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Lord Graham of Edmonton: Now answer that!

6.26 p.m.

Baroness Cumberlege: My Lords, I shall endeavour to answer that. I am grateful to all noble Lords for having taken part in the debate and for the way in which today's proceedings have been marked by sensible discussion on the merits of the Bill. I should like to associate myself with the remarks of the noble Lord, Lord Winston, who paid a tribute to the maiden speech of my noble friend Lord Harris. I know that my noble friend is the chairman of a go-ahead and thrusting company called Carpetright. I can assure him that he does not get just his business affairs right, but also the business of this House.

Your Lordships will know that the Bill is about proper and prudent management of the health service. It seeks to ensure that patients continue to receive the services they need and that those who contract with the NHS can do so with absolute certainty. They need to be confident that the contractual liabilities of certain NHS bodies which become defunct will not merely die along with the defunct body.

I gained the impression from the noble Baronesses, Lady Jay and Lady Robson, that all was well with capital schemes in the past. But the noble Baroness, Lady Robson, who is a distinguished former regional chairman, will remember that year on year the NHS transferred capital to revenue. Capital funds, although available, were not used. Why? Because of the red tape. It is well known in the NHS that it took

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20 years to build a hospital. Many of the schemes overran, despite the measures outlined by the noble Lord, Lord Dean. With PFI, that will not be the case. With a private partner there is a real incentive to get on with schemes.

As noble Lords will be aware, and as I said in my opening remarks, there is £1.5 billion of schemes in the pipeline. The noble Baroness, Lady Jay, suggested that PFI in the NHS is failing, but, as she stated, the Labour Party supports in principle a private-public partnership. That view was endorsed by other noble Lords on the Opposition Benches. So I am sure that she and those noble Lords will be pleased to know that some 54 schemes have been approved since the launch of the PFI, bringing in private sector capital worth nearly £0.5 billion. A further 40 major schemes, each over £10 million, with a total capital value of over £1.5 billion, are testing private finance options as part of the PFI procurement process. Last month the Secretary of State for Health gave the go-ahead for the biggest ever private finance venture in the NHS at the Norfolk and Norwich NHS Trust and for a major hospital rebuilding project at the Swindon and Marlborough NHS Trust.

The noble Baroness, Lady Jay, asked for a definition of clinical services.

Baroness Jay of Paddington: My Lords, I am grateful to the Minister for giving way. We are aware of the exciting proposals within the NHS/PFI agreements. However, have any of the contracts to which she referred in relation to the specific hospital building programmes been signed? If they have been signed has any building work been started?

Baroness Cumberlege: My Lords, I am in a quandary on this issue because on the one hand I detect a sense of impatience on the Benches opposite but on the other I listened to the noble Lord, Lord Haskel, who so wisely reminded us that it would be unwise to rush through the approval processes and the singing of the contracts simply to demonstrate the success of the initiative. We believe that there is a case to go forward with caution. As I said, the schemes are in the pipeline and I am sure that in time many of them will be signed.

Baroness Jay of Paddington: My Lords, I am sorry to interrupt the Minister again. Is the answer to my question, no?

Baroness Cumberlege: My Lords, I explained carefully to the noble Baroness that a balance must be struck. She is right to say that not a single specific hospital buildings contract has yet been signed but I am right to say that there are many in the pipeline. I subscribe to the view of the noble Lord, Lord Haskel, that it would be unwise for us to rush through the approval processes merely to demonstrate the success of the initiative. Noble Lords opposite would criticise us most severely for doing so.

The noble Baroness, Lady Jay, asked about the definition of clinical services. She sought a definition of what constitutes a clinical service and a clear statement on a number of clinical specialisms. The division

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between occupational groups which provide clinical and clinical support services, as she will know from her close contacts with the NHS, is becoming increasingly blurred and can vary from organisation to organisation. The concept of a recognised healthcare professional is evolving as new forms of therapy become accepted in clinical practice.

The noble Baroness also asked about the privatisation of clinical services. I remind her that it is no part of the Government's policy through PFI to transfer the delivery of NHS clinical services into the private sector. By sub-contracting responsibility for design, construction and operation of the building, support services and other supporting facilities, an NHS trust allows itself to concentrate on the efficient provision of high quality clinical services. However, if a trust explores local arrangements for private sector provision of some clinical and clinical support services we would not stand in its way. As the noble Lord, Lord Carter, said, it is a matter of local determination and it cannot be carried through without the support of clinicians. If a PFI project is submitted for approval and its viability depends on the privatisation of clinical or clinical support services which does not have the consent of local clinicians it would not receive departmental backing.

Lord Carter: My Lords, I am grateful to the Minister for giving way and for her clear answers. Will the patients be consulted if it is decided to privatise or to let out the clinical service contracts?

