POWERS OF NHS TRUSTS TO ENTER INTO AGREEMENTS

HC Deb 14 July 1997 vol 298 cc124-59 9.54 pm

Mr. Simon Hughes

I beg to move amendment No. 11, in page 1, line 13, at end insert— '(aa) he is satisfied that the agreement has been the subject of full public consultation in the area which it is to effect; and'.

The Chairman of Ways and Means (Sir Alan Haselhurst)

With this, it will be convenient to discuss amendment No. 5, in page 1, line 15, at end insert 'and (c) the agreement has been approved by the health authority for the relevant area'.

Mr. Hughes

Both amendments are about consultation. They stress the importance of ensuring that PFI projects are the subject of full public consultation in the area affected, which is the import of amendment No. 11, and that they have been approved by the health authority for the relevant area, which is the import of amendment No. 5.

There are two substantive points to make. The first is that there is at present no adequate provision in law for consultation. Lord Ezra moved a similar but not identical amendment in another place. The Minister's reply was that there had to be consultation with the community health council. That is a statutory form of consultation, but it does not of itself guarantee that the public are involved in any significant way. Community health councils have an appropriate watchdog function, but there is often a much wider interest engendered than that in the community health councils. Some are very good; some are not.

We have to go further, and not just because it is right to do so as a matter of principle. What Baroness Jay said in another place was insufficient. She said that she would consider extending the consultation further, and I hope that the Secretary of State will say that he has thought about what that means, and that, if he cannot accept the amendment, he will read into the record a guarantee of proper consultation in the community.

The first substantive point is that there is absolutely no point in consulting people and then blatantly ignoring what they say, which is a regular experience in the health service.

I cite a constituency example. A couple of years ago, there was a consultation exercise on proposals put forward by the Guy's and St. Thomas' hospital NHS trust about what to do with the services at Guy's hospital. More than 1,000 responses opposed the proposals and 20 supported them, 17 of which had a vested interest in their going ahead. The public were effectively ignored. It is like the Duke of York leading people to the top of the hill and then down again. It is not good enough. Consultation means that there is a duty to take into account what people say; if one does not, one should explain why not.

Secondly—I cite the same example—we all know that private finance initiative schemes often start off as one thing and end up as something else. It is no good consulting on scheme 1 if what comes out the other end is scheme 2. Between scheme 1 being consulted on and scheme 2 being agreed, the project often goes to the board of the trust. It then becomes commercially confidential, and we are told that we cannot know what is going on because it would prejudice either the tenderers, when there are several, or the final negotiation.

The final product becomes something entirely different, which goes against the principle of consultation. It is no good any hon. Member or any Minister, new or old, pretending that that does not happen, because it does. I seek an assurance that any scheme that reaches the stage of final consideration will have been the subject of consultation in the form in which it was originally proposed.

The hon. Member for Lewisham, East (Ms Prentice), who is on the Government Front Bench, represents a constituency in the same part of the world as mine. She knows that, in the constituency example that I R gave earlier, the proposal that emerged after discussions with the local contractor provided for fewer beds and facilities than that originally consulted on. Thomas Guy house at Guy's hospital has just begun to be opened in the past few weeks. What is going into it is not what was originally planned. The ground rules have changed.

I have accepted that what the Minister has said is progress. Outline business cases were all meant to be secret. Once they were agreed and discussed, they went between the local trust, the regional outpost, the Treasury and the Department of Health—all in secret and without the chance for questions. That is not good enough. We must arrive at a system in which we consult widely at the beginning.

It being Ten o'clock, THE CHAIRMAN left the Chair to report progress and ask leave to sit again.

Committee report progress.

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),

That, at this day's sitting, the National Health Service (Private Finance) Bill may be proceeded with, though opposed, until any hour.—[Ms Bridget Prentice.]

Question agreed to.

Again considered in Committee.

Question again proposed, That the amendment be made.

Mr. Hughes

After that traditional interruption, we can go on a bit. I think that the hon. Member for Lewisham, East realised that we had not made much progress. We were being generous by not forcing a Division on that motion.

I want to press the Government on what the Minister of State said in his press notice of 10 June, which he probably does not remember offhand. I shall remind him. In that press notice, and in a parliamentary answer, he said that information about outstanding PFI projects should be made available by trusts unless that would affect on-going negotiations. I welcome that. He also said that trusts should include information about their proposals and actions in their annual reports.

Will the Minister elaborate on that? He will realise that the definition of an on-going negotiation can cover almost everything. Most trusts would say that they could not say anything if negotiations were going on. Indeed, most trusts have said that. What the Minister has offered is therefore not much of an advance on the present position. I say that not in hostility, but from experience. We are often given the answer, "I am sorry, we cannot tell you. This is about on-going negotiations."

We want better and wider consultation. On that basis, the Government could easily accept the amendment. I hope that they will do so, and will not regard it as problematical. The Minister should be brave, regardless of what his brief says, and decide that the amendment is straightforward and can be included. I look forward to that as a helpful sign of things to come.

The second issue that I should like to raise is also important. My hon. Friend the Member for Richmond Park (Dr. Tonge) may also want to talk about it. There is growing concern about the provision in clause 1(3): The Secretary of State may give a certificate under this section if— (a) in his opinion the purpose or main purpose of the agreement is the provision of facilities in connection with the discharge by the trust of any of its functions". I think that the Minister will know what I am about to say. Under the National Health Service and Community Care Act 1990, there are two ways in which trust functions can be defined. Having looked at the legislation, I am surprised that we can define them in such a way as to exclude any reference to providing NHS services. I am concerned about that. I have not misread the provision, because that concern has been expressed by others, specifically by consultants and consultant associations. It means that one could have a PFI scheme that had nothing to do with NHS functions.

We need to be alert to that, because we have been down that road before. When the water companies were privatised, we found that, before too long, a lot of the new water authorities were doing all sorts of things that had absolutely zero to do with the provision of water. I accept that they used to be involved with fishing and things like that, but suddenly they were running hotels, tourist facilities and boating lakes.

It is an important matter, and I specifically ask the Minister to consider it. If he cannot address that problem now, the substantive 1990 Act will have to be amended to ensure that we do not run the risk of PFI proposals that have nothing to do with NHS core services being approved because the law allows that.

That is the specific reason why we need consultation. Later tonight, we will have a debate about clinical services, which is controversial. There may, for example, be a proposal by a trust to run a residential home with no nursing care. The community health council might say that that is not the job of a local NHS trust, and that council certainly should be consulted about such proposals.

In relation to a trust's plans, we should know who is consulted, at what stage in the proceedings, and about what. We should also be clear about the extent of the trust's activities and how far they deviate from the NHS provision. I hope that the Minister will give a positive response.

Dr. Jenny Tonge (Richmond Park)

I should like to expand on the remarks of my hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes).

The National Health Service and Community Care Act 1990 contains two options. Most trusts were set up under the first, under which they were given the functions of owning and managing what had previously been NHS hospitals. Under the second option, or the alternative, they were given the function of providing and managing hospitals and other facilities.

It is my understanding, and that of many of my colleagues in the health service, that the second alternative function was given in 1996 by the previous Secretary of State to those trusts that were engaging in PFI schemes. It is of great concern to us that, because that provision persists, a loophole may exist to allow private companies to provide more and more private facilities in conjunction with NHS trusts. That would mean that NHS facilities would have to piggy-back on huge private provision.

I have every sympathy with what the Government are trying to do to get the new hospitals built, but my colleagues and I urge them to consider the great danger that exists. We could choose that second option as a means of delivering health care. It has been taken by many European countries and used to excess in the United States.

I know, however, that the Liberal Democrats want properly planned health provision, and I have always assumed that everyone on the Government Benches wants the same. We do not wish to slide unwittingly into private health care. I am not clear, therefore, whether the Government really understand what they are doing. I say that cautiously, because I know that they have a great deal of experience. I hope that they have thought about it a lot.

I beg the Minister to reconsider. The Bill is not strong enough without, or even with, the amendments. We must ensure that the health service functions are defined clearly before it passes into law. We must ensure that the trusts know exactly what they should be providing. We do not want to allow the PFI to be the gateway towards a slide to privatisation.

Dr. Vincent Cable (Twickenham)

I support my hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes). I recognise that many Liberal Democrat and Labour Members face a dilemma over the legislation. There are crumbling hospitals, and the only option on offer is an unacceptable system of financing.

The dilemma in my case is particularly acute, as I share a district hospital, the West Middlesex, with the hon. Member for Brentford and Isleworth (Mrs. Keen). The problem is painfully apparent. The hospital has been in physical decline almost since it was first erected as a workhouse in the 19th century. In many parts of the third world, it would already have been closed as unfit for human habitation. People feel so passionately about it that, a few years ago, our local health service campaigners staged a hunger strike to demand that the hospital be rebuilt.

But there is only one proposal on offer. The public consultation that has been offered, although probably more extensive than in many other cases, has been perfunctory. The perfunctory public consultation consisted largely of a public meeting, attended by about 50 people. We were essentially asked to take on trust the judgment of the hospital managers, and to accept that there was no alternative to the mechanism.

I have resolved the dilemma by today writing to the Minister of State to support the hospital trusts and to support the appeal of my neighbour, the hon. Member for Brentford and Isleworth, for the PFI to be reconsidered. It narrowly missed the cut by one place. Given the options available, that seems to be the sensible way forward.

Many of our anxieties about the proposal could be eased if proper mechanisms for public consultation were built into the legislation. There are two main arguments about public consultation. The first is that, even in areas such as mine, which is desperate for a new hospital, the public need to be reassured about many things. We are talking about the permanent disposal of public assets, and about economic mechanisms that are questionable even on a common-sense level.

Many of the contractors involved in the PFI, including the ones involved in my case, are used to operating on an international level. They have the option of PFI projects in Malaysia, Thailand or China, where they can get a 20 per cent. return. They are looking for the same sort of returns here, and those returns will have to be paid for. Although the PFI enables them to get round the limits on capital expenditure, five or 10 years down the track there will be an enormous recurrent burden on the trusts, and it is not at all clear that they will be able to sustain it. A process of explanation to the public is badly needed to ensure that the mechanism is properly understood and sustainable.

Amendment No. 11 is geared to building in a statutory strengthening of the public consultation process. Amendment No. 5 aims to build in the role of the health authority. The health authority is necessary, for two reasons. First, the authority carries with it an obligation to consult the community health councils. The CHCs are often not particularly dynamic institutions, but they are repositories of understanding, experience and commitment to the NHS.

Building in a mechanism for obligatory consultation with the CHC creates an important safeguard. By making it necessary to clear such matters with the health authorities, we create an embryonic planning surveillance. As we understand it, many of the PFIs are not satisfying the test of strategic need.

The Minister of State may be familiar with the valuable research that appeared in the British Medical Journal in April. It gave a dispassionate review of the progress of many of the PFIs. In each case, the assessment showed that the bed reduction was roughly 20 to 25 per cent. removed from the status quo—often way below the health authority's planning assumption. We therefore believe that public consultation and health authority provision is a necessary safeguard that should be built into the legislation. Were that available, many anxieties about the legislation would be eased.

