East Ayrshire Community Hospital

Prayers – in the House of Commons at 12:30 pm on 19 March 1997.

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Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley 12:30, 19 March 1997

First, I must say how pleased I am to see the Minister of State for the Scottish Office, the right hon. and learned Member for Edinburgh, West (Lord James Douglas-Hamilton) here to answer the debate. I must take this opportunity to thank him for his unfailing personal courtesy to me and, I believe, to other Scottish Members, during his term of office. We have been grateful for that.

I regret to say, however, that the story of the proposed East Ayrshire hospital is a saga of Government delay and ineptitude, and of the Conservatives putting political dogma ahead of health care. As far back as 1993, which is four years ago, the South Ayrshire Hospitals national health service trust had planned to replace the Ballochmyle hospital at Mauchlin with a new purpose-built community hospital for East Ayrshire on the same site at Ballochmyle. That meant that the land was in NHS ownership, ready for the building to go ahead.

The Government had earmarked £13 million in the capital budget. If construction of the hospital had started as planned and been funded as originally intended, it would be open now, and the urgent needs of the people of East Ayrshire would be being provided for at this minute. Instead, we have had a catalogue of dithering, delay, political interference and, I am afraid to say, chicanery.

First, the then Health Minister, Lord Fraser, threw a spanner in the works when he announced that, rather than proceed as planned, two NHS trusts would have to compete for the right to build and run the hospital. That is a prime example of the way in which unnecessary competition and rivalry have replaced planned provision in the NHS, setting trust against trust.

Instead of providing immediately for the health needs of the area, there was a long and often acrimonious debate about which trust should run the hospital, and whether it should be at Ballochmyle, as originally planned by the South Ayrshire Hospitals trust, or on a new site at Cumnock, where the Ayrshire and Arran Community Healthcare trust preferred it to be.

That long-drawn-out consultation eventually finished in June 1995, but, regrettably, the dithering of the Ayrshire and Arran health board added further to the delay, when it failed to decide at its board meeting in July as it had planned to do. The board left the decision until the end of September and opted for the community trust—not the trust that had originally intended to build the hospital— and for building the hospital on the Cumnock site. Incidentally, that site is not in NHS ownership, so the decision added planning and acquisition problems.

I regret to say that that was not the end of the catalogue of delay and interference. Ministers intervened again to insist that the option of a private finance initiative should be considered alongside that of public funding, which had been the original intention and for which the money had been earmarked. The public funding option had not been questioned, either by the board or the trust, until the Government interfered. That political interference was unnecessary, as public funding had been earmarked for the hospital, and it has been the cause of even more unnecessary and unwelcome delay.

Nearly 18 months after the health board's decision, not a brick has been laid. There is not even an agreed contract, unless the Minister tells me otherwise today—but I doubt it, for reasons that I will come to. On 17 November 1995, however, the chairman of the health board, Jim Donaldson, wrote to me giving the timetable, promising that the first patients would be treated in the day hospital by November 1996. That date has passed, and not a brick has been laid or a contract signed. He also promised that the out-patients and general practitioner unit would be operating in October 1997, and the continuing care facilities by April 1998. There is no hope of any of that now.

In his letter, Mr. Donaldson said: The Board and the Community Trust have made a clear public commitment to delivering the new Community Hospital within the time scale outlined above … It is the responsibility of the Board to ensure that the timetable is achieved. It is evident that it has failed in that responsibility; and who are the losers? None other than the people of East Ayrshire, who are waiting for much-needed, long-overdue healthcare facilities.

Although the Ayrshire and Arran health board has manifestly failed, I argue that the Government are the principle cause of that failure. The board is responsible to the Minister—it is appointed by him and under his direction. It reports to the management executive, to Mr. Geoff Scaife and, through him, to the Minister regularly. It is the dithering, the interference and, frankly, the dubious practices of Scottish Office Ministers that have caused the delay.

