HC Deb 14 July 1997 vol 298 cc75-124

Order for Second Reading read.

Mr. Deputy Speaker (Sir Alan Haselhurst)

I have to announce that the amendment in the name of the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) has not been selected.

6.48 pm
The Minister of State, Department of Health (Mr. Alan Milburn)

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

Two weeks ago, I announced the outcome of a review of all the major private finance initiative acute schemes in the national health service. I gave the go-ahead to 14 hospital projects that the Government believe are likely to contribute most to the health care needs of their local communities and proceed most rapidly to an affordable, value-for-money financial close. Those not selected had the right to make representations about the decision and the list cannot be regarded as closed until they have all been considered.

Prioritisation means that the chosen projects can be expected to reach financial close within the next 18 months. As I have stressed throughout, I shall not hesitate to cancel any contract that fails to deliver on time and on price. However, I am confident that work will be well under way on site by the turn of the decade on each of the pathfinder schemes, which will deliver much needed and long overdue hospitals to communities that have waited too long for them.

Mr. Simon Hughes (Southwark, North and Bermondsey)

Can the Minister say whether any of the trusts responded to the opportunity to make representations within 10 days and, if so, how many and which ones?

Mr. Milburn

A number of trusts responded and have made representations. Today is the last day for representations to be received. From memory, I believe that eight or nine responded. Perhaps I can give the hon. Gentleman a list later. That was his first question; I hope that it may also be his last, but I am probably over-optimistic about that.

The fact that both the national health service and the private sector—banks, contractors and builders—have given such a warm welcome to the Government's announcement speaks for itself. The House must recognise that four or five years of indecision and inaction had sapped confidence in the viability of the PFI. The prioritisation process has helped to secure confidence on all sides. I make no apology for taking decisive action to unlock the PFI gridlock in the national health service.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

I apologise for interrupting my hon. Friend. I will ask just one question. My hon. Friend will know from the disastrous privatisation of the railways that the taxpayer can come a pretty bad second in any of these arrangements, particularly in relation to the health service. We want new hospitals to make up for the neglect, but we must ensure that taxpayers will not pay more in the long run than they would have done otherwise, and for an inferior service. Can my hon. Friend assure me that that aspect has been looked at carefully?

Mr. Milburn

I am grateful for my hon. Friend's comments. I can give her that assurance. Indeed, no PFI scheme will get the go-ahead unless it can demonstrate improved value for money for the taxpayer as well as meeting real strategic health need in local communities. That is the essence of the private finance initiative. I am very pleased to be able to give my hon. Friend that undertaking.

Mr. Dale Campbell-Savours (Workington)

May I press my hon. Friend a little further on that? It is a very important issue, as my hon. Friend clearly recognises. Will there be a public sector comparator that we can examine for each project so that we can see what the real figures are?

Mr. Milburn

As my hon. Friend possibly realises, to date much of the process of the PFI has been shrouded in secrecy, which has helped to devalue the currency of the private finance initiative in the national health service. I am happy to give an undertaking that in future the public sector comparator will be published at the appropriate time so that hon. Members and, indeed, local communities can better judge for themselves the content of PFI schemes and make sure that they mean improved value for money for the taxpayer.

Mr. Campbell-Savours

May I press my hon. Friend once again on that matter? I am pleased to hear those responses, which I am sure will be very reassuring. Of the schemes that are proceeding, can we assume that at some stage—perhaps my hon. Friend can say at what stage—information will surface to show that they are more economic in terms of the public sector comparator?

Mr. Milburn

That is indeed the case. When the final transactions are concluded on the 14 deals—if 14 there are, bearing in mind the representations—we shall make information publicly available to demonstrate the very point that I have just made: that they do indeed make more economic sense from the point of view of the national health service.

Mr. Michael Jack (Fylde)

I am grateful to the Minister for giving way so early. He criticised the past four to five years as a period of inactivity due to problems with the private finance initiative. Before the end of the Second Reading debate, will he tell us how many district general hospitals valued at, say, £25 million or above were completed in each of the past five years?

Mr. Milburn

I will endeavour to provide that information for the right hon. Gentleman.

Mr. Simon Hughes

The logical question which follows that asked by the hon. Member for Workington (Mr. Campbell-Savours) is whether the Minister will also publish the criteria for what in shorthand was called the PFI ability. If we are to have comparators, we also have to know whether, for example, value for money is measured over 25 or 50 years and whether to take into account the cost of borrowing and payback; we also need to take into account the certainty of the use of the building and the variability of the demand for a particular service.

Mr. Milburn

All of those are extremely reasonable points. As I understand it, information has already been placed in the Library. Indeed, I wrote to all hon. Members on both sides of the House acquainting them with the prioritisation exercise, the criteria and the assessments that were undertaken. It has been a very open and very fair process. I shall, of course, endeavour to ensure that appropriate information is made available.

Perhaps one point about which I can assure the hon. Gentleman and some of my hon. Friends is that the PFI represents a good deal on major acute hospital schemes precisely because it includes not just the building of the hospital but the maintenance over the life of the contract. We all know from experience in our own communities the horrendous maintenance backlog that has built up, particularly during the course of the past 18 years. The PFI offers an opportunity not just to have up-to-date hospitals now but to have up-to-date hospitals in five, 10, 15, 20 and 25 years' time. That will be a real boon for the national health service.

I make no apology for taking that decisive action, but I realise that it has left some trusts and, indeed, some colleagues very disappointed. I can understand their concerns. Perhaps the most shocking thing that I found during my many meetings with colleagues on both sides of the House in the lead-up to the prioritisation announcement was the evidence that they brought with them of the appalling physical state of their local hospital buildings. Years of neglect have contributed to a considerable backlog of restoration and replacement work. Unless we act now, we shall face a real danger that the 21st-century NHS will be operating out of hospitals built in the 19th century.

Mr. Simon Hughes

I shall try to limit myself after this to one more intervention.

The Minister is right. Will he give his Department's estimate of the capital repairs and maintenance backlog? Will he also tell us whether the Government are continuing to sustain the Tory Government's 16 per cent. capital reduction in public funding this year, and what the capital reduction will be next year and the year after?

Mr. Milburn

From memory, I think that the estimated backlog in repairs, from the Department's point of view, amounts to about £2 billion. We shall consider capital and revenue allocations in the light of my right hon. Friend the Chancellor's recent Budget announcement allocating a further £1.2 billion for the national health service. Before the hon. Gentleman gets too smug about this, I note that in the Liberal Democrat manifesto the Liberals were talking about putting an extra £500 million into the national health service. We have already trumped that figure. Indeed, we have doubled it.

As I have said, unless we act now, we shall face the very real danger that the NHS of the 21st century will be operating out of hospitals built in the 19th century. That is why the Government have acted to get the hospital building programme moving. The announcement that I made two weeks ago is just the first wave of new hospitals for the next century. I intend to make a further announcement about the second wave in spring next year. The second wave will be based on assessments made by NHS regional offices of the health service need for large capital development projects in their areas.

In other words, in future it will no longer be the whims of the market that drive hospital building; it will be the needs of patients. No more, no less. As the party that created the national health service and, indeed, first advocated public-private partnerships to improve investment in public services, it is our duty to make the PFI deliver the goods for the benefit of all patients. Now that we have a sensible number of projects in play, we must ensure that they reach financial close without too much delay. That is the purpose of the Bill.

The Bill makes it clear that NHS trusts have the power to enter into PFI contracts so that the financial community can have the confidence that it needs to provide funding for the most advanced hospital development projects. The Bill should also be seen as another important step in our programme to develop new forms of public-private partnership, of which the PFI is one model. The NHS needs high-quality facilities to deliver world-class services. The PFI undoubtedly has the potential to provide those facilities, but despite all the promises of jam tomorrow, not one major hospital has been built through the PFI since the initiative was first launched in 1992.

In theory, under the PFI the public sector does not pay to build a hospital; it pays for the delivery of a specified service to agreed quality standards. No payment is made until the new facility is ready, and any diminution in service standards can lead to a reduction in payments. So far, so good. Unfortunately, however, the PFI in the NHS has never left the drawing board. Some small schemes have been brought to fruition—car parks, accommodation blocks and so on—but the urgently needed major hospital building programme has been stopped dead in its tracks.

Mr. George Stevenson (Stoke-on-Trent, South)

I am concerned about the interface between smaller and larger schemes. I am sure that most of us welcome my hon. Friend's initiative, but can he give us some assurances about smaller schemes, which are as important to the community as larger schemes? A smaller scheme in my constituency of £1 million has been held up over the past four years. It is in the hands of the West Midlands regional executive committee. No progress has been made.

Mr. Milburn

I shall be announcing in due course what progress we intend to make with smaller schemes. If the scheme to which my hon. Friend refers involves less than £1 million, it is within the powers of the individual trust to make progress with it. If it is not doing so, I suggest that he takes up the issue with the local trust management. If my hon. Friend wishes, I shall be happy to look into the issue that he has raised.

Smaller schemes have not been the problem, but little initiative has been forthcoming to provide for urgently needed major hospitals. Time has been wasted in wrestling with apparently insurmountable problems, and £30 million that might have been better spent on direct patient care has been used by NHS trusts on legal, financial and other consultancy fees without one major contract being secured. There is always a steep learning curve when initiatives are introduced and tested, and it costs money to obtain expert help. In reality, however, the record of the past few years has been appalling. To expend such a level of public money without one positive result is an unenviable record.

Mr. Chris Pond (Gravesham)

My constituents and my hon. Friend the Member for Dartford (Dr. Stoate) will be emphasising the fact that they have waited for years, notwithstanding promises, for a new district hospital. It is only now that the initiative is being put into place. One of the difficulties, as my hon. Friend will accept, is that in such lengthy processes, and despite all the expenditure on consultants, we may end up with hospitals that may not fully meet the needs of the districts that they are designed to serve.

In the health district within my constituency there are about 500 beds. Every general practitioner in the district considers that provision to be inadequate. With the PFI project negotiated by my hon. Friend's predecessors, who tried to rush the contract through, the proposal amounts to only 400 beds. In the longer term, shall we see measures to ensure that contracts meet the health needs of the districts in which they are to operate? I ask that question while very much welcoming the PFI proposal for Dartford and Gravesham.

Mr. Milburn

I know that my hon. Friend is an advocate of the proposed new hospital in his constituency. He has been lobbying consistently for progress to be made. I would expect that all health authorities would continue to ensure that PFI projects in their areas, once under way, met local health service requirements. I would expect especially that in the annual contracting round the issue of the number of NHS beds available in any hospital, whether publicly funded or funded through the PFI, would be properly taken into account when commissioners were reaching financial agreements with providers of services.

Mr. Simon Hughes


Mr. Milburn

The hon. Gentleman wishes to intervene again. I have given him a couple of cracks of the whip already and I know that he will make a long speech. He has also tabled a large number of amendments. I therefore ask him to hold his horses for a moment or two.

The Government draw no pleasure from the fact that the previous Administration were unable to make the PFI work in the NHS. The real losers—those who suffered most—were the patients in need of treatment and the doctors, nurses and other health professionals who had to work in inadequate facilities. They are why we gave our manifesto commitment to overcome the problems that have plagued the PFI in health, and we are honouring that commitment.

My hon. Friend the Paymaster General commissioned a rapid review of the PFI across Government, and he has accepted all the recommendations contained in Malcolm Bates's report. My hon. Friend has already announced the creation of a new Treasury private finance task force, which will focus on the quality of PFI transactions. Its tasks will include helping central Government Departments and agencies to road-test significant projects for commercial viability before procurement begins. My Department looks forward to working with the task force to deliver real improvements to the NHS-PFI programme in future.

To complement that work, we are undertaking an overall review of the workings of the PFI in health. We are committed to end delays, to sort out confusion and to develop new forms of public-private partnership that work better and protect the interests of the NHS. The review will help us to secure the market, improve the process and develop the project. We shall be listening to the views of both public and private sectors. The objective will be to identify how to make the best use of skills and expertise from both sectors for the benefit of patients.

The proposed legislation before us will remove the most significant obstacle in the way of pathfinding schemes. There is no lack of support or interest in the financial community for the PFI in health. Banks are concerned, however, that there is some doubt about whether NHS trusts can enter into PFI contracts. Our legal advice is that the National Health Service and Community Care Act 1990, which sets out trust powers, provides the power for entry into PFI contracts. At the same time, the PFI is obviously not explicitly referred to in the 1990 Act. Banks remain concerned that they may not be able to recover their money if, at some stage in the future, PFI contracts are found to be ultra vires for the trust. The banks have been chastened by their problems in other sectors and are unwilling to take what they perceive to be an excessive and unnecessary risk without further legislative cover. The possibility of a statutory instrument has already been explored, but it is clear that that would not resolve their concerns.

In those circumstances, primary legislation is necessary, and the Bill removes any doubt about the power of an NHS trust to enter into contracts under the PFI. The banks concerned with the leading projects, including the one in Dartford, have seen and agreed the wording of the Bill. They have made it clear that the wording satisfies all their outstanding concerns. As a result, they will be prepared to lend into the leading schemes once the Bill is enacted. We believe that the legislation will also provide security and confidence to enable successor schemes to reach financial close without hindrance.

Clause 1 provides that the powers of an NHS trust include the ability to enter into agreements certified by the Secretary of State as externally financed development agreements, and specifies the circumstances in which the Secretary of State may give a certificate to that effect. In practice, we expect all but the very lowest value contracts to be certified. Individual trusts have thresholds below which they can approve schemes without reference to the Secretary of State. There are three different levels of threshold, which are set in relation to the turnover of the trust. Rather than state an absolute de minimis limit for certification, we propose that contracts whose value is below the trust's delegated limit will not be certified. We shall make that requirement clear in guidance.

Clause 1(6) of the Bill makes it clear that the validity of such contracts—indeed, any contracts made by NHS trusts in the past, now or in the future—will in no way be affected by the lack of a certificate: they will stand or fall on their merits. We know from experience that there has largely been no problem in funding smaller schemes; it is the major, acute schemes that have encountered problems.

Clause 2 allows any corresponding provision made by Order in Council in respect of Northern Ireland to be subject to the negative resolution procedure.

It will be apparent from the brevity of the Bill that this legislation is straightforward and uncomplicated.

Mr. Simon Hughes


Mr. Milburn

I know that the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) does not think so, but he must wait his turn.

The Bill fulfils a manifesto commitment, and its purpose is transparent: to remove any doubt about the power of an NHS trust to enter into contracts under the PFI.