Two years ago, a rudimentary system of public consultation was built into the NHS code of practice. We are essentially asking that the spirit of that code of practice should be honoured and entrenched in this legislation.

10.15 pm

Mr. Donald Gorrie (Edinburgh, West)

The duty of this place, as I see it, is to try to ensure that our public services are run in a democratically accountable fashion. The best way to do that in the health service would be to make democracy penetrate, which it does not at present. There is no democracy in the health service at all, and until we change that, which is the Liberal Democrats' goal, we will have to make do with consultation. I therefore strongly support the notion of having better consultation written into the Bill.

That is especially necessary because my experience in Edinburgh is that there is often a dispute between the public perception and the wishes of the important consultants who drive projects through in the health board. All professions have their own politics, and in medical politics there is a great deal of aggrandisement of people's professional opportunities. Doctors are human, too, and some of them have strong Napoleonic tendencies.

In Edinburgh, there is a private finance initiative proposal to renew the Royal infirmary on a new site and there is strong thrust behind having it as big and as all-purpose as possible, at the expense of other hospitals. Public opinion is in favour of greater diffusion and of having more services, for example, at the Western General hospital. That hospital is to have directly funded—not PFI—facilities, which is a welcome step on the part of the Government.

It is necessary to have really good public consultation to determine the public's views on, for example, the siting of maternity services—whether to have one huge facility, or two facilities, which is what most people want. In order to counter specialists' legitimate professional drive, it is important to have good consultation—but the only real answer is to have some democracy.

Mr. Milburn

I am grateful to Opposition Members for reminding us of the principle that important decisions taken about private finance schemes—or, indeed, any major change in the national health service—should not be taken by politicians or bureaucrats locked away in ivory towers, without any consideration for the public who will use, or at least have to live with, the new hospital planned for their community. Nor should decisions be taken without the full involvement and support of the health authorities responsible for planning local health care strategies. I agree with those principles, but I cannot support the amendment.

Arrangements already exist to ensure public consultation on significant changes in the health service, which may well be the result of a major private finance initiative scheme, and to ensure full health authority involvement in taking PFI schemes forward. In addition—this is an extremely important point, which I hope Opposition Members will heed—our review of the PFI will specifically address how better to engage both health authorities and the public from the outset of proposed PFI schemes.

For any PFI scheme to receive a green light, it must demonstrate strategic health need, and the public have to be properly consulted about the make-up of their local health service. There is a simple maxim: the public have a right to know what is being planned for their local health service, because it belongs to them. It does not belong to trust management, and certainly not to private consortiums; nor does it belong to Minister sitting in Richmond house.

We have taken an important first step. As the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) was good enough to acknowledge, a circular was recently issued to the NHS which had annexed to it the text of two parliamentary questions that I had answered about public information being provided by the NHS about PFI schemes. The circular also asks the NHS to be as open as possible and to give as much information as possible, as long as it is compatible with commercial confidentiality.

Amendment No. 5 is unnecessary, because all health authorities must already provide formal support for PFI schemes, and must do so well before the Secretary of State comes to certify an agreement. When a scheme is submitted to the Department of Health for approval of its full business case, the health authorities which are the main purchasers from the trust must provide the Department with a formal statement of their support for the scheme.

The amendment would add nothing to existing arrangements, therefore, and I give Liberal Democrat Members a clear assurance that the Government will not allow a PFI scheme that lacks formal health authority support to proceed.

Amendment No. 11, requiring the Secretary of State to satisfy himself that full public consultation had taken place before he issued a certificate, is unnecessary for similar reasons. When I recently announced the wider review of the PFI and health—the hon. Member for Southwark, North and Bermondsey mentioned the speech I made and the press notice that was issued—I said that, in future, we would have to be satisfied that schemes had taken due account of the needs and wishes of local communities.

I am more than happy to reiterate that promise tonight. No PFI scheme that involves a significant change in services will be allowed to proceed unless a proper consultation exercise has been carried out.

Mr. Simon Hughes

I am grateful to the Minister. We hope to respond to what he says, and obviously we shall not push things if he is able to assure us. Can he tell us, first, whether that promise applies from now on and immediately, and not only at the end of the review? Secondly, can he confirm that a proper consultation exercise has not been carried out if only the health authority and community health council have been consulted?

Mr. Milburn

Of course I want full and meaningful consultation to take place, and when there is a significant change in the make-up of local health services being planned for the local community, of course it is right and proper—indeed, a statutory obligation—for health authorities to consult the local community health council.

Whatever Liberal Democrat Members think, I believe that, by and large, CHCs do an extremely good job as the patient's watchdog, and have a duty to represent the interests of the patient when it comes to the major changes in service provision that a PFI scheme, especially a new hospital, represents. Although it is impossible to consult every member of the public about every major change to the provision of local health services, I would expect key stakeholders to be consulted in future, and I say to the hon. Member for Southwark, North and Bermondsey that in future, when significant changes in services are proposed, we shall expect that proper consultation exercise to be carried out.

Mr. Hughes

I am just trying to ensure that I am clear in my mind that this will apply from now on, and not only from the end of the review. The Minister may be about to come on to this point, but if the scheme changes, as schemes often do, must there also be consultation on the changed scheme, if anything has happened that counts as a significant change?

Mr. Milburn

There is already a vehicle for local stakeholders—the CHC, local trusts, local commissions, local authorities and others—to make representations. That is the annual contracting process between the purchaser and the provider, in which the health authority must assess whether developments that are taking place in providers are appropriate to meet local health care needs.

The hon. Member for Twickenham (Dr. Cable) referred to the recent British Medical Journal article about bed numbers. When it comes to annual contracting between the health authority and the trust, I would expect issues about bed numbers to be properly considered. Other stakeholders should have an opportunity to be involved in that process and make appropriate representations.

The other important issue raised by the hon. Members for Southwark, North and Bermondsey and for Richmond Park (Dr. Tonge) was trust establishment orders. I am well aware of the concerns. Indeed, I have met ACHCEW—the Association of Community Health Councils for England and Wales—on a number of occasions to try to deal with its concerns directly.

We propose to issue directions to NHS trusts to make it clear that their income generation activities should not be to the detriment of their NHS patients. The 1990 Act is extremely clear: the interests of NHS patients come first, and the primary duty of NHS trusts is to look after the interests of NHS patients. Income generation activities, including private patient facilities, are secondary. I hope that the directions we propose to issue in the near future will help to address some of the concerns that have been expressed tonight.

The Bill's purpose is to provide reassurance to the banks that propose to lend into the PH that NHS trusts have the power to enter those contracts, and it has the support of those banks.

I wish to make a general point at the outset of our Committee stage. To introduce amendments for which there is no substantive need achieves precisely nothing, and serves only one purpose: to create uncertainty on the face of a Bill intended to eliminate doubt. I hope that Opposition Members will bear that in mind.

Mr. Simon Hughes

I am keen that we should act in good faith. On amendment No. 5, I accept what the Minister said about consultation with health authorities. He may have worked out already that the original intention was that we should have proper consultation at regional level, but, because the Government inherited no regional health authorities and have not yet put them back, they cannot consult something which does not exist and which I have not yet persuaded them to re-create. I therefore accept that the lower health authorities are not there to be consulted.

On the consultation issue, we accept that the Minister's response is a sign of his good faith. I simply ask that, before the guidance is finalised, we can discuss those issues with him and offer our practical experience of how changes in the process mean that we must be very careful. Sometimes, the annual contracting process, or the annual report, does not occur sufficiently quickly, and the ball game changes between the time when the proposal is made and when the decision is taken. On that basis, and given the Minister's willingness to have the widest possible consultation with the appropriate people, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Jack

I beg to move amendment No. 1, in page 1, line 15, at end insert 'and '(c) he is satisfied that all the terms of the agreement have been finalised and that the necessary finance has been committed: and no certificate given under this section may subsequently be withdrawn or amended.'. I hope that the Minister will take this amendment in the spirit in which it was tabled—as a constructive contribution to make his new arrangement work better.

The terms under which a certificate can be granted are not defined in the Bill. If the circumstances under which the Secretary of State can grant a certificate were more tightly defined, that would benefit the Minister and the Secretary of State, and help them achieve their objective of using this useful piece of legislation to ensure that they not only gave comfort to the banks, but enabled all the ducks of the agreement to be put well and truly in a proverbial row.

Granting the certificate is important and it confers the ultimate seal of approval on any deal. It says to those who wish to become involved financially in an externally financed development agreement that, legally, it is all right to do so. In my earlier remarks, I hinted at the problems that private finance deals have faced in the past. At the last minute, bankers have entered the negotiations and sought additional gain by reopening the discussions.

10.30 pm

Our amendment seeks to ensure that the Secretary of State does not grant a certificate until he is satisfied that all the terms of the agreement have been met and, importantly, that the necessary finance has been committed. In the past, the finance appeared to be in place, but sudden disagreement between the construction side of the consortium and the bankers led to the bankers' withdrawing and the project falling to pieces. The Secretary of State should make it clear that, although he has the power to grant the certificate, he will not do so until all the necessary elements are in place. That would be the ultimate carrot, and would ensure that deals were concluded properly.

The remaining part of the amendment states: no certificate given under this section may subsequently be withdrawn or amended. It addresses a perceived deficiency in the Bill. Although it may never be the Secretary of State's intention to deny granting the seal of approval, the Bill does not say that. In theory, we believe that an assurance that no certificate given under this section may subsequently be withdrawn or amended provides added security for the financial contracting parties to the arrangement and underpins further the benefits of the legislation.

I hope that the Minister will confirm the circumstances under which the Secretary of State will use those powers. We believe that our amendment is constructive. It would add value to granting powers by way of certificate and ensure that deals, once arranged and negotiated fully, proceeded to financial closure. The fact that there could be no alteration or amendment thereafter would add greater certainty to the legislation.

Mr. Richard Allan (Sheffield, Hallam)

I hope to persuade the Committee of the importance of the finality issue, which is introduced by the amendment, in terms of local health planning. Most of my criticisms will be directed at the previous Government's handling of capital investment in the national health service. However, if this Government are to improve matters, they must learn from those failures and respond to them in the legislation.

I shall illustrate my point by referring to the example of Sheffield's proposed new hospital for women, to be situated on the Stone Grove site. Despite achieving a top mark in terms of NHS need, it was not chosen for fast-track development. The Minister kindly received the delegation comprising me and the hon. Members for Sheffield, Attercliffe (Mr. Betts) and for Sheffield, Hillsborough (Helen Jackson), and explained the decision to us. I shall not rehearse the issues tonight, but I hope that the proposal will qualify for the substantial public funding that the Minister said that his Department would generously provide.

The history of the project to replace Jessop hospital, where I was born, demonstrates the need for Government to make any future decisions final and binding. The new hospital was proposed more than 10 years ago, when the PFI was only a twinkle in the Prime Minister's eye. Four or five years ago, the parties were on the verge of signing a Treasury-funded deal but, in response to NHS guidelines, they decided to wait a few months for the outcome of a local strategic review. By the time that review backed the project and found that it would meet desperate local need, the rules had changed again. The parties were sent down the "thousand flowers" route, pursuing the elusive quarry of a new publicly funded hospital—which was rather like joining the previous Government in a hunt for a unicorn.

