HC Deb 01 May 1996 vol 276 cc1182-205
Mr. Barron

I beg to move amendment No. 1, in page 1, line 6, leave out 'ceases to exist' and insert 'is dissolved or abolished by the Secretary of State'.

Mr. Deputy Speaker

With this, it will be convenient to discuss amendment No. 2, in page 1, line 16, leave out 'ceases to exist' and insert 'is dissolved or abolished by the Secretary of State'.

Mr. Barron

I do not intend to keep the House too long as the purpose of the amendment is plain. We are concerned about the meaning of the phrase "ceases to exist". In Committee, we probed the issue at some length. The Under-Secretary said then that our amendment was defective and his answers were unsatisfactory. In the light of his comments, we have reworded the amendment.

The nub of the problem is that the phrase "ceases to exist" is vague and open to misinterpretation. We are concerned that the phrase has been placed in the Bill to cover eventualities of which the House would take a dim view were they to happen. We wish to be assured about one matter in particular. If a trust could go bankrupt, or into receivership, without or before action having been taken by the Secretary of State, the House should be told about that now. If the phrase "ceases to exist" means anything other than the dissolution or the abolition of the organisations covered by the Bill, the House should be told now.

We recognise that the original National Health Service and Community Care Act 1990, to which the Bill adds, made it appear unlikely that a health service body could cease to exist without specific action by the Secretary of State for Health. We are concerned that the organisations covered by the Bill are being treated to different phraseology from that in the originating Act. Dissolution and abolition by the Secretary of State are the ways in which trusts and health bodies cease to exist. The Bill appears to open the door to other ways in which those bodies may come to an end. The clear implication of the wording is that the health service bodies covered by the Bill may come to some sort of sticky end without the Secretary of State's approval, and that such events may not be clearly within his control, as they are under the current Act.

It is an implicit admission by Ministers that they may well lose control of private sector involvement in the health service. Profit-dominated organisations may hold sway over our health care and a private contractor's bottom line may determine the continued provision of certain local health services. If that is not the case, the Minister has plenty of opportunity tonight to give us the correct position.

I have taken legal opinions from various sources on the phrase "ceases to exist", and they have given contradictory views on the interpretation of that phrase. The Minister will recall that my colleagues and I warned him in Committee that the phrase might open the floodgates to legal challenges should the Bill's provisions ever be used. It seems that the differing legal opinions that I have obtained may reinforce that warning.

In Committee, the Minister argued that the phrase "ceases to exist" was an umbrella term, but the umbrella term already exists in law—in part IV of schedule 2 of the National Health Service and Community Care Act. That Act defines the Secretary of State's powers as being exercisable, if considered appropriate, in the interests of the health service. Why, then, has the second term come into being? Perhaps the Minister would like to argue that his phrase puts in plain English the occasions on which the powers granted to the Secretary of State under the Bill may be exercised, but it is surely an extremely unusual definition of plain English that confuses, rather than clarifies, the position.

Amendments Nos. 1 and 2 make the position clear. They insert in the Bill the concept that trusts and other bodies can come to an end only after the Secretary of State for Health has exercised a specified, positive powers. Our amendments suggest that "dissolved or abolished" is the term that effectively covers the exercise of those powers. That is real plain English. Both terms are well defined in the legislation and neither is open to misinterpretation by the courts.

There can be no reason to object to the amendments unless the phrase "ceases to exist" is in the Bill for some purpose other than plain English. Will the Minister assist the House by placing it on record that the Bill covers only the following eventualities: first, that a national health service trust is dissolved by the Secretary of State for Health; secondly, that a health authority or a special health authority is dissolved by the Secretary of State? If there are any other ways in which the Bill's provisions can be activated, the House must be told, and the Minister has the opportunity to do so in this debate. He must take this opportunity to assure the House that the continued day-to-day existence of national health service organisations lies with the Secretary of State and the powers invested in him through Parliament, the electorate and the British people.

If the Bill transfers risks from the private sector to the public, rather than the other way round, it already breaks the fundamental principle of the PFI. It already guarantees that the private sector will have an apparently unfettered line of credit from the public purse. Now, there is a further threat to the provision of health care and to the continued existence of the national health service, and it is no slight matter that that uncertainty is intended to be written into law.

The national health service does not need the uncertainty caused by the Bill's existing wording. The amendment helps to re-establish the principles of continuity in health service provision that we all wish to see. Sadly, continuity has not been a major feature of the Government's attitude to health care. The Secretary of State has not been backward in exercising his powers to dissolve, merge and establish trusts and, to some extent, health authorities.

There are frequent revisions to originating capital debt—given levels of interest-bearing loans and public dividend capital—as well as changes to external financing limits and various guarantees from the Secretary of State. Most of that process is designed to prop up the internal market and most of it simply adds resources to the bureaucracy at the expense of front-line patient services. Unless the Bill is amended in the way that we suggest—or by some similar wording, perhaps at a later stage in another place—that tangle of financial directives, limits and guarantees will be balanced all the more delicately against a crash.

The private sector, not the Secretary of State, will have the upper hand in determining whether a health service body crashes or survives. The Secretary of State will be giving away his ability to act positively, by abolition or dissolution, and will be left with no other duty than to pay off the debts and pick up the pieces.

It is a disgrace that the Bill has been introduced in order to prop up the PFI and to avoid answering major questions about the future of the national health service and its bodies. We seek a coherent definition of the circumstances in which the Government envisage using the powers that the Secretary of State proposes to take. The phrase "ceases to exist" does not provide any such clarity or assurance. Our amendments Nos. 1 and 2 are far superior, and I urge the Minister to look upon them favourably.

6 pm

Mr. Horam

I agree with the hon. Member for Bother Valley (Mr. Barron) on this occasion. I do not think that there is any difference between the two sides about the matter and I can give him the assurance that he seeks.

All NHS bodies covered by the Bill are creatures of statute: they can be established and can cease to exist only by statutory procedure. The existing NHS Acts listed in the notes on clauses to the Bill provide the means by which those bodies can cease to exist. There is no other way, short of an Act of Parliament—which would come before the House—that they can do that.

The hon. Gentleman asked whether an NHS trust could go into receivership. That cannot happen—as a statutory body, insolvency legislation does not apply to an NHS trust. It can cease to exist only by the statutory procedure that involves the House. Therefore, I give the hon. Gentleman the assurance that he seeks: there is no other way in which such bodies can cease to exist, and we do not seek to enlarge that process.