When the Bill was considered in the other place, a number of amendments were tabled, but were subsequently withdrawn following clarification by my noble Friend Baroness Jay of Paddington. One amendment, however, was accepted, as we agreed that it improved the comprehensibility of the Bill without detracting from the achievement of its objective. The amendment substituted a new subsection (6) in clause 1, which broadens the scope of the original subsection. The provision is in much shorter and simpler terms than its predecessor. It was a victory for plain English, and those are few and far between in the House.

It is fair to say that there was underlying support for the Bill from all quarters, but one issue of contention arose over the question of services in PFI deals. Concern was expressed that clinical services might be included in a PFI deal. That certainly was the case under the previous Administration, but not under this Government: indeed, it is our stated manifesto policy that clinical services are excluded from the PFI.

However, we have acknowledged that there is a continuing debate about some of the grey areas, especially the definitions of so-called clinical support services, and we have said that that will be addressed as part of the wider review of the PFI in health that is under way. It is obviously essential to consult widely on such a sensitive issue before decisions are made. Any schemes proposed before the review is complete will be considered case by case. Projects will not be allowed to proceed if they transfer to the private sector categories of services that Ministers believe, in the interests of the health service, should be provided directly by NHS bodies.

By the end of the year, once the review is complete, we shall have a categorical statement of what may or may not be included in the PFI. I do not propose to anticipate the detail of that review, but I am pleased to be able to repeat for the benefit of hon. Members an assurance given by my hon. Friend in the other place that pathology and radiology services will be excluded from the PFI. I know that there will be other services about which hon. Members will want similar assurances, but I believe strongly that the review should be conducted before conclusions are drawn. Our commitments on pathology and radiology are given in response to specific issues that have been raised during the passage of the Bill, and to act as a signpost for the future.

It is important that in the future the interests of employees are properly taken into account as they, too, are significant stakeholders in the national health service.

Lest there be any confusion, I should like to take the opportunity to remove any other doubts about the Government's intentions on the NHS. We will renew the health service. We will tackle bureaucracy and we will replace the internal market. We will do that not behind closed doors, but in a constructive and open partnership with all those who care about the service: the patients who use it and the community health councils that represent them, the clinicians who provide the service, the managers and other staff who support it and the taxpayers who pay for it. Above all, the NHS under this Government will remain a truly national health service, available to all on the basis of clinical need.

Two weeks ago my right hon. Friend the Chancellor of the Exchequer gave a massive boost to everyone who cares about the NHS by announcing an extra £1.2 billion for patient care. As a result of prioritising major acute schemes, we have also been able to secure the largest new hospital building programme in the history of the NHS. The programme is worth around £1.3 billion. Taken together, those undertakings represent an extra £2.5 billion to take forward the modernisation of the health service.

It is clear that we are putting the people's priorities first. We are determined to get hospitals built, rather than just talk about them being built. Not one hospital planned under the PFI has yet got off the drawing board. I am determined to put that right. By enacting this legislation, we shall be able to start constructing the new facilities that the NHS so badly needs. We gave a manifesto commitment to sort out the mess in which the PFI had been left, and we are delivering on that commitment. This is a practical, essential and simple measure and I commend it to the House.

7.15 pm
Mr. John Maples (Stratford-on-Avon)

I must, first, deal with the Minister's imaginative arithmetic. Of the £1.2 billion, only £1 billion is for England. That represents a lower real increase in spending than the increase that the previous Government proposed for this year. During his speech, we discovered that it also includes next year's capital spending. When asked by the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) whether public capital would be available for some of those projects, the Minister said that he was considering how much of that £1 billion would be available.

Mr. Milburn

Will the hon. Gentleman remind the House how much his Government had allocated for the national health service next year?

Mr. Maples

We would have proposed a settlement similar to this year's. As the Minister knows, the figure for this year is £1.6 billion, and it does not include capital spending—almost all of it is for hospital spending. If the Government can match our spending record over the past 18 years, why do they not commit themselves to doing so?

At Health questions three weeks ago, I invited the Secretary of State to say whether he would match the 3.1 per cent. a year real increase in spending over the past 18 years, but he declined to do so. He might like to take this opportunity to do so, but I doubt that he will because he knows how difficult that would be. The Government will certainly not match it next year.

The Secretary of State for Health (Mr. Frank Dobson)

Would the shadow Secretary of State care to give us the average real increase for the past three years?

Mr. Maples

I am talking about a long-term average: the Secretary of State keeps referring to long-term plans. He picks three years because four years ago the figure was 5.9 per cent., and he conveniently wants to leave that year out. If he chose four years, the average would be extremely good. We can all play with numbers, and he deliberately picks three years because it leaves out an almost 6 per cent. real increase in spending in the previous year. He refuses to commit the Government, who have had 18 years to think about what they will do with the national health service. He has spent all that time criticising the previous Government, yet he refuses to commit himself to bettering our spending record.

It is not our intention to oppose the Bill: it is our Bill, and had the election been called 10 days later, it would have been introduced by Conservative Ministers. We intend to try to amend it, and to use those amendments to explore the Government's thinking, because the PFI involves some complex issues. We and many people outside the House want to be clear about what is involved.

The Minister is clearly an enthusiast of the private finance initiative, but his enthusiasm was not, until recently, shared by many in his party. One must be careful when using the word "hypocrisy" in the House. It certainly does not apply to the Minister, but this is a massive exercise in collective hypocrisy by the Labour party. It says one thing in opposition and does another in government.

My right hon. Friend the Member for Fylde (Mr. Jack) and I plan to have a little section high on the menu of health debates entitled "words for eating" to remind Labour Members what they were saying until a few weeks ago.

Ms Bridget Prentice (Lewisham, East)

Oh no, this is the same speech as the hon. Gentleman made three weeks ago.

Mr. Maples

No, these are different words for eating. We have a large residue of quotations; we shall mine this seam for some time to come.

The Financial Times of 11 April referred to the private finance initiative, and we were told that The move marks Labour's final conversion to using the PR in the NHS after years of warning that the government's plans to have the private sector design, build, finance and operate hospitals were merely a front for privatisation. When she was shadow Secretary of State for Health, the Secretary of State for Social Security, the right hon. Member for Camberwell and Peckham (Ms Harman), said—as recently as April last year— The Tories have made NHS hospitals reliant on private finance … a policy strongly opposed by Labour. A few weeks earlier, the right hon. Lady had said: The latest scheme for privatising the NHS is the Private Finance Initiative. When asked a couple of weeks earlier by the BBC whether she objected to the use of the PFI for building hospitals, the right hon. Lady had replied: Well we certainly do, because under this Government this is a new trick to privatise the health service … they're using the PR as a raft for, a sort of ramp for privatising the NHS. All that was said only a few months ago. The right hon. Lady's predecessor, the President of the Board of Trade and Secretary of State for Trade and Industry, the right hon. Member for Derby, South (Mrs. Beckett), said: Market testing represents creeping privatisation; as does the PFI.

Mr. Campbell-Savours

If there were reservations about the PFI—

Mr. Maples

And there were.

Mr. Campbell-Savours

Yes, there should be no doubt that some of us had reservations because of a PFI project that had been approved in 1988, under a Conservative Government. That was the Dartford River Crossing plc project, and the Opposition—as they now are—would do well to consider it. Under privately financed options, the cost was to be £234 million; under publicly financed options, it was to be £180 million. The additional cost arising from the PFI was £54 million. When Labour was elected, it had to find a way of ensuring that penal costs of that nature did not fall on the taxpayer. That is what the Labour Government have done, and that is why the PFI is now so much more acceptable.

Mr. Maples

The quotations that I have given do not express reservations; they anathematise the whole process, describing it as privatisation of the national health service. The hon. Gentleman should have addressed himself to the point that I was making—but, of course, he is not the only person not to do so.

As ever when we are mining these seams of words, the Secretary of State for Health features largely. He was on to the subject a long time ago. In 1986, when he was the Opposition's deputy health spokesman, he said—he has, very decently, changed his views since then; I suspect that he held his earlier views until he was given his present job and realised the magnitude of the task in front of him—that a similar proposal was quite unacceptable to the forthcoming Labour Government and that any such arrangements entered into now will be terminated by that Government.

Mr. Dobson

The hon. Gentleman is suggesting that my letter, from which he has quoted, referred to the PFI. The PFI was invented by the then Government in 1992; the letter was written in 1986. Will the hon. Gentleman tell the House what my letter was actually about?

Mr. Maples

The right hon. Gentleman's letter was about a private-public partnership for the building of a psychiatric hospital on the site of the Queen Elizabeth hospital in Birmingham. He was anathematising such private-public partnerships. That is not entirely surprising, because we know what the right hon. Gentleman thinks of business men. Only four or five years ago, he described them as stinking, lousy, thieving, incompetent scum". Presumably, those are the people whom the right hon. Gentleman is now trying to charm into becoming involved in private-public partnerships.

Mr. Dobson

May I put the record straight again? If the hon. Gentleman is always going to quote from The Sun, his quotations may not always be accurate. If he looks at other newspapers, he will find that most of that abuse was directed at the Tory Government. To the extent that it was directed at business people, it was directed at millionaires who paid poverty wages. What does the hon. Gentleman call such people?

Mr. Maples

I think that what the right hon. Gentleman said applied more widely than that. I must say that it is interesting to note how slow he is to catch up with the Labour party's new orthodoxy. I thought that The Sun was now a reliable source of information on political issues. So it has suddenly become unreliable, has it?

Mr. Charles Clarke (Norwich, South)

Will the hon. Gentleman tell us how much money was raised from privatisations and oil revenues during the 18 years of Conservative government? How much of that money was given away in tax handouts and social security benefits to deal with high unemployment, and how much was invested to deal with public needs? Does he not concede that the reason for the PFI is the need to invest in the public sector, because his Government threw away and squandered public resources?

Mr. Maples

I agree that the PFI is needed for investment in the public sector. That is why the last Conservative Government invented the idea.

A 1995 Labour party policy document on the NHS, interestingly entitled "Reviewing the NHS"—that seems to be what Labour seems to spend most of its time doing with the NHS—described the PFI as "creeping privatisation", and I must say that we saw a little of that hostility to it on the Government Benches this afternoon. The document does, however, show how far we have come, how soon reality breaks in on a Government, how quickly our policy has become Labour policy, how soon history is rewritten—

Mr. John Gunnell (Morley and Rothwell)

Will the hon. Gentleman give way?

Mr. Maples

No, I would like to make a little progress. I have given way an awful lot.

The document also shows how far Labour is willing to take the policy. It was described to us as commercialisation of the health service, but it appears that the Secretary of State plans the ultimate in commercialisation, although he may choose to deny it. According to the 9 July issue of BMA News Review, as part of the celebrations of the 50th anniversary of the NHS, Supermarkets will be allowed to print the NHS logo on carrier bags under government plans". "Expressions of interest" have been invited from Safeway, Kwik Save, Boots"— [Interruption.] It is from BMA News Review. I do not know whether it is true, but if it is, we will take no more lectures on commercialisation or privatisation from Labour Members.

Let me now turn to the policy that is under discussion. Let us look at the Conservative record on that policy. Notwithstanding what the Minister said, it is fair to remind the House that it was invented by a Conservative Government, who had two aims: first, to relieve pressure on public spending, which, as we all know and as the Labour Government are discovering, is infinite and difficult to meet, and to achieve better solutions. Our second purpose, which should not be ignored, was to find local, entrepreneurial, imaginative solutions to local problems, to encourage local trust managers to come up with those solutions, to—if I may use the jargon—let a thousand flowers bloom.

Mr. Stevenson

Will the hon. Gentleman give way?

Mr. Maples

No, I will not.

That was based on the realisation that central planning from the top in Whitehall has not worked in the health service. The man in Richmond house does not know best. He cannot know the best way to run pathology services in Nottingham, and canteens and car parks in Chester; but there is a good chance that local managers in those areas do, and may have some original ideas. There is a possibility of better, more efficient solutions, not just financial but medical.

Mr. Stevenson

Will the hon. Gentleman give way?

Mr. Maples

I would like to get this section of my speech out of the way. I have given way an awful lot so far.

There is a possibility of such novel, imaginative local solutions to problems large and small, from building car parks to building hospitals. The NHS executive guidance published in 1993—shortly after the PFI became an option for the NHS—stated: The additional scope for using private capital in the NHS will mean additional resources for health care. We must aim to use the new arrangements to benefit patients to the greatest extent, either through provision of services to patients or by finding more efficient ways of providing support services. It was never a leasing arrangement; it was never just a piece of financial engineering. It was about efficiency and effectiveness in the provision of services.

Mr. Gunnell

Will the hon. Gentleman give way?

Mr. Maples

I want to finish this section of my speech.

An answer to a parliamentary question reveals that, by January this year, 32 PFI schemes worth over £1 million each had been completed and put into operation. By June this year—according to a parliamentary answer given by the Minister himself, obviously referring to the years before he was responsible for policy—61 projects worth over £1 million had full business case approval, to a total value of £800 million, and 151 had outline business case approval, to a total value of nearly £3 billion. Twenty-five PFI schemes for new hospitals had reached preferred bidder stage, five had full business case approval and one had been signed in November 1996.

When Labour rubbishes our record and talks about five years of indecision, let us remember the truth. This is our policy. It was, I remind the House, introduced in the teeth of Labour opposition. Many projects had already been successfully completed, and many more were in the pipeline. The Minister was able to give the go-ahead to 14 projects two weeks ago because we got the projects to that stage. If it were not for us, there would be no private finance initiative and no new hospitals being built in Norwich or Dartford.

Mr. Gunnell

Would the hon. Gentleman like to comment on the grand announcement made on 29 January last year by the then Minister, the hon. Member for Orpington (Mr. Horam), of a £50 million scheme at St. James's hospital in Leeds? Not surprisingly, the scheme has not been approved as one of the 14 that can go ahead. People at the hospital accept that the scheme cannot go ahead. Despite all the trumpeting, the scheme cannot go ahead. I was told that the hospital would present a better scheme than the one that was announced so grandly. The Conservative Administration's PFI mechanisms were ineffective and did not result in the major developments that they wanted. There was a residual liabilities measure to clear up the mess, but my right hon. Friend the Minister had to introduce another Bill to make it clear that companies should adhere to their agreements.

Mr. Deputy Speaker

Order. Interventions should not be speeches.

Mr. Maples

Hon. Members seem to want to make bits of their speeches in the middle of mine. Perhaps they would do me the courtesy of waiting.

I have given the figures on our achievements under the PFI. It has been said that there is a steep learning curve for such new approaches. I gather that there were particular and specific problems with the Leeds project. No doubt the hon. Gentleman is making representations to the Minister about it and I am glad that he is able to do that.

