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Hospital Car Parking Charges (Hereford)

Volume 514: debated on Monday 26 July 2010

Motion made, and Question proposed, That this House do now adjourn.—(Bill Wiggin.)

I am very grateful for the opportunity to bring before the House this important issue, which is of great local concern in Hereford, where a campaign led by Sarah Carr has resulted in a petition of more than 1,400 signatures against hospital car parking charges. It is important to emphasise that this issue is not about a “little local difficulty”. On the contrary, it shines a bright light on the huge cost and inflexibility of the private finance initiative and raises some profoundly important long-term public policy issues about the management and financing of the NHS. It is a case study of the foolishness and self-serving incompetence of the last Government.

These charges are expensive and unfair. They affect hospital patients and their families at a very vulnerable and difficult time in their lives. They particularly target frequent users, such as those visiting in-patients and those suffering from cancer, and they are socially regressive, falling relatively harder on the poor than the rich. Nationally, patients are estimated to pay more than £100 million a year in these charges.

But the problem of car parking charges does not end with Hereford hospital—quite the contrary. The trust would like nothing better than to reduce or scrap the charges for those affected, but it cannot because its hands are almost completely tied by the hospital’s PFI contract.

To see why, we need to step back a little. Hereford hospital was started in 1999 and was one of the earliest projects undertaken through the PFI. It was built, and is currently owned and managed under a 30-year contract, through Mercia Healthcare. Mercia is a special-purpose company that is 75%-owned by Semperian, a large PFI firm that is based in the City of London, and 25%-owned by the French industrial services giant, Sodexo. As well as being a shareholder, Sodexo acts as the contractor for car parking, among other things, which it in turn subcontracts out to CP Plus. Other non-clinical services are contracted out, including maintenance to WS Atkins.

The total cost of the project has been about £93 million. In return the hospital trust pays a unitary sum every year, currently about £15 million, which covers all costs—both capital and services. Governing all that is a huge legal contract that seeks to cover every eventuality that could arise between the two sides over its 30-year life. But there is little transparency in the contract as to how much different services cost or what margin is being charged on them. Instead, there is massive inflexibility.

This is how the contract works. A consultant who wants to put up a shelf in her office cannot do it herself or get the odd-job man in—after all, the trust does not own the hospital; instead, she has to use the in-house PFI contractor at unknown but doubtless significant expense. The contract allows up to 12 weeks for a quotation to be supplied and up to 12 more weeks for the work to be completed—six full months from when the original need arose. Even that is not necessarily the end of the matter. The contractor will also insist that some items be treated as capital items—as permanent additions to the infrastructure. and charged for in every subsequent year of the life of the contract.

A recent low point was reached with the installation of a new TV aerial in the consultants’ staff room at the hospital. A “changes” notice was raised and sent to the contractor, WS Atkins in that case. Twelve weeks later, it was costed at the princely sum of £819 plus VAT, or a grand total of £963—almost £1,000 for a TV aerial! That is the reality of public contracting in the UK today.

It is significant that later PFI contracts contained some financial safeguards for the NHS, which included 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; any efficiency savings go direct to the PFI consortium. Yet including savings of only 3% a year would reduce the cost of services by 60% in nominal terms over the life of the contract. That is a lot of lost medicines, lost hospital care and lost surgery.

The car park is managed not by Mercia or by its contractor, Sodexo, but by Sodexo’s subcontractor, CP Plus, in effect creating a treble mark-up on the deal. The hospital trust has little influence, knowledge of underlying costs or legal scope to negotiate changes to the contract. There are no automatic efficiency savings, and the contract cannot be re-tendered until 2029. The PFI consortium is thus sitting on a huge revenue stream, paid for by the taxpayer. My fear is that the contract is costing the taxpayer millions of pounds too much over its life.

Is it any surprise that the citizens of Herefordshire are paying so much for car parking, or that so little progress has been made to fix the problem, despite the trust’s best efforts? Is it any surprise that cost inflation in the NHS has been running at twice the national level?

Let us take stock. The issue of car parking charges is a matter of public concern. Every year, thousands of vulnerable people are affected by the charges in Herefordshire alone. We must have a solution.

