Private Finance Initiative

Peter Bottomley Excerpts

Thursday 23rd June 2011 Westminster Hall

[Jesse Norman]

It seems to be true that many decisions were made from a desire to fit the financial cloth to the pocket rather than from the actual clinical needs of the patients. It is certainly true that the squeeze that these inflation-adjusted costs exert on hospitals is heavily responsible for the closure of A and E units.

Let me return now to the situation at Hereford hospital. Later PFI contracts have contained financial safeguards for the NHS, including automatic efficiency savings of 3% a year and the right for a hospital to put services out to public tender periodically. However, the Hereford contract contains neither of those safeguards. There are no automatic efficiency savings, and the contract cannot be retendered until 2029. The hospital trust is doing a valiant job, but it has little influence, legal scope or access to underlying costs which might help it to negotiate changes to the contract. Worse still, no mechanism exists by which the hospital can group together with other PFI hospitals to exercise collective influence over the PFI contractors. By contrast, Semperian has 106 PFI contracts. The imbalance in power is obvious, yet the NHS seems to have done nothing to remedy that.

For almost a year now, I have been campaigning for a voluntary rebate for taxpayers on the PFI of £500 million to £1 billion. Those are large numbers, but that goal is not unrealistic.

[Sir Peter Bottomley (Worthing West) (Con)]

I hope that my hon. Friend does not think that I am sitting on the other side of the Chamber because I do not support his proposal; I do support it. May I ask that those who read his words as well as those who listen to them pay some attention to the old Ryrie rules, which were supposed to limit Ministers using private finance when it was not appropriate? May I also ask my hon. Friend if he would direct the Chamber’s attention to the design, build, finance and operate Dartford crossing, which was a proper use of the private sector? There was a limit to the amount of time that the project could be charged and it had an income stream, so there was no powerful debt either.

[Jesse Norman]

I shall be talking about the early history of the PFI shortly. As my hon. Friend implies, the Ryrie rules were an important part of the fiscal stringency that surrounded that project. What the issue of the Dartford crossing brings out is that PFI is often successful on these economic infrastructure projects and less effective on social infrastructure projects.