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Mr. Hargreaves : Indeed I am, and I make no bones about it. The hon. Member for Brecon and Radnor (Mr. Livsey) referred to the whole process of privatisation. The Opposition have previously referred to privatisation as selling the family silver, but this valuation expert considers that we are selling the silver duster and improving it, the better to preserve the silver.
The whole question of privatising the PSA is one of efficiency. The hon. Member for Brecon and Radnor asked why the legislation was being introduced. The simple answer is that we require these services to be provided more efficiently and more cost-efficiently. For the benefit of those Opposition Members who tend to be a little sceptical, I shall cite a personal example that I have brought to the attention of my hon. Friend the Under-Secretary. In the car park some nine months ago, my car was unfortunately reversed into a pillar by one of the attendants. It took the PSA almost nine months to find out who employed the attendant and who was responsible and, subsequently, to arrange for insurance cover to be paid.
That is not the standard of efficiency that hon. Members would applaud. It is the very inefficiency that the
Column 377Environment Select Committee referred to when it said that the PSA was inefficient. It is my experience, and that of many of my hon. Friends, that that is true. It is in an effort to improve that efficiency that we are embarking upon this legislation.
We are discussing, especially in the case of the Crown Suppliers, the provision of such items as light bulbs and fuel. We might as well be talking about the provision of cabbages. Surely the Opposition are not suggesting that only the PSA can provide this House or other Government institutions with cabbages-- [Interruption.] As one who has stood on the rostrum selling such objects, I assure hon. Members that they can be provided with equal skill, to better effect and more cost-efficiently by the private sector.
The hon. Member for Brecon and Radnor referred to striking at the very heart of Whitehall. Many of my constituents--and, I am sure, many others-- would welcome a fresh approach to the provision of services and the management of facilities around Whitehall. I have been ashamed by the shoddy condition of Government buildings. I have escorted senior foreign bankers--one, alas, was blown up the other day--to the Treasury. It is a disgrace compared with the Treasuries of other countries, which in a former existence I have visited either on official business or unofficially. I do not refer in particular to the outside of the building, which although not magnificent is reasonably well preserved ; it is the inside of the building that shames me.
I urge hon. Members to reflect on what this legislation attempts to achieve --an improvement in the management and the provision of such items as light bulbs and heating oil. To say that only the PSA can supply those items is nonsense. There may be parts of the PSA--and I bow to the superior knowledge of my hon. Friends--which, for security and other reasons, might be better in the public sector, but surely not the provision of light bulbs and heating oil. It is crazy.
Mr. Hargreaves : Because there is a perfectly good marketplace in which to buy such items direct and more cheaply, which means better value for money. My constituents want cheaper services to Government and therefore lower public expenditure.
I rest my case in saying that there is good reason for privatising the PSA and the Crown Suppliers, and I urge my hon. Friends to support that view.
Mr. D. N. Campbell-Savours (Workington) : The hon. Member for Birmingham, Hall Green (Mr. Hargreaves) made an interesting speech, which takes me to the heart of my case. I always try to be extremely objective about commercial matters-- [Interruption.] Oh yes I do. Those hon. Members in the Chamber this evening, especially my hon. Friends, who have heard my comments on Finance Bills and trade and industry matters generally will know that I have sometimes dissented from a position because I felt that arguments about efficiency, effectiveness and delivery were crucial. However, I have never accepted the premise that efficiency in delivery of service is necessarily the monopoly of the private sector. I cannot intellectually come to terms with that as a proposition.
Column 378concept that competition tends to lead to great efficiency in companies bidding for the same contract. It sharpens the acuteness with which they attempt to do the job. I am sure that the hon. Gentleman appreciates that.
Mr. Campbell-Savours : I accept that and I shall deal with the question of competition when I speak about the Crown Suppliers. I shall draw the hon. Gentleman's attention to a report of the Public Accounts Committee and appendices to evidence that we took on these matters some 15 months ago.
The proposition that the man who buys a cabbage in the private sector can necessarily acquire better terms than the man who buys a cabbage in the public sector is quite ludicrous. Whether I worked in the private or in the public sector would not influence in any way the efficiency and effectiveness of my operations as a buyer for a commercial organisation.
