House of Commons Hansard Debates for 6 Dec 1989

Mr. Livsey : I agree that the frontage on to Whitehall is truly excellent, but most of us in the Norman Shaw building must look at the back of it, which is not so attractive. The entire building should look well rather than just the front.

We must ensure that standards are maintained and improved. We are talking about a large business and the Secretary of State has already said that it is worth £3.4 billion per annum. It is a big business to privatise, but the most important consideration must be the PSA employees. It employs 23,000 civil servants, and I am sure that we would all want their well- being to be guaranteed and their conditions of service protected and maintained.

The proposals for the privatisation are some of the most radical to be introduced under the Government's privatisation programme.

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Mr. Campbell-Savours : Reactionary.

Mr. Livsey : Perhaps that is a more suitable word.

The proposals are radical because the Government are going beyond just privatising a nationalised industry--they are striking at the heart of Westminster and Whitehall. They are talking about the privatisation of the services that support the Government, and that is a significant change in comparison with previous privatisations. We must ask whether that quantum leap of privatisation, which strikes at the heart of Whitehall, is desirable. On examination, there remains some doubt as to whether these services are suitable for privatisation.

If the Bill is to see the light of day, safeguards must be built into it in Committee. It is vital to safeguard the pension rights of the staff. The Secretary of State has mentioned that, but we need further evidence that the terms and conditions of the employees will be maintained. If the PSA and the Crown Suppliers become part of the competitive world, what will happen to the 23,000 civil servants who become employees of the new company? Will there be problems of overstaffing, as at present? Will immense cuts be made in the numbers employed? Will such reductions result in a decline in quality of workmanship and design? Will there be many relocations? So far those human-interest questions have not been answered.

It is also important to consider the land holdings and buildings associated with the PSA. We have been told that only the services provided by the PSA and the Crown Suppliers will be privatised, but the hon. Member for Hammersmith (Mr. Soley) mentioned 300,000 hectares of land. I am sure that all hon. Members would like to know the location of those hectares. My guess is that they will be found in most of our constituencies. In the past 12 months some responsibility for land holdings has been handed from the PSA to the Ministry of Defence. I should like to know the extent of that split of responsibilities.

We have already flogged the security horse but it is one of the most critical factors of the privatisation. Over and above the questions that I put to the Secretary of State and the comments made by the hon. Member for Hammersmith, I shall mention a report in The Independent of 19 October that detailed the fears of the United States Air Force about the proposed privatisation. It said : "The US Air Force has voiced concern over the security implications of privatising the Property Services Agency, which carries out building work at bases in Britain.

Representatives are to meet officials from the agency and the Ministry of Defence in the near future. A USAF spokesman said : We currently have a very sound working relationship with PSA and any proposed change would require serious negotiations.' "

What happened as a result of the meeting with the MOD in October? Has any agreement been made with the USAF as a result? What guarantees were the Government able to give the USAF in the event of the privatisation of PSA? I hope that the Minister will be able to give answers to those questions.

The security angle behind the privatisation relates to Cabinet Ministers' houses and foreign embassies. Given that they are the target of terrorists, their protection is of grave concern. Privatisation of the PSA begs the simple question : can one privatise a service that services Government? That question has not yet been adequately answered in this debate.

The Department of the Environment, which is responsible for the PSA, will have some difficulties as a

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result of what is going to happen. The services provided by the PSA, including design project management, property maintenance and estate management, are all competitive parts of the private sector. During the Bill's passage, we are duty-bound to ensure that there are safeguards for those operations. The property holdings are to remain in the public sector and the Government will remain the landlord. I hope that I have correctly interpreted the Bill.

Many weaknesses in the operation of the PSA have been outlined. The escalation of costs for the Department of Energy building--which tripled over 18 months--have been mentioned. That shows the necessity of tightening up the PSA management. Whether there is to be a management buy-out in the long-term future is a matter of public interest. It has been forecast that at least 50 per cent. of present PSA business will be lost as a result of competition. Whether the remaining parts of the PSA operations will prove desirable buy-outs for the management will be called into question.