It is well known that PFI contractors have done very well over the years from the huge wave of spending that has taken place in the NHS. I therefore ask Sodexo and Semperian to sit down again with the hospital trust, open up the books, sharpen their pencils, pass on some efficiencies and work with the trust to craft a new agreement. For myself, I shall not let the matter rest until they do.

However, the deeper issue, here as elsewhere, lies in the impact of the PFI itself. It is almost as though these contracts were deliberately designed to impede public transparency and public accountability. The point is not to blame those who originally negotiated the Hereford contract; they were rightly delighted that the new hospital was being built, in a county traditionally starved of public investment. It was one of the earliest deals of its kind, and as with any new market it took time to develop the knowledge and safeguards of the public interest that existed in later deals.

But if we look more broadly, we see some staggering ironies. The PFI was used to protect the last Government’s much-vaunted fiscal rules, only for the same rules to be spectacularly smashed anyway, as their spending boom gave us the longest and deepest recession on record. Secondly, the early PFI consortiums were actively encouraged by the Government to take on service provision so that their debt could be put off balance sheet. The result has arguably been to impose hundreds of millions of pounds of unnecessary costs on the NHS, while the Office for National Statistics has started to look at bringing the same debt on to the national balance sheet anyway. You could not make it up, Mr Speaker. Thirdly, the PFI has put car parking and other services beyond the scope of public accountability, while the structure of the contracts prevents hospital trusts from having the very information they need to renegotiate the contracts themselves.

This cautionary tale raises a vital wider question. At a time of fiscal crisis, should PFI projects be exempt from contributing to the public purse? I would argue that they should not be exempt. They should contribute to our national economic recovery like everybody else.

There are some £210 billion-worth of outstanding PFI capital assets in this country at the moment. A McKinsey study last year suggested that for the NHS alone, a reduction in interest charges of just two or three one hundredths of 1% could save £200 million. Anyone who thinks two or three hundredths of 1% is a lot should bear in mind that since July 2007, the base rate has fallen a full 5.25%.

“Are these not commercial contracts?”, it might be asked. Of course they are, and I am not for one moment suggesting that those contracts should be torn up. But the Government do not lack influence in this area. They have many points of contact with the different consortiums. For example, Semperian alone has stakes in 106 different PFI or public-private partnership projects, while Sodexo has stakes in 11 of them.

Moreover, many of the investors in these organisations are themselves public authorities. The largest investor in Semperian, with an equity stake of more than 25%, is Transport for London. It and other public bodies may themselves wish to support fairer treatment of PFI hospitals, rather than make huge sums at a time of national austerity.

Finally, some PFI providers are looking to expand abroad in search of future growth. They will not wish to be faced with criticism at home about the high cost of their services, while they seek new markets overseas. So I would call on the Government to use all these levers to encourage PFI providers to rebate some of their gains to the taxpayer. There is a direct precedent for this in the voluntary code that was introduced a few years to encourage PFI providers to share refinancing windfalls with the taxpayer.

I will close on a more positive note. The use of assets in many PFI hospitals remains far below international best practice. But over the longer term, there is clear scope to open up current deals, to relax some of the restrictions, to make better use of hospital assets and to remit more value to the public purse. The contractors will get what they are owed, but the taxpayer could benefit still more. That, I suggest, should be the thrust of Government policy in this area, and I greatly look forward to hearing what the Minister has to say on this issue. I would, of course, be happy to work with him to win a fairer deal for the taxpayers of Herefordshire and elsewhere if the need arises.

I begin by congratulating my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) on securing his first Adjournment debate—on the effect of NHS PFI costs on hospital car parking charges in Hereford.

Let me provide a little background on the trust before discussing my hon. Friend’s specific points about car parking. As he will know, Hereford Hospitals NHS Trust is the main provider of acute services across Herefordshire and for parts of Wales. The trust offers a wide range of services, including a dedicated cancer unit, which forms part of the three counties cancer network. I understand that funding has now been secured in partnership with Macmillan Cancer Support to develop a new cancer unit.

The most recent Care Quality Commission outpatient survey, released in April this year, showed that 19 out of 20 patients—95%—attending the Hereford hospital out-patient department rated the care they received as either “good”, “very good” or “excellent”. It also found that 89% of those asked stated that they were treated with dignity and respect at all times. This is very much to the hospital’s credit, and I pay tribute to the hard-working staff at Hereford hospital. It is through their dedication and expertise that my hon. Friend’s constituents benefit from such a high quality of care.

