examined in some detail about this matter by the PAC on 17 March 1982.

The settlement that was finally reached on the mosaics will be published in the summary accounts of health authorities to be laid before the House of Commons as a paper. It was always the position that the Department's accounting officer would provide the PAC with any further information that it requires. There has therefore been no cover-up; nor, indeed could there have been. But in view of the outrageous and serious allegations that have been made on this subject, I have made available to the House the fullest possible information.

I turn now to the relationship between the Secretary of State and WHTSO—[Interruption.]

Mr. Speaker

Order. This is an important statement for those in Wales.

Mr. Edwards

I have been pressed by the Opposition to make a statement in reply to serious allegations.

The WHTSO is a special health authority established under the Health Service Acts. It is entitled in the conduct of litigation to act as a principal. It is not required to seek my approval to settlements of legal actions in which it may be engaged. It is normal for health authorities to engage in litigation and to reach settlements without reference to Ministers. But given the public and parliamentary interest in this case and the particular terms of the non-disclosure clause, I think that it would have been better had I personally been informed, particularly since one of my officials was a member of the WHTSO board. I regret that this was not done; and I am sure that, in these exceptional circumstances, I was right immediately to arrange that the fullest information should be given to Parliament.

I will deal with the suggestion that the cost of putting right the defects at the University Hospital of Wales may amount to as much as £8 million. As the House was told in answer to a parliamentary question on 1 February, the total cost of the remedial work is expected to amount to as little as under £4 million. The fullest possible information has, again, been given to the PAC. I regret that the hon. Member for Pontypool, who has been responsible for most of the wilder allegations, did not at any time check the facts with my Department.

I have had to answer this afternoon for events involving a hospital conceived in the 1940s, planned in the 1950s and built largely in the 1960s, before I entered the House. I have had to report on the absence of any protective legal measures during the whole period of the last Labour Government, on the outcome of complex legal actions that were initiated very soon after we came to office and on measures to repair damage that will be a burden on the health service for several years to come. I shall accept such responsibility as is mine. I trust that others will accept theirs.

Mr. Barry Jones (Alyn and Deeside)

The right hon. Gentleman referred to the hon. Member for Pontypool. There is no such Member, and to that extent his statement was inaccurate. He was, in fact, referring to my hon. Friend the Member for Torfaen (Mr. Abse).

Is it not a fact that the right hon. Gentleman has been forced to make this statement because of the tenacious campaign of my hon. Friend the Member for Torfaen and because a South Wales Echo journalist, Mr. Tindle, made a prudent inquiry?

Is it not a fact that the Welsh health technical services organisation, WHTSO, struck a secret deal with the architects and engineers responsible for major defects at Wales's premier hospital, and that a settlement was reached last February? Amazingly, the terms of the settlement were to remain confidential between the parties and their legal advisers. The settlement sum was derisory. The cost of repairs is prohibitive.

Is it not a fact that a board member of the technical services organisation happens to be one of the right hon. Gentleman's right-hand men— [Interruption.]—and that that senior civil servant, an assistant secretary, was a signatory to the secret deal? In relation to one of the Secretary of State's most senior advisers, could it be possible that before, and since, the secret deal, at least over a period of 11 months, the matter was not mentioned once? This technical organisation is supposed to give value for money, one of the right hon. Gentleman's objectives.

May we be told when, in his crucial first six months in office—crucial from the legal point of view—the right hon. Gentleman met the technical services organisation and discussed the hospital's problems? If he did not meet his technical advisers, why did he not do so, considering that an important issue was being dealt with? It affected the capital building programme of Wales's hospital network.

Will the right hon. Gentleman publish the findings of his internal inquiry into the technical services organisation? Does the right hon. Gentleman agree that his Permanent Secretary has stated that the technical services organisation is a special health authority answerable in the same terms as any other health authority?

The right hon. Gentleman told me that £4 million was the cost of remedial works. Has he omitted to include the cost—£1.8 million at 1981 prices—of restoring the flat roofs?