Mention has been made in the debate of the furnishing business and core furnishing, which has a turnover of more than £70 million and on which many people's livelihoods depend. As the hon. Member for Romsey and Waterside (Mr. Colvin) said, the people involved in manufacturing that furniture are involved with charities and the disabled. I am sure that hon. Members would not wish those people to lose part of their livelihood.

The Secretary of State said that some of the Crown Suppliers' vehicles hire services would remain with the Government. Will the courier services and all the transport operations--not just some of them--remain with the Government? What will happen to an extremely desirable residence near Waterloo and one of the future Channel terminals, Wellington house, presently valued at £36 million? Will it be sold off because it is part of the Crown Suppliers? If it is to be sold at a knockdown price, I am sure that there are many sharks willing to take it over and make a great deal of it, because it is in a favourable position.

Why is the Bill being put through Parliament? What is it all worth? If the Government's privatisation programme is to retain any credibility, the Government should produce a balance sheet which has been audited by the National Audit Office so that everyone can be clear of the valuation of these public assets before the privatisation measure goes through so that the public and the House can judge whether this is the proper way to proceed with legitimate matters of public interest. I trust that this will be done and that we do not see the same sort of shabby business as occurred with Rover and Royal Ordnance.

Who will get their hands on some of the services involved? Many of the companies may be building companies. They may win in competition with the PSA or they may wish to get involved in other ways by buying their way in. It is salutary that many of these firms, including Cementation, Taylor Woodrow and Trafalgar House, all support the Conservative party, have a vested interest and might benefit from privatisation. We must regard with suspicion the objectives of and motives for this measure.

The Bill alters the course of Government management which has developed in a direct line since the middle ages when the first public works clerk was appointed to a royal palace. The PSA now looks after 8,000 public buildings. Does the PSA still have any involvement in royal palaces?

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The Select Committee on the Environment said that the PSA was inefficient and its lines of communication were too long. The privatisation may be being used as an excuse to try to put right some of these matters. It is legitimate to ask whether options other than privatisation are available to make the PSA more efficient. Alternatives may well exist.

The Bill also involves some aspects of the Secretary of State's career. He has to make a partial commitment to Thatcherite privatisation. He is being clever enough to set up the final stages of the privatisation of the PSA until just after the next general election. It is a good case of the Secretary of State having his cake and eating it.

6.57 pm

Mr. Michael Stern (Bristol, North-West) : I am grateful for the opportunity of following the hon. Member for Brecon and Radnor (Mr. Livsey), not because of the usual sour platitudes with which he ended his speech, using the normal Liberal tactic of substituting insults for policy, but because he referred earlier to a subject on which I wish to speak : the position of the PSA staff under the proposed privatisation.

I declare a constituency interest in this matter. There is a substantial PSA office at Westbury on Trym, in my constituency. Many people not only work in that office but live close by. When the former Secretary of State for the Environment, now Secretary of State for Defence, visited my constituency during the 1983 general election and walked the high street of Westbury on Trym he was immediately besieged and almost mobbed by PSA employees worried about the implications of the Alfred report. That report would have caused huge upheavals in the PSA and created the ultimate indignity for a Bristol office by putting it under Cardiff's control.

Substantial numbers still work at the Westbury on Trym office in north-west Bristol and I was anxious to receive as wide a briefing as possible on this measure's effects on the staff. Not surprisingly, I received a briefing from the Government and asked the union if it would supply me with a briefing, which it duly did. I received a briefing from the south-west branch of the National Union of Civil and Public Servants earlier this week, immediately grabbed it and scanned it with great interest. I admit that my interest rapidly waned as I read through it. The document did not give a broad view of the Bill's effects on the union members at the PSA, but was an openly party political document which set out to denigrate privatisation and slag off those of its members who happened to disagree politically with the writer of the briefing. It was a thoroughly scurrilous little document.

When dealing with the interests of the staff--its members--the document says that the business of the PSA will decline automatically as a result of privatisation. Let us forget what we heard this afternoon about the favourable costings that the PSA is able to put forward in privatisation because according to the writer of the document, privatisation has to mean decline because that is what the Labour party says it has to mean. Let us forget that the document is trying to look after the interests of its members who will themselves be responsible for whether the PSA is efficient or inefficient in future. I know, apparently better than the trade union concerned, that many of its members regard the PSA as an extremely efficient organisation and are in no way scared of

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competition. I find it worrying that the people they pay to represent them have totally the wrong idea of the work they are doing.