At the time, the trust was given a written guarantee that Treasury funds would be made available if its PFI bid failed. The Minister in question is no longer able to deliver that funding and the new Government do not seem willing simply to pick up those responsibilities. Once again, we have another change in the rules governing funding for capital projects.

I accept that the Minister has a genuine desire to improve funding arrangements and make them better in future, so I urge him to accept the amendment as a sign of his genuine commitment to local health planners, as it would give them complete confidence that once a certificate was signed, it would be honoured. Let us avoid a repeat of the disappointment that is felt by people in Sheffield as they suffer delays in much needed facilities as a result of the rules changing every time they get a project together.

Mr. Milburn

I assure the hon. Member for Sheffield, Hallam (Mr. Allan) that I understand the very real concerns in his city that the project did not get the go-ahead in the first wave. I can also tell him that it is recognised that the project has a high strategic health need. It will be considered with other schemes for possible prioritisation in the future. The whole idea behind the prioritisation process is to do just what the hon. Gentleman wants—to bring clarity where it has been lacking, to sort out the confusion and to bring certainty to the national health service and the private sector.

In future, schemes across the country that are regarded as having the highest strategic health service need will be chosen and prioritised and then driven through the PFI. In future, the PFI process will really deliver the goods. The problem, as we heard earlier, was that too many projects were in the pipeline. The previous Government simply were not able to deliver them all. One of the most telling speeches in our earlier debate was made by the hon. Member for Orpington (Mr. Horam), who urged me to be more robust and to prioritise. That is precisely what we have done. I am convinced that, in future, there will be much greater clarity, and as a consequence we shall get more hospitals built.

Mr. Simon Hughes

Does the Minister accept, then, that there must be a regional element in strategic planning? If he is holding to his view of a fortnight ago, that there will not be any re-creation of democratic regional authorities, how is there regional strategic assessment involving the public and not just the bureaucrats in the regional outposts?

Mr. Milburn

Just on a small point of detail, there were never democratic regional health authorities. It is certainly not our intention to re-create the regional health authority structure, but we shall ask the regional offices of the national health service to undertake a full, impartial, fair and objective assessment of capital development schemes in their areas. When they have assessed where the highest strategic need is in their regions, those schemes will be submitted for prioritisation nationally. Once they have been prioritised nationally, we shall seek to make progress on them.

To overcome the problems that the hon. Gentleman addressed earlier, on public consultation, I reiterate that we shall expect any major NHS changes to be subject to full, public consultation at the appropriate point. It is pointless doing that before prioritisation, because if a scheme is not to be prioritised, there is no point in consulting on it. If it is to be prioritised, there is, of course, a need to ensure that the scheme has backing not only from the national health service and the private sector, but, most important, from the local community. I can give the hon. Gentleman the assurance that I think he seeks.

Mr. Hughes

indicated dissent.

Mr. Milburn

Obviously, not quite.

Mr. Hughes

That was a fair and straight answer, but does it mean that, at regional level, at the appropriate stage—I use the example of my hon. Friend the Member for Sheffield, Hallam (Mr. Allan)—my hon. Friend would be able to know what the region was thinking and have some input into the regional process, and that it would not happen in secret, behind closed doors and involve only those who work for the NHS?

Mr. Milburn

That access to information will not be at regional level. It will be at trust level and health authority level. I agree that, all too often, the PFI process has been shrouded in secrecy. I accept that and I am determined to stamp out such secrecy. I want the process to be as open as possible. We must get the balance right, however, between public openness and ensuring that there is no risk to commercial confidentiality. I shall get that balance right, and I give an undertaking that in future the health authority and the trust concerned will be consulting widely and taking Members and other representatives into their confidence. Indeed, I have asked them to do that already, and the process has already begun. It is a process that will continue in future.

Dr. Brand

Does the Minister recognise that there are some services of concern to the public that go wider than the area covered by one health authority or trust? I am thinking about radiotherapy services, which are both vital and capital intensive. Access to them is extremely important to people throughout a region. I hope that we shall see something more proactive from the Minister's Administration than we saw from the previous bunch of Ministers.

When the regional outpost was pushed to give a lead on where it would like to see investment in a new site, for example, it washed its hands of the matter and said, "This is a matter for local trusts and districts to negotiate." That is clearly not a satisfactory way of establishing a vital service. Members of the public should have a say on whether the facility is to be based in a part of the region that is accessible and to which they can relate.

Mr. Milburn

If there are services that cross trust and health authority boundaries and which impact substantially upon the make-up of local NHS services, consultation should take place as a matter of course. That should be happening already as a matter of course. I shall, of course, consider the specific matter that the hon. Gentleman has raised with me.

I hope that I have satisfied some of the concerns that have been expressed from the Liberal Democrat Benches. I shall now take up the matters raised by the official Opposition. I appreciate the concern of the right hon. Member for Fylde (Mr. Jack) to ensure that the Secretary of State does not certify what might be described as a dud contract. Legally, however, the amendment does not achieve anything.

Part of the amendment would require the Secretary of State to be satisfied that the terms of the agreement had been finalised. In law, that is approaching gobbledegook, and I shall explain why. Certification is precisely that which confirms that an agreement is an externally financed agreement for the purposes of the Bill. Until then, there is no agreement within the terms of the Bill. The Secretary of State may reasonably be expected to ensure that the commercial contract for a PFI deal has been signed before he certifies that contract as an externally financed development agreement—for short, an EFDA—and he will do that in any event.

I shall move on further down the PFI process to explain how the amendment would be inoperable, for it would require the Secretary of State to satisfy himself that the necessary finance had been committed. It is a point that the right hon. Member for Fylde was keen to stress. That would have to be done before the Secretary of State certified an agreement. That requirement would again be legal gobbledegook.

I know that the right hon. Gentleman recognises that the purpose of the Bill is to reassure bankers who are considering putting up capital for private finance schemes in the NHS. Bankers will be willing to put up capital once an agreement has been certified, but not before. The amendment would merely serve to ensure that bankers refused to finance NHS schemes, thus undermining the purpose behind the Bill.

The rest of the amendment is beside the point. It states that no certificate, once given, could be withdrawn. I am advised that once an agreement has been certified, it is once and for all an externally financed development agreement. If the certificate were withdrawn, it would have no effect, as the original act of certification would have conferred permanent validity on the agreement.

The amendment also stipulates that a certificate, once given, could not be amended. As I said, once a certificate has been given, it is a once-and-for-all EFDA. That is not to say that there would be no circumstances under which the certificate, as drafted, might cease to apply to at least part of the agreement. Under those circumstances, recertification could take place, and we do not need to legislate for that.

10.45 pm

Mr. Jack

The Minister has just said something intriguing. He said that there may be circumstances under which part of an arrangement could be subject to recertification, but that no legal mechanism is required to enable that to occur. Would he be kind enough to describe a circumstance in which such a process would operate, and to tell me how the Secretary of State would address the problem?

Mr. Milburn

The obvious example is when one of the facility providers in a PFI deal either withdraws or is unable to fulfil its part of the contract, for whatever reason. The EFDA will have been given against a whole PFI deal, but will inevitably cover specific parts of it, so if an element comes adrift for whatever reason, recertification may be necessary. The original certification would have been given for a PFI deal, part of which was no longer operable. Those are the circumstances that I envisage, but frankly it is a pretty minor point.

Mr. Jack

May I press the Minister on that point? He is giving the impression that deals can be subdivided. It was my understanding that a certificate was granted in respect of bankers, who may be external to any service provision in which other parts of the consortium providing the PFI may be involved. The bankers provide the money. If two bankers were involved and one of them ran into a problem and was unable to provide the money, would the mechanism that the Minister has just described work?

Mr. Milburn

There are endless possibilities. The basic point is that if an EFDA has been given and a PFI deal has been certified, and subsequent to that, a component of the PFI deal comes adrift, the deal may need to be recertified. Frankly, that is not a major issue.

Part of the amendment is unnecessary, part is beside the point and the requirement to confirm finance before certifying the agreement would stop the hospital building programme in its tracks. For those reasons, I invite the right hon. Gentleman to withdraw the amendment. If he does not, I invite the Committee to reject it.

Mr. Jack

We have had an interesting insight into what we can prise out of the Minister when we propose a straightforward, simple and helpful amendment. We have discovered a new dimension to the potential granting of not just one certificate but subsequent certificates under various, perhaps obscure, circumstances in which the nature of the provision of parts of a contractual arrangement changes.

It would useful if the Minister were to consider publishing explanatory guidance, to ensure that those who read in Hansard the slightly uncertain explanation of the variations on those terms know exactly where they stand. I remind the Minister that the whole purpose of the legislation is to remove doubt about the legality of entering into financial arrangements. We have seen an interesting scintilla of what might happen if something went wrong.

The Minister said that the Secretary of State would not use the mechanism unless all the financial ducks were in a row, but, on the basis of experience, I think that the Secretary of State could derive added value and advantage from making it absolutely clear that, unless all the promises of finance were in place, a certificate would not be granted. It might happen the other way round: the bankers might say, "We will provide the money, subject to the Secretary of State's signing on the dotted line." We need further clarification.

I am, however, at least 75 per cent. satisfied that a final lock on the use of the legislation is provided by the Bill as currently drafted. Subject to the Minister's agreement to make a clear public statement about the second point that he raised, perhaps in a parliamentary answer—he nods; I am grateful to him—I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Dr. Brand

I beg to move amendment No. 6, in page 1, line 15, at end insert 'and (c) in his opinion the agreement is compatible with the fair distribution of capital and revenue spending within a regional strategic framework.'.

The Chairman

With this, it will be convenient to discuss the following amendments: No. 7, in page 1, line 15, at end insert 'and (c) the agreement has been subject to a public and published report by the Audit Commission who shall give their assessment of the value for money provided.'. No. 2, in page 1, line 15, at end insert— '(3A) The Secretary of State shall not give a certificate under this section unless he is satisfied that the agreement meets the criteria published pursuant to subsection (3B) below and the National Audit Office has confirmed that those criteria have been met.'. No. 3, in page 1, line 15, at end insert— '(3B) The Secretary of State shall publish details of the criteria which must be met before an externally financed development agreement is certified under this Act, including criteria relating to—

1. (a) value for money;
2. (b) risk transfer;
138
3. (c) affordability;
4. (d) adequate prior consultation;
5. (e) such other relevant considerations as he may think fit.'.

Dr. Brand

I have been told that I must not talk about my previous and current jobs, but I was delighted to hear the Government commit themselves to abolishing two-tierism in the NHS. I am, however, a little worried by the announcements that have been made about the PFI to date. There is clearly two-tierism in capital development in the NHS. Projects that are "PFI—able"that, apparently, is a new term that we must all learn—can go on to their own list and climb up it, and if they are lucky and reach the top 14 they will succeed, but we have heard nothing about the assessment of other schemes within regions which are just as essential. Are those schemes being assessed? Are they being considered for public expenditure?

It is not just a case of finding the capital; it is running the service that will take up the resources that are so desperately needed, and if there is to be some sort of resource allocation system, account must be taken of future needs. We discussed that at length earlier.

