[Mrs Anne Main in the Chair] — Backbench business — Private Finance Initiative
Stella Creasy (Walthamstow, Labour)
No, let me be clear. The Treasury uses the Green Book to assess whether a PFI is an appropriate model. An assessment is made specifically of the Exchequer’s tax take over the life of the contract. It is precisely because that is part of the value-for-money assessment that I have great concerns about the fact that we are not getting the tax we expected, which would make the PFI a reasonable model to use.
It is therefore fair to ask what we can do. If the Government are proceeding with the PFI—that is an interesting issue for Government Back Benchers who are concerned about this issue—what action are they taking to learn from the way in which previous contracts were negotiated? One thing that is clear to those of us on the PAC is that there is a better understanding of the skills needed to negotiate these contracts. The hon. Member for South Norfolk was clear about the skills needed in the public sector to negotiate with the private sector and to improve the way in which contracts are negotiated. We must also appreciate that we in the public sector have tried to renegotiate contracts after the fact by asking for increased provision in our hospitals, for example, or by looking at different services. That, of course, has consequences for the response from the private sector.
The fundamental question as regards continuing with the PFI—the Government certainly seem content to do so—is what action Ministers are taking on tax and tax havens. The hon. Member for Hereford and South Herefordshire is right that we need better data on tax assessments, and those of us on the PAC were certainly unable to get information about assessments of the tax that various PFI projects were expected to generate when they were commissioned and about what would happen next. What concerned us was that, although Treasury officials accepted that an initial assessment would be made, they were clear that no assessment would be made further down the line of whether that initial assessment had been reasonable.
Indeed, there has been no learning about the way in which tax is assessed in decisions to go for the PFI, even though that could be used in future contracts. Specifically, officials were clear that there is no commitment from the Government to look at the tax status of funds or even to explore what action might be taken to, for example, require a company bidding for a PFI contract to show in its books that it has been operating in the UK for the past five years, so that we can be confident that the bulk of its work is done in this country and, therefore, that we would get the tax back. We would then have a reasonable expectation that the Treasury would recoup the general sum that was part of the calculation. This is not a new concern or a new idea; in fact, a previous Labour Member tabled a private Member’s Bill on precisely this point, but it did not receive support from the then Opposition, and I hope that that will
change if we can all agree that we want to improve the way in which the PFI operates, if it continues to be taken forward.
The hon. Member for Hereford and South Herefordshire has said that the PFI might be a better model for some types of infrastructure projects than others, but the list of the 61 projects that the Treasury is developing includes a wide range of projects, including hospitals, schools, fire buildings, roads and police stations, so this is a live issue. We could be making progress on challenging the costs to the Exchequer and the value for money of projects, but there is no commitment from the Treasury to look at these issues.
Those are the main concerns that I wanted to put on the record about the hon. Gentleman’s campaign. First, were we to push for a rebate, it would be difficult to get the private sector to renegotiate, although I wish him well in looking for haircuts from people such as David Metter. Secondly, there might be very real consequences for the renegotiation of the cost of the services that are delivered, although I am sure that they would be unintended consequences as far as the hon. Gentleman is concerned.
Thirdly, it is a real concern that we may leave untouched the tax status of these companies and the money that the Exchequer might lose, but which was part of the original decision to go for a PFI project. In putting as much pressure as possible on the Government to talk to companies—the briefing says Ministers have, but the reality revealed in the PAC is that they have not—I hope the hon. Gentleman will also put pressure on them to look at companies’ tax status. I hope he will put pressure on them to look at how we can close the present loophole, so that we can be sure that where an assessment is made of the money that will be returned to the Exchequer over 30 years or whatever term is chosen for the 61 projects, the Exchequer will actually recoup that money. We all agree that value for money should be at the top of the agenda, and we should be thinking about the best way to get the infrastructure buildings that our country will need in the future. If so, how do we make sure, not only when the contract is committed to but in the years ahead, that we are securing that value for money?
I congratulate the hon. Member for Hereford and South Herefordshire on securing the debate, and I urge him to think about his target. I look forward to hearing what he has to say later.