It is the union's recommendation that the staff concerned should be quickly offered a choice. One would think that we were talking about the direction in which their careers should go. That is not the case. The choice recommended by the union is between remaining in the Civil Service and joining the new PSA on loan. There is no question in the union's mind that any members of staff, whatever their political outlook, should have enough belief in the organisation for which they have worked for most of their lives to want to join it.

The nub of the scurrilous little document is that the union predicts that those members of staff with "highly marketable skills" will automatically leave the PSA and go to an employer of their own choosing. Neither we in the House nor my constituents live in a slave society. They have the right to choose their employers. I do not find it in any way deplorable that, as a result of the Bill, my constituents should be given the opportunity of selling their skills in the best marketplace. I find it deplorable that the people who represent them should so resent them possessing ambition. The opportunities opened up in the Bill for my constituents are legion. It has already been pointed out that the PSA will benefit from being able to compete with the private sector in the private sector.

Mr. Campbell-Savours : When the hon. Gentleman consulted those civil servants, did he ask them about morale within the PSA? What did they say about that? He must have consulted them as it is an important issue for the hon. Gentleman. Did they say that morale was good or bad?

Mr. Stern : I am sure that the hon. Gentleman will appreciate that there is never a simple answer to that question, and I did not receive a simple answer.

Mr. Campbell-Savours : Did the hon. Gentleman ask?

Mr. Stern : Of course I asked, as I meet them regularly. They said that morale was variable. Some older members of staff greatly value their titles and positions as civil servants and are reluctant to see those positions changed. One of the reasons that I welcome delayed privatisation in this case is that it will give an opportunity for older members of staff to work out arrangements which will be satisfactory for them for the short remainder of their careers. If I am chosen to serve on the Committee, I will want to look at that point.

There were and there remain a large number of people to whom I have spoken who are excited at the prospects opened up by the Bill. The Crown Suppliers is excited at the prospects of taking part in the management buy-outs that are likely to come about as a result of the Bill. The answer to the hon. Member for Workington (Mr. Campbell-Savours) is that, as with so many other issues, there is no simple answer.

Mr. William O'Brien (Normanton) : The hon. Gentleman said that a person should be allowed to transfer to where he can obtain the highest reward. He also referred to older people who may have two years to go. What about job satisfaction? Did the hon. Gentleman question those people who are now employed by the Crown Suppliers or the PSA about job satisfaction and the

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fear that they may lose that job satisfaction? Did he question those people with perhaps four or five years to go about their fear that after two years they will not know where they belong? Those issues must be addressed. The prospect of privatisation is causing that concern.

Mr. Stern : I disagree totally with the final point made by the hon. Gentleman. Of course there are concerns in many different areas. They are not caused by privatisation ; they exist anyway. The hon. Gentleman rightly speaks up for the people concerned about the effects on their careers, but he discounts the people--and I have spoken to many--who are excited by the prospects opened up by the change in character of the organisation. They are entitled to just as much consideration.

Mr. Campbell-Savours : The hon. Gentleman said that he believes that morale is mixed. Can he explain why last year a net figure of 500 senior managers left the PSA? Why did they go? Were they happy and contented? Did it have anything to do with the prospect of privatisation?

Mr. Stern : The hon. Gentleman is seeking to create generalisations where none exists. In any organisation containing 23,000 employees, some will leave in any year and some will be senior managers. They will all leave if they see that prospects are better elsewhere. However, the hon. Member for Workington does not take account of people joining the organisation at the same time.

Mr. Hunter : My hon. Friend is right. He may wish to know that the Select Committee on the Environment discussed that point with the PSA, which said that it had a recruiting and retaining problem because of competition with the private sector.

Mr. Stern : I am grateful to my hon. Friend for underlining my point.

Prospects have opened up for my constituents--both present and future employees of the PSA--and are greatly enhanced by the Bill. For the first time, the organisation will be able to go into the marketplace and fully sell the skills that it has built up. That marketplace is not just in Britain but worldwide. The opportunity for the organisation to compete worldwide will be greatly enhanced by the Bill. I suspect that that is what is interesting many of those employees who are keen to share in the overall organisation. It is a unique organisation that has been held back by its position as part of the arm of just one of the world's Governments.