I assure him that we mean nothing sinister by using that phraseology. It is a matter of semantics and of using what we believe to be plain English. If the hon. Gentleman's measures were adopted, wherever the phrase "cease to exist" appeared in the Bill, it would be replaced with "dissolved", "abolished" or "revoke the establishment order of'. That is quite a mouthful. We are on common ground in talking about simple, straightforward terms that cannot be misinterpreted in law. I repeat that they are statutory bodies that can cease to exist, only by statutory procedure.

Mr. Barron

It is a great pity that the Minister did not provide that explanation when we discussed the amendment in Committee. He did not explain his position as succinctly as that then. I am sure that the House will be reassured by his comments. We will not argue over the Dispatch Box about what constitutes plain English. The Opposition and the people of this country—who dearly love the national health service—want to be clear that major decisions about local health services will be taken by the Secretary of State for Health and not in a banker's office or anywhere else in the City. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Order for Third Reading read.

6.2 pm

Mr. Horam

I beg to move, That the Bill be now read the Third time.

The Treasury Committee's verdict on the private finance initiative is that it is an imaginative and laudable innovation. It will bring forward the rebuilding and re-equipment of our major hospitals on a scale hitherto believed impossible. The last two projects that we announced—Swindon, which would have cost £90 million, and Norwich, which would have cost £170 million—will probably be built five years earlier than anticipated.

Mr. Barron

That is outrageous.

Mr. Horam

No, it is perfectly true, and I shall explain why. Until now, all schemes—however good and in spite of the approval of trusts, health authorities and Ministers—have had to wait in a queue for money. There was one turnstile and the Treasury controlled it. It had a monopoly on the supply of capital funds. Under the PFI, there will be any number of turnstiles and any number of competitive suppliers of finance—there will be no, or certainly shorter, queues. If a scheme is affordable and represents good value for money, it will go ahead. That has not occurred in the past, and clearly more schemes will now come forward.

As the House knows, in the past 10 years only one scheme worth more than £25 million went ahead each year—which is still better than the last Labour Government's record. Now, no fewer than 25 schemes, each worth more than £25 million, will go forward. If even half of those schemes are completed—I suspect that we shall complete more than that—other much desired projects will come forward at a much faster rate.

Mr. Simon Hughes

rose—

Mr. Horam

No, I shall not give way. I have given way to the hon. Gentleman several times today.

More hospitals will be built, and they will be built better. It is no longer a matter of build and forget. The private sector will not only build the hospitals but be responsible for their on-going maintenance. That will provide the incentive to build them well and thus minimise maintenance costs—which is a good thing.

As the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) said, hospitals will be built more flexibly. Ownership of hospitals in the private sector will provide the incentive to ensure that they do not become white elephants within 10 years. Hospitals will be built using flexible designs that can be adapted to new uses as clinical measures develop. For example, the new Jimmy's hospital in Leeds is being built in such a way that it can be used for other purposes. There will be better hospital designs. I recently attended a conference of the Royal Institute of British Architects and architects' enthusiasm for the new design culture that we are bringing to the health service was evident. That is very heartening.

There will be less risk for the public sector. As I have said during today's debate, the risk to the private sector will increase because it will bear the burden of commercial risk which is borne by the taxpayer at present. For example, the taxpayer had to meet the cost overruns associated with the building of the Chelsea and Westminster hospital. The public and private sectors will be in partnership, a partnership that we encourage. The Opposition claim that they also support such a partnership—although they do not seem to do so in this case.

The national health service will have the opportunity to concentrate on what it does best: provide clinical services free at the point of use. It will determine its own priorities in its own way. Therefore, the NHS will be able to realise its ambitions for providing better patient care—which is ultimately what it is all about. The Bill helps the PFI to succeed. I recommend it to the House and I urge hon. Members to support it.

6.6 pm

Mr. Barron

The Bill has only one purpose: it is an attempt to breathe life back into the Government's failed private finance initiative in the health service.

Hon. Members and the general public know that, in its current form, the health service PFI is little more than an attempt at privatising the NHS by the back door. The Bill is an attempt to revive the privatisation of the health service which has been rejected categorically by clinicians, most NHS staff, patients and, increasingly, the private sector.

In general terms, we know that the private finance initiative is being used not as a supplement to, but as a replacement for, public provision. Opposition Members have argued consistently that, if the PFI has a role to play, it is in supplementing the existing Government capital expenditure budget for the national health service. We know that the PFI is a twisted and a distorted attempt to mirror the properly thought-out joint partnerships between the public and private sectors which have been suggested by the Opposition.

In health terms, Ministers have tried desperately to kick-start the PFI as the Government's years of neglect of the national health service have come home to roost. The Bill is the result of that. Ministers know that, in the period before the general election, they need to show the voters that foundations are being dug and bricks are being laid and that alleged new hospital projects are under way. We heard that again from the Minister tonight.

The groundwork has already been done, but only in the minds of Ministers. Successive Ministers have been announcing for years the same so-called new hospitals, yet not a single brick has been laid. In his speech tonight, the Minister had the audacity to mention Norwich and say that the new hospital that is badly needed will be built five years ahead of plans because of the private finance initiative.

Let us look at the truth about Norwich. The former Secretary of State for Health, now the Chancellor of the Exchequer, was first off the starting blocks when he announced the go-ahead for a new £100 million hospital in Norwich. That was in 1990. On 3 April this year, the current Health Secretary announced that he had "given the go-ahead today" for a new hospital in Norwich.

Mr. Henry McLeish (Fife, Central)

Perhaps there will be two hospitals.

Mr. Barron

Two hospitals may have been promised, but no bricks have been laid on any of the sites. The second audacious announcement was made when we debated the Bill on Second Reading.

In December 1993, the then Secretary of State announced that he had approved a project to replace the Princess Margaret hospital in Swindon. On 3 April this year, the current Secretary of State issued another press release headed "Approval announced…for Swindon hospital". Health Ministers constantly claim to be building hospitals, but those hospitals exist only in their minds. Norwich and Swindon are just two examples of the cynical ploys that Ministers adopt in their efforts to look good on health matters.

Will the Minister tell us whether the latest announcements promising new hospitals will ever materialise? Perhaps he will tell us the difference between his assurances today and, for example, that given by the former Secretary for Health about Norwich, that construction is expected to start in 1992. That year might ring a bell with hon. Members, as it was an election year.

Will the Minister and the Secretary of State be promising that the construction of the new hospitals that they have promised will start in the next 12 months—in advance of the next general election? Who does he expect will believe him? Multiple announcements of so-called new hospitals do not treat patients. Press releases are not pain relievers, however much Ministers would like to think otherwise.

The Bill shows that Ministers will go to any lengths in their attempts to persuade the electorate that theirs is a caring Government, but the electorate and the House know that that is not so. The Bill breaks the most basic principles of the PFI. It opens up the possibility of the private sector closing down parts of the health service to further profitability. It denies Parliament a proper role in scrutiny and removes any notion of accountability.

