Private Finance Initiative

HC Deb 12 June 1997 vol 295 cc1267-8

6. Ms Mountford

To ask the Chancellor of the Exchequer what new measures he is proposing to improve the private finance initiative. [1590]

The Paymaster General (Mr. Geoffrey Robinson)

I immediately moved to ask Mr. Malcolm Bates to carry out a complete review of the private finance initiative process with a view to streamlining it, and I abolished the requirement for universal testing which gunged up the process under the Tories.

Ms Mountford

I welcome my hon. Friend's encouraging reply. Is he aware that the Conservative Government spent £30 million on consultants' fees, yet not one PFI hospital was built? Does he agree that the private finance initiative process is in urgent need of improvement?

Mr. Robinson

My hon. Friend is absolutely right, and we are giving it that improvement. I am pleased to say that the legislation that we have introduced to enable NHS trusts to become involved in PFI projects is making good progress in another place—or will do next week. I am also pleased to say that, immediately after Question Time, my right hon. Friend the Deputy Prime Minister will introduce a Bill to enable local government to enter into positive public-private sector partnerships for the benefit of the country.

Mr. Dafis

Will the Minister assure us that PFI companies will never have any responsibility for the hiring and firing of teachers, the provision of books and equipment and the delivery of the curriculum? Will he give a categorical assurance that those responsibilities will remain with local education authorities, schools and governors, where they belong?

Mr. Robinson

I can give the hon. Gentleman a categorical assurance that none of those aspects features in any of the proposals for private sector investment in education that I have seen; nor would they be approved by me.

Mr. Derek Foster

Was not the former Chancellor guilty of extraordinary political incompetence, in that he screwed up the whole PFI process over a three-year period? Is it not now crucial for my hon. Friend to cut through the swathe of bureaucracy and put bulldozers on sites, particularly the site of Bishop Auckland hospital in my constituency?

Mr. Robinson

As my right hon. Friend will appreciate, I cannot give any undertaking in relation to the Bishop Auckland health trust, but I assure him that we are moving to cut through the swathes of bureaucracy, as he so aptly describes them. I can tell him that the measures that we have taken via the review—such as getting rid of universal testing—and the legislation that we have introduced have done more to encourage the PFI in five weeks than the Tories did in five years.

Mr. Jack

I welcome the Paymaster General to his post. Can he confirm that purchasing services with the maximum risk transfer will remain the key objective for the private finance initiative? Can he also confirm that financial reporting standard FRS5 and standard of accounting practice SAP21 will remain the standards by which the viability of the PFI is judged?

Mr. Robinson

There the Opposition go again, getting bogged down in a whole lot of details and losing sight—[Interruption.] That is precisely why their bureaucratic, pettifogging approach has delivered no PFI deals on hospitals or local government. The right hon. Gentleman ought to be ashamed of his record.

Mr. McAllion

Elsewhere in Europe, public investment which creates a tangible public asset does not count against the public sector borrowing requirement total. Will my hon. Friend therefore consider bringing Britain into step with the rest of Europe by changing to that form of public accounting? Will he bear it in mind that, as the markets already acquiesce in it throughout Europe, there is no reason to suppose that they would not acquiesce in this country as well? An added advantage would be that Scottish local authorities could raise private money to invest in remedying the housing crisis which afflicts so many people in my country.

Mr. Robinson

I hear what my hon. Friend says. We shall, of course, consider those matters, but it would be wrong for my hon. Friend to think that we had any immediate proposals for change.