Many of my constituents are worried about their conditions and prospects under this change, but I welcome the Bill on their behalf. I have no doubt that it will create more opportunities for more people than there would ever have been had the PSA remained in public hands.

7.10 pm

Mr. Tam Dalyell (Linlithgow) : If selected, I look forward to serving on the Committee examining this Bill and I hope that the hon. Member for Bristol, North-West (Mr. Stern) will serve on it, too. This Bill is a can of worms and there is a great deal to be said about it.

As the parliamentary debate goes on, it often happens that more issues are raised. I have a great respect for the hon. Member for Bristol, North-West ; he and I are both involved in the promotion of chess, but I beg him to realise

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that, although he may be right about some people being excited by the prospect, a great many others are deeply worried about what is happening.

On 24 April 1989, I raised this subject by asking whether Ministers would honour the commitment given to this House by junior Ministers that

"the pensions of the staff of the Crown Suppliers upon privatisation will be comparable to those they are entitled to under the principal Civil Service pension scheme."

The hon. Member for Southampton, Itchen (Mr. Chope) replied : "When tender invitations are issued, prospective purchasers will be invited to offer pension terms to transferred staff broadly comparable to those in the principal Civil Service pension scheme. Detailed future pension arrangements will be a matter for the purchaser to discuss with the Government in the course of the sale."--[ Official Report, 24 April 1989 ; Vol. 151, c. 412. ] That is open-ended.

On 25 April, following a clarification question from me and a holding answer, the Minister said :

"No decisions have yet been taken upon the detailed criteria which will apply."--[ Official Report, 25 April 1989 ; Vol. 151, c. 526. ]

We want to see the small print.

On 2 May, in reply to my question about non-industrial staff, the Minister said :

"my right hon. Friend yesterday met the unions representing the staff of the Crown Supplier."--[ Official Report, 2 May 1989 ; Vol. 152, c. 56. ]

The Minister has not satisfied the unions in these meetings. On 16 May the Minister said :

"The pension terms on offer would be assessed by the Government Actuary."-- [ Official Report, 16 May 1989 ; Vol. 153, c. 185. ] That is more than an important point for the Committee. The Secretary of State said this afternoon that, after privatisation, the staff of the Crown Suppliers and the PSA who are transferred will have

"exactly the same redundancy payments as anyone else. They are not losing their redundancy entitlement".

The Secretary of State referred to the operation of the TUPE regulations. He is aware that regulation 7 excludes pensions, but severance arrangements in the Civil Service are enshrined in the principal Civil Service pension scheme. Does the Minister regard severance arrangements as caught by the regulation 7 exclusion? If so, will he or the Secretary of State tell the House whether he is satisfied that he has discharged his full obligations under the relevant European directive?

In the Civil Service, severance entitlements are guaranteed by Act of Parliament. The total obligation of the state towards civil servants in the PSA is estimated at £1 billion.

Does the Secretary of State recognise that the severance obligations are vulnerable in the private sector?

The construction industry is volatile and not known for its integrity in dealings with staff. Are Ministers aware that the union representing senior managers--the Institution of Professionals, Managers and Specialists--has said that it will take strike action to defend severance terms? The Treasury guaranteed severance terms in the ordnance factories and the dockyards. Why are similar guarantees not being offered to PSA staff?

Despite considerable underfunding, the PSA has been consistently acclaimed for promoting standards of excellence. Over the years, it has won numerous awards, ranging from the Europa Nostra diploma of merit for the superb restoration of Richmond terrace in Whitehall--I

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pay tribute to the late Duncan Sandys for his remarks about the PSA's work--to the Association for the Protection of Rural Scotland special award for the modernisation of Fort George in Inverness. Fort George was a fantastic performance by the PSA, and knowing as I do something about the Scottish highlands, I venture that no other body could have done the work as well. I am sure that the chairman of the Historic Buildings Council for Scotland, who is present, would not deny that.