We also spoke earlier about the need for a regional overview. It is no good allowing schemes to go ahead in one part of a region because the private sector is particularly interested in juicy ways of generating extra income for a particular trust, or for the erection of a particular set of PFI buildings. As I said earlier, there is also the question of the distribution of regional services, which should go where clinical need is greatest and not necessarily where the private sector believes that the PFI can generate more money.

We are not asking for something impossible. I am sure that the Minister already has this in mind, but I am a bit concerned that we have heard nothing from him about the effects that the PFI is having on other new services which need to be developed in the NHS.

Mr. Jack

I hope that the Committee will not mind if I spend some time on our amendments in the group. I have some important points for the Minister. Our amendments provide a two-part check and balance on whether the deal that the Secretary of State is sanctioning, via the mechanism that is the subject of the Bill, fulfils his objectives.

Because of the importance of the PFI mechanism and its role in the health service, there is a need for the National Audit Office to become involved. To date, the Government have shown no reluctance to involve the NAO in some important issues. The Chancellor of the Exchequer used it to underpin some of his Budget assumptions, and if he is prepared to use it, the Secretary of State for Health might be tempted down that road.

The NAO submitted a memorandum to the Select Committee on the Treasury when it considered the private finance initiative. I shall quote briefly from that to give weight to our amendment. It states: Although the NAO's investigative work on PFI projects has just begun, it is quite clear that a key issue will be the way PFI projects handle risk: who bears what risks, how much risk traditionally borne by the public sector is transferred to the private sector, and at what price. That issue is central to many of the proposals that will be implemented through the private finance initiative which is certified by the mechanism with which the Bill deals. Our amendment seeks to qualify the way in which the certificates should be issued and shows the importance that we attach to such matters in the context of risk and risk transfer.

The National Audit Office has already demonstrated the role that it can play and it has been consulted by Departments in the recent past on the matters that we are debating. The Minister has said that he is planning some substantial changes to the way in which the PFI operates. He spoke about what he called new public-private partnerships. He is thinking about new mechanisms and I appreciate that at this stage they may be only a small glint in his eye. However, a glint means that he has an idea and perhaps he can say whether those mechanisms would come under the definition of externally financed arrangements and would be subject to the amendments.

The Minister has shown that he attaches great importance to the private finance initiative. In Library research paper 97/88 the Minister is quoted as saying that the truth is that when there is limited public capital, it is PFI or bust. The "or bust" bit worries me because is shows a cavalier desire to achieve his objectives come what may. That is why our amendment sensibly suggests the checks and balances that the NAO would provide. That would make sure that the Minister did not go too far down the road of becoming bust. The benefit of the NAO's views would add value to the proceedings.

On 10 June, the Minister spoke to stakeholders on looking at other possible models of structuring private finance schemes. I was interested that he wanted to improve value for money. That again is one of the aspects of our amendment, so I ask him again to give the Committee some insight into exactly what the other ideas that he is considering are. It is good to be innovative, but I want to make certain that we cover all possible contingencies. A tick in the box from the NAO would be extremely helpful. As I have said, it has been useful in giving examples of what is good practice to other Government Departments.

11 pm

Amendment No. 2 interlocks with amendment No. 3 in saying that the use of the procedure that we have outlined depends on all of us having a clear idea of the criteria that will be deployed to achieve the Bill's stated aims and other relevant issues. The Minister placed in the Library a document entitled "Review Criteria". I wanted to find out a little more about how he was going to approach the question of what would or would not be a PFI arrangement and, by means of a parliamentary answer, he confirmed to me: The criteria for measuring health service need is expected to be similar to that used to assess service need in the recent Private Finance Initiative prioritisation exercise, copies of which have been placed in the Library."—[Official Report, 10 July 1997; Vol. 297, c. 577.] I was grateful that the Minister did that because it gives a clear insight into some of the reasons why we have tabled the amendment.

Paragraph 10 of the document discusses "service need". It leads us to probe carefully what criteria the Minister and the Secretary of State for Health will follow in determining the way in which the PFI operates. In listing a number of factors that the Minister will take into account, why has he not distinguished in any way, shape or form the statistical weighting that he attaches to these criteria? From the way in which he has laid out the document, improved clinical quality of services carries precisely the same weighting as improved strategic fit of services". Will we get a more detailed explanation of exactly what all these factors mean? What exactly does "improved" mean in improved clinical quality of services"? Improved relative to what? Will the Minister publish data that will enable us to come to conclusions?

On quality of services, I have asked the Minister questions in another context about the word "quality". So far, quality is not a statistically defined word or term that the Minister has been prepared to use, but, if we are going to have stated criteria, as our amendment suggests, we need to have this information published and in considerable detail, so that we may follow the matter more closely.

The same could be said of other items here. I could go through them in detail, but I will not. I want to pick out just one or two things that are particularly important. "Improved strategic fit" of services is mentioned. Liberal Democrat Members may be interested in probing that subject as it goes to the heart of the matter. How exactly will the Minister's new mechanism to determine future PFI projects—the ones that are the subject of his further representations and of further PFI arrangements, and which may ultimately be the subject of public capital arrangements—fit into this wonderful phrase "improved strategic fit" of services? Bearing it in mind that the Minister has brought back in-house the whole question of the way in which hospital investment will operate, he owes it to the Committee to let us into the secret of what "improved strategic fit" means.

The projects on the Minister's winners list are very interesting. North Yorkshire, the north-east, north Durham, Bishop Auckland and south Tees are all winners and, I am sure, worthy projects, but they are awfully close to each other. The Minister may wish to correct me, but my understanding is that an independent consultants' report asked some searching questions about whether the Bishop Auckland project was viable. The Minister may say that subsequent to the health authority receiving that report, the project was amended and became viable. What we do not know is how Darlington hospital, in the Minister's constituency, now fares with the arrival on the winners list of Bishop Auckland.

Does the Minister intend to use some sort of Paretean criteria in deciding future winners in his strategic overview? A case could be made that worthy as north Durham, Bishop Auckland and south Tees are, until we have a better insight into what the wonderful phrase "improved strategic fit" means, we shall have no idea of the criteria and whether they will lock on to a good private finance initiative project.

Will the Minister publish a Green Paper which would allow all of us to contribute our views to the debate that he wants on the grand strategy that he is now devising? Will he publish a White Paper laying down in clear, unequivocal terms, not only what "improved strategic fit" means, but what provide better access to services means? That is an important point in relation to the criteria which are the subject of our amendment. Does provide better access to services mean—to go back to my hon. Friend the Member for Hexham (Mr. Atkinson) who, sadly, is not in his place—more Hexhams, where we reduce the distance people have to travel to acute NHS hospitals? Does it mean removing services from regional centres and spreading them around so that people can get easier access? Or does it mean having fewer district general hospitals, but with better services so that access to them therefore provides better access to services? It is that sort of vague phraseology that needs to be tied down if, when devising new criteria, the exercise is to be more transparent—to pick up on the Minister's words—and be seen to be what it is. It is extremely important that we have that information.

It is also extremely important to look at another phrase, make more effective use of resources. What would be the Minister's reaction, in the context both of risk valuation and of getting better value for money by making more effective use of resources, if in his new world he were to receive non-compliant bids from organisations which had been invited to compete for private finance initiative projects?

I refer the Minister to section 10 and to schedule 2 (6)(1) of the National Health Service and Community Care Act 1990, which provide that NHS trusts should obtain value for money. Later in the debate, my hon. Friend the Member for Stratford-on-Avon (Mr. Maples) will deal with the matter of clinical services. What will happen in a situation, however, in which the Minister has defined all the criteria that will guide his decision-making process but in which a consortium submits a bid that does not comply with his criteria and yet demonstrably provides the best value for money, perhaps by including a range of clinical services?

Under the new criteria, what would the Minister or the Secretary of State do to comply with those provisions of the 1990 Act? Would such a bid be in or out? If the Minister is to achieve his objective of making more effective use of resources, he will definitely have to answer those questions.

As amendment No. 3 states, risk transfer will be a very important criterion. As the Minister knows, risk transfer is very much to do with putting health care provision in the hands of whichever part of the health care equation can best handle it. More specifically, the design risk of a hospital, for example, would be best handled by the private sector partner. In his reply, I hope that the Minister will tell us whether there will be any changes to the already published PFI documentation, which provides clear guidance on risk transfer. Does he propose to maintain that guidance, to change it or to put different mathematical weightings on the risk that he thinks should be transferred?

The Minister knows also that there is a fundamental problem in PFI affordability, because of the differential way in which the NHS deals with the write-down of capital over 60 years and PFI projects operate for periods between 20 or 30 years. He knows also that a substantial sum will have to be allocated to his winners list so that they can make the grade. He told us, however, that subsequent schemes will have to be affordable without the provision of any further central support. Will he highlight how, in his new world, that affordability gap will be closed? Unless he changes the criteria in the NHS—which, so far, he has not said that he will do—the matter of smoothing affordability, as he described it, will remain.

I think that I have said enough to show clearly—

Dr. Tonge

Hear, hear.

Mr. Jack

I am glad that there is so much support. Having had a modicum of responsibility for operation of the PFI, I can tell hon. Members that, if we do not very carefully define our terms and criteria, not only will those who are trying to do business under the PFI not know where they are going, but the NHS will not be able to achieve its objectives. I therefore look forward to the Minister shedding some light on the issue.

Mr. Simon Hughes

I shall speak briefly to amendment No. 7 and the question of an Audit Commission report, but I must tell the right hon. Member for Fylde (Mr. Jack) that neither my hon. Friend the Member for Richmond Park (Dr. Tonge) nor I dissent from the proposition that we need to know what the criteria are to be—my hon. Friend was simply suggesting that the Conservative spokesman had made his case adequately on that point.

The Audit Commission has already done some useful work on the PFI and has shown itself to be competent, interested and able, and it might well be better that an existing body be given the responsibility rather than our creating new bodies or setting up quangos to do the job.

11.15 pm

The important point about amendment No. 7, which is not dissimilar to amendment No. 2 tabled by the hon. Member for Stratford-on-Avon (Mr. Maples), is that the report should be public and published and that, given criteria that we all understand, the value-for-money assessment should be considered regularly by the body which does the assessment throughout the whole procedure. The Minister might come back to us and say that he has something else in mind, or the review may show that another body could do the job—that is fine, but one of the things that the health service desperately lacks is independent, objective, consistent accountability. We have to build that in, because I am never prepared to trust any Government with the statistics and the assessment of what goes on in the health service, and I do not think that the public are, either.

Mr. Milburn

I pay tribute to the right hon. Member for Fylde (Mr. Jack), who has great knowledge of and expertise in these matters. He made some extremely important points about affordability, risk transfer and value for money. Those matters are currently dealt with by the PFI process, as he knows. However—I say this advisedly—the right hon. Gentleman is in some danger of putting the cart before the horse. I remind him that the purpose of the Bill is to get existing PFI deals delivered. I take no pleasure in saying that the previous Administration failed in that, and I am not going to repeat those mistakes.

