Hospitals: Private Finance Initiative (Hansard, 28 September 2000)

§ The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath)
My Lords, the private finance initiative is an important element in our drive to build 100 new hospitals. We agree that further guidance is needed in the light of the findings of the National Beds Inquiry.

§ Lord Clement-Jones
My Lords, I thank the Minister for that somewhat obscure reply. The Minister and his colleagues are relying heavily on the PFIs as a means of delivering the new NHS national plan in respect of new and improved facilities. The report from the King's Fund, an impeccable source, casts considerable doubt on the long-term benefits of the PFI in particular as regards the lack of flexibility in PFI contracts.
Will the Minister and his department now undertake a full review of whether the PFI will provide the benefits in which he and his colleagues so clearly believe?

§ Lord Hunt of Kings Heath
My Lords, no, we shall provide further guidance in relation to PFI to ensure that all schemes take account of the increase in the number of beds that we wish to see as a result of the national plan. Overall, PFI brings us an ability to expand a hospital programme. It also brings an ability to keep control, as we failed to do in the past, in terms of cost over-runs and time over-runs. Overall, it is an important asset to the delivery of the national plan.

§ Lord Rea
My Lords, when hospital developments are planned, whether through the PFI or, preferably, through the public sector now that our finances are in good order, do the Government bear in mind the need to do that as part of a package, including the development of a community health service and the social and economic characteristics of the population to be served which are crucial determinants of the type and number of beds needed?

§ Lord Hunt of Kings Heath
My Lords, the King's Fund report totally ignores the fact that a PFI proposal cannot be taken forward unless it has the support of the local health community and the regional office of the NHS executive. It is not the case that PFI schemes are simply taken forward by an individual trust without regard to the strategic needs of the health service as a whole.

§ Lord Astor of Hever
My Lords, in the light of the BMA's estimate that the Government's PFI plans will lead to the loss of 5,000 NHS beds, will the Minister confirm that there will be no reduction in the total number of NHS beds?

§ Lord Hunt of Kings Heath
My Lords, I am always wary of BMA estimates. There has been a reduction in the number of beds in the health service over many years. In 1984/85 there were 325,000 in the health service. In 1995/96 the figure was reduced to 206,000. That was under the stewardship of the noble Lord's party.
The National Beds Inquiry makes it abundantly clear that overall we now have to increase the number of beds we wish to see in the health service: 2,100 extra general and acute beds; and 5,000 intermediate care beds. We are reviewing each of the large PFI schemes at present to ensure that what they propose is consistent with our desire to increase the number of beds overall, although individual PFI schemes may well show some reductions. We shall look carefully at that.

§ Lord Mackie of Benshie
My Lords, will the Minister tell the House what the private financier expects in return for his initiative? Is it 20 per cent or 30 per cent as against bonds at about 8 per cent?

§ Lord Hunt of Kings Heath
My Lords, no, but clearly a private financier wishes to enter into an agreement on a viable proposition. The advantage for the National Health Service is that we have access to more capital; we can transfer the risk of cost over-runs and time over-runs; and we can expand the number of hospitals that we bring into use in the National Health Service. PFI is but one element of the expansion in our capital stock. We shall still use traditional public finance approaches where appropriate. Overall, I believe that PFI enables us to expand the NHS in as fast a time as possible.

§ Lord McColl of Dulwich
My Lords, is the Minister aware that since 1960 7,000 to 8,000 beds have been taken out of the NHS every year irrespective of which Government have been in power? Will the Minister admit that, by pretending that it is the former Government who closed the beds, he makes himself a stranger to the truth?

§ Lord Hunt of Kings Heath
My Lords, no, I do not recognise that. If the charge is made, as it was, that we are reducing the number of beds, it is only right for me to inform the House of the stewardship of the former Government. Of course as technology and science have changed in the health service we have seen a reduction in the number of beds—in fact since the health service was started.
The past year has shown that we did not have enough capacity to deal with pressures on the system. 942 That is why we set up the National Beds Inquiry. That is why we shall expand intermediate care and increase the number of general and acute beds by 2,000. At the same time, PFI enables us to expand our capacity overall alongside public finance so that we can build those 100 hospitals.