HL Deb 19 June 1997 vol 580 cc1348-72

3.34 p.m.

Baroness Jay of Paddington

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Baroness Jay of Paddington.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 1 [Powers of NHS trusts to enter into agreements]:

Lord Brightman moved Amendment No. 1: Page 1, line 7, after ("agreement") insert ("(which includes a series of connected agreements)").

The noble and learned Lord said: The amendment seeks to clarify a short point which arises on the certification of what is called an externally financed development agreement. The purpose of the Bill, as the Committee will be aware, is to remove any doubt about the power of NHS trusts to enter into such agreements; for example, an agreement for a hospital project where finance is to be provided from the private sector.

The Bill is designed to set at rest any question that the NHS trust is acting ultra vires, and that those who provide the private finance may lose their money as a result. To be legally watertight under the Bill in the area of ultra vires, an externally financed development agreement will usually need to be certified as such by the Secretary of State. In practice, an important project is likely to involve a series of separate agreements, not necessarily all between the same parties, which together form the total package; for example, a project may involve the lease of a hospital site and such subsidiary matters as the provision of laundry facilities for staff and patients. The lease would normally be in one document in the usual form, and the laundry services would probably be the subject matter of a totally different document.

It would be inconvenient and cumbersome if everything involved in the project had to be contained in one document. However, I have been told by the Financial Law Panel that the department has indicated that it is its present intention to certify only one document in any project. Does that mean that if, for convenience, the project is contained in five separate documents, only one agreement will be certified, and therefore made legally watertight in the area of ultra vires, and that the other four agreements will not be certified and therefore can be vulnerable?

The amendment is designed to make it clear that the Secretary of State can be asked to certify all the agreements which form a particular project, by saying that the agreement includes a series of connected agreements. I beg to move.

Baroness Anelay of St. Johns

I thank the noble and learned Lord for his explanation of that legal point. If the amendment were to be considered necessary to ensure that agreements are properly certified and that no part of such an agreement remained vulnerable, is it not a pity that the definitions could not be contained within just one clause? As a layman, it is difficult sometimes to find one's way through legislation. I have had to read social security law and regulations over the past 20 years, and sometimes still feel no better off when trying to unravel them. Clause 1(5) contains definitions of two other terms which fall within subsection (3). I am referring to the terms "another party" and "facilities". If it were necessary to have the amendment to secure the underlying nature of the agreements, we might be able to look at having all definitions within one clause.

Baroness Jay of Paddington

I am grateful to the noble and learned Lord for employing his legal erudition to move the amendment. I, too, feel rather like the noble Baroness, Lady Anelay, that we are, as it were, amateurs in the legal minefield. I am also grateful to the noble and learned Lord for acquainting me with the reasons for putting down the amendment before he did so. The amendment, as he said, seeks to clarify the fact that a series of connected agreements may be treated as a single externally financed development agreement, and certified as such by the Secretary of State. I entirely appreciate the noble Lord's intention to improve and clarify the Bill, but my advice is that the amendment is unnecessary. The purpose of this Bill is simply to give bankers reassurance that NHS trusts have the power to enter into externally financed development agreements; in other words, private finance contracts. We have been in close contact with the banking community at all stages, and they have signalled their satisfaction with the Bill as drafted.

Their confidence in the Bill is not misplaced. My legal advice is that the Interpretation Act states that the singular includes the plural. This allows the Secretary of State to certify a group of agreements as constituting one externally financed development agreement. This, in practice, is what we see happening.

Typically, a major PFI scheme involves a contract between the NHS trust and the private sector consortium, and a series of further contracts between the consortium and its individual members; in other words, a whole group of contracts. However, it is unnecessary to certify each of them separately.

What we envisage is what already happens in the leading PFI schemes: there is an overarching project agreement between the trust and the consortium which incorporates all the others by referring to them. The Secretary of State will issue one certificate which lists or refers to all the documents that constitute the externally financed development agreement—that is, the overarching project agreement and all the related contracts—and will certify that they together constitute such an agreement. Certification of the project agreement will therefore provide certification of all the related contracts.

It is, of course, true that this approach would not allow the certificate to cover contracts made subsequent to the certificate, which might happen if, for instance, a member of the private sector consortium were replaced by another company. However, I am advised that the proposed amendment would not solve that problem. The easiest way of covering such contracts would be to amend the overarching project agreement to include the new contract and to issue a new certificate. This could also be done if a contract were accidentally left out when a project agreement and its related contracts were being certified. I have to say that, given the time, money and amount of legal brain power applied to these agreements, I find that particularly unlikely.

Some lawyers have asked what would happen if a satellite or subsidiary contract fell outside the scope of the Bill. In practice, it is hard to see this happening since in Clause 1(3) the Bill refers very loosely to agreements "in connection with" the provision of facilities to enable a trust to discharge its functions. If the satellite contract were omitted accidentally from the overarching project agreement, the agreement could, as I have said, be amended and recertified. If the satellite contract were not related to the functions of a trust, it is hard to see why it would form part of the PFI scheme in the first place.

While we understand that the intention behind the amendment is sound and is meant to be helpful the approach we are taking makes it unnecessary. We are grateful to the noble and learned Lord for tabling the amendment, but hope that he will not press it.

Lord Brightman

I am grateful to the noble Baroness for that explanation, which is entirely satisfactory and relieves me of all anxieties. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Ezra moved Amendment No. 2: Page 1, line 13, at end insert— ("() he is satisfied that the provision of those facilities in the circumstances proposed is in the interests of the population of the area served by the trust and is in the wider public interest; and").

The noble Lord said: In moving this amendment I shall speak also to Amendment No. 3. They derive from the experience at Norwich in relation to the Norfolk and Norwich Hospital project. Reference was made to that during our Second Reading debate on 3rd June by the noble Baroness, Lady Cumberlege, my noble friend Lord Addington and the noble Lord, Lord Rea. Therefore, there was reference to the issue from all sides of the House.

The purpose of the amendments is to obtain reassurance that when the Secretary of State is deciding to give his certificate under Clause 1(2) he must be sure that, according to Amendment No. 2, the proposal he is certifying is in the local and wider public interest. Amendment No. 3 provides that he must make sure that the proposal he is certifying has been the subject of adequate public consultation.

The relevance of the Norwich affair is that the project, although subject initially to detailed public consultation, was subsequently changed to a material degree. In particular, a smaller existing hospital within the city of Norwich, which was to have formed part of the project as initially discussed, was scheduled to be closed under the revised proposition. That has created a considerable amount of public concern. It is for those reasons that the amendments have been tabled. I beg to move.

3.45 p.m.

Lord Rea

The amendments could well be categorised as constructive opposition, which is the way the Liberal Democrat Party has said that it will behave certainly during the first part of the Government's term in office. They allow my noble friend to speak on a topic of strong local concern in at least one part of the country. There is no doubt that the citizens of Norwich, as represented by their elected council, do not feel that, the provision of those facilities in the circumstances proposed is in the interests of the population of the area served". Nor do they feel that there has been, adequate public consultation". as provided in the amendments.