The right hon. Gentleman yesterday mentioned Bangor. Has he issued writs against the construction company that built the nurses' home, which has major problems? Is the IDC construction company the company that built the nurses' home? What is the scale of moneys that the right hon. Gentleman seeks as compensation?

Fundamentally, this issue spotlights the right hon. Gentleman's ministerial responsibility and his control over his Department. We think that he has failed abjectly. Why have we had to drag the information out of him? Is it not a sad spectacle to see the right hon. Gentleman saying that the technical services organisation is independent of him when it is directly responsible to him? Did not the right hon. Gentleman have seven valuable months in which to save Welsh taxpayers millions of pounds? It is pathetic of him to hide behind his ministerial predecessors—former Welsh Office Ministers who always face up to their responsibilities because they have nothing to be ashamed of. Does the right hon. Gentleman not recollect the Crichel Down case?

The right hon. Gentleman has been seen to have a feeble and faulty grip of affairs. He should go away and consider his position. The people of Wales have already lost confidence in him.

Mr. Edwards

Almost all the allegations made by the hon. Member for Torfaen (Mr. Abse) have been proved false and were dealt with in detail in my statement. The information was not confined to the legal advisers, and there was no secret deal. Indeed, it was WHTSO that inserted into the agreement the disclosure clause that ensured that the information would be provided to Parliament through the Public Accounts Committee, as is normal practice for confidential agreements of this kind. I repeat that there was no secret deal. The information would have been provided to the Public Accounts Committee, and indeed the summary of the financial settlement will appear in the normal course of events in a House of Commons paper that will appear in the next few weeks.

The hon. Member for Alyn and Deeside (Mr. Jones) inquired about the time scale on which legal action was taken. Legal action was initiated as a matter of urgency within weeks of this Conservative Government having come into their place. The hon. Gentleman asked me whether I was involved in the discussions of that settlement. I was indeed fully informed about the early stages of this matter which led up to the decision that we could not proceed with the claim for £3 million of the £4 million at issue, on the advice of counsel. The reasons for that have already been given to the Public Accounts Committee.

I was also involved in the decisions that led up to the renovation programme for the hospital. I can confirm that the cost of the programme is £4 million, and not more, as has been alleged, including the work on the roof. I confirm that writs have been issued in respect of the Bangor hospital.

The hon. Gentleman talks about control of the Department. I have to point out that legal action was initiated within weeks of the Government coming into office and was followed through energetically. No legal action at all was taken by WHTSO to protect its position in 1975 when the hon. Gentleman was responsible for the Health Service in Wales and when his right hon. and learned Friend the Member for Aberavon (Mr. Morris) was Secretary of State, and no legal action was taken to protect the position of the taxpayer for the five years between 1975 and their going out of office.

Sir Raymond Gower (Vale of Glamorgan)

Although it is true that this catalogue and history of disaster appears to have continued for two decades and during the terms in office of several Governments, are there not some signs that the earliest opportunity for effective remedial action might have occurred during the time of the Labour Government?

Mr. Edwards

The undoubtedly crucial event was the issuing of the architect's certificate in November 1975. Counsel has made it clear in his opinion, which is in the Library, that WHTSO could have taken action at that time to protect itself and the taxpayer, and that it failed to do so. It might have had good reasons for doing so, but I cannot tell at this stage because I have no access to the papers of my predecessor. That was undoubtedly a crucial event and it is also undoubted that serious defects were known from 1977 onwards and no effective legal action was taken until we came to power, when a meeting was held with counsel. Action was initiated in July 1979 onwards.