Sir Nicholas Fairbairn (Perth and Kinross) : That was indeed a most remarkable restoration, to which the Historic Buildings Council contributed generously, but the idea that only members of the PSA could have achieved it is phenomenal. The PSA is not restoring Westminster abbey, but no one would deny that that is a remarkable restoration.

Mr. Dalyell : That is open to argument, but my point about the highlands stands.

Do the Government accept that the PSA's design costs have been shown to be 25 per cent. to 30 per cent. cheaper than those of private designers?

As for maintenance, in 1988 the Government abandoned their attempt to contract out district works offices after receiving tenders for the pilot in Southwark which proved to be twice as high as the PSA's costs. My hon. Friend the Member for Hammersmith (Mr. Soley), who spoke excellently, asked about that but did not receive an answer. Is it true or false?

I have had no answer to my question about the private valuation of the new DSS headquarters costing 266 per cent. more than the PSA's valuation would have done. What are the facts? On Second Reading, the House is entitled to know them.

We are also entitled to know what physical assets will be assigned to a privatised body, and on what basis. Will such property and equipment remain in public ownership? Will it be leased to such a body or given it as a sweetener?

I listened extremely carefully to the Secretary of State's opening speech and took down his phrase that flotation was not envisaged. If not, who will own these assets?

I want to say a word about service and value for money. The Minister has conceded that the sensitive use of landscape was central to the role of the PSA. With more than 300,000 hectares of land, from Cornwall to the Shetlands--as well as many other places around the world--under its management, the agency sets and meets high standards. PSA landscape architects work with practices of international standing to bring about sensitive and effective results. However, the privatisation of the PSA will reflect an ill-considered reliance on market forces to conserve and enhance the environment, and will ignore the PSA's critical role. Ironically, the announcement of the PSA's privatisation in the Queen's Speech was followed by the statement :

"my Government will continue to attach very great importance to protecting the environment."

Let us start with the north, although there are endless other examples. What will happen to the ownership of all the Orkney and Shetland brochs? They are of European importance and extend right through Britain. It is not clear who will take over the ownership of royal palaces and so on from the PSA and whether there will be leaseback. The economical use of departmental accommodation requires centralised co-ordination. In the PSA's absence, Departments will end up unnecessarily competing against

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each other for scarce and costly accommodation with the constraint of central pressures to order the proper use of space. Moreover, the lack of professional understanding in the market place will cause Departments to pay higher rents than necessary.

Do the Government deny that? In its second report for the 1986-87 session the Select Committee on the Environment said :

"PSA should be allowed to manage the civil office and storage estate more positively to ensure that the estate is controlled strategically as a major property resource. It should also have control over major new construction work in this sector." The unions say that that will not be achieved under the new regime, and they are right. If we are wrong about that, there ought to be some rebuke from the Government.

I should like to raise the matter of quality of service. Departments will have to fund their works organisations either from existing resources, thus undermining the services that Departments are supposed to provide and increasing pressure on their staff, or raise entirely new funding, placing an additional burden on the taxpayer. Departments may use a mixture of those two. The financial pressures on Departments will mesh with the competitive pressures on the PSA to push down standards across the range of Government accommodation requirements. The cheapest is not necessarily the best but Departments will be forced to accept the lowest tenders. Is that denied? I listened carefully to the Secretary of State and did not hear anything in his speech which would contradict that statement. Will the Minister explain how such valuable public resources as property are to be valued? He did not explain that, nor did he say who will be given that task and how soon such a portfolio will be completed. What assurance can he give the House that such valuations will be able to withstand public scrutiny so ensuring that, bluntly, the public are not ripped off?

Clause 2(2) refers to the Transfer of Undertakings (Protection of Employment) Regulations 1981. What undertakings is the Minister prepared to give in relation to any person or persons subsequently made redundant by the new private body? Like many other parts of the legislation, that has not been thought out.