One of the pledges of the Labour Party in its manifesto was that health service provision should become more locally accountable, since the previous government steadily eroded local democratic representation on health authorities and trusts. A meeting of Norwich City Council just over a week ago resolved that: The proposals for a new district general hospital at Colney received planning permission from South Norfolk District Council and tacit approval for PFI-funding from the previous Tory Government, despite strong local opposition. Norwich City Council opposed the approval particularly on planning grounds: the proposals are environmentally damaging, economically damaging to the City and very poor in access for both service users and staff. Norwich City Council therefore resolves— To request an independent review of all decisions made with regard to new hospital provision in the Norwich area. This review to be held in public and 'transparent' in all details, including finance. The review to consider environmental impact, sustainability and access issues as well as economic impact". That is the first of a series of clauses. There are six other clauses.

I understand why the noble Baroness is anxious that the Bill should pass through this House unamended. One of the reasons is the ability to go ahead quickly with this and other schemes. However, this scheme in particular is very expensive, environmentally disruptive and opposed by local opinion. Surely it is time to step back and not be in such a hurry. Alternative and much cheaper schemes have been drawn up in outline and costed. Surely they should be examined. It is unnecessary and unfair to suggest, as did my right honourable friend Mr. Alan Milburn, that if the current scheme is not accepted lock stock and barrel Norwich will go to the back of the queue. Is that fair when a much cheaper and more acceptable alternative has been drawn up in outline by a highly respected architect and is waiting in the wings?

Baroness Jay of Paddington

I am grateful to the noble Lord, Lord Ezra, for reminding us that all those important decisions about private finance schemes should not be taken by politicians or bureaucrats locked away in ivory towers, without consideration for the public in whose communities they will be built and who will use the new hospitals. I very much take on board the specific points made by the noble Lord and my noble friend Lord Rea about the Norwich situation. But as my honourable friend Mr. Milburn, who has been referred to, made clear in another place in announcing the wider review of PFI in health, on 10th June, in future we must be satisfied that the projects have taken due account of the needs and wishes of local communities. I am sure that all Members of the Committee will wish to endorse those sentiments.

However, despite sharing the noble Lord's concern on this matter, I cannot agree that the right way to address it is by amending the Bill in this way, as there is already legislation in place which requires consultation on such matters.

It is not possible to consult every single member of the public on every single local health service issue. Instead, the Committee may be familiar with the expression that the community health councils are the "patients' watchdog.". Paragraph 1 of Schedule 7 to the 1977 NHS Act states that it is the, duty of a Community Health Council … to represent the interests in the health service of the public in its district.". We continue to acknowledge the pivotal role played by community health councils in articulating the views of local people, and they are required to be consulted on important changes to health services. Regulation 18 of the 1996 Community Health Council regulations state: It shall be the duty of each relevant Health Authority to consult a Council on any proposals which the health authority may have under consideration for any substantial development of the health service in the Council's district, and on any proposals to make any substantial variation in the provision of such service". I am sure your Lordships will agree that a major PFI development is precisely the sort of "substantial development" on which a council could expect to be consulted. Given the requirement for consultation which already exists, we cannot agree that the Bill should be amended to make yet further provision.

But my honourable friend, Mr. Milburn, is looking at the whole prioritisation of PFI schemes. He has made it clear that in the future, that will be done on the basis of major capital schemes and their relevance to the health service. Service need will be paramount. These conditions build upon the existing, well-established framework for approving major capital schemes as set out in the Capital Investment Manual, which requires the Department of Health and the Treasury to give their approval for major projects. Those bodies are also able, at a stage in the approval process long before the certification point with which this Bill is concerned, to ensure that consultation has taken place and that the interests of all parties have been taken into account in deciding whether a scheme should progress. That is the general point of the amendment which has been put forward and which lies behind the contribution from my noble friend Lord Rea.

I understand that there are particular anxieties in Norwich in relation to the proposals for the building of the hospital there. But the health authority carried out a formal consultation along the lines of the general principles that I have discussed. Although I understand there is controversy about it, the people in the local community realise that it is the best possible solution to the local problem of where to build the hospital.

Perhaps I may quote from a letter to my honourable friend in another place from one of the Members of Parliament for Norwich, Mr. Charles Clarke. He said that when he was elected he reviewed the facts about the situation in Norwich in relation to the new hospital and had a series of meetings with Ministers and civil servants: It became very clear to both myself and my colleague, Dr. Ian Gibson", who is another Member of Parliament for Norwich, that the real choice here was between the particular site which was being proposed and no new hospital at all". Without in any way wishing to sound heavy-handed in relation to this matter, that really is the situation. As my noble friend Lord Rea suggested, there are particular problems in that community. The hospital has been given a high priority in my honourable friend's review of the PFI in the health service. There are many other competitors for immediate funding who are wanting to go ahead with their contracts and who have the interests of their local community at heart. I am afraid that it is the case that because of that prioritisation system, any project where there has been a problem, which has been properly reviewed and where discussion has been going on for many years, will find itself pushed back down the queue.

However, I hope that the noble Lord, Lord Ezra, will understand that the specific legislation which is in place will allow proper and appropriate consultation to be held on future schemes. Proper consultation has taken place on the specific matter that he raised, although I know that subsequent controversy has occurred. Given that it is also in the interests of the whole NHS building programme which lies behind this measure to go ahead as quickly as possible, he will find it unnecessary to press the amendment.

Lord Ezra

I thank the Minister for her full answer to the issues raised by the amendments. I am reassured by what she said: that there is already in place in other legislation an obligation to carry out full public consultation and to consider the interests of the local population and any wider areas which may be involved. Therefore, on those grounds I agree that it does not seem necessary to introduce such an obligation in the present Bill.

However, the second reason for moving the amendments was to relate them back to the Norwich case which seems to have been particularly long drawn out and complicated. I have done that. We referred to it on Second Reading and it has been referred to again now. The Minister must be well aware that there is continuing concern about that issue. Having achieved my two objectives, I beg leave to withdraw Amendment No. 2.

Amendment, by leave, withdrawn.

[Amendment No. 3 not moved.]

Lord Ezra moved Amendment No. 4: Page 1, line 25, at end insert ("other than services provided by professional staff which have direct impact on patient care").

The noble Lord said: I move this amendment on behalf of my noble friend Lady Robson who unfortunately cannot be with us this afternoon due to other urgent commitments.

The purpose of the amendment is very simple and again relates back to the discussions that we had on Second Reading. The concern is that the reference to "services" in the Bill does not make it clear that that would exclude clinical services.

There seems to be general agreement by the Government and everyone else that clinical services should not be affected by any project by private investment; and that those should always be kept apart and fall within the public domain.