First, the Government's insistence on the PFI option meant a delay while the preferred bidder was chosen. We had to go through all the procedure of considering potential bidders and choosing one. Ultimately, the community trust chose G. A. Construction Ltd.—formerly Gilbert Ash Ltd., I think.

The first delay was in coming to a decision about the preferred bidder, but eventually, on 2 September last year, the trust submitted the PFI bid, together with the public funding option as an alternative. That option is still there. That is the benchmark for considering whether the hospital should be constructed through the PFI.

I presume that the benchmark must be at or near—I hope that the Minister will confirm this—the £8 million that was the original figure with which the community trust won the competition with the South Ayrshire Hospitals trust. The right hon. and learned Gentleman will know that the South Ayrshire Hospitals trust bid was about £11.5 million.

What happened? I understand that this is happening not merely in East Ayrshire but in other parts of Scotland and the United Kingdom. It would appear that the PFI bid was not merely much more expensive than the £8 million benchmark—in other words, PFIs are much more expensive than funding by the traditional public method— but it is rumoured that it was even higher than the South Ayrshire Hospitals trust figure. It might even have been as high as £12 million.

What happened then? This is the interesting thing, as Ministers received the details of the PFI bid and the benchmark figure, but then told the community trust that they would give the preferred bidder time "to revise the bid". The Minister used that phrase in a parliamentary answer to me.

That was very fishy: why was extra time given to revise the bid? What fiddling of the figures was needed behind the scenes? Were the specifications reduced in an attempt to get the PFI bid down to the benchmark figure or below? The Minister has so far refused all the opportunities that I have given him to answer those questions. I hope that he will take the opportunity to answer today, to the House and to me, but above all to the people of East Ayrshire.

I regret to say that there is more to the story: 1 November passed and there was still no announcement, and on 4 November I tabled another parliamentary question, to be told by the Minister that he would announce the decision "shortly"; but still there is no decision. I can see that my hon. Friend the Member for Cumbernauld and Kilsyth (Mr. Hogg) agrees that that is stretching the English language a little too far. It is stretching the patience of the long-suffering people of East Ayrshire even further, particularly as the closure of wards in Ballochmyle continues relentlessly. Health care in East Ayrshire is deteriorating rather than improving as was intended.

The suspicion that something fishy was going on behind the scenes was increased with the revelation that a second revised PFI bid had to be submitted two weeks ago today. I understand that it is still on the Minister's desk, being considered. Why was that further revision necessary? I hope that the Minister will answer that question today. Have there been further changes in the specification? Are corners being cut? Will we get a second-rate hospital because the Minister and the management executive are insisting that the trust should try to find reductions in the PFI bid?

Over the past few months, I have asked question after question in the House and in the Scottish Grand Committee, and still delays continue as Ministers try to get the answer they want rather than the best answer for the national health service and for the people of East Ayrshire.

I hope that the Minister will confirm today that the facilities to be provided in the East Ayrshire hospital have not been cut back, that they are still as outlined in his written answer to me of 6 February, and that there is still money in the capital pool to fund the hospital publicly. I believe that that is the better option.

Will the Minister say whether the report in yesterday'sFinancial Timesis correct, which said that banks will not support PFI schemes for hospitals, because any trust signing a deal with a private consortium would be acting ultra vires under current legislation? Will he stop trying to fiddle the figures to favour the PFI option? Why does not he give the go-ahead for the long overdue and much-needed hospital, funded with public money?

I have spoken to my hon. Friend the Member for Hamilton (Mr. Robertson), and I can assure the Minister in this changeover period that my hon. Friend would support the course of action that I advocate. Parliament is to be prorogued on Friday, and the Minister has the opportunity to finish his ministerial career with one act of sense and courage; I urge him to do so.

Photo of Lord James Douglas-Hamilton Lord James Douglas-Hamilton , Edinburgh West 12:43, 19 March 1997

I congratulate the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) on securing a debate on this important subject. I should like to say straight away that there have certainly been no cuts in specification for the new hospital.

