West Hertfordshire Health Authority

HC Deb 18 November 1998 vol 319 cc914-20 1.30 pm

Mr. Tony McWalter (Hemel Hempstead)

Very often, an Adjournment debate can be a lonely business, with sometimes just oneself and somebody else on the Front Bench. However, Mr. Deputy Speaker, I thank you for allowing me to come here accompanied by a box which contains the signatures of some 35,610 objectors to various plans made by West Hertfordshire health authority. I understand that another 36,000 people from Watford are similarly inclined to object to the use made by the authority of the private finance initiative.

In asking for a debate on this matter, I was not trying to be a fundamentalist about the use of the PFI. In my constituency, I have been desperate to try to get a new initiative for a matter on which the public authorities seem to have become locked into inaction. In particular, I am trying to get a road from St. Albans road in Hemel Hempstead—a dual carriageway—into the wonderful new £5 million accident and emergency unit at Hemel Hempstead hospital. I hope to get that road, and I will be happy to trade with anyone in the private sector who wishes to provide the necessary expertise, energy and financial input.

Sometimes, the PFI might allow one to get something done which previously was not being done. However, looking at the Government's strategy for health, I am forced to suggest to the Minister of State, Department of Health, my right hon. Friend the Member for Darlington (Mr. Milburn) that perhaps there is a conflict between the untrammelled operation of the PFI and the Government's strategy for improving health care. After all, the Government want to invest in a better NHS. Indeed, they have made £21 billion available for that investment over the next three years.

We all want that investment to be used for the kind of capital investment that would achieve substantial revenue savings. For instance, a hospital that is poorly insulated is often in that condition because of desperate neglect over many years. If the insulation is improved in a poorly insulated hospital with a high energy bill, revenue savings will be made. In the case of the general hospital in the constituency of my hon. Friend the Member for Watford (Ms Ward), such neglect has resulted in a backlog of repairs of some £7 million. That ought to be rectified by a Government who are committed to investing in the NHS. If the insulation is improved in a poorly insulated hospital with a high energy bill, revenue savings will be made.

Revenue savings can also be made by appropriate investment in information technology. Revenue savings can be made—this is a case close to my heart—by trying to improve nurses' accommodation, so that they are attracted to living near a town centre hospital, such as Hemel Hempstead or Watford, where medical staff have the amenities of a town centre, and of affordable housing. Where such investment in accommodation has been made, the health trust will not have to pay ludicrous amounts to get or to manage temporary or agency staff.

Revenue savings can lead to real improvements in health, and I commend the Government's strategy for investment. Capital investment initiatives can lead to a virtuous circle, in which hospitals and trusts begin to think of real improvements in the quality of care they give their patients. In Hertfordshire, there is the possibility of a link with the newly emerging health faculty at the university of Hertfordshire, which could lead to the county becoming an attractive place for practitioners and nurses to work. I shall be having lunch with the current vice-chancellor of the university after this debate to discuss that very matter.

I understand the strategy adopted by the Government, but the strategy adopted by West Hertfordshire health authority seems to be about as far removed from the Government's as it is possible to imagine. To start with, the authority wants to attack the five hospitals that are built, operating and functioning. These include hospitals in Hemel Hempstead and Watford—I am sorry that the hon. Member for Ruislip-Northwood (Mr. Wilkinson) is not here to defend Mount Vernon hospital—which have produced more than 70,000 people who support their retention. The people of west Hertfordshire are worried by the prospect that the wonderful deposit of NHS resources, built up since the start of the NHS in 1948, might be frittered away on the PFI-inspired philosophy of the health authority.

The PFI is inappropriate for our current circumstances. A House of Commons research paper on the matter states that the need for the private finance initiative was initially put in place so that up-front capital funding for new developments was replaced with a long-term revenue commitment by the public sector. It said that no longer would the NHS own an asset—it would lease it. Assets that were publicly held would be lost.

That is not the situation in which we find ourselves. The Government want to make capital investment and to save on revenue—yet the PFI points the other way.