Mr. Leo Abse (Torfaen)

As the Secretary of State regrets that I did not communicate with him when I could have had all of the information that I required, does he recall that, in May 1983, I tabled a parliamentary question asking him to give information about the surveyor's report of Ove Arup? He refused to do so because litigation was pending. As he refused to give information, how can he now complain that, until I and the South Wales Echo and the rest of the Welsh press prised the matter open, this secret deal was kept under wraps? Is it not clear from the right hon. Gentleman's statement that his passion, which is shared by the rest of the Government, for secrecy is now superseded by zeal for obfuscation? Having failed to put all the responsibility on civil servants, as he shamelessly did originally, he is now attempting, in the most convoluted manner, to persuade the House that some past Labour Administration was responsible, when he well knows that it was his own folly, neglect and lack of monitoring that led to millions of pounds being lost by taxpayers in Wales.

Mr. Edwards

When the hon. Gentleman tabled his first question, as he said, litigation was pending and information was not given to him for that reason. Of the £4 million, £3 million has already been accounted for fully to the Public Accounts Committee, and the accounting officer has been examined in detail on all aspects of this matter, giving details of the amounts and of legal opinions. The legal opinions have now been published. It will be clear to anyone who studies them that I was not responsible for any failure. Furthermore, it is quite clear that every proper legal step to pursue the matter was taken from the moment that the Government came to power. It is also clear that the £1 million that remained outstanding and which was involved in the settlement, would have been reported in detail to the Public Accounts Committee in the normal course of events. Indeed, the settlement provided that it should be.

Several Hon. Members

rose—

Mr. Speaker

Order. I remind the House that there are two other statements and that we have a full day before us. I propose to call those hon. Members who were not called at Question Time yesterday when this matter was discussed.

Mr. Gwilym Jones (Cardiff, North)

I am grateful to my right hon. Friend for making a statement. The hospital is in my constituency and the matter is of great concern in Cardiff. Since the news of the settlement came out, what approaches were made to my right hon. Friend or his office by the hon. Member for Torfaen (Mr. Abse) before he made allegations of a cover-up by my right hon. Friend? Does my right hon. Friend agree that those allegations have so obscured the pursuit of the heart of the matter that they ought to be considered in a full public inquiry by the Select Committee on Welsh Affairs?

Mr. Edwards

I would welcome any investigation by the Select Committee on Welsh Affairs. My hon. Friend is right. No approach was made by the hon. Member for Torfaen (Mr. Abse). There is no doubt that, in the circumstances that have arisen, I have given fuller disclosure to the House than has probably ever been given about a commercial contract of this type. I thought that it was absolutely right to give the fullest possible information to the House. That is why I made the statement today, and why I have laid so much information in the Library.

Mr. Alex Carlile (Montgomery)

As the Secretary of State claims that all possible legal steps were taken as soon as the Conservative Government took office in 1979, will he please explain to the House why no writ was issued as soon as the Conservative Government took office, and why there was a delay from May to December 1979 before legal proceedings were started when his legal advisers should have known well that it was essential to issue a writ as soon as possible?

Mr. Edwards

On the basis of the law at the time, the writ was in time both at the time of its issue and now. The limitation period ran from the time when damage was discovered or was reasonably discoverable, which was the receipt of a letter on 18 December. The law as to the limitation before the Pirelli case was the decision in the Sparham Souter case, referred to in counsel's opinion on 5 March 1982. The Pirelli decision moved the start of the limitation period back in time to the date when damage occurred, regardless of when it was discovered. The writ was out of time as regards the claim of negligence after the issue of the Pirelli decision, but the writ has always been in time for the claim based on breach of contract, and it still is.

Mr. Donald Anderson (Swansea, East)

Cannot the Secretary of State see the contradiction between alleging in his own defence that WHTSO is an independent agency, and blaming my right hon. and learned Friend the Member for Aberavon (Mr. Morris) for his deficiencies during his period of office? Has he not admitted that he first heard of this settlement by reading the South Wales Echo, which clearly shows gross mismanagement of his Department? Are there any other contracts to his knowledge with these non-disclosure clauses?