I am extremely encouraged by the recent good progress towards securing the new facility, and I am delighted that more locally based, responsive health services will in the future be available for the people of East Ayrshire. I have listened carefully to the hon. Gentleman's description of his concerns and those of his constituents, and I hope that he will be reassured that we are well on the way to delivering this important new facility.

I shall turn to the details of the development in its local context in a moment, but it is important to place the new East Ayrshire community hospital in a national context. The scheme that has been developed for East Ayrshire is an excellent practical example of the projects that we are encouraging and that will be supported by the initiatives in the White Paper "Ready for the Future".

The White Paper's main themes are an emphasis on prevention; better information for the public and access to services; greater responsiveness to patients' needs; effective continuity of care; and excellence in clinical and management practice. The positive features of the new East Ayrshire community hospital will translate each of those into action.

Most obviously, the convenient siting of the hospital at Cumnock will provide the easiest access for the greatest numbers of the people whom it will serve. Transportation links to the site were a key consideration for the trust. For both in-patient and out-patient treatment, as well as for longer-term continuing care, the hospital meets head on the challenge to ensure that patients have access to care locally wherever possible, and can avoid travelling to facilities many miles further from home.

The improved services and facilities will meet patients' needs better, tackle the particular health problems prevalent in the area, provide effective continuity of care and foster clinical excellence. The location of the new facility in Cumnock will offer new opportunities to develop new and effective strategies to improve the health service's action in preventing disease.

The development provides a first-class example of a primary care-led NHS. There will be accessible and locally provided services, and patient care will be properly planned and well co-ordinated between the primary and secondary care sectors. A broader range of services will be available locally, with access to a network of specialist support services.

Ayrshire and Arran health board has had very clear criteria about the objectives of the East Ayrshire community hospital project since its inception. It wanted high-quality, innovative, cost-effective services delivered locally for the people of East Ayrshire. I am delighted that we are getting closer to delivering exactly that

Photo of Lord James Douglas-Hamilton Lord James Douglas-Hamilton , Edinburgh West

I shall say in the course of my remarks.

The hon. Gentleman will, I am sure, be the first to recognise the particular importance of the project. East Ayrshire contains areas of considerable socio-economic deprivation and unemployment, and relatively poor health. All the parties involved with the project have recognised from the outset that the development of health services in the area must take proper account of that. Health care must target resources on the areas of local need. The new community hospital will therefore be sited at Cumnock in order to provide the easiest possible access to the largest possible proportion of the area's population.

The proposals are built on the concept of locally provided, patient-centred care, in terms of both service delivery and building design. It will be a primary care-focused service, offering integrated care for the locality. The hospital will include a 24-bed general practice unit—doubling the current complement in the area—24 day hospital places, out-patient services, and 50 continuing care and respite care places.

People will be able to receive the care that they need as close to their homes as possible. That is a model for future NHS services: local people deciding how best to meet local needs, and working in partnership—both public and private—to produce innovative and imaginative schemes. I therefore welcome this opportunity to pay tribute to all those who have played a part in bringing this project so close to fruition.

Photo of Lord James Douglas-Hamilton Lord James Douglas-Hamilton , Edinburgh West

I am just coming to that.

As I have said, good progress has been made. The hon. Gentleman will be aware that, in the autumn of 1995, the health board selected Ayrshire and Arran Community Healthcare NHS trust to take forward its proposals for the new community hospital. Having advertised for bidders, narrowed down a shortlist, and examined the resulting tenders, the trust selected a private partner with whom to explore funding the project under PFI in June 1996.

The hon. Gentleman has made clear his concern that the process of exploring PFI has taken longer than it should. He will be aware that several months of delay were caused by the refusal of the then Cumnock and Doon Valley district council to grant planning permission for the new facility. Although that problem was eventually resolved, the resulting delay of more than four months was frustrating for those keen to make progress. It was in no measure the fault of the trust, the health board, or the PFI process.

