HC Deb 07 June 1989 vol 154 cc214-5
5. Mr. Michael Brown

To ask the Secretary of State for Scotland if he will make a statement on progress on competitive tendering in the Health Service in Scotland; and if he will make a statement.

Mr. Michael Forsyth

Since the last general election, savings from competitive tendering have increased from £600,000 to £25 million on 74 contracts. That represents substantial additional resources for patient care in Scotland's health service over the next three to four years. Boards will continue to make progress in both the scope and range of services to put to competitive tender and are much encouraged by their success to date.

Mr. Brown

Bearing in mind the Opposition's attitude to competitive tendering, is it not the case that they would be prepared to deny £25 million of additional resources for patient care in Scotland? Is not that £25 million of extra care the direct result of my hon. Friend's decisions?

Mr. Forsyth

Yes, my hon. Friend is correct. Boards can use savings for direct patient care. The resources released so far could buy more than 2,000 kidney dialysis machines, or pay for 8,000 hip replacement operations or about 4,000 heart bypass operations.

Mr. Dewar

indicated dissent.

Mr. Forsyth

The shadow Secretary of State for Scotland scoffs, but he was among those who indulged in disruption to prevent competitive tendering and saw 3,500 operations cancelled in Scotland.

Dr. Reid

What instructions has the Minister issued to Scottish health boards about value added tax for the purposes of competitive tendering? Is he aware of the Treasury circular of August 1988 which lays down specific guidelines on the conditions under which VAT may be refunded to health authorities when it is incurred in putting work out to private tender? Why has that circular been ignored, and why have health boards been advised instead that the matter is under review? Is it not because strict compliance with Treasury conditions would reveal that much of the savings that the Minister boasts about are bogus?

Mr. Forsyth

VAT policy is a matter for my right hon. Friend the Chancellor of the Exchequer. I am aware of the circular, with which health boards are complying. They are asked to disregard VAT when evaluating in-house contracts as compared with those of private enterprise. However, the hon. Gentleman's analysis of the situation is incorrect. Three-quarters of the contracts awarded, and the bulk of the savings, have been achieved as a result of in-house tenders being accepted on which VAT was never levied. When making a comparison between in-house and private sector tenders, VAT is disregarded because it is a receipt to the Exchequer. The key point is that savings are made to the public purse as a whole.

Mr. Galbraith

Why is the Minister conniving with the likes of the Scottish National party through competitive tendering in Tayside to sack some of the lowest-paid workers in Scotland? Is it not the case that competitive tendering in the National Health Service is subject to some extremely dubious accounting practices in which many costs to the private contractor are hidden, to the disadvantage of the in-house tender? Does the Minister agree that it is time that we had a full investigation into accounting practices and competitive tendering in the National Health Service and that until that is complete we should halt further competitive tendering within the National Health Service?

Mr. Forsyth

The hon. Gentleman's previous position was that there were no savings to be made. Now that savings of £25 million have been made, we are getting bluster. As for conniving with the SNP to make people redundant, the hon. Gentleman will be aware that three quarters of the contracts in the Health Service are the result of successful in-house bids. When people have been made redundant, they have received redundancy payments and many have been re-employed by the private sector. The public interest demands that the best possible value for money be obtained. The hon. Gentleman should look to the conduct of his colleagues in Lothian where, as a matter of political prejudice and ideology, the Labour party has put the ratepayers' interests second.

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