HC Deb 24 April 1996 vol 276 cc544-62

'.—(1) This Act does not apply to any liability in excess of £5 million incurred after the Act is passed unless the conditions referred to in subsection (2) are fulfilled.

(2) The conditions referred to in subsection (1) above are—

  1. (a) the agreement of the Secretary of State and the consent of the Treasury were obtained before the liability was incurred, and
  2. (b) a statement has been laid before Parliament by the Secretary of State setting out the terms of agreement and the consent referred to in paragraph (a) above.'.—[Mr. Barron.]

Brought up, and read the First time.

10.50 pm
Mr. Kevin Barron (Rother Valley)

I beg to move, That the clause be read a Second time.

New clause 1 is about giving back to Parliament the right to scrutinise and monitor decisions relating to the national health service, as they might mean a call on the public purse. It would ensure that the Executive, in the form of the Secretary of State for Health, and the Exchequer must approve the borrowing. It would also provide that the House be informed that new liabilities have been approved and will be incurred. Neither of those checks applies to existing liabilities; the new clause seeks to place them on any future liabilities below the sum of £5 million. It is constructive and designed to strengthen the Bill.

Hon. Members who missed the Bill's Second Reading might wonder why we have tabled the new clause. We believe that it is not right or proper that the Executive should effectively let people in various outposts of the now fragmented national health service take decisions about public borrowing that has been okayed neither by the Executive in Whitehall nor by the House.

Our case is that, currently, anything up to £5 billion could be borrowed by a national health service trust without statutory protection and without any proper Executive approval or parliamentary scrutiny. It is a unique condition that public liabilities are incurred entirely without public approval or knowledge. We want that changed.

The new clause would guarantee parliamentary scrutiny and ensure that borrowing by NHS bodies was approved in advance by the Secretary of State. It is a straightforward measure that the Government should have thought of but, instead of considering carefully what the Bill proposed, Ministers have stumbled blindly to this point. They have been blinded by their desperate desire to revive the private finance initiative in the health service, which is in a state of chaos.

Mr. Mike Gapes (Ilford, South)

Is my hon. Friend aware of concerns expressed to me only last week by my local health authority about the implications of the private finance initiative for the long-term status of health authorities? Can he assure us that, when there is a change of Government, steps will be taken to resolve the problem?

Mr. Barron

We are prepared to give the assurance that the private finance initiative will not take over clinical practice in the national health service or influence decisions that should be taken by clinicians who are in the NHS for the public good rather than for other purposes, as the PFI players will be.

The whole purpose of the Bill is to gold-plate the private finance initiative in the health service. Since their opening remarks on Second Reading, Ministers have stopped pretending that the Bill has any other purpose than effectively to underwrite liabilities that we thought were quite the right type of risk to go with the benefits that the private sector receives. Our new clause would bring back what the Government are intent on giving away. It would ensure that the Secretary of State holds himself accountable for his current manipulation of the PFI rules and the constant change that is taking place under them.

It cannot be right that health service bodies can borrow against a blanket guarantee from the Secretary of State without the Secretary of State's having to approve such liabilities as and when they are incurred. It also cannot be right that no Minister will be responsible to Parliament for sanctioning such borrowing as and when it occurs, and that the Treasury will be left paying the private sector's bills without ever having agreed to do so.

The Under-Secretary of State for Health, the hon. Member for Orpington (Mr. Horam), tried to claim in Committee that, by approving external financing limits, Ministers will approve new liabilities. It is our contention that that is wrong. What the Under-Secretary claims counts as proper parliamentary accountability is in fact some vague approval of health service bodies' hypothetical ability to consider using borrowed money. They are hardly the tightly defined measures that our new clause proposes.

It is equally important that the Under-Secretary's alternative does not represent proper parliamentary scrutiny. It certainly does not offer the openness and accountability that we want. The Under-Secretary has an obligation to explain where that openness and accountability will be found in his PFI support system. When and through what mechanisms can Parliament scrutinise the cheques that will be written to PFI contractors? How can Parliament hold the Secretary of State to account for agreeing to underwrite private contractors' returns for, in some instances, as much as 60 or 70 years into the future?

As we understand it, contracts of that length are running at the moment. What does that mean for change in the health service, as has occurred in the past 20 or 30 years, new medical practice and new science that is now taken on board practically every day? We are not too sure whether we are disagreeing with a straitjacket not only on public liability but on the flexibility that the health service needs to be able to change and to deliver increasingly better health care for years to come.

What is the device for limiting the level of exposure of the public purse to those gold-plated risks in the health PFI? We recognise that the Government have made a mess of investment in the national health service owing to their incompetent handling of the PFI, but is it right that they should ask Parliament to dig them out of the mire by passing the Bill and, in doing so, keep all of us in Parliament, including Conservative Members, in the dark about decisions that will be taken on our local health services in years to come?

We want parliamentary scrutiny of the private sector's involvement in the national health service. We want the secret system surrounding health service borrowing from the private sector—including the amounts of money, the terms of repayment, and the lengths of deals—made much more transparent than it is in the current chaos. Our new clause delivers scrutiny, accountability and openness, and I commend it to the House.

The Parliamentary Under-Secretary of State for Health (Mr. John Horam)

The new clause returns to the issue that we discussed at some length in Committee and relates to the scrutiny and control of hospital trust borrowing and liabilities by the Government and the House. The hon. Member for Rother Valley (Mr. Barron) will recall that he tabled an amendment in Committee to increase scrutiny and control by the procedures that are repeated in the new clause. He will recall that my objection to his amendment in Committee was that it would bring about a huge increase in bureaucracy.

He is asking that not only a contract that is part of the PFI, but every contract—including a supply contract, for example—should be brought before the House, and agreed by the Secretary of State for Health, by the Treasury, and, ultimately, by Parliament. The hon. Gentleman agreed, on reflection, that his amendment was not entirely sensible because it would require my right hon. Friend the Secretary of State to spend his entire time signing bits of paper. If the amendment had been intended to disrupt the sensible working of the health service, it would have been effective.

Mr. Barron

Who takes the decisions now about public expenditure in the health service? To whom is he accountable?

