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Mr. Soley : No. I meant exactly what I said. The Crown Suppliers and the PSA determine and advise on arrangements to deal with counter-terrorist activities on behalf of our armed forces. If the hon. Gentleman does not understand that, he does not understand what they do.
We did not hear from the Secretary of State whether that aspect of the bodies' activities will be wholly privatised, partly privatised or not privatised at all. We need to know that and it is no good the Secretary of State ducking the issue and hoping it will go away. It will not go away because we are not prepared to gamble with people's lives, even if the Government are. The issue is far too important to ignore.
Let us look again at what the Parliamentary Under-Secretary of State, the hon. Member for Itchen, had to say :
"For security reasons, I have decided to exclude from the sale the design and procurement of security furniture and equipment and the car service which transports Ministers and senior officials in London."--[ Official Report, 28 July 1988 ; Vol. 138, c. 441.]
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That is all. We have to forget the families, Faslane and Aldermaston. The Government are concentrating only on the ministerial car service, security furniture and equipment and its design and procurement. That is what we have been told in a public document, but the Secretary of State said that he could not refer to that. However, the Under-Secretary of State has already discussed it and it has been discussed in public. The Secretary of State is trying to hide behind the idea that somehow we cannot discuss security now.The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope) : I do not know whether the hon. Gentleman knows,understands or is interested in the fact that most of the married quarters are maintained by private sector maintenance firms.
Mr. Soley : Yes, but who advises them about security against paramilitary activities? Will the Minister accept that the PSA and the Crown Suppliers advise them? The Minister should not intervene unless he knows what the debate is about.
The PSA advised on the security on the Prime Minister's home in Dulwich. Is that kind of advice going to be privatised? Will it be excluded from the privatisation? We have heard only one little statement from the Under- Secretary of State, which I have quoted, that certain parts of the PSA will not be privatised. That is not enough and the House would find it unacceptable if those matters could not be discussed in detail in Standing Committee. I put the Government on notice, as I put them on notice about the money involved in the Bill, that we will not put the security factor at risk here just because the Government want a little extra money in an ideologial bid to back their private supporters. That is not good enough and it will not do for the British people.
Relationships with overseas Governments are also involved. Reference has been made to this and I want to refer to a meeting between senior British civil servants and members of the United States air force represented by Lieutenant Colonel Dean Bartel and General Anderson, the officer commanding the 3rd air force. That meeting took place in October in Germany. The United States representatives said that privatisation would cause great difficulties.
We must consider the way in which the American Government's attitude on this issue differs from that of the British Government. Congressional rules specifically forbid the United States air force from using a private sector firm. Work must be placed in a relevant Government Department in the host country. I presume that that rule exists for security reasons, something which the Secretary of State is not even prepared to discuss on the Floor of the House. Congressional rules also forbid the location of private sector companies on USAF bases. In other words, such companies will not be able to enter those airfields to work. There are PSA works offices based on USAF airfields. Under that rule, PSA works offices on USAF sites would have to be closed after privatisation unless the Secretary of State can tell us that these matters have been considered and debated with the United States' Government and a satisfactory arrangement has been reached. However, that
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is unlikely because American procurement is based on official United States documentation which cannot be delegated to a non-governmental body.Lieutenant Colonel Bartel is responsible for USAF civil engineering work. He has expressed himself fully satisfied with the PSA's performance and has said that the United States Government would oppose the privatisation of PSA because of the interference with USAF operational arrangements. He said that the Americans regarded the privatisation of the PSA as a breach of treaty obligations. I do not know how far that goes in the detail of the treaty, but we will have to pursue that in Committee. However, we should not have this Second Reading debate without the matter being referred to. General Anderson said that pressures were being applied at the highest levels to retain the status quo. Again, we will want to investigate that in Committee.
The situation is extremely serious and I will touch on other issues in Committee. However, I want to refer now to environmental issues because it is important that we remember that it was the Secretary of State for the Environment who moved this Second Reading. No doubt the Prime Minister gave him this post because she wanted to saddle him with the poll tax, water privatisation and a sports Bill, none of which he believes in. That was a useful way of curbing his ambitions. It was also useful for the Prime Minister to appoint the right hon. Gentleman because that gave some credence to her green record. The Secretary of State is in some trouble with this Bill. The Parliamentary Under-Secretary of State, in one of his enlightened moments, which are very few and far between--although I would not like to deny him this one--said :
"The sensitive use of the landscape is central to the role of the PSA. With over 300,000 hectares of land under its management, from Cornwall to the Shetland Isles, as well as many places around the world the Agency sets and meets high standards. PSA landscape architects work, along with practices of international standing, to bring about sensitive and effective results."