Baroness Cumberlege: My Lords, we believe that the running of trusts is up to the trust boards. The noble Lord will be aware that trusts work closely with community health councils which, I am sure, will want to listen to what the general population has to say. However, in the end it must be the decision of the trust or of the department if it falls within the parameters I have mentioned.

The noble Baronesses, Lady Jay and Lady Robson, were concerned that PFI is replacing capital expenditure. The great benefit to the NHS in developing the opportunities given by PFI is that the private capital involved in this way is additional to that which can be obtained from public funding sources. The PFI allows a much greater number of major projects to proceed. As I pointed out in opening the debate, the capital programme for this year is £1,542 million.

The noble Baroness asked whether PFI removes the role of government in setting NHS priorities. We need to look at that in the context of a local devolved health service. If it is for local health authorities to set their priorities in their strategic purchasing plans and for local trusts to respond to that plan by coming forward with proposals for capital investment if those are needed for it to fulfil the requirements of the plan. However, it is

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important not to ignore the fact that there is a substantial continuing publicly funded capital programme of £1,542 million for the current year.

Baroness Robson of Kiddington: My Lords, is it purely coincidence that the emphasis on PFI comes together with a reduction of 16.8 per cent. in the capital grant?

Baroness Cumberlege: My Lords, as I explained earlier, it is ridiculous to set aside whole sums of money which cannot be spent. That has been the tradition of the National Health Service. When I was a regional chairman almost every year we transferred capital to revenue. Therefore, it would be foolish to earmark the money for capital expenditure when it cannot be spent. Clearly, the PFI and the allocations made for capital expenditure must be seen in tandem.

The noble Baroness, Lady Robson, was concerned that PFI will be expensive for health authorities in the future. All schemes must be affordable to the purchasing health authorities which must be able to provide through contracts with the trusts the funding that the trusts need to pay a PFI partner. The affordability criterion is very important in the approvals process and helps to ensure that the health service is not committed to expenditure it cannot meet.

The noble Lord, Lord Winston, raised the issue of morale. I can never remember a time when detractors of the NHS did not say that morale was low. I cannot accept that it is at an all-time low. I do not believe that people would be working so hard, that there would be more people treated, that GPs would be doing more sophisticated work and that nurses would be taking on an extended role if morale were low. And I do not believe that so many young people would want to enter the healthcare professions.

PFI makes a difference, although the noble Lord, Lord Winston, suggested that it does not. Only this morning I opened a new £1.8 million health centre. Almost every week I or my ministerial colleagues open wards, units, clinics, surgeries and departments. Although it is people who, in the end, matter with their professional skills, knowledge and commitment, buildings also have an effect on the way in which they work. We believe that the PFI and its train of new fabric and new buildings will help them to do their jobs better.

The noble Lord, Lord Harris of Peckham, from first-hand experience, vividly accounted the need to run hospitals and other healthcare facilities efficiently and well. Good management clearly affects the quality of care given to patients and that also raises morale. I am sure that the noble Lord, Lord Winston, who clearly listened so carefully to the noble Lord's well-informed maiden speech, will agree that there are many ways to raise morale, not least through enlightened leadership.

The noble Lord, Lord Blease, asked for a definition of liability. The term "liabilities" in the Bill refers to the term as used in the Secretary of State's existing statutory powers to transfer property, rights and liabilities. Those are listed in paragraph 7 of the Notes on Clauses. If it would be fair to summarise a liability as an obligation enforceable at law.

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The noble Lord also raised the issue of the use of the negative resolution procedure. Since the introduction of direct rule it has been normal practice to legislate for Northern Ireland by way of Order in Council in respect of the transfer of matters. They are those areas for which if there were a Northern Ireland Assembly the body would legislate. The Government recognise that the Order in Council procedure is not ideal but in the circumstances of direct rule it is the only practical way of dealing with the majority of Northern Ireland legislation. If it were possible to create a local administration with legislative powers in Northern Ireland locally elected politicians would have greater scope to debate and decide legislation.

The noble Lord, Lord Haskel, was concerned about the reaction of the private sector to PFI. If it is our view that at the end of the day the Secretary of State needs to retain his existing powers to organise the National Health Service as he thinks fit. If it would not be right to allow some outside body, however closely involved with the NHS, to make such decisions or to be able to require the Secretary of State to dissolve a trust. Perhaps I may add that no Secretary of State has ever ratted on a debt. Officials have held a number of meetings with firms on that issue and they have been helpful. I should be happy to follow that up if the noble Lord has further suggestions.