11 pm

Mr. Horam

It is obvious that my right hon. Friend the Secretary of State takes those decisions. The hon. Gentleman's comment is ludicrous. His amendment, which he wisely withdrew on reflection, would have obliged my right hon. Friend to sign every contract and to look at every liability incurred by any trust. One can imagine what would have happened. The hon. Gentleman would have built up a huge, bureaucratic nightmare. Anyway, he has since seen sense.

Mr. Nigel Spearing (Newham, South)

Will the Minister give way?

Mr. Horam

No, because I would like to carry on.

The hon. Member for Rother Valley has seen sense and we now have a new clause that limits the damage to £5 million. He is willing to let through anything below that bottom line. Even with that quite high limit, the new clause would involve extra regulation. That is interesting, in view of the fact that the Labour leader, the right hon. Member for Sedgefield (Mr. Blair), pointed out only this week that the Labour party is now the party of deregulation.

This evening, the hon. Member for Rother Valley and his hon. Friends are proposing extra regulation. They have not quite caught up with up the mood that has been evident in their party this week. The mood may change next week, but this week it is for deregulation—although we now have a proposal for extra regulation. Week by week, Labour changes. We would like a little consistency from Labour Members.

The new clause would involve extra regulation. We are not simply talking about the PFI. As I have already told the hon. Gentleman, if the new clause were accepted, it would affect not only PFI contracts and liabilities incurred under them, but supplies. For example, if the NHS supplies authority had a contract to supply bandages to an NHS trust, that contract would be covered by the new clause. In effect, the Secretary of State, the Treasury and Parliament would have to look into every contract for bandages involving national health service trusts. That is the nonsense proposed by the hon. Gentleman. It shows clearly—

Mr. Kevin Hughes (Doncaster, North)

Will the Minister give way?

Mr. Horam

No. It is late and the hon. Gentleman should have made his points in Committee or on Second Reading.

The new clause is regulatory when we are trying to deregulate—I thought that the hon. Member for Rother Valley was also trying to deregulate—and it would affect everything, not just the PFI, which I thought was its object.

Mr. Hughes

Will the Minister give way?

Mr. Horam


The new clause would centralise. Trusts have the freedom and ability to run their own business. The hon. Gentleman seeks to bring all control back to the House of Commons, to the Treasury and to the Secretary of State for Health, in a heavily centralised way. The new clause is regulatory, heavy-handed and bureaucratic.

Mr. Hugh Bayley (York)

Will the Minister give way?

Mr. Horam


The new clause would also add further delay. If all the relevant contracts had to go through the suggested procedure, the decision-making process would be lengthened, so there would be additional delay. Most important—

Mr. Kevin Hughes

Will the Minister give way?

Mr. Horam

All right. I shall give way to the hon. Gentleman.

Mr. Hughes

I want to go back a few sentences. The Minister mentioned the effect that the new clause would have on supply contracts. What would the residual liabilities on, for example, the sale of bandages be? The Minister made quite a point about that.

Mr. Horam

The whole point of the Bill is to ensure that liabilities are recognised by my right hon. Friend. That is the fact of the matter. Liabilities do not occur in that case, so why does the hon. Gentleman support the new clause? No problem arises, so the new clause is unnecessary.

My final point in reply to the hon. Member for Rother Valley is that the new clause—

Mr. Bayley

Will the Minister give way?

Mr. Horam

No, I have already given way once on the point and, frankly, it was a waste of time, so I do not feel that there is any point in giving way again—[Interruption.]

Mr. Bayley


Mr. Deputy Speaker (Mr. Michael Morris)

Order. The hon. Member for York must see that the Minister is not giving way—[HON. MEMBERS: "Why not?"] Order. I certainly do not expect to hear anything from the Whips. If the Minister is not giving way, the hon. Gentleman should resume his seat.

Mr. Horam

The hon. Member for York will recall that he had a very good deal from me in Committee, so he ought not to push his luck now.

The new clause is unnecessary. The controls are perfectly satisfactory as they are, and we spelled them out at some length in Committee. As I pointed out to the hon. Member for Rother Valley more than once, there are the external financing limits, which are agreed at the beginning of the year, and monitored—

Ms Harriet Harman (Peckham)

They are voluntary.

Mr. Horam

They are agreed at the beginning of the year, and then monitored quarterly. If anything is going wrong, it will be spotted quickly by the NHS executive. That is the effective managerial control that is in place, and it is backed by statute.

Ms Harman

It is not.

Mr. Horam

It is backed by statute.

Mr. Barron


Mr. Horam

If the hon. Gentleman reads section 10(2) of the National Health Service and Community Care Act 1990

Ms Harman

indicated dissent.

Mr. Horam

The hon. Lady is wrong. Section 10(2) of the 1990 Act gives my right hon. Friend the power to fix financial controls. [Interruption.] That is the fact of the matter; the hon. Lady is simply wrong. She should ask her researcher to go back and look at it again.

Mr. Clive Betts (Sheffield, Attercliffe)


Mr. Gerry Steinberg (City of Durham)


Mr. Horam

I shall not give way.

The controls that are in place, both managerial and statutory, are perfectly adequate to deal with the situation. The new clause is entirely unnecessary, and I therefore urge the House to reject it.

Mr. Simon Hughes (Southwark and Bermondsey)

The Minister's response has not taken the debate much further. In fairness to the hon. Member for Rother Valley (Mr. Barron), I must say that the question is implicit in the new clause. The £5 million could have been £6 million or £7 million; that is not the fundamental question. The question is: is there a limit on the amount of money that any trust can incur as a liability which, of itself, will force that obligation to be called in to be double-checked?

That is a perfectly proper question, and there are two reasons for asking it, which I offer to the Minister for his slightly more considered reflection. First, the NHS does not have a wonderful reputation for entering into capital commitments that prove to be terribly wise. Plenty of things go wrong, as the Minister may recall.

The litany of things that the NHS has done under the arrangements that the Government have introduced has not always been a happy one. Contracts for the health service in Wales have not been satisfactory; neither have the contracts for computers in the west country, which cost millions of pounds. Nearer to home, and more recently, money has been wasted on contracts for computers in Greenwich. The Minister will be aware of that. There are all sorts of such obligations and implications.

All the money involved is public money, and the bills have all been incurred by trusts. The monitoring system and all the controls—the accounting officers, the external financing limits and so on—have not worked so far. That is the first issue, but let us assume that it will all be dealt with by some method.