It is interesting that the notice of the privatisation contained in this Bill appeared immediately next to the phrase in the Queen's Speech :
"My Government will continue to attach very great importance to protecting the environment."
The environmental side of the PSA will be sold out along with the British taxpayer and the interests of the security of this country.
Mr. Chope : Does the hon. Gentleman believe that it would be a good idea for the PSA's expertise in landscaping to be available to the wider private sector?
Mr. Soley : It is already available and it would be even more available if, instead of this absurd privatisation exercise, the Minister said that work could be put out to tender for private sector contracts.
The problem is that the Under-Secretary of State served on Wandsworth council. That council has one of the few hospitals which has not been closed down under the community care programme and the councillors have not yet been put out on the streets. However, they should be. The Minister is trying to live up to an absurd reputation. He seems to believe that privatising and flogging everything off is the only way to influence the private sector. Reports from the Minister's Department show that the PSA raises standards in the private sector. Why does the Minister deny it that role? Why should it be flogged off instead?
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I now want to refer to a very important point, which to give the Secretary of State his due, he touched on. We will want to consider staff conditions very carefully in Committee. Redundancy is also important. I understand why the Bill prevents what might in effect in certain circumstances be double redundancy. However, I do not accept that the Bill or the Secretary of State's speech explain what will happen to staff who are moved from the present system in which they have certain guarantees about redundancy to a company with worse standards.With regard to redundancy and pensions, we should state that staff should not be transferred to a system which is worse than the one they have. We must bear in mind what happened to many workers, particularly in the Health Service and those in lower paid jobs. They were very vulnerable when they were transferred to the private sector which, far from negotiating up their conditions, negotiated them down. A low-paid exploited midnight army of people are doing some of the most essential but most unattractive work in the country. The type of work in the Crown Suppliers and the PSA is different, but the pension rights and redundancy arrangements of the staff are crucial. In no circumstances should staff be transferred to a private organisation in which their conditions of service, including redundancy money and pensions, are less than they presently receive from the Civil Service. The Civil Service has an honourable record as a good employer. The last thing that we should do is hand over a group of people as if they were goods and chattels instead of people who need to make provision for themselves and their families. Will they be allowed to transfer to another scheme of comparable value without great cost to themselves? Employees should not have to pay more to get the same pension. We shall explore those issues in much greater detail in Committee.
I repeat what I have already said to the Minister. There are two key matters. The first is the unacceptable way in which the Government are handling the funding of privatisation and the way in which they have used taxpayers' money to feather the pockets of many private companies in this country and overseas. It is a misuse of the public's money. The second matter relates to security. It is deeply disturbing, and the Secretary of State did not even consider it important enough to debate.
The Opposition will not play with the security of this country. We will not allow it to be diminished in any way. We will pursue this matter in Committee to make sure that the protection of our armed forces is at least as good as that of Ministers in their cars. 6 pm
Mr. Ian Gow (Eastbourne) : It is certainly a source of great satisfaction to me and, I hope, to my right hon. Friend the Secretary of State to find clause 6(2) included in the Bill. Alas, it is rare to find a Bill introduced into this House or into another place which extends to Northern Ireland. I have long criticised the procedures whereby almost all legislation affecting Northern Ireland is done by unamendable Order in Council, so I am pleased that this Bill extends to the whole of the United Kingdom.
I felt that some parts of the speech by the hon. Member for Hammersmith (Mr. Soley) were a little unreal, particularly those parts in which he expressed concern lest there might be a loss of jobs on United States bases following the privatisation of the Property Services
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Agency. It was not so long ago that the hon. Gentleman's party was advocating the closure of all American bases, so his concern about the possible loss of jobs seems rather unreal. My hon. Friend the Under-Secretary of State will make it clear that proper arrangements will be made to protect and safeguard the legitimate and necessary interests of the United States forces who are stationed in this country at our invitation.The other part of the hon. Gentleman's speech which I found to be rather unreal was his statement which gave the impression that the security of the United Kingdom depended upon the Property Services Agency. I shall say some generous things--at least they will be intended to be generous--about the Property Services Agency, but to describe it as a major factor in the security of these islands is to overstate the case.
