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PFI Debt (NHS Hospitals)

Volume 540: debated on Tuesday 21 February 2012

1. What steps he is taking to address levels of PFI debt in NHS hospitals; and if he will make a statement. (95312)

The previous Government left 102 hospital projects with £67 billion of PFI debts. We have worked closely with NHS organisations for which PFI affordability is an issue to identify solutions for them, which have included joint working with the Treasury to reduce the costs of PFI contracts. Despite that, some trusts have unaffordable PFI obligations. On 3 February I announced how each of them could access ongoing Government support to help meet those costs.

I thank my right hon. Friend for that answer. Russells Hall hospital was expanded in 2003, but still has £1.8 billion of PFI debt attached to it—debt which will not be paid off until 2042. What steps is he taking to help reduce the PFI costs for hospitals such as mine that have not been completely crippled by Labour’s PFI and therefore do not qualify for central support, but none the less have high levels of debt?

I am grateful to my hon. Friend, who illustrates the precise issue with what Labour left. Labour talked of building new hospitals but left this enormous mortgage, in effect, of £67 billion. He refers to Russells Hall hospital, which, like others, is having its contracts reviewed for potential savings following the Treasury-led pilot exercise that I described, which was undertaken at Queen’s hospital, Romford.

Given that the PFI process has been proven to have flaws in delivering value for money for taxpayers, what effect does my right hon. Friend feel that that will have on new commissioning boards?

My hon. Friend will know from the very good work being done by the developing clinical commissioning groups in Plymouth that they have a responsibility to use their budgets to deliver the best care for the population they serve. It is not their responsibility to manage the finances of their hospitals or other providers; that is the responsibility of the strategic health authorities for NHS trusts and of Monitor for foundation trusts. In the future, it will be made very clear that the providers of health care services will be regulated for their sustainability, viability and continuity of services but will not pass those costs on to the clinical commissioning groups. The clinical commissioning groups should understand that it is their responsibility to ensure that patients get access to good care.

The Secretary of State will recall that he cancelled the new hospital planned for my area shortly after the general election. Will he advise the House how many hospitals the Government are building that use models other than PFI?

The hon. Gentleman will recall that his foundation trust was looking to receive more than £400 million in capital grant from the Department, which went completely contrary to the foundation trust model introduced under the previous Government. I pay credit to North Tees and Hartlepool NHS Foundation Trust, which is developing a better and more practical solution than that which it pursued before the election—many of the projects planned before the election were unviable. The hon. Gentleman will know that projects are going ahead, and last November, together with the Treasury, we published a comprehensive call for reform of PFI. We achieve public-private partnerships and use private sector expertise and innovation, but on a value-for-money basis.

John Appleby of the King’s Fund says that PFI represents less than 1% of the total annual turnover of £115 billion. Does the Secretary of State agree?

I gave the hon. Lady the figure: £67 billion of debt. Seven NHS trusts and foundation trusts are clearly unviable because of the debt that was left them by the Labour Government.

Is the Secretary of State confident that subsidising hospitals burdened with PFI will not be deemed anti-competitive under forthcoming legislation, or state aid under EU legislation? Has he taken appropriate legal advice?

I always act on advice, and I am absolutely clear that the support we have set out for NHS trusts and foundation trusts will not fall foul of anti-competitive procedures.