The basic principles of the PFI are unequivocally stated in a NHS executive letter of 20 March 1995, which states: A fundamental principle of the PFI is transfer of risk to the private sector. The Bill does exactly the opposite. It commits the Secretary of State to guaranteeing totally and absolutely all the risks that are supposedly transferred to the private sector. It removes not one risk from central Government, yet it gives central Government virtually no role in assessing the risks that they have assumed.

It is universally acknowledged, even by the Secretary of State, that private sector services cost more than public sector ones. The right hon. Gentleman said that in his speech to the Royal College of Physicians. In the same speech he said: I am strongly in favour of testing public and private sector solutions and adopting the approach which offers best values. I am asking the Minister to consider two identical projects. In each case, the risk falls entirely on Government, but the capital costs of one are more expensive. A normal, right-thinking person would choose the cheaper alternative, but the Bill creates circumstances in which the only possible option will be the more expensive one—the private sector project. Perhaps the Minister will explain the logic that he uses to conclude that that is the best possible future for the health service.

How can there be any justification for spending more money on the PFI alternative when it produces no benefit in terms of reduced risk? Clearly, there is no justification, unless, as we all suspect and Ministers occasionally let slip, PFI is a step on the road to the privatisation of our national health service and the Bill is designed to ease that route.

Already, the road to the NHS privatisation is clear. First, the Government starve a service of funds. The national health service capital programme has been cut by nearly 20 per cent. Secondly, pressure is applied to consider alternatives. All trusts have had to go through the entire process of testing major projects against private sector finance, regardless of the urgency of those projects. Thirdly, the pressure is racked up. In health, the fine line is continually blurred between what may or may not be possible targets for market testing, contracting out and privatisation.

On Second Reading, I complained that the Secretary of State had not responded to my letter of mid-February asking him to identify those services that would be exempt from PFI. I had the opportunity to ask the same question in Committee, as it is important that we are clear about the scope of the PFI. The reason for that is illustrated by what my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) said about the hospital in Scotland where everything is being put out to tender. Although the Minister's defence seemed to be that one of the three bids being considered was from the NHS, we understand that every service is being put out to tender.

The Secretary of State is still reluctant to define clinical services. He knows that he has promised to protect such services from privatisation, but he does not want to do that. He knows that, if he has to list which services are clinical, he will be limiting the scope of privatisation. That would place question marks over the bids for Stonehaven hospital.

When an answer to my letter finally arrived—unfortunately, the day after the Committee stage had ended—it was not particularly helpful. The Secretary of State wrote: The requirement to include clinical support services as part of the testing of the PFI options are matters for local determination and cannot be decided without the support of local clinicians. What can local clinicians hope to make of the Government's attitude? How can they hope to work within boundaries that the Secretary of State has blurred almost beyond distinction?

The Bill is being proposed to smooth the jangling nerves of potential PFI contractors. The Government hope that more of them will propose new PH projets in the health service. However, about a fortnight ago the Financial Secretary to the Treasury told us on "Newsnight" that the PFI will replace public expenditure.

The blurring of choices means that local clinicians and other health service professionals are faced with a stark choice—private money or no money. One way to guarantee that a clinician will ultimately agree to the PFI is to starve him of funds to improve the services that he wants to give his patients. That is how it is being achieved; it is driven by withholding from clinicians the vital investment that they need to improve health care. It is a pity that the Secretary of State is not here, but I must tell him and the Minister that that is not the way to treat health professionals or issues of public health. I call on the Minister this evening to list all the clinical and clinical support services that he can guarantee will be free from the risk of privatisation.

The Government are driving towards privatising the NHS, and are stepping up the pressure to achieve their aims. The Bill makes matters worse. It is not just this Bill that is adding to the Government's PFI woes. The private sector is getting increasingly annoyed about it, despite all the concessions that the Secretary of State is prepared to offer it. Earlier today, the Minister said that the Treasury was involved in the PFI. John Laing Construction was recently reported in the Financial Times as having described the PFI regime as farcical and leading to growing frustration among contract bidders". Laing is one of the leading bidders for health schemes, so its opinion must be taken seriously.

Martin Laing, the company chairman, said that there is virtually no chance of PFI targets being met unless there is a really big shake-up in the way the Government handles PFI projects". Another PFI specialist, a City banker, is quoted in the same report as saying that the PFI needs to overcome the inertia and lack of expertise that reign supreme in most departments".

We already know that the public do not trust the Government on the PFI, and that clinicians and health service staff do not either. It now transpires that even the private sector does not trust the Government on the PFI.

The Secretary of State will have big problems if he intends to put all his NHS eggs in the PFI basket—but that is what he is doing. He is betting everything on the Bill and on its option of guaranteeing liabilities over which he has no control. The Bill solves none of the problems of the PFI and probably creates a whole new set of its own.

Still, I have little doubt that this Secretary of State will eventually get his way and that the Bill will be passed. After it has been railroaded through the House, he will be able to go back to the private sector contractors who demanded the Bill and tell them that it is safely through and that the Secretary of State has underwritten the risks that most people thought went with the contracts. 1 only hope for the right hon. Gentleman's sake that the contractors do not come back to him with yet another problem to solve. If and when they do, I hope that he will not cave in to them as easily as he did with this Bill.

The House deserves a better explanation of a Bill than the one we were given on Second Reading. It was disgraceful of the Government to talk about technicalities without telling us the public expenditure implications.

The next problem may arise in the context of information technology. The Department is already creating a shambles because of its unwillingness to get a grip on strategic provision. The recent trauma over hospital information support systems was just the latest in a long line of failures. Now we hear that the entire PFI growth area of information technology is under threat from the VAT man. PFI-led IT projects may turn out to be not just more risky and expensive than publicly funded alternatives: they may have an extra 17.5 per cent. VAT dropped on the final invoice too.

Many of the projects that the Minister has said are in train at the moment include small information technology units. Now there is a debate between the Treasury and the Inland Revenue about whether, as they will not be owned by the trusts, they ought to attract VAT. Ludicrously, the Government consistently say that they are in control of the PFI, but as soon as people are ready to sign contracts, all of a sudden 17.5 per cent. VAT is dropped on them. How can anyone have faith that the Government know what they are doing?

Perhaps, as the Secretary of State has already gerrymandered the PFI rules once, there will be another sweetheart deal for the private sector in health. Perhaps he will siphon off more NHS money to pay the contractors' VAT bills. The Opposition will not let this issue go away. It may be deemed the concern of the Treasury, but it affects public health, and we shall ensure that the matter is not dropped. I only hope that the Government will introduce some coherence to what is happening with information technology under the PFI.