The wording used here to cover that point is proposed by the BMA. Having looked at the matter very carefully, that is what it proposes. I can read it out in full; but in summary the BMA defines clinical services as services provided by professional staff, whom it describes as doctors, dentists, pharmacists, nurses and other health professionals, which have a direct impact on patient care. Those are the words used in the proposed amendment.

The BMA then goes on to describe in full what it means by those services. I do not need to detain the Committee by going through those. Therefore, here we have the wording put forward by the BMA to support the views already expressed and assurances given by the Secretary of State for Health when he spoke to the Royal College of Nursing in May. He said that the Government would keep to their promise not to extend private finance to include clinical services. At a later date, Mr. Alan Milburn MP, Minister of State for Health, spoke in very much the same terms and in our debate on 3rd June the noble Baroness, Lady Jay, (at cols. 612 and 613 of Hansard) said very much the same thing. There is no doubt about it at all; that is the Government's intention. The purpose of the amendment is to put that intention on the face of the Bill. I beg to move.

4 p.m.

Lord Jenkin of Roding

I find the amendment as worded extremely obscure. The noble Lord, Lord Ezra, referred us to the brief of the BMA, but by merely excluding services, which have direct impact on patient care", he would render the subsection nearly meaningless. However, when one looks at the brief of the BMA, it makes specific reference, as the noble Lord said, to diagnostic services such as radiology, pathology and clinical biochemistry.

The only point that I should like to make at this stage is that I believe it would be a great pity if the Government were to rule out the possibility of a PFI scheme for those services. I say so for one overwhelming reason. There must be very few radiology departments and clinical pathology departments where the professionals involved could put their hands on their hearts and say that they have all the equipment that they need. My experience is that most departments have been calling for some years for an upgrading of their equipment to take advantage of modern technology, to be able to buy new machines and, therefore, provide a very much better and often—especially in the case of pathology—much quicker service.

There is a second angle to the matter. Both this Government and the previous one have been looking for more collaboration in such fields for trusts, and perhaps neighbouring trusts, to form consortia to provide a more effective and cost-effective service in support of the substantive clinical services. It would be quite impossible to achieve that aim on the basis of no additional capital expenditure. I say impossible, but that is perhaps an exaggeration. There may be cases where it could be done. However, in the majority of cases, the clinicians and the technicians who provide a great deal of those services—although I am not clear whether they have a direct impact on patient care—and the other clinical services, for example, medicine, surgery, gynaecology, and so on, that need diagnostic services, would be far more enthusiastic if they thought that a scheme of rationalisation, or of collaboration, between neighbouring trusts would bring with it the prospect of substantial additional equipment, such as might be provided under a PFI scheme, than would otherwise be the case.

Therefore, with the greatest of respect to the noble Lord, I believe that the BMA has got it wrong. By seeking to rule out any PFI for these diagnostic services, we would in many cases rule out necessary improvements in the quality and cost-effectiveness of such services. When the Minister replies, I hope that she will take full account of that view. If the Government are to follow through what may have been their intention when the Secretary of State spoke generally at the conference of the Royal College of Nursing—namely, that they were intending to exclude such services—I believe they will find the improvements that they seek to make much more difficult to achieve. I cannot believe that that is their intention.

Lord Monkswell

The noble Lord, Lord Jenkin, has actually highlighted the difficulties that we have with the whole business of PFI. In contributing to the debate on the basis that amendment talks about services, the noble Lord mentioned capital equipment. That is the sort of confusion about which we need to be most careful. We all recognise the worry that clinicians and doctors have that they may end up being employed by a private company rather than the National Health Service. That is the main worry. However, the difficulty is where you draw the boundary. It is all very well for the BMA to say that it is concerned about the professionals with whom it works closely and that, "We should be protected and our immediate colleagues should be protected". Indeed, we recognise the justification of that concern, but it is not just them; it goes into other areas.

The amendment refers to, professional staff which have direct impact on patient care". There are many other white-collar workers working in a hospital; for example, the manager of the cleaning staff, the manager of the catering staff or the manager of the boilerhouse. Which one of them does not have a direct impact on patient care? If they do not do their job properly, surely that impacts on patient care. As I said, it is most difficult to draw the boundaries.

There is one particular risk that I foresee in providing reassurance to those who are worried about the possible privatisation of patient care. If we set a list of those services or professions which could be construed as being directly involved, we effectively say that everything else that is not on the list is available for privatisation. We must be very careful in that respect. When considering the issue raised this afternoon by the Front Bench opposite about the review which is taking place, the question was posed in terms of the extension of charges. In any review process, I should like to think that we would actually consider how we can eradicate the charges that we have at present. We must think in both directions.

There needs to be some mechanism to provide reassurance not only to the professions involved but also to the public at large that the use of PFI for the next year or so, just to keep the capital building programme going, is not the thin end of the wedge of privatisation. I am fairly confident that my noble friend the Minister can provide that assurance.

Lord Winston

I find myself completely in agreement with the spirit of the amendment moved by the noble Lord, Lord Ezra. However, I also find myself, most surprisingly, in agreement with the noble Lord, Lord Jenkin, over the issue of definitions. It is impossible to define what is a patient service. I should like to extend the proposition made by the noble Lord to include, for example, the operating theatre. There are many examples in the working of a large general hospital where there is urgent need of investment which would pertain to, reflect and be important for patient services, which really cannot be distinguished.

What we need from the Government is an undertaking that we will not have a creeping privatisation of the National Health Service. I am sure that that is the spirit of this Government. I hope that we can look forward to hearing some kind of reassurance from my noble friend the Minister in that respect. That is the best we can hope for if the Bill is to proceed as it must.

Baroness Cumberlege

While I very much respect the views expressed by the noble Lord, Lord Ezra, we on these Benches cannot support the amendment for the two reasons given by my noble friend Lord Jenkin of Roding. First, we believe that the approach is too centralist; and, secondly, we have difficulty with the definition of what does or does not have a direct impact on patient care. We are back into those grey areas which so bedeviled the Minister on Second Reading. As the noble Baroness will remember, I pressed her during that debate to define what she meant by the definitions regarding subsection (3) referred to in Clause 1(5). At that time she was unable to do so.

When looking at the BMA evidence—and I am most grateful to the association for sending such evidence to me and other Members of the Committee—it is clear that the BMA has difficulty in defining clinical services. It starts with a list but there is a caveat at the bottom of the list which states that it is not exhaustive. That is the problem with lists. It is far better to build in a degree of flexibility. Those of us who do the weekly shop know how difficult it is to stick to a list and how much we would miss if we did so. We would have none of those little luxuries which make life worth living.

The RCN does not even attempt to define what is meant by clinical services. Although I would expect the new Labour Government with their roots embedded in a history of centralised bureaucracy, to deny local people the power of decision making, I am surprised and sad that both the BMA and the RCN are denying their members the choice which we gave them in our clear policy contained in the National Health Service (Residual Liabilities) Act which covered this ground.