The noble Lord, Lord Haskel, was also concerned about out-sourcing and market testing which he said can cause difficulties. I am aware that as a result of market testing of non-clinical services it is estimated that since 1993 the NHS has saved £1 billion. The improved value for money achieved has released additional resources for direct patient care. I agree that where it is not successful there must be an opportunity for the NHS to take back the service. Indeed, we have some examples of that.

The noble Lord, Lord Dean of Beswick, again raised the issue of the Wessex region. Your Lordships will be aware that earlier this afternoon I paid tribute to the noble Lord for his vigilance on the issue. But the noble Lord goes too far in suggesting that a former chairman and chief executive of the NHS should be "doing porridge." I think those were his words. The noble Lord has qualified privilege in your Lordships' House but those allegations are quite disgraceful and false. The noble Lord knows that the police were involved. The authority was totally open. Inquiries were held within the NHS and there were also in-depth investigations through Select Committees and the Public Accounts Committee. Those who transgressed were disciplined. To defame others who were not found guilty and were not prosecuted is unworthy of the noble Lord.

The noble Lord asked also about irregular payments in the Yorkshire RHA. Any suggestion of misuse of public funds is a matter for great concern and should be investigated fully. That has been done in respect of Yorkshire and in his report the Comptroller and Auditor General acknowledges the prompt and decisive action taken by Alan Langlands, the chief executive of the NHS Executive, in setting up an inquiry to investigate those matters.

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I agree with the noble Lord that it is right that the public and Parliament should expect the highest standards of probity and public accountability in the NHS. We have sought to achieve that. Since those incidents occurred, the NHS has issued codes of conduct on accountability and openness. The codes are mandatory on all NHS boards and compliance is a condition of appointment for both executive and non-executive board members.

The noble Lord, Lord Desai, asked when a hospital or NHS body ceases to exist. All the NHS bodies covered by the Bill are creatures of statute. They can be established only by statutory procedure and can cease to exist only by statutory procedure. Existing NHS Acts lay down the means whereby those bodies can cease to exist. There are no other means by which they can do so. There is nothing sinister about that. It is a matter of language. The 1990 Act gives the Secretary of State power to dissolve NHS trusts. The 1977 Act, as amended by the 1995 Act, talks about abolishing health authorities. "Ceases to exist" is merely a phrase which covers those actions in plain English. While I respect the noble Lord's greatly deserved reputation as a respected economist, I can tell him that yes, we have thought through those issues.

The PFI is about harnessing the skills of the private sector to improve hospitals and healthcare facilities from which dedicated NHS doctors, nurses and other clinicians provide high quality health care. I assure the noble Lord, Lord Blease, that the NHS is not for sale and NHS services will continue to be available on the basis of clinical need, largely free at the point of delivery. That applies as much to volunteers as it does to staff.

In fact, this Bill reinforces the position of trusts as part of the NHS structure. Private finance makes little or no difference to the basis on which health care is provided. There is no impact on responsibility for the provision of health care which remains with the Secretary of State as before other than that it may be easier to obtain redress against the poor delivery of those services which support the NHS. There is no impact on patients in relation to accessing health care other than improving facilities and those facilities will be realised more quickly. There is no cost impact on patients other than that the same services will cost less for taxpayers who are, of course, patients too. And there is no impact on clinical activities which can continue to be provided by NHS staff other than that they take place in a better environment.

The noble Lord, Lord Rea, and the noble Lord, Lord Monkswell, were concerned about the potential costs caused by the Bill. It was suggested that the Bill would result in significant extra expenditure for the Government. But that is really not the case. As the Explanatory and Financial Memorandum makes clear, any additional expenditure occasioned by the Bill is likely to be negligible. The reason is that in all places where NHS trusts have been dissolved, property, rights and liabilities have been transferred on dissolution. In fact, it is inconceivable that the Secretary of State would walk away from liabilities to contractors, staff and patients. I assure the noble Lord, Lord Monkswell, that

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the Bill does not require the Secretary of State to meet those liabilities at the time at which the body ceases to exist but ensures that they are transferred to another body which can continue the obligation. Thus, the liabilities do not actually become a charge to the Consolidated Fund or moneys voted by Parliament until they need to be paid.

The noble Lord, Lord Monkswell, and the noble Viscount, Lord Chandos, were concerned that the Bill removes the risk for the private sector. It was suggested that the provisions of the Bill undermine one of the principles of the PFI which is that of risk transfer. That is to misunderstand the situation. It is one of the central principles of PFI that the risks should be borne by those who are best placed to manage them and their consequences. The Bill seeks to ensure that private sector partners will not be left high and dry following, for example, the dissolution of a trust in any future NHS reorganisation. It does not in any way affect the many and varied types of risks which will be borne by the private sector under PFI.

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