Mr. David Rendel (Newbury)

The hon. Gentleman seems to think that that is a specific case. Will he comment on the Royal Berkshire trust and the priority care trust in Newbury, both of which were ready to go ahead with new hospital buildings before the PFI scheme started? Both were delayed under the PFI scheme and neither has gone ahead. The Royal Berkshire has now decided that it cannot proceed under the private finance initiative.

Mr. Maples

I do not know the details of that scheme and cannot comment on it. In case it has escaped the hon. Gentleman's notice, perhaps I should tell him that I am the Opposition spokesman on this subject and not the Minister who answers questions about it.

I am delighted that Labour has converted to the PFI and that 14 schemes will proceed. Of course, two of those were signed by us and several of the others have full business case approval. The Minister spoke about a £1.3 billion scheme, but there is no guarantee that the 12 projects or the two that have been signed for will be built. He spoke about work being under way on them by the end of the decade. Therefore, there is still a period of uncertainty.

The Minister heralded the hospital building programme as the biggest ever announced, but it is the biggest cancellation of such a programme that has ever been announced because 23 schemes were cancelled. The Minister's stance has changed somewhat, because on 10 June he said that schemes that failed to make the list, for whatever reason, would be invited to stop any further work, decline any tenders they had and stand down preferred partners. The projects would then be considered nationally alongside schemes that were competing for limited public sector capital.

In his announcement, the Minister hinted that successful schemes either would go forward in the second wave of new model PFI projects or would compete for public sector capital. Today, he went further and said that he had invited comments on the projects and was considering specifically whether they could be taken forward in a new wave of PFI projects next year. I shall be delighted if that proves possible. There is no need to stand all these projects down just because they have not made the cut on his first assessment and first decision. If they stand down their proposals and partners and stop work, it will be extremely difficult to get them going again. I am prepared to bet that they would be unlikely to start again and if they are stood down, even temporarily, those 23 places will not get new hospitals under Labour.

The redevelopment of Walsgrave hospital in Coventry is one of the 23 schemes. It serves my constituency and is an important acute hospital and a regional tertiary referral centre. It is important to us that the project should be allowed to see whether it can reach the criteria.

Labour's view of the PFI is rather like its view of the management of the health service, and that is where it differs so much from us. Labour sees the health service being run from the top down rather than from the bottom up. It is not interested in local solutions or local entrepreneurship. The advice to those who run trusts is, "Do not bother thinking up original ways to do things because if they do not fit Ministers' concepts of health service need, you can forget it." Matters are dictated by Ministers' views of health service need, which is an appalling way to attempt to motivate local trusts and health authorities. [Interruption.]

The evidence lies in what the Minister said. He said that matters were prioritised solely on the basis of health service need and that that would be his criterion for the future. That is not the way to motivate local trusts and health authorities to come up with solutions to local problems. Apparently, health service need will be determined in Richmond house and not in Camden, Darlington or Warwick. That is a mistake, but it is symptomatic of the Government's approach.

The Government plan to scrap the internal market, fundholding and internal competition, and propose to replace them with heavy central planning and some local consensus designed to involve people but which is unlikely to give them any power to go with their responsibility. That is a giant step backwards. It did not work before and it will not work this time. There will be a massive loss of efficiency and effectiveness and reduced cost control, and it will abolish local incentives to try to find different ways of doing things. I am worried that Labour views the initiative as a way of financing buildings and not as a way of seeking new ways to provide services. It sees it as a method of getting round public spending constraints.

On 10 June, the Minister spoke about concentrating resources on schemes that have high health service need. He intends to abandon the "thousand flowers" approach and adopt an approach in which health service need dictates new capital investment. That confirms my fear.

Mr. Stevenson

What is wrong with that?

Mr. Maples

Part of the purpose of the PFI, which we introduced, was to encourage local trusts and health authorities to come up with imaginative local solutions to their problems. If the programme is dictated by the Government's assessment of health service need, that will not happen.

Mr. Campbell-Savours


Mr. Gunnell


Mr. Maples

I have already given way to both hon. Members, who made extremely long speeches in the middle of mine. Hon. Members have until 10 o'clock to make speeches.

It is not necessary to concentrate PFI resources because they are not limited like public sector capital. As I have said, that will not work because it did not work before. That is why we introduced the PFI. There must be incentives for local trusts and managers, and the message to health authorities and trusts from the Government's decision is depressing. It is that the man in Whitehall, in Richmond house, knows best.

A recent survey by the NHS confederation showed that, unsurprisingly, managers want more autonomy. Some 62 per cent. of them wanted more autonomy to manage local services and about 60 per cent. said that new alliances with the private and voluntary sector should be pursued. The people who manage the NHS are, apparently, to be ignored. Their views are to be of no significance when compared with the assessment of health service need by Ministers and civil servants.

Over the next two or three years, this issue will be the battleground on the NHS. The Government plan to reimpose central planning and control in place of the local diversity and management that we began to introduce. Management will lose incentives to improve efficiency and control costs and to respond directly to patient need and choice. The health service will lose efficiency and effectiveness, medically and financially, and managers will lose the incentive to manage creatively and respond to local need, which is what they want to do.

The evidence is on our side. GP fundholders have made improvements to their practices and to the quality of their services. There have been improvements in meeting the patients charter standards and there has been increased efficiency and cost savings. All those matters have improved the response to patient need and the quality and quantity of health care. The Government are adopting methods that did not work in the past and will not work in future. Unless they are prepared to spend much more, fewer patients will be treated, there will be lower capital investment, higher costs, lower responsiveness and longer waiting lists. We shall make those matters the test of their policy because they will not match our record on spending. Their planned reforms will not match our record on efficiency and the outcome will therefore be worse.

I invite the Minister to reply today or in Committee to two specific questions on the PFI, about which we have tabled amendments. The first is the criteria that will be used. He said that he had published those with his statement on, I think, 3 July, but they were outline and sketchy criteria. We need much more detail to understand and to evaluate how he plans to operate the policy.

In a speech in early June, the Minister criticised us for not publishing enough information. He said that there would be no attempt to conceal any information", and promised, if I may put it like that, to provide as much information as possible. I invite him to do that. It is not just us who want that. Those submitting the schemes and those who monitor and manage the health service would like that information too, so I hope that he will provide it.

I hope that the Minister will deal with the issue of risk. What are the criteria on risk transfer? If there is no risk transfer, it is simply a leasing operation—just financial engineering. Risk transfer is vital, because without it the process will be the same as borrowing, but more expensive because the Treasury can probably borrow more cheaply than private sector schemes. Problems will be created for the future because the health service will be committed simply to a long stream of payments, rather than such expenditure counting as public sector capital spending.

There must be some genuine transfer of risk. I am sure that the Minister accepts that. It was mentioned in all the PFI documents, both before and after the election, but we need to know what the criteria are. What are the quantitative hurdles that have to be met? Off-balance-sheet financing has caused much trouble in the private sector and we would not want that to happen in the public sector. Of course, if it did, it would cause problems for future NHS spending.

The Department of the Environment, Transport and the Regions has issued a note calling for a 20 per cent. financial risk transfer. Some early Treasury documents called for a 30 per cent. transfer. At the moment, there does not seem to be any clear guideline on that, so I should be grateful if the Minister would deal with it.

The second subject that I invite the Minister to address is clinical services. He said that he was considering the subject and that he would return to it in the House. The question of what services can be included is important. The greater the service element, the greater the potential for real risk transfer. Paragraph 14 of the Treasury's review, which it commissioned from Malcolm Bates and which was published a few weeks ago, states: Departments should ensure there is a significant level of service content in their transactions, consistent with protection of the public interest. Service content is important. Departments should avoid de facto asset procurement. Government's ultimate interest is in the service delivered from an asset not the nature of the asset itself. I am sure that the Minister agrees.

Our approach was a local one. We were prepared to consider a wide range of different arrangements. My right hon. Friend the Member for Charnwood (Mr. Dorrell), the previous Secretary of State for Health, made it clear that he was reluctant about clinical services in any way being subjected to privatisation, but he did say that he would consider non-NHS involvement if local clinicians favoured that. The Minister should be prepared to consider as wide a list as possible.

The Government would have a problem in drawing up a list because technology and medical practice are changing. Some criteria need to be established, although we will have to allow the Government some latitude and ask them to explain each decision. However, they would be making a mistake if they boxed themselves in. I am surprised and disappointed that they have already ruled out X-ray and pathology services.

There is a danger for the Government—as they would no doubt say there was for us in this—in getting hung up on ideology. The NHS buys in an enormous number of things from the private sector and private sector employees. It buys in all its drugs, all its supplies and quite a lot of waiting-list surgery. An answer to a parliamentary question in January contained a figure that surprised me: expenditure on the purchase of health care from non-NHS providers in England for 1995–96 amounted to £800 million. We are talking about operations and procedures—[Interruption.] Does the hon. Member for Workington (Mr. Campbell-Savours) want to intervene? He keeps talking. If he wants to intervene, I will let him, as long as he will then be quiet.

Mr. Campbell-Savours

I will intervene. I was saying to my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) that, before the election, we had tremendous difficulty getting Conservative Members to talk openly about clinical services being included. Indeed, I remember an interview between Jeremy Paxman and the then Secretary of State for Health, in which Mr. Paxman dragged the words out at the very end of the interview, and the then Secretary of State looked extremely embarrassed. Opposition spokesmen now liberally talk about these matters. It was obvious that they were trying to avoid telling the truth to the electorate before the election.

Mr. Maples

My right hon. Friend the previous Secretary of State said in a 1995 Department of Health press notice that there is no question of clinical staff or clinical support staff being employed by non-NHS employers unless such a change has the agreement of local clinicians. The hon. Gentleman is making a phoney point, and he knows it.

We should not get hung up on ideology, and I mean that in a genuine and constructive spirit of trying to ensure that the PFI achieves its potential. We already buy in an enormous amount from the private sector. I gave the figure of £800 million-worth of health care, not drugs and supplies, being bought in from the non-NHS sector. That was 4 per cent. of hospital and community health service spending in that year, which is not an insignificant amount.

We should be careful about saying that there is some ideological barrier about clinical support services. There is a possibility of gaining valuable advances in quality and quantity of service by subjecting such services to PFI treatment. Even by that test, the average GP's practice would fail because most of them are small private businesses that have independent contracts with the NHS. GPs' properties are not owned by the NHS and GPs are not employed by it, so do not let us get hung up on definitions because ultimately the only criterion should be what is best for patients.

Perhaps the best way to run a pathology service in a big city is through one concentrated facility, used by all hospitals, both public and private. If so, why not allow someone to build, finance and run it privately? Some capital spending projects may not qualify for the PFI without some service inclusion. A study by Meara Management Consultancy for the Institute of Health Services Management states: Small schemes, particularly those in the elderly and mental health care fields, may only succeed if clinical services are included in the FM"— financial management— package. What exactly is Labour's policy? Is there an ideological dimension? Are there some no-go areas, even if local clinicians agree to such a package, or are the Government open to a range of proposals and possibilities? Our amendments are designed to explore that.

The PFI offers great scope for improving health services without increasing public spending, but if the PFI projects merely replicate what the public sector would have done anyway, a large part of the objective of the policy will have been missed. I urge the Government to reconsider their attitude to local solutions, which they should encourage. They will not gain much advantage if they simply tailor a project that they wanted to do anyway to fit the PFI criteria that they have established. I urge the Minister to meet his high standards of disclosure and in particular to be completely open about risk transfer. Simply rechristening finance leases as PFI projects will lay up huge financial problems for the future.

The Government are in danger of getting the worst of both worlds: projects that they wanted to do anyway, with no local creative input or incentives, moved off the balance sheet in a temporary trick to reduce public spending and to avoid its controls. If one of our European partners did that in an attempt to meet the Maastricht criteria, we would rightly call it a fudge and that is exactly what it would be. I hope, therefore, that the Government will not allow their ideology to get in the way of optimum solutions, but, given their record so far, I fear the worst.

7.47 pm
Dr. Howard Stoate (Dartford)

I am pleased to be called to speak on the Bill as it is important to my constituents. One of the first schemes that will be built, I hope, after the Bill has been passed is that for the Dartford and Gravesham NHS trust. As my hon. Friend the Member for Gravesham (Mr. Pond) has already said, the people of north-west Kent have waited far too long for the hospital. They have waited more than 18 years for it—since the time I became a doctor in the region and almost exactly the period that the Opposition were in Government.

I am glad that the Secretary of State for Health and his colleagues have been able to find time in the first three months of the Labour Government to enact the Bill because it is so important, particularly for the people of Dartford and Gravesham and all the people throughout the country who are also waiting for their facility to be built. We pledged to make the PFI work and we will.

The Bill is short and to the point. It does its job of allaying the fears of the people financing PFI projects in the NHS about protection against the failure of NHS trusts. It is the Bill that has been needed to do that. The National Health Service (Residual Liabilities) Act 1996 served a similar purpose. Under the Conservatives, I suspect that the bankers thought that they needed that legislation because, like many people, they did not wholly believe what the Conservatives were saying about their commitment to the NHS. I am sure that there is much less need under Labour, because everyone knows that we are committed to the national health service, which we founded almost 50 years ago.

In being short and to the point, the Bill does not address some of the concerns that are being expressed by the medical profession and others about the scope of the private finance initiative in the health service. I know that attempts were made in another place to amend the Bill, but I do not believe that this closely focused piece of legislation is the right means. I want the Bill to complete its passage through Parliament, so that work on new and improved facilities for the people of Dartford and other areas can start on time. I hope that my hon. Friend the Minister can join me in September to break the ground on this project.

The concerns cannot be ignored as they go to the heart of our understanding of what our national health service represents. One of the concerns is the nature of the services that will be run by the private partners in a PFI hospital. Of course, it is not a new concern, as services are already passing out of the hands of trusts to be run by private contractors. An attempt was made in another place to exclude clinical services from the scope of those that could be transferred to a private partner. The difficulty is in defining clinical services, as I believe my right hon. and hon. Friends on the Front Bench have already found, and which is the subject of tonight's debate.

The British Medical Association, of which I am a member, has already made a start and included in its definition of clinical services dietetics, physiotherapy, pathology and radiology—which my hon. Friend the Minister has already assured us will not be privatised. We must build on that and I am pleased that the Department is working on producing a definition of clinical services. I trust and hope that there will be wide consultation with the medical profession and with those working in the NHS, as well as with those representing patients.

Mr. Jack

As a doctor, perhaps the hon. Gentleman could help me—[Laughter.] I always look to the right people for advice. That is why I am asking a question. Does the hon. Gentleman consider haemodialysis a clinical service?