The overwhelming majority of the work that is presently done on behalf of or under the direction of the Property Services Agency is done by the private sector. It is ludicrous to say that, if the Property Services Agency happens to go from the public sector to the private sector, which of course I want it to do, there will be less involvement by the private sector. Following the privatisation of the Property Services Agency, some of its security responsibilities will continue to be carried out by the agency itself, whether in public or private ownership, and some responsibility may be transferred to client bodies.
This is a memorable debate. My right hon. Friend the Secretary of State is the sixth Secretary of State for the Environment in the past 10 years. I had the priviledge to serve under my noble Friend Lord Jenkin of Roding. Each of the former Secretaries of State, even including my right hon. Friend the Member for Henley (Mr. Heseltine), whose absence from our proceedings upstairs yesterday I deplore, had distinguished careers at No. 2 Marsham street. I mean no discourtesy to any of them, but I predict that the record of my right hon. Friend will be no less distinguished than those of any of his five predecessors. His record is already significantly better than those of any of his predecessors. My right hon. Friend has succeeded where each of his predecessors has failed--he has brought this Bill before the House.
I am happy to see in his place my hon. Friend the Member for Ealing, Acton (Sir G. Young), an Etonian baronet from London, not from Clywd, North-West. When I arrived at Marsham street in June 1983, I had the good fortune to find my hon. Friend, who was then Under-Secretary of State with responsibility for the Property Services Agency. I found also that my noble Friend Lord Jenkin of Roding had allocated the Property Services Agency to me. My hon. Friend will confirm that, from the day I arrived at Marsham street until the day I left, I was strongly in favour of bringing the Property Services Agency into the private sector. I shall give way to my hon. Friend if he wishes to dissent.
Sir George Young (Ealing, Acton) : I could not miss the opportunity of hearing my hon. Friend's second public performance since our proceedings have been televised. My hon. Friend exhibited impatience when he found that standards in the PSA were not up to his high expectations. He quite rightly pursued the policy of privatisation, which comes to fruition this evening.
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Mr. Martin Flannery (Sheffield, Hillsborough) : This is a tender moment.Mr. Gow : The tender can wait.
I am grateful to my hon. Friend the Member for Acton for his remarks. I hope that he will catch your eye, Madam Deputy Speaker, before 10 o'clock.
The opening remarks by my right hon. Friend the Secretary of State and by the hon. Member for Hammersmith were characterised by some general references to privatisation. It will come as a surprise to hon. Members to learn that I have always been and remain a strong advocate of putting into the private sector all those aspects of the nation's life that it is not essential to have in the public sector. There may be a legitimate dispute between the hon. Member for Hammersmith and his right hon. and hon. Friends about whether the Property Services Agency must be in the public sector.
The task of maintaining the Government's stock of buildings and responsibility for some of our new buildings, including military buildings, can properly be entrusted to the private sector. It is perfectly proper for the hon. Member for Hammersmith to say, "No. Responsibility for maintaining Government buildings must be with a public sector body." I do not share that view, but it is certainly legitimate.
Mr. Dalyell : As the hon. Gentleman is a strong advocate of privatisation, is it not a matter of dismay to him, and doubtless to the electors of Eastbourne, that, two years ago, the Crown Suppliers was making a profit of about £5 million? Am I wrong in saying that, under the guidance of the Under-Secretary of State, it lost £1 million last year? What a mess the Under-Secretary of State has made of things. Would the hon. Gentleman's constituents in Eastbourne not be extremely angry?
Mr. Gow : I rejoice in the fact that there was profit ; I do not rejoice in the fact that there was a loss--
Mr. Gow : That underlines the very point I am making
[Interruption.] Well. I have only been a Member of the House for the twinkling of an eye, but in those 15 years nothing has altered the view that I held on arrival--that no special gifts, qualities or abilities were given to Ministers to enable them to run industries and enterprises better than folk outside.
Mr. Dalyell : Is the hon. Gentleman aware that John Stuart Mill coined the phrase.
"the deep slumber of a decided opinion"?
Should not the hon. Gentleman now wake from it?
Mr. Gow : I shall quote some Mill at the hon. Gentleman-- "The worth of a State, in the long run, is the worth of the individuals composing it A State which dwarfs its men, in order that they may be more docile instruments in its hands ... will find that with small men no great thing can really be accomplished." So I believe that John Stuart Mill supports my argument rather than that of the hon. Gentleman.
