East Ayrshire Community Hospital

Part of Prayers – in the House of Commons at 12:43 pm on 19th March 1997.

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

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.