§ 4. Jeremy Corbyn (Islington, North)What her estimate is of the rate of return of capital in schools funded wholly or partly by PFI contracts. [6689]
§ The Parliamentary Under-Secretary of State for Education and Skills (John Healey)I refer my hon. Friend to the written answer that he received on 16 October, at column 1182W. The rate of return to a private sector contractor in a schools PFI contract is fixed as part of the annual payment made by a local education authority for delivery of the services specified in the contract, and as such is a matter between the local education authority and its private sector partner. All PFI contracts in schools rave to demonstrate better value for money than public sector traditional procurement.
§ Jeremy CorbynDoes not the Minister accept that the traditional form of public sector funding of capital development in education is both cheaper and more accountable than PEIs? The evidence collected by the Treasury Committee on health PFIs, for example, shows that in many of them there is up to an 18 per cent. return on capital. Nothing like that rate of return has ever been paid by traditional funding methods in the public sector. 399 Is not it better for education to fund new developments directly through taxation, rather than bringing in the private sector to make money out of it?
§ John HealeyNo, I do not accept that private sector financing has no part to play. I remind my hon. Friend that PFI contracts can proceed only if the value for money is better than that of public procurement comparators. Payments to private sector contractors must be linked to levels of service. That brings benefits to the public sector in terms of new buildings and guaranteed high levels of maintenance.
You would not expect me to answer about the health service, Mr. Speaker, but we have no evidence of profiteering in the education sector. If my hon. Friend has, I would like to see it.
§ Mr. Crispin Blunt (Reigate)I support the gist of the Minister's answer, but I invite him to go slightly further and explain that the value of PFI contracts comes from the private sector not only building the capital assets but running them. Surrey county council has done that for schools in Surrey. Why do the Government need legislation to force Labour authorities to go down the same road?
§ John HealeyNobody needs legislation to encourage authorities, under whatever political leadership, to apply for PFI schemes: 90 out of 150 local education authorities have shown an interest in applying. Part of the benefit is that the risk over the long term of the contract period is transferred to the private sector. There are also benefits in freeing up head teachers from having to manage buildings and allowing them to concentrate on the curriculum. The hon. Gentleman may be interested to know that in one PFI contract the contractor's pay is directly linked to exam results.