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Mr. Campbell-Savours : Well, the allegation is that he was authorised to do it. When he was questioned, he said so.

Mr. Holt : Who is "he"?

Mr. Campbell-Savours : Whoever the civil servant might be. I am sure that the hon. Gentleman would not like to to name a civil servant in the House in connection with such an allegation. Is he really that irresponsible?

Mr. Chope : The hon. Gentleman is making serious allegations. Why did he not write to me about them rather than raise them in the House without knowing whether they are substantiated? He could have given me notice of


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the matter. It could have been dealt with in correspondence. Surely that would have been a more responsible way in which to deal with the matter.

Mr. Campbell-Savours : The Minister will regret that intervention, because it shows that he is not doing his work. If he checks with his Department, he will find that I raised these matters with the National Audit Office two months ago. The correspondence went to his Department, and he should know the answers. If he does not, he should check with his civil servants in the Box. I have raised the matter, and I should have liked it to have been dealt with before tonight.

Mr. Chope : Has the hon. Gentleman received a reply from the National Audit Office?

Mr. Campbell-Savours : I have received no reply on the detailed allegation. I do not know as yet what the position is. The Minister must know, because presumably the matter came to him. Or has he once again abdicated his responsibility and told his civil servants to get on with it and ignore any complaints from my hon. Friends and myself?

Mr. Sedgemore : I used to be what is loosely described as a senior civil servant, and, indeed, a private secretary to Ministers in a previous incarnation. I am now a member of the Treasury and Civil Service Select Committee. My general feeling is that standards of integrity in the Civil Service have declined considerably as politicians have interfered in its conduct. I am sure that the example that my hon. Friend has given is correct, and all that I can say is that in my day that attendance would have been regarded as highly damaging to the integrity of the Civil Service, whether it had been authorised or not.

Mr. Campbell-Savours : Perhaps the allegation is baseless. Perhaps it is only a rumour ; perhaps it is nonsense. But if it is the truth, the Minister should be asking his Department who authorised and whether, in the circumstances of privatisation, it was correct to authorise.

A note from the chief executive of the Crown Suppliers to all staff, headed "Conflicts of Interest", says :

"As the sale of The Crown Suppliers approaches, it may be helpful for you to have a note about particular issues that could give rise to a conflict of interest.

Staff Conduct

As privatisation approaches, and particularly after the purchaser has been selected, there is likely to be increasing pressure to look to the objectives and requirements of the prospective new management. Until the sale has been completed (and indeed beyond for those staff who are seconded to the new owner), all TCS staff will continue to be bound by the rules of conduct applicable to civil servants. These are set out in the Staff Handbook."

It is a very good letter. It goes into the special position of, and the separate guidance to be given to, members of the buy-out team. It deals with the question of personal share dealing and staff conduct generally. The gentleman who wrote the letter is obviously a fine civil servant and understands the responsibility that has been placed on him by the House to protect the integrity of the Civil Service. Even so, we have the allegation to which I have drawn the attention of the House this evening. I do not have concrete evidence. I simply stated my allegation and it went to the National Audit Office, which will have sent it to the Department. As yet, we have had nothing back. I have identified no individuals but the incident has been pressed upon me vigorously and those who have pressed it


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upon me sound very convincing. If the allegation is true, something is very wrong. It means that, during this sensitive privatisation period, the Minister is allowing relationships to develop, which, in the minds of the public could be treated with great suspicion.

Mr. Lofthouse : Did my hon. Friend understand the Minister to say that the organisation had made a £3 million profit this year, as I did, whereas only last week the staff were informed that the profit indicators for the nine months that have so far been worked this year suggest a projected loss of £1 million this year?

Mr. Campbell-Savours : While I was speaking my hon. Friend must have taken advice on these matters and he must have been advised by people who know about these things. I am sure that my hon. Friend would not have intervened unless he had concrete information. The Minister must reply to this. We are like postboxes in this affair. Representatives of the work force contact us on the one hand and on the other there are the civil servants. Perhaps we can establish the truth during this debate.

Mr. Holt : The hon. Gentleman has made some serious allegations against individuals outside this place and against my hon. Friend the Minister.

