Oral Answers to Questions — Private Finance Initiative

– in the House of Commons at 12:00 am on 2nd March 1999.

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Photo of Dennis Canavan Dennis Canavan Labour, Falkirk West 12:00 am, 2nd March 1999

How many PFI projects have been approved in the national health service. [72383]

Photo of John Denham John Denham Minister of State (Department of Health)

The private finance initiative plays an important role in modernising the national health service and contributing to the biggest new hospital building programme in the history of the service.

The final decision to proceed with a major capital development in the NHS is made on the basis of an approved full business case. To date, in the NHS in England, 10 major PFI hospital schemes have been given full business case approval, and construction work has now started. In addition, a further 15 major schemes are being developed, and could be given approval as PFI projects subject to satisfactory full business cases being produced and approved.

Photo of Dennis Canavan Dennis Canavan Labour, Falkirk West

May we have an assurance that the national health service in England will not follow the bad example of the notorious PFI deal in Scotland, whereby three Edinburgh hospital buildings on associated land were handed over to a private consortium that stands to make up to £200 million profit by developing the land for housing, and will also receive £30 million a year of public money for 30 years to build a new hospital that will never become public property? The shady deal will be financed partly by cutting the number of beds, cutting the number of nurses and cutting the number of doctors. Is that not conclusive proof that the PFI is a disaster for our national health service?

Photo of John Denham John Denham Minister of State (Department of Health)

No. My hon. Friend made a number of points; let me deal with the important ones.

The PFI does not lead to a reduction in the number of beds. The number of beds required in the local health service is identified at the outset, whether a hospital is to be built with public sector funds or through the private finance initiative. My right hon. Friend the Secretary of State has announced and put in hand a national beds inquiry to ensure that the number of beds that is provided reflects local and national priorities properly.

As for the financing of the deal, open market value is obtained for any surplus NHS land that is included in a PFI deal. A PFI deal will go ahead only if it is affordable for the NHS and represents value for money.

Photo of Stephen Dorrell Stephen Dorrell Conservative, Charnwood

Does the Minister agree that, ever since the foundation of the NHS, its effectiveness under Governments of both political parties, has been undermined by the fact that it has tried to deliver modern health care with inadequate capital investment? That is largely the result of the health service being trapped in a public sector capital model. Therefore, does he agree that the best option for the health service capital programme is a partnership between the public and private sectors to ensure that clinical staff who are employed by the NHS have the most up-to-date capital resources at their disposal?

Photo of John Denham John Denham Minister of State (Department of Health)

The capital programme that is being developed by the Government includes a mixture of PFI arrangements and traditional public sector capital investment. That is absolutely right. There is a big difference between the present Administration and the previous one. They made a complete mess of the private finance initiative—numerous schemes were developed, none of which has ever begun construction. It was the present Administration who sorted it out and got the priorities right. We will build on that in due course with clear guidance on contracts to be used and the approach to be taken. We are using PFI not as a bit of political rhetoric, but to deliver new hospitals and better conditions for NHS staff and patients.

Photo of Ms Jane Griffiths Ms Jane Griffiths Labour, Reading East

Is my hon. Friend aware of the situation in my constituency, where Royal Berkshire hospital failed in its PFI initiative, but has now received Treasury funding to provide the new hospital consolidation that is greatly needed? Is he further aware of the scandalous situation with regard to Berkshire health authority? It threatened savage cuts to health services in my constituency, but they were found not to be necessary by a recent National Audit Office investigation and, following a campaign by my hon. Friends the Members for Reading, West (Mr. Salter) and for Slough (Fiona Mactaggart), have been halted.

Photo of John Denham John Denham Minister of State (Department of Health)

I congratulate my hon. Friend on the close interest that she and her colleagues took in the proposals in Berkshire. I understand that proposals that were initially made last autumn have been substantially varied. She has drawn the House's attention to the flexibility that underlies the Government's approach to capital investment, with the right vehicle for particular projects being chosen.

Photo of Mr Archie Norman Mr Archie Norman Conservative, Tunbridge Wells

When is the long-awaited announcement on the next round of hospital PFIs likely to be made?