Jesse questions Chancellor of the Exchequer on PFI at Hereford hospital and “unfair” rural cancer funding

Jesse Norman speaking in a Westminster Hall debateLocal MP Jesse Norman was able to question Chancellor of the Exchequer George Osborne recently on two key issues for Herefordshire residents: the Private Finance Initiative contract at Hereford Hospital, and the huge difference between cancer funding in urban and rural areas.

The Chancellor was being questioned by the Treasury Committee, of which Jesse is a member. Highlighting a “systematic problem” of “massive failures” by the contractors, including “serious concerns about ventilation and emergency systems in maternity”, Jesse pressed the Chancellor to focus specific Treasury attention on this and other PFI contracts.

In a separate intervention, Jesse focused on cancer care: “In my county, if you have cancer, the level of cancer care funding is £5,000 a year. If you live in Birmingham, it is £10,000 a year. The difference is that there are three times as many people in my county with cancer as a proportion of the population as there are in Birmingham. Do you think that kind of disparity is fair and is it something that the Government should be ... addressing?”

In response, the Chancellor acknowledged that successive governments had not adequately tackled areas of rural deprivation, highlighted work under way to improve the funding of rural schools, and praised the Hereford MP’s expertise and work in this area.

Speaking afterwards, Jesse said “Fair and proper funding for the hospital and for cancer treatment in Herefordshire are massive issues for local people. I was very glad to be able to put these questions directly to the Chancellor, and to highlight some of the unfairness in the present system.”

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Q187 Jesse Norman: Chancellor, can I start by welcoming the removal of the student cap? That is a tremendous step forward and it is good for two reasons: first because it is good for young people in the way that you have indicated, and secondly because it levels the playing field for new institutions that are coming in. Certainly in Herefordshire, we are trying to create a new liberal sciences technical university and we are absolutely thrilled to see that development, so thank you very much indeed for that.

I want to return to an ancient theme of my own, which is infrastructure and the Private Finance Initiative in particular at this point. Of course the Treasury has taken some important measures to tighten up existing PFI contracts already, but the evidence from work we have done looking at the PFI contract in Hereford Hospital shows that there have been massive failures in fire compartmentation and in other areas. That points to a more systematic problem.

Those failures were rooted out by just checking the contracts, making sure that these contracts had done what they said they were doing, and what has come out of that are serious concerns on ventilation and emergency systems in maternity. I have referred these contractors to the Health and Safety Executive because of my concerns about them. There are 106 projects nationally, hospitals built under PFI after 1997. Do you think that there is a case now—as I believe, an overwhelming case—for a central team that is specifically tasked with reviewing and bearing down on this waste?

Mr Osborne: We have provided that facility for those who have undertaken PFI contracts to come to us and see if we can renegotiate some of these contracts, get them down. There has been some of that renegotiation taking place, but I am certainly open to suggestions of what more we can do to bear down on some of these terrible deals that have brought real hardship, most notably, for example, in the south-east London hospitals situation.

Q188 Jesse Norman: Yes, thank you for that. There is in fact evidence that elements of the Department of Health have been almost captured by the contractors over PFI. I wonder whether you would consider asking the Treasury to take a specific look at whether or not the Department of Health is properly bearing down on those contracts, because I am far from persuaded that it is doing its job in that area.

Mr Osborne: Again, any proposal that would enable us to save public expenditure, get better value for money is one I would look closely at. You have investigated this area thoroughly and have a great deal of expertise in this, so I will certainly listen to your proposals.

Q189 Jesse Norman: I am grateful for that, thank you. In my county, if you have cancer, the level of cancer care funding is £5,000 a year. If you live in Birmingham, it is £10,000 a year. The difference is that there are three times as many people in my county with cancer as a proportion of the population as there are in Birmingham. Do you think that kind of disparity is fair and is it something that the Government should be looking at addressing?

Mr Osborne: This is a complicated question of how we apportion public expenditure around the United Kingdom and within England, and the truth is that our urban areas do get relatively more public spending, but they tend to also have much greater health and deprivation problems. It does not mean that it is perfect and that you cannot look at this, as we are doing, for example, in the school funding formula. Look, as a constituency MP in Cheshire, I know there is always a debate about how much money per head of population we receive compared to neighbouring Manchester, and I think there is room for improvement in some of these formulas, but fundamentally we make a decision as a country that we spend more money in the most deprived areas.

Jesse Norman: Even if those deprived areas are sometimes rural ones?

Mr Osborne: One of the things that these formulas have not been very good at tackling is pockets of rural deprivation and that is, for example, in the national funding formula for schools, we are looking at issues where you could have two schools with the same number of kids on free school meals, which is not a bad indicator of deprivation, and yet because one is in a rural area and one is in an urban area, the rural school gets much less. That is something we are looking at in the national funding formula for schools. Of course, as I say, there is a broader debate to be had, but I think you are still going to end up with a situation where you are concentrating resources in areas of greater deprivation.