At Second Reading of this Bill the noble Baroness, Lady Jay, was clearly not ready or prepared to define services. In answer to the probing questions that I put she admitted that although the Government had undertaken to present the Bill to Parliament, they had not yet defined what they meant by services. That was unlike the previous government. When I was asked at the Dispatch Box by the noble Baroness during the passage of the National Health Service (Residual Liabilities) Bill what was the position regarding clinical services, I gave a clear answer; indeed, one which her noble friend Lord Carter had no problem at all in understanding. I am glad that the noble Lord is present to listen to this part of the debate. My reply was: The noble Baroness also asked about the privatisation of clinical services. I remind her that it is no part of the Government's policy through PFI to transfer the delivery of NHS clinical services into the private sector … However, if a trust explores local arrangements for private sector provision of some clinical and clinical support services we would not stand in its way. As the noble Lord, Lord Carter, said, it is a matter of local determination and it cannot be carried through without the support of clinicians. If a PFI project is submitted for approval and its viability depends on the privatisation of clinical or clinical support services which does not have the consent of local clinicians it would not receive departmental backing".—[Official Report, 21/5/96; col. 785.1 With our policy the decision was left for local determination.

It seems to me a great pity that the people in the service, doctors, nurses, managers, scientists, laboratory staff and so on, who have by far the greatest knowledge of the local situation and of what will work both geographically and professionally, are, under this Government's proposals, being denied the power to influence their own destiny. The Government's approach is to ignore all that wisdom and understanding and to deprive local clinicians of their rightful opportunity to influence the shape of their new facilities—as highlighted by the noble Lord opposite—and give the best possible service to patients. Instead, they will have to conform to a template set centrally by a remote bureaucracy.

I understand from a letter which the noble Baroness sent to me yesterday evening—for which I thank her—that there is to be a list of which services may or may not be included in a PFI contract—no local decision making but a central government list, a diktat. While I have a sense of relief that the Government are at last getting their act together on this part of the Bill, I have serious misgivings that not only will the list be deeply problematical but, like all lists, it will prove to be rigid and inflexible.

One of the great strengths in the 50 years' life of the NHS has been its ability to respond remarkably well to advances in modern technology; to increasing consumer demand; to an ageing population; and to the shift away from institutional care to looking after people in their own homes. Many of those challenges have been met through a sharing of skills and flexibility in working. The enemy of innovation is to place people in a strait-jacket and to give them titles from which they cannot escape. That is exactly what the Minister proposes to do. The Government's unimaginative, rigid and centralised approach will, I fear, set in aspic some of the very attitudes which in extreme cases verge on professional tribalism. I urge the Minister, whom I know does not lack flair and imagination, to try to persuade her colleagues to trust those who work day in, day out, treating, caring and managing patients, for it is they who know and in our policy it is they who would have been trusted to make the important local decisions.

The noble Lord, Lord Ezra, said that he was in no doubt about the Government's intention. I admire his certainty. I refer to the document given to me by the Minister which contains the speech made by her colleague, Mr. Milburn, when he met key stakeholders on 10th June 1997. He said in that speech: Definitions of clinical service can he vague, especially in the area of so-called clinical support services, and I have commissioned advice on this thorny issue. I understand and recognise the benefits of including service elements in the current model of PFI scheme". That raises a whole series of questions. Perhaps the noble Baroness can give a definitive statement as regards what her colleague was saying on that occasion.

Lord Rea

My noble friend will be pleased to hear that I shall not say a great deal on this amendment except to record my view that the noble Baroness, Lady Robson, in tabling the amendment, and the noble Lord, Lord Ezra, in moving it, have performed a useful task because it allows my noble friend further to clarify the Government's position on what is certainly a thorny problem.

4.15 p.m.

Baroness Jay of Paddington

I thank the noble Lord, Lord Ezra, and my noble friends who have spoken, including my noble friend Lord Rea whom I thank for his helpful intervention. We are at one in seeking to exclude clinical services from PFI agreements in the NHS. As has been said by several Members on different sides of the Committee, the difficulty is to define those services in a way which is legally and professionally watertight as well as making common sense. I am aware of the BMA's contribution to that and its proposal which is framed in the amendment.

Since Second Reading I have tried—possibly without the flair and imagination which the noble Baroness opposite attributes to me—with officials to draft exclusions which appropriately reflect the concerns which the noble Lord, Lord Ezra, and I share. Some of our discussions have more resembled linguistic philosophy seminars than drafting committees for a Bill. Every attempt we have made has met with objections. That is why I feel that I cannot recommend the amendment to the Committee although I sympathise with its purpose.

If we look in detail at the wording of the amendment, the Committee may understand some of the difficulties we are all encountering in attempting to enshrine this policy in primary legislation. The amendment refers to, services provided by professional staff which have direct impact on patient care". I can see endless scope for lawyers to argue over the exact definition of such terms as "professional staff'. My noble friend Lord Monkswell has already identified an area where that might happen. The phrases "direct impact" and "patient care" are other areas where I believe there is scope for enormous debate. For example, is the accountant who might negotiate effectively on the hospital's behalf covered by the definition, or the chef who prepares the food that helps the patient on the road to recovery? I am afraid I do not think the amendment helps us to get round those problems.

When noble Lords discussed this issue at Second Reading I reiterated the Government's clear commitment that we would not allow clinical services to be included in the PFI, or in public/private partnerships as they develop. That is an extremely important point and I am happy to repeat it here. We have decided that if we attempt to define clinical services on the face of the Bill we immediately introduce an element of doubt into the legislation whose sole purpose—as I have said before is to remove any doubt. I am sure that that is not what the noble Lord or the noble Baroness, whose name was to the original amendment, intended, but I believe that that is precisely what would happen. Once the banks and their lawyers detect any uncertainty of purpose this Bill will face trouble and the real overriding concern which it attempts to deal with, which is to get hospital building programmes off the ground as soon as possible, may be delayed again.

As there is not yet any agreed definition of the boundaries of "clinical services" and we cannot delay the Bill while the work is carried out to arrive at such a definition, my honourable friend Mr. Milburn, as the noble Baroness, Lady Cumberlege, mentioned, is looking again at the thorny problem. Members of the Committee are right to challenge the Government about their intentions regarding clinical services. It is right that we should be prepared to demonstrate that there is now more certainty than ever before about the commitment not to privatise the NHS.