Since then, much progress has been made. A full business case was received in the autumn of 1996, and subsequent negotiations between the trust and the bidder have been extremely fruitful in making the PFI option even more attractive. As with many PFI projects, a great deal of negotiation has been necessary to ensure that the project is affordable and that the taxpayer gets the new hospital at the best possible price.

I am glad to say that those issues are now largely concluded in the case of East Ayrshire, and I would expect negotiations to be concluded very shortly. However, I am bound by election rules since the declaration of the Prime Minister. I would not expect the trust to sign the contract until after the general election, in the light of advice from the Treasury and the Cabinet Office that no further decisions should be made or actions taken that are of a continuously binding or long-term character. However, I expect negotiations to be concluded this month.

The new East Ayrshire community hospital is not the only development to benefit from the private finance initiative. Some 18 health projects, with a capital value of nearly £56 million, have already been completed. They include: Ferryfield house, a 60-bed nursing home in Edinburgh that is now up and running; hospital information support systems at the Law hospital, Perth and Kinross Healthcare and Yorkhill NHS trusts; and a new £3.8 million community hospital in Stonehaven.

Thirteen more projects, with a total value of nearly £600 million, are beyond the point of being advertised as PFI schemes; a further nine projects, with a value of £250 million, are preparing to advertise in the near future. Projects are coming to fruition rapidly.

In the past few weeks, Lanarkshire health board has given formal approval for the building of two new district general hospitals under the PFI to replace Law and Hairmyres hospitals. Lothian health board has approved a scheme for the new royal infirmary. A promising design has been proposed for the redevelopment of the Western general hospital in Edinburgh. All the trusts concerned will be working with the consortia on the final stages of contract negotiations before submitting final proposals to the Scottish Office.

This huge investment programme could not be funded from the public capital programme. Demand far outstrips the availability of public capital. However, the PFI brings many other tangible benefits. The evidence so far is that it gives very good value for money, and only projects that offer value for money are allowed to proceed. It provides an ideal opportunity for the private sector to offer innovative solutions, while enabling projects to go ahead well in advance of the time scale that would apply if public capital alone were used.

PFI contracts also give the private sector an incentive to deliver on time and maintain services to a high standard. Quality of service is a recurring theme. The PFI is about delivering services rather than assets, and payments for the services are based on results. Capital and management skills are provided by the private sector, while the service remains under public control. Finally, risks previously borne by the public sector are transferred to the private sector through PFI deals. In particular, the risks of technical obsolescence, upgrading and residual value of equipment are borne by the supplier.

Those points are well documented, and I suspect that most Opposition Members would accept them, despite their initial reluctance wholly to embrace the PFI. It is worth remembering that these are all benefits that will improve health care services provided to people, including now those in East Ayrshire. I know that the hon. Member for Carrick, Cumnock and Doon Valley will welcome that.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

I am conscious of what the Minister said about Treasury rules and the Cabinet Office instruction about not making decisions until after the general election, which is right and understandable. However, that would suggest that no decision can be taken until well into May, which means further delay for East Ayrshire hospital. If the Government decided to go ahead with the traditional public funding method using public capital, and if my hon. Friend the Member for Hamilton (Mr. Robertson) concurred, would it not be possible to make a decision now?

Photo of Lord James Douglas-Hamilton Lord James Douglas-Hamilton , Edinburgh West

We are virtually at the stage at which a PFI project can go ahead. If the hon. Gentleman favoured that—I see that he does not, so I cannot make him an offer, given the election rules.

The PFI will greatly benefit the national health service, because it will ensure that public sector funds go much further. The PFI is new territory for the NHS and the private sector, and both have much to learn about each other. The deals are long-term partnerships of 20 to 25 years, involving millions of pounds of capital and significant revenue streams into the future. Partnerships— I deliberately use the word "partnership" because this is a partnership between the public and private sectors— involve provision of health care environments, and as such are not the sort of schemes that should be hurried into agreements. The NHS is too important for that. We have to get the details right.