My hon. Friend has raised the important issue of parking costs at Hereford hospital. The quality of care inside the hospital is excellent. However, the service provided outside the hospital presents a real and pressing concern for patients, visitors and members of staff.

The Hereford county hospital development was, as my hon. Friend mentioned, part of the previous Government’s first wave of private finance initiatives. The County hospital PFI contract lasts for 30 years, from 2002 until 2032. In some respects, the Hereford contract differs from later PFIs, which utilised a standard form developed following the experience of earlier agreements.

In 2005, car parking charges for the period 2006-15 were agreed between the trust and Mercia Healthcare and incorporated in the main PFI contract through a legally binding variation, as my hon. Friend mentioned. Although Mercia owns the car parks, CP Plus operates them on a day-to-day basis via a subcontract with Sodexo, which runs all food and facilities management services on the site. I am told, unfortunately, that the cost to the trust of buying back the car parking element of the contract to 2032 has been calculated at some £7 million, a sum that my hon. Friend will agree is deemed prohibitive by the Hereford Hospitals NHS Trust.

The contract also switched car parking charges from pay and display to pay on exit. That change was introduced to discourage people using the hospital car park when shopping in Hereford city centre, cutting the number of spaces available for patients and visitors to the hospital. The hospital offers concessionary parking for different types of user. For example, a range of discounts is available to those who use the car park frequently, to the disabled and to a wide range of people on benefits or low incomes. In addition, when the length of stay exceeds certain local waiting targets, the cost of parking is reduced to the target wait. For example, if initial treatment is not given within four hours at accident and emergency, the cost of parking is reduced so that a patient pays only for four hours. Also, parents of children staying overnight in the hospital have their parking costs discounted to the two-hour rate of £3.

However, there is a real issue about people not knowing that those concessions exist. Although they are clearly displayed on the trust’s website, the internet, as my hon. Friend will probably appreciate, is not usually the first place to look for information when one drives into a car park. The clear and prominent display of the discounts and concessions available is a common complaint of patient groups throughout the country and one with which I have a considerable sympathy. I am told that the current car parking charges are in fact a little lower than those originally agreed with Mercia and reflect the trust board’s decision to subsidise the tariff by 50p an hour over the past two years. The annual cost of that subsidy is £88,502.

The strategic health authority has informed me that the trust board has taken a number of measures to ensure that car parking charges are reasonable. It has committed to reducing progressively the costs of on-site parking for patients and, eventually, to eliminating those costs all together. To pay for the reduction, charges for visitors and other users will be increased in line with the existing 10-year tariff plan. The trust is also investigating alternative transport initiatives to encourage staff and patients to use public transport.

The strategic health authority informs me that Hereford Hospitals NHS Trust is reviewing its car park policy. The aim is to develop proposals for charges and concessions for patients’ parking at the hospital, covering the hourly rates charged to patients and the availability of revenue to develop alternative arrangements. The review will also consider the range and appropriateness of current concessions. The trust hopes to complete its review of car parking charges by the end of this month, and the next increase to car parking charges, now due, is on hold pending the outcome of it. I also understand that the trust has already agreed a package of measures to improve car parking arrangements for patients receiving chemotherapy. These include the allocation of further free car parking spaces and better advertising of concessions.

Individual patients and advocate groups such as Macmillan Cancer Support and the Patients Association regularly raise the issue of car parking charges. Macmillan has highlighted how a lack of awareness among users and the poor promotion of concessions by some trusts lead to low take-up among long-term patients. We are giving those concerns serious thought. The Department of Health recently conducted a consultation on car parking charges, and I can assure my hon. Friend that we aim to publish a response to that consultation in September.

Unfortunately, though, whatever one’s views might be on the subject of NHS car parking charges, given the dire state of the public finances it is simply not possible to abolish them. Within a very difficult economic climate, this Government are committed to delivering health care outcomes that are among the best in the world. As part of this, power is being devolved to the front line like never before. As my hon. Friend will appreciate, when we came into government in May we inherited a deficit of £155 billion. Some tough decisions are having to be taken because my right hon. Friend the Chancellor of the Exchequer rightly makes it a priority to reduce the huge debt that we inherited, which is causing so many problems for our general economic well-being.