Mr. Campbell-Savours : I do not suggest for a moment that the PSA is my ideal example of absolute efficiency. My case is that the efficiency with which problems are handled in any organisation manned by mortal human beings such as myself, who can work equally well in either sector, is entirely dependent on motivation. If those in the public sector are motivated in the right way--
Mr. Andrew Hargreaves rose --
Mr. Campbell-Savours : I would willingly give way if I had time, and perhaps I can deal with the hon. Gentleman's point in private conversation. I have a good deal to say this evening, however, and I do not wish to detain the House unreasonably at such an early hour. Let me ask the Minister to take the advice offered by President Bush last year at the Republican convention in the United States, which I was fortunate enough to attend. Turning to his opponent, the President said, "Watch my lips." I hope that the Minister will watch mine very carefully, as I should like him to address many of my remarks specifically in his reply.
In my interventions this evening, I have persistently argued that in this instance the public sector provides a cheaper service than the private sector. [Hon. Members : "Nonesense."] We are starting the debate in the knowledge that the party with the most votes to deploy at 10 o'clock tonight believes that my view is nonsense. Let me draw hon. Members' attention to the third report of the Public Accounts Committee on the Property Services Agency and management of the civil estate. Questions were asked, and the Committee was subsequently provided with information by the accounting officer, Sir Gordon Manzie.
I asked about a report into in-house and out-house design work done by the PSA. My question was :
"Is it true that the latest Semple Sweett comparison into in-house out- house major design work shows that PSA are 25-30 per cent. cheaper than private consultants on major design work?"
The question concedes a little to the Government, and I shall therefore read the reply in full so that we can consider the implications :
"The original Sweett/Semple review in 1983 concluded that there was likely to be an additional cost of about 10-20 per cent. in putting work out to private consultants. However,
Column 379the review also concluded that it would always be more economical for a proportion of the design work to be carried out by the private sector, in particular to give the agency flexibility to deal with fluctuations in its workload. The latest management update of the Sweett/Semple review is still under consideration. When finalised it will cover the 44 year period to March 1987 and allow for the introduction and extension of fee competition for work done by private consultants. But the only really accurate and valid basis for comparison of in-house and out- house costs will not be available until the Agency is moved to a system of full commercial accounts, underpinned by much improved management information and accounting systems."
I understand that those systems of "full commercial accounting", underpinned by
"much improved management information and accounting systems", are currently being put into place, and that computerised programme is being used in the Department. If I am right, will the Minister confirm that that programme has now been subjected to 1,900 modifications, that the whole system is a disaster and that it is making it almost impossible to evaluate the relative costs of in-house and out-house work?
These are internal departmental matters, separate from the propaganda of the debate. The Minister has come to the House with a proposal to privatise the agency, without having even established whether his proposal will save money : that, at any rate, is what was said in a recommendation that the Government accepted, provided by Sir Gordon Manzie for the use of the Committee.
On the Crown Suppliers, however, the answers given to us are far clearer. Let me quote from evidence provided by Sir Gordon and contained in the appendix to our report. Sir Gordon is in the Chamber this evening, and no doubt is nodding vigorously.
A paper was produced by the central unit on purchasing, which "followed a review of the future of The Crown Suppliers undertaken by a team of officials led by the Cabinet Office. The Cabinet Office review team concluded on the information available to them that whilst privatisation would bepossible"--
it is always possible--
"it would not, in their view, be in the pulic interest." I understand that that review team is one of the most prominent committes in the land, that it is at the very heart of Government and that it advises the Prime Minister ; but it says that privatisation would not be in the public interest. Those are not my words.
The evidence continues :
"They recommended that The Crown Suppliers should be retained as a central purchasing agency in the public sector with rather greather autonomy in accounting and staffing matters, but that further consideration should be given to contracting out certain of their non-procurement activities."
I am reading all this because that is what is says, although I may not agree with it. The thrust of the recommendation is "Keep it in the public sector."
Column 380"The Central Unit on Purchasing came to a similar conclusion about the central procurement function, but made rather more radical suggestions about The Crown Suppliers' other activities. A request by Dr. Oonagh McDonald"--
the former Member of Parliament for Thurrock--
"that a copy of the paper by the Central Unit on Purchasing should be placed in the Library was refused by Sir George Young"-- the hon. Member for Ealing, Acton, then a Minister in the Department--
"because it was not in a form suitable for publication." What that really means is that the paper was embarrassing, that it should not be read by the public and that the union should not have access to it, because it reinforced its case.