Despite the language of the West Hertfordshire health authority—which talks about a "new super—hospital"—the proposal represents a substantial cut in the facilities available to the people of west Hertfordshire. According to the authority's figures, there will be a cut from 1,170 acute places to between 695 and 730. This cut is portrayed in the authority's documents as if it were somehow a benefit. If that is a benefit, I would rather do without it.

There is also the problem that the process has cost a huge amount of public money in consultation.

Ms Claire Ward (Watford)

Is my hon. Friend aware that the health authority has conducted consultation, and that the response that it has received from the public–80,000 signatures collected by a pressure group—local Members of Parliament and the local authorities has shown that there is objection to the proposal and to the favoured option of the building of a new hospital?

Mr. McWalter

That is true, and the public's understanding of such matters often transcends that of hon. Members in this Chamber.

In the consultative process, it is unclear what the terms of reference of any PFI contract are to be. I do not know this to be the case, but what I call a "BOOT" system may be in operation—that is, build, own, operate and transfer. In such a case, at the end of the contract the assets are held by the private consortium. In west Hertfordshire, acute facilities at four hospitals could be downgraded and any number of them could close down, with the remaining community hospital at Harpenden closing as well. In west Hertfordshire, the operators of the NHS system have carte blanche, under their current plans, to do what they like with current assets.

Ms Ward

Does my hon. Friend agree that the objection of local people to the West Hertfordshire health authority is not necessarily an objection in principle to the PFI, but to the proposals that the authority has put forward? It has not made a case for its option, either financially or strategically.

Mr. McWalter

That is a good point, but the trouble with the PH is that, when the previous Administration introduced it, it was a recipe for inactivity and for saving public money. This Government have made large amounts of money available for investment, and what worries many of us is that that investment could destroy public assets. In west Hertfordshire, we have the example of an asset that is held by the public—five hospitals. In 30 years' time, we could end up publicly not owning one brick or a trowel full of mortar.

Another important aspect is that the revenue projections of the process are extremely unclear. In a representation to the Treasury Select Committee two years ago, Christopher Bland, head of the private finance panel said that when he asked such questions as, "What are the revenue implications of the PFI contracts signed for, say, 2005?" Lo and behold, the answers were not forthcoming. We are in strong danger not only of losing public assets, but of buying an expensive pig in a poke.

Mr. Richard Page (South-West Hertfordshire)

I agree that the revenue projections are exceedingly shaky and that they have to be fleshed out in greater detail, but is not the basic reason why the process is taking place—unless the Minister is going to give us some good news at the Dispatch Box right now—that the Government will not give the money to maintain the status quo?

Mr. McWalter

The hon. Gentleman fails to recognise that the status quo is deeply unsatisfactory because the Conservative Government introduced an odious system called capital charges, which required all health operators to study their asset base and to make substantial payments—on average 9 per cent. of their income. West Hertfordshire health authority would not be in deficit if it were not for the capital charges—

Mr. Page

I agree with the hon. Gentleman about the way in which capital charges are operated. If they were removed, we would have no problems in west Hertfordshire and could continue with the status quo.

Mr. McWalter

I am grateful for the hon. Gentleman's support for what appear to me to be policies designed to ensure that public assets remain in the public sector, rather than the policies of the previous Government, who did their level best to ensure that a haemorrhaging of public assets into the private sector.

Apart from threatening the very fabric of the NHS in west Hertfordshire, the overall impact of the plans, assuming that we do not have the BOOT system and the asset is not transferred but is kept within the public sector through some devious route—possibly a joint venture in which each party gets 50 per cent., for example—would be that the asset base on which the health authority has to pay capital charges would be greater than it is now, according to all the figures that I have seen. Therefore, the authority's deficit would be even larger. Therefore, implicit in its plans must be a substantial reduction in the asset base, which means that an awful lot of hospital closures that have not been accounted for must be in the pipeline.