Dr. Stoate

Yes, I do, and I hope that that will be included in the definition of clinical services as eventually set out by the Government. As I said, it is the subject of discussion and negotiation. No doubt, a full statement will be made at some time in the future. I would certainly include it within clinical services.

In protecting clinical services, we must not lose sight of the importance of other services to the care of patients in the NHS. Old jokes about leaving hospital in a worse condition than on admission are not funny if the cause is poor cleaning or catering services that have been allowed to decline as a result of cost cutting. Further contracting out of those and other services, if they are not defined as clinical, must involve unions and community health councils to ensure that the interests of staff and patients are recognised.

Another concern is the involvement of private health care providers in PH consortiums. Initially, the major hospital projects are mainly in the hands of construction companies. That is no bad thing as the construction industry has taken a severe drubbing over the past 18 years and so is now welcoming this boost to their fortunes. Once hospitals are built, will construction companies continue to be interested in the facilities of a hospital for the long term? In the private sector, such expertise lies mainly with private health contractors and providers. There are signs that companies in the United Kingdom and the United States are well aware of that and are looking for opportunities within PH projects.

I want the best for the NHS, for the best price, and I am not afraid of private sector involvement where that is appropriate—but I do not want a takeover of health care by stealth. I would like the Minister's assurance that interest in PFI projects will not end with approval. I want to know that the Government will take a close look at any changes in PFI consortiums and the ownership of private partners, to ensure that they are for the benefit of the NHS. Trusts must not become secondary purchasers of health care with all the providers in the private sector.

In the five years since the PFI was introduced by the Conservative Government in 1992, no major hospital building was started. The Labour party made a manifesto commitment to make the PFI work in the NHS, and within our first five months building will start on the new hospital for Dartford and Gravesham. The 50th anniversary next year of the start of the NHS will be a true celebration of a health service available to all, on the basis of need, not ability to pay. I am pleased to support the Bill.

7.53 pm
Mr. Simon Hughes (Southwark, North and Bermondsey)

At 5.28 am today, with the hon. Member for Vauxhall (Kate Hoey), I drove the first Bakerloo line train through the tunnel from south bank to north bank, after nine months' closure.

Mr. Milburn

The hon. Gentleman will need an early night then.

Mr. Hughes

That is a good try, but the Minister ain't seen nothing yet.

This evening, the Government are trying to drive through, in one sitting, the first health service Bill of this Parliament. On behalf of my colleagues, I want to register our severe disapproval of yet another abuse of the powers of government. I believed that the Labour Government would try to conduct their business properly, but they are not. So far, six Bills have had a Second Reading. The Referendums (Scotland and Wales) Bill was the subject of a guillotine motion, and it was then pushed through on the Floor of the House. The latter action was, arguably, valid because it was a constitutional Bill. We have just debated a guillotine motion on the Finance Bill—not unheard of, but not always necessary. The Plant Varieties Bill went through all its stages in one day. It may not have been a Bill to shake the foundations of the globe, but it raised many important scientific questions. The Firearms (Amendment) Bill was rushed through on the Floor of the House instead of going into Standing Committee. Part of the Education (Schools) Bill has also been dealt with on the Floor. That is not the fault of the Minister—I simply say to the Government that it is arrogance and they should not behave that way. The evidence to support why the Government should not behave with such arrogance has come in this debate from the hon. Member for Dartford (Dr. Stoate) and his neighbour the hon. Member for Gravesham (Mr. Pond), who have raised major concerns about the Bill.

I am surrounded by a significantly larger number of Liberal Democrat colleagues than I was before the election. One reason why they are here is that the public were extremely sceptical of both the Conservative Government's and the Labour Opposition's positions on the health service, and rightly so. Many of my hon. Friends were, in large measure, elected because we did not believe that a Labour Government would put enough public finance into the NHS, and the proof of the pudding is in what the Chancellor has been telling us ever since election day.

We take a fundamentally different position from that of the old Government and that of the new, both on the general structure of the NHS and on the Bill. I respect the Minister. We do not believe—and I hope that the Government do not believe—in a top-down health service. However, when he told the House recently that the Government do not intend to recreate regional health authorities, it sounded as though the obvious tier for strategic planning in England, elected and democratically accountable, had been abolished at a stroke.

We do not support the view of the hon. Member for Stratford-on-Avon (Mr. Maples) on the health service—that we simply let a thousand flowers bloom and allow anybody who thinks he wants a PFI project to dream one up and pop it up to the Government for approval, without any intention of seeing it as part of a strategic planning process. The approach has been proven to be far from right, not least because so few projects have been approved and because a system non-strategically planned—as my hon. Friends the Members for Newbury (Mr. Rendel) and for Hereford (Mr. Keetch) can show—has resulted in many projects in the pipeline never getting through, however strategically important they might have been. There was no prioritisation.

The Minister has said, and I accept that it is an improvement, that there will be central scrutiny and prioritisation. I hope that over the relatively long summer holiday, when the hon. Gentleman is lying on the beach, he will reflect on his words and realise that it would be far better for him—I hope that he keeps his job for as long as the Government are in office—to have regional strategic planning as that would make his job better and it would be better for the health service. Matters should not be decided only in Richmond house or Whitehall; they should be decided around the country.

We should not tonight rush through Second Reading, Committee stage, Report and Third Reading. The hon. Member for Stratford-on-Avon said that we have until 10 o'clock. I hate to tell him, but we have until 9 o'clock tomorrow morning. The Minister might wear a bit by then. My hon. Friends are in good spirits and good form and may well keep the Government up for some considerable time yet.

We want to ask hard questions partly because—as the hon. Member for Gravesham, my hon. Friend the Member for Hereford or I could tell the House—many schemes proposed under the PFI end up as scaled-down versions of what the commissioning authority wanted. The commissioning authority might say that it wants, for example, 500 beds, but it is told that it can have only 300 or 400 beds. In my own local hospital trust—Guy's and St. Thomas' Hospital NHS trust—the PFI scheme failed because the trust was presented with ever smaller proposals, and the trust finally said, "Thank you very much, but we can do it much better ourselves." Projects have therefore returned to the public sector, and the PFI has disappeared from the agenda.

We have to consider some very serious issues. Regardless of how undemocratic health authorities may still be—even after replacement of Tory nominees by other nominees, and however much they may consult and reach a view that they must provide 500 beds, for example—it will not be much of a planned health service if the private sector ultimately does not deliver what authorities have asked for. There are, therefore, severe doubts not only about the Bill's points of substance but even about some of its practicalities.

The Order Paper summarises the Liberal Democrats' principal objections to the Bill. The first is that the PFI is clearly one of those financing systems—which can be improved and tempered—that is driven by someone saying, "We think that we can make a profit out of this scheme, but not out of that one." The scheme is driven by commercial profitability—private sector partners do not join it to make a loss—rather than by strategic and locally calculated health need.

Like me, many hon. Members represent areas that have high levels of health deprivation, morbidity and mortality. The areas that most need the health service, however, are not those that, for self-evident reasons, will provide the biggest returns.

Mr. Stevenson

I am particularly interested in the local point made by the hon. Gentleman. What does he say about the situation in my area in which a PFI scheme that has had the support of the district health authority, the community health council, the trusts and the local community has been held up for four years? How can that be top-down consultation—surely it must be bottom up? The project has been held up because of the system that the Bill is designed to expedite.

Mr. Hughes

The hon. Gentleman makes a good point. We have tabled an amendment to the Bill to provide consultation with and approval by both the public and the authorities. I do not know the details of the scheme that he mentioned, but he said that such consultation has occurred. Once it has crossed that threshold, the scheme should get off the starting blocks.

If the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) will bear with me, I will also tell the House how we can better fund schemes in the constituencies of all hon. Members, because the Liberal Democrats have an answer. I am not speaking in the debate only to be critical without providing a constructive option. My right hon. Friend the Member for Yeovil (Mr. Ashdown) has said that the Liberal Democrats are "the constructive Opposition", and today we will oppose constructively.

We must, however, ensure that schemes—regardless of which hon. Member's constituency they are in—are priorities in the larger scheme of things. Perhaps the scheme in the constituency of the hon. Member for Stoke-on-Trent, South is a very good one, but—in a time of limited health resources, even with private finance—it may not be the most important one in his county, district, borough or region. We must consider that factor. My colleagues and I believe that schemes must pass also the test of being regionally and strategically important before being considered a priority.

The Minister said that the PH process is the best method of getting money into the health service. My hon. Friends and I disagree with him on that point and think that, if he conducts his review openly and honestly, he, too, will reach a different conclusion. We do not believe that there is evidence to support his conclusion. Until very recently, even those at the Treasury said that they did not believe that the PFI was the best way to accomplish that goal.

Mr. Milburn

On a point of information for the hon. Gentleman, I said that our PFI review would examine a variety of means of establishing public-private partnerships, of which the PFI is certainly one possibility. We will look beyond the PFI, and we are certainly not wedded to the Tories' version of the PFI. I should make that clear to him now.

Mr. Hughes

The Minister knows that I welcome that statement. One of the burdens of our case is that there should have been such consideration before the general election. The Labour party should have reached a view on establishing a better scheme. The Liberal Democrats think that a better scheme—I will be honest about it, and it is not a secret, a perfect answer or even terribly original, although I hope that the Government will consider it in their review—would be a capital-funding bank for health service projects, which can be organised both regionally and nationally. Parallel organisations, although in a different context, are regional development agencies.

The Minister and other hon. Members will know that such a move has been advocated most recently by the King's Fund as a way in which to ensure that one agency provides both public capital funding and private capital funding. Such an agency would be better because everyone would apply at the same time and with the same criteria. We could do away with variable interest rates, and people would not have to operate by different timetables. We would also be able to pool resources by using that method of obtaining private finance. There would be many benefits.

I will not pretend—as I did not pretend in debates on charging or on rationing in the health service, which will come regardless of what we pretend—that we will be able to manage the health service without private money. We never have and we never will operate the NHS without private money, and the question is only one of how we will do so. Liberal Democrats believe that rather than arranging such finance on a local and ad hoc basis, we should arrange it more strategically, both regionally and nationally.

Mr. Maples

If the hon. Gentleman is suggesting that there should be some type of bank that contains private and public money, is he aware that all the money spent as loans by that bank would be public spending and count as part of the public sector borrowing requirement? How would he get round that?

Mr. Hughes

No, that consequence would not follow; it is a separate matter. The hon. Gentleman knows enough about the health sector to know that a separate debate is occurring in which the Treasury is very defensive—we all know the score—about what constitutes public sector borrowing. He knows also—because it was his predecessors' idea—that the PFI scheme was his predecessors' method of getting round that problem and that accounting criterion.

A very odd accountancy fiction—it is no secret; it is the argument—is that spending money on lease payments for health services, like hire-purchase payments on a car, does not constitute public expenditure, whereas buying services or a car outright does constitute public expenditure. No one in the real world believes that there is a difference in the types of payment, because it is all money going from the public purse into a private pocket.

The former Financial Secretary might believe that there is a difference in leasing. The issue, however, is how we define what is public expenditure and what is not. As he knows, the Treasury's position in that debate is under attack and is no longer generally accepted.

Mr. Jack

Perhaps the hon. Gentleman will first tell the House how accounting financial reporting standard 5 relates to his comments. Secondly, will he tell us, in the mechanism of repaying that private capital as some type of lease payment, where the money will come from? Thirdly, is it not the case that that private money would attract a greater rate of return or interest than the public money that goes with it? Therefore, by definition, that money would be more costly in terms of public expenditure. Perhaps he will deal with those three points.

Mr. Hughes

I cannot deal with the first point, because I have not a clue about it. I can, however, deal with the second and third points. The first issue—it is not only a health service issue—is how one defines public expenditure. It has to do with the public-private financing of, for example, the railways and public transport. It has to do with whether or not we take capital receipts for housing purposes as public expenditure. The same debate on spending crosses Government Departments. The Treasury has always defended its position that certain things count as public expenditure and others do not.

When the previous Government were in power, and when the right hon. Member for Fylde (Mr. Jack) was a member of it, they pursued private sector finance because they believed it would not count towards public expenditure totals. I understand why they did it, but I support the current Minister's view that we need to consider afresh whether there are better ways of producing, at low cost to the public purse, the same gearing or ratio of public to private sector investment.

I cite another obvious example. When the previous Government set about establishing city technology colleges around the country, the theory was that 80 per cent. of the money would come from the private sector and 20 per cent. from the public sector. In broad-brush terms, the reverse happened—20 per cent. came from the private sector and 80 per cent. from the public sector because, in the end, it was not seen as a saleable proposition. We have to examine not only what maximises public investment in the health service, at the lowest cost to the taxpayer, but what maximises private investment.

There are two other substantive reasons why my colleagues and I believe that the Bill is inadequately drafted. It is a bit rich for the Government to proceed as they are, given that in opposition they went hammer and tongs at the Tory Government about the threat of privatising the NHS and, in particular, clinical services. I remember the right hon. Member for Islington, South and Finsbury (Mr. Smith), who was then the shadow Secretary of State for Health, going on about the privatisation of clinical services during Question Time after Question Time, and seeking assurances that they would not be included.

If clinical services are not to come under the PFI, they should not be included in the Bill. It is no good the new Government saying they are terribly sorry, they will not include clinical services but they will be left in the Bill. I understand the semantic argument that there is a grey area in respect of back-up services, but whose Bill is it? The answer is that it is a Tory Bill, not a Labour Bill at all. It was taken off the shelf at Richmond house—I saw it there before the election.

Mr. Milburn

If the hon. Gentleman thinks that he has a solution to this thorny problem, perhaps he will give us a list now of clinical and non-clinical services. Let him give us a list if he thinks it is as easy as that.

Mr. Hughes

When we deal with the amendments that we have tabled, we shall deal with exactly that matter. It is not an easy issue, but we have provided a definition and included it in an amendment. Our proposal is much better than the Bill as drafted. If the hon. Gentleman thinks that there should be a list, the way to proceed is to draft a Bill that contains a general definition and includes a schedule which we can amend by orders under secondary legislation. He knows that as well as I do. Two categories have already been defined—his colleague in another place mentioned radiology and pathology, which are straightforward. [HON. MEMBERS: "They are not."] My hon. Friends who have dealt with this matter professionally will tell the Minister that they are not that much less straightforward than many other categories.

The point is that the Government should not introduce their first primary legislation without having thought through its implications. I know that the Minister has not been in opposition for 18 years, although his party has, but the issue has been around for several years; the PFI has been around since 1992. It is no good saying in February, March or April that clinical services must not be privatised, but then coming to the House in July with proposals to include them in the PFI.