Mr. Campbell-Savours : I have named no one.

Mr. Holt : It is suggested that my hon. Friend the Minister must know what every person in his Department is doing. I am sure that the hon. Member for Workington (Mr. Campbell-Savours) will recall that during the tenure of office of my hon. Friend's predecessor, members of the Department were found guilty of corrupt practices and were jailed. There is no way in which my hon. Friend the Minister or his predecessor would want to shield people who are carrying out criminal activities. It is irresponsible of the hon. Member for Workington to come to the House with a load of smears, no names and no evidence.

Mr. Campbell-Savours : Obviously the hon. Gentleman has not listened to me. I have reported no criminal activity. I said that I can understand the context in which this kind of activity could happen. I have simply questioned the propriety of a civil servant perhaps doing these things with the authorisation of his chief. If that has happened, it is wrong. I have waited a long time for answers to my inquiries. In desperation I came to the Floor of the House tonight because I want to know the truth. Where taxpayers' money is being allocated to purchase products, equipment and services from industry, the general public and I do not want to believe that there is any possibility of irregularity. I am sure that the hon. Member for Langbaurgh (Mr. Holt) and his constituents would not want to believe that.

If the hon. Member for Langbaurgh, or I, were ever tempted by a bottle of whisky or a food hamper in our Constituencies, I am sure that those gifts would be sent back. Although they are meaningless and insignificant in terms of the income of a Member of Parliament, we know that if the public were aware of them, the reasons for those gifts might be questioned. The public might believe that such gifts are wrong, and that is why we do not accept them. The same is true of public procurement. There must be no question of impropriety even if we understand the


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context in which these matters arise. Impropriety must not happen and that is why I have raised the issue tonight. [Interruption.] I am sorry that the Secretary of State was not present to hear me tonight, or to watch my lips.

8.22 pm

Mr. Gwilym Jones (Cardiff, North) : I listened with great interest to the hon. Member for Workington (Mr. Campbell-Savours). He spoke at great length, and he may now hold the record for making the longest speech in this debate. His filibuster served only to expose the weakness of the Opposition's case with regard to this measure because so few Opposition Members have spoken tonight.

Throughout his overlong speech, the hon. Member for Workington did not advance one positive argument in support of what I would have thought should be the intellectual starting point for the Opposition's case for opposing the measure. I believe that the starting point for any Opposition Member must be to argue why it is necessary for the PSA to remain a nationalised industry.

We must remember that a nationalised industry does not come about naturally because legislation is required to create one. Similarly, legislation is required when a nationalised industry is moved to the private sector. However, any group of citizens can arrange the shareholding for a public limited company.

If Opposition Members were arguing that the PSA should become a nationalised industry, they would surely have argued why that was necessary. The hon. Member for Workington did not do that. However, in that he was not exceptional, because no other Opposition Member advanced any arguments why the PSA should remain a nationalised industry.

We have had a one-sided debate this evening. All the arguments for privatisation and some important reservations have come from Conservative Members. The hon. Member for Linlithgow (Mr. Dalyell) repeated the usual Opposition questions, while making appropriate comments about apprehensions felt by the staff. However, he did not offer any positive arguments why the PSA should remain a nationalised industry. I could not be sure whether the hon. Member for Brecon and Radnor (Mr. Livsey) was in favour of the measure or against it. He referred to the PSA as overstaffed and said that the management needed tightening up. Perhaps his was the unique Liberal position in that he was neither in favour of the measure nor against it.

Mr. Soley : It is possible that the hon. Gentleman has not been in the Chamber for the whole debate ; if he had been here, he would not have said what he has said. He would have heard me and several of my colleagues quote Ministers saying that it was necessary for the PSA and the Crown Suppliers to be in the public sector because that was in the public interest. Whatever else the hon. Member for Cardiff, North (Mr. Jones) can say, he cannot say that the argument was not made. It was made forcefully and we used the Government's own evidence as to why it was in the public interest for the PSA and the Crown Suppliers to stay in the public sector. Perhaps the hon. Gentleman should address that and tell us why he thinks the Government's reports were wrong.