We also have a second issue. It is no secret, because the Chancellor of the Exchequer has conceded the fact, that the Government are now clearly seeking to replace public sector expenditure on capital projects in the health service with private expenditure. In this financial year, and thereafter, public expenditure on such projects will go down, and were it not for the private finance initiative there would unarguably be less money spent on the health service than in the previous couple of years.

As I have said to Ministers before, the Government have never obtained parliamentary endorsement for the proposal that we should build 10, 20 or 50 per cent. of our hospitals with private money under the PFI. All the evidence suggests that the PFI is a dubious way forward and not yet a certain and secure one. I guess that the Treasury Committee will come into the next debate if the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) pursues new clauses 2 and 3. It has raised questions about public expenditure.

We are entitled to ask the Minister what figure for incurred liability the Government believe should be authorised by central Government rather than by local, delegated trusts that meet in secret. If not £5 million, is it £10 million, £20 million, £50 million or £100 million? Is there a figure, or are the Government entirely happy with the present regime?

Ms Harman

Is it £5 billion?

Mr. Hughes

As the hon. Lady says, is it £5 billion? Is there a figure sufficiently large that it should be called in automatically? Big planning applications cases are called in by the Secretary of State for the Environment. Big national health service expenditure projects that involve borrowing should be called in and examined centrally.

It would be different if we could attend local hospital trust meetings, hear the debates, see the submissions and elect people to the trusts, but we cannot do any of that. The process is secret and we hear about it later. The Audit Commission or the National Audit Office reports two years later, when it is too late to stop a project that may have gone wrong.

I hope that the Minister understands that there is significant public concern that the mechanisms for accountability, democracy and the assessment of importance are not being dealt with adequately. The Government say that everything is fine because it has worked in the past and no matter how big the liability, they believe that it can be incurred by the present trust structure meeting undemocratically in secret. Many people, and not only Opposition Members, are unhappy with the present regime. The Minister must give a better answer to persuade them than he has given us.

Mr. Sam Galbraith (Strathkelvin and Bearsden)

I thought that the Minister's response was both confusing and more worrying than I had expected. He sought to muddy the waters by introducing the question of payment for bandages. He somehow equated that with the building of a large district general hospital. Although it seems silly to equate the two, one of my problems with the private finance initiative concerns where the dividing line is drawn between when the buying of supplies involves PFI and when it involves normal contractual arrangements. That confusion pervades the Government, too. There is no clear definition of what the PFI is. It is a heterogeneous idea that can involve leasing, building, or running things. The parameters have not yet been clearly drawn. That is part of the problem in discussing it and part of the reasoning behind the new clause.

There are two issues involved in the PFI, which I shall deal with when I come to new clause 2. The main one is about who carries the risk in long-term agreements. Currently, in Scotland, Stonehaven hospital is out for tender under the PFI. Three submissions have been made, one of them by the local trust, yet none has been made public. They are not going to be made public—not even that from the local trust, which is a public body. No one knows how much money is involved, how long the leases will be or anything else.

What liability will the Scottish Office and the Treasury be taking on? What length of time will be involved? Are we to be lumbered with a hospital with a 100-year lease that could be obsolete, but for which we have to accept the residual liabilities and so keep it going against our wishes? How great are the liabilities? It is no good the Minister saying that that would require every contract to brought down here for scrutiny. That is impractical. That is one of the problems of the PFI, and the Government should have thought about that before they got into it.

There must come a dividing line, beyond which value Parliament and the Treasury have to scrutinise a contract. That is the issue. The external financing limit is no good because it can be got round. We do not know whether the EFLs will be breached in the Stonehaven contract.

There must come a point when the Treasury has to say, "We want to know what the liability is here. We want to consider it." Unless the Minister comes up with some answer on that, we are storing up trouble for future Governments.

11.15 pm
Mr. Robert Ainsworth (Coventry, North-East)

It is entirely understandable that the Minister does not want to accept interventions, given the manner with which he dealt with the only one that he accepted—that of my hon. Friend the Member for Doncaster, North (Mr. Hughes). He was attempting to suggest that the intervention was a waste of time, but it exposed the fact that the Minister's answer was not appropriate.

The National Health Service (Residual Liabilities) Bill has nothing to do with bandages, or with over-centralisation or regulation. We are talking about the proper scrutiny of public money. The Minister is attempting to confuse those issues and, therefore, to participate in debate. If that is what he is going to do, he will provoke more hon. Members to intervene to a greater extent. He has a duty to answer properly the point being made in the new clause and in my hon. Friend's intervention.

Mr. Spearing

I would not have sought to catch your eye, Mr. Deputy Speaker, but for the unfortunate discourtesy of the Minister in declining to give way to the second intervention of the debate. For reasons that you will know of, Mr. Deputy Speaker, I do not think that we can put the origin of such discourtesy on the institute of higher education that the Minister happened to attend, so I must look for some other explanation. I suspect that it is the weakness of his case. With due courtesy, perhaps I can test that out.

The Minister said that the new clause was unnecessary regulation and that there were proper scrutiny, audit procedures and this, that and the other. In other words, "Don't worry, it's all right, it's been dealt with." I shall put an actual case to the Minister and ask him, if he catches your eye to reply, Mr. Deputy Speaker, to confirm or deny the scenario.

In the Newham Healthcare NHS trust area, an old hospital is about to close—St. Andrew's, Bromley-by-Bow. Its facilities—alas, lacking 24 beds—will be rebuilt or built into the existing Newham general hospital. It may cost about £20 million or £25 million and the trust has been told that the money will not be available from health service or Government sources, as it used to be, but will have to first be considered under the private finance initiative.

I understand that that is a long procedure. One has to produce a scheme, put something out to tender, get banks, insurance organisations and perhaps even European institutions to say whether they will plan, build and take responsibility to some extent for running the newly built part of Newham general hospital. The anxious people of Newham and I have been told that it is going to be a lengthy process and, even at the end of it, there will be no guarantee that such PFI money is available.

Let us suppose that it might be. I suggest to the Minister that the money that is available, might be at a cost premium compared with that from Treasury or other sources. Of course, we will not necessarily know that—or will we? The terms of the PFI may or may not be made public. So my first question is that of transparency.

Let us suppose that the terms are made public and, at some stage, there is a public liability. Clearly, if the Newham Healthcare trust is changed—as it might well be if, alas, the present Administration continue and there is some change in the status of such trusts—some liability may be placed on the Minister. Something might go wrong. The hospital might have to stay. There will be a liability in respect of the money that has been contracted.

