Local Government Finance (England) Special Grant Report (No. 76)

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Mr. Cash: The Highways Agency has responsibility for the highways, which include the crossing of a railway crossing. The Minister rightly points out that Railtrack owns the apparatus. However, the question is whether the local authority has a sufficient interest, in conjunction with Railtrack, to enter into what would effectively be a joint venture agreement, to resolve issues of public interest and safety. I understand the point that the Minister is making; the matter has a hybrid quality. What about the position with a hospital? That will be made up of component parts, such as roads and other factors. I strongly urge the Minister to consider that because, at this juncture, I am not convinced that the money will be made available in any other way. This is a serious safety problem in my constituency.

Ms Hughes: The hon. Gentleman raises a technical but interesting point. The tarmac involved means that we are talking, essentially, about a road, but the railway tracks going in the other direction make it unclear whose responsibility it is. I shall make further inquiries and write to him.

Mr. Cash: I am not so much talking about an improvement to the railway crossing as a complete substitution of the bridges, which are mentioned in appendix 6 and were originally proposed by Railtrack as an alternative means of dealing with the safety and congestion problems. That would eliminate the hybrid nature of the problem; there would no longer be a crossing, but simply a railway line with a bridge over the top, which would be supported by the PFI and would be an exclusively county council function. People may think that once upon a time I was an expert on these matters, but I am afraid that I have forgotten most of it now.

Ms Hughes: I thank the hon. Gentleman for that further explanation. I now fully understand the question that he is posing, and I shall respond to him in due course.

In response to the hon. Member for Chipping Barnet, I cannot comment on Barnet general hospital, and I do not know what is happening in terms of phase 1b. On his general question about the maximum rate of interest that can be included within a PFI deal, we do not set a maximum in the sense that interest of more than a certain amount would automatically preclude a PFI deal. It would depend on what is nowadays a robust, rigorous and detailed appraisal of the total package for the scheme that the local authority is proposing. That would take into account the rate of interest, the payments that the authority would have to return to the contractor and what those payments are for, including the capital element and the maintenance element. The whole package must be appraised in terms of value for money.

One of the advantages of the way in which PFI has developed is that it allows enormous flexibility with regard to the detailed terms and conditions of particular contracts. For example, it can provide for the capital asset to return to the local authority or not. Those differing factors will affect both the return to the contractor and the amount of the payments that are made to the contractor by the local authority or, in this case, the health authority.

Sir Sydney Chapman: The Minister is being very helpful. I know that the Government want to be as transparent and open as possible about these arrangements. However, it would be helpful if the two component parts of the repayment—the management and maintenance charges, and the interest and recouping of the capital cost—could be separated and made known to the public. The Minister could argue that the public would be able to find out that information. However, in the case of Barnet general hospital phase 1b, we might have to wait to examine with a microscope the detailed annual financial return. Unless the interest rates are unfairly high, the separation and publication of the two elements would give the PFI process greater credence and public acceptance.

Ms Hughes: The monthly or annual payments that the public sector body will make to the contractor include not only interest on the capital that has been raised by the contractor, but any maintenance charges. It would be difficult to extract from that the interest payments on the capital. As I said, one of the advantages of the process is its flexibility, which means that there are many variants in the types of packages and contracts that are constructed. The details vary enormously from scheme to scheme. However, I shall consider his point and write back to him on it. I do not know whether this will be relevant to the particular scheme that he discussed, but the flexibility to include the maintenance of a building in a PFI scheme is important. To return to the point made by the hon. Member for Cotswold, that is part of transferring the risk. That the contract to maintain a building is continuing is an incentive to obtain high-quality construction and materials.

Mr. Clifton-Brown: Despite the Minister's remarks about PFI being in a muddle when she inherited it, one of the first DBFO road schemes—indeed, I think it was the first—was built in my constituency. One problem that arose with that scheme concerned restrictions in the contract that related to the maintenance of the road. When I pressed the chairman of the Highways Agency through the Public Accounts Committee to make that document public, he told me that it was commercially confidential. If the public use facilities such as the hospital in Chipping Barnet or that road in my constituency, they have every right to know the maintenance obligations on the contractor in that project. I urge the Minister to examine which documents may be placed in the public domain. As a general principle, the more information that can be placed in public domain, the more the public will like, understand and be reassured by such projects; the point raised by the my hon. Friend the Member for Chipping Barnet.

Ms Hughes: Certainly, I shall investigate that. The hon. Gentleman raised the issue of commercially sensitive information, which is important. However, I take his point that once a contract is signed and sealed and a facility is in operation, it is hard to see why the breakdown of the arrangement should not be made public. I shall write both to him and to the hon. Member for Chipping Barnet on that issue.

In summary, we have heard several points of view and I am grateful for the support that our version of PFI is receiving. It has enabled local authorities to take forward many projects that are improving services to local people, which is what PFI is all about. I hope that the Committee will endorse the report.

Question put and agreed to.


    That the Committee has considered the Local Government Finance (England) Special Grant Report (No. 76)(House of Commons Paper No. 233)

Committee rose at twelve minutes past Five o'clock.

The following Members attended the Committee:
Cummings, Mr. John (Chairman)
Atkins, Charlotte
Campbell, Mr. Ronnie
Casale, Mr.
Cash, Mr.
Chapman, Sir Sydney
Clifton-Brown, Mr.
Fitzsimons, Lorna
Foster, Mr. Don
Hughes, Ms Beverley
Hughes, Mr. Kevin
Iddon, Dr.
Keeble, Ms
Lepper, Mr.

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