Sir Giles Shaw (Pudsey) : I hesitate to interrupt my hon. Friend when he is in such erudite flow, but I was worried because he said that small men can offer no great accomplishments.
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Mr. Gow : I apologise to my hon. Friend. I was not referring to "small men" in any literal sense.
I was asserting that the private ownership of the Property Services Agency, especially by those who work in it--by worker shareholders--is a concept that has long been dear to my heart. When British Gas was offered for sale to its workers, 99 per cent. of those who work for British Gas took up shares. When British Telecom was offered for sale to its workers, 96 per cent. of those who worked for British Telecom applied for shares. I believe
Mr. Flannery rose--
Mr. Gow : Yes, I shall give way to the hon. Gentleman, whose decision not to stand at the next election I deplore.
Mr. Flannery : The hon. Gentleman is wrong--it is nearly 16 years since he became a Member for the House. I remember going to Ireland with him at the time.
On his point about workers getting shares, surely the con is obvious to everybody? They get the shares as part of a propaganda ploy and in no time at all they are sold to the big boys. The hon. Gentleman knows that as well as I do.
Mr. Gow : The hon. Gentleman has chosen a bad day on which to make that intervention, because today is the day of the sale of the water industry. I am happy to be able to tell the hon. Gentleman that tens of thousands of those who work in the water industry have applied for shares in that industry. There will be a great expansion of worker shareholders in the water industry, for which my hon. Friend the Member for Southampton, Itchen (Mr. Chope) has responsibility. I warmly welcome the proposal, because it will give those who work for the Property Services Agency the chance to become owners of the enterprise in which they work, but sadly that will not be until 1992. I hope that my right hon. Friend may be able to bring that forward. Many other hon. Members wish to take part in the debate, so I shall make just one more point. The arrangements in recent years for managing and administering the Government estate have been most unsatisfactory. For many years, the Government estate has been run only by the Property Services Agency, which then had to find somebody else to do the work. It was almost the case that if the washer broke on a tap one had to get hold of the Property Services Agency simply to get a new washer. That procedure was cumbersome. Despite some excellent people working for the Property Services Agency, much of its work--although by no means all-- was inefficient, not through the fault of those who worked for the agency, but because the system itself was cumbersome.
Therefore, I greatly welcome the new arrangements that are about to come into force, whereby each Government Department will be responsible for the maintenance of its own buildings and will be able to go where it pleases to find those who will maintain, repair and improve its buildings. I am afraid that many Government buildings, not only in London but throughout the kingdom, are in a bad state of repair, have been poorly maintained in the past and in too many cases provide a working environment that would be unacceptable in many private buildings and private companies. I hope that the new arrangements that my right hon. Friend described will mean that we can bring to a much higher standard of
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maintenance and repair the buildings in which so many of our civil servants work, because some of the buildings in which some of our civil servants are working are frankly deplorable.I congratulate my right hon. Friend on the Bill. It has only six clauses and deserves to receive a speedy passage through Committee. I congratulate him warmly on having introduced it.
6.15 pm
Mr. Gerald Bermingham (St. Helens, South) : I listened to the pearls of wisdom from the hon. Member for Eastbourne (Mr. Gow), who is graciously smiling the smile of the crocodile, with the tears to match, but where does that take us? Where is the justification for the Bill?
Let us look at the Bill analytically. The Secretary of State spent a long time on it this afternoon, but he did not justify what is sought to be done. The hon. Member for Eastbourne made a tour de force across his own Benches, but he did not justify what is sought to be done. We must ask ourselves this simple question ; will the service provided to the state be more economical in cost to the state before or after this privatisation? That is the only question and the only test.
Let us look at the history of privatisation, starting way back with INMOS and moving forward through the royal ordnance sale, and Rolls-Royce and Rover as they rolled through. What have those sales really done? The state has received a capital sum. We have also seen the sale of the gas, telecommunications and water industries--assets that belong to each and every one of us.
The state received a capital sum, but who received the benefit of that capital sum? Was it the millions of people who do not pay any income tax? Was it the millions who live on social security, or was it those who pay a lot of income tax or who used to pay a lot of income tax, but whose tax rates have been scaled down from 60 per cent. to 40 per cent.? Those people were the beneficiaries. What of the properties, the goods, the companies and the firms that were sold off? What about our assets? Who now has the profits from those? I will not bore the House by talking about Rover, because that is a scandal itself, but let us look at the royal ordnance factories that were sold off. Enfield is an example of a once thriving works that is now closed. The value of the land was massive and who has been the beneficiary? The state? No. The beneficiary is the company that bought it so cheaply.