What will happen then? I assume that the amount of liability will not be known unless there is an audit in the Treasury or in the Department of Health; that it will not have been approved openly by the House; and, as the Minister mentioned, that every single contract of liability—such as that contained in the new clause—may not be practical.

Surely liabilities for large construction—such as that at Newham—should be made open to the taxpayers of Newham, to the taxpayers of London and to the representatives of the taxpayers in the House. The Minister has not given any reasons why that should not be so. If he cannot openly and clearly show us why that should not be the case, his discourtesy lies with the weakness of his case rather than any defect of his education or his personality and character, which some of us have known for some years.

Mr. Betts

My hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) was correct: the Minister did not answer the questions about how public scrutiny can be exercised over non-elected people who are appointed to these boards in advance of long-term commitments. That is absolutely crucial. If any hon. Member tries to ask questions of any Government Department about the private finance initiative, as soon as they get to the issue of individual schemes and projects, they are told that it is commercial confidentiality and that it cannot release the information because it would breach confidentiality with the contractors with whom they are negotiating and with whom they are entering into contracts.

We can see some of the difficulties over intellectual property rights in these schemes, particularly when contractors have been asked to come up with new ways of doing things. The new clause provides a way of having accountability to elected representatives so that non-elected people cannot commit public funds for the future without any public control. That is a simple point, and the Minister has not answered it.

I understand that the Department of Health has instituted a registration scheme for PFI and other projects. This came out of the evidence given to the Treasury Select Committee by Treasury officials. They pointed out that work had been done to various Departments and the Department of Health had instituted a registration scheme whereby hospital trusts were invited to give details of projects that they had entered into. It was also revealed that the registration scheme was voluntary—that trusts are not compelled to give notice to the Department of the schemes that they are entering.

If the Minister cannot accept that he and his colleagues should be approving schemes costing over £5 million, he should accept that the trusts should give him notice and that the schemes should be registered. In addition, the registration scheme should be made public so that everyone can see what future commitments are being entered into. The Minister must address that issue.

The Minister was in danger of misleading the House on another issue. He mentioned external financing limits and said that they are mechanisms for control. Has the Minister thought to ask himself how many years ahead we have EFLs for? There are commitments in the Red Book for a number of years ahead. How long are trusts committing public expenditure for by entering into PFI schemes? For far longer ahead than the Government have agreed EFLs for.

There are no control mechanisms, there are no monitoring levels and there are no real controls of public expenditure against which trusts are committing future expenditure. The Minister says that they can do that without public control and scrutiny or democratic accountability. Perhaps the Minister would like to come back to the EFL point, because I think he was in danger of misleading the House.

Mr. Deputy Speaker

Order. That is not the case on this amendment—maybe the next one.

Mr. Betts

I am sure that at some stage the Minister would want to address hon. Members on whether he has misled the House on that very important political point. Finally, I shall do a comparison with the way that the Government control local authority borrowing. We are talking about non-elected bodies committing public expenditure, and we are asking for some control by Ministers.

Every pound that local authorities borrow is controlled by central Government by general approvals or, in many cases—increasingly—by specific credit approvals for individual projects. Even when local authorities spend their own capital receipts, they are controlled.

Mr. Deputy Speaker

Order. The hon. Gentleman's knowledge of local authorities is extensive, but I should be grateful if he would restrict it for the moment to future liabilities as they affect the health service.

Mr. Betts

I was merely drawing attention to the fact that local authorities are democratically elected but are controlled, not merely in capital borrowing but in spending their receipts. We are discussing trusts that are completely unaccountable for the way in which they commit, not millions, but billions of pounds of public money. That is the comparison that we seek to draw.

Opposition Members are fighting for democratic control and proper scrutiny; Ministers do not appear to care about either.

Mr. Steinberg

I also had not intended to speak in the debate, but the Minister's discourtesy in not allowing several interventions forces us to make speeches to make our points. If he had been prepared to answer a simple question in the first place, we should not have had to stand up and speak.

My local health trust, the Dryburn trust, is in the process of accepting a preferred PFI bid. Unlike the experience of some hon. Members with other trusts, I can honestly say that I have had a very good relationship with the trust. I have a good relationship with the chairman, who has kept me informed of what has happened all along the line and freely given me information about all aspects and about bids that have been made.

Recently, I wrote the Minister a letter about the worrying revenue implications of the bid. The bid may possibly mean that the health commission, the purchaser, will have to pay about 11.5 per cent. interest charges over about 30 years. That is a considerable amount of public liability, which the public purse will have to find from taxation, and it is likely that the health commission will be unable to find that money over that period.

I want a response from the Minister. We have waited 15 years for a new district general hospital. Year after year, we were promised public funds with which to build it. In January 1994, the hospital was approved, and then it had to go out to a PFI bid and was delayed until October 1994. Now we are in a contract situation.

Let us suppose that everyone is reasonably satisfied with the PFI bid and that the trust accepts it and goes along to the health commission with the public liability of two or three times the amount of revenue which has to be paid each year to pay for that PFI bid. What will happen to my district general hospital and the PFI bid if the health commission says that it cannot afford to take on that public liability for the next 30 years? What will happen to my hospital? Am I going to get a hospital out of the PFI?

Will the Minister give the people of Durham and my constituents a guarantee that he will make Durham a special case and provide that money for the next 30 years? Or will he tell us, "You will not get the hospital that you have been promised for 15 years. Tough—you have had it"? Or will he say, "Right, I will now look at it in the public sector again and have a public bid"?

I want to know tonight what will happen if Durham County health commission says that it cannot afford that public liability for the next 30 years, which is probably considerably more than would have been spent if the hospital had been built in the public sector.

Mr. Bayley

I shall be brief.

The House has a responsibility to scrutinise and approve Government expenditure. The PFI, put simply, is a hire purchase scheme for the purchase of goods and services. If I may draw a parallel: if I came to the House seeking a Bill in which the law of the land would underwrite the hire purchase agreements that I might enter into should I default on those payments—if the House were minded to enter into such legislation—it would want some control over how many hire purchase agreements I took out, and it would want to assure itself that I would be in a position to meet the payments on those hire purchase agreements.

