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PFI Schemes

Volume 540: debated on Tuesday 21 February 2012

We have made a lot of progress. All PFI schemes are having their contracts reviewed for potential savings following a Treasury-led pilot exercise. We are providing seven of the worst affected PFI schemes with access to a £1.5 billion support fund, and we are working with 16 other trusts to address long-term sustainability. As I said, in November last year the Treasury announced plans for a complete reform of the current PFI model, using public-private partnerships, private sector expertise and innovation, but at a value-for-money price for the taxpayer.

I thank the Secretary of State for that answer. The new Southmead hospital in Bristol will cost over £400 million, to be funded by PFI, yet it will take over 30 years, at £37 million per year, to pay that off. That cannot be good value for money for the taxpayer or for the NHS. What more can the Government do to ensure that these contracts can be renegotiated in future?

My hon. Friend will be aware of the difficulties involved in the contracts that we inherited; that is true for PFI, as well as for the NHS IT contracts and many others. We have to try to use PFI contracts more cost-effectively; on average, the Treasury exercise demonstrated a 5% saving on their costs. Beyond that, we have to ensure that from now on the NHS delivers a much more value-for-money approach to using private sector expertise, including proper transfer of risk.

PFI enabled the building of many new hospitals and brought benefits to millions of patients. However, the Public Accounts Committee has found that lengthy procurement timetables led to increased costs. What will the Department do to sharpen its capital funding procurement model to get a good deal for the taxpayer?

That is a sensible question, and precisely why we are pursuing, as we said in November last year, a new approach to public-private partnership that does not entail the extreme costs, delays and burdens that past PFI projects have left. We are working with projects—for example, one at Alder Hey in Liverpool—to ensure that they demonstrate enhanced value for money compared with past PFI projects.