Private Finance Initiative Costs

Oral Answers to Questions — Health – in the House of Commons at 11:30 am on 21st October 2014.

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Photo of Jesse Norman Jesse Norman Conservative, Hereford and South Herefordshire 11:30 am, 21st October 2014

What steps he is taking to encourage hospital trusts to manage their PFI costs more effectively.

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

PFI schemes have had their contracts reviewed for potential cost savings. A major data collection on the results is currently under way. In 2013, the Treasury launched a code of conduct for operational PFI contracts which contained a number of new guidelines for better working relations between the public and private sector parties.

Photo of Jesse Norman Jesse Norman Conservative, Hereford and South Herefordshire

Thanks to determined work with which I have been closely associated and with outside experts’ advice, Hereford hospital has managed to save several million pounds on its exorbitant PFI contract—money that is already being ploughed back into medicine and services for local people. My studies make it clear that there are hundreds of millions, if not billions, of pounds still to be saved on the PFI across other NHS hospital trusts. Will my hon. Friend press Monitor and the NHS Trust Development Authority to do everything they can to encourage hospitals to take on specialist PFI contract advisers to help them make these savings?

Several hon. Members:

rose—

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

My hon. Friend is right to highlight the fact that the annual cost of PFI left by the previous Administration is £1.79 billion, which will rise to £2.7 billion. It is right that we do all we can to support hospitals to reduce the costs of PFI that have been inflicted upon them, and we will continue to do that and work with the Treasury to make sure that that specialist advice is available for the NHS to reduce the cost.

Photo of Barry Sheerman Barry Sheerman Labour, Huddersfield

I am worried that the members of the ministerial team are living in some sort of parallel universe. At the Calderdale and Huddersfield Trust we had a PFI. A hospital that has a long history of success is now struggling because it cannot get a management that works between the clinical commissioning groups and the trust. That is the truth—it is chaos.

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

There is nothing wrong with PFI schemes in principle; the point is the way in which they were put together by the previous Government. In 2011, Andy Burnham said:

“We made mistakes. I’m not defending every pen stroke of the PFI deals we signed”.

Those PFI contracts have damaged local hospitals and damaged local health care provision—

Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission

Order. I just said to a Back Bencher that his question was too long. I have said to the Minister several times that his answers are not just too long, but far too long, and if they do not get shorter I will have to ask him to resume his seat—which frankly, for a Minister, is a bit feeble.

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

Will the Minister confirm that unlike the PFI agreements for my neighbouring hospitals in north Middlesex and Barnet, which were negotiated badly and ineffectively, the rebuild of Chase Farm hospital will be funded by proceeds from its own land sale and Treasury money, not PFI?

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

My hon. Friend makes an important point. Hospitals should always look to their own efficiencies first by improving procurement practices and freeing up surplus land to fund local schemes. His hospital has done that very effectively, and it has not pursued the policies of the previous Government, which have put so many trusts into difficulty.

Photo of Nick Brown Nick Brown Labour, Newcastle upon Tyne East

Given the total forecast deficit across English hospital trusts, including PFI schemes, is it still the Government’s position that the situation can be dealt with by efficiency savings alone?

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

During this Parliament we are set to improve efficiency in the NHS and make £20 billion-worth of efficiency savings. There is much more that we can continue to do on improving hospital procurement practices, sharing business services across the NHS, and freeing up surplus land—which, as my hon. Friend Nick de Bois outlined, is happening at his hospital. That is what we need to focus on in freeing up money for the front line.

Photo of Guy Opperman Guy Opperman Conservative, Hexham

Hexham hospital is outstanding but was built under a very expensive Tony Blair PFI. Does the Minister welcome the fact that Northumbria NHS trust is the first in the country to buy out the PFI and put it into public ownership, thereby putting millions more into front-line care?

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

My hon. Friend makes an important point. The PFI schemes negotiated by the previous Government were, quite frankly, disastrous for many hospitals. His hospital has seen that the way forward is to buy out the PFI and free up more money for front-line patient care. We will support as many more hospitals in doing that as can be achieved, because this is about making sure that we deliver more money for NHS patients.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I was fascinated by the question from Guy Opperman. Would not the simple solution be to take all PFI assets back into public ownership, reintegrate them with hospitals’ existing assets, and save millions of pounds for hospitals every year and billions of pounds for the public purse over time?

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

I understand that the hon. Gentleman is unhappy with the way in which the previous Government negotiated PFI contracts. We are unhappy with it as well, because it is costing the NHS almost £2 billion on current forecasts. We are making sure that we can put in place measures to support hospitals in mitigating the worst excesses of these poorly signed PFI deals.