The first stage in the process of getting new capital development under way in the national health service is to get the Bill on the statute book, to get deals delivered and then to move on. We shall certainly be looking at different forms of public-private partnership and at ways to improve the PFI as one form of that partnership. The right hon. Member for Fylde asked me for details on how we might do that. We shall be considering a number of issues in our PFI review.

We shall try to ensure that we no longer go through the endless process of reinventing the wheel when it comes to PFI documentation. One of the real boons of recent years is that because of the steep learning curve that I described earlier, a mass of information and expertise is now locked in the system, and it is important to take advantage of it so that NHS trusts no longer have to reinvent the wheel for every PFI they enter into. That is why standardisation of documents and contracts will form such an important part of the process in future.

Similarly, I should like improved competition in the PFI and more bidders in place for longer during the PFI process. Such competition might help to improve value for money from the point of view of the public sector and from that of the taxpayer. These will be the subject of detailed further consideration when we undertake our PFI review. I repeat the invitation that I issued earlier: I am happy to receive representations from right hon. and hon. Members of all parties and, indeed, from my right hon. and hon. Friends to ensure that there is a full consultation exercise that takes account of as many views as possible from the House and from the public and private sectors.

The right hon. Member for Fylde went into detail about the criteria that had been used for the initial prioritisation exercise. The criteria may not apply as fully and in the same detail to the next round of prioritisation. It is important for him to understand that at the outset.

The right hon. Gentleman asked for transparency. He has a bit of a cheek, given the lack of transparency from the previous Government on the private finance initiative, most notably their failure even to publish the number of PFI deals under consideration, the number in the pipeline and their assumed capital value. We have put that right and we shall ensure more openness and transparency in future. In that spirit, I assure the right hon. Gentleman that there will be criteria, appropriate weighting and a proper process for future prioritisation exercises. I shall ensure that those criteria are made fully available so that the public can see that the assessments undertaken by the region and the capital prioritisation group in the NHS executive are done fairly and objectively.

Mr. Jack

I am grateful to the Minister for his kindness in answering one half of the range of questions that I asked. One of our amendments deals with the National Audit Office. I understand the Minister's reluctance to go all the way, but can he assure me that the National Audit Office's expertise might be used at least in a sampling operation to ensure that deals done under the new arrangements meet his criteria?

Mr. Milburn

If the right hon. Gentleman gives me a moment or two, I shall come to the point about the NAO and the Audit Commission when I deal with the amendments individually.

The right hon. Gentleman referred to the north-east schemes. It is important to set the record straight. He knows full well that the decisions on Northern and Yorkshire schemes were taken by my right hon. Friend the Secretary of State. I absented myself from those decisions, for reasons that are crystal clear. It was important that I should do that. All the schemes that the right hon. Gentleman highlighted—south Tees, north Durham and Bishop Auckland—had been well highlighted for many years as front runners for the PFI. I do not believe that there were any surprises there, although if the right hon. Gentleman has information to the contrary I should be happy for him to share it with me.

During the previous 17 years, from 1980 to 1997, just two new hospitals were built in north-eastern England. I am pleased about my right hon. Friend's decision, because it means that the region, together with others, will catch up. We shall provide long-overdue facilities not just in my part of the world but in communities up and down the country.

Some of the issues that the right hon. Gentleman has highlighted may appear in another guise, but that is a subject for further consideration. I assure him that our criteria will be made publicly available.

I shall now deal with each amendment in turn, starting with amendment No. 6. We can sign up to the fair distribution of revenue and capital. As the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) is well aware, we want to ensure a fairer distribution of NHS resources. In particular, we want to ensure that NHS need is properly taken into account in the allocation of resources for secondary and primary care services. I shall make a further announcement about that in due course.

However, I am afraid that there are fundamental problems with the amendment. The first concerns its drafting. It refers to the need to ensure that the agreement is compatible with the fair distribution of capital and revenue spending within a regional … framework. I am afraid that terms such as "compatible", "fair distribution" and "regional framework" are very imprecise. Frankly, it is that lack of precision, aside from any other factor, which makes it impossible to accept the amendments. The PFI has already been lawyer-fest and they have done very well out it. The last thing that I intend to do is to give lawyers yet more business. That is why I am determined that the Bill should be properly and precisely drafted.

Mr. Simon Hughes

I declare my interest as someone who trained and practised as a lawyer. The Minister cannot have it both ways; one cannot have plain English on the one hand yet reject things that are drafted to be absolutely plain. The Minister must certify that any agreement is fair, within a regional strategic framework and compatible. If he cannot do that, it is his problem, not ours. We think that the amendment is clear.

Mr. Milburn

I am sure that the hon. Gentleman thinks that it is clear, but I am afraid that it does not stack up.

It is by no means clear whether the amendment—I am happy to be advised on it—contemplates simply ensuring equality between trusts within each region or more general equality between all trusts by using a regional strategic framework. I am unclear; I guess that NHS trusts would be unclear, and certainly the private sector would be unclear. The only people who would be making business from that lack of clarity would be the aforementioned lawyers.

We can be quite sure that the Bill is not the means by which to address such issues. As I said recently, in future we will prioritise capital schemes. In doing so, we will take health service need as the driving force. We want a well-thought-out and rational capital expenditure policy that covers PFI schemes and publicly funded schemes. Above all, any consideration of the proper allocation of resources to trusts needs to take place long before the agreement is submitted to the Secretary of State for certification.

The amendment does nothing to improve the fair distribution of resources, however the hon. Gentleman defines fair. I am afraid that it suffers from being hopelessly imprecise. I know that the intentions behind it are good, but I am afraid that when it comes to defining words on the statute book, good intent is not quite good enough. It would introduce a further element of uncertainty into a Bill that is designed to end that. I therefore ask the hon. Member for Isle of Wight (Dr. Brand) to withdraw the amendment. If he will not do so, I invite the Committee to reject it.

Amendment No. 7 refers to the assessment by the Audit Commission. The Secretary of State's certification identifies that an agreement is an externally financed development agreement, an EFDA, under the terms of the Bill. That certification will usually take place when the contract is signed between the NHS trust and the private sector. For that reason, the Audit Commission cannot assess the value for money of an agreement in advance of its certification since there will be no legally binding agreement for it to assess.

The hon. Member for Southwark, North and Bermondsey will be aware that the Audit Commission's main task is to audit expenditure already incurred and decisions already taken, not to provide a form of guarantee in advance that a particular proposal represents value for money.

The right hon. Member for Fylde asked about the National Audit Office. It will not examine an agreement retrospectively to assess its value for money. I am more than happy for either the Audit Commission or the NAO to consider PFI deals for value for money. I positively invite them to do so. We have nothing to hide.

We believe that if a PFI deal has been certified, by definition it gives improved value for money and improved risk transfer for the public purse. If the right hon. Gentleman and the hon. Member for Southwark, North and Bermondsey are seeking further assurance about the role of the NAO and the Audit Commission, I am more than happy to invite them to scour each PFI deal to which we give the go-ahead to re-establish that confidence in the process about which I spoke earlier.

The hon. Member for Southwark, North and Bermondsey might want to bear in mind a final point about the Audit Commission. The amendment would require the commission to publish its value-for-money assessment of a proposed scheme, but it would not require the commission's views to be taken into account. Of course, Ministers always have due consideration for Audit Commission reports; it is an extremely important body and its reports are extremely influential, but, as drafted, the amendment does not give the hon. Gentleman what I suspect he wants—for me to take on board the Audit Commission's views. For those reasons, I invite him to think again, save the Committee a bit of time, allow us to make progress and not press the amendment.

11.30 pm

On amendment No. 3, there has been more than a little reinventing of the wheel. The criteria that have to be met before a PFI scheme is allowed to proceed are well known. They include criteria referred to in the amendment, including value for money, risk transfer and affordability. All those factors have to be taken into account well before an agreement is certified. In particular, they have to be taken into account when the Department of Health is asked to approve the full business case for a PFI scheme. Unless the criteria are met, a scheme will not be allowed to progress beyond that point and achieve certification.

The requirement for adequate prior consultation proposed in the amendment is an odd and subjective test. The right hon. Member for Fylde has just been giving us his views on subjectivity and on the need to improve objectivity. When he reconsiders the amendment, I am sure that he will agree that its wording—where it calls for "adequate prior consultation"—is inadequate. As I said, as part of our PFI review, we shall certainly want to look again at consultation arrangements to secure the right balance between the maximum public openness and the minimum risk to commercial confidentiality.

I shall turn finally to amendment No. 3—[Interruption.] I am pleased that my hon. Friend the Member for Leeds, East (Mr. Mudie), the deputy Chief Whip, supports me in my endeavours. As I have not been in favour of amendment No. 3, it follows that I shall not be in favour of amendment No. 2. Criteria such as value for money are considered before my Department or, indeed, the Treasury, approves the full business case for a PFI scheme. The amendment simply enshrines in law what already happens and, in doing so, complicates the Bill without achieving any changes in practice.

For all those reasons, I invite the right hon. Member for Fylde not to press his amendment. If he will not do so, I invite the Committee to reject it.

Dr. Brand

We shall not press amendment No. 7 to a Division. But it would be good if the Minister could give an undertaking that the Audit Commission's annual management letter will be published. The Audit Commission considers the NHS and its effectiveness; it would be a good sign of open government if that letter were to be published.

The Minister has been reassuring all night, but he has lost me on amendment No. 6. I am not a lawyer, so I am not qualified to assess such things, but the amendment is absolutely clear. It states that we expect the Minister, before acting as final arbiter of a PFI scheme, to ensure that "PFI-ability"—as the night goes on, that phrase becomes more difficult to say—does not milk resources from other essential developments that a region needs. We have not received a reassurance on that matter. The PFI cannot be taken in isolation, distinct from other capital and service developments. I should therefore like to stress that the amendment is necessary.

The other important issue is an acknowledgement that there is a need for a regional strategy. I hope that, in pressing the amendment, we will have the support of the Deputy Prime Minister, who I know has a great interest in regionalisation.

Mr. Jack

I am grateful to the Minister, whose response to our points has been very courteous, for stating that he is to publish the details of the criteria outlined in amendment No. 3. However, I did not hear the hoped-for assurance that he would go a little further in terms of the details that he will provide. The point about publication is to press him to go beyond the rather bland statements in the criteria he used to select the 14 projects that are now able to proceed with negotiations.

The Minister looks pained—he is probably tired, because it is the first time he has been up as late as this. I know that it is difficult to concentrate on these matters, but those of us who have a genuine interest in those who need new hospitals will continue to press the Minister until he is alert to answer our questions. We need some numerical or objective measures to understand what are his new criteria.

Mr. Milburn

rose—

Mr. Jack

I shall give way in a minute. The Minister is a careful man and I have always admired the care with which he addresses the House of Commons. However, I would remind him of the terms he gave me in a reply, in which he said that the new review would be a bit different from the existing one. He stated that the criteria for measuring health service need is expected to be similar to that used to assess service need in the recent Private Finance Initiative prioritisation exercise".—[Official Report, 10 July 1997; Vol. 297, c. 584.] That and other answers to parliamentary questions definitely led me to believe that there would be more than a passing similarity to the points made here. Can I tempt the Minister to the Dispatch Box to satisfy me on that point?

