HC Deb 14 July 1997 vol 298 cc159-65

'This Act shall come into force on a day to be appointed by order of the Secretary of State, being a day not earlier than 1st September 1997.'.—[Mr. Jack]

Brought up, and read the First time.

Mr. Jack

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

The Chairman of Ways and Means (Sir Alan Haselhurst)

With this, it will be convenient to discuss new clause 2—Date on which Act shall cease to have effect— 'This Act shall cease to have effect three years after enactment.'.

Mr. Jack

The Minister, who is an assiduous man, will no doubt be familiar with paragraph 29(vi) of the Bates report and paragraph 12(6) of a document that I am sure he has studied in great detail, "Guidelines for Smoothing the Procurement Process". Both deal with a matter of considerable importance to the Minister, who told us at the beginning of the debate that he wanted to do all he could to accelerate the PFI process and to leave a nice taste in the mouth of those who are involved in it. The reason we have tabled our new clause, providing a specific date for introduction of the Bill's powers, is to give him time to reflect and to consider the matters dealt with in the two numbered paragraphs.

The Minister is perhaps a little unsighted, and I should perhaps explain the matter in a little greater detail. Paragraph 29(vi) of the Bates report—which I remind him has been accepted in full by the Paymaster General—states: When a decision is made not to proceed with a project and that decision is not related to the viability of tenders received, contractors' bidding costs should be refunded. Such a procedure exists already in the Highways Agency and should apply generally across Departments. That advice, which the Paymaster General claims is new, reflects the advice in one of the numbered paragraphs in "Guidelines for Smoothing the Procurement Process".

I raise the issue now to give the Minister a chance to consider what will happen to those who ultimately become the losers in the exercise. I appreciate that he might guide me in saying that projects that are refused are not yet losers, because they are subject to his consultation exercise and may return in another guise. At some point, however, someone will lose, whether it is a bidding consortium that incurs considerable costs or a trust itself.

I do not accept the Minister's answer to a parliamentary question from me, because his answer indicated a difference of view. As I had understood it, in normal circumstances expenses incurred by trusts in such matters would have been capitalised. He disagreed, and said that expenses would have to be taken into account under revenue. Either way, a trust will lose after having spent a considerable sum. Ultimately, and more importantly, however, those whom the Minister wants to attract to his cause—contractors and others in a consortium—will lose out.

As the Bates report states, the Government's policy is to reimburse people for their bidding costs if, through no fault of their own, a project comes to a conclusion unfavourable to them. We have suggested delaying by one month the Bill's commencement, so that the Minister may reflect carefully on his obligations if he is to stay in line with the stated position of the Paymaster General.

Mr. Simon Hughes

I should like to say a few words on new clause 2, which is grouped with new clause 1. I accept that the arguments in this debate have been run in the other place. Our proposal and our view are very clear, and have not been changed or shaken by the debate in either the other place or this House; rather, they have been confirmed by the Minister's comments.

We are clear in our belief that current PFI arrangements are neither satisfactory nor the best that can be provided for a public-private partnership in the health service. Therefore, we do not want permanently to establish the current system, which has been inherited from the previous Conservative Government and which has been continued unchanged, at least initially, by the new Government. We do not want the system to be perceived as something that will continue indefinitely.

We want to force the pace of change, and there are only two ways in which to do so. Either we should say, "We will change it one day," or—as the House often does with legislation—we should time-limit it and say, "Unless the House decides that it wants to continue legislation, that legislation will no longer continue to exist."

New clause 2 would therefore place a time limit on the Bill. If the Government won the argument and held to their view that PFI was the best form of public-private partnership, they would return to the House in three years, or as soon as they wished to do so, and say that it had to be continued, and that they intended to legislate for an indefinite period. If, however, as we hope, they come back after their review and say that it is not the best system, the legislation will either need to be replaced or repealed, or will be left on the statute book and not used, which is nonsense if we want a statute book with no redundant legislation on it.

The only argument against the notion of a time limit is that used by the Minister in response to my hon. Friend the Member for Oxford, West and Abingdon (Dr. Harris) in the previous debate—that it would cause uncertainty. That argument was also used by the Minister in another place. Intellectually, I understand that argument, but the Government have to decide what signals they want to send. We are dealing with all stages of the Bill in one day, unlike what happened with the last short NHS Bill introduced by the previous Government, which at least went through all its stages in the correct time, and unlike what happened to this Bill in another place, when there were proper gaps between all the stages.

The Bill was introduced because the Government want to ensure that projects already in the pipeline can be progressed. My colleagues and I happen to think that that pragmatic view is not sufficiently principled to be justifiable on the basis of dealing with projects in the pipeline.

Even if that were the Government's view for the time being—even if they said they believed that the PFI was the only show in town, or, to use the Minister's words, it was PFI or bust, as in the case of Gravesham and of Norfolk and Norwich—it still would not mean that something else could not happen within three years. To deal with the uncertainty, the Minister has only to say that there will be partnership arrangements which will protect the interests of the private partners, that the Government will ensure that they are consulted on, that they will ensure they get the legislation right first time, and that everything will be done in good time. In that way, the assurance is given.