Under the previous administration—the noble Baroness, Lady Cumberlege, explained it clearly—there was no commitment to exclude core clinical services from the PFI. Under this Administration, there is. It is our stated policy that clinical services are excluded from PFI and we will abide by that. However, there is ongoing debate—I acknowledge reference again to the fact—about some of the grey areas, in particular the definitions of so-called clinical support services. We have said that that is being addressed as part of the wider review of PFI in health which has already begun and which was announced on 10th June. It is obviously essential to consult widely on these issues before decisions are made, precisely to avoid the problems, to which the noble Baroness, Lady Cumberlege, referred, in somewhat alarming language, about central bureaucracy. Any schemes which come forward before the review is complete will be considered on a case by case basis. None will be allowed to proceed where projects transfer to the private sector categories of services which Ministers believe, in the interests of the health service, should be provided directly by the NHS.

Once the review is complete, we shall have a categorical statement of what may or may not be included in PFI. I am sure the Committee will understand that there would be no purpose in this widespread consultation if I sought to anticipate the detail of what that review may uncover. However, I am pleased to be able to answer one of the most pressing questions raised at Second Reading. I am sorry that this will disappoint the noble Lord, Lord Jenkin of Roding. We have decided that pathology and radiology services will be excluded from PFI. I know that there will be other services about which noble Lords may want immediate similar assurances, but I believe strongly that the review should be conducted before conclusions are drawn. Our commitments on pathology and radiology are given both to respond to specific issues raised by noble Lords during the Second Reading debate and, I hope, to act as a signpost for the future about our intentions.

Perhaps I may make one further general point. Before this Bill, it was theoretically possible for clinical services to be included in PFI. The Bill does not make it any easier for clinical services to be included. Its impact is neutral in that respect. The important difference is that the present Government are committed to excluding clinical services from PFI; previously there was the discretion which the noble Baroness, Lady Cumberlege, explained. The wider review of PFI will result in a list of services which may or may not be included. But to amend the Bill today to try to make the commitment more explicit would be a serious mistake because it would undermine the purpose of the legislation which is to move quickly ahead on the organisation and start on hospital building programmes.

Following what I hope is a convincing restatement of the Government's overall policy on this issue, and the specific exclusion of pathology and radiology services from PFI, which I am happy to announce today, I trust that the noble Lord will not feel it necessary to press the amendment.

Baroness Cumberlege

Before the noble Baroness sits down, perhaps I may thank her for that clear explanation. I am left in no doubt that the Government are seeking a centralised solution. What are the Government's objections to leaving it to local determination?

Baroness Jay of Paddington

The noble Baroness's question reveals the Government's clear difference in philosophy in relation to PFI: to make it possible for hospitals to be built under private finance initiative, we hope with further public-private partnerships. The previous Government's intention was to allow such wide discretion that privatisation of individual schemes could occur at local level. We do not want that to happen. We want there to be safeguards for what we regard as a National Health Service, with all the guarantees that were in our manifesto.

Lord Jenkin of Roding

Before the noble Lord, Lord Ezra, responds to the noble Baroness, perhaps I may say this. The noble Baroness recognises that her announcement today causes me much disappointment; it will also disappoint many people in the health service. Schemes which have been in preparation for perhaps a year or more because of the need to find sources of capital to invest in new, modern, up-to-date equipment will now be abandoned. Schemes for collaboration between neighbouring trusts will probably founder. I do not know whether the noble Baroness realises that that will happen. It will be for my noble friends to form a view. However I suspect that we may wish to return to the matter at a later stage of the Bill. If that is the Government's final word, I think that they have made a silly decision and I hope that the noble Baroness recognises that.

Baroness Jay of Paddington

I am sure the noble Lord would not expect me to agree that what has been decided is silly. I said that I knew he would be disappointed. I confirm to him that as regards the initial schemes under the PFI hospital building programme none of the concerns that he expressed is relevant.

Baroness Cumberlege

Perhaps I may follow my noble friend to ask this. As regards schemes which are being stopped in midstream, will there be compensation for the developers who have invested so much in them?

Baroness Jay of Paddington

I am not sure to which schemes the noble Baroness refers. I can only repeat what I said to the noble Lord, Lord Jenkin of Roding. As regards those schemes under immediate consideration, none of the issues that I have raised in relation to pathology and radiology services will be affected. If the noble Baroness is so concerned about retrospective financing, I hope that she will think about the £30 million spent under the previous regime in private consultancy fees which did not result in one hospital building programme being started.

Baroness Cumberlege

Perhaps I may help the noble Baroness. I refer to the speech by her honourable friend Mr. Milburn. He stated: Those schemes that fail to make the list, for whatever reason, will be invited to stop any further work, decline any tenders they have and stand down preferred partners if they have selected them".

Baroness Jay of Paddington

My honourable friend Mr. Milburn was referring to the strategy of the national programme on PFI schemes as regards which, as with the noble Lord, Lord Jenkin, there will be people who will be disappointed because their schemes will not be included in the priorities.

Baroness Cumberlege

Will the noble Baroness say whether or not they will receive compensation?

Baroness Jay of Paddington

That will be up to the individual contractors to discuss with those with whom they were forming the financial arrangements.

Lord Ezra

Having listened to this interesting and lively debate, I believe that my noble friend Lady Robson was fully justified in putting forward the amendment. I am pleased that the noble Lord, Lord Rea, pointed out that the purpose of the amendment was to initiate just such an exchange of views.

I fully recognise the difficulty of achieving a proper definition. I agree with all noble Lords who made that point; we foresaw that at Second Reading. On the other hand, we believe it necessary before the Bill proceeds further at least to attempt some definition of clinical services. As do those on the Government Benches, Members of the Committee on these Benches believe that clinical services should be excluded from PFI. The problem as ever is the grey area. The announcement made today by the Minister has eliminated certain aspects of the grey area; it has become clearer in colour. No doubt, as time goes on, the issue will be further clarified. I hope that there will be clarification before the Bill finally passes through another place. All concerned will then be well aware of what is involved in the reference to services. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Baroness Turner of Camden)

I must tell the Committee that if Amendment No. 5 is agreed to, I cannot call Amendment No. 6.

Lord Brightman moved Amendment No. 5: Page 1, line 26, leave out subsection (6) and insert— ("(6) The absence of a certificate given under this section shall not affect the validity of any agreement to which a National Health Service trust is a party and which it had power to enter into apart from the provisions of this section.").

The noble and learned Lord said: This amendment and Amendment No. 6 seek to clarify subsection (6). I do not expect that the discussion on this amendment will prove as absorbing as the debate we have just heard. Subsection (6), omitting a few words for brevity, reads as follows: Nothing in this section affects the validity of any agreement … if the agreement … has not been certified … but would have been an externally financed development agreement … if it had been so certified".

Any agreement would by definition be an externally financed development agreement if so certified. I therefore have difficulty in seeing what exactly the subsection does. I think, although I am not certain, that it probably seeks one of two things. Either it seeks to say that the absence of a certificate does not invalidate an agreement if the agreement is one which the NHS trust had power to enter into apart from the Act; or, more probably, it seeks to say that an uncertified agreement is valid if it is one which the Secretary of State would have certified if an application for a certificate had been made because the requisite conditions are fulfilled. The latter construction seems to accord with what is said in the Notes on Clauses.