I am sure that my hon. Friend will appreciate that, as I said, it is simply not possible to abolish car parking fees at the moment, because the ethos of our policy towards better provision of health care, as outlined by my right hon. Friend the Secretary of State for Health in his White Paper last week, is that we believe that it is crucial to put patients at the forefront and the centre of health care. We must have bottom-up provision of health care that meets local needs to improve services and ensures the finest quality health care that the health service can provide in such a way that we do not have politicians and bureaucrats dictating a top-down approach.

Does my hon. Friend agree that many of the problems that we face in Hereford and in many other towns across the country are down to poorly negotiated private finance initiatives agreed by the last Labour Government?

I am grateful to my hon. Friend for making that cogent and powerful point. As we have all found out since we came into office, the economy was left in a dire state, and we are now having to pick up the pieces, as we did in 1979, to sort out the mess that the previous Government left us. That is the challenge that we are facing, and that is why we are having to take some tough decisions for the general better welfare of the economy as a whole and the people of this country, as tends to be traditional when we come to power after a Labour Government.

Where car parking charges make it difficult for staff to do their jobs properly, where they damage patients’ access to services, or where they prevent family and friends from visiting, hospital trusts have a responsibility to look again at their charges and policies. As my hon. Friend knows, a review is currently under way at Hereford hospital. I trust that he and all his constituents who are concerned about the level of car parking charges at the hospital are contributing to that review and ensuring that their views and concerns are known as regards the impact that those charges may be having on them. I also believe that it is crucial, not only in Hereford but throughout the country, that greater publicity and prominence be given to the fact that some people may qualify for a reduction in car parking charges due to their individual circumstances. That must be drawn to the attention of the client group that might benefit, because one suspects that too often, there is too little publicity and awareness of those discounts, which would provide genuine help to those who find car parking charges genuinely onerous to pay for.

I should just like to have it recorded in Hansard as a point of important note that while we are talking about the people who are the most disadvantaged by the charges that are so often levied in hospital car parks, not a single Opposition Member is here to hear the debate. I hope my hon. Friend agrees that that is an important point that should be recorded and registered.

I congratulate my hon. Friend, who has certainly succeeded in achieving what he intended. No doubt tomorrow, when Hansard is published, his cogent point will be marked. The only disappointment is that as there are no Opposition Members here, they will not be aware of his intervention, but I am sure he will use his skills to ensure that his point is given a wider audience.

Before my hon. Friend concludes, will he address the point about renegotiating the PFI? Will he take up the offer of my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) and try to squeeze some more value out of the PFI, and to help? He has made an eloquent case about how tight the money is.

I thank my hon. Friend for that extremely helpful intervention. I am grateful for his kind offer for me to try to intervene and use my good offices to facilitate a renegotiation. It is late at night, but I do not want to be churlish and I do not want to upset my hon. Friend. However, gone are the days when politicians and bureaucrats sitting in Whitehall interfere and micro-manage local health services. The Government’s vision, new policy and ethos is for a localised health service, responding to local needs, not hamstrung by interfering Ministers, including—I know that my hon. Friend will find that difficult to believe—me. I must therefore say that it is a local matter, which would have to be taken up and sorted out locally, though, from my extensive knowledge of the position, I would not, were I a betting man, put a considerable amount of money on the suggested course of action being adopted.

Having said that, during a review of car parking at the hospital, it is important that all those with an interest or a concern about the charges play a full part. Ultimately, as I hope that my hon. Friend the Member for West Suffolk (Matthew Hancock) will appreciate, it is for the NHS trust to manage its car parking to suit best the needs of its patients, the visitors and staff.

However, I hope that, given the campaign of my hon. Friend the Member for Hereford and South Herefordshire and my hon. Friends in the surrounding constituencies, who have played their part not only in recent months but for a considerable time in representing their constituents and trying to get a good deal for them, they will continue to open dialogue with the local trust and do all they can to pursue the matter and ensure that they get a better and fairer deal, which is mutually satisfactory to the trust, the PFI and my hon. Friend’s constituents.

Question put and agreed to.

House adjourned.