We are witnessing a long slide into confusion—a slide that the Minister cannot control, because the Bill gives him few or no powers, except to accept the consequences. The Minister has started down a slippery slope that may cost taxpayers billions of pounds, and there may be no end to the slope. The Bill represents a fundamental error of judgment. The Minister has been weak when a secure future for the health service required him to be strong. He has pandered to the private sector instead of supporting the best interests of Britain's health care.

The Bill offer gilt-edged returns to the private sector but does nothing for patients, nurses, doctors or health care. It merely bails out the Government's drive to privatise the health service. The Bill offers Parliament no openness, no accountability and no scrutiny. Contracts for up to 70 years will be signed—70 years of private sector risk but no parliamentary say in the matter. Who in his right mind, looking at developments in the NHS of the past decade, would allow that to happen? We are signing up to 70 years of public liability without a debate in the House on the daily innovations in the health service aimed at improving it.

There will be up to £5 billion in liabilities, and no parliamentary say in how or why they are incurred, and no chance to hold the Secretary of State to account for bailing out the private sector and, effectively, privatising the NHS.

The Bill is ill thought out and—I hope that I am wrong—the public purse and the people who need health care may find themselves paying for the Government's folly for many years to come.

6.26 pm
Mr. Galbraith

On Second Reading, I was prepared to give the private finance initiative in the NHS a fair wind and some consideration, but having sat through most of the Bill's stages I am now convinced that it is wrong. What has emerged from my confusion—Conservative Members may be confused as well—is that this is being done for short-term financial reasons while building in long-term liabilities. We are converting capital expenditure to revenue that will be with us for a number of years, and future Governments and generations will have to pick up the tab.

The PFI has other consequences too. Having heard the Minister, I am convinced that what is involved is a distortion of service provision within the NHS. I return to the idea of the hospital in my area becoming obsolete. In order to remove risk from the private sector, long-term contracts will be awarded whether or not the facility is needed. To avoid its becoming a white elephant with unoccupied wards and beds, NHS facilities that may be better prepared and more suited to people's needs will have to be closed so that the hospital built with PFI money can be used. This represents a drift, once again, away from a more effective and efficient NHS towards the private sector—one of the major problems associated with the PFI.

It is also clear from what the Minister said that the PFI will not be involved only in building and leasing buildings. He mentioned maintenance and the provision of services. After all, they are the only way in which money can be made in such ventures. The Skye bridge is a case in point; once it was built, it had to be run and charged for at rates higher than those charged by the ferry. The risks had to be removed from the private sector by locking into a long-term contract to enable it to recover its expenses. The Skye bridge was built only when the Government gave an undertaking that the profitable public sector ferry would cease to run, so as not to be in competition with the bridge. Within the national health service, public sectors will be closed to maintain the PFI project.

It serves no purpose for the Minister to maintain that clinical services will not be affected. It is clear that they will be an integral part of the PFI. Stonehaven is a classic example. We know that everything is up for grabs at Stonehaven. That is part of the Government's philosophy. That is the trend and that is the way in which the Government see the NHS continuing. The cat was let out of the bag by Duncan Nichol.

Mr. Bayley

The position has been made clear by the Secretary of State. On 21 November 1995, he spoke to the Royal College of Physicians. During his address, he said: Some Trusts have explored local arrangements for private sector provision of some clinical and clinical support services. That is a matter for local determination. The right hon. Gentleman is sanctioning precisely what my hon. Friend fears.

Mr. Galbraith

I fully agree with my hon. Friend.

I mentioned Duncan Nichol, the former chief executive, who is responsible for the shambles within the NHS. He now works in the private sector with BUPA. In effect, he says, "It does not matter who provides the service. The issue is what charge is made when the service is delivered." The Government no longer talk about services being free at the time of need; they talk instead of services being free at the time of delivery—in other words, they are saying, "Although you need them you might not get them, except those that we decide to deliver."

The shift towards privatising clinical services and allowing individuals to have those services paid for by others will soon mean that individuals will have to take out private insurance. That will take us fully down the line of a privatised health service. That is part of the purpose behind the Bill. The Bill is not merely a short-term fix to overcome under-investment over the years by shifting moneys from capital to revenue. It is part of a long-term plan, the final aim of which is to have a fully privatised health service in terms of delivery and charges.

The Minister has argued that it will be much quicker under the PFI to have hospitals built. According to Douglas Watson, the head of structured finance at the Clydesdale bank, who wrote in the Scottish Business Insider of March 1995, putting together PFI projects is slow and time consuming and far from speeding things up, some projects may actually have been delayed by putting them out under the PFI. The myth that the Government peddle does not accord with reality.

Another myth is that the PFI will make projects cheaper. That is not so; costs will merely be deferred over a period of years, leaving others to pick up the tab. It is known that the cost to a trust of establishing a PFI to build a hospital is probably increased by 3 to 5 per cent. The Edinburgh royal infirmary project is an example. Expenditure will be increased, because of the PFI, by between £4.2 million and £7 million. That extra expenditure would not have been incurred under the normal arrangements. In addition, there is the high return demanded by venture capital of between 8 and 10 per cent. These are the increased costs that are incurred by use of the PFI.

We shall have a system in which we shall allow private finance to obtain substantial profits from the health service. There will be no risk. There will not even be the normal business risk. We shall build in obsolescence within the health service. We shall distort our clinical services, we shall further delay projects and we shall increase costs. What an indictment on the Government. In addition to the bureaucracy that they have enforced on us over the years, they want to charge us more. It is no wonder that I and, I hope, many of my right hon. and hon. Friends think that the PFI is a shambles. It is inherently wrong politically and financially unsound. We should have nothing to do with it.

6.35 pm

Mr. Simon Hughes

Before us is a short Bill and a big subject. No one disagrees fundamentally with the principle that the national health service should not leave others singing for their money. At the same time, no one has subscribed in a democratic way to the principle that we should build capital projects within the NHS in a new way, which effectively means building by the private sector. That is why the Minister has run into a squall and some difficulty.

The Conservative party's manifesto did not refer to capital projects within the NHS being undertaken by the private sector. The Government never stated in a Queen's Speech that they intended to go to the private sector for the building of hospitals. Instead, they have proceeded by stealth. The health service has suddenly discovered, through the Government's actions, little by little, project by project, idea by idea, press release by press release, and guidance of slightly more than a year ago, that it will have to enter into a greater partnership with the private sector, as have other sectors.

The move may be a good idea. There is nothing theologically wrong with the private sector being used to provide buildings or services. However, the case has never been made, and authority has never been given to the Government. My colleagues and I—indeed, Parliament—have never agreed to move from a system whereby the public purse finances NHS buildings and services to one that admits private sector finance. Such a change in system has never come before us as a proposition, and consequently there has never been a majority vote in the House.