Finally, consultation must be built into the Bill. It may be that there was widespread, local consultation in Dartford, Gravesham or anywhere else. That is very helpful, but there is nothing in the Bill to require it; there is no guarantee. Health authorities are not the most democratic of institutions, and health trust boards certainly are not—[Interruption.] The Secretary of State for Health says that they will be. With the greatest respect, as long as their members are appointed by him, they will not be democratic bodies, and with a week's notice to get in the nominations, they certainly will not be. I welcome the idea that we review their membership.

The Bill should self-evidently not be going through all its stages in one sitting. If we are to have a proper debate on which services are clinical services, the Bill should go into Standing Committee where we can debate it and try to get it right. We are here to get legislation right, not to rush it through to meet a self-imposed Government deadline. When this Parliament began, no date was fixed for the end of term. The Government have control of the agenda, and, as far as anyone can see, they have their own Back Benchers entirely under control, apart from one or two. They therefore have to deliver the answers.

We are going to probe as hard as we can and remain consistent with the position we have adopted for the past five years, unlike the Government who have done a somersault. The reality, as my hon. Friend the Member for Gordon (Mr. Bruce) made abundantly clear and as my right hon. Friend the Member for Yeovil has often made clear to the Prime Minister, is that we are facing not a future in which there will be a great bonanza of funding for the health service, but a future in which capital funding from the public purse will be significantly pared down. If we are to rely on the private sector under a Labour Government, which many Labour supporters think is a bit funny anyway, we want to know what the rules are and that it is done with the public's consent and in the public's best interest.

On this issue, the Conservative Opposition are not really an Opposition at all. We are the people who are going to tell the Government, as we told their predecessors, that the PFI is not the right way forward. The Government have not thought it through, and it is a pity that they are trying to bulldoze the Bill through the House on a summer's evening, hoping that no one notices. We hope that people will notice and realise that it is a bad way to legislate.

8.16 pm
Mr. David Hinchliffe (Wakefield)

I have some reservations about the general principles of the Bill, but I must commend the Minister of State, Department of Health, on dealing with a difficult situation carefully and cleverly. The problems that the Bill is designed to tackle present him with a number of difficulties.

It has not come over loud and clear from the Opposition, but we have a deteriorating national health service infrastructure, which is very much a result of neglect over the past 18 years. Hon. Members present will know what problems that has caused to their constituents. The previous Government's private finance initiative has very apparently been a failure in that, as my hon. Friend the Minister made clear, few schemes have come to fruition.

One of the difficulties of dealing with the capital infrastructure in the NHS is the way in which the market-based organisational structure of the previous Government—the internal market—has driven wedges between various elements of the NHS. I am also aware that the Minister speaks against a background, which we understand, of extremely limited options for public expenditure and of a radically changing NHS. I shall deal with those points as they manifest themselves in Wakefield.

The Secretary of State and the Minister are aware that my constituents are in the main served by Pinderfields district general hospital. They may also be aware that a substantial part of that hospital provides care in huts constructed to care for soldiers injured in the second world war, before I was born and, I imagine, before most, if not all, hon. Members here were born. [HON. MEMBERS: "Not all."] Most, I said, not all.

That situation has a knock-on effect on the operation of the hospital. A hospital with those facilities has difficulties in attracting top-quality staff, who consider the capital arrangements, the buildings and the working conditions before applying for a post. Pinderfields has sometimes been concerned about its inability to attract high-quality consultants.

The hon. Member for Orpington (Mr. Horam), who was an Under-Secretary of State for Health under the previous Government, is in his seat. He knows that I have often spoken about how my constituents have been deceived by commitments given by the previous regional health authority under the former Government about the arrangements for the closure of facilities.

I was particularly angry about the closure of Manygates hospital, in which I and my two children were born. A clear commitment was given to my constituents as part of the public consultation process that that facility would be replaced by a purpose-built maternity facility at Pinderfields hospital. That has never happened. My constituents are rightly aggrieved about having been misled when the community health council and others accepted the closure in the formal process, only to find that the previous Government, through the health authority at district and regional level, did not follow through on the commitment that had been given.

Pinderfields hospital developed a private finance initiative project that included a new maternity facility, but, for reasons that were no surprise to my hon. Friend the Member for Normanton (Mr. O'Brien) or me, the proposal was not approved in the list recently published by the Department of Health. It was no surprise, because the project was developed against a background of an organisational shambles in the running of the health service in Wakefield over the past few years under the previous Government. That situation is a direct consequence of the internal market.

Since the introduction of the internal market, we have had two competing acute trusts serving the east and west of the Wakefield metropolitan district. We have a higher than average level of GP fundholding. The former Under-Secretary will remember the evidence I produced of a clear two-tier system, with patients of fundholders in Wakefield being given priority over those of non-fundholders at one hospital.

It was proved and accepted by the health authority that that was a logical consequence of the system introduced by the previous Government. The only way in which the health authority could deal with the situation was by moving to total GP fundholding on a locality commissioning basis, which we now have in Wakefield. Since April, we have also had a merged acute trust—the Pinderfields and Pontefract trust.

I suspect that one reason why my right hon. Friend the Secretary of State and my hon. Friend the Minister did not bring forward the Pinderfields PFI project was the uncertainty over the arrangements for future acute hospital provision in the Wakefield area. The two trusts were previously based on district general hospitals at either end of the area. PFI schemes were being brought forward for both hospitals. A decision has to be made on what provision will be made and what the new PFI project will be.

The current review of acute provision, which began after the public consultation process that resulted in the creation of a single trust, is being carried out by Newchurch and Co. I am concerned about the fact that that is the same company that was invited by the previous Government in January 1993 to advise authorities and trusts on the private finance initiative. I hope that my right hon. Friend will look into that.

Questions could be asked about the objectivity of the company in looking at acute provision, when it has also been given a similar role by the previous Government on the PFI. That may be perfectly honourable, but questions are being asked about whether it is appropriate for the company to be involved in those two areas, which may come into conflict.

In my area and elsewhere, there is a lack of clarity about the future balance between primary care and hospital care. Probably as a consequence of the move towards fundholding, some huge GP complexes, the size of small cottage hospitals, are being constructed in Wakefield. I know of no strategic debate having taken place about the implications of that for the future construction under the private finance initiative of acute hospital provision.

One huge complex close to completion on Barnsley road in Wakefield, near where I live, will offer minor surgery, clinical investigations and low-dependency beds. I do not object to a move towards such provision, but when considering a Bill about the PFI, we must think about what capital developments will be needed in years to come. My slight worry about the PFI arrangements is that we may lock ourselves into models that will not be appropriate in even five years.

The private finance initiative has added to the obvious lack of clear direction resulting from the internal market mess that the previous Government made of the good-quality provision that we have traditionally had in my area. I accept the amendments to the scheme made by my hon. Friend the Minister. I have listened carefully to the differences from the model offered by the previous Government. My perception of the PFI has been as a political never never land.

My hon. Friend the Member for Workington (Mr. Campbell-Savours) pointed out earlier that the revenue implications of the scheme as operated under the previous Government have been unclear. We are not sure what expenditure problems we are building up for future years. I am particularly concerned about that.

That may be a never never area for national politicians, but it is not for the NHS work force. I listened carefully to what my hon. Friend the Minister said about the grey area in clinical and non-clinical services. I am concerned that PFI schemes may result in some people being placed in the employment of a private sector employer and finding their conditions of employment far worse.

I accept that the Minister is reviewing the issue. I should like to put in a plea for those who are regarded as at the bottom end of the clinical team. Hospital cleaners and porters are key people, whom I regard as an integral part of the clinical team. My impression is that my hon. Friend understands the need to consider the future employment of people in such positions.

I vividly recall my first operation in hospital. I will not go into detail, as it was a somewhat delicate operation, the particulars of which could embarrass one or two people here, including me.

I was all set for the operating theatre, having been given a pre-med, and I was in some distress because I was not looking forward to the operation. The person who gave me most comfort was the lady sweeping the floor. She was prepared to talk to me and to reassure me that the operation would not be as bad as I thought. She turned out to be right. I have not forgotten that that woman took time out to talk to me, despite being under pressure because she was working for a privatised company in an NHS hospital. She made a difference to my experience of hospital.

We should understand that the cleaners and porters of this world, who are already low-paid, deserve not to be driven further down the scale. I draw great comfort from the fact that I know that is not on my right hon. Friend's agenda. I look forward to the review to which the Minister of State has committed the Government.

Audrey Wise (Preston)

Perhaps my hon. Friend will remember that, when he and I were involved in an inquiry into maternity services, great stress was laid by user organisations on the need for absolute cleanliness in maternity wards. In latter years, those organisations, such as the National Childbirth Trust, have had to advise mothers-to-be to take their own cleaning materials into hospital to do their own cleaning immediately after giving birth. That reinforces my hon. Friend's argument about the importance of the function of cleaners, which is valuable in preventing infection.

Mr. Hinchliffe

My hon. Friend has made an important point. She deserves great credit for what came out of that report on maternity services. I vividly remember how members of the Select Committee on Health were told about the consequences of a deterioration in cleanliness, which were judged to be a direct result of compulsory competitive tendering.

Mr. Dobson

I share my hon. Friend's concern about the terms and conditions of ancillary staff. I am glad to report that, on a visit to Halifax, where the Calderdale PFI is a welcome development, I discovered that the terms and conditions of the ancillary staff are an improvement on those that they had when services were contracted out at the Halifax hospitals.

Mr. Hinchliffe

I am grateful to my right hon. Friend for that reassurance. I know that he has taken on board the concerns that I have expressed, as well as those expressed by other hon. Members on both sides of the House.

I will not detain the House for much longer, although the Liberal Democrats have said that we might be in for a late night, but I have one worry. We have been handed the PFI model by the previous Government. In my constituency, the models governing future delivery are not clear because of the increased role of GPs. I do not argue against that, because I do not believe that we have ever properly developed primary care along the lines envisaged by the NHS in 1946. If we are not careful, however, the PFI will lock us into what will soon become old-fashioned models of care. We need to watch carefully for that.

The delivery of community care had been moving away from the institutional model of care homes and nursing homes. As a result of 18 years of Conservative government, however, it is sad to note that the institutional model, which was outdated when the Conservatives came to power, has been re-established.

If one considers the huge building programme for care homes and nursing homes it is clear that we are moving in the opposite direction to that taken by the majority of other European countries. That backward step is a direct consequence of handing the provision of that care to private companies. They have invested in the easiest form of provision—bricks and mortar—rather than in real care within the community.

Dr. Peter Brand (Isle of Wight)

Does the hon. Gentleman agree that what has happened in community care is a direct consequence of the private sector dictating how things should be provided rather than the community deciding?

Mr. Hinchliffe

The hon. Gentleman has understood my point. I am not necessarily saying that there are no good models in the private sector. I accept that there are some excellent models, with regard to community care, for example, in telecommunications and the ability to contact people in their homes.

I am concerned, however, that, by handing over community care to the private sector, we have taken a significant step backwards, particularly in relation to the care of the elderly. We could do better. I hope that the Secretary of State will understand my concern that the PFI could lock us into old-fashioned models that could be overtaken by far better alternatives, which are on the horizon.

The Minister of State, who knows Wakefield well, and my right hon. Friend the Secretary of State have listened to my concerns, and I am grateful for the reassurance that my right hon. Friend has given me. I hope that the Minister will respond to one or two of the other points that I have raised.

8.35 pm
Mr. John MacGregor (South Norfolk)

I support the Bill, and welcome the late conversion of the Labour party to the PFI concept in the NHS. I never cease to be fascinated when I hear members of the Labour Front Bench extolling the virtues of privatisation and the PFI, because I recollect from the past 18 years how often they were opposed to both. I am pleased to see their late conversion, because it shows that we won the argument.

I support the Bill principally because of its effect on the Norfolk and Norwich hospital in my constituency. As the Minister of State knows, it will be one of the first large acute hospital PFI projects, and I hope that it will start shortly. It will undoubtedly be one of the most expensive, and will provide 21st-century, state-of-the-art hospital facilities for my constituents and for people throughout Norfolk.

I support two points made by my hon. Friend the Member for Stratford-on-Avon (Mr. Maples), which were doubted by the Minister. First, he referred to the expenditure allocated in the Budget to the NHS next year. It simply is no good to argue that my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), the previous Chancellor, allocated less for next year according to his three-year expenditure programme. My hon. Friend is entirely right to say that my right hon. and learned Friend allocated for this year, 1997–98, a bigger increase for the health service than the current Chancellor has allocated for next year.

The reason for that is quite simple, as the Minister of State knows perfectly well, because the allocation for the year ahead is frequently increased in the current expenditure round as one moves into the final year and takes something from the reserves. All that the current Chancellor has done is bring forward to now rather than November the announcement of next year's public expenditure increases, and taken those increases out of the reserves. It is therefore absolutely comparable with what my right hon. and learned Friend did in November. The facts are clear. The previous Government provided for a bigger increase for this year than the current Government have provided for next year. My hon. Friend is absolutely right.

Secondly, my hon. Friend was also right to say that this is a Tory Bill, which, of course, is one reason for my support. It would undoubtedly have been brought before the House if it had been possible to hold the election a little later. I am sure the Minister knows that to be exactly the case, because, as he almost said in his opening speech, the Bill is intended to remove any doubts.

I agree. The 1996 legislation gave the banking consortiums that intended to help finance the PFI the assurances they sought. I am informed that the Norfolk and Norwich project would have gone ahead, and the Octagon partnership was quite content with assurances of that legislation, until one of the banks involved in the Dartford hospital project raised certain doubts. The Minister of State's legal advice was probably perfectly correct, but in order to provide the belt and braces that one of the banks involved in the Dartford hospital project appears to want, the Bill has had to be introduced. When it was seen that one of the banks involved in the hospital project had raised doubts, those involved in other projects also wanted the safety of belt and braces.

That is why I support the project. I know that there were discussions, because I was heavily involved in them before the election. The Norfolk and Norwich project was the up-and-coming project. I know that there was cross-party agreement on it.

Mr. Simon Hughes

Clearly, the Bill and the project need bankers to support them. The right hon. Gentleman may be about to deal with the issue, but can he tell us whether he believes that the community should also support PFI projects? If so, how does he reconcile his position with the overwhelming view of the elected authority in Norwich, which does not support the project?