Mr. Milburn

The right hon. Gentleman has anticipated what I was going to say. We expect the criteria to be similar, but we will be making decision in due course. When we have made the decision, we will, of course, publish the criteria.

Mr. Jack

I hope that that detail will be available to us, because it is very important. Our amendment No. 2 states: The Secretary of State shall not give a certificate under this section unless he is satisfied that the agreement meets the criteria published", and then we simply listed those. The Minister said the amendment was not necessary because the criteria would have had to be satisfied in the first place. My interpretation of our amendment is that that was the starting point of the exercise and that, once the criteria had been published, the Minister's view of the world would then prevail—but, by definition, it could not prevail until the criteria had been published. We shall watch carefully for the details.

I am grateful to the Minister for including the National Audit Office in the process and I agree with the way in which that has been done. I remind him that his comments on the question of having standard-form contracts in future borrow entirely from the successful policy we introduced into the Prison Service—or at least, we were getting there, but we were overtaken by events. There was a template arrangement in the Prison Service and I am glad that he borrowed from our good practice.

On the question of value for money, risk transfer and affordability, my comments about the Northern and Yorkshire region were not meant as a personal criticism of the Minister. However, he did not respond to my important point. My reason for pressing him was that he will achieve neither value for money nor affordability until he can answer questions such as: will having three new district general hospitals in a tight geographic area have any deleterious effect on the existing hospitals such as that in Darlington? Health experts have led me to understand that, as a result of that expanded capacity, there will be surplus capacity in Darlington that will have to be funded.

We shall look for the opportunity cost factors that will be involved in the exercise that the Minister is carrying out. I say that to save the Minister making an error in future. He is a reasonable man; I am as well, and I like to help Ministers who are moving towards our joint objective of having more PFI hospitals.

In the light of the assurances given by the Minister, we shall not seek to press amendments Nos. 2 and 3.

Question put, That the amendment be made:—

The Committee divided: Ayes 26, Noes 216.

Division No. 54]	[11.39 pm
AYES
Allan, Richard (Shef'ld Hallam)	Keetch, Paul
Baker, Norman	Kirkwood, Archy
Ballard, Mrs Jackie	Livsey, Richard
Brand, Dr Peter	Oaten, Mark
Burstow, Paul	Öpik, Lembit
Campbell, Menzies (NE Fife)	Rendel, David
Feam, Ronnie	Russell, Bob (Colchester)
Foster, Don (Bath)	Sanders, Adrian
George, Andrew (St Ives)	Stunell, Andrew
Gorrie, Donald	Taylor, Matthew (Truro)
Harris, Dr Evan	Tonge, Dr Jenny
Harvey, Nick
Heath, David (Somerton & Frome)	Tellers for the Ayes:
Hughes, Simon (Southwark N)	Mr. Paul Tyler and
Jones, Nigel (Cheltenham)	Mr. Phil Willis.

NOES
Ainsworth, Robert (Cov'try NE)	Betts, Clive
Allen, Graham (Nottingham N)	Blackman, Liz
Anderson, Janet (Rossendale)	Blears, Ms Hazel
Armstrong, Ms Hilary	Blizzard, Bob
Banks, Tony	Borrow, David
Barnes, Harry	Bradley, Keith (Withington)
Barron, Kevin	Bradshaw, Ben
Battle, John	Brinton, Mrs Helen
Bayley, Hugh	Brown, Rt Hon Nick (Newcastle E)
Beard, Nigel	Brown, Russell (Dumfries)
Beckett, Rt Hon Mrs Margaret	Browne, Desmond (Kilmarnock)
Bennett, Andrew F	Buck, Ms Karen
Benton, Joe	Burden, Richard

Burgon, Colin	Jackson, Helen (Hillsborough)
Butler, Christine	Jenkins, Brian (Tamworth)
Byers, Stephen	Jones, Ms Fiona (Newark)
Caborn, Richard	Jones, Helen (Warrington N)
Campbell, Alan (Tynemouth)	Jones, Ms Jenny (Wolverh'ton SW)
Campbell, Ronnie (Blyth V)
Campbell-Savours, Dale	Jones, Jon Owen (Cardiff C)
Canavan, Dennis	Keen, Alan (Feltham & Heston)
Cann, Jamie	Keen, Mrs Ann (Brentford)
Cawsey, Ian	Kidney, David
Chapman, Ben (Wirral S)	Kilfoyle, Peter
Clapham, Michael	King, Andy (Rugby & Kenilworth)
Clark, Dr Lynda (Edinburgh Pentlands)	Ladyman, Dr Stephen
	Laxton, Bob
Clarke, Charles (Norwich S)	Lepper, David
Clarke, Rt Hon Tom (Coatbridge)	Lewis, Ivan (Bury S)
Clelland, David	Linton, Martin
Coaker, Vernon	Livingstone, Ken
Coffey, Ms Ann	Lloyd, Tony (Manchester C)
Coleman, Iain (Hammersmith)	Lock, David
Colman, Tony (Putney)	McAllion, John
Corbyn, Jeremy	McAvoy, Thomas
Cousins, Jim	McCafferty, Ms Chris
Cranston, Ross	Macdonald, Calum
Cryer, John (Hornchurch)	McDonnell, John
Cunningham, Jim (Cov'try S)	McFall, John
Darling, Rt Hon Alistair	McNamara, Kevin
Darvill, Keith	McNulty, Tony
Davey, Valerie (Bristol W)	Mactaggart, Fiona
Davidson, Ian	McWalter, Tony
Dawson, Hilton	McWilliam, John
Denham, John	Mahon, Mrs Alice
Dismore, Andrew	Mallaber, Judy
Dobson, Rt Hon Frank	Marshall, David (Shettleston)
Doran, Frank	Marshall-Andrews, Robert
Dowd, Jim	Maxton, John
Drew, David	Michael, Alun
Eagle, Angela (Wallasey)	Michie, Bill (Shef'ld Heeley)
Efford, Clive	Milburn, Alan
Ellman, Ms Louise	Moffatt, Laura
Ennis, Jeff	Morgan, Ms Julie (Cardiff N)
Fatchett, Derek	Morgan, Rhodri (Cardiff W)
Fitzpatrick, Jim	Morley, Elliot
Foster, Michael John (Worcester)	Morris, Ms Estelle (B'ham Yardley)
Foulkes, George	Mountford, Kali
Gapes, Mike	Mudie, George
Gardiner, Barry	Mullin, Chris
George, Bruce (Walsall S)	Murphy, Jim (Eastwood)
Gibson, Dr Ian	Murphy, Paul (Torfaen)
Godsiff, Roger	Naysmith, Dr Doug
Gordon, Mrs Eileen	Morris, Dan
Graham, Thomas	O'Brien, Mike (N Warks)
Griffiths, Jane (Reading E)	O'Hara, Edward
Griffiths, Win (Bridgend)	O'Neill, Martin
Grogan, John	Organ, Mrs Diana
Hall, Mike (Weaver Vale)	Osborne, Mrs Sandra
Hall, Patrick (Bedford)	Pendry, Tom
Hanson, David	Perham, Ms Linda
Heal, Mrs Sylvia	Pickthall, Colin
Henderson, Ivan (Harwich)	Pike, Peter L
Heppell, John	Plaskitt, James
Hesford, Stephen	Pond, Chris
Hill, Keith	Pound, Stephen
Hinchliffe, David	Prentice, Ms Bridget (Lewisham E)
Home Robertson, John	Prentice, Gordon (Pendle)
Hoon, Geoffrey	Purchase, Ken
Hope, Phil	Quin, Ms Joyce
Hopkins, Kelvin	Quinn, Lawrie (Scarborough)
Howarth, George (Knowsley N)	Rapson, Syd
Hoyle, Lindsay	Raynsford, Nick
Hughes, Kevin (Doncaster N)	Reed, Andrew (Loughborough)
Hurst, Alan	Roche, Mrs Barbara
Hutton, John	Rooker, Jeff
Iddon, Dr Brian	Rooney, Terry
Ingram, Adam	Roy, Frank
Jackson, Ms Glenda (Hampstead)	Ruddock, Ms Joan

Sawford, Phil	Thomas, Gareth (Clwyd W)
Simpson, Alan (Nottingham S)	Thomas, Gareth R (Harrow W)
Singh, Marsha	Tipping, Paddy
Skinner, Dennis	Todd, Mark
Smith, Rt Hon Andrew (Oxford E)	Touhig, Don
Smith, Miss Geraldine (Morecambe & Lunesdale)	Trickett, Jon
	Truswell, Paul
Smith, Jacqui (Redditch)	Turner, Dennis (Wolverh'ton SE)
Smith, John (Glamorgan)	Twigg, Derek (Halton)
Smith, Llew (Blaenau Gwent)	Twigg, Stephen (Enfield)
Spellar, John	Vis, Dr Rudi
Squire, Ms Rachel	Ward, Ms Claire
Starkey, Dr Phyllis	Watts, David
Stevenson, George	Winterton, Ms Rosie (Doncaster C)
Stewart, David (Inverness E)	Woolas, Phil
Stewart, Ian (Eccles)	Worthington, Tony
Stoate, Dr Howard	Wray, James
Stringer, Graham	Wright, Dr Tony (Cannock)
Stuart, Ms Gisela (Edgbaston)	Wright, Tony D (Gt Yarmouth)
Sutcliffe, Gerry
Taylor, Rt Hon Mrs Ann (Dewsbury)	Tellers for the Noes:
	Mr. David Jamieson and
Taylor, Ms Dan (Stockton S)	Jane Kennedy.

Question accordingly negatived.

Dr. Evan Harris (Oxford, West and Abingdon)

I beg to move amendment No. 8, in page 1, line 15, at end insert 'and (c) if the National Health Service trust has proved to his satisfaction that the agreement would not restrict clinical freedom or patient choice.'.

The Second Deputy Chairman of Ways and Means (Mr. Michael Lord)

With this it will be convenient to discuss the following amendments: No. 4, in, page 1, line 24, leave out from 'property' to end of line 25 and insert— '(b) any non—clinical services, and (c) any clinical or clinical support services agreed to by local clinicians.'. No. 9, in page 1, line 24, leave out from 'property' to end of line 25.

Dr. Harris

It is unfortunate that, on my first opportunity to speak on national health service legislation in this place, an hour ago I was called to attend a visitor to the House who had collapsed outside the Chamber. I sent him to St. Thomas's hospital, and I am sure that all hon. Members wish him a speedy recovery. It is important to take note that I passed on his care to an NHS paramedic, who passed it on to an NHS ambulance worker. I spoke to an NHS doctor in the company of NHS nurses at the hospital. [Interruption.]

The Second Deputy Chairman

Order. There is far too much general chatter in the Chamber. The hon. Member for Oxford, West and Abingdon (Dr. Harris) should be heard in silence.