If the private sector, or the bankers—to use the example cited in the previous debate—are so troubled about whether they have any future in the health service that the prospect of a Government assurance that there will be legislative arrangements within three years is not enough, I do not think that they are very secure partners for the NHS. We want people who are committed to the health service, not just to short-term financial profit. We want people who see themselves as having a long-term obligation to be partners in British health care.

The Bill is to deal with projects in the pipeline. The Minister has helped himself since the debate in another place by giving 14 of them the green light. He knows as well as I do, because it is in the letter that he kindly wrote to us at the beginning of the month, that they are meant to be up and running within 18 months; if they are not, he will ask why.

I am not trying to tie the Minister to the exact day, but, in this final debate on amendments to the Bill, I should like the Minister to tell us when he expects the PFI review to be completed—this calendar year, financial year or legislative year. I am not bothered which it is, because I want it to be done properly, but whichever it is, there will be plenty of time for Parliament to debate what should come after the scrappy PFI scheme introduced by the Tories.

It does not sound convincing when the scheme which the Labour party criticised so roundly and so often is now being endorsed so warmly as the only show in town. Either it was right before, which the Conservatives are entitled to argue, and is right now, or it was suspect then, as we argued, and it is suspect now. There is nothing to suggest that it was right then and suspect now, or the other way around.

We think that the Bill should be time-limited. Three years is sufficient to get the new show on the road. People who make a commitment to the health service and whose present project has been approved under the Bill will be reassured by a subsequent Government assurance that they intend to put a replacement and better system in place—a system that I shall collaborate with them in achieving—well before the three years are up.

Mr. Milburn

Both the new clauses would, in different ways, undermine the PFI in the national health service. They would therefore also wreck the urgently needed hospital building programme.

New clause 1 would prevent the Bill from coming into force before 1 September. That is a slightly odd proposal from the Conservatives, who have previously declared their firm intent to help speed the Bill through. We are committed to sorting out the mess that we have inherited. As part of that process, we want to reach financial close and to see work starting on site as soon as possible. Commercial contracts have been signed for the schemes at Dartford and Norwich. They are just waiting for the Bill to be passed before they proceed to financial close and the diggers start on site.

I remind the right hon. Member for Fylde (Mr. Jack), if he has not realised this already, that, if the Bill cannot come into force before 1 September, bankers—I know that that word is anathema to some Liberal Democrats—will not commit their money until that date. It is that simple. The consequence, right down the line, will be that communities that are waiting for schemes to go ahead will face further delay. We are all sick and tired of delay. We want certainty and clarity, and we want work to begin. For that reason, I invite the right hon. Gentleman to withdraw the motion.

Mr. Jack

The Minister talks about the need to speed up progress on the Norfolk and Norwich project. How will the project achieve what he wants without the one-fiftieth scale architectural drawings required to know what to build where?

Mr. Milburn

The scheme is at commercial close, and is waiting to see how the Bill progresses. There are issues to be sorted out, but I am confident that rapid progress will be made. The last thing the project needs is a further timetabling obstacle. The people of Norfolk and Norwich need a new hospital in the city, and they should get it.

If the right hon. Gentleman wants more information about abortive costs than I can briefly give him now, I shall gladly write to him. He will know that NHS policy has always been that bidding costs are at risk until a scheme is given full business case approval by the NHS executive and the Treasury.

That is reasonable, because otherwise the Government could end up refunding costs incurred by the private sector in developing a mediocre scheme. Why should the taxpayer subsidise poor schemes? The hon. Member for Orpington (Mr. Horam) urged me to take robust action. I am doing that. Robust action does not involve bailing out poor schemes. The Bates report recommends certain actions on abortive costs, but the proposals will not be applied retrospectively. They will apply to any scheme approved after 23 June, when the conclusions of the report were issued.

The aim of new clause 2 is that the Bill should cease to have effect after three years. That is another pretty unusual proposal, which does not improve the legislation.

The hon. Member for Southwark, North and Bermondsey (Mr. Hughes) asked a simple question: how long will our review of the PFI take? I give him a simple answer: it will be finished by the end of this calendar year. The last thing I want is yet a further obstacle placed in the way of establishing confidence in the existing PFI process. For that reason—to avoid doubt and to guarantee what he referred to as the long-term involvement of a number of stakeholders in the PFI—I ask the hon. Member not to press his new clause.

Mr. Jack

We have heard the Minister come almost full circle. I do not want to delay unnecessarily the implementation of the PFI in the health service.

If the Minister and his officials cared to examine the record of the Treasury during my time there, they would discover that we did a great deal to try to make progress in what would, inevitably, always be an immensely complicated area. We took a lot of steps which I will not go into now to try to make that progress.

Had we not made some progress by establishing good foundations, the Minister would not have 14 projects on which he can now negotiate. If it had not been for us sticking to our guns on the PFI, there would be no such thing for him to benefit from. Bearing in mind the flak to which we were subjected from the then Opposition, who used to tell us that the PFI meant privatisation by the back door, criticism of our inadequacies comes rich from the Minister now.