The change of system has never been subscribed to even by the Conservative party, let alone on a cross-party basis. We should not change the capital funding of the health service by means of spatchcocked, belated Bills that are put together to close loopholes, without addressing the issues head on.

There is objection because the NHS is less democratic now than at any time since its creation. The Secretary of State is accountable to Parliament, but, as we well know—Ministers make no bones about it—when he answers detailed questions, he almost always says, "I don't know the answer, so ask the local trust." Alternatively, he will say, "I don't know the answer, so ask the local health authority." He may also say, "The figures are not kept centrally."

Trusts and health authorities are less democratic now than ever before. Members of trusts are appointed entirely by Secretaries of State. They meet in secret and make their decisions in secret. They cannot be part of a democratically elected health service. It is not that they want to be secret. I understand that the official policy of the National Association of Health Authorities and Trusts is that the authorities and trusts are happy to meet in public. It is not they who are blocking the system. Instead, the Government are refusing openness.

The management of the health service would have far more credibility if it were democratic, open and accountable. For as long as hospitals are managed, along with all other parts of the health service, behind closed doors by people appointed by the Secretary of State, who decide what they shall be paid in private, there will not be public confidence.

We are therefore even more dubious—not surprisingly—about going down this road if there cannot be any public participation. None of us pretends that the health service's previous structure was wonderfully, democratically accountable—of course it was not—but at least the majority of health authority meetings were open to the public, at least the health authority took the decisions, not just about commissioning, but about the running of services, and at least some democratically elected people sat on health authorities.

All that is out of the window. Regional health authorities have gone. They have been replaced by civil servants. Therefore, there is an undemocratic and unaccountable health service. That is not sustainable. Whether the Minister's party are again in government in the near future, or whether colleagues in the Labour Front-Bench team are in government, the one thing that both parties must do—the Labour party has not done it nearly adequately enough yet—is to ensure that we have a democratic health service structure, in which the public can choose the people who run the service locally and the public can get rid of them when they do not like them. We must see that happening in the open.

Mr. Harry Cohen (Leyton)

The hon. Gentleman makes a good point. I agree with him about secrecy in the management of the national health service generally, but, specifically on the Bill, there will be secrecy in the relation to the PFI contracts that are entered into, some of which, as my hon. Friend the Member for Rother Valley (Mr. Barron) said, can go on for 70 years and incur NHS and taxpayers' money.

In Committee, the Minister refused to give a commitment that that procedure would be opened out before the contracts were signed, perhaps even with the community health councils being consulted. Does the hon. Member not think that it is appalling that that secrecy in the signing of such contracts could cost the NHS and taxpayers a great deal of money?

Mr. Hughes

I agree with the hon. Gentleman. The public might be concerned about all sorts of issues.

They might, for example, not want a contract to be placed with a particular private sector contractor because of its investment policy, because it does not have ethical investment, or because it supports a drugs company that has an unsatisfactory record—there are all sorts of reasons. The public are carved out of that.

The hon. Gentleman knows as well as I that, in the public service, the more secretive financial contracts are, the more likely it is that bad practice or corruption will take place and all the rest of it. The same contracts are given to friends and to the people who happen to be part of the service, however well one tries to regulate it. I agree with him that that is a real worry.

That links to my third point. Let us not be naive about this. The reason why the Government are going helter-skelter down the road marked "PFI"—any Government might be in this position—is that the Treasury and the Chancellor of the Exchequer are saying, "We must cut and hold down public expenditure, so we must look for other ways of financing public projects."

The public's demand for public projects is going up. They are not saying, "We don't want more health services or public education, " but, "We do want more health services and public education." The Government are therefore asking how they can find the money without raising taxes. Some of us subscribe to the view that a decent taxation level for people who can afford to pay is a prerequisite of a civilised society, as well as a fair and equitable distribution of wealth.

It will not surprise me if the next election is fought on this issue: should people who can afford to do so pay a decent level of taxes, and should people who earn an enormous amount of money pay an enormous amount of taxes? There appears to be a general, growing timorousness among hon. Members in the two largest parties about asking anyone to pay anything for anything. I am worried about that. That does not meet the public mood.

The public do not want Government and public services to waste their money, but they are willing to pay fair taxes if they know that the money is going towards decent public services. They are willing to pay for the health service and education, so long as the money goes on the health service and education.

If, at the next election, the Tory party says, "We are the tax-cutting party"—although no one believes it about that—and if the Labour party says, "No, we're going to be as good at tax-cutting as the Tory party"—I do not think that people will believe that either—I hope that some of us will go on saying, "You can't have decent public services supported only by cutting taxes."

There are short-term political pressures. I understand them and we should acknowledge them, but the foolishness is that, as the Treasury Select Committee makes clear—this is the fourth point—there is no guarantee that one achieves better value for money through the PFI. On the short section on the PFI in health, the Select Committee, to which the Government have not responded, gives warnings that the PFI may not provide the best value for money. First: The concern is that capital spending in health will be cut on the basis of expected PFI investment that has yet to materialise. By the Chancellor's own admission, such spending is being cut, and we do not yet have a guarantee that the PFI will materialise. Secondly: A further criticism of PFI is that in some circumstances it has delayed rather than encouraged investment. True—that is what we are all being told in our constituencies. Thirdly: This raises the concern that the ability of the Trust to plan effectively the provision of its services could be lost as decisions will be determined by the method of funding rather than an objective assessment of need. That is very worrying. It will be a bit like the decision that led to the Jubilee line extension being built: a particular project will be built because it is the one for which the most funding can be secured rather than the one that patients need most.

Fourthly—this point was made by the hon. Members for Rother Valley (Mr. Barron) and for Strathkelvin and Bearsden (Mr. Galbraith)—in the view of the Select Committee and the Department of Health: clinical services should not be provided under the PFI. They are as explicit about that as they can be, yet it is clear that clinical services are being provided under the PFI.

Lastly, the consequence is that PFI was forcing it"— the trust— to introduce a false split between 'clinical' and 'non-clinical' services which, hitherto, had been successively provided together, in some cases by the same people.

We know the score: under the PFI, one contracts now, but pays later. The probability is that it will be no cheaper, and it may be more expensive. I will not go to the wall for saying that it will be, but it may be. All I say is that, until the Government—any Government—have the approval of the people and of Parliament to change the basis of the health service's funding, they should not do it.

We understand the logic of this little Bill, but that will be opposed tonight; that is why the Minister had better be careful that his Department does not go down this road so quickly that, throughout the country, it finds itself in a series of muddles, with the public increasingly dissatisfied about contracts that they think should never have been entered into.

