National Health Trusts: Major Contracts (Hansard, 1 July 1996)

§ The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege)
My Lords, Royal Assent was given to this Act on 22nd May. No contracts worth more than £1 million have been signed since then. Information on private finance schemes worth under £1 million is not kept centrally.

§ Lord Haskel
My Lords, I thank the Minister for her rather disappointing reply. During the debate on the National Health Service (Residual Liabilities) Bill on 21st May of this year, the Minister said (at col. 785 of Hansard) that the Government had approved 54 private finance initiative projects worth more than half a billion pounds and that the reason for rushing the Bill through your Lordships' House was to unlock this work. Can the Minister tell the House what is holding up signature of these contracts?

§ Baroness Cumberlege
My Lords, I well recollect that debate. I also remember that the noble Lord said that to rush into taking on more liabilities in an area not fully understood would only end in tears. During that debate the noble Lord was anxious that the Government should not rush into these schemes but treat them with caution and weigh them up with discretion. We have done that. There are a number of schemes in the pipeline. There are now 57 schemes worth over £1 million, and we expect to sign several of them in the next few months.

§ Baroness Hayman
My Lords, can the Minister give the House an estimate of the costs incurred by the NHS on external consultancy and advice on potential PFI schemes? Is it correct that some of the major schemes have run up bills for legal and financial consultancy of several million pounds each without having reached signature? Is the noble Baroness aware that there is near desperation in some parts of the service about the seeming impossibility of getting much needed schemes under way because of the almost Kafka-esque complexity of the current PH rules and their infinite ability to delay and absorb money without producing anything?

§ Baroness Cumberlege
My Lords, one of the tests of a PFI scheme is that it should give better value for money than conventional financing. Certainly, those schemes which have been completed indicate that the process has been very good value for money. I cite 1213 Havering Hospital where the savings on the entire scheme were 26 per cent. It improved the standard and quality of services and it guaranteed savings. It was considered to be a great success. Of all the schemes that have been completed, we have no knowledge of any that has not produced a better service than would have been produced using conventional finance. The tradition in the health service was that the building of a hospital took 20 years. Many of these hospitals have been built within five or six years.

§ Lord Strabolgi
My Lords, can the noble Baroness say how many contractors have withdrawn from schemes under the PFI? Is she aware that these include the Sheffield University and Royal London Hospital Trusts? What is the reason for this lack of confidence on the part of contractors?

§ Baroness Cumberlege
My Lords, if one has to test schemes, obviously some will not succeed. At the moment 22 have been completed and 12 are under way. We expect other major schemes to be signed within the next few months.

§ Baroness Jay of Paddington
My Lords, is it not a matter of concern that several major hospitals have been publicly promised by the Department of Health—for example, in Carlisle, Amersham, Norwich, Durham and various parts of the country—and the contracts appear to be in almost permanent suspension because of the hiatus in the private finance initiative? As my noble friends have reminded the Minister, the assumption was that this would be sorted out by the National Health Service (Residual Liabilities) Bill. If the finance is not forthcoming, how do the Government intend to meet the prospective hospital requirements and keep the promises that they have made about new hospitals?

§ Baroness Cumberlege
My Lords, one of the great successes of the private finance initiative is that £½ billion of extra funding has been attracted into capital programmes in the NHS. We accept that some of the initial time taken may be a little longer but, considering the project as a whole, the construction of a particular unit or new equipment such as a scanner takes less time. That is obvious because of the strong incentives in the private sector to complete on time and contain costs. The added advantage is that the risks are transferred to the private sector.

§ Baroness Jay of Paddington
My Lords, I believe that the Question put by the noble Lord, Lord Haskel, was not concerned with relatively minor schemes like scanners but with major hospital building programmes. In view of the promises that have been made, can the Minister confirm that, for example, the initial scheme for Carlisle Hospital was agreed in 1989, the one for Norwich was agreed in 1990 and the ones for Swindon and Amersham were agreed in 1993?

§ Baroness Cumberlege
My Lords, that is very fast progress. My recollection of the NHS is that it took at 1214 least 20 years to build a hospital. This is much quicker. These schemes will get off the ground, but they are tested, and not every one will succeed. It would be nonsense to test schemes if there was a presumption that every single one would go ahead. We are determined to get value for money.