Mr. MacGregor

I do not know which authority the hon. Gentleman means. Does he mean the Norwich Labour-controlled city council? If so, I am coming to that subject later. I do not agree with the council. I have consistently said that I support the project in my constituency. I certainly support the PH approach. We had almost achieved our ends—in fact, I think that we would have done so, were it not for the doubt raised by one of the banks in relation to the Dartford project.

This is a simple Bill that deals with a straightforward point in the correct way, as it would have done before the election. That is why I hope that it will be passed quickly.

I have, for a long time—since the mid-1980s—been heavily involved in trying to get the Norfolk and Norwich hospital to its present state. There are a number of reasons for the delay. The issue that we are addressing tonight—the clarification of the legal powers in the Bill—was not one of the causes of the delay. There are three main reasons. The first involved the inevitable complexities and legal problems of putting land together and of reaching agreement among all the parties to bring the project to reality.

The second reason involved the framing of the PFI template. As the Minister correctly said, it was one of the biggest projects, and putting it together was a complex business. The Minister spoke of a steep learning curve, and I agree. As a result of that work, we shall have a template that will make it much easier for other PFI projects to go ahead more quickly—many of the details and problems have been thrashed out. I pay tribute to the chairman of the Norfolk and Norwich health trust, Michael Falcon, and its chief executive, Malcolm Stamp, for all the work they have done in getting the project to this point.

The third reason—this answers the question posed by the hon. Member for Southwark, North and Bermondsey (Mr. Hughes)—is the one which, above all others, caused the delay, and it has nothing to do with the PH. There have been endless arguments over the siting of the hospital. I originally opposed the idea of the hospital coming to Colney in my constituency. I believed that Hellesdon—the site being proposed in the early 1980s—was the right one.

The main reason why I was anxious for the hospital to be located in Hellesdon was that the project was in an advanced state of development, and I could foresee a delay of 10 years if, at a very late stage, a decision was taken to change the site of the hospital; but that is what happened. The decision was taken, not least because of pressure from the consultants, to change the site of the hospital, which has led to a 10-year delay.

The arguments about the siting of the hospital have continued. Ever since the decision was taken to move from Hellesdon to Colney, I have been wholly in support of the Colney project. There have been some issues to sort out, but they have nearly all been resolved. The only remaining issues involve access and whether the road structure is adequate to deal with what will undoubtedly be an expanding hospital.

Curiously, the delay has brought two benefits. First, we have able to get a more modern hospital than we would have had 10 years ago; we have been able to take advantage of the advances in medical science and organisation. Secondly, the site has been located to the Norwich research park, which will enable the hospital and the research institutions to do a great deal of work on medical research and development that might not otherwise have taken place so easily. Therefore, the delay has brought some benefits.

The argument seems to be continuing, not least in Norwich city council and among certain people in Norwich. They argue for returning to the site in the centre of Norwich where the present hospital is located. I am convinced that that would lead to another delay of at least 10 years before the people of Norwich and Norfolk got their new hospital. That is why I have been so strongly opposed to having the hospital in the centre of Norwich. There are other arguments: the majority of people using the hospital would find it much more difficult to gain access to the hospital there than if it were located at the new site at Colney.

Some groups are still exerting pressure. I am glad to see that the two Norwich Labour Members of Parliament seem to have come round to the view that the hospital should be at Colney. But, even today, some groups in Norwich are arguing against the Colney site. In a letter in today's Eastern Daily Press, the secretary of the Keep Our Hospital in Norwich Group mentioned a meeting that the group had just had with officials in the Department of Health. The letter concludes: The officials appeared genuinely interested in the Keep Our Hospital in Norwich alternative and have gone away to evaluate its financial cost compared with that of Colney. I know that the Minister has been extremely helpful in considering the matter of the site. He has been extremely fair, and has quickly brought himself up to speed on the matter. He has been supportive of the idea that the hospital must be at Colney. I am certain that we would not see the hospital in many people's lifetime were it to be moved back to the centre of Norwich. The Minister has been robust on the issue and I ask him to continue to be so.

Once the Bill has been passed—which I hope will happen tonight, and which will clear up any doubts about the financing—work can finally commence on the site within a matter of months, if not weeks. That can happen provided that the Minister sticks to his position. That is why, above all, I support the Bill tonight.

8.46 pm
Mr. Charles Clarke (Norwich, South)

Thank you, Mr. Deputy Speaker, for calling me to speak in the debate. I am glad to follow the right hon. Member for South Norfolk (Mr. MacGregor). I shall later comment on the aspects of Norwich to which he referred.

I support the Bill as a whole, principally because it is the most effective and practical way of getting hospitals built. I congratulate my hon. Friend the Minister of State on his determination to ensure that the problems of inadequate hospital buildings that exist up and down the country are solved by the Government as rapidly as possible.

I think that the hon. Member for Stratford-on-Avon (Mr. Maples) was being a little disingenuous; he omitted to mention the massive sell-offs and the massive squandering of the oil revenues during the Conservative years. In contrast to what happened in other European countries, that money was not spent on health or education, but was simply frittered away. It was those Conservative actions that led to the need for us to look at propositions such as the PFI in order to raise funds.

I also support the Bill because it encourages public-private partnerships. Many areas of management of the public sector gain from such a partnership, and the Bill will encourage that approach.

Mr. Simon Hughes

Given what the hon. Gentleman has said about spending on health during the Tory years, I take it that he will expect his Government to spend at least as much per year in real terms as the Tories did, over each year of this Government. I am talking about public expenditure, not about extra private finance.

Mr. Clarke

That is what I hope. That is the answer as given by my right hon. Friend the Secretary of State and my hon. Friend the Minister of State. I, too, share that hope. I think that hon. Members on both sides of the House hope that we shall achieve the growth and success that will allow far higher investment in the public sector, not just in health, but in education.

I wish to address two specific issues. The first involves the process of the PFI itself. It is critical that the process is open and democratically accountable and that people can feel that they are part of, and understand, it. Although there are issues of commercial confidentiality in any private finance deal and although there is some confusion about whether the problem has to do with openness in NHS decision-taking structures—which my right hon. Friend the Secretary of State is trying to address—or with openness in the PFI process itself, it is absolutely essential that we support what my hon. Friend the Minister of State said in an earlier debate, that It is the people's national health service".—[Official Report, 15 May 1997; Vol. 294, c. 272.] The people have the right to know what is being done in their name and with their money. I hope that the review to which the Minister of State referred will set up new processes that fully reflect that aim and require genuine openness and public consultation, so that people will feel that the new developments are for them. Those are not simply internal NHS processes, although the issues raised by my hon. Friend the Member for Wakefield (Mr. Hinchliffe) relating to working conditions are critically important; community commitment to the developments is also a factor. Although not a major theme in the debate, there are questions to be asked about how effectively some community health councils are representing the communities that they serve.

I want to draw attention to the need to take into account environmental considerations. That is important in the context of the PFI, because some developers have told me that they would greatly prefer to develop on green-field sites rather than in city centres. There are serious environmental issues that must be considered. The current NHS process looks at the environment for patients, staff and visitors, but not for the wider community; nor is it simply a matter of formal planning approval. The new PFI processes should ensure that a full-scale environmental impact assessment of a new hospital or health development is carried out.

Environmental impact must be a major factor in making choices, and to illustrate that point, I refer to two parliamentary questions that I asked recently. When I asked my hon. Friend the Under-Secretary of State for Defence what guidance his Department currently applies in ensuring that full account is taken of the environmental impact of its new building programmes", he answered: My Department carries out an environmental assessment on all new buildings likely to generate environmental effects. The environmental assessment is included in the formal consultations with the local planning authority as part of the planning process."—[Official Report, 19 June 1997; Vol. 296, c. 264.] However, my hon. Friend the Minister of State, Department of Health, accurately reflecting the policies that he inherited, had to answer: Policy on environmental issues is the responsibility of the Department of the Environment, Transport and the Regions, which produces guidance for local authorities to use when considering planning applications by NHS Trusts for new building projects. He went on to say: NHS Estates, an Executive Agency of the Department of Health has issued 'A strategic guide to environmental policy for General Managers and Chief Executives'—[Official Report, 26 June 1997: Vol. 296, c. 621.] What the Ministry of Defence can do, the Department of Health should be able to do. It must be recognised that all these developments have major local environmental implications, and full weight should be given to such factors when making a decision. I hope that my hon. Friend the Minister of State can give full consideration to both those aspects—openness and accountability and environmental impact—and offer the House the necessary assurances on both matters.

My second theme is the issue of the Norwich hospital. For the reasons stated by the right hon. Member for South Norfolk, the Norfolk and Norwich hospital is the most expensive of all the projects either agreed or approved by the Department. The new site was located in the right hon. Gentleman's constituency until boundary changes placed it in my constituency of Norwich, South, along with the Norwich research park and the John Innes centre—a net gain to me and a net loss to him over which we can wrangle in future.

Like the right hon. Gentleman, I emphasise that most people in Norwich believe that the new hospital should be in Norwich. However, because of the problems that I have just outlined, many in my constituency—obviously, I cannot speak more widely than that—did not believe that the chosen site was the right one, because the PFI process that the previous Government went through was flawed: it was not properly open and did not take account of environmental factors. I do not say that the procedures were not followed—I am sure that they were—but it was not a correct process, which is why my constituents welcome the decision of my hon. Friend the Minister of State to review the whole process.

The right hon. Member for South Norfolk says that the delays to the PFI project were entirely due to petty political squabbling between the local councils, both Labour and Liberal Democrat, but that is not a sustainable position. The fact is that the process lacked clarity—the question whether the new hospital was to be the second or the first Norwich hospital and a whole series of other issues led to disputes within and between political parties. There is little to be gained from going into the history of the dispute and, with respect to the right hon. Gentleman, it diminishes the force of the rest of his argument to suggest that party political arguments were the most serious problem.

In the light of those failures under the Tories, I want to take the opportunity of this debate to ask my hon. Friend the Minister to do everything in his power to ensure, first, that the new Norwich hospital has proper transport and good access. The right hon. Member for South Norfolk referred to that issue, which is of great concern to local people, especially elderly people, and it must be sorted out. Secondly, I ask my hon. Friend to ensure that bed numbers are kept under constant review, as there are serious doubts in Norwich as to whether the bed numbers planned for the new hospital will be adequate. Thirdly, constructive uses must be found for the sites of the hospitals that are to be closed—the Department owns the sites, so its attitude is extremely important. Fourthly, there must be proper primary care—including accident and emergency care—available in the city of Norwich.

I hope that my hon. Friend can offer assurances on those matters, so that the benefits of the new health care PFI process, which I strongly support and for which the Bill provides a legal foundation, can be felt by the people of Norwich in their entirety.

8.56 pm
Mr. John Horam (Orpington)

It is a rare pleasure, in a House with such a large Labour majority, to speak in support of a Tory Bill.

Mr. Simon Hughes

There may be more.

Mr. Horam

The hon. Gentleman is right; there may be more conversions along the road, as reality seeps in on this new Labour Government.

It is also a pleasure to speak in favour of a Bill with which I was personally associated. It is almost word for word what the previous Government would have passed, perhaps with Labour help, if the general election had been called even a week later than it was.

I am delighted that the Government have adopted our Bill so fully. I note what the Minister of State said about one small change for the sake of clearer English, and I wholly support that; if more Bills were written in clearer English, the House would be delighted.

I must even disagree profoundly with the contention of the hon. Member for Southwark, North and Bermondsey (Mr. Hughes)—who is looking at me with fond affection from the second row—that the Government are not right to push the Bill through in an evening. I think that they are absolutely right to do so.

Mr. Hughes

The hon. Gentleman would think that.

Mr. Horam

Although it prevents me watching on television the last night of the Royal Opera house, Covent Garden, which I very much regret, it is sensible for the Bill to complete all its stages in one evening, because it is the type of simple Bill, with all-party support, broadly speaking, which should be pushed through quickly. It is totally different from the Finance Bill, which my right hon. and hon. Friends on the Opposition Front Bench rightly made a lot of fuss about earlier. The Bill is needed—[Interruption.] I have provoked an intervention. I knew that I should never have departed from the path. The Bill is simple, clear and has broad all-party support, so it should pass quickly.

Mr. Hughes

If, as the former Minister rightly says, the Bill was on the shelf when he left the Department of Health, why did not the Government introduce it weeks ago, instead of waiting for the last few days before the summer recess and then being obliged to rush it through the House? He must agree that there would have been a better way.

Mr. Horam

There it is; harmony has been restored. I have no doubt that the Government could have passed the Bill more quickly and with greater scrutiny if they had so wished, but they did not do so.

This support may be unwelcome to the Government. Let me point out that the reason for the Bill is Labour's habitual financial incontinence. The banks have gradually become extremely suspicious about lending to organisations that are not wholly part of central Government—local authorities, trusts or whatever. They have become suspicious, because there is a long history of the usual improvident loony Labour councils getting into financial difficulties and trying to borrow money at great length from City bankers and so on.

One thinks especially of the swap arrangements entered into by the London borough of Hammersmith and Fulham—an incident that is embedded in the memory of all City bankers because, in the end, the court decided that it was ultra vires for the borough to engage in such practices. That was another example of an improvident loony Labour council doing things that were crackers, causing the City to become very leery of lending to bona fide organisations such as health trusts and local authorities, because it could no longer trust Labour. I believe that it is now discovering that it can no longer trust Labour in national Government, never mind local government, as a result of the events of the past few weeks, but that is a party political point.

There is another reason why I am glad that the Bill has been introduced. As my hon. Friend the Member for Stratford-on-Avon (Mr. Maples) said, it is, we hope, the final full conversion of the Labour party to the private finance initiative process. As has been said, for many years Labour opposed the PFI, and those of us who were Health Ministers in the previous Government remember a constant stream of shadow Health Ministers—I hope that Labour has a better record in government than in opposition—inveighing against the PFI process as creeping privatisation, totally unacceptable, ideologically unsound and so on.

I hope that the Minister of State, who has persuaded the Government that the PFI is sensible, can bring the trade unions with him. The House will remember the Unison advertisement—in the Manchester Evening News, I believe—which said that the PFI was so unacceptable that it was the worst thing to happen to the national health service since 1947. The advertisement appeared in connection with the South Manchester University Hospitals NHS trust scheme—one of the 14 schemes that the Minister of State has prioritised. I hope, therefore, that the Government will bring the trade unions with them.

When we were in government and the Opposition were opposing our proposals, we had to put up with the criticism that the implementation of the PFI was a mess and that it was going too slowly. Astonishingly and amusingly, within weeks of a Labour Government being elected, two huge schemes are given the go-ahead. How could that have happened if all the underlying work had not been thoroughly done? Within a few weeks of that, another dozen schemes are out into the open, which can proceed within the next 18 months. That could not have happened if all the groundwork had not been done.