My hon. Friend the Member for Hammersmith mentioned security ; I shall delete from my speech what I proposed to say about that because he covered it so powerfully. However, he was not answered. It is to the credit of the Secretary of State that he normally jumps up to answer a question, but this time he did not. His uncharacteristic behaviour reveals that the matter had not been thought through. My hon. Friend the Member for Hammersmith posed legitimate questions. I should like to put a precise question to the Secretary of State. Is it true that he has already decided that work on Ministers' residences and official residences will not be privatised? Has he decided that such work will remain with the Government? If there are no security problems in privatising the PSA, why are Ministers' residences, certain royal palaces and the House of Commons being excluded from his privatisation plans? Does he agree that that is a case of double standards- -one for Ministers, their wives and families and another for service men and their dependants? The Minister may be able to answer that, but it jolly well looks as if there are double standards.

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I am embarrassed that the security of 650 hon. Members and that of those who work with us should be judged on one set of standards while we lay down different standards for other people. If it is argued that those different standards are in no way inferior, the obvious questions to be posed by people outside is, why are they not good enough for people in the House of Commons and the royal palaces?

Mr. Andrew Hargreaves : They are not.

Mr. Dalyell : Did the Minister say that?

Mr. Chope : No, it was a mere mortal.

Mr. Hargreaves : As a mere mortal, may I inform the hon. Gentleman that Conservative Members would be quite happy to see those standards improved, because we do not find acceptable the standards that have to be endured in this place and in another place. Some of us would urge my hon. Friend the Minister to go further in terms of the standards provided by the PSA.

Mr. Dalyell : If that is so, why is the House of Commons not being privatised like everything else?

Mr. Hargreaves : We are referring not to the House of Commons but to its management and security.

Mr. Dalyell : I do not know whether that means privatising the Serjeant at Arms. This will be seen as double standards, and that is a source of embarrassment. I see that my hon. Friends on the Front Bench agree with me. The matter needs to be dealt with.

Other hon. Members wish to speak, so I will shorten the remainder of my speech. In terms of clause 2(2), will the Minister tell us what provision has been made with regard to the equalisation of pension rights and conditions as contained in the principal civil service pension scheme compared to those that the private body will be required to undertake? That is a rather careful question, and as far as I can make out it has not previously been answered.

Mr. Richard Holt (Langbaurgh) : The other questions were careless ones.

Mr. Dalyell : The others were pertinent ; I never ask careless questions.

In terms of clause 3, is it the intention of the Secretary of State to hold any shares or part shares in the proposed privatised body? I have ears like Jodrell bank and distinctly heard the Minister say to his parliamentary private secretary, "Never answer his questions." What limits are the Government likely to place on their proposals? Clause 4 is about the Crown Suppliers. Can the Secretary of State advise us about the order and extent of the liabilities that he seeks to extinguish?

In Committee, the debate will become more and more interesting, because some of us will keep an open mind and will continue to ask questions until they are answered. We shall make as much parliamentary difficulty as we can if Ministers are reticent. If they are forthcoming and frank, the Bill will go through Committee like lightning.

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7.30 pm

Mr. Andrew Hargreaves (Birmingham, Hall Green) : I am grateful for the chance to catch your eye Mr. Deputy Speaker, especially as, unfortunately, because of other commitments in the House, I shall probably not have the pleasure of joining the hon. Member for Linlithgow (Mr. Dalyell) in serving on the Committee to which he is looking foward so much.

I wish to make a few comments on the hon. Gentleman's remarks about standards of security. My hon. Friend the Under-Secretary is aware of recent incidents at premises under the management of the PSA in which I and my hon. Friends work. The incidents concerned breaches of security such as theft, the rifling of hon. Members' cabinets and so on. They were brought to the attention of my hon. Friend, the Serjeant at Arms and others whose busines it is to know about such matters. There might just as well have been bombs.

I ask the hon. Member for Linlithgow to pay attention to this point, as he referred to double standards of security. Conservative Members are concerned about the standards of security, and no doubt will be urging my hon. Friend to assure us that, in not transferring these specific services to the private sector, he can undertake that they will be improved by the PSA.

Mr. Soley : The hon. Gentleman is not giving a fair crack of the whip to those who have a duty to manage our security. We put them--quite rightly--in a difficult position because we tell them that we are prepared to take certain risks to ensure that the democratic process is as open and as public as possible. They must balance the security throughout the Palace ; that is not the case for Ministers.

Mr. Hargreaves : I respect the hon. Gentleman's view, but I do not think that it applies to the office accommodation of hon. Members. It is a problem that needs to be addressed.

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