The amendment asks that the House has control over the expenditure consequences of liabilities incurred by the NHS under the private finance initiative. The Minister has not explained why the Government believe that the House should be denied the opportunity to exercise control over future liabilities that may be incurred if a health service trust enters into a hire purchase agreement that it cannot afford to meet.

Mr. Horam

I shall deal first with the point raised by the hon. Member for York (Mr. Bayley). He levelled the charge that the private finance initiative is a hire purchase agreement. That is not so, because a PFI project must demonstrate that it represents better value for money than a conventional publicly financed alternative. That is the test.

11.30 pm

It must demonstrate value for money in several ways. First, the trust must examine the business case over time and decide whether it will put it to a health commission or health authority. The hon. Member for the City of Durham (Mr. Steinberg) raised that point. The health authority then considers the case and decides whether it is affordable. As the hon. Gentleman is aware from his knowledge of the situation in Durham, every health authority receives a stream of revenue from the NHS Executive. Therefore, the authority must gauge the cost of the two alternatives—one publicly financed and the other privately financed—over the lifetime of the project. It will then reach a decision on that basis. We have not yet reached that point in Durham's case.

Mr. Steinberg

What happens if the health commission says that it cannot afford it?

Mr. Horam

I do not really want to respond to seated interventions. It would depend on which alternative it decides upon after comparing the items of expenditure—one financed publicly and the other privately. It must then decide what it can afford. I am not familiar with the details of the hon. Gentleman's example, but the health authority may decide that it cannot afford either scheme or it may opt for another scheme with fewer consequences for future revenue support. Neither scheme may pass the test.

If the health authority chooses to build a new hospital, for example, it must then decide which of the two schemes put before it is more likely to yield value for money over the next 30 to 60 years. The schemes are not hire purchase agreements in any sense: they compare private finance with public finance and determine best value for money for the public purse.

The second test is affordability—whether a health commission or health authority deems a scheme to be affordable. If it decides that it is not, the project will not proceed—whether it is financed publicly or privately. I hope that the hon. Gentleman understands that point.

Mr. Steinberg

With due respect to the Minister, that is my point. If the health commission says that it cannot afford to fund the PFI bid, my constituents will not get their new hospital, for which they have been waiting for 15 years. I seek a guarantee from the Minister tonight. His predecessor, the hon. Member for Bolton, West (Mr. Sackville), almost gave such a guarantee: he said that, if the PFI bid was unsuccessful, he would consider a public sector bid. If the health commission says that it cannot afford the PFI bid of 11.5 per cent. over 30 years, but it can afford 5 per cent. over 60 years, will the Minister provide a guarantee that the hospital will go ahead with public sector funds?

Mr. Horam

If it could be demonstrated that the public sector project was better value for money than the private sector project, the publicly financed project would be more likely to go ahead. I do not know the particular circumstances of Durham, but the proposal is still under discussion, so I cannot comment. It may be that a satisfactory conclusion will be reached, but the hon. Gentleman will understand that I cannot give him a definite answer. However, I will look into the matter and write to the hon. Gentleman about his particular case. The project is still in negotiation and open for discussion, but I hope that the hon. Gentleman now understands the way it will be decided.

Mr. Betts

Is not the fundamental dilemma that, if a comparison is made between PFI and public sector funding and the PFI is more expensive, a scheme cannot be funded that way? At the same time, if public funding would be cheaper, there is no guarantee that it will be available, because public sector finance has been cut to allow PFI schemes to grow.

Mr. Deputy Speaker

Order. That intervention had absolutely nothing to do with new clause 1.

Mr. Horam

Anyway, whether or not it had anything to do with the new clause—

Mr. Deputy Speaker

Order. Not anyway—the Minister will not respond to that intervention. He should address the new clause.

Mr. Horam

I am duly reprimanded, Mr. Deputy Speaker.

Many Opposition Members questioned the procedure by which schemes will be checked. First, they will have to pass the test of being better value for money than a fully worked out scheme alternatively financed by the public sector. The second test is that, where a full business case is worked out, and if the capital value is more than £10 million, the scheme will be scrutinised by the NHS Executive and the Treasury.

If the value is more than £50 million—the last two schemes were valued at £170 million in the case of Norwich and £70 million in the case of Swindon—the project must go to Ministers. That is the scheduling level with which a scheme must advance side by side. Those are the controls, and there will ultimately be a check by Parliament in the appropriation accounts and the normal Departmental—

Mr. Rhodri Morgan (Cardiff, West)

Will the figures be published?

Mr. Horam

Of course they will be exposed. Normal parliamentary procedures will be available for checking.

Mr. Patrick Thompson (Norwich, North)

My hon. Friend referred to the new Norwich district general hospital, which we hope will be built as soon as possible. Can my hon. Friend say, while remaining in order, what would be the effect of Labour's proposal on the prospects for that hospital?

Mr. Horam

They would cause further delay. When we launched that scheme, we pointed out in the press release that the scheme was being brought forward five years earlier than would have been the case if there had not been a PFI scheme.

Ms Harman

That is not true.

Mr. Horam

It is true.

Mr. Barron

My hon. Friend the Member for Peckham (Ms Harman) has quoted the 1990 press release about the new hospital in Norwich that was put out by the present Chancellor of the Exchequer when he was Secretary of State for Health. What does the Minister mean when he says that the scheme will start earlier? It has been delayed for the last six years.

Mr. Horam

That is not true. If the Norwich scheme had to be in the queue for public financing, as the Opposition wish, it would not be progressing on the time scale that it has. The Opposition would delay schemes year after year. The hon. Member for Southwark and Bermondsey (Mr. Hughes) made the point well, when he read out a long list of conventionally financed schemes that were part of our NHS history, whichever party was in power. They were object lessons in delay, overspending, and so on. The Chelsea and Westminster hospital, and the national library, are examples of publicly financed schemes that got out of control.

There is no magic way to keep publicly financed schemes under way, never mind privately financed schemes. Under any Government, the record of publicly financed schemes is not good. I am sure that the hon. Member for Rother Valley will recognise that fact, because he is honest about such matters.

I contend—we discussed the point in Committee—that one of the points of the PFI is not only for a consortium to build a new project, such as a new hospital, but for it to have the responsibility for maintaining the building thereafter. That is why the PFI will bring us the possibility of greater—not less—control over the revenue consequences to public funds in the future. That is the reality.