I have tabled two amendments to cover the two possibilities. Amendment No. 5 takes out the whole of subsection (6) and states: The absence of a certificate given under this section shall not affect the validity of any agreement to which a National Health Service trust is a party and which it had power to enter into apart from the provisions of this section".

Amendment No. 6 leaves in paragraph (a) of subsection (6) but rewrites paragraph (b) so that the subsection as a whole would read: Nothing in this section affects the validity of any agreement made by a National Health Service trust if the agreement—

  1. (a) has not been certified under this section; but
  2. (b) would have been so certified if an application for a certificate had been duly made".

I wonder whether the Minister would consider referring the wording of subsection (6) back to the draftsman to see whether its purpose could be more plainly expressed. I beg to move.

4.30 p.m.

Viscount Ullswater

I support Amendment No. 5. At Second Reading when we discussed the vires of a trust in concluding PFI agreements, I made a point which I believe was correct in its interpretation; namely, that the Bill will cover major projects which are externally financed but will not cover a deal where the private sector contractor finances the project from its own resources. In her reply—and I am grateful to her for putting the reply forward—she said that Clause 1(6), the clause that is now subject to this amendment, provides that nothing in the Bill affects the validity of an agreement between a trust and a private contractor which does not have a certificate … Apparently there is clear legal advice that trusts are able to enter into contracts without a certificate and the certificate process provides concrete reassurance to the banks which are funding the larger schemes".—[Official Report, 3/6/97; col. 612.] That would seem to indicate that the Bill's concern is only with the larger projects and that perhaps there is not so much concern for the many smaller projects coming forward under the PFI initiative.

I wonder whether the Minister was in fact correct in the advice that she received on that occasion. As the noble and learned Lord, Lord Brightman, indicated, there are two halves to subsection (6). Clause 1(6) makes it clear that the section will not affect the validity of an agreement made by a trust only if, first, the agreement has not been certified under the section and, secondly, it, would have been an externally financed development agreement for the purposes of this section if it had been so certified". Because of the second part of the requirement, only those agreements that fall within the definition of an externally financed development agreement will be protected by Clause 1(6) as it stands. I am advised that the definition does not include those contracts where the contractor or service provider is providing the finance itself.

Amendment No. 5 would set out clearly on the face of the Bill that, where there is no other party (it does not use those words, but has that effect) and therefore no certificate, the validity of an agreement is not at risk. Does the noble Baroness not see that as a form of clarification—not seeking to amend the terms of the Bill but merely making the provision clearer on the face of the Bill in relation to the many smaller projects?

Baroness Anelay of St. Johns

The noble and learned Lord, Lord Brightman, commented that discussion on this amendment might not be as absorbing as on the previous one. It is no less welcome than the previous amendment. The noble and learned Lord is trying to clarify a matter which underpins whether or not contractors feel secure in the way in which they enter into agreements. The noble Viscount, Lord Ullswater, drew to our attention the worries that smaller contractors might face.

On this side of the Committee we welcome any clarification in subsection (6) provided that it does not necessarily hold up proceedings. However, we should not wish any such clarification to alter the policy intention as we see it behind subsection (6) as it currently stands. On that basis, we are neutral in relation to this amendment.

When I originally examined the noble and learned Lord's amendment I had some difficulty. At that stage, given the way in which it was phrased, referring to "any agreement", it appeared that agreements might go out with the normal range of PFI contracts. I am grateful to him for his explanation today. It clarifies that matter.

Provided the policy intention is not changed by this clarification, we remain neutral on the amendment.

Baroness Jay of Paddington

I am grateful to the noble Baroness, Lady Anelay, to the noble and learned Lord for his suggested amendment, and for the contribution made by the noble Viscount. As the noble and learned Lord said, the amendment reflects an interest in replacing the wording of the existing subsection (6). We have considered the amendment carefully. However, the legal advice we received is that it does not improve the meaning of the Bill, nor does it correct an error or omission. We feel that the existing text satisfies the reasonable concern that the validity of an agreement which meets the conditions set out in subsection (3) cannot be challenged merely because it has not been issued with a certificate under this clause.

The amendment suggests that the validity of any agreement into which a trust enters, whether externally financed or otherwise, should not be affected. However, the advice I received is that it is unnecessary to make the point since a trust has express powers to enter into such contracts—under paragraph 16 of Schedule 2 of the 1990 Act which set up the trusts. The Bill is specifically designed, as I have said several times both on this occasion and at the Second Reading, only to address the question of externally financed development agreements, about which the banks have expressed concern, and not any other kind of contract. It leaves the validity of self-financing deals entirely untouched. We therefore do not see any reason to accept the amendment. The self-financing equity funded schemes are not covered and it was never intended that they should be. I hope that that satisfies the noble Viscount. It was a point that he raised at Second Reading and I hope that my remarks clarify it.

In addition, there is the general financial case that I have made on a number of occasions that the banks, waiting to lend and go ahead with the schemes—and the noble Baroness, Lady Anelay, confirmed her point of principle in wishing to support that intention—have seen and agreed the wording of the Bill. Their legal advisers have made it clear that it satisfies all their outstanding concerns, which are related to major hospital building projects. If we now change the wording of the Bill with no good cause, it will risk creating doubt and delay, which I think we all agree would be unfortunate, on a matter which is generally agreed. Even if we do not agree on the detail, it is a timely piece of legislation. I therefore ask the noble and learned Lord not to press his amendment.

Lord Brightman

I have in my hand the Notes on Clauses. Paragraph 14 reads: Subsection (6) is designed to ensure that the validity of an agreement which meets the conditions set out in subsection (3) cannot be challenged merely because it has not been issued with a certificate under this clause". I ask why subsection (6) cannot simply read in this way, using the admirable wording of the Notes on Clauses: The validity of an agreement which meets the conditions set out in subsection (3) cannot be challenged merely because it has not been issued with a certificate under this clause".

Baroness Jay of Paddington

The noble and learned Lord raises an interesting and sensible point. I agree that anything which adds clarity in that way and simplifies the drafting is entirely to be welcomed. I am advised that the way in which it has been phrased is part of the legal understanding. Of course, I defer to the noble and learned Lord on a matter of such detail, but since the amendment seeks to ensure that the validity of all trust contracts should be included when the proposal is only dealing with the externally financed development agreement, it may unnecessarily over-complicate the issue.

However, if the noble and learned Lord would like me to take away his wording and refer it back to my officials, I shall do so. I believe that their response will be that the way in which the amendment is drawn up does not add to the clarity of the Bill as the wording is now expressed.

Lord Brightman

I am grateful to the noble Baroness and will take up her kind offer. Perhaps she would be good enough to refer this amendment back to the officials to see whether we have the best form of words. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 6 not moved.]