6.47pm

Mr. Ronnie Campbell (Blyth Valley)

I have raised before the question of the Cheviot and Wansbeck NHS trust's Ashington hospital in my constituency. The other week, the trust met in secret to decide on phase two of the hospital, phase one of which has been open only about two or three years. The trust has been trying to get phase two off the ground.

Two weeks after it became a trust, it announced that it was £2 million in debt. We have discussed that on the Floor of the House. This time, however, the trust has decided that, to get phase two off the ground, it will put all non-clinical services out to tender. About 40 per cent. of the hospital will be privatised if it goes down that route. It has not made a final decision, but I understand that it is testing the water with tenders from private entrepreneurs.

It makes no difference what the Government say. I remember that, not long ago, they said that the health service was safe in their hands. I do not know what they meant by that. If they meant that it was safe in their hands because they were going to privatise it, that was fair comment.

There is no doubt that this is a back-door method of privatisation by the Tories, as has been mentioned. 1 cannot understand why they are doing it, because public opinion does not want it. I expected that they would try to make themselves popular before the elections, but they are making themselves unpopular.

My local newspaper, The Journal, mounted a campaign against non-clinical services being privatised, and against the Bill. It was surprising for that newspaper to have a go at a Tory Government. Coming up to a general election, the Government should want to be popular. One opinion poll after another has shown that people do not want the health service to be privatised; but hospitals are being pushed into corners because, as my hon. Friend the Member for Rother Valley has said, their money has been savagely cut by the Government, and they are being forced into privatising non-clinical services—40 per cent. in the case of Wansbeck.

It is a disgrace that people do not have a say about privatisation. It is done by the back door, and it is time the Government stopped it. The Cheviot and Wansbeck trust has not yet decided, but it wants to test the water. I say to it, "Don't. Wait until Labour comes to power, and we will sort you out our way. Don't go down the Tory route. Labour will get phase 2 for Wansbeck."

6.50 pm
Ms Hilary Armstrong (North-West Durham)

I am grateful for this opportunity to take part in the debate. I shall try to take the Minister back to his previous incarnation in the House, when he represented a constituency that was known as Gateshead, West. At that time, he represented the Labour party. I am sure that he may have tried to wipe out all memory of that. Part of the western boundary of that constituency must have edged on to bits of my constituency, which is large.

Shotley Bridge hospital, which I am sure the Minister knew in those days, certainly services the Derwentside part and some of the area on the northern banks of the Tyne. That hospital is now part of North Durham health trust, and the Government approved the building of a new hospital that would eventually link Dryburn hospital and Shotley Bridge hospital. Against my advice, the chosen site for that is Dryburn, and my constituents were promised that, when Shotley Bridge hospital was closed as a district general hospital, other good hospital functions would move to Shotley Bridge.

I do not want to go into my concerns about the process, but local GPs have come up with a good scheme for the development of Shotley Bridge. All this hinges on promises to my constituents about what would happen to the new hospital at Dryburn. It was approved over two years ago, before the Government had thought of the private finance initiative.

My complaint about the Government is that they have demonstrated time and again that they do not know what they are doing with the PFI. The Minister said that it would mean less risk to the public sector. That may be true in terms of the Government's overrunning and over-borrowing, which have led to the PSBR being much higher than anyone ever imagined, but it will not mean less risk for the public or for my constituents and their health care.

They are suffering enormously because of the Government's dithering, indecision and lack of understanding about what they were entering into when they told the trust that it had to go down the PFI route. That has delayed the new hospital at Dryburn, and, what is worse, it is now threatening any development at Shotley Bridge.

Last weekend, because the trust had overspent in the acute areas, it closed five wards in Shotley Bridge hospital. That is totally counter to all the promises it gave to my constituents and me about the way in which the amalgamation of the two hospitals would proceed.

Staff morale is at rock bottom, and constituents are angry, because they never wanted to lose their hospital, as the Minister will know if he remembers his previous incarnation. Instead of going to Shotley Bridge, people from the top of the Tyne valley and Weardale will have to travel about 30 miles to Dryburn. The accident and emergency service was closed before the commitments were given, and that was out of line with earlier commitments.

Far from the public being reassured, the Government's actions are a betrayal of the people of north-west Durham and of Derwentside. The Bill has been presented because the Government have made such a mess. If the PFI was working, the Bill would not be before us. If there was confidence, if people thought that the Government knew what they were doing, there would be no need for it. The Government try to tell us that the Bill will put into law what has always been happening, but the reality is that nobody knows the practice, because the PFI procedure has not been tried before.

The Government do not know the nature of the contracts, because the people who draw them up are not publicly accountable. The Minister said that we have to respect commercial confidentiality. He is asking us to agree that the services and their nature and delivery for the next 25 years will be secret. How on earth can we justify that in the public sector? By all means we should work with the private sector to get money to support the public sector, but when that is done in a way that betrays and breaks the trust between the public and their health service, it will fail dismally.

I beg the Minister to reassess what is going on. My constituents face the worst of all worlds: every promise made to them by the trust and by previous Ministers will have been broken. It is their health service and their hospital. What we have worked out together, and the GPs' plan for a GP-led community hospital, are now in jeopardy because of the overspending of the acute trust and because of anxiety to get the PFI right. The rest of health care and support is likely to disappear, and that will mean that the acute service will not be able to meet the needs of my constituents.

The other half of my constituency is served by Bishop Auckland hospital. As hon. Members will know, we were promised months ago that the PFI in that hospital would be the first to be announced by the Secretary of State. That did not materialise, and I heard worrying rumours this week about the PFI crumbling in Bishop Auckland. That will leave half my constituents with no hospital, and some of them will have to travel nearly 40 miles to get to one. That is a disgrace.

It is about time the Minister shook himself out of his complacency and recognised that, when we debate people and health, we must discuss the public need for health care, and not his Government's incompetent management of the PSBR.

6.57 pm
Mr. Clive Betts (Sheffield, Attercliffe)

The Government have presented the Bill because they feared that they could not get PFI schemes off the ground in the health service, as the banks and other private sector organisations would not enter into liabilities which they were not sure would be picked up by trusts that might not exist in 20—or, indeed, 70—years from now.

The Secretary of State for Health told the Select Committee on the Treasury about a lacuna in the legislation. That was his word, not mine, and I was not sure what "lacuna" meant, until I looked it up in the dictionary. The Secretary of State obviously uses the word frequently to describe his problems.

He said that the problem had been around since the 1940s, and that it was everyone's responsibility. That is not true, because in the past, borrowing for the public funding of projects in the health service has meant that trusts and hospital boards have not had any difficulties. The PFI scheme has raised difficulties because of the different way in which such schemes are entered into compared with borrowing through the old mechanisms.