I suggest to my hon. Friend the Minister that a conflict exists between retaining the PFI as, potentially, a force for squeezing out public sector holdings and assets, and retaining it for its potential to be used in new and improved schemes. It is a major mistake to retain a PH that is designed to erode, compromise or put into joint venture holdings capital assets that are publicly owned.

Those matters are all relatively new, and many of us have been awaiting the comprehensive spending review to find out precisely what sort of shape we may be able to put the NHS in over the next few years. I have already said that I strongly welcome what the Government are doing in that regard, but there is a head-on conflict between substantial capital investment and continuing to keep the PH, which could result in the haemorrhaging of the very resources that one wants to put at the disposal of the health service. We want a system of public investment and expenditure that is not designed to erode the very basis of health provision.

Dr. Lynne Jones (Birmingham, Selly Oak)

The reservations that my hon. Friend has expressed about private finance developments in Hertfordshire are shared by people in Birmingham, who are worried about private finance initiatives there. Resources are being diverted from care into paying for the raising of capital by private sector companies, which is more expensive than it would be in the public sector.

Mr. McWalter

My hon. Friend has a good point, and I hope that it will be considered. The present 20-year interest rate for public finance is 4.77 per cent., whereas the cheapest possible rate for private finance is more than 6 per cent. We are already faced with a spread or differential that makes it extremely difficult to manage the interest payments that will be required through such initiatives. That in itself represents a haemorrhaging of resources. I look forward to the Minister telling me that PFIs that have the capacity to undermine public assets and provision will not be welcome in his Department.

1.48 pm

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

I am happy to have the opportunity to respond to the debate launched by my hon. Friend the Member for Hemel Hempstead (Mr. McWalter) and congratulate him on securing the time for it. The issue is of considerable concern to his constituents and, indeed, to some hon. Friends and other hon. Members in the Chamber.

I can assure my hon. Friend that the Government share his aim to provide a high-quality national health service for the people of this country, wherever they live. The national health service was founded on the principle that the very best health care should be available to everyone—a principle that the previous Government did their best to erode and which this Government are determined to restore.

We are doing that by modernising the national health service, by making its services faster and more convenient for patients, by tackling variations in quality, by improving standards and by developing integrated services around the needs of individual patients and across the traditional care boundaries. Above all, we are doing it by transforming the NHS from a sickness service into a service that works in partnership with others to reduce the appalling health inequalities that are a scar on our nation.

The Government's modernisation programme is extremely ambitious—it will take time and a great deal of money. From next April, as my hon. Friend the Member for Hemel Hempstead rightly said, a record £21 billion of extra investments will start to come on line to help to modernise the NHS. All parts of the country will benefit.

The comments of the hon. Member for South-West Hertfordshire (Mr. Page) could not have been wider of the mark. The Government have made available extra investment over and above that planned by the Conservative Government. In the past 18 months, we have provided West Hertfordshire health authority with an extra £15.4 million. Moreover, we recently announced next year's allocations, which include a further £19 million for West Hertfordshire—a cash increase of 6.38 per cent., which I hope will be warmly welcomed by hon. Members on both sides of the House. That money is necessary to modernise and sustain services.

The money is also necessary to sort out the mess that the Government inherited. When we came to office, 72 of 100 health authorities, including West Hertfordshire, were in deficit. Across the country, we reduced the total deficits in health authorities from £238 million to less than £20 million at the end of 1997–98. In West Hertfordshire, the deficit has been reduced from £4 million to less than £2 million.

The Government are delivering on their promise not only to save the NHS but to modernise it as well. I remind my hon. Friend the Member for Hemel Hempstead that we were also elected on a manifesto promise to sort out the problems that have plagued the private finance initiative so that it could work for the benefit of the health service. We have delivered on that promise, too.

We inherited a PFI process under which no new hospitals had been built. A lot of money—£30 million, I think—had been spent on management consultant and legal fees, but no bricks had been laid and no bulldozers had been moved. Today, because of our actions, work has started on the construction of eight hospitals under PFI. Since we came to office, we have been able to announce the biggest new hospital building programme in the history of the NHS–31 new hospitals worth almost £2.4 billion, 25 of which will be built through PFI, with a total value of almost £2.2 billion.