Clause 1 agreed to.

4.45 p.m.

Lord Brightman moved Amendment No. 7: After Clause 1, insert the following new clause—

ABSENCE OF RELEVANT DISCHARGE TERMS (" .—(1) Subsection (2) applies where—

  1. (a) the result of a determination or order made by a court on an application for judicial review or an audit review is that an externally financed development agreement does not have effect, and
  2. (b) there are no relevant discharge terms having effect between the National Health Service trust and a person with whom the trust has entered into the contract.
(2) That person shall be entitled to be paid by the trust such sums (if any) as he would have been entitled to be paid by the trust if the contract—
  1. (a) had had effect until the time when the determination or order was made, but
  2. (b) had been terminated at that time by acceptance by him of a repudiatory breach by the trust.").

The noble and learned Lord said: The ultra vires question is central to the purpose of the Bill, as the Committee will know. Although the Bill is welcomed by the financial markets for what it does, there are two aspects of the ultra vires risk which are not covered: first, the risk that a certificate of the Secretary of State might be quashed; secondly, the risk that a contract might be upset on the grounds that the NHS trust exercised the power given by the Bill for an improper purpose.

The point raised in my amendment was highlighted in a paper published by the Financial Law Panel in May 1996 entitled Transactions with Local Authorities. I am not certain whether the Committee is aware of the existence or background of the Financial Law Panel but it is a prestigious body chaired by a former Master of the Rolls, with a High Court judge among its membership and a representative of the Treasury as a "participating observer". Its purpose is to identify areas of uncertainty in the law affecting financial markets and to seek to remove them or limit their scope.

In connection with a proposed certification procedure affecting public authorities which the paper was discussing in 1996, the panel said that a third party, should be protected absolutely against the consequences of a transaction, which has been certified, subsequently being held to be ultra vires. The simplest approach would seem to be that, on the grant of a certificate, the transaction is conclusively deemed to be infra vires, so far as concerns third parties acting in good faith".

I have been assured within the past few days that this approach is strongly supported by the British Bankers' Association, notwithstanding their satisfaction with the Bill as a whole. The amendment which I am advocating is lifted straight from Clause 7 of the Local Government (Contracts) Bill which the Government have just introduced in the other place. There is a close connection between the two Bills. They have common objectives. The Long Title of the NHS trust Bill which we are considering reads: An Act to make provision about the powers of NHS trusts to enter into agreements". The local authorities Bill is described as: A Bill to make provision about the powers of local authorities … to enter into contracts".

There is the same wording in each Bill.

The local authorities Bill has the same kind of regime for certification of contracts as the NHS trust Bill. Clause 2(1) of the local authorities Bill reads: Where a local authority has entered into a contract, it shall be assumed that the local authority had power to enter into the contract if the contract is a certified contract".

So there are the two situations, one dealing with NHS trusts and the other with local authorities, with the same background and the same problems.

If a safeguard clause for third parties acting bona fides is contained in the local authorities Bill, why should not a similar safeguard be contained in the NHS trust Bill? I shall not bore the Committee by reading my amendment; it is in rather technical legal language. It is enough for me to say that it protects innocent third parties from loss if the certificate of the Secretary of State is set aside in precisely the same form, mutatis mutandis, as the protection set out in the local authorities Bill.

Perhaps I should add that Amendments Nos. 8 and 10 which are grouped with Amendment No. 7 are purely consequential. I beg to move.

Baroness Anelay of St Johns

The amendment deals with the absence of relevant discharge terms in contracts. As a layman, I approached it from the point of view of what it would mean to me if I were a contractor wishing to enter into a PFI agreement. As a contractor, I should expect that in signing the contract I would find that it would normally contain details about what would happen when it came to an unexpected end: that is, of course, unexpected to one of the parties. As a contractor, I should normally expect that those discharge terms would be written into contracts to detail what recompense I or the other party would have, depending on which one is considered to be the loser.

I then thought: what difference would the amendment make to the Bill? Perhaps as a contractor I started work in good faith, as the noble and learned Lord suggested. I started work for a trust thinking that it was a PFI contract. Then the contract turned out not to have been such a contract because a court decided thus upon a judicial review or upon an audit review. As I understand an audit review, it could be decided by an NHS trust that it had entered into a contract without having the appropriate resources to keep to the terms of the contract.

Let us say that the court made that decision. Then, under Amendment No. 7 proposed by the noble and learned Lord, the contractor still gets paid as the contract provides, even though there were no discharge terms within that contract. I assume that it makes the situation as though the National Health Service trust had repudiated the contract. To me it is a belt and braces amendment giving security to contractors and, as such, it would seem to be the sensible move. On that basis we would not oppose it.

Baroness Jay of Paddington

I am grateful again to the noble and learned Lord for his interest in trying to improve the Bill in this way. Ever since the idea of PFI was conceived and developed in detail what has been called a "safe harbour" clause in the contracts has been discussed at great length. I am also aware that there are considerable similarities between the wording of the amendment and the present Local Government (Contracts) Bill.

However, the provision would mean that the contractor would not be prejudiced if the contract turned out to be ultra vires—a point made by the noble Baroness, Lady Anelay. He could recover all the moneys due to him as though he could sue on the contract. In effect, the contract would be validated by the Secretary of State against the possibility of it being ultra vires of the trust. I understand that that approach was initially favoured by some members of the banking community because a similar provision exists in local government legislation and because of the "belt and braces" approach described by the noble Baroness.

However, we believe that the circumstances of the PFI contracts in the NHS are different from the circumstances with which the local government provision was intended to deal. In that instance there was usually a straightforward contractual relationship between two parties, whereas most PFI agreements are considerably more complex, as we discussed when the noble and learned Lord introduced his first amendment this afternoon.

The Bill before the Committee works on an entirely different principle; it underpins the vires of the trust making clear beyond doubt that a trust has the power to enter into externally financed development agreements—EFDAs as we have learnt to call them. To attempt to amend it at this stage in order to introduce an element of "safe harbour"—though I acknowledge what the noble Baroness said about belt and braces—would be a mistake, if for no other reason than that it would create uncertainty and doubt where at present there is clarity and certainty. Moreover, it would be unfortunate. It would suggest that a Bill whose only purpose is to put beyond doubt the validity of PFI agreements, also contained a provision which contemplated their invalidity.

The banks who are ready to lend into the PFI schemes and their legal advisers, as I said, have seen and agreed the wording of the Bill as drafted. They have said that it provides sufficient reassurance for them to lend once the Bill is enacted. That is the sole purpose of the Bill. Since the objective to be achieved by the Bill before us is the one we have described so often in terms of its accelerating the much needed hospital building programme, I hope that the Committee will not accept the amendment.