Mr. Simon Hughes

That may be the reality, but the Minister must concede that all the professional evidence given to the Treasury Select Committee and the evidence given by the Treasury last year is that the case is not yet proved. The theory is that the PFI will do that, but the danger is that it will take us one step further away from control over that consortium of builders, which is a profit-making organisation. The danger is that the consortium will put its prices up and will make even more profit at the expense of the taxpayer and the NHS.

Mr. Horam

The organisation involved will not profit more, because no privately financed scheme will be agreed unless it is better value for money than a publicly financed scheme. I agree with the hon. Gentleman on one point: we cannot forecast the future—we are talking about a theoretical situation—but that is true of any scheme.

Mr. Hughes

indicated assent.

Mr. Horam

I am glad that the hon. Gentleman agrees. Proper checks are properly written into the legislation. The normal checks are there, including the strong check of monitoring by the NHS Executive. The amendment is therefore unnecessary.

Mr. Barron

We would be happier about the checks if people knew about them. There is no openness in the current situation. Through new clause 1, we seek to bring openness, accountability and scrutiny to the delivery of health care and expenditure by the Department of Health.

I do not intend to go into great detail, but perhaps the Minister will write to me and to other hon. Members to tell us which individual trust holds a contract for bandages worth more than £5 million, as I was intrigued by that comment.

My only other comment on the Minister's speech is that we cannot accept the charge of causing bureaucracy in the national health service from a Government who have created so much bureaucracy in the health service in the past 10 years that most people, including clinicians and managers, would like to see the back of them tomorrow. We do not accept the charge. Our request for accountability, openness and the ability for all Members of Parliament to scrutinise decisions taken by the national health service would cause less than a tenth of the bureaucracy that the Government have forced on the health service.

We cannot see eye to eye with the Government on the new clause. I withdrew it in Committee to give the Minister a chance to consider whether he was prepared to accept what we think is common sense. Given that he is not prepared to do so, I invite hon. Members to join us in the Lobby.

Question put, That the clause stand part of the Bill:—

The House divided: Ayes 127, Noes 174.