Let us look at Rolls-Royce, British Steel and the gas industry. Who has been the beneficiary of those sales? Certainly not the people of this land. The major taxpayers have received tax cuts and ultimately it is they who own those industries today.
I turn now to the Property Services Agency and the Crown Suppliers. I do not intend to follow my hon. Friend the Member for Hammersmith (Mr. Soley) and to discuss security, because that matter can be debated later and elsewhere. I shall simply consider the maintenance of the buildings. Let us take as an example the construction of the courts, where much work still remains to be done. The Truro court, built by the Property Services Agency if my memory serves me correctly, stands internationally recognised. Maidstone is another one. It used the wrong marble, but that does not matter. It may have been the most expensive staircase in history.
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Leaving that mistake aside, if in future such buildings are built by private companies, they will take into account in their quotations not only labour and material costs but that other element which any private company tendering for a contract includes-- namely, profit. The Property Services Agency does not need that profit element so it does not include it in contracts. Hence the examples of valuations that we were given earlier. The costs were considerably less than in the private sector. That is bound to be. The private sector always includes profit in its figures. It has to worry about the variables, because profit is important. Companies do not trade for nothing ; they trade to make a profit. That is a piece of simple economics which seems to escape the Government every time. Plainly, the costs to Government Departments will increase.Who will benefit from the sale of the Property Services Agency? We know that we the taxpayers, and the millions who do not pay tax, will get nothing out of it. Perhaps in 1992--the timing is significant : just before the next election--there will be further tax cuts funded by the sale of state assets.
How will the Property services Agency be sold off? There is talk of turning it into a company. Fine. What will we do then? Turn it into a co-operative, such as National Freight? Its thousands of employees receive the benefit or profit. Will the Property Services Agency be sold to some boys in the city- -for example, construction companies such as Higgs and Hill, Tarmac or Trafalgar? How will it be valued? The Government's track record in valuing assets before sale leaves much to be desired.
Mr. Andrew Hunter (Basingstoke) : If the hon. Gentleman is so anxious about taxpayers' money, how does he defend a system such as that under which Buckingham gate was constructed where the original estimate was £4.5 million and the completion costs more than £12 million? Similarly, the completion costs of Richmond house were over £1 million more than the estimate. That was a waste of taxpayers' money under the present system.
Mr. Bermingham : The hon. Gentleman makes a valuable point, and I am big enough to concede it. If people under-estimate the cost of construction, whether in the public or private sector, a little column called "extras" is added. The building trade is full of such extras. They represent additions and alterations which are usually certificated by the architects. The hon. Gentleman probably knows that from his experience in industry. There were simply wrong estimates of the actual cost. If someone makes a wrong estimate, they are not employed again, or they are sued.
Mr. Andrew Hargreaves (Birmingham, Hall Green) : How often have responsible members of the Property Services Agency or any other governmental or quasi-governmental agency been sued or dismissed for making such wrong estimates?
Mr. Bermingham : There is no reason why they should not be sued or dismissed. If mistakes have been made--the Government have been in charge of the agency for the past 10 years--why have they not been inquired into and sorted out? The Government cannot shy away from the problem and say, "We will sell it off to get away from the problems in the future." That is to dodge the issue.
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As I was saying, if the Property Services Agency is sold to the people who work in it, they will make a profit. However, I suspect that it will slip down a sleazy road and fall into private hands at a valuation far lower than its true value. The City has been laughing for 10 years. It has bought up Government assets at knockdown prices.Mr. Geoffrey Lofthouse (Pontefract and Castleford) : It has been the sale of the century.
Mr. Bermingham : They got an even better bargain from the Government. The Government cannot value anything.
The Crown Suppliers services embassies abroad and Government Departments. It has developed its own technique.
It lost money last year, but with proper management it is capable of making a profit. Who will benefit? Certainly it will not be the people who will work in it eventually, unless there is an in-house buy-out in which everyone participates. However, I suspect that, because the Government are not fond of co-operatives, that will not be the case. There will be no winners from the point of view of the state, but simply increased costs.