I asked another question, about the study of the feasibility of privatisation by Coopers and Lybrand in association with Samuel Montagu, and the study of the options other than privatisation by Mr. Dewi Jones. They
"were commissioned because Ministers believed that, taking into account the wider commercial benefits"--
again, I am quoting Sir Gordon's reply--
"privatisation might prove to be a valid option despite the conclusions of the earlier reports. The Parliamentary Under-Secretary of State"--
who is now in his place but who is not watching my lips "responded to a request by Mr. Tam Dalyell for these reports by saying that summaries had been placed in the Library ; the full reports were not proposed for publication because they contained commercially confidential information."
That was the second occasion on which Ministers were hiding the truth from Parliament because they did not want the case against privatisation to be put, based on accurate information produced by those who had had the opportunity to go into the Department and evaluate what was in the best interests of the general public. "The Crown Suppliers Board prepared a commentary for Ministers on the Dewi Jones report."
Again I quote Sir Gordon :
"This was an internal document commenting on a commercially confidential report and"--
in the words of Sir Gordon--
"was not intended or suitable for publication."
I can presume only that that is yet another example of Sir Gordon having to defer to the Minister's instruction not to publish information that might be highly embarrassing to the Department. I understand that there is another matter to which I might briefly allude at this stage.
"A team of staff of The Crown Suppliers, who are assembling a bid for all or parts of the business of The Crown Suppliers, asked for assistance with the cost of consultants' fees. The Government has agreed in principle that assistance should be given for some of these costs but no decision has been reached on the level of assistance to be provided."
I understand that that is a precedent. I hope that the Minister will comment upon it.
The Government do not want the truth to come out. The privatisation is being driven through by a Minister who is determined to foster his reputation as the grand privatiser of everything in the private sector. However, he has a small problem on this occasion. He has always promoted himself as effective and efficient and as a leading light in the formulation and promotion of the Government's privatisation policies, but the Minister has turned the Crown Suppliers, which was a highly profitable organisation, right round. In 1987 it made a profit in previous years. The Minister has turned the Crown Suppliers into a loss-making organisation. A profitable state concern has been turned into a loss-making state concern.
Column 381In desperation, therefore, the Minister now comes to the House to propose the privatisation of an organisation that he has been unable to manage effectively. He may say that he is not responsible for the Crown Suppliers management, but I understand that he has attended board meetings on privatisation. He takes an almost day-to-day interest in what goes on in the Crown Suppliers and at PSA generally. If I am wrong, I hope that the Minister will correct me. I understand that he has a permanent monitoring role.
Mr. Chope : I do not have a permanent monitoring role, in the sense of being a Crown Suppliers executive. It has an independent board that consists of full-time employees and non-executive directors. I have occasionally attended board meetings. I attended my first board meeting earlier this year. I hope to be able to be at another one later this month. I have attended a few other board meetings, and I accept my share of responsibility for the Crown Suppliers' performance. In the last year for which there are published accounts, Crown Suppliers made a profit of over £3 million on its trading activities.
Mr. Campbell-Savours : The Minister's information perhaps updates that which I have, but there are those who will have heard what he has said. If what he has said can be challenged, it will be challenged on the Floor of the House during Question Time on environmental matters.
I remind the Minister what happened last year when he was tripped up over Richmond house. He knows what happened. On that famous evening he answered for the Government. We were well-briefed for that Adjournment debate. We knew that he had spent over £40,000 on a service that we knew we could have provided for him, if only he had asked us for our advice, for £1,500. If there had been a Labour Government throughout the Richmond house affair, the taxpayer would be over £40,000 better off, but because there is a Conservative Government who are obsessed with privatisation and contractorisation, public money has been lost.
We caught the Minister out last year and we may have caught him out again this year. Does he remember that on 8 May he answered a written question from me, in which I asked
"the Secretary of State for the Environment whether the Crown Suppliers continue to comply with established public procurement procedures and relevant EEC/GATT regulations."
The Minister answered :
"Yes."--[ Official Report, 8 May 1989 ; Vol. 152, c. 355. ] That was a very clear answer. I understand that no sooner had he given me that answer than there were phone calls to him from the Department asking, "Minister, are you sure that you haven't misled Campbell-Savours with that rather odd reply?" I understand that it was not true. Legal advice was taken by the Department. The Minister might care to intervene to deny what I now say.
Column 382I understand that for the last two years the Crown Suppliers has systematically avoided European Community requirements to open its supply contracts to competition throughout the European Community and has done so in the full knowledge that its actions could not be defended either in the European Court or, if contested, by European commissioners, in the same way as European commissioners will now contest the subsidies paid to British Aerospace in the Rover takeover.