Perhaps I can make a general point. We do not have a blank sheet of paper on this issue. We do not have a great deal of time to revisit endlessly what might be described as the intellectual arguments for what it is probably not unfair to describe as a Holy Grail of a safe harbour. I have already described this afternoon the numbers of hours spent and wet towels which have been used in trying to get some of the definitions right on this Bill. This issue has taken on a significance which may be out of proportion with its real importance. It will no doubt remain a topic of conversation, when PFI lawyers are gathered together. But I must emphasise that the simple fact is that the Bill before us today will enable real hospitals to be built under PFI. The bankers have agreed and understood the terms; that much is certain. I therefore ask the Committee not to accept the amendment and I hope that the noble and learned Lord will not press it.

Lord Brightman

I am grateful to the noble Baroness for her explanation. I shall consider the matter over the next seven days and, if necessary, bring it back. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 8 not moved.]

Clause 2 agreed to.

Lord Ezra moved Amendment No. 9: After Clause 2, insert the following new clause—

DURATION (" .—(1) This Act shall cease to have effect at the end of a period of three years beginning with the day on which it is passed. (2) The Secretary of State may by order provide that this Act shall continue to have effect after the date in subsection (1) for a period specified in the order. (3) An order under this section shall be made by statutory instrument; but no order shall be made unless a draft of it has been laid before, and approved by resolution of, each House of Parliament.").

The noble Lord said: I speak to this amendment on behalf of my noble friend Lady Robson. Its purpose is quite simple. Its seeks to set a term to the application of the proposed legislation. The reason for that is that the Bill is being rushed through to meet a special situation. In the meantime we are well aware that much further consideration is being given to the whole issue of PFI in the NHS. In due course therefore we may expect further, more detailed, legislation and it does not seem necessary for this Bill to have a prolonged life. In any event, there is a safeguard in that in subsection (2) we say that the Secretary of State may prolong the period if need be. It is a simple proposition. I have explained the reasons for it. I beg to move.

The Earl of Home

I listened with some care to what the noble Lord, Lord Ezra, said on behalf of the noble Baroness, Lady Robson. I believe I understand his anxiety. However, I have four short but major worries on this topic.

First, if the Bill when enacted does not work, remedial legislation will have to be brought forward well before the proposed expiry period. If it is working well, why stop it at that moment? Secondly, projects of this nature will still take time, despite the Bill. For some of them a period of three years could turn out to be too short. Thirdly, the Secretary of State will be able to control the number and speed of these projects and that power in itself will regulate progress.

In relation to the powers of the Secretary of State, I understand that officials from the Department of Health have been talking with financial practitioners on the size and duration of eligible projects and I hope at some stage that the noble Baroness or the Secretary of State in another place will give us some guidance on their interpretation of eligibility.

Fourthly, while I accept that deadlines concentrate the mind of investors, financiers and sponsors, a three-year duration set at the outset will cause concern and uncertainty about a piece of legislation which is designed to remove just that uncertainty. I believe those points are supported by the British Bankers' Association, which represents many of the practitioners involved in PFI. For that reason, I do not feel able to support the amendment.

Baroness Cumberlege

I am not sure whether the Committee is aware that my noble friend has joined the Front Bench, though not for this subject area. I therefore welcome him onto the Front Bench. For the reasons that he so commendably outlined, the Opposition do not support the amendment.

Baroness Jay of Paddington

I join with the noble Baroness in welcoming the noble Earl to the Front Bench and look forward to his contributions in that capacity.

In a previous amendment we were discussing what is colloquially known as a "safe harbour" provision. I believe that this one should be referred to as a "sunset" clause. This is an unusual legislative device normally used only in circumstances where there is a potential problem about a piece of legislation—for example, the Prevention of Terrorism Act where habeas corpus was suspended—and where the need to review a piece of legislation is regarded as being part of the agreement to allow it to proceed at the time. I understand that is the principle behind the amendment, but the difference of circumstances is such that it would not qualify in that category.

I am grateful to the noble Earl for making points which otherwise the Committee would have been extremely bored to hear me make again in relation to the element of uncertainty which may be introduced into the Bill if the amendment is accepted. There is also the problem that all PFI contracts contain discriminatory legislation clauses which allow the contractor to terminate the contract if legislation is enacted which threatens that contract. Such clauses have been essential in the early days of PFI to reassure the private sector, as the noble Earl described, that it would have the right to orderly termination of contracts if the goalposts are moved after contracts had been signed in good faith.

We believe the amendment is precisely the kind of discriminatory legislation which could cause the private sector to walk away from the PFI, and, far from enabling deals to reach financial close, would—in the way suggested by the noble Earl—precisely reawaken the doubts which have been so unfortunate and so problematic in the past. I do not believe that we should doubt the Government's commitment to the private finance initiative. We take the view that it has great potential in the NHS; it is one model of public/private partnership that we want to develop. We will look at other models. We are currently reviewing the possibilities. The noble Earl was right to draw attention to the fact that my honourable friend in another place is at the moment prioritising strategies for schemes in the way that we discussed earlier today.

For many years, as we all know, so many of these projects have languished in the queue for Exchequer capital, and those which tried to progress through PFI found themselves gridlocked, for reasons that we all understand. When we discussed these matters at Second Reading, the noble Baroness, Lady Robson, whose name is on the amendment, argued for limiting the Bill's duration on the grounds that there was some uncertainty about the accountability of those providing services under a PFI contract. That was not a point raised by the noble Lord today. But, as the noble Baroness was concerned about it, perhaps I can provide reassurance on that point.

We believe that the Bill enhances the accountability process which already exists. PFI schemes, as the Committee will know, have always been subject to Department of Health and Treasury approval. Once the Bill is enacted, schemes must also be certified as EFDA (externally financed development agreements) by a senior civil servant, thereby introducing another level of control into the process.

Trust chief executives are, as the Committee knows, formally accountable to Parliament through the NHS Chief Executive for the performance of their trusts. The responsibility for ensuring the integrity and efficiency of the trust's performance rests unambiguously with the trust board. We feel that those are very clear lines of accountability. We know who is in charge and we will know who is managing the contracts.

That is an extremely effective way of focusing the consortium's attention on the overall service provided, in the way in which the noble Baroness sought reassurance. I am sure that Members of the Committee will agree that it is accountability of the most direct kind, which we do not feel will be improved by limiting the duration of the PFI Bill or within the terms of the amendment to which the noble Lord spoke. I believe that the accountability of the trusts for their PFI schemes is very clear. I hope very much that the noble Lord will pass on those assurances to his noble friend and will not seek to press the amendment.

5 p.m.

Lord Ezra

I should like in particular to thank the noble Earl for his intervention, which I considered very important. I also congratulate him on his new Front Bench responsibilities. I listened with care to the Minister's remarks and in the light of the assurances that she gave to me to pass on to my noble friend, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 [Short title and extent]:

[Amendment No. 10 not moved.]

Clause 3 agreed to.

House resumed: Bill reported without amendment.