I have looked at the Bates report, and after the conclusion of our proceedings I should be grateful if the Minister told me where it mentions the starting date to which he referred. We proposed a delay to allow the Minister to consider what appears to stated Government policy. He is now at odds with his colleague the Paymaster General, who said in his press release that the Government accepted all the Bates report.

I do not see anything in the press release from the Treasury to say that the terms of that acceptance apply only to projects agreed after the introduction of the report. I accept that the terms governing the procurement process state that the reimbursement of the bidding costs remains a matter for individual Departments. Bates has moved on from that, however, and has stated clearly that, when a decision not to proceed with a project is made and that decision is not related to viability, the bidding costs should be refunded.

The Minister's announcement was made after Bates had reported. Some people in the world of construction, project finance and so on will be extremely upset and disappointed by the Minister's narrow interpretation of that report.

At least this brief debate has teased out the fact that the Minister will disappoint people. His remarks are on the record, and I have no doubt that the contractors will want to take them up with him. As we do not wish to delay the PFI as it makes its undoubted progress, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Bill reported, without amendment.

Order for Third Reading read.

Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. Milburn.]

12.47 am
Mr. Simon Hughes

The House has spent six hours dealing with all stages of the Bill. It is a hugely important one for the health service, and in the past six hours we have exposed the differences on it which exist across the House.

The Liberal Democrats believe that, if the Government had started the day with significantly more funds for public provision for the health service to build, the Bill would not be so crucial. A better funded health service is a better and more central remedy than the Bill.

As my hon. Friend the Member for Isle of Wight (Dr. Brand) said cogently, it is nonsense for the health service to plan for itself spontaneously from the bottom up only when a local idea comes to bloom, or to make every proposal subject to the approval of the Secretary of State or the Minister.

The hon. Member for Norwich, South (Mr. Clarke) asked that the Minister should approve the number of beds in the new Norfolk and Norwich hospital, as well as the approach roads to it. It is nonsense for the health service to make such decisions. Of course Ministers should be accountable, but proposals should be planned and scrutinised at a regional level. It is at that regional democratic level that the public should be involved, to ensure that we have an adequately resourced and adequately planned health service.

Thirdly, I think that we have clearly made the point that we believe that a better way for private finance to be involved in the health service is not through the one-off, ad hoc, area-by-area local deals, but through establishing a secure, national system whereby those on the private sector who want to invest in the health service can do so. That should save all the duplication, which I agree we want to avoid—there would be one process for distributing the resources and sharing out the capital. There would be one source, with one kitty and, ideally, one pool of money. We clearly take a different view from the Government on that.

Despite those reservations, and for obvious reasons, we will not vote against Third Reading, just as we did not vote against Second Reading. We tabled our reasoned amendment, but it was not selected; we accept that that is the way that the House organises its business. The Minister knows that there are things in the pipeline that have been frustrated enough. Whatever our view might be about the individual schemes in Norwich, Gravesham or Dartford, it is not our job to frustrate people—including some of my colleagues in Newbury, Hereford and elsewhere—who have already been waiting long enough for schemes that are approved under the system.

We have not blocked the Bill, but we have severe doubts about the system of financing. We believe that we will be proved right, but, in the meantime, we will collaborate with the Minister and the Government to try to ensure that we get a better system than the one that they took off the shelf in Richmond house when they inherited the system from the Tories. They can do better than that, and Britain can do better than that.

12.51 am
Dr. Harris

There are a couple of points on which I should like to seek reassurance from the Minister. I am sorry that I was unable to catch his attention and intervene during the debate on Second Reading.

The first point involves the report from the Institute of Health Services Management, which stresses the need for purchasers to be actively involved in the genesis, not just the checking, of PFI schemes. It states: the purchasing side of the NHS must get a grip on the process. Leaving the initiative with provider trusts, and with their consortium partners, risks locking the service into models of health care that may quickly be out-dated. 'The starting point has to be a clear view about the kinds of health care facilities needed in the future.' I seek the Minister's reassurance about how the purchasers within the health service are to be locked into that process from the beginning, not just forced to accept whatever provider trusts and their consortiums bring forward.

I also seek the Minister's reassurance, either now or at a later date, about the preservation of some of the important aspects within the health service, such as education, which may be peripheral to the concerns of bidders in the PFI process. What means will there be to ensure that those running hospital services are able to respond to new Government initiatives relating to the appropriate treatment of hospital staff after hours? I have referred to catering facilities after hours for those unfortunate members of the health professions who have to work out of hours in difficult circumstances.

I stress that, for many hospitals in my region, particularly those that are not able to use the PFI, the delay has arisen from initially having to engage in the PH process. If it was clear what made a scheme fit for the PFI, and if public funding were available for necessary schemes that were not appropriate to the PFI, we could ensure that urgently needed schemes that were not suitable for the PFI were not subject to the delays that we have seen in the past few years.

Question put and agreed to.

Bill read the Third time, and passed, without amendment.