We will give the go-ahead to PFI proposals only after it has been shown that they are affordable and offer taxpayers better value for money than a publicly funded alternative. Unlike the previous Government, we will not allow any clinical services to be included in a PFI deal. We are also making the whole PFI process more open, and we have considered how better to protect the interests of staff who are included in PFI deals.

I know that there are concerns, both in the House and beyond, about PFI in the NHS, but public-private partnerships are here to stay. As my hon. Friend the Member for Watford (Ms Ward) said, patients are not worried about whether hospitals are built through cash from the PFI or through cash from the Exchequer; their concern is, rightly, that new hospitals should be built.

The situation in west Hertfordshire is complex. The proposal to build a brand new hospital in the health authority's area has been submitted, with nine others, to the capital prioritisation advisory group. I established CPAG to advise me on which major hospital developments were most needed in the NHS—under our arrangements, NHS needs, not the whims of the private sector, but to decide where new hospitals will be built. I will shortly be considering CPAG's advice on the proposals in west Hertfordshire, but I will not give the go ahead to any new hospital unless it is part and parcel of a proper local plan for delivering and sustaining high-quality local health services.

Ms Ward

Will my hon. Friend assure me that he will not allow the proposals to be acted on until the health authority has answered the genuine points that have been raised by members of the public and the local authority and until it has investigated every other option, which it has so far failed to do?

Mr. Milburn

I shall speak about that in a moment. In the consultation process—in west Hertfordshire or anywhere else—I expect those who play a decision-making role in the NHS to listen seriously to what concerned patients, organisations and communities say. Inevitably, difficult decisions have to be taken, but I expect to see evidence that local concerns have been analysed extremely carefully.

Any proposal for local hospital developments must be part and parcel of a properly worked through local health plan to deliver quality and sustainable services. There have been far too many cases of ad hoc hospital developments, which have proved to be unsustainable precisely because they were not considered as part of the local configuration of services.

There is no final agreed plan for the make-up of local hospital or broader health services in west Hertfordshire. The health authority has consulted widely on its radical proposals for changes to hospital services. As my hon. Friend the Member for Hemel Hempstead is aware, the health authority agreed at its public meeting on 30 October to take a staged approach in changing local health services. That was in response to the strength of local feeling and to the need to provide further information on the authority's proposals. Indeed, he and my hon. Friend the Member for Watford have reflected those concerns today.

As I understand the position, the South-West Hertfordshire community health council will formally object to the proposals, so the matter will be referred to Ministers. I am sure that my hon. Friends will understand that my position as a Minister prevents me from commenting on the proposals at the moment. If the local community health council formally objects to the proposals that the health authority adopts after the consultation period, the matter will be referred to me for a decision.

I assure my hon. Friends that the Department of Health is fully committed to the provision of high-quality, up-to-date treatment in a modern and responsive health service. If the matter is referred, Ministers will uphold the health authority's decision only if we are satisfied that adequate alternative services are available. I have heard what my hon. Friends have said and I assure them that their points will be borne fully in mind when we consider the matter. I also give the specific assurance that I will not approve any proposal through the CPAG process for a new hospital until Ministers have considered the make up of health services in the area.

I have listened carefully to what my hon. Friend the Member for Hemel Hempstead and others have said. I know that their concerns are shared by many people in the community. Difficult decisions have to be taken, not least because of the financial problems that the previous Government left in the health service.

My hon. Friend also knows that the NHS in west Hertfordshire and elsewhere cannot stand still. Progress in medical technology and in doctors' training and the alterations in our population and in public expectations are all driving change. No change is not an option for the NHS. Our job is to ensure that change delivers improvements in the care and treatment of patients. I assure him that any proposals for change in west Hertfordshire that the Government consider will be judged against that criterion.

It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.