The Minister of State has walked into a rich inheritance. When he opened the doors of Richmond house, he could not have conceived that such a cornucopia of schemes was waiting for him to pick up and advance. Indeed, as Lord Jenkin of Roding said in another place, Labour took over at an extremely fortunate moment in the history of the private finance initiative, and I am interested to see that the Government are advancing it.

I shall risk another intervention from the hon. Member for Southwark, North and Bermondsey by saying that we are used to the Liberal Democrats taking credit for things that other people do. Hon. Members will know those little leaflets that come through letter-boxes when a Labour council has done something and the Liberal Democrats claim credit for it, or when a Conservative council does something and the Liberal Democrats are very sharp to claim credit for it immediately. They may have voted against it in some cases—

Dr. Brand

We deliver leaflets.

Mr. Horam

Yes, the Liberal Democrats do deliver leaflets. They endlessly deliver leaflets. They do not canvass, but they deliver leaflets.

Even by comparison with the Liberal Democrats, who have a tendency to take credit for things that they have not done, the Minister's announcement the other day was astonishing. However, as has been said, it was not an announcement of progress on schemes, but a cancellation announcement. Apart from the 14 schemes that were going ahead anyway, 23 had been cancelled or delayed, or whatever phrase one may choose. I feel sorry for the new Labour Members—

Mr. Milburn

As the hon. Gentleman is so confident about all those schemes, on what time scale does he think that they would have gone ahead? Will he remind us how many successes there were under the "let a thousand flowers bloom" philosophy? How many hospitals were built?

Mr. Horam

The schemes would have gone ahead more quickly than under a Labour Government, because we would not have stopped for innumerable reviews. Thirty-eight reviews are now being conducted—indeed, they overlap. The hon. Gentleman had to exclude some hospitals from the PH scheme, because the London review does not report until later in the year. He is therefore not on to a good point.

New Labour Members representing Gloucester, Peterborough, Leeds, Rochdale and elsewhere can simply thank the Government for the fact that the schemes that were going ahead under the Conservatives have now been delayed, cancelled or are otherwise a problem. As my hon. Friend the Member for Stratford-on-Avon said in his opening remarks, the hon. Gentleman is imposing central planning. We are now moving back to the cosy Stalinism that the health service knew for so long, but from which, under the regime that we put in place, it was gradually escaping. We deliberately motivated people and gave them the power to make decisions.

An important issue over the years to come will be the difference between the two sides of the House: the Conservative party believes in local decision making, whereas the Labour party believes in central planning. The Labour party believes that Richmond house and Quarry house know best; we believe that local managers have their ears to the ground and know how to do the job.

We believe that that is the way forward on the vexed issue of clinical support services, which the Liberal Democrats also raised. Why do we need to define clinical support services? Why must we constantly invent things that are out and things that are in? Why not simply let local clinicians decide whether radiology or pathology are now out? Why debate the matter here? Local people can decide in the light of their experience what works in their area. That is wholly consistent with the Conservative and Liberal Democrat view. I am sorry that the Government have gone to so much trouble to come up with a definition of what is right for clinical support services. It is totally unnecessary. When one hears the British Medical Association say that there must be a clear definition of a clinical support service, one's suspicions that that is the wrong track to go down prove to be well founded. It is an unnecessary ideological battle that need not be fought.

I welcome the Bill but stress that, although the centre has a role, it is not the heavy-handed central planning role that the Government envisage. I make two recommendations. First, the Government should take more care about the outline business case. In my experience, too many unsatisfactory schemes surmounted that hurdle too quickly. If the Government were much tougher at the outline business case stage of a scheme, it would benefit the whole process. I am sure that that will be taken into account in the years to come.

Secondly, a point that has not been raised during the debate is the quality of buildings, particularly design quality. Evidence now shows that people's health improves more quickly in the right surroundings, and hospital staff are better motivated if their surroundings are pleasant and they have an input on them. The great danger with the PFI is that it becomes a design-and-build process, in which the architect is employed by the consortium building the hospital and the input from consultants and others involved in the hospital is too little. The danger is that financial and planning considerations simply outweigh concerns of quality, functionality and ability to produce a satisfactory health solution.

The Minister of State may be aware that, as Minister, I established a committee to examine design quality. The Minister for Arts is also concerned about that issue, and we have addressed a joint conference about the quality of hospital buildings. The Minister of State will know from his own experience that the NHS has a poor record when it comes to quality buildings. For example, St. Thomas's hospital, which was bombed during the war, retains its original Florence Nightingale-influenced design. There is an interesting building next to the hospital, but a very unsatisfactory office block behind it. Those three totally different buildings create an architectural mess that Members of Parliament must look at every day when we stand on the Terrace.

We must not forget about the quality of new hospital buildings. I am sure that the hon. Gentleman does not wish to be remembered as the man who built unsightly hospitals all over the country. We want new hospitals to contribute to health care provision and to be good neighbours in their areas.

I welcome the Bill as a recognition and a continuation of the previous Government's policies. I wish it satisfactory and speedy progress through the House this evening.

9.10 pm
Dr. Peter Brand (Isle of Wight)

This is a fascinating debate about a very small Bill. I am amazed by the amount of support that it enjoys on both sides of the House, because hon. Members have very different ideas about what the PFI achieves and what the Bill encompasses. I was brought up to believe that words mean what they say and, as a new Member of Parliament, I thought that legislation should say what it means.

I have received many assurances from the Minister today and in another place about what may form part of the PFI definition and what powers the Bill confers. However, it is difficult to see how the Government, in their new role, are clarifying their approach to the private sector. Today's debate has been confused: the PFI is not equivalent to private sector involvement. The PFI is a form of private sector involvement, but it is not the only form.

The private sector has been involved in the NHS for many years. I suppose that I should declare an interest in the debate: I am an NHS general practitioner and I have two surgeries that are part of a mini-PFI scheme. We buy in several clinical services from the private sector, such as pathology, radiology and diagnostic imaging. The private sector provides many magnetic resonance intensifier services in this country. The great test of private sector involvement is that the private sector can make a profit only if it can attract patients or work from those who purchase its services.

I am confused about Conservative Members' attitudes to the PFI. Accountability must be written in by contract. Those who are involved in PFI delivery will confirm that such contracts are long term. There is nothing wrong with involving the private sector, but it must be accountable. I have problems with the Bill as it stands because the Government have not yet defined how they will operate the purchasing-providing split in the NHS.

Under the previous Government, private sector involvement depended on competition to deliver quality and value for money. If we are to have not purchasing-providing, but a form of cosy commissioning and delivery by favoured friends, we must become very good at guessing what the national health service will need not just in two years or five years, but in 10 years.

Hon. Members may remember a wonderful television programme in which Jim Hacker gave out an efficiency award to a hospital that was fully staffed and fully equipped but without any patients. It is bad enough to have a white elephant building in the district, but if that building has services attached, it is so embarrassing that people will fill it and use the service even though, clinically, the need for that service may well have been superseded.

A valuable point was made about the community care element developing much greater units to look after older people than we would like to see, because that is the only condition under which the private sector is prepared to deliver that service at the cost that we are prepared to provide. That is a big lesson for us about the PFI.

I am very disappointed that an amendment to restrict the PFI element for trusts to their NHS services was not accepted. With the way in which the regulations are set out at the moment, there is an enormous risk that a trust encouraged by a private sector partner may develop yet another private wing. We have one in my local hospital and it has lost an enormous amount each year. That loss has to be found from the money that goes in, which should be spent on the NHS and acute services.

The Bill is, I am afraid, too short. It is nice to have a short Bill, but it needs to define slightly more what it is trying to do. The Labour party has not spent the past 18 years working out an alternative to the PFI to get more capital funding into the NHS, which many other public services get.

When the Deputy Prime Minister was in opposition, he used to appear frequently on the "Today" programme, telling us that the public sector borrowing requirement was an artificial straitjacket and that he had all sorts of schemes to get round it. There are indeed schemes to get round it, and I hope that some will be found. The idea of having a bank for the health service estate makes tremendous sense. Assets could be held against the borrowing by the organisation very much along the lines of housing associations, which receive both private and public money. It would be a very good way to expand our building programme.

I urge the Minister to look at the amendments that we tabled. He clearly needs the Bill to pass through the House. It is essential that a number of projects start, but I would not want the Bill to be an indication of the Government's intent towards public and private partnership for the NHS, as it gives the wrong message to patients in the NHS and certainly to all of us who work there.

9.17 pm
Mr. Peter Atkinson (Hexham)

I do not share the Liberal Democrats' concern about the Bill. It is a relatively simple matter. The concern of most of us is where the Government will go with the private finance initiative.

I listened very carefully to the Minister, particularly to the end of his speech and the "soundbitey" section where he said that the Government would fulfil the people's priorities for the health service. The question that I ask him is the question that the people of Hexham ask me: will they will get a new general hospital?

Hexham general hospital was proceeding towards a successful conclusion in the PFI when the Minister put it on to the "do not proceed" list. There was widespread anger in the area when that happened, because the people of Hexham had campaigned for years for a new district general hospital. When it was within our grasp that we would get one, it was then put on the "do not proceed" list. The campaign had run for six years. There are cars throughout the constituency that still have stickers on the back saying, "Save our general hospital service in Hexham". It is a huge concern to the people locally because Hexham district hospital serves one of the largest rural catchment areas of any hospital, ranging from some of the most isolated parts of the country right up to the boundaries of the city of Newcastle. It is the only hospital that lies between Newcastle and Carlisle. Therefore, if patients have to go for treatment in Newcastle, in many cases it will mean a 60-mile round trip. The Minister will appreciate that the hospital is of enormous importance.

There was a feeling in Hexham that the hospital was doomed. It is a small district general hospital and there are real problems in maintaining adequate levels of service in such a small hospital. The feeling was that the national health bureaucracy did not like small hospitals and that it thought that big was always beautiful.

It was an exciting idea when the previous Government agreed that the district general hospital at Hexham should be linked with a large teaching hospital in Newcastle—the Royal Victoria infirmary—in a joint trust. All the support services of a big, expert and nationally recognised hospital could help the small district general hospital fulfil its important health care role. The consultants would travel from Newcastle to Hexham rather than patients having to travel from Hexham to Newcastle to see consultants. It was an imaginative idea. Only better physical surroundings were needed.

The hospital—I hope that the House will forgive me for perhaps being parochial, but I am raising an important local issue—was a wartime emergency provision. It was built to treat soldiers who had been wounded during the second world war, who returned for long periods of treatment. The majority of the buildings date from that period. Providing an adequate level of health service in such physical surroundings is extremely difficult. The maintenance staff have perpetual nightmares over provisions such as heating to keep the building warm during the winter for the benefit of patients.

Within the core fabric that I have described, however, is an excellent hospital. The nursing and medical care is renowned. The people of Hexham and of surrounding areas value the hospital as a facility of enormous importance.

There was great concern about the way in which the hospital was scored under the new prioritising system that the Government have produced. It scored three out of five on the health services scale. That is what the people of the hospital cannot understand. The service provided by the hospital is of supreme importance and those concerned feel that such a low score cannot possibly be right. It may be that because the area scored well for those hospitals that were approved there was concern about putting too many schemes forward at one time, thinking that the area would have too large a share of the cake, and accordingly Hexham was scored down.

The hospital has appealed, if that is the right word, against the rating of three out of five. I wish the Minister to give an assurance that he will revisit that scale. If the hospital does not feature in the next wave, to be announced in the spring, we shall have real problems in providing an adequate health service in a rural area.

The building has not had maintenance money spent on it because a new hospital was within sight. It is clearly not sensible to pour a large amount of money into the fabric of a time-expired building, but if there is now a huge delay in reconstruction there will be difficult times in maintaining patient care in Hexham.

This is not merely a parochial matter. The hospital treats 10,000 or more patients a year. When the reorganisation of health services in Newcastle was planned, the near closure of the Newcastle general hospital was based on the ground that many patients would continue to be treated in a hospital on the site at Hexham. If Hexham were to fail to operate, that would have a severe implication for medical services throughout Newcastle.

I ask the Minister to accept that it is essential for the people of Hexham that they have a new hospital. They hope earnestly that he will ensure that provision for such a hospital goes forward in the next phase that he has announced today.

9.24 pm
Mr. Michael Jack (Fylde)

This has been a useful and informative debate on the next stage of the private finance initiative in the national health service.

It is important to reflect on and respond to some of the points that the Minister made when he dealt with my intervention. Delay in achieving major hospital projects is nothing new. Despite having the biggest ever capital expenditure programme for NHS hospitals, the previous Government still had one major hospital project worth £25 million every year.

The problem that the Minister did not mention was that it used to take on average 10 years from the inception of an idea to the fruition of a project for a major district general hospital. The idea that delay has suddenly become the order of the day because of the private financial initiative is unnecessarily and unfairly misleading.

Mr. Milburn

The right hon. Gentleman asked about projects worth more than £25 million that have been given the go-ahead. The better comparison is with projects that are worth more than £38 million, because that is the value of the lowest capital development in the schemes for which I have just given the go-ahead. He may be interested to know that only two hospitals with such a value were built in the past five years. He should be a little cautious about trumpeting the previous Government's success.

Mr. Jack

We can all trade numbers, but the Minister reminded us that all he has done is to give the go-ahead to continue to negotiate. There is no guarantee that on any particular date in the next 18 months that he cares to give us, any or all of those projects will have been completed to a financial close. The Minister's intervention does not lessen my point that delay in bringing complicated projects, such as hospitals, to fruition is not a new phenomenon.

The Minister was a little unfair to the private finance initiative. He gave a somewhat one-sided view, and forgot to remind the House that the initiative is already doing excellent business outside the health service in the provision of prisons, roads, underground trains, information technology systems, Government accommodation and universities. It provides millions, if not billions, of pounds of public investment and gives better value for money.

That brings me to the central point of the private finance initiative. I doubt whether some Liberal Democrat Members have understood and focused on the purpose of the process. Its purpose is to buy services for the public using a method that gives better value for money than the old, conventional method of public procurement. If one starts from that point, it makes a great deal of sense. In no way does that simple formulation corrupt our fundamental belief that the national health service should provide treatment to patients free at the point of consumption. There is no conflict. I shall have more to say about the formulation of the hon. Member for Southwark, North and Bermondsey (Mr. Hughes).

Mr. Simon Hughes

I accept that the PFI does not necessarily determine the quality of service and the fact that it is free to patients. Does the right hon. Gentleman accept that one of the questions that must be answered is whether deferred payment under the system of private finance—payments over time—will be much more expensive in the long term than the alternative, which is to pay now? It may be difficult to find the money immediately, but at least the payment would be less.