Division No. 109] [11.43 pm
Adams, Mrs Irene Harvey, Nick
Ainsworth, Robert (Cov'try NE) Henderson, Doug
Allen, Graham Heppell, John
Anderson, Donald (Swansea E) Hill, Keith (Streatham)
Armstrong, Hilary Hoey, Kate
Barnes, Harry Hoon, Geoffrey
Barron, Kevin Hughes, Kevin (Doncaster N)
Battle, John Hughes, Robert (Aberdeen N)
Bayley, Hugh Hughes, Simon (Southwark)
Beckett, Rt Hon Margaret Hutton, John
Beggs, Roy Illsley, Eric
Bermingham, Gerald Ingram, Adam
Berry, Roger Jenkins, Brian (S. E. Staff)
Betts, Clive Jones, Barry (Alyn and D'side)
Bradley, Keith Jones, Jon Owen (Cardiff C)
Brown, N (N'c'tle upon Tyne E) Jones, Lynne (B'ham S O)
Burden, Richard Jones, Martyn (Clwyd, SW)
Byers, Stephen Jones, Nigel (Cheltenham)
Callaghan, Jim Kennedy, Jane (L'pool Br'dg'n)
Campbell, Mrs Anne (C'bridge) Khabra, Piara S
Campbell, Ronnie (Blyth V) Liddell, Mrs Helen
Clapham, Michael Lloyd, Tony (Stretford)
Clarke, Eric (Midlothian) Llwyd, Elfyn
Clwyd, Mrs Ann Loyden, Eddie
Coffey, Ann Lynne, Ms Liz
Corston, Jean McAvoy, Thomas
Cousins, Jim McCartney, Ian
Darling, Alistair McKelvey, William
Davidson, Ian Mackinlay, Andrew
Dewar, Donald McLeish, Henry
Dowd, Jim Madden, Max
Eastham, Ken Mahon, Alice
Fisher, Mark Marshall, Jim (Leicester, S)
Flynn, Paul Martlew, Eric
Foster, Don (Bath) Maxton, John
Foulkes, George Meale, Alan
Galbraith, Sam Michael, Alun
Gapes, Mike Michie, Bill (Sheffield Heeley)
Godman, Dr Norman A Milburn, Alan
Hall, Mike Miller, Andrew
Hanson, David Moonie, Dr Lewis
Harman, Ms Harriet Morgan, Rhodri
Morley, Elliot Skinner, Dennis
Mudie, George Smith, Chris (Isl'ton S & F'sbury)
Murphy, Paul Smith, Llew (Blaenau Gwent)
O'Brien, William (Normanton) Spearing, Nigel
Pickthall, Colin Spellar, John
Pike, Peter L Squire, Rachel (Dunfermline W)
Pope, Greg Steel, Rt Hon Sir David
Powell, Ray (Ogmore) Steinberg, Gerry
Prentice, Bridget (Lew'm E) Stevenson, George
Prentice, Gordon (Pendle) Sutcliffe, Gerry
Primarolo, Dawn Tipping, Paddy
Purchase, Ken Touhig, Don
Raynsford, Nick Turner, Dennis
Reid, Dr John Wardell, Gareth (Gower)
Rendel, David Wareing, Robert N
Robertson, George (Hamilton) Watson, Mike
Robinson, Geoffrey (Co'try NW) Wicks, Malcolm
Roche, Mrs Barbara Williams, Alan W (Carmarthen)
Ross, Ernie (Dundee W) Worthington, Tony
Rowlands, Ted Young, David (Bolton SE)
Sheerman, Barry Tellers for the Ayes:
Short, Clare Mr. Joe Benton and
Simpson, Alan Mr. Malcolm Chisholm.
Alison, Rt Hon Michael (Selby) Field, Barry (Isle of Wight)
Amess, David Fishburn, Dudley
Arnold, Jacques (Gravesham) Forman, Nigel
Ashby, David Forsyth, Rt Hon Michael (Stirling)
Atkinson, Peter (Hexham) Forth, Eric
Baker, Rt Hon Kenneth (Mole V) Fox, Dr Liam (Woodspring)
Banks, Matthew (Southport) Freeman, Rt Hon Roger
Batiste, Spencer French, Douglas
Bonsor, Sir Nicholas Fry, Sir Peter
Booth, Hartley Gale, Roger
Bottomley, Peter (Eltham) Gallie, Phil
Brandreth, Gyles Gill, Christopher
Brazier, Julian Gillan, Cheryl
Bright, Sir Graham Goodlad, Rt Hon Alastair
Brooke, Rt Hon Peter Goodson-Wickes, Dr Charles
Brown, M (Brigg & Cl'thorpes) Gorman, Mrs Teresa
Browning, Mrs Angela Gorst, Sir John
Bruce, Ian (South Dorset) Grant, Sir A (SW Cambs)
Burns, Simon Greenway, Harry (Ealing N)
Burt, Alistair Griffiths, Peter (Portsmouth, N)
Butcher, John Grylls, Sir Michael
Butler, Peter Gummer, Rt Hon John Selwyn
Butterfill, John Hague, Rt Hon William
Carlisle, Sir Kenneth (Lincoln) Hamilton, Rt Hon Sir Archibald
Carrington, Matthew Hampson, Dr Keith
Cash, William Hargreaves, Andrew
Channon, Rt Hon Paul Harris, David
Clappison, James Hawksley, Warren
Clark, Dr Michael (Rochford) Heald, Oliver
Clarke, Rt Hon Kenneth (Ru'clif) Hendry, Charles
Coe, Sebastian Higgins, Rt Hon Sir Terence
Congdon, David Horam, John
Conway, Derek Howard, Rt Hon Michael
Coombs, Simon (Swindon) Hughes, Robert G (Harrow W)
Cran, James Hunt, Rt Hon David (Wirral W)
Davies, Quentin (Stamford) Hunter, Andrew
Day, Stephen Jack, Michael
Deva, Nirj Joseph Jenkin, Bernard
Dorrell, Rt Hon Stephen Jessel, Toby
Douglas-Hamilton, Lord James Jones, Gwilym (Cardiff N)
Dover, Den Jones, Robert B (W Hertfdshr)
Duncan, Alan Kirkhope, Timothy
Eggar, Rt Hon Tim Knapman, Roger
Evans, David (Welwyn Hatfield) Knight, Mrs Angela (Erewash)
Evans, Jonathan (Brecon) Knight, Rt Hon Greg (Derby N)
Evans, Nigel (Ribble Valley) Knight, Dame Jill (Bir'm E'st'n)
Evans, Roger (Monmouth) Kynoch, George (Kincardine)
Evennett, David Lait, Mrs Jacqui
Faber, David Lang, Fit Hon Ian
Fabricant, Michael Legg, Barry
Lennox-Boyd, Sir Mark Shaw, David (Dover)
Lester, Sir James (Broxtowe) Shephard, Rt Hon Gillian
Lidington, David Sims, Roger
Lilley, Rt Hon Peter Skeet, Sir Trevor
Lloyd, Rt Hon Sir Peter (Fareham) Smith, Tim (Beaconsfield)
Lord, Michael Soames, Nicholas
Luff, Peter Spicer, Sir James (W Dorset)
Lyell, Rt Hon Sir Nicholas Spicer, Sir Michael (S Worcs)
MacGregor, Rt Hon John Spink, Dr Robert
MacKay, Andrew Spring, Richard
Maclean, Rt Hon David Squire, Robin (Hornchurch)
McNair-Wilson, Sir Patrick Stanley, Rt Hon Sir John
Maitland, Lady Olga Streeter, Gary
Malone, Gerald Sweeney, Walter
Marland, Paul Sykes, John
Marshall, Sir Michael (Arundel) Taylor, John M (Solihull)
Martin, David (Portsmouth S) Temple-Morris, Peter
Mates, Michael Thompson, Patrick (Norwich N)
Mawhinney, Rt Hon Dr Brian Townsend, Cyril D (Bexl'yh'th)
Merchant, Piers Tredinnick, David
Mitchell, Sir David (NW Hants) Twinn, Dr Ian
Monro, Rt Hon Sir Hector Vaughan, Sir Gerard
Neubert, Sir Michael Waldegrave, Rt Hon William
Newton, Rt Hon Tony Walden, George
Nicholls, Patrick Waller, Gary
Norris, Steve Ward, John
Oppenheim, Phillip Wardle, Charles (Bexhill)
Ottaway, Richard Waterson, Nigel
Page, Richard Whittingdale, John
Paice, James Widdecombe, Ann
Pattie, Rt Hon Sir Geoffrey Wiggin, Sir Jerry
Porter, David (Waveney) Wilkinson, John
Renton, Rt Hon Tim Wolfson, Mark
Richards, Rod Wood, Timothy
Riddick, Graham Young, Rt Hon Sir George
Robathan, Andrew
Robertson, Raymond (Ab'd'n S) Tellers for the Noes:
Robinson, Mark (Somerton) Mr. Michael Bates and
Sackville, Tom Mr. Patrick McLoughlin.

Question accordingly negatived.

Motion made, and question proposed, That further consideration be now adjourned.—[Mr. Streeter.]