The Minister is fully aware of the Crown Suppliers flagrant disregard of the Government's international treaty obligations. He has chosen to hide the information from Parliament by not giving direct and clear answers to questions on these matters. The European Community supplies directive 77/62 requires that
"Government contracts for the purchase of goods valued at over £92, 000 are put out to tender and that such contracts are advertised in the EEC Journal."
The reasons will be obvious to the House. Probity, fair trading, free competition and obtaining the best value of public money are among them.
For the past two years, however, the Crown Suppliers has been in flagrant breach of the regulations on numerous occasions over contracts for furniture and furnishings totalling tens of millions of pounds. When such contracts come to an end and further substantial quantities of the same goods are required, tender competition should be organised and advertised in the European Community Journal. Instead, contracts have been extended in clear breach of EC directives and the standard of public accountability that the House expects has clearly been breached. I stand to be corrected at any stage in my contribution, but I have been told that more than 120 contracts have been extended in that way.
I had some notes on Community rules on this matter, but they seem to have disappeared, so I cannot comment on them. I wanted to place them on the record. Perhaps one of my hon. Friends will ask me to give way.
Mr. Sedgemore : Would my hon. Friend care to develop the Richmond terrace affair, as I was the hon. Member who raised the matter on an Adjournment debate and I received no satisfactory answer at the time? The Minister used to be on Wandsworth council and he claimed to be a value-for- money person. He is now more adept at wasting public money than anyone cares to mention. When my hon. Friend has talked about that, will he draw the parallels between the Rover sale to British Aerospace and the extension of the 122 contracts that do not accord with the EC directive? If he will comment on that, we can then have another intervention from a Conservative Member and I shall come to help him look for his papers.
Mr. Campbell-Savours : They were here all the time. In reply to my hon. Friend, the matter of Richmond terrace remains for those who study Hansard to read well into the future and I am sure that they will draw the same conclusion as I have. Richmond terrace is a very beautiful building, but it was a very nasty contract.
As I understand the arrangements within the Community, contracts can be awarded under open or restricted procedures or, in specified circumstances, under a negotiated procedure. In open procedures, all suppliers who are interested in the contract can submit tenders. In the restricted procedures, tenders are allowed only from suppliers who have been invited to participate. Negotiation procedures allow contracting authorites to
Column 383negotiate with one or more suppliers of their choice. In certain, closely defined circumstances--and it is on these matters that the Minister will have to comment later--they can do so without prior publication of a tender notice. We may be looking at those areas tonight and I am sure that the Minister will want to be clear about them because we shall be checking to see whether his comment is strictly correct.
Except in such closely defined circumstances, there must be a call for competition by means of a prescribed tender notice published in the official journal of the European Community, allowing minimum time scales for responses by candidates or by tenderers. When a contracting authority makes an award, it is required to send a contract award notice to the journal for publication and to record details of the award for inclusion later in a statistical return. On the technical specifications of the contracts, whether or not procurements are above the thresholds in the directive, the contracting authorities have obligations under article 30 of the treaty of Rome. The Commission takes the view that decisions of the European Court of Justice mean that where there are no European standards, contracting authorities must consider products from other member states manufactured to a different design, but having an equivalent performance on equal terms with products meeting national or other preferred standards.
There are special procedures for dealing with matters of urgency. The directive provides that purchasers may use the negotiation procedure without prior publication of a tender notice in so far as is strictly necessary when, for reasons of extreme urgency brought about by events unforeseeable by the purchaser, time limits laid down for the open and restricted procedures cannot be met. The circumstances involved must not be attributable to any part of the contracting authority.
The directive provides separately that when urgency makes the normal time limits impractical, the time limit for the receipt of requests to participate shall not be less than 15 days from the day of dispatch and that the time limit for the receipt of tenders shall not be less than 10 days from the date of the invitation to tender. Purchasers should not abuse these provisions--I hope that the Minister is listening--which the European Court, the Commission and, where relevant, other signatories to the Government procurement agreement are likely to give a narrow interpretation.
Many of my hon. Friends are concerned that European Court requirements, Commission requirements, parliamentary decisions and whatever has any connection with the European Community are issues that are too often discarded by this Government.
Mr. Sedgemore : I want to be clear about what my hon. Friend is saying. The Prime Minister tells us constantly that we do not have a level playing field in Europe and that all the other countries are cheating. Is my hon. Friend saying that Britain is cheating?
