Private Finance Initiative (Hansard, 28 January 1999)

§ 1. Mr. Dennis Canavan (Falkirk, West)
What assessment the Treasury has made of the (a) advantages and (b) disadvantages of private finance initiatives. [66514]

§ The Chief Secretary to the Treasury (Mr. Alan Milburn)
The private finance initiative is one of the forms of public-private partnership by which the Government are harnessing private sector finance, innovation and management skills to modernise our infrastructure and improve public services. This Government, unlike the previous Government, are making the PFI work in areas such as the NHS. Since the election, we have signed £4 billion of PFI deals.

§ Mr. Canavan
Will the Treasury investigate reports that a PFI secret deal led to three Edinburgh hospital buildings and their land being sold off to a private consortium, which stands to make £200 million by developing the land for housing, and will collect £30 million of public money per year for 30 years to build a new hospital, which will never become public property? Is it not a scandalous misuse of public money to encourage public asset stripping and privatisation of the NHS?

§ Mr. Milburn
Those are more rightly matters for my right hon. Friend the Secretary of State for Scotland. However, there are no PFI secret deals. This Government, unlike the previous Government, have opened up the whole process of PFI, so that local communities, the staff affected by the deals and the public who are served by the facilities that are built through the PFI have the right to know from the outset what the PFI is delivering for those communities. Unlike the previous Government—who managed to spend £30 million on lawyers' and accountants' fees in the NHS to try to get the PFI going, but did not build a single hospital—this Government have launched the biggest single new hospital building programme that the NHS has ever seen. We should be proud of that record.

§ Mr. Owen Paterson (North Shropshire)
The experience of my constituents in the village of Hodnet—who want a bypass built by means of the PFI—directly contradicts the previous two replies from the Minister. As soon as the Government came to power, there was a review, new rules were laid down and the bid was prepared. However, another review has been launched. When will this reviewing stop, and when will clear guidelines be laid down so that people know where they stand?

§ Mr. Milburn
As usual, the Tory party is living in a dream world rather than the real world. The Government have signed £4 billion of PFI deals since the general election. What is more, during the next three years, we will sign a further £11 billion of PFI deals to modernise our health service, to improve standards in education and to improve the infrastructure that the hon. Gentleman talks about in local communities such as his own.

§ Mr. John Home Robertson (East Lothian)
May I welcome the fact that the Government have been able to go ahead with the building of a new Edinburgh Royal infirmary? The people of my constituency and my part of Scotland have been waiting for that for years and years. Does my right hon. Friend agree that it is rather bizarre that my hon. Friend the Member for Falkirk, West (Mr. Canavan) regards that as a scandal? It is very good news.

§ Mr. Milburn
My hon. Friend—[Interruption.] Hon. Members should stop chuntering for a moment. My hon. Friend is absolutely right. We fought the general election on a manifesto commitment to reinvigorate the PFI, and that is precisely what we have done. The consequence is being felt in communities up and down the land, and not just in terms of the NHS. We have signed our first PFI deals in the education sector for new schools to be built—including in the constituency of my hon. Friend the Member for Falkirk, West (Mr. Canavan), where Falkirk council has concluded a PFI deal to replace five existing schools, with £65 million of new investment. There is more investment to come, with £350 million of PFI deals in the schools sector during the next three years. That is an important and successful record. In addition, not only are we making the PFI work, but we are doubling the public sector net investment in our economy, so sadly neglected by the Conservative party.

§ Mrs. Margaret Ewing (Moray)
Pursuant to the right hon. Gentleman's answer to the hon. Member for Falkirk, West (Mr. Canavan), will the Minister answer a straightforward question? Does he believe that one disadvantage of the PFI system is that improvements in the public infrastructure will never become part of public ownership?

§ Mr. Milburn
Of course not. These deals are only given the go-ahead in the first place if it is demonstrated that they provide better value for money than the public sector comparator. There are strict rules about such deals in education and in health. Unlike the previous Government, we have been completely open about the comparisons between the public and private sector options to build.