House of Commons Hansard Debates for 8 Jan 1990

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only are these fire fighters not included in the Bill but--we never expected this--women who are now covered by legislation will be excluded.

Although there will not be a Division on the Bill, the House must return to the long-term fundamental issues of equal opportunities and pensions. The Opposition and a significant number of Conservative Members will not accept legislation that operates on the spurious ground that removing the rights of one group of pensioners whether male or female, is equalised by the ending of discrimination against another group. That is no way to proceed with legislation. I shall not seek to divide the House--I see that you are smiling, Mr. Deputy Speaker, and thinking, "Thank God for that"--but I am not satisfied with the legislation.

4.44 pm

Mr. Ryder : By leave of the House, Mr. Deputy Speaker, I should like to speak again. I am grateful to hon. Members for the attention and interest that they have shown in this largely detailed and technical Bill, but I should like to stress again that it is a modest Bill and has modest scope. It amends the statutory framework in which the regulations for public service pension schemes are made. Apart from some adjustments at the margin to the law prescribing the index linking of public service pensions, the Bill does not directly alter the rules of any pension scheme. Changes to these rules will continue to be made in the usual ways, which are prescribed in the Superannuation Act 1972.

There can be no fear that the Bill will seriously affect the pensions of those who have retired after many years of public service. I assure the House that there is no cause for such concern. The proposed changes to the qualifying conditions for pension increases--clause 1--will be introduced in a way that fully protects the accrued rights of serving public servants and those already retired. The double indexation of part of the pensions paid to surviving spouses will be phased out gradually and only the widows and widowers of scheme members not yet retired will lose this anomalous and unintended benefit. That is covered by clause 5. The ending of the extremely small payments of pensions increase on additional lump sums will be introduced for future retirements only, and this is covered by clause 3.

I assure the hon. Member for Newport, West (Mr. Flynn) that we are not alone in work of this kind. Other European countries are affected by the 1986 directive. I know that that will be of interest to my hon. Friend the Member for Eastbourne (Mr. Gow). The hon. Member for Newport, West asked whether there had been consultation with various interest groups. I believe that all interest groups support the measures in the Bill, but if any have suggestions to improve it, let us have a look at them.

I understand that the Department of Education and Science is holding discussions with teachers' representatives all the time and that a joint working party on pensions is operating now. The hon. Members for Newport, West and for Makerfield (Mr. McCartney) asked why we did not "level-up" pension increases for retired male scheme members so that those under 55 with dependent children could receive pensions increase. As the hon. Gentlemen know, this would be a costly improvement to superannuation benefits for which either employers or employees would have to pay. During my

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opening speech I set out details of how many people would be affected one way or the other. If we went down the road advocated by the hon. Members for Newport, West and for Makerfield, an estimated 7,000 retired policemen and fire fighters would be affected and it has been said that, on a conservative estimate, about 50,000 retired service personnel would benefit if payments were also made in armed forces schemes. The ultimate cost would be more than £100 million a year--for the police about £14 million and for the armed forces about £100 million.

Mr. McCartney : Surely, in considering whether to amend the legislation, the principle should be whether the current position of women is right. We should ask whether this is a proper aspect to include in pension provisions. The Opposition say yes, in principle. We should therefore consider how it can be applied to all members of the scheme. The Minister has implied that if amendments caused a huge influx in the number of people included in the scheme, the Government might have difficulty in finding the resources needed. The Government should turn to the second, more feasible option and introduce a sheme of phasing in arrangements rather than phasing out the current arrangements for women.

Mr. Ryder : I explained earlier why we have drafted the Bill along these lines. The hon. Gentleman will know that, for the reasons that I gave then, we believe that this is the right course. As I said, we understand that very few people will be affected. We know of only eight teachers who will be affected by the provision, although there may be more.

I referred to the initial cost of taking the course that the hon. Gentleman advocates, which is to level up. I gave that cost as over £1 million a year, and I shall be happy to supply him with the details of that figure if he wishes.

The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) knows that any proposal to phase in pensions increase for male pensioners under 55 with dependent children would be equally vulnerable to a challenge that it did not meet the requirements of EC directive 86/378, to which I referred in my opening remarks.

The hon. Member for Newport, West answered his own question about clause 7. An additional voluntary contribution can buy an index-linked annuity if the individual so chooses. The Government support the personal pension developments but also wish to continue good occupational pension schemes, as the hon. Gentleman knows. My hon. Friend the Member for Orpington (Mr. Stanbrook) has for several years campaigned assiduously for the concession of an additional pension for war service of former colonial expatriate civil servants. I have followed his campaign with interest for longer than the six months for which I have held my present position. The benefits and qualifying conditions of the colonial scheme have been modelled on those of the United Kingdom public service schemes--in particular, the provisions applying to home civil servants. There can be no special relaxation of the rules for colonial Civil Service pensioners.

My hon. Friend the Member for Orpington also drew the attention of the House to arrangements in Hong Kong. Ministers have said, as he may know, that we do not rule out the possibility of public officers' agreements in due course, although it is not clear whether, in the unique circumstances of Hong Kong, there may be other ways of

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achieving these ends. It may help if I explain that as other former colonies went into independence, the question of sterling safeguards was settled much closer to the time of constitutional change. This question is one of the matters that the Government are keeping under careful review in consultation with the Hong Kong Government. On present evidence, we are not persuaded that the current arrangements work to the disadvantage of Hong Kong pensioners.

Ministers have stated that the Government fully recognise the particular concern of HMOCS officers in Hong Kong and will continue to keep their interests in mind in the years leading up to 1997. Particular considerations apply in respect of Hong Kong--for example, guarantees under the joint declaration that expatriates may continue to serve after 1997. No firm decisions have yet been made on special measures, such as compensation, that might be appropriate in Hong Kong's unique circumstances.

The hon. Member for Roxburgh and Berwickshire asked about consolidation. I agree that simplicity and comprehensibility are important in any pension schemes and underlying legislation. There are already some important consolidation measures on the statute book--for example, the Superannuation Act 1972 of which he may have even closer knowledge than I. We need to be careful that attempts to produce statutes of near-universal coverage do not make the position more complicated. I am not convinced that the time of the House would be well spent on further pensions consolidation at present. As I have said, the Bill represents a relatively simple and straightforward correction of a few minor anomalies in existing legislation. With his customary acuteness, the hon. Member for Roxburgh and Berwickshire highlighted clause 2. He is quite right that the clause is retrospective. It aligns the law with the practice of schemes. It brings the law into line with what it was thought and intended to be. I stress, emphasise and underline that no pensioner will lose out as a result of clause 2.

The hon. Member for Roxburgh and Berwickshire wondered whether the position of police and fire personnel had been looked into. The answer is yes, and no anomalies in the way in which legislation affected them were identified.

If I have not covered any detailed points, I shall be happy to write to hon. Members or to talk to them before the Bill progresses further.

Mr. McCartney : Some Government Departments are considering setting up agencies to deal with their work. Will any changes have to be made in the legislation in respect of civil servants who, from this year, may be working for agencies, which although attached to the Civil Service are technically outside it?

Mr. Ryder : Not as far as I know. All public servants are treated the same under the Bill, whoever they work for and whatever the circumstances in which they work. I shall certainly let the hon. Gentleman know if I am wrong in that judgment.

As I explained in opening, the Bill is evolutionary rather than revolutionary. It is intended not to replace a system that has worked well for nearly 20 years but to adapt and improve it to meet the needs of the 1990s in a way that is fair to pensioners and current employees. Against that

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background, I commend the Bill to the House. I thank those hon. Members who have taken part in the debate--especially my hon. Friend the Member for Orpington, who has given the Bill his support, the hon. Member for Roxburgh and Berwickshire, who spoke on behalf of the Liberal party, and the hon. Member for Makerfield. If any points need to be clarified, I shall be happy to clarify them during the next few days.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.-- [Mr. Lightbown.]

Committee tomorrow.

PENSIONS (MISCELLANEOUS PROVISIONS) BILL [ Money ] Queen's Recommendation having been signified--

Resolved,

That, for the purposes of any Act resulting from the Pensions (Miscellaneous Provisions) Bill ("the Act") it is expedient to authorise the following--

(1) the payment out of money provided by Parliament of

(a) any increase in the cost of providing increases under or by virtue of the Pensions (Increase) Act 1971 in official pensions and in other pensions within the meaning of that Act ;

(b) any increase in the cost of providing pensions, allowances and gratuities payable under section 1, 7, 9 or 10 of the Superannuation Act 1972 ;

(c) any increase in the sums payable under any other enactment which is attributable to increased expenditure by any authority in consequence of--

(i) any such increase as is mentioned in paragraph (a) or (b) above ;

(ii) any provisions of the Act requiring the payment of contributions towards the cost of providing increases under Part I of the Pensions (Increase) Act 1971 in official pensions payable under section 9 or 10 of the Superannuation Act 1972 ; or

(iii) the provision of benefits for teachers in connection with injuries sustained, or diseases contracted, in the course of their employment ;

(d) any administrative expenses of a Minister of the Crown attributable to the Act ;

(2) the payment into the Consolidated Fund of any sums received by a Minister of the Crown by virtue of the Act ;

and in this Resolution--

"official pension" has the same meaning as it has in the Pensions (Increase) Act 1971 ; and

"teacher" has the same meaning as it has in section 9 of the Superannuation Act 1972.-- [Mr. Lightbown.]

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Government Trading Bill

Order for Second Reading read.

4.58 pm

The Chief Secretary to the Treasury (Mr. Norman Lamont) : I beg to move, That the Bill be now read a Second time.

The main purpose of the Bill is to extend the enabling powers under the Government Trading Funds Act 1973 to establish trading funds. The new powers will be a major contribution to Civil Service management changes, and thus to the benefits that the Government expect from the Next Steps initiative--the creation of agencies--and the fundamental reform of the Civil Service management and financial management. To illustrate the links between the Bill and the wider processes of management improvement, we have published the White Paper, "The Financing and Accountability of Next Steps Agencies". The House, through the Select Committees that have so far taken most interest in Next Steps--the Public Accounts Committee and the Treasury and Civil Service Select Committee--has generally supported the Next Steps initiative, and I hope that the Bill will commend itself to hon. Members on both sides of the House. The Bill and White Paper are designed to strengthen the performance of Government Departments by encouraging civil servants to take a more businesslike approach to the efficiency and quality of the delivery of Government services. The White Paper sets out the background to the Bill. As it says, although the powers to set up trading funds are not limited to Next Steps agencies, it is expected that future trading funds will be entirely, or almost entirely, drawn from agencies. Thus the Bill takes forward the objectives underlying the Government's whole strategy for public service reform--greater freedom for managers, coupled with greater accountability for delivering agreed objectives. It will allow more organisations to operate as trading funds, which will give them greater financial freedom and greater disciplines akin to those of private sector organisations.

It may be helpful if I explain how trading fund status will help to promote those objectives. As paragraph 4.2 of the White Paper stated :

"A trading fund' provides a financing framework which covers operating costs and receipts, capital expenditure, borrowing and net cash flow. It has powers to borrow to meet capital expenditure and working capital requirements, and to establish reserves out of surpluses. Within this framework, it can meet outgoings without detailed cash flows passing through Vote accounting arrangements." At present only some 20 per cent. of the running costs of Government Departments are offset by related receipts. It follows that the majority of Government activities will not be suitable to become trading funds. That does not mean that agencies dealing with those activities are second-class citizens. Indeed, much of the White Paper is devoted to improving arrangements for them. It is important that all agencies that could benefit from the more commercial discipline of a trading fund should be able to do so. As my right hon. Friend the Chancellor informed the House on 1 February 1989, when he was Chief Secretary, the main purpose of the Bill is to widen the enabling powers under the Government Trading Funds Act 1973 to cover bodies that are directed by statute to provide a service and where the fees are fixed by

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regulation. As bodies such as the vehicle inspectorate and Companies house do not fall within existing powers, the main purpose of the Bill is to extend the 1973 Act enabling powers to such cases. Trading fund status will make possible a much more businesslike approach to the delivery of Government services. However, it has one characteristic that will rightly cause the House carefully to consider an extension of the Government's powers to use that particular financial mechanism. It is that the detailed cash flows of trading funds are outside the full processes of the supply system through which Parliament authorises and controls expenditure. In recognition of that, the 1973 Act rightly requires that no trading fund can be set up without Parliament debating each proposal on an affirmative resolution order. That principle is extremely important, and it is maintained in the Bill.

The other characteristic of the original legislation, which is strengthened in the Bill, is the statutory requirement for accounting to Parliament. That is much stronger for trading funds than for the remainder of the Civil Service, and the accountability operates direct from the trading fund to Parliament.

The Government Trading Funds Act 1973 arose from an early precursor of the Government's management reforms. That was the concept of units of accountable management proposed in the 1968 report of the Fulton committee on the Civil Service and the 1970 Conservative Administration's White Paper "The Reorganisation of Central Government". Although the concept is similar to that underlying changes implemented by the Government, it never really took off in the 1970s. The 1973 Act and the three trading funds still established under it--Her Majesty's Stationery Office, the Royal Mint and the Crown Suppliers--are almost the sole surviving relics.

Mr. Tam Dalyell (Linlithgow) : How do these proposals fit in with those for the PSA and Crown Suppliers Bill that we shall begin discussing in Committee tomorrow?

Mr. Lamont : The proposals for the Crown Suppliers and its possible privatisation are entirely matters for the Committee considering the Bill. If that Bill is enacted and the Crown Suppliers are ultimately privatised, it would cease to be a trading fund. The Crown Suppliers was one of the products of the original legislation, but it is being dealt with separately by the Bill to which the hon. Gentleman referred.

During the 1980s the Government have pursued a series of