Private Finance Initiative (Hansard, 10 June 1997)

§ Mr. Milburn

I intend to undertake an urgent exercise to prioritise all the major Private Finance Initiative (PFI) schemes in the acute sector. I have today written to all Members, giving full details of the steps I intend to take and setting out the way forward for the PFI in the National Health Service.

The need to prioritise the schemes currently battling for the limited private and public sector resources is now understood and accepted. Only if resources are concentrated on those schemes with the greatest need will real progress be made and schemes delivered.

The prioritisation exercise will cover all the major acute schemes on the current project list that have an approved Outline Business Case. They will be given separate 428W gradings regarding health service need, how well the scheme fits with the PFI process and hence its likelihood of delivering a successful outcome, and how far and well negotiations have progressed.

The health service need will consider the service's own assessment of the medical and estates reasons for completing the scheme.

The fit and deliverability (or PFI-ability) of the scheme will evaluate if the scheme is one that is likely to prove attractive to the private sector. Too many inherently unsuitable schemes were forced to test for PFI and we must not be seen to be unnecessarily prolonging that process.

The third criteria will be how well and far negotiations have progressed. If we are to concentrate resources on the leading schemes, it is clearly a nonsense to allow the system to become further clogged by new schemes entering the process. Equally, many schemes have become stalled because the system is overloaded and these cannot be left to stagnate.

Performance of each of the schemes against these criteria will form the basis for the selection of the schemes that will proceed. Final announcements regarding the fate of all the schemes will be made at the end of June. During this time, I am making myself available to receive representations from constituency members. No final decision will be taken on any of the schemes without Members having had the opportunity to personally represent their own and their constituents' wishes. The prioritisation exercise is going to be fair and genuine.

There will be a separate exercise for London PFI schemes arising from our Review of health services in the capital which will be announced in due course.

Those schemes that fail to make the list, for whatever reason, will be prioritised nationally alongside schemes that are competing for the limited public capital we have. We will only invite competition for the schemes that have a genuine health need and can be delivered.

In conjunction with this work on prioritisation, I will be looking over the coming months at improving the PFI product in terms of fostering innovation; resolving affordability and delivering PFI solutions in non-acute fields like primary care and mental health. In addition, I will also be looking, more fundamentally, at developing other possible models of structuring private finance schemes in the longer term.