Department of Health: Budget

Lord Mawhinney Excerpts

Thursday 6th December 2012 Lords Chamber

[Earl Howe]

My Lords, the deficit is not rising. The Government are putting £12.5 billion extra into the NHS over the course of the spending review. The noble Lord, Lord Hunt, will know from his ministerial experience that government departments have an absolute requirement to manage expenditure within the financial controls that are set by Her Majesty’s Treasury and voted on by Parliament. For the Department of Health that means that the net expenditure outturn, which incidentally stems from around 400 organisations, all of whose accounts have to be consolidated, must be contained within the revenue and capital expenditure limits. Given those circumstances, it is sensible to plan for a modest underspend to mitigate against unexpected cost pressures.

[Lord Mawhinney]

My Lords, why does my noble friend believe that he will be able to tell your Lordships’ House that all the PFI hospital projects undertaken under the previous Administration, some of which are in a serious financial mess, will be deemed to be financially sustainable? How many of them are likely to require extra expenditure from his budget to achieve that desired end?

[Earl Howe]

My noble friend raises a very important issue. The analysis that we have done on hospitals financed by private finance initiative has indicated that there are seven trusts that are basically unsustainable as a result of their PFI commitments. The Department of Health has therefore undertaken to support those trusts to enable them to make up the shortfall which is beyond their control. It would be wrong to suggest that PFI was a solution that did not deliver benefits. Clearly it did, but I am afraid that some of the sums that were done initially were sadly wanting.