Private Finance Initiative

I congratulate not only the hon. Member for Hereford and South Herefordshire (Jesse Norman), but everyone who has spoken today. We are having an absolutely first-class debate with some very innovative thinking. When the PFI was first introduced, I was deeply concerned about it in the west midlands, which is where I am from. I felt that clever companies were running rings around the inexperienced procurers of a lot of our public services. I was worried about it then and I am still worried about it, because everything I have feared has come to fruition. Today, £67 billion-worth of PFI contracts have been signed, and the total payment has been £210 billion, which says it all. In the NHS, the BBC found that £11.3 billion of investment in hospitals will have a total lifetime cost of £65 billion. The average NHS PFI profit is a return of 66%. If we compare that with the 2.8% figure for major construction companies, there is a shocking contrast. A number of speakers have talked about PFI being the only game in town, the lack of access to capital finance and the need for off-balance-sheet funding. The problems have been very apparent. There are long, inflexible arrangements that are often unresponsive to change. Again, I shall give a health-related example. Hospitals currently do not have the money to keep pumping into these inflexible contracts. Hospitals change their functions and have a need for physical alterations, but PFI contracts are not responsive enough to help. Of course, there are also policy changes. We now have a situation whereby we are trying to conduct as much care as possible within the community. It is very interesting to speculate about what that will mean for the PFI. At the moment, we are facing the spectre of closing beds and sacking staff to balance the books and satisfy the contracts that were drawn up with inexperience a long, long time ago. The distribution of risk concerns me greatly. Who really takes the risk if something goes badly wrong? Given the statistics that I have quoted, it must be difficult to fail with such a level of profit built in. There is also the issue of the trading of contracts. Once a company has acquired a contract, it goes out into the market and, as the hon. Member for Hereford and South Herefordshire has said, there is sub-contracting and different people take their profit and a cut. The European services strategy unit found that the Treasury's poor monitoring of the trading of PFI debt was giving companies a licence to print money. It is a very concerning and problematic picture. What are the Government doing about the issue? Since we have been in government, we have forced Departments to bear the revenue cost of PFI contracts—I bet that has made one or two people think again about further investment. We are also reopening three major contracts as part of a renegotiation strategy and—I hope that this will be a warning to many PFI holders—as mentioned, we are doing a deep-dive investigation into Queen's hospital, Romford. That will be the first forensic look at the operation of a PFI in 15 years. We have talked about solutions. The hon. Member for Hereford and South Herefordshire has campaigned brilliantly on the idea of trying to obtain a rebate, and a voluntary code was agreed in 2002 under the previous Government. After several PFI providers made windfalls in refinancing deals, it was negotiated that 30% of gains from existing projects should be returned to the taxpayer. I understand that today that figure is 50%. We need a proper rebate and a proper code of conduct. I am also attracted to the idea of a national asset trust fund and the possible extension of a Government bank, such as the green investment bank, to use the Government's natural low-borrowing ability to obtain cheaper funding. I have been very brief, Mrs Main. This gravy train has got to dry up. There is an issue with many, although not all, PFI companies. That point has been made. Some contracts have been well conducted, professionally done and are good value for money. However, a lot of PFI companies have taken advantage and have bled our public services dry. It is time to release the tourniquet before the patient who feeds it bleeds to death.