Mr. Campbell-Savours : I have been on my feet for 20 minutes and I have spent 10 or 15 minutes on this matter. The Minister has had the opportunity to intervene to put me right, yet he has not. He is looking for his notes, and
Column 384I am sure that Sir Gordon is being consulted most vigorously on the matter and that he is enjoying himself immensely.
The directive does not include any provisions for enforcing compliance and it is left to the Commission to take action against a member state under article 169 of the treaty for failing to implement the directive properly. The Commission has said that it intends to do so more vigorously where the directive appears to have been breached and that where a breach is established, any Community funding conditional on compliance may be withheld.
In theory at least, judicial remedies for injured suppliers may already be available in the United Kingdom. Compliance ought to be challenged. It is of increasing importance in the negotiations in Geneva on the improvement and broadening of the Government procurement agreement and suppliers from other signatory countries can be expected to become increasingly aware of the available remedies.
I have references in my notes to the threshold being £92,000, which is the equivalent of 130,000 ecu. I want to know whether the rules have been breached. I understand that the rules were breached and, despite consulting Sir Gordon and having had a most vigorous consultation, the Minister has still not been able to get to his feet to tell me whether the rules have been breached. The breaching of rules is a major issue within the Department. Legal advice has been taken on the matter and the legal advice is that the rules have been breached. Yet the Minister is still not tempted to come to his feet. I am sure that the European Commissioner responsible for these matters will be examining what I have said in my modest contribution tonight, yet the Minister still refuses to make a comment at the Dispatch Box.
I understand that sweeteners have been provided at the insistence of leading members of the management buy-out team in the case of the Crown Suppliers. The Minister has encouraged that bid and financed it from public funds. That breach continues today even though top lawyers at the Department of the Environment have advised that it is in clear breach of the treaty of Rome to which the Government are a signatory. There would be no defence if the European Community became aware of the breach and decided to prosecute the Government--if it had that power. I hope that the European Community takes action.
Mr. Sedgemore : Before my hon. Friend moves on, can he tell us whether he is claiming that it is Ministers who have deliberately flouted European law, or is he claiming--which would be a serious matter in this Chamber--that Sir Gordon has condoned the flouting of European law either tacitly or overtly?
There is another matter that I want to raise, which I regard as somewhat controversial. An allegation has been made that the Civil Service is being brought into disrepute. As a member of the Crown Suppliers board, the Minister has sat idly by while members of the management buy-out team have indulged in activity which is highly improper for public servants. I put the allegation to the House. I do not know in any great detail what the evidence is, but I have
Column 385been given vigorous assurances that what I am saying is correct. It seems that one of the people involved accepted an invitation from a manufacturer called Pentos to attend an all-expenses-paid weekend at this year's British golf open. When that fact was discovered, he said that his attendance had been authorised. I understand that it had, indeed, been authorised--by another member of the management buy-out team. The justification was to provide reassurance to a major manufacturer but that same manufacturer had already been provided with hundreds of thousands of pounds' worth of reassurance in the form of numerous extended contracts. It is thus alleged that someone involved in the management buy-out had an improper relationship with a company that was a contractor to the Crown Suppliers.
I understand that such activities can be approved, but there are rules governing these matters. I take my text from the staff handbook of the Department of the Environment and the Department of Transport. Under the heading
"Acceptance of Gifts, Rewards and Hospitality",
the handbook says :
"Working relationships often bring civil servants into contact with outside organisations where it is normal business practice or social convention to offer hospitality, and sometimes gifts, to facilitate useful contact and working relationships. Offers of this kind to individuals or to their families can place civil servants in a difficult position. To refuse may cause misunderstanding, or offence to the giver, especially if the offer comes from an overseas Government or government organisation. To accept could involve criminal liability or otherwise give rise to questions of impropriety or suspicion of conflict of interest."
The guiding principles are as follows :
"The actions and conduct of individuals acting in an official capacity should not give the impression to any member of the public, or to any organisation with whom they deal, or to their colleagues, that they have been or may have been influenced by a gift or consideration to show favour, or disfavour, to any person or organisation. The conduct of an individual should not foster any suspicion of conflict between official duty and private interests." I understand that the permanent secretary is the final arbitor on advisability of acceptance or refusal of gifts, hospitality and so on and is advised by the director-general of organisation and establishments. The handbook says :
"The correct course to be followed in the case of proffered gifts or hospitality will be determined by the context in which the offer is made."
I want to make it clear that I do not myself make any allegation of impropriety against the civil servant involved. [ Hon. Members :-- "Oh."] Listen to what I am saying. I merely question whether he should have been authorised to do that. That is a fair question.