Mr. Jones : The hon. Gentleman should not be apprehensive. I know that he has not been present for the whole debate because he has been out for a good dinner.


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Mr. Holt : On a point of order, Mr. Deputy Speaker. Is it not out of order for private conversations to take place inside the Chamber?

Mr. Deputy Speaker (Mr. Harold Walker) : Conversations outside the Chamber are beyond my range of vision.

Mr. Jones : I can assure the hon. Member for Hammersmith (Mr. Soley) that, unlike him, I have been in the Chamber throughout the debate. He need not be apprehensive, because I will refer to his comments in a moment.

I listened to the hon. Member for St. Helens, South (Mr. Bermingham), who gave us a perfect example of the lawyers' trade. He realised that his case was so weak that he changed the question. Once he had done that, he invented his own answer and claimed that he had proved his case on the most spurious of grounds.

I also listened to the hon. Member for Hammersmith, who spoke for about 47 minutes. On several occasions he said that privatisation of the PSA was not necessary. He said that it was not in the interests of the public sector. On one occasion, he even said that it was not in the interests of the private sector. While he referred to reports, he did not develop one argument as to why it was not necessary. More importantly, he did not address the fundamental question why it is necessary for the PSA to remain a nationalised industry. I invite the hon. Gentleman to read his remarks in Hansard tomorrow morning, when he will find that he did not advance any positive arguments in that regard.

I welcome the Bill as I have welcomed all the government's privatisation measures. However, I still believe that the term "privatisation" is something of a misnomer. I do not believe that privatised companies are made private. They have been taken from state ownership and are now owned by the people. When they were nationalised industries, they were far more private affairs than they are now as public companies. The dead hand of nationalisation has been raised from them. They have become successful public companies, in stark contrast to their traditional condition as nationalised industries.

It is appropriate that we are considering the privatisation of the PSA today. As has been mentioned earlier, the offer on the sale of shares in the water companies in England and Wales closes today. We knew that the privatisation of the 10 water companies in England and Wales would be successful. This day we are seeing people put their seal of approval on that privatisation. Many of the 4 million people who have registered an interest in obtaining shares in the water companies of England and Wales will take up the opportunity to do so. We have seen television reports of the last-minute applications and many people queueing to make sure that they do not miss out on the opportunity to own shares in the water companies of England and Wales. I refer in particular to employees, such as those of the Property Services Agency and of the water companies.

As my hon. Friend the Member for Eastbourne (Mr. Gow) reminded us, perhaps the biggest privatisation occurred when 99 per cent. of British Gas employees bought shares in the company. I remember doing a fellowship with the Industry and Parliament Trust. I was assigned to British Gas before it was privatised. At the start of my fellowship, several employees asked me, "Why


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do you want to privatise us? We are not a glamour stock like British Telecom." It took about two years to complete my fellowship, and I completed it almost immediately before the sale of shares in British Gas. Attitudes had changed by then. The same employees and many others impatiently turned to me, asking, "When, at last, will we get the opportunity to own shares in our own company?" That was the attitude of British Gas employees, and it is the attitude of water company employees. I am sure that staff of the Property Services Agency will have the same attitude.

The Property Services Agency is an appropriate organisation to be privatised. It is a large, important organisation. It is the country's largest building consultancy, and it has an annual expenditure of £3.5 billion. It has resources of £300 million. Nearly 25,000 people work for the Property Services Agency. Its work comprises five main functions : estate management, in which it is involved in the purchase, disposal and leasing of land for departmental needs ; building maintenance ; the design of new buildings--reference has been made to 22 awards in 1989 ; the supervision of construction by outside contractors ; and, of course, supply, which is essentially the function of the Crown Suppliers. Among the 22 awards in 1989 was the curiously named Europa Nostra diploma of merit for Richmond terrace. I join hon. Members in paying tribute to what the PSA has achieved in Richmond terrace. It is a good example of an attempt to build a brand new functional building but in a style which is appropriate to its setting in Whitehall. I commend all who were involved in it.