Mr. Jack

Deferred payment over time—a sort of hire-purchase arrangement—would not be private finance; no accounting officer would agree with that. We are talking about payments over time for services rendered, against a given specification of output. It is no longer my task to explain that to the House; it is the Minister's task—but I am glad to see him nodding in agreement.

My hon. Friend the Member for Orpington (Mr. Horam) put his finger on why we are here this evening. He rightly reminded us of Hammersmith and Fulham, a Labour local authority that walked away from its obligations. Hammersmith and Fulham sowed the seeds of doubt in the financial community. [Interruption.] If the hon. Member for Lewisham, East (Ms Prentice)—who is trying to attract my attention from a sedentary position—wants another example, let me remind her of the real reason why we are having this debate. Deutsche Morgan Grenfell observed what Allerdale council had done—as late as January this year: it took as long as that for it to wake up to the situation. Labour was the largest party at the time, and subsequently ran the authority. In more recent times, it was Allerdale that walked away from a timeshare arrangement, bringing the issue of vires and public bodies into question. That is why we are debating the Bill, which my party thoroughly supports. My hon. Friend the Member for Orpington did the House a great service in reminding us of such action by local authorities.

My right hon. Friend the Member for South Norfolk (Mr. MacGregor) also did us a service by reminding us how hard he had campaigned for his local Norfolk and Norwich hospital. When I was at the Treasury, my right hon. Friend was a stalwart campaigner on all aspects of that issue. I am sorry that the hon. Member for Dartford (Dr. Stoate) is not in his place. Our former hon. Friends Jacques Arnold and Bob Dunn did heroic work to ensure that the Dartford project reached the stage that it has now reached.

Perhaps the Minister will learn a lesson if he recalls what his right hon. Friend the Member for Camberwell and Peckham (Ms Harman) said some time ago when we—who were then in government—had the temerity to put Dartford and Gravesham hospital on what we called a B list. In those days, two and a half years ago, we had a ranking system. We were chastised and accused of watering down the project in some way, but—because we let the thousand flowers grow—Dartford and Gravesham bloomed a darn sight faster than many other projects. It matured rapidly, proving to be an excellent PFI project, and is now one of the "flagship" and "pathfinder" projects that the Minister seeks to make his own, as though he had done all the hard work. In fact, all the hard work was done by those in the NHS trust, by my former hon. Friends and by others who helped to advance the project.

I do not blame the Minister for trying to capture one or two early points of success. He is a good Minister, but he has his own ambitions: he wants to get things done. We also wanted to get things done. As the Minister will know from his officials, a process of rationalisation was undertaken to ensure that the best projects had the best chance of making it to the end. We will probe the Minister a little about his attitude to, for example, the so-called affordability gap. Addressing that problem was germane to ensuring that some projects stood a real chance of making it to the finishing line.

We also want to probe the Government on another issue. Instead of allowing local people to generate local projects, meet local needs and make their own progress, the Bill and the mechanism outlined by the Minister will bring back, centrally, the strategic NHS hospital programme. We want to know more about how that will work.

In a telling speech, my hon. Friend the Member for Stratford-on-Avon (Mr. Maples) told us, when dealing with the important subject of clinical services, that he had advised the Government not to become "boxed in". I asked the hon. Member for Dartford—who is a doctor—about one aspect of clinical services: I asked him whether haemodialysis was a clinical service. I think that he said yes. The publication, "Private Opportunity and Public Benefit" describes the provision of haemodialysis treatment by South Tees acute hospital trust on the Darlington Memorial hospital site. The Minister chose not to mention that, which is sad. He will know the detail of that excellent PFI project. It is on his doorstep and it provides his constituents with clinical services. I have never heard it said that it is not a clinical service or that in some way it is not a PFI project. The Minister might usefully draw on the example of a service that is plainly benefiting his constituents.

Dr. Brand

Will the right hon. Gentleman give way?

Mr. Jack

No. I should like to bring my speech to a close.

That shows that under the private finance initiative clinical services are already making a contribution. I do not blame the Minister for thinking carefully about this important issue and I look forward to hearing his future definition.

At the centre of the Bill is the issue of giving legal certainty to those who wish to provide finance for hospital projects under the PFI. We are taking an important step to remove doubt, and it is a pity that the banks did not express their reservations earlier. If they had, we would have been able to bring more projects to fruition quicker. I am glad to be able to welcome the Bill.

The Minister chastised us when he said that the nasty Tories had made a complete mess. He said that all the delays were due to us. [HON. MEMBERS: "Hear, hear."] Before the Minister joins in the "Hear, hears", perhaps I should say that I shall not break the confidences that were shared with me when I was a Treasury Minister. Before the debate, I looked at old papers on this matter. I remind the Minister that on one of the projects mentioned in the debate the developers decided to change the contractual arrangements so that they could obtain tax benefit. The trust became involved and decided that it wanted to look at the specification with a view to increasing the number of beds by about 100. The contractors suddenly decided that they wanted to put in a large claim for extra operational costs over the life of the contract.

The Minister should look at why there have been delays, because some of them were not the fault of the Conservative Government: they were due to a combination of factors involving local hospital trusts and the construction industry and its bankers. He will learn to understand the difficulties in PFI contractual negotiations. These are complex matters, but in giving the Bill a Second Reading we are taking an important step to removing the last legal impediment to an important process whose foundations we put in place.

9.37 pm
Mr. Milburn

I am grateful to the right hon. Member for Fylde (Mr. Jack) for his support for the Bill and to hon. Members in all parts of the House who have taken part in this wide-ranging debate. I remind the House that the Bill is a simple, short and effective measure with a single purpose—to get new hospitals built. It is intended to unlock the PFI gridlock that has built up in recent years in the NHS.

The Bill's secondary purpose is to re-establish the confidence that has been so badly dented in the NHS and in the private sector in the ability of public-private partnerships to work for the benefit of patients. The Bill is not the final word on the PFI or on the future of public-private partnerships in the NHS. The aim of the review is to get such issues right in future. I assure the hon. Member for Isle of Wight (Dr. Brand) that we shall return to this issue. I am happy to receive views from hon. Members on both sides of the House about how we can take such partnerships forward.

The hon. Member for Southwark, North and Bermondsey (Mr. Hughes) complained that the Bill was progressing too quickly and accused the Government of arrogance in trying to get the Bill through this evening. Where has he been for the past 18 years? Has he visited some of the communities that have been waiting for these hospitals, which are long overdue, much needed and now have the chance of going ahead? We need to get on with it. Without the Bill, there is a simple alternative: those hospitals in Norwich, Dartford and elsewhere would not be built. It is as simple as that.

Mr. Simon Hughes


Mr. Milburn

I know that the hon. Gentleman wants to speak later, so, if he can just contain himself, I will continue.

Some hon. Members referred to specific projects in their constituencies. The right hon. Member for South Norfolk (Mr. MacGregor) talked about the important Norfolk and Norwich hospital. He said that the endless arguments in the local community are the reason for the delay. The reason for the delay has nothing to do with endless arguments in the community. It is about the need to tie up the technical, legal and financial niceties and the Bill is an important step in that direction.

My hon. Friend the Member for Norwich, South (Mr. Clarke) made some important points about the process leading up to where we are now in relation to Norfolk and Norwich hospital. I understand some of the concerns in the community, particularly in the city of Norwich, about the location of Colney hospital and about the process surrounding the PFI. We are seeking to address those concerns, but there is a simple alternative for the people of Norwich and of Norfolk: either to go ahead with the Colney PFI or not to have a new hospital.

Whatever reservations and concerns they may have about the process, above all, people in Norfolk and in Norwich want their new hospital. Of course we will try to co-operate with the city council and with others in trying to address the concerns to which my hon. Friend the Member for Norwich, South alluded about the future of primary care and about proper access to the site, but it is time to look to the future rather than harking back to the past.

Dr. Ian Gibson (Norwich, North)

Does my hon. Friend agree that, besides giving first-class care to the people of Norfolk and Norwich, the localisation of the hospital on the research park will attract world-class research institutes and perhaps even a postgraduate medical school, which will provide badly needed jobs for the people of Norfolk and Norwich?

Mr. Milburn

My hon. Friend is right. The Norfolk and Norwich PH deal will not just improve the quality of patient care in Norfolk and Norwich, but provide economic regeneration opportunities. I look forward to that added value developing in the next few months and years.

Mr. MacGregor

I agree with that. When I was talking about delays, I was looking back over many years and it was the siting that caused those delays. We must above all avoid that happening again, so will the Minister confirm that the meeting that I referred to, which gave the impression that the siting was being reconsidered, is wrong and that there is no question but that the site should be at Colney?

Mr. Milburn

I confirm two things. First, there is a simple choice: Colney or bust. The people of Norfolk and Norwich want Colney—they want a new hospital. Secondly, frankly, it is extremely important that any Government address community concerns. I am intent on doing that. I want to open up the PFI process, and we will come to that when we discuss some of the amendments. It is important that we re-establish the confidence not just of the private sector and the NHS in the PFI, but of the community—the public—because we are talking about their hospitals and their health service. I hope that I can be helpful in dealing with some of the concerns expressed by my hon. Friends and others in Norwich.

My hon. Friend the Member for Norwich, South raised some general concerns about the need to be open and accountable in relation to the PFI. Our review of the PH and future partnerships between the public and private sectors will include that point. Environmental considerations are important and they will be properly taken into account.

My hon. Friend the Member for Wakefield (Mr. Hinchliffe) referred to the danger of becoming locked into outdated forms of care if we go down the PFI route. That is a real concern on both sides of the House. However, whether a hospital is provided through the PFI or through the public sector, there is a danger of getting locked into inappropriate forms of care. That is why it is important, as the hon. Member for Orpington (Mr. Horam) said, that we design buildings, especially hospitals, in a more flexible way so that they can have a variety of purposes and be geared accordingly.

We need only look back over the past 30 or 40 years to see the changes in the nature of health care in this country. If we look forward 30 or 40 years, the possibilities are endless—but so are the dangers. That is why flexibility in building design will be extremely important.

My hon. Friend the Member for Dartford (Dr. Stoate) invited me to a sod-cutting ceremony—if that is the right phrase—and I would be delighted to cut a sod with him in Dartford. He expressed concern about the future of staff interests, as did my hon. Friend the Member for Wakefield. He referred to some of the services that, potentially, could be transferred to the private sector under PH deals.

As I have already made clear, we have ruled out any clinical services being part of a PH deal. We have ruled out radiology and pathology being any part of a PFI deal. We have also said this evening that there will be a proper review of other services in order to produce a definitive dividing line between clinical and non-clinical services. That is extremely important and it will help to deal with a number of concerns.

The hon. Member for Orpington railed against prioritisation and accused us of cancelling a whole host of hospital projects for which he had responsibility when he was a Health Minister. He told the House, and me in particular, that we needed to be more rigorous about rooting out poor PFI projects. He is right—we do need to be more rigorous. We need to ensure that if public money is going into the health service through any sort of capital development, it goes to the projects that are most needed. That is why we will prioritise projects on the basis of NHS need, not on the whim of the market and not on the basis of a consortium and trust cobbling together a deal that manages to pass a number of Treasury hurdles. We will prioritise on the basis of clinical, patient and strategic need. I hope that the hon. Gentleman will welcome that and stop carping about the prioritisation exercise.

The hon. Member for Stratford-on-Avon (Mr. Maples) produced a long litany of quotations from former Labour spokesmen about the PFI. The one thing that he did not quote was Labour's manifesto at the general election. It is important, so I will remind him of what it said about the PFI: The Tory attempt to use private money to build hospitals has failed to deliver. Labour will overcome the problems that have plagued the Private Finance Initiative, end the delays, sort out the confusion and develop new forms of public private partnership that work better and protect the interests of the NHS. The hon. Member for Stratford-on-Avon may have difficulty with the concept, but we believe in keeping our promises. We are keeping our promises: we are unlocking the PFI gridlock, we will end the uncertainty, we will build hospitals and we will develop new forms of public-private partnership.

The hon. Member for Stratford-on-Avon and the right hon. Member for Fylde talked about the success story of the previous Administration's hospital building programme. If they will take a bit of advice from me, I suggest that a bit of humility would not come amiss. In the past five or six years, using the public sector route, the previous Administration managed to build only two major hospitals. Moreover, under the previous Government, not a single new hospital was built using the PH route—although an endless raft of self-congratulatory press releases was issued by Richmond house. I am interested not in issuing press releases or in making promises or talking about building hospitals but in building hospitals and in delivering the goods, for the good of patients.

The hon. Member for Stratford-on-Avon made a point—to which several hon. Members returned—on cancellation. I can tell them that projects that have not been prioritised in the first wave will still have an opportunity to progress and that no project—whether it is in Hexham or anywhere else—has reached the end of the road. In future, however, NHS regional offices will examine projects proposed for their area and determine which meet the greatest health service need. Patients' needs and genuine health service needs—not the ability of private sector consortiums and trusts to cobble together a deal—will drive the hospital building programme.

I know that there are pressing needs in Hexham and elsewhere across the country, and the Government want to re-examine some of those projects.

Mr. Maples

The Minister had a go at the previous Government's hospital building programme. Will he give the House a cast-iron, 100 per cent. assurance that any one of the 14 hospitals that he has listed will be built?

Mr. Milburn

I give a cast-iron guarantee that not a single hospital would have been built if we had not prioritised. For four or five years, the previous Administration tried with the PFI to build hospitals, but they did not succeed. I am confident that the pathfinder schemes will result in new hospitals being built in the communities that need them.

I have been clear from the outset, however, that the Government—as guardians of the public purse—will not accept a deal at any price. I will not hesitate to cancel projects that fail to deliver on time or at the right price. I do not think that the hon. Member for Stratford-on-Avon would expect me to do anything other than that.

The Bill is a very important measure and is urgently needed. The NHS and local communities are tired of empty promises and of hospitals that are planned but never built. The Bill will help to forge a constructive partnership between the public and the private sectors, harnessing the strengths of both. I think that it provides an excellent foundation for the future. Above all else, it will achieve something that has not been achieved in the past five years: building new, much needed hospitals in the communities that need and deserve them.

Question put and agreed to.

Bill accordingly read a Second time.

Motion made, and Question put forthwith, pursuant to Standing Order No. 63 (Committal of Bills),

That the Bill be committed to a Committee of the whole House.—[Ms Bridget Prentice.]

Question agreed to.

Bill immediately considered in Committee.


Forward to