Mr. Edwards

No, it is not I who seeks to have this absurdly tight control over a health authority in the settlement of these matters. It is perfectly right that health authorities should negotiate the best possible terms, and I would not have sought to overrule their judgment, which was perfectly correct in the nature of the settlement. The only fault they made was in entering into a clause involving parliamentary disclosure, without consulting Ministers about the way in which that parliamentary disclosure should be made. Opposition Members are arguing that there should be the tightest possible control on WHTSO and that it should be run, as indeed it frequently was by my predecessors, in the tightest possible way. Yet although they ran it in that way, they apparently did not know about these matters or, at least, did not take steps to ensure that effective legal action was taken.

Mrs. Ann Clwyd (Cynon Valley)

Does not the failure of the Secretary of State for Wales and the Welsh Office show a basic flaw in the reorganisation of the NHS in 1974? I was a member of the Welsh Hospital Board which started an investigation into this matter, but we were abolished by the Conservative Government, and the powers for the Health Service were taken over by the Welsh Office. Does not that failure by the right hon. Gentleman's Office underline, as we have always claimed, that the reorganisation was basically undemocratic and that the Welsh Office simply cannot exercise day-to-day control over the running of the Health Service in Wales?

Mr. Edwards

I think that when the hon. Lady studies the papers she will find that it was not the Welsh Office. Certainly I have no reason to think that WHTSO was necessarily responsible for a failure to recover. We have a story of a hospital first planned in the 1950s by local hospital boards, carried towards completion under the hospital board, of which the hon. Lady was a member, and taken over under the new organisation. The hospital was planned over a long period. There are lessons to be learnt about the general management of such capital programmes. Indeed, it was exactly about that subject that I made my maiden speech in 1970. The hon. Lady is quite wrong to conclude that the failure to recover and the loss that was incurred were the fault of the reorganisation of the Health Service. It was quite the contrary.

Mr. Donald Coleman (Neath)

You will be aware, Mr. Speaker, of the exchanges in the House earlier this afternoon about the withholding of information from the House. Will the Secretary of State, in addition to referring this matter to the Public Accounts Committee, invite the Chairman of the Select Committee on Welsh Affairs to carry out an in-depth investigation into this matter?

Mr. Edwards

I should find it hard to discover anything in common between this case and the other case that was referred to. The complaint in this case is that my official did not keep me informed about a matter, which I have since revealed in full to the House. I should certainly welcome any further investigation which the Welsh Affairs Select Committee chooses to make.

Mr. Alan Williams (Swansea, West)

Is it not remarkable and unbelievable for the Secretary of State, who is responsible for hospital services in Wales, to tell the House that, having been informed that negotiations about the £4 million deficit in a major hospital in Wales were in hand, he never bothered to establish their outcome in the next four and a half years? Does he recognise that it is no good coming to the House and saying that his officials should have informed him about the matter? Is it not a fact that virtually a year after the settlement he knew nothing of it until he read about it in the South Wales Echo last week? Does he recognise that on those considerations alone he is guilty of incredible incompetence? Is he further aware that the attempted cover-up that followed was made even more serious by the fact that a term of the settlement could, as you ruled, Mr. Speaker, have been a contempt of the House, had it been enforced? Finally, does he realise that the revelations of the past 10 days have left the clear impression in Wales of a Cabinet Minister who not only does not know what his Department is doing, but does not even try to find out?

Mr. Edwards

The right hon. Gentleman is wrong in almost every respect. I have already said that not only was I fully aware, but a full report had been given to the Public Accounts Committee of £3 million of this matter. The detailed clauses of the settlement were not disclosed to me. It was an error of judgment not to tell me of the particular disclosure clause. That was a matter about which Ministers should have been consulted. There was no attempt at a cover-up — indeed, WHTSO took specific action to ensure that provision for full disclosure to the PAC was included in the terms of the settlement. I believe that I am right in saying that it is for the PAC to decide whether it sits in camera and whether it accepts that the information given to it is confidential. Therefore, in my judgment this particular settlement could not have kept information from Parliament because the PAC could, if it had wished, have published all the information that it received.