Costs will have to increase, because companies have to make a profit to live. It is simple economics. The cost increases, the state pays more and the taxpayers receive a lump sum but pay for it afterwards. If ever there was a case of live now, pay later, the Government are a prime example. They sell anything to survive today, knowing that someone else will have to pick up the tab tomorrow. The Bill is not a good Bill. It is full of doctrine and dogma, and it lacks common sense. It is a bill which the next generation will have to meet to pay for the Government's squandering behaviour. 6.26 pm
Mr. Michael Colvin (Romsey and Waterside) : We have heard accusations from the Opposition that the Bill is full of dogma, but that is the only true accusation that we could level at them. The charge of Conservative dogma is completely refutable. In their defence all that Opposition Members do is to preach what to us sounds like a greater degree of dogma. Some years ago I noticed that at one of its conferences the Labour party decided to repeal the clause--I think it was clause four--in its constitution which contains provisions for state ownership. That clause may have been dropped from the Labour constitution but nothing that has been said by Labour Members today gives us reason to believe that they have forgotten the dogma upon which so many of their policies depend.
I am pleased to take part in the debate and that the measure has at last come before the House after a long delay. Some of us have asked why so much time was wasted in bringing the Crown Suppliers and Property Services Agency into the private sector, but the explanation given by my right hon. Friend the Secretary of State this afternoon satisfies me. We have talked about efficiency and value for money, but another side of privatisation must be taken into account. It may be described as the social implications of privatisation. I shall concentrate my remarks on a narrow aspect of the proposals, the knock-on effect of this privatisation on a manufacturer who is largely dependent on the Crown Suppliers as a major customer. I refer to Enham
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Industries, near Andover. I raise the matter so that the Government may be aware of the effect that privatisation could have on charitable organisations, which could in turn throw an extra burden on to taxpayers, in this case to support disabled people who hitherto have done so much through their efforts in manufacturing to support themselves. Enham Industries is one such organisation. The Papworth centre, near Cambridge, to which it is linked, is another. The well known Remploy factories could be similarly affected by this privatisation measure.I declare an interest as an unpaid governor of the Enham village centre for the past 25 years. The village is in the constituency of my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell), who is sorry not to be in the Chamber now. He has another urgent meeting to attend and apologises for his absence. He knows the Enham village centre well and has visited it often. Even without hearing what I have to say he wishes to be associated with my remarks. Enham Industries comprises the industrial and commercial element of the Enham village centre, which is a self-contained community supporting an industrial work force of about 350 people, two thirds of whom are disabled. The centre was founded towards the end of the first world war for the permanent resettlement of disabled ex-service men and their families, with the opportunity to work as an essential ingredient of the rehabilitation process, especially when linked to adjacent living accommodation within the supportive community. Over the years the village has adapted to changing needs and today it caters for a wide range of physical and other disabilities, including those resulting from illnesses and accidents as well as congenital diseases. To the uninformed observer, Enham looks like a typical English village. That is why it provides such a good environment for the rehabilitation of disabled people. Enham also offers special training and retraining opportunities for handicapped people, particularly the young. Its commercial activities have reduced considerably the dependence of those people on the state. That is something which we all want to see.
Some of that work could be put at risk by the Government's proposals to privatise the Crown Suppliers. There is considerable uncertainty at Enham about the method and precise timetable of privatisation. We have learnt something about that this evening, and I am relieved that my right hon. Friend the Secretary of State wishes to proceed with all possible haste. His motto was certainly sooner rather than later. Fears about the timetable have not necessarily been dispelled by the contents of the Bill or the explanatory note which my hon. Friend the Under-Secretary of State made available to us. I appreciate the Government's need to keep their plans fairly fluid, but it is important for those who work at Enham to have a firm idea about timings.
The survival of the furniture factory, which is the largest unit in the village, is critical to the well-being of the entire village. It has a turnover of £3 million out of Enham's total industrial turnover of £4.5 million. Besides employing many disabled people directly, it supports overheads which enable other disabled people to be employed and has the potential to make money to support some of Enham's other activities, such as a sheltered computer unit and a professional management team who give advice to other employers on the employment of disabled people.