Dr. Harris

Thank you, Mr. Lord. I suspect that that gentleman will have a chest X-ray, which will be conducted by NHS radiographers and examined by an NHS radiologist—it may be the husband of my hon. Friend the Member for Richmond Park (Dr. Tonge). He may have a blood sugar test and give a urine sample, which will be examined by laboratory staff—not pathologists—who are employed by the NHS. I do not think that the gentleman suffered a heart attack, but, if he did, his rehabilitation will be provided by NHS occupational therapists. We seek to preserve that NHS clinical team in our amendment No. 9. That team provides the patient care, and its integrity under single, NHS, management, is vital to a good service and adequate care provision in the NHS.

We believe that the term "service" used in the Bill is too vague. The Minister said, when commenting on another Liberal Democrat amendment, that vagueness is dangerous in legislation such as this. Therefore, we urge the Government to accept amendment No. 9, which seeks to remove the vagueness by deleting the term "service". We are not reassured by statements made by the Minister, his colleagues in another place and by the Secretary of State that—undefined—clinical services will not be subject to the PFI and therefore run by private companies. Without definition, we cannot be reassured on that point.

We must also reassure those who work in the health service. My former colleagues and other NHS staff view the PFI and private sector involvement in the health service with great suspicion. It is vital that we address the problems of low morale and suspicion among clinical staff as, in many geographical areas and in many specialties, we face a recruitment crisis that affects medical staff, nursing staff, those in the professions allied to medicine and those in support services. Many of my former NHS colleagues say that they will not apply to hospitals that are run under the PFI. I recall that an early draft of the Norfolk and Norwich PFI scheme gave no consideration to accommodating junior hospital doctors on call at night, and the problem was noticed and pointed out only at a late stage in negotiations.

It is also the case that, in many of the schemes, little provision may be made for circumstances in services which had previously been defined as non-clinical, such as catering, where it is not really in the interests of a company trying to run catering efficiently and for profit to provide food for isolated clinicians working in the middle of the night. Hon. Members on both sides of the House would be gravely concerned if there was not a bite to eat or a drop to drink in the House after 8 pm. That is the danger of not ensuring that the national health service, which does at least have some accountability to those working in it, continues to provide those services.

At the election, Labour stood for an end—Liberal Democrats support this—to local pay bargaining for nurses and, by implication, other staff. What is it if it is not local pay bargaining when some NHS workers are contracted out—whether or not it be within the undeclared definition of clinical services—to a local contractor and then have to negotiate terms and conditions locally? It is local pay negotiation by the back door. I am sure that hon. Members on the Government Benches will be very keen to preserve the national part of the national health service, to preserve national terms and conditions, as they are pledged to do, but that will not be possible while not excluding the word "services" from the text of the Bill.

It is important that we recognise the contribution that is made to NHS clinical services by education and research establishments within the NHS. Academic medicine provides approximately 10 per cent. of direct patient service. Many of the education sectors of the health service, including many in my constituency, are provided not only by doctors but by research workers and other staff in the hospital. The contiguity of the team in education and in the labs, which provides the service to the hospital, is under threat. Applications to those posts, which are already depleted, will be under threat if we do not reassure staff. The best way to do that is to define clinical services on the face of the Bill, which the Minister ruled out on Second Reading, or to remove the term "services" altogether. That would improve the Bill.

Amendment No. 8 talks of the need to ensure that patient choice is preserved. We heard concerns about research that shows that bed provision in PFI schemes is between 26 per cent. and 30 per cent. below what health service academics who have looked at this feel is required. The British Medical Journal may not be required reading even for new Labour Members, but it was adequately reported in The Guardian. We have yet to be reassured about that concern.

There is also a concern that, with time, patient needs will change and that some of the PH schemes will lock the NHS into relatively secret 30-year contracts. The hon. Member for Stratford-on-Avon (Mr. Maples) raised a concern—it has not been answered satisfactorily—about a different choice. A PFI scheme is either a straight leasing scheme with no transfer of risk, where it will clearly be just a more expensive way to raise capital for the NHS, or the risk will be transferred to the private sector, which will want a bigger return to justify this. The private sector is more likely to get a return on matters relating to running services where it can see scope for expansion or where it can be protected against an excess of capacity versus an excess of demand. No reassurance has been given that patient choice will be protected where there is just an excess of demand for a scheme that is locked in for 30 years. That is another unaddressed concern that we have.

More worrying is the lack of democratic accountability in the NHS at the moment. It was surprising to hear the Secretary of State indicate from a sedentary position on Second Reading that he felt that democracy was being brought into the NHS by the new round of appointments that are about to be made. That is not democratic, and it is barely accountable. It is strange that, in local authorities, where compulsory competitive tendering has led to the private sector employment of people providing vital public services, there is democratic accountability for decisions made, whereas in the health service, where there is little or no democratic accountability, there seems to be no protection or comeback for professional groups that feel that they may be hostages to fortune to whatever private sector company is running their service. We cannot be reassured, as we were invited to be earlier, that terms and conditions might improve under the private sector. They may improve for the first year, but there are many examples of where what is granted in the first year by privatised industries gradually regresses into something worse than we would support.

For all these reasons, we are suggesting amendments Nos. 8 and 9.

12 midnight

Mr. Maples

The Liberal Democrat amendments in this group seem to be like all the others—it is not, of course, for me to answer them—in that if they were agreed to they would kill the private finance initiative stone dead. I do not see how amendment No. 8 would ever work. Indeed, it provides for a lawyers' charter. I am surprised that an amendment with the names of three doctors to it should provide for such a charter. Perhaps the Liberal Democrats have their objectives slightly muddled.

An amendment that would omit any references to services would make it almost impossible to see an PFI project through. I suspect that none of the smaller ones would go through. Even the large ones, those relying on property maintenance services, would be in question. The service element is a crucial element in securing value for money and risk transfer. If it were not present, the project would not fly and it would become straightforward public expenditure.

I ask the Minister to consider amendment No. 4, which would split the service question into non-clinical services and clinical or clinical support services. I realise that it begs a question and does not assist with the problem of definition, but I ask the Minister rather more to share his thinking with us. I raised some of the considerations on Second Reading and I feel that in his reply—I know that he had many matters to which to respond—he did not deal with them fully.

It is easy to pose the extremes, and I imagine that the Government have no problem with property services and maintenance as attached to a PFI contract. On the other hand, there is a great deal of problem with open-heart surgery being provided as part of a PFI contract. The difficulty lies in drawing the line, and I am not suggesting that the drawing of it is easy. As the Minister says that he will try to develop some guidance, however, I shall try to develop the matter.

I am disappointed that the Minister has already ruled out radiography and pathology. I gave an example on Second Reading of a theoretical scheme that might work well in the area of pathology. It may be that something like that, attached to a PFI project, would make the project work, provided that there was value for money and risk transfer. Without those elements the project would not exist. If there were merely the construction of a building, that would not fly for there would be only a leasing deal. There must be a service element attached to the project, and it may be that the logical service lies in a clinical support area. Ruling that out from the start seems to be restricting the possible scope of PFI projects.

As I said on Second Reading, the NHS already buys in an enormous amount from the private sector without apparently any ideological problem. General practitioners are effectively in the private sector. They represent small businesses that contract independently with the NHS. We buy in all our drugs and other supplies. The year before last, apparently, we spent £800 million directly buying in health care. If that has been acceptable to us all for years, perhaps without realising consciously that it has been happening, I do not understand why it should be unacceptable to include radiography or pathology services in a PFI bid.

Amendment No. 4 provides that there should be agreement by "local clinicians" to provide the sort of safeguard that the Government would probably require, and one which the previous Secretary of State, my right hon. Friend the Member for Charnwood (Mr. Dorrell), had always discussed.

I shall focus on the issue by asking the Minister what he would do if he received a really good proposal that he wanted to put into effect, that might allow the building of a new district general hospital, but for PFI purposes meant the inclusion of pathology and radiography services—the two examples that he has excluded already. Let us suppose that those services were part of the project and that without them the value-for-money and risk criteria would not be met, but otherwise the proposal would go straight to the top of the Minister's list of priority projects. How would the Minister deal with that? Perhaps he will develop his thinking with us and explain how he proposes to deal with that issue.

Mr. Milburn

The amendments represent the two extremes on clinical services under PFI. The Liberal Democrat amendment No. 9 would prevent any transfer of services under the private finance initiative, with the consequent wrecking of the leading schemes, especially those at Norwich and at Dartford, and the other 12 schemes that we have prioritised thus far.

The hon. Member for Oxford, West and Abingdon (Dr. Harris) gave a reasonable presentation of his case. However, if he is prepared to wreck the Bill and thus wreck the prospect of new hospitals for those communities, he should have the courage of his convictions and should go to those communities and explain to them why, out of ideological dogma—which is what it is—he is not prepared to let them have those hospitals. It is incumbent on him to do that.

Amendment No. 9 seems to be designed to prevent the Secretary of State from certifying an agreement under which any services are to be transferred to the private sector. The practical result of that would be that such agreements would not reach financial close, with the consequence that none of the major PFI acute schemes would be built.

As Liberal Democrat Members have shown a profound lack of understanding of what the PFI does, perhaps I should explain why, under the PFI, some services are transferred to the private sector. The PFI is not an expensive way of raising a loan to build a hospital: it is a way of providing the NHS with a complete service, including buildings and non-clinical support staff, for which the NHS pays. Under the PFI, significant amounts of risk are transferred to the private sector, so that if the service stops, so do the payments by the health service. All the major hospital schemes that are now going ahead have been developed on that basis. The amendment would stop every one of those schemes in its tracks.

That is not to say that there will not be new forms of public-private partnership in the future. I have already said that our review of PFI will consider other partnership agreements. We shall consult to see whether there are other ways of engaging with the private sector for the benefit of patients. The amendment prejudges that review and its conclusions about where the dividing line between clinical and non-clinical services should lie.

On amendment No. 8, arrangements already exist to ensure that these issues are considered—as they certainly should be—well before an agreement is submitted to the Secretary of State for certification. A trust must justify a PFI scheme to the Department of Health when requesting approval of the full business case. It must also justify it to the Treasury. In so doing, it must show what options it has considered to meet its service needs, and why it has chosen its preferred option. I would expect it to demonstrate, among other things, the clinical advantages of its preferred option. That is a fundamental aspect of a PFI scheme.

I am happy to assure the hon. Member for Oxford, West and Abingdon that I shall see to it that these issues continue to be given proper weight when a PFI scheme is taken forward. That need not be specified in the Bill, which, for the benefit of Liberal Democrat Members, is about removing doubt, providing certainty and, above all, getting new hospitals built.

I shall deal with the other end of the spectrum. Amendment No. 4 is a neat reinstatement of the previous Government's position on this issue. It tells its own story. It shows the Tory party's failure to understand why it lost the general election. It lost on 1 May because the British people no longer trusted it. Above all, it lost because it was not trusted on the national health service. It was not trusted because the public believed, quite rightly, that it intended to privatise the national health service, and, if amendment No. 4 is anything to go by, it clearly has exactly that intention now.