To underline that point, while we finally got it out of Secretary of State in the Treasury Select Committee that trusts are free to borrow, he went on to say that they are not free to pledge assets. That is why there has not been such a problem in that past. By and large, financial organisations have been willing to lend to trusts only if the loans are backed by the security of the property on which they are lending. That security has always depended on the say-so of the Secretary of State. That is the fundamental difference, and the reason for the Bill. It shows that a control mechanism exists for borrowing through the traditional route that is not there for borrowing through the PFI.

While the Government hope that the obstacle will be removed to allow projects to go ahead, in fact the system presents obstacles all over the place to the setting up and construction of new hospitals and additions to hospitals. Much administrative time is spent on comparisons between PFI and public schemes.

Ask the chief executive of Royal Hallamshire hospital, Sheffield about what happens. He got the go-ahead for its Stone Grove project to replace a rundown mother-and-baby and gynaecological service in 1993. Not only has not a single brick been laid—not even an accountant's pen has been put to a contract for the scheme, because it is still being assessed three years after the original project was given the go-ahead.

If the PFI is cheaper, we must ask why. Again, evidence to the Treasury Select Committee showed that interest charges on private borrowing are 2 to 4 per cent. higher. The Government talk about risk transfer, but if the private sector takes on the risk, it will want the public sector to pay for it. That is right. It will want its risks in the project covered.

The Government will not tackle my worry that any savings from private sector projects will be produced in the same way as they have been with compulsory competitive tendering in local government, where 70 per cent. of savings result from cuts in wages and conditions of the lowest paid workers. That is why cleaning, building maintenance and management and other such activities will be part of the projects. The Government can deny that if they want, but that is the evidence from the Audit Commission on CCT in local government. I fear that the same savings will be made and be called efficiency savings, when they are cuts in pay and conditions.

The Government say that, if private sector funding is cheaper, we should go down that route, but there is a question mark over what would happen if public funding were cheaper. Is the public funding there? Royal Hallamshire hospital has asked me what would happen if its assessment showed that the public sector was cheaper.

There is no guarantee—the hospital thought there was, but it is beginning to change its mind—that there will be public sector funding, because the Government cut £2 billion from the budget estimates for capital infrastructure projects in November last year. A large amount of that £2 billion was taken from the health service. Even if the public sector route was cheaper, the hospital may not be built, because there would be no public funding. It is like a football match where the rules allow only one goal for a side to score in. Only one side could win. The Government have not tackled that.

It comes back to the fact that the Government have retreated from their initial position that the PFI means additional rather than substitutional spending. The game was given away by the Financial Secretary, when, in his final muddled words to the Treasury Select Committee, he said that the money was additional at the time that it was spent. In other words, PFI money is additional to the Government's £2 billion cut. Those are weasel words to disguise what they are doing.

From the delays in bureaucracy, it is clear that there are no controls over the system. It was accepted that there is no control system in the Treasury or Departments. There is only voluntary registration by trusts of schemes into which they have entered. That is not an effective control mechanism for money that has been committed for 70 years—or for most schemes, 20 or 30 years—into the future.

The Minister said in an earlier debate that the PFI would be controlled by the external financing limit, but that is not true. It is true for publicly funded projects, because the capital charges are up front in the first year in which they are committed. They are not in PFI schemes, which involve charging for the provision of a service or the design or construction of a building over the years in which the service is delivered.

Often, when the commitment is made to enter into the contract, there is almost no expenditure in the first two or three years. In the years for which there is an EFL agreed by the House and promoted by the Government, there is no commitment. The commitment is made for years when there is no agreed EFL. It does not act as an effective control and monitoring mechanism. I should like the Minister to reply on that. He made that comment in a previous debate, but the controls are not there. We are committing money for years ahead, without democratic control or accountability.

There is a different sort of control over borrowing, in that organisations are usually prepared to lend only where there is a guarantee against a building. Trusts cannot at present pledge assets against borrowing. That control mechanism may not be very effective, but it is better than anything that exists for the PFI projects that the Government promote.

Sir Christopher Bland, the new chairman of the Private Finance Panel, admitted in evidence to the Treasury Select Committee that there was a built-in incentive to use the PFI route precisely because there are no financial control mechanisms in the first two or three years. There is no disincentive to use that route, because there is no control of over-expenditure in those years.

There are delays and lack of controls, and no additional funding is being provided, but in some ways the most serious problem is the impact on the choice of schemes that will go ahead. Because there is no guarantee of public funding to underpin the schemes, and because of the incentive to use the PFI that I have explained, we are effectively transferring the choice about which hospital projects go ahead from a public process done by democratic representatives to one where the private sector picks and chooses the projects that it wants to fund, design and build.

Some projects will not go ahead, not because of a public choice of priorities but because of a private sector choice. That is a complete handover of political responsibility to the private sector. It is disgraceful that a Government who talk about political sovereignty and role of Parliament should be prepared to hand such power to the private sector.

The privatisation goes further. Ministers must accept that, irrespective of what they say about clinical services not being privatised, that is precisely what is happening. It is happening to Royal Hallamshire hospital in Sheffield, according to its chief executive's evidence to the Treasury Select Committee. I do not know whether the Minister read it, but it frightened me. He said that the distinctions that the Government wanted to draw could not be drawn. Housekeeping teams are composed of people with clinical and non-clinical responsibilities. Management cannot be in the public sector for one and in the private sector for the other. That does not work in a hospital context.

Non-clinical people are being trained to do jobs such as taking blood samples. The trust is trying to enrich people's jobs and pass them more responsibility, under proper clinical training. What should be done with those people? Should we take away those responsibilities—or, when their jobs are privatised, is the totality of their work, including the clinical elements, privatised? Those questions have not been answered.

Further, services at Royal Hallamshire hospital, such as pathology and diagnostic images, are being transferred. Why are hospitals going to the private sector to fund such services? The chief executive's evidence to the Treasury Select Committee was clear. He said that it was because there is no longer any public funding to replace such equipment. He said that there was no choice but to privatise them, because clapped-out equipment could not otherwise be replaced. That is privatisation by the back door of clinical and non-clinical services.

The Bill is designed to remove an obstacle to the financing of PFI schemes but in doing so, it creates crucial problems for the NHS because of fundamental problems with the PFI. It will create delays in the construction of buildings and the provision of services. There will be a lack of democratic control. The choice of which projects go ahead will be transferred from political representatives to the private sector. The fact that resources are not available from the public sector to underpin those choices means that some projects simply will not go ahead when the private sector does not want to fund them.