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For many years the furniture factory has depended heavily on one customer, the Crown Suppliers. In earlier years, its business was less price-sensitive that it is now and substantial profits were achieved. The money was ploughed back to help the beneficiaries in the village. The risk inherent in over-dependence on one customer was recognised in recent years and every attempt made to rectify it--with, I am afraid, rather limited success, mainly because of the apparent inflexibility of the factory and work force. As a result, they remain about 80 per cent. dependent on the Crown Suppliers to supply their goods to the Ministry of Defence.Crown Suppliers' work is obtained by competitive tender. The only advantage to Enham as a charity employing severely disabled people is its priority supplier status with Government Departments. Although it competes on price, delivery and other factors, if it does not win a tender, it can still ask to be allocated part of the business on the same conditions as the best tender.
Much of my anxiety for Enham's future hinges on the Government's apparent formula for privatisation. It has been reported that the Crown Suppliers may be broken up into two or three parts, with its furniture side being one major part. I understand that, of its total sales of £230 million in 1988-89, wooden furniture accounted for £40 million and metal furniture for £33 million. Furniture is the main part of Enham village's output.
I should be grateful if my hon. Friend the Under-Secretary of State could be more specific about his proposals for the timing and structure of the privatised concern. The sister organisation to Enham, Papworth village near Cambridge, is in a similar position, with its furniture factory turning over about £1 million a year--not as much as at Enham--yet remaining 50 per cent. dependent on the Crown Suppliers as its principal buyer.
Of particular interest is the position of the Ministry of Defence as the ultimate prime user. Will it use a commercial middle man after privatisation to replace the Crown Suppliers, or will it be able to buy direct? Enham would favour selling directly to the MOD users, but if that part of the Crown Suppliers is to be sold, Enham would favour a management buy-out. I am glad that my right hon. Friend the Secretary of State said that he, too, favoured a management buy-out with an opportunity for the company to continue to deal on a "priority supplier" basis.
Benbow furniture designs is the trademark for Enham's furniture products. It belongs to the Ministry of Defence and is manufactured by Enham through a licence from the Crown Suppliers. What will happen to those trademarks following privatisation? I have a letter from my hon. Friend the Under- Secretary of State who says about them that the Bill
"also provides for the transfer to the purchaser of Crown copyright attributable to the TCS business. This is likely to include the copyright of Benbow designs."
I am not certain that that is strictly true. I was under the impression that Benbow designs belonged to the Ministry of Defence and could be passed to someone else only if it was prepared to sell the licence.
I appreciate that my hon. Friend the Under-Secretary of State will be tempted to say that all these questions are for the Ministry of Defence because it is the ultimate prime purchaser of Enham's output, but he must have a view and we should like to hear it. In particular, we should like an undertaking from him that he will talk to the Minister of
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State for Defence Procurement to see whether ways can be found to cushion the effect of privatisation on an organisation which has done and continues to do so much to support itself.6.39 pm
Mr. Richard Livsey (Brecon and Radnor) : Clause 1 relates to the sale of
"property, rights or liabilities which are associated with the Property Services Agency and The Crown Suppliers."
Clause 2 states that no redundancy compensation will be available to staff who are transferred automatically to a new employer. From clause 3, it appears that the Secretary of State will have shares in the company formed, but the right hon. Gentleman did not make that clear this afternoon. I hope that the Minister will clear up that matter when he replies tonight. Clause 4 relates to the
"winding up of The Crown Suppliers' trading fund".
The Bill is about reducing public expenditure, and Conservative Members have stated that clearly tonight. The right hon. Member for Blaby (Mr. Lawson) made a number of speeches as Chancellor in which he said that it was the stated aim of the Government to reduce public expenditure to below 40 per cent. of gross domestic product. The Bill is a further step towards achieving that objective. Unlike Conservative Members, however, I disagree with it. If the Government choose to follow that path, they must remember the cost involved. Provision for the privatisation of most of the PSA's designs, buildings and maintenance work has a knock-on effect. What will happen to standards? The hon. Member for Eastbourne (Mr. Gow) was right to say that many Government buildings are not in the best state. I have visited many such buildings, and I must agree with him. None the less, what will happen to standards if the Bill is passed? What standard will be laid down for those buildings erected for Government Departments following the passage of the Bill? Will those standards be better than the existing ones? The newer buildings that have been erected to PSA design are excellent. I visited Richmond house yesterday and it is built to a high standard. Perhaps one can criticise the outside of the building, but inside it is excellent.
Mr. Campbell-Savours : Although I might criticise the arrangements for the valuation of Richmond house, I regard it as one of the most beautiful pieces of architecture erected this decade. It is a tribute to the architects who designed it.
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