This is, of course, all dressed up in the clothes of "clinical choice". The Opposition's line is that, if desperate doctors working in an antiquated hospital say that the price that they are willing to pay to get a modern hospital is private employment through a PFI deal, that deal should be given the green light. Let me tell the hon. Member for Stratford-on-Avon (Mr. Maples) that, while I am all for clinical choice, I am adamantly opposed to the privatisation of clinical services in any part of the NHS. I remind the hon. Gentleman—who seems to have forgotten—that it is a national health service of which Members of Parliament are guardians, not a rag-bag collection of competing local health services. This Government are determined to run the service as a national health service; we are also committed to run it in accordance with our manifesto commitments. The manifesto committed us to opposing the inclusion of clinical services in PFI deals, and, despite the hon. Gentleman's prompting, I am not about to reverse that principle by accepting amendment No 4.

As I have explained, as part of our review of the PFI the Government will, for the first time in the history of the NHS, define where the boundaries between clinical and non-clinical services lie. That will form part of the PFI process. If the hon. Member for Stratford-on-Avon wants to make representations, I invite him to do so, but the last thing that we need is yet more uncertainty in the Bill. As the hon. Gentleman knows, what we need tonight is clarity, so that we can make progress.

Mr. Maples

For the first time during the debate, I heard ideology creeping into the Minister's speech. Although I understand some of his reasons, I feel that there should be practical reasons for acting or not acting.

As I said earlier, the NHS buys in a certain amount of health care from the private sector. I do not know the amount now, but it was £800 million-worth two years ago. I do not hear the Minister saying that he proposes to abolish that arrangement, and I do not think that the Conservative Government were heavily criticised for presiding over it. Health authorities probably acted with good reason, making decisions for themselves.

There are so many examples of the health service buying in services from the private sector that the ideological no-go area proposed by the Minister is likely to restrict the number of options open to him. My right hon. Friend the Member for Fylde (Mr. Jack) mentioned the haemodialysis service at Darlington Memorial hospital, which was set up and is being operated under the PFI. Presumably the Minister would not have allowed that, although he is probably more familiar with what clinicians and others at the hospital think about it than any of the rest of us are. Will the Minister reflect on whether the PFI has really caused the problems for doctors and patients that he suggests the amendment would cause? I hope that he will keep an open mind in his review—or, at least, a more open mind than he appears to have now. I do not think that he should start ruling things out.

Interestingly, the Government seem to have changed their position. On the first day of debate in the House of Lords, the Minister who was dealing with the Bill did not rule out radiology and pathology services, but did rule them out a few days later—in Committee or on Report; I forget which. I should have thought that, with several years of office ahead of them and with a review on the subject, the Government would be wise not to rule out such services. They may well find that schemes that they want to introduce rely on the value-for-money and risk-transfer elements involved in some degree of service provision.

Drawing the line between clinical and non-clinical support is extremely difficult, and I hope that the Minister will take that into account in the review. He has as good as said that he will.

Dr. Harris

I thank the Minister for his reply in respect of amendment No. 8. We continue to hear reassuring noises from the Government about scrutiny to ensure that patients' interests are preserved, but we shall continue to carry out the scrutiny of the Government in a way in which the Conservative party cannot.

12.15 am

Amendment No. 9 relates to the definition of clinical services. In the first Health Question Time in this Parliament, the Secretary of State said: When the Bill comes to this House from the House of Lords, if the hon. Gentleman wishes to move an amendment to make that clear I shall consider it carefully."—[Official Report, 20 May 1997; Vol. 294, c. 504.] Despite attempts in another place, we do not think that the Government have considered this matter carefully, because in the other place we requested a list of clinical services as the Government saw them. It is unsatisfactory to have an assurance from the Minister now that only after the Bill is passed will there be such a list. There was plenty of time to define it, and simply throwing in the expression "pathology and radiology services" betrays a lack of understanding of the extent and integrity of the clinical team.

We do not wish to stop the building of any hospital. The Government claim that the amendment risks threatening the private finance initiative. That is the Government's view, but it is not ours. The Bill as drafted puts at risk the national health service as we know it, and we would rather tie our colours to the mast of protection for the NHS than any perceived risk to the PFI.

Mr. Milburn

It is not our perception: it is the view of the bankers, and they will stump up the cash. If the hon. Gentleman intends to press this matter to a vote, he should also be intent upon explaining to the 14 communities that their hospitals will not be built. There should be some honesty among Liberal Democrat Members.

Dr. Harris

We do not accept that the amendment puts any hospital at risk, and it is not our intention to stop the building of any hospital. We have consistently, and this year, promised extra funding for the national health service. The Minister's reference to bankers more eloquently betrays a lack of understanding of the nature of NHS functions as a public service than anything that has been said earlier.

We shall press our amendment on this issue to a vote. Following Ministers' remarks in another place, doctors, the Royal College of Nursing and ourselves are not satisfied. We shall put down a marker that it is creating a hostage to fortune to allow the private finance initiative to proceed into the field of clinical services. We shall press amendment No. 9.

The Second Deputy Chairman

Order. We must first dispose of amendment No. 8.

Dr. Harris

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: No. 9, in page 1, line 24, leave out from 'property' to end of line 25.—[Dr. Harris.]

Question put, That the amendment be made:—

The Committee divided: Ayes 26, Noes 174.

Division No. 55]	[12.17 am
AYES
Allan, Richard (Shef'ld Hallam)	Keetch, Paul
Baker, Norman	Kirkwood, Archy
Ballard, Mrs Jackie	Livsey, Richard
Brand, Dr Peter	Oaten, Mark
Burstow, Paul	Öpik, Lembit
Campbell, Menzies (NE Fife)	Rendel, David
Fearn, Ronnie	Russell, Bob (Colchester)
Foster, Don (Bath)	Sanders, Adrian
George, Andrew (St Ives)	Stunell, Andrew
Gorrie, Donald	Taylor, Matthew (Truro)
Harris, Dr Evan	Tonge, Dr Jenny
Harvey, Nick
Heath, David (Somerton & Frome)	Tellers for the Ayes:
Hughes, Simon (Southwark N)	Mr. Paul Tyler and
Jones, Nigel (Cheltenham)	Mr. Phil Willis.

NOES
Ainsworth, Robert (Cov'try NE)	Bennett, Andrew F
Allen, Graham (Nottingham N)	Benton, Joe
Armstrong, Ms Hilary	Betts, Clive
Banks, Tony	Blizzard, Bob
Barnes, Harry	Borrow, David
Barron, Kevin	Bradley, Keith (Withington)
Battle, John	Bradshaw, Ben
Bayley, Hugh	Brinton, Mrs Helen
Beard, Nigel	Brown, Rt Hon Nick (Newcastle E)

Brown, Russell (Dumfries)	Ladyman, Dr Stephen
Browne, Desmond (Kilmamock)	Laxton, Bob
Burden, Richard	Lepper, David
Burgon, Colin	Lewis, Ivan (Bury S)
Byers, Stephen	Linton, Martin
Caborn, Richard	Livingstone, Ken
Campbell, Alan (Tynemouth)	Lloyd, Tony (Manchester C)
Campbell, Ronnie (Blyth V)	Lock, David
Campbell-Savours, Dale	McAllion, John
Cann, Jamie	McAvoy, Thomas
Cawsey, Ian	Macdonald, Calum
Chapman, Ben (Wirral S)	McDonnell, John
Clapham, Michael	McFall, John
Clark, Dr Lynda (Edinburgh Pentlands)	McNamara, Kevin
	McNulty, Tony
Clarke, Charles (Norwich S)	Mactaggart, Fiona
Clarke, Rt Hon Tom (Coatbridge)	McWalter, Tony
Clelland, David	McWilliam, John
Coaker, Vernon	Mahon, Mrs Alice
Coffey, Ms Ann	Marshall, David (Shettleston)
Coleman, Iain (Hammersmith)	Marshall-Andrews, Robert
Colman, Tony (Putney)	Michael, Alun
Corbyn, Jeremy	Michie, Bill (Shef'ld Heeley)
Cousins, Jim	Milburn, Alan
Cranston, Ross	Morley, Elliot
Cryer, John (Hornchurch)	Mudie, George
Cunningham, Jim (Cov'try S)	Murphy, Jim (Eastwood)
Darling, Rt Hon Alistair	Murphy, Paul (Torfaen)
Darvill, Keith	Naysmith, Dr Doug
Davidson, Ian	Norris, Dan
Dawson, Hilton	O'Brien, Mike (N Warks)
Denham, John	O'Hara, Edward
Dobson, Rt Hon Frank	O'Neill, Martin
Doran, Frank	Pickthall, Colin
Dowd, Jim	Pike, Peter L
Drew, David	Plaskitt, James
Efford, Clive	Pond, Chris
Ennis, Jeff	Pound, Stephen
Fatchett, Derek	Prentice, Ms Bridget (Lewisham E)
Fitzpatrick, Jim	Purchase, Ken
Foster, Michael John (Worcester)	Quin, Ms Joyce
Foulkes, George	Quinn, Lawrie (Scarborough)
Gardiner, Barry	Rapson, Syd
George, Bruce (Walsall S)	Raynsford, Nick
Gibson, Dr Ian	Reed, Andrew (Loughborough)
Godsiff, Roger	Roche, Mrs Barbara
Gordon, Mrs Eileen	Rooker, Jeff
Graham, Thomas	Rooney, Terry
Griffiths, Win (Bridgend)	Roy, Frank
Grogan, John	Ruddock, Ms Joan
Gunnell, John	Sawford, Phil
Hall, Mike (Weaver Vale)	Simpson, Alan (Nottingham S)
Hanson, David	Singh, Marsha
Henderson, Ivan (Harwich)	Skinner, Dennis
Heppell, John	Smith, Rt Hon Andrew (Oxford E)
Hesford, Stephen	Smith, John (Glamorgan)
Hill, Keith	Smith, Llew (Blaenau Gwent)
Home Robertson, John	Spellar, John
Hoon, Geoffrey	Stevenson, George
Hopkins, Kelvin	Stewart, David (Inverness E)
Howarth, George (Knowsley N)	Stewart, Ian (Eccles)
Hoyle, Lindsay	Stoate, Dr Howard
Hughes, Kevin (Doncaster N)	Stringer, Graham
Hurst, Alan	Stuart, Ms Gisela (Edgbaston)
Hutton, John	Sutcliffe, Gerry
Iddon, Dr Brian	Taylor, Ms Dari (Stockton S)
Ingram, Adam	Thomas, Gareth (Clwyd W)
Jackson, Ms Glenda (Hampstead)	Thomas, Gareth R (Harrow W)
Jamieson, David	Tipping, Paddy
Jenkins, Brian (Tamworth)	Todd, Mark
Jones, Ms Jenny (Wolverh'ton SW)	Touhig, Don
	Trickett, Jon
Jones, Jon Owen (Cardiff C)	Truswell, Paul
Kidney, David	Turner, Dennis (Wolverh'ton SE)
Kilfoyle, Peter	Twigg, Derek (Halton)
King, Andy (Rugby & Kenilworth)	Twigg, Stephen (Enfield)

Vis, Dr Rudi	Wright, Tony D (Gt Yarmouth)
Watts, David
Woolas, Phil	Tellers for the Noes:
Worthington, Tony	Janet Anderson and
Wray, James	Jane Kennedy.

Question accordingly negatived.

Clause 1 ordered to stand part of the Bill.

Clauses 2 and 3 ordered to stand part of the Bill.