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Baroness Cumberlege: Perhaps I may press the Minister on something that he said. I may have misheard him. He mentioned that the Secretary of State would walk away from any partnership which he felt was unsatisfactory or possibly failing. I can understand his wish to do that, but how does that give confidence to the private sector? What guarantees will the private sector have?

Secondly, I want to ask the Minister whether he will respond to the question about attracting developers into the heartbreak wilderness areas, to which, in the past, they have not been attracted. What incentives does the scheme provide to ensure that developers go into those areas? If they do not, that will reinforce the inverse care law, which would be a great pity.

Finally, I want to ask about the spin-out companies which were mentioned by the Minister. In debate in another place, the Minister, Mr Denham, described the development of spin-out companies as exploiting intellectual property. I very much endorse that. I believe it is right that the NHS should benefit financially from innovation discovered within the service. However, without going into detail, in another place the Minister said that we must recognise that

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clear procedures are needed for managing risks with spin-out companies. I believe that it would be very helpful to the House if the Minister could set out the details of those companies. It may not be possible to do so this afternoon, but he may be able to place something in the Library which we can see before Report stage--if, indeed, there is one.

Lord Hunt of Kings Heath: In answer to the final point made by the noble Baroness, we shall, of course, need to set out guidance and procedures to ensure that the management of such companies is conducted properly and that we do not, for example, face a situation in which an NHS trust becomes rather over-entrepreneurial and seeks to make money at the expense of its core activities. We are clear that spin-off companies should enable the NHS to see a return. However, that is based very much on taking advantage of the work being done within the NHS trust. I shall find what information I can to send to noble Lords and to place in the Library before Report stage. However, clearly further work needs to be undertaken following the passage of this Bill.

In relation to the Secretary of State walking away from an agreement, I very much hope that that does not happen; indeed, I have been encouraged by the discussions that have taken place between the department and various potential public/private partners in the whole area of public/private partnership. Of course, the intention is that an agreement should be reached on the best way forward with a commitment on both sides to make the project work. I was simply answering the point raised by the noble Earl, Lord Howe, as to how to proceed in the event of a fundamental breakdown in the relationship. However, there will be a great deal of incentive on both sides to ensure that such a relationship does not break down.

The noble Baroness raised an interesting point in asking why this project will be more successful than others in improving the quality of facilities in primary care areas. I want to make two points about that. First, the Government will put money into the scheme so that it will be seen to have received commitment in a financial as well as a policy sense.

Secondly, because of the way that NHS LIFT will operate, there will be a greater opportunity to put together sensible programmes which will be successful. Perhaps I may give an example. At present, very often a problem in relation to primary care is that schemes are limited and small-scale and, therefore, are not particularly attractive to major investors. However, by batching together a number of different developments, savings can be made both in development and transaction costs.

A third area in which the project is likely to be more successful is in building up a residue of expertise. Again, at present, in attempting to sort out poor quality primary care facilities, a problem is faced in knowing where to turn in order to find expertise, particularly in relation to private sector investment. I believe that the whole package of NHS LIFT will be able to provide the type of expertise that is required.

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None the less, I believe that that is a great challenge faced in primary care. It fits together with our other plans to ensure that the resource allocation formula also provides financial incentives.

3.45 p.m.

Baroness Noakes: Perhaps I may press the Minister on the information that will be given when the new companies are set up. If I heard him correctly, he said that he would devote an extra chapter of the Department of Health's annual report to those companies and would give the information which Amendment No. 34 seeks to provide. The annual report is published six months or so after the end of the year. Therefore, if one of those companies were to be set up on, let us say, 1st April 2001, information might be made available to the public in October 2002. The amendment provides for early information to be given when one of those companies is set up.

I should be interested to know how the Minister saw information being made available to Parliament on a more timely basis. We must recognise that, in setting up those companies, significant financial commitments could be entered into, guarantees given by the Government, and significant projects could be entered into whether the Government have a minority or majority interest; that matters little. When the Government are involved in such companies, many issues are raised with regard to the Government standing behind the companies. Perhaps I may press the Minister on what information he envisages will be made available to Parliament in advance of the Department of Health's annual report.

Lord Hunt of Kings Heath: I rest my case on the information that I have already given. In terms of appropriate parliamentary reporting, the Department of Health's annual report provides the necessary information to ensure that Parliament is aware of what has occurred. The noble Earl, Lord Howe, hinted at the fact that it would be premature to bring information before Parliament at an early stage in the discussions or agreement. I believe that the suggestion in relation to a short period of retrospection would discharge appropriate information to Parliament. After all, as the noble Baroness said, the information would be available only a few months after the end of a financial year.

Baroness Noakes: Perhaps I may make the point that there would be a potential delay of 18 months after a transaction had occurred. That is rather a long time.

Lord Hunt of Kings Heath: I accept that, but we are not talking here about a requirement for parliamentary approval to be given. That is a matter for agreement between the Secretary of State and any of the companies involved. The question is how that action should be reported. I really believe that a period of six months or so after the end of the financial year is appropriate and, indeed, consistent with reporting by the previous government.

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Earl Howe: I am grateful to the Minister for his very full reply and for the number of helpful assurances that he was able to give me. I shall obviously read extremely carefully what he said.

Perhaps I may pick up two points. The Minister indicated in response to my Amendments Nos. 28 and 33 that it was inappropriate to suggest that the Secretary of State should automatically consider the private sector whenever there is a proposal on the table for a new project under either of those clauses. He referred back to the regime of compulsory competitive tendering which used to operate. That was not in my head when I tabled the amendments. The wording of the amendments is chosen carefully to ensure that the Secretary of State should consider whether the facilities or services in question can be provided most efficiently and cost-effectively through the involvement of the private sector. So, if he were to decide that a process of competitive tendering was not appropriate because it was not cost-effective, then that would not happen. I was sorry that the Minister was not able to take on board the point I made in the spirit in which I was trying to make it.

The second point to which I want to refer is a point which my noble friend has just mentioned; that is, the ability of the Secretary of State to use NHS LIFT to direct investment to where it is most needed. I queried whether as a shareholder in a minority company, the Secretary of State would have much leverage in that sense.

I was rather surprised to hear the Minister say that in the final analysis, the Secretary of State could walk away from the company. Unless I am completely wrong, NHS LIFT will essentially be a finance company. Because the Secretary of State will have only a minority holding, the borrowing of that finance company will be off the public sector balance sheet. Although that borrowing will be raised at commercial rates, it will be at very favourable commercial rates, by virtue of the Secretary of State's shareholding.

I am not sure how reassured the City will be to hear that the Secretary of State could simply walk away from such an arrangement. That is a surprising thing to contemplate because the private sector needs to be given as much confidence as possible. The taxpayer and the general public need to be given confidence that there is proper value for money for public funds.

We all look forward with great interest to what NHS LIFT will bring to us.

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