That is all for a scheme that is substitutional, not additional. It brings no extra resources into play in providing health services. According to health professionals, regardless of what Ministers say, the scheme is privatisation of clinical services by the back door. Those are major concerns. If the Government allow the process to go ahead without at least imposing proper political and democratic control over it, it will be a complete dereliction of their duty to the country.

7.9 pm

Mr. Stephen Timms (Newham, North-East)

I apologise for being absent for much of the opening speeches. I was attending a meeting of the Treasury Committee. Indeed, I want to refer to evidence that it took on the private finance initiative in the health service. The debate on the Bill has revealed very deep confusion about the funding of the health service, not least on the part of Ministers responsible for it.

The Secretary of State gave evidence to the Treasury Committee on 4 March, to which reference has been made. My hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) said to the Secretary of State: Can you tell me, the trusts have the power to borrow, do they not? The Secretary of State said: No, that is incorrect. My hon. Friend then asked: The trusts do not have the power to borrow? The Secretary of State replied: The trusts do not have the power to borrow. My hon. Friend then read to the Secretary of State the schedule to the National Health Service and Community Care Act 1990, which confers that power on trusts. The Secretary of State said: I am open to correction and accepted that trusts did indeed have the power to borrow.

In a later exchange at the same meeting, we talked about the extent to which it would be possible for the Government to control trusts' borrowing, given the fact that, under the Bill, the whole strength of the public sector will stand behind the trusts in their activities. The Secretary of State said: The trusts' power to borrow will be constrained by their external finance limit in the same way that it is now and it will be constrained for the same reason that it is now, namely in order to control the capacity of the pace at which trusts take on liabilities which the taxpayer stands behind. He then talked a little more about the external financing limits. I asked him where the power to set those limits was set out in the National Health Service and Community Care Act. He said that he was not sure and that he would send the Committee a memorandum to explain the position.

The external financing limits came up again in the debate on the Bill last week, when the Minister said: there are the external financing limits, which are agreed at the beginning of the year and 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."—[Official Report, 24 April 1996; Vol. 276, c. 548.] Today, I re-read the memorandum that the Department of Health sent to the Treasury Committee in response to the Secretary of State's commitment. It refers to guidance in the NHS trusts finance manual, and says that the trusts have three core financial obligations. First, trusts have to achieve an annual financial target of a real pre-interest return of six percent on their average relevant net assets". That is fine. Secondly, it says that trusts have to break even on an Income and Expenditure basis". That is also fine. The third core obligation is to meet, or come within agreed limits of flexibility, the External Financing Limit set by the NHS Executive", to which the Minister and the Secretary of State have referred.

The memorandum goes on to say of those core obligations—the third being the external financing limit—that The second of these has statutory force, while the other two do not. That is the confusion that has arisen in the debate. What exactly is the status of the external financing limit? Is it statutory or not? If, as the memorandum to the Treasury Committee said, it is not, how is the public purse safeguarded when trusts take on the new powers?

The problem is particularly severe because of the way in which the health service has been fragmented in recent years. In my area of east London, there has been a dispute—it has finished in the past few days—between East London and the City health authority and Newham Healthcare NHS trust. Both bodies were established by the Government, and all their members are appointed by the Secretary of State. The dispute was about funding and resulted in my constituents being sent away from Newham general hospital and being told that they could not be given dates for their operations. Given the autonomy of such bodies and the fact that there do not appear to be the necessary statutory controls to monitor their performance, great anxieties arise in the Bill about the risks being taken with the public purse in order to allow those large PFI hospital construction projects to take place.

We can understand the Government's anxiety to get the Bill in place, but the level of risk in what they are doing is very high. They are putting the public purse in jeopardy. I hope that there will be further, long and cool reflection—and indeed amendment—before the Bill passes into law.

7.15 pm
Mr. Horam

I commented during the speech made by the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith), who I am glad to see back in the Chamber, that if he thought it sensible not to carry on his career as a medical man when he left the House, he might take up a career in finance. I withdraw those remarks in the light of what he said later. His failure to understand the simple principles behind the Bill was fairly stupendous. I overrated what he had to say. The Bill simply makes it necessary for the NHS to honour its debts, whereas at the moment, it need not do so.

Ms Armstrong

rose—

Mr. Horam

I shall not give way to the hon. Lady because I am replying to the hon. Member for Strathkelvin and Bearsden.

The hon. Member for Southwark and Bermondsey (Mr. Hughes) said, in a rather interesting speech, that the Bill was not theologically wrong and might be a good idea. I am glad to have that rather qualified support. He also said that there was not much accountability in it, but he forgot the role of community health councils, which are important. [Interruption.] They are important. When any major change takes place in local health provision, it has to be referred to the CHC, and, indeed, other representative bodies. The hon. Gentleman cannot therefore ignore all that.

Mr. Simon Hughes

rose—

Mr. Horam

I have given way to the hon. Gentleman about five times. What I have said should he taken into account when one considers consultation and accountability.

The hon. Members for Blyth Valley (Mr. Campbell) and for North-West Durham (Ms Armstrong) made very understandable points about their local hospitals, which I shall read when I look at Hansard. In many ways, they were very fair points. They were both in essence saying that they wanted schemes to go ahead—there was no doubt about that—but with public sector cash. The hon. Member for Blyth Valley said precisely that. He hoped that there would be a Labour Government and that schemes would then go ahead with public sector cash.

The hon. Member for Sheffield, Attercliffe (Mr. Betts) will be surprised to know that, in some technical respects, he was actually quite correct, and I agree with him. [Interruption.] They were technical points. I am glad that he agreed with me on the fundamental point about savings being available through things such as compulsory competitive tendering and market testing in the health service. He may well know, since he is a student of those matters, that we have saved more than £1 billion through market testing in the NHS since we introduced it. In objecting to that process, the hon. Gentleman must realise that that gap would have to be filled by public sector cash.

The hon. Member for Rother Valley (Mr. Barron) made the point in his initial speech—at some length—that, in the final analysis, this is about the financing of hospitals and hospital improvements. The Government are bringing in private sector cash not only to build new hospitals, but to deliver better value for money. Labour certainly admits that it wants more hospitals, but if it does not use private sector cash to provide them, its only recourse is to use more public sector cash. That is the fundamental point that Labour must face, but it never faces up to it—it is a tax-and-spend party.

Labour's only alternative to the way in which we are providing funds via the private sector is to bring in public sector funding. It must increase public sector expenditure even more and raise taxes to fund that increase, or it will Licensing (Amendment) (Scotland) Bill not be able to build hospitals. That is the fact of the matter. Labour is fundamentally ashamed of its past, and silent about this matter. Its opposition to the Bill is considered. wholly bogus.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

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