Question put:—

The House divided: Ayes 160, Noes 80

Division No. 110] [11.55 pm
Alison, Rt Hon Michael (Selby) Carlisle, Sir Kenneth (Lincoln)
Amess, David Carrington, Matthew
Arnold, Jacques (Gravesham) Cash, William
Ashby, David Channon, Rt Hon Paul
Atkinson, Peter (Hexham) Clappison, James
Baker, Rt Hon Kenneth (Mole V) Clarke, Rt Hon Kenneth (Ru'clif)
Baldry, Tony Coe, Sebastian
Banks, Matthew (Southport) Congdon, David
Bates, Michael Conway, Derek
Batiste, Spencer Cran, James
Bonsor, Sir Nicholas Davies, Quentin (Stamford)
Booth, Hartley Day, Stephen
Bottomley, Peter (Eltham) Deva, Nirj Joseph
Brandreth, Gyles Dorrell, Rt Hon Stephen
Brazier, Julian Douglas-Hamilton, Lord James
Bright, Sir Graham Dover, Den
Brooke, Rt Hon Peter Duncan, Alan
Browning, Mrs Angela Eggar, Rt Hon Tim
Bruce, Ian (South Dorset) Evans, David (Welwyn Hatfield)
Burns, Simon Evans, Jonathan (Brecon)
Burt, Alistair Evans, Nigel (Ribble Valley)
Butcher, John Evans, Roger (Monmouth)
Butler, Peter Evennett, David
Faber, David Marland, Paul
Fabricant, Michael Marshall, Sir Michael (Arundel)
Field, Barry (Isle of Wight) Martin, David (Portsmouth S)
Fishburn, Dudley Mates, Michael
Forman, Nigel Mawhinney, Rt Hon Dr Brian
Forsyth, Rt Hon Michael (Stirling) Merchant, Piers
Forth, Eric Mitchell, Sir David (NW Hants)
Fox, Dr Liam (Woodspring) Monro, Rt Hon Sir Hector
Freeman, Rt Hon Roger Neubert, Sir Michael
French, Douglas Newton, Rt Hon Tony
Gale, Roger Nicholls, Patrick
Gallie, Phil Norris, Steve
Gill, Christopher Oppenheim, Phillip
Gillan, Cheryl Ottaway, Richard
Goodlad, Rt Hon Alastair Page, Richard
Goodson-Wickes, Dr Charles Paice, James
Gorman, Mrs Teresa Pattie, Rt Hon Sir Geoffrey
Gorst, Sir John Porter, David (Waveney)
Greenway, Harry (Ealing N) Renton, Rt Hon Tim
Gummer, Rt Hon John Selwyn Richards, Rod
Hague, Rt Hon William Riddick, Graham
Hamilton, Rt Hon Sir Archibald Robathan, Andrew
Hampson, Dr Keith Robertson, Raymond (Ab'd'n S)
Hargreaves, Andrew Robinson, Mark (Somerton)
Harris, David Shaw, David (Dover)
Hawksley, Warren Shephard, Rt Hon Gillian
Heald, Oliver Sims, Roger
Hendry, Charles Skeet, Sir Trevor
Higgins, Rt Hon Sir Terence Smith, Tim (Beaconsfield)
Horam, John Soames, Nicholas
Howard, Rt Hon Michael Spicer, Sir James (W Dorset)
Hughes, Robert G (Harrow W) Spicer, Sir Michael (S Worcs)
Hunt, Rt Hon David (Wirral W) Spink, Dr Robert
Hunter, Andrew Spring, Richard
Jack, Michael Squire, Robin (Hornchurch)
Jenkin, Bernard Stanley, Rt Hon Sir John
Jessel, Toby Streeter, Gary
Jones, Gwilym (Cardiff N) Sweeney, Walter
Jones, Robert B (W Hertfdshr) Sykes, John
Kirkhope, Timothy Taylor, John M (Solihull)
Knight, Mrs Angela (Erewash) Temple-Morris, Peter
Knight, Rt Hon Greg (Derby N) Thompson, Patrick (Norwich N)
Knight, Dame Jill (Bir'm E'st'n) Townsend, Cyril D (Bexl'yh'th)
Kynoch, George (Kincardine) Tredinnick, David
Lait, Mrs Jacqui Twinn, Dr Ian
Lang, Rt Hon Ian Vaughan, Sir Gerard
Legg, Barry Walden, George
Lennox-Boyd, Sir Mark Waller, Gary
Lester, Sir James (Broxtowe) Ward, John
Lidington, David Wardle, Charles (Bexhill)
Lord, Michael Waterson, Nigel
Luff, Peter Whittingdale, John
Lyell, Rt Hon Sir Nicholas Widdecombe, Ann
MacGregor, Rt Hon John Wiggin, Sir Jerry
MacKay, Andrew Wolfson, Mark
Maclean, Rt Hon David
McLoughlin, Patrick Tellers for the Ayes:
Maitland, Lady Olga Mr. Timothy Wood and
Malone, Gerald Mr. Roger Knapman.
Ainsworth, Robert (Cov'try NE) Jones, Nigel (Cheltenham)
Anderson, Donald (Swansea E) Kennedy, Jane (L'pool Br'dg'n)
Barnes, Harry Liddell, Mrs Helen
Barron, Kevin Lloyd, Tony (Stretford)
Bayley, Hugh McAvoy, Thomas
Beckett, Rt Hon Margaret McCartney, Ian
Beggs, Roy Mackinlay, Andrew
Bermingham, Gerald McLeish, Henry
Betts, Clive Mahon, Alice
Boateng, Paul Martlew, Eric
Bradley, Keith Meale, Alan
Brown, N (N'c'tle upon Tyne E) Michael, Alun
Burden, Richard Michie, Bill (Sheffield Heeley)
Byers, Stephen Milburn, Alan
Campbell, Ronnie (Blyth V) Moonie, Dr Lewis
Clapham, Michael Morgan, Rhodri
Clarke, Eric (Midlothian) Morley, Elliot
Clwyd, Mrs Ann Mudie, George
Coffey, Ann Pike, Peter L
Corston, Jean Pope, Greg
Darling, Alistair Prentice, Bridget (Lew'm E)
Davidson, Ian Primarolo, Dawn
Dewar, Donald Purchase, Ken
Dowd, Jim Rendel, David
Galbraith, Sam Robinson, Geoffrey (Co'try NW)
Godman, Dr Norman A Roche, Mrs Barbara
Hall, Mike Rowlands, Ted
Hanson, David Salmond, Alex
Harman, Ms Harriet Simpson, Alan
Harvey, Nick Skinner, Dennis
Henderson, Doug Spellar, John
Heppell, John Steel, Rt Hon Sir David
Hill, Keith (Streatham) Steinberg, Gerry
Hoon, Geoffrey Sutcliffe, Gerry
Hughes, Kevin (Doncaster N) Turner, Dennis
Hughes, Simon (Southwark) Wallace, James
Hutton, John Watson, Mike
Illsley, Eric Worthington, Tony
Ingram, Adam
Jenkins Brian (S.E. Staffs) Tellers for the Noes:
Jones, Lynne (B'ham S O) Mr. Joe Benton and
Jones, Martyn (Clwyd, SW) Mr. Malcolm Chisholm.

Question accordingly agreed to.

Further consideration adjourned.

Ms Harman

On a point of order, Mr. Deputy Speaker. Would it be in order for the Government to explain why, when they apparently wanted to push Government business through the House, we have had the shambles of their abandoning it and seeking that further consideration be adjourned? Is the shambles of the Government and of the private finance initiative in the health service?

Mr. Deputy Speaker

I do not think that I need to answer that.