The hon. Gentleman asked about trust vires. We have clear advice that NHS trusts have the power to sign PFI contracts. Some banks have expressed concern about that. The issue has been discussed with them, but the calling of the general election has prevented any conclusion from being reached.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

The Minister in his reply to my earlier intervention seemed to be about to make an offer. Although I was wincing a little, I was not shaking my head. It may be that what he was about to say would have been acceptable. That could be explored with my hon. Friend the Member for Hamilton, and my hon. Friend the Member for Edinburgh, Leith (Mr. Chisholm), who is present. If there were a way forward to ensure that there was no further delay, I should be grateful if it could be explored.

Photo of Lord James Douglas-Hamilton Lord James Douglas-Hamilton , Edinburgh West

We are close to the possible signing of a contract, but under general election rules we are not in a position to do that. If the hon. Gentleman spoke to the shadow Secretary of State and received his support, and believed it to be in the public interest that the project should go ahead, I would certainly raise it with the Secretary of State for Scotland. However, both Government and Opposition are bound by the Cabinet rules. I shall endeavour to ensure that he has all the available information. It will be a few days before we are in a position to do that. If he wants to come back to me, he is welcome to do so.

Ayrshire and Arran health board has consistently received higher than average resources per head in recognition of its population profile, and an increasing share of the national total. For 1997–98, it will receive an extra 5.4 per cent. over the 1996–97 figure. We believe strongly that the development will mark yet further progress in health care facilities for Ayrshire and Arran. Just as the new hospital will be geared to meet the health needs of East Ayrshire, so has the Scottish Office made sure that the same principle holds true for the people of the whole of Ayrshire and Arran by ensuring that they receive funding much higher than inflation, and above the national average.

I thank the hon. Gentleman for his contribution. On 18 December 1996, he asked me in the House why the proposals have been delayed by the PFI, and why public funding was not being made available immediately. I told him that the trusts were confident that, with further negotiations, the hospital could be provided under the PFI. That remains the case, with the PFI looking increasingly likely to provide the fastest solution.

Contrary to speculation, the scheme has a far better chance of getting up and running quickly under the PFI than it would if it joined the queue for the limited public capital resources available. If negotiations are concluded soon, I expect building to be completed by the end of 1998, which is probably faster than could be achieved by any other route. The sooner we can deliver the hospital, the better.

The East Ayrshire hospital project has been able to learn the lessons of other PFI schemes, such as the most effective period over which to let a contract, the need for flexible output specifications, and the need to ensure the right balance between debt funding from banks and equity input from investors. For many reasons, the PFI looks like the best mechanism to deliver the desired improved quality of services to those who need them.

I congratulate the hon. Gentleman on securing the debate. If he wishes to come back to me, he is welcome to do so: I would look into the matter speedily and effectively. He has served a valuable purpose by raising the subject.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

I am grateful to the Minister for the way in which he has dealt with the debate, and for his offer. I shall talk to my hon. Friend the Member for Hamilton. My hon. Friend the Member for Leith, who also has an interest in the matter, has been present for the debate today. I am grateful for the Minister's offer of further discussions. I do not want dogma to decide the matter—I want the health needs of the people of east Ayrshire to decide it. As the Minister rightly said, they have particular health needs, because they are disadvantaged. I am grateful to the Minister for that help.

Photo of Lord James Douglas-Hamilton Lord James Douglas-Hamilton , Edinburgh West

In the half minute that remains, as the hon. Member for Edinburgh, Leith (Mr. Chisholm) is here, I repeat that I have made it clear that PFI projects would not be pursued unless clinicians and local management wanted them. In relation to the question that the hon. Gentleman asked some time ago—

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. We now move to the next debate.