It is appropriate also to mention some other examples which do not hold the PSA to the greatest credit. I have only to think of my own constituency. As some right hon. and hon. Members might know, I have the curious distinction of having in my constituency PD1 of the Inland Revenue--that same Department which handles the taxation affairs of every hon. Member. However, PD1 is sited on a Government block in a surburban part of my constituency. That block contains the most inappropriate high-rise buildings, which should never have been allowed to be built in that setting. They were built some years ago, perhaps before the time of the PSA. I should like to think that the PSA is not to blame for the Inland Revenue complex at Llanishen. More recently, a new Welsh Office building has been constructed in Cathays park. It is a building of no recognised outside architectural merit. I would not be at all pleased to be associated with the remarks that have been made about it. I wonder whether even His Royal Highness the Prince of Wales might have cast a glance over that great monstrosity, which is totally out of keeping with Cardiff's otherwise fine civic centre.

One of the best cases for privatising the Property Services Agency is contained in a union brief. Like my hon. Friend the Member for Bristol, North-West (Mr. Stern), I have read a brief from the National Union of Civil and Public Servants, which cites evidence from an outside specialist that

"management has been less geared to commercial aspects of running a business, naturally".

It is most unusual that anyone in this day and age should say that it is natural that the management of the Property Services Agency should be less geared to the commercial aspects of running a business. Surely one must be aware of the commercial realities of life these days. One must be


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aware of the need to achieve and improve a sound economy. How else have we increased spending on the National Health Service, social services and education, improved our defence and provided more police? We do so only by having a sound economy.

The NUPCS brief goes on to refer to

"no proven commercial information records".

That is rather strange. The only answer that is advocated in the brief is that Government Departments should be denied the advantages of competition- -that they should be denied the advantage of being able to place their business on the best terms that they can obtain to get the best services at the best price. Instead, they would have to pay the highest price. They would be unable to provide important services because they had to pay the highest price for the PSA. It is nonsense to suggest that, as customers, Government Departments should not be interested in achieving the best return on their money.

The brief goes on to state :

"More money from the taxpayer has to be found for the Property Services Agency."

The hon. Member for Hammersmith started his contribution with a realistic point. He sought to remind hon. Members that there is no such thing as public funding, that it is money from the taxpayer, and that the taxpayer must be remembered. I disagree with the National Union of Civil and Public Servants. If the situation were half as bad as it makes out, we would be considering not privatisation but liquidation of the PSA. I have much more confidence and optimism for the future.

The National Union of Civil and Public Servants brief goes on to state :

"In 1988 PSA's design costs were shown to be 25-30 per cent. cheaper than private designers."

That is strange, because it describes the PSA as an organisation which is

"less geared to commercial aspects of running a business" when it managed to achieve costs 25 per cent. to 30 per cent. lower. Could it be because, as the brief says, the PSA's spending power and market information enabled it to secure substantial price advantages? A little earlier in the brief, the union claimed that these are

"no proven commercial information records".

One statement does not square with the other.

Clearly, the PSA is not the hopeless case that the union would like to make out. It is an organisation with great ability. It has enjoyed great achievements. It deserves to be freed so that it and its employees can rise above being part of a Government Department. The PSA deserves freedom because of the more competitive arrangements in Government building, construction, management and departmental supplies. Departments now have effective procurement arrangements and the authority to make their own choices in obtaining required services.

The Property Services Agency is losing its guaranteed market and it must compete with everyone else outside by providing a good service ; otherwise, there would be the bleakest prospects for staff. They would leave for whatever they could find elsewhere, and customers would suffer. The PSA needs freedom to compete effectively and on equal terms, and that can be achieved only by privatisation. The Bill will create necessary diversification. Inevitably, when Government Departments are able to choose, some business will be lost through competition. The PSA cannot complacently look forward to retaining 100 per cent. of its


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business--some will be lost. It therefore needs the opportunity to diversify to replace the business that will be lost. One of the most attractive features of the proposal is that that process will enable the removal of the usual Treasury public sector spending constraints from the Property Services Agency.

We know that the privatisation will take some while to complete. It is suggested that it will not come about before the second half of 1992 at the earliest, but steps are already in hand to reorganise the PSA. The commercial activities, which comprise 90 per cent. of its activities, have been separated from its Government functions. Those activities are now being established in four separate operating divisions : PSA building management ; PSA projects ; PSA specialist services and PSA overseas. I am glad that, prior to privatisation the PSA will have the scope to expand into other markets and those divisions will be valuable first steps into areas in which I expect greater penetration after privatisation.

All in all, that bears out the view that I was given by some staff in Cardiff yesterday--that the path to privatisation is well organised. That brings me to the position of the staff. My hon. Friend the Under-Secretary of State knows of my concern about the PSA in Cardiff, which is situated in my constituency at Gabalfa. About 250 excellent, able and hard-working staff are based there. I understand from yesterday that almost everyone at the PSA at Gabalfa is dealing competently and effectively with an extremely large work load.

In the run-up to privatisation there has inevitably been some speculation in the press. Some has been well intentioned and some has not. Perhaps the most common story has been that the number of PSA officers will be reduced to eight. I was especially concerned about the future of the PSA office in the capital city of Wales. Accordingly, I corresponded with my hon. Friend during the summer recess. I was pleased that he answered my question in Hansard of 2 November, confirming that the office in Cardiff would continue. Indeed, my hon. Friend's actions on the road to privatisation have left open the door not only for retaining the office in Cardiff, but for very much expanding that office.

I see the PSA in Cardiff as growing in line with the growth in Cardiff. We have an exciting expansion programme for the redevelopment of south Cardiff and a large construction programme for the Cardiff bay barrage, which is likely to be an integral part of that redevelopment. The interest that is being shown in the redevelopment of south Cardiff suggests that Cardiff will definitely be one of the sunrise locations. Indeed, I predict that in the next century Cardiff will be the city of the south-western quarter of the United Kingdom. I feel sure that the PSA in Cardiff will grow in line with Cardiff, and perhaps at a greater rate.

I know that the confirmation of the continuation of the Cardiff office has been well received there. It provides the essential framework for the staff in Cardiff to apply their known ability and enthusiasm when taking advantage of the new opportunities and of the open door that is now presented to them.

However, at the same time, we must have the fullest regard for the staff who work in the PSA. Only yesterday a most significant comment was made to me by one employee there. He said that he had not got over his surprise at the fact that he will no longer be working for a Government Department. When he joined the PSA, it was


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a Government Department, and he had assumed that it always would be. It is important to understand that comment. That employee has completed many years' work for the PSA in Cardiff and others have worked for it for all their lives. We should consider all the staff of the PSA and their natural fear of the unknown and that they might be going into a hostile environment.

It is all very well to talk about great opportunities, about the staff rising up from being Government employees and about the PSA rising up from being a nationalised industry, but we must never ignore genuine anxieties. The staff must be regarded as the PSA's prime assets. The staff are always important in any company, in any industry, but in a service industry such as the PSA, they are especially important and should be given our fullest consideration. The apprehensions that were spelt out to me yesterday included questions such as : would there be the same conditions of service, the same redundancy arrangements and the same pension provisions? The staff need important reassurances in all those areas. I was told that the staff understood that guarantees had been given in other privatisations, but that no guarantees had been given or could be given in the case of the PSA.

Mr. O'Brien : I am following the train of the hon. Gentleman's argument closely. He is obviously making strenuous efforts to demonstrate the importance of consulting and considering the staff. Will he persuade his hon. Friend the Minister in that context that there should be a ballot for all those who work for the PSA and the Crown Suppliers and that they should decide whether they want the privatisation? Does the hon. Gentleman subscribe to that thought?

Mr. Jones : I am sorry, but that would not be an appropriate proposition. The staff have much more important problems that deserve our fullest attention. I have been trying to refer to their apprehensions about their terms of employment, redundancy and pension arrangements. The staff are very concerned because they have the impression that the staff involved in other privatisations have been in a superior position and that they will not be in such a position. I very much hope that that will not be the case because in each of those three areas it is reasonable for the staff to expect the same conditions that have been given to staff involved in other privatisations and to expect that, as far as possible, their terms in those three areas should be comparable. It is reasonable that there might be some variations, but if there were to be any significant variation in, for example, the pension scheme, there should be compensations for the staff.

Mr. Allen McKay (Barnsley, West and Penistone) : Does the hon. Gentleman agree that clause 2 defines the difference in how people have been treated?

Mr. Jones : The hon. Gentleman is going ahead of us at this point. That matter is very much for the Committee to consider. However, perhaps he will join me in putting down the largest marker for trying to ensure that the staff are properly looked after and given all the necessary reassurances and safeguards. They must not be treated any less favourably than the staff involved in other privatisations. I want the staff to go forward into the new


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PSA with whole-hearted commitment, because I believe that there is a tremendous future for them in the new PSA and I do not want them to be put off in that.

Examples have been given to me of staff in their fifties and sixties in Cardiff. Understandably, they might already be thinking in terms of their own pensions and of retiring direct from the PSA. However, they are now worried about facing an unknown future and about what might happen. They are wondering whether they will be able to retire at the time they had expected and whether they will receive the same pension as expected. They are wondering whether they have any reason to be concerned that a new employer might raid their pension scheme. Younger staff do not necessarily have the same apprehensions and although staff under 50 might think that it will be relatively easy to move to another job, that will not be the case for everyone and for some it may involve moving house.

In every respect, my greatest concern is about the staff, all of whom--both older and younger--deserve the fullest reassurances. I want to be able to look forward to them continuing to be employed on the same pay and with the same hours and holidays and--in this remotest eventuality--that the basis of any redundancies will be the same as it is at the moment. I also want the staff to be able to receive the same pension.

I heard what my right hon. Friend said earlier and I imagine that my hon. Friend the Under-Secretary of State may refer to the same subjects when he replies. I hope that he does, because we cannot over-emphasise the great need to publicise to the PSA staff exactly what will happen and the commitments that the Government have made and must make to ensure that they are properly looked after in the change to privatisation.

I very much welcome the Bill, which has been introduced on a most appropriate day. I look forward to our time in Committee. I believe that it was the hon. Member for Workington who said that the Bill could pass through Committee like a knife going through butter. I hope that it will have a speedy and satisfactory conclusion and resolution so that we can look forward to a successful privatised PSA.

8.50 pm

Mr. Andrew Hunter (Basingstoke) : In sharp contrast to the hon. Member for Workington (Mr. Campbell-Savours)--I note that he is not in his place--I warmly welcome the Bill as the first stage in the privatisation of the Property Services Agency and Crown Suppliers. I regret that the hon. Gentleman is not here because I had it in mind to take up a point that he made towards the beginning of his speech. I believe in privatisation, not per se, as an item of dogma, but for pragmatic reasons. Some industries and services benefit from passing from public to private ownership, and I firmly believe that the PSA and Crown Suppliers are such services.

I acknowledge that my remarks bear in mind the findings of the Select Committee on the Environment. That Committee has had much contact with the PSA, and it annually reviews the main estimates. For a long time, it has urged fundamental reform. I regard the Bill as the Government's response to that demand for reform.

I strongly welcome the Bill. My reasons have already ben put clearly by several of my hon. Friends, including my hon. Friends the Members for Eastbourne (Mr. Gow) and for Cardiff, North (Mr. Jones). Those reasons can be


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summed up in one word--competition. Competition is wholly good and at present wholly missing. That must be rectified, and that is what the Bill will do.

It is absolutely right that Government Departments should be able to choose where they purchase the goods and services that they require. It will be good for the PSA and Crown Suppliers to have their guaranteed markets removed, because guaranteed markets do no good whatever. Moreover, the measures in the Bill will ensure that, in the few years before privatisation, the taxpayer will obtain greater value for money.

I wish to pick out three specific points of detail. I ask the Minister to note them, because some matters need to be clarified, although perhaps it would be more appropriate to clarify them in Committee.

I note that the Bill and accompanying briefs suggest that the PSA will be reorganised into four operating divisions. One of those will be PSA Specialist Services. Is there really a need for such an operating division? Reference has been made during the debate to the problems of recruiting and retaining staff in the PSA. That is especially true of the most specialist areas where the temptation and lure of the private sector is great. I am of the opinion that the services that PSA Specialist Services would offer can already be provided by the private sector, so perhaps there is no need for further duplication.

A second area of the reorganisation that disturbs me a little is the creation of PSA Overseas, which was the focus of attention earlier. The hon. Member for Linlithgow (Mr. Dalyell) raised the question of security, as did the hon. Member for Hammersmith (Mr. Soley). The speech of the hon. Member for Linlithgow was an important contribution to the debate. I accept the immediate reassurance given by my right hon. Friend the Secretary of State. However, we must go further, and I hope that in Committee we shall receive a detailed reassurance. Security must be considered carefully.

Mr. Dalyell : Absolutely right.

Mr. Hunter : Another point about PSA Overseas disturbs me. We understand that it is to be created mainly to support Ministry of Defence establishments. The different nature of MOD establishments and their geographical spread means that the creation of one PSA Overseas will not prepare that part of the PSA's activities for competition. Perhaps my right hon. Friend should look more closely and consider a subdivision of PSA Overseas.

A third point which worries me--I shall try to put it

constructively--is the emphasis on the length of time that it will take to prepare the operational divisions for privatisation. It strikes me that the best part of three years is a long time. I should have thought that one of the best ways to prepare for privatisation is immediately, or as soon as possible, to expose the operational divisions to the realities of the marketplace and to learn from it. I hope that in due course we shall return to that theme. Why do the Government believe that such a long period is necessary?

My next point relates to points made by the Select Committee on the Environment. I mentioned earlier that it has positively criticised the PSA for several years. I wish to relate those criticisms to the next two years, or the pre-privatisation period. Can my hon. Friend the Minister


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give an assurance that our anxieties about the way in which the PSA has operated in the past will be removed during the run-up to full privatisation?

The Select Committee's first area of concern was the principle of annuality, which has not been mentioned so far in the debate. The Environment Select Committee concluded that one reason why the PSA did not operate efficiently was that it was bound by the principle of annuality. That is not the case for its competitors in the private sector. It can be argued strongly that, in preparing PSA for privatisation, the rigid annuality under which it now operates must be slackened.

The second area that worried the Select Committee is another instance where the PSA operates artificially, and that is the practice of the property repayment service which is the rates that Departments are charged by the PSA, as a token charge regardless of market reality. Again, the PSA does not operate in market circumstances. Arguably privatisation will increase its efficiency, but one must ask whether the property repayment service aspect will continue during the next two years as the PSA prepares to privatise. My last point is about project management. My great criticism of the PSA--it is my conviction that it is right to privatise it--is based on the poor assessments of PSA project management. We have already referred to several of these. When I intervened in the speech of the hon. Member for St. Helens, South (Mr. Bermingham), I may have unintentionally misled the House. I referred to the cost of the Richmond house project and to an additional cost of £1 million. That was not the total difference between the estimate and the final cost of the project but merely the 1987 increase. There was a discrepancy between the estimate and the concluding price of £5.7 million on the total project. I apologise to the House for getting the figure slightly wrong.

The project management aspect of the PSA has rightly caused great anxiety.

Mr. Dalyell : Is it not the experience of the National Trust and other ancient monuments organisations that it is difficult to estimate the costs of restoring old buildings? Costs can easily escalate. It is not only the PSA that has problems.

Mr. Hunter : There is great truth in that, but it is not the entire truth. In these particular projects, there were miscalculations and changes of plan. Even when projects were started, new ideas came in, for example, at Derby Crown court, Richmond house and Buckingham gate. Slack management allowed the projects to spin out over the years as clients demanded one change after another. Public money was at stake. I take the hon. Gentleman's point, but we must look for other reasons why costs escalated so much in the PSA.

My hon. Friend the Minister may be inclined to argue now or in Committee that for Departments the change from being clients to having financial responsibility will increase the efficiency of project management. I hope that that will be the case. The fundamental question is whether reorganisation will improve project management.

I entirely support and warmly welcome the Bill. There are still questions to be answered and points to be sorted out, but I have no hesitation in saying that I am sure that the new regime will be far better than the existing one.


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