Private Finance Initiative

HC Deb 28 March 2000 vol 347 cc215-7

11. Dr. Lynne Jones (Birmingham, Selly Oak)

What assessment he has made of the effectiveness of private finance for health capital projects. [115158]

The Minister of State, Department of Health (Mr. John Hutton)

The private finance initiative option for every national health service capital investment project must demonstrate that, overall, it is better value for money when compared to the publicly funded alternative, the public sector comparator. Under this Government, 18 major hospital PFI schemes worth nearly £1.4 billion have been approved and are currently under construction. That is the biggest capital investment in the history of the national health service.

Dr. Jones

My hon. Friend will be aware that approval in principle has been given for a new hospital to replace the Selly Oak and Queen Elizabeth hospitals in south Birmingham. Although there is considerable public support for the new hospital, there is anxiety that the additional cost of private finance could lead to the provision of fewer beds and a reduced service.

I note my hon. Friend's reply, but the Select Committees on Health and on the Treasury have exposed the lack of rigour and transparency in the assessment of value for money of private finance schemes. Will my hon. Friend assure my constituents that those problems will not arise in the case of our hospital, and that if, after a fair evaluation, it is found that the public sector comparator offers best value, adequate public capital will be made available so that our hospital can go ahead?

Mr. Hutton

We have not yet received the outline business case on the investment in Birmingham to which my hon. Friend referred. However, I hope that I can allay some of her fears about the issues that she has raised. In total, the first wave of major PFI schemes will provide slightly more beds than would have been the case if they had been built under the conventional public capital method.

May I also remind my hon. Friend that the Government commissioned Arthur Andersen to examine PFI projects? That report, published in January this year, showed that, on average, PFI projects were delivering savings of 17 per cent. over traditional forms of procurement. The evidence of value for money certainly exists, and I am sure that my hon. Friend will join me in welcoming the recent finding of the Select Committee on the Treasury that

the promotion of PFI projects has clearly led to a considerable and welcome increase in investment in our hospitals.

Mr. Edward Garnier (Harborough)

The Minister may know that it was private finance alone that built the breast cancer unit at the Glenfield hospital in Leicestershire, and that it was the Secretary of State for Health's predecessor who opened the unit last November. It is now threatened with closure. When will the Minister, on behalf of the entire ministerial team, be able to make a pronouncement about the future of the unit? I appreciate that the magic word "consultation" is being bandied about, but the people of Leicestershire and of the Trent region need to know the Government's attitude towards the future of that hospital.

Mr. Hutton

If changes in services are proposed in the hon. and learned Gentleman's constituency or anywhere else, there must be proper public consultation. If issues are raised in the course of that consultation—for example, if a community health council opposed the service reconfigurations that were being proposed—it would be for Ministers eventually to decide the outcome of that process. We are not there yet, but there will be plenty of opportunity for the hon. and learned Gentleman to raise those concerns with me and my right hon. Friend the Secretary of State in future months.

Mr. Andrew Reed (Loughborough)

Does my hon. Friend accept that the public sector route has a vital role to play in rebuilding our national health service, and that we should not rely on private finance initiatives alone? On that basis, may I thank him and the rest of the team for financing the £9.5 million Loughborough hospital, which will start work this summer and is financed solely by the public sector? Will my hon. Friend visit that site, along with the Opposition spokesperson, the hon. Member for Woodspring (Dr. Fox), who visited it recently, to see Labour delivering its health promises?

Mr. Hutton

That is probably an invitation that I shall not be able to turn down, so I look forward to visiting my hon. Friend's constituency. Ultimately, what is important is what works, and what delivers the new investments and the new capital projects for the NHS on time and on budget. The PFI has an outstandingly good record on delivering those projects on time and on budget, but of course my hon. Friend is right to say that a significant amount of investment is still taking place through the traditional public sector capital route, and that will continue to be the case.

Mr. David Davis (Haltemprice and Howden)

I am glad to hear the Minister speak of the 17 per cent. advantage that an average PFI project has. As he has just commented, such projects are also significantly faster than the public sector route. Given that one of his problems with the extra money that he has will be capacity increase, can we look forward to a dramatic increase in the use of PFI to accelerate the increase in capacity in the health service?

Mr. Hutton

We want an expanded role for the private finance initiative. However, what matters not just for the right hon. Gentleman's constituents who are patients of the national health service, but for his constituents who are taxpayers as well, is that whatever route we take and whichever way we deliver new capital investment projects for the NHS, the system provides value for money. The PFI has shown its worth, and we are making sure that it will continue to play that role in future.

Mr. John Smith (Vale of Glamorgan)

I, too, welcome my hon. Friend's comments on the effective use of PFI. What counts is what works. Does he suspect, as I do, that civil servants are sometimes reluctant to consider other uses of private finance initiatives, not just for capital projects but for the shared use of facilities and other imaginative proposals that could allow us to retain vital health services in smaller hospitals, which have sometimes been under-utilised? I am sure that there are plenty of good ideas out there, but I sometimes sense a reluctance to push ahead with them.

Mr. Hutton

I reassure my hon. Friend that we are in the market for new ideas. We are examining all sorts of ways of encouraging the closer partnerships to which he has drawn attention. I am particularly interested in making sure that, in relation to social services, for example, we encourage greater use of the PFI as a route to getting some of the important reinvestment that we need. There is a clear difference, is there not, between the Government, who have delivered that capital investment through the PFI route, and the Opposition, who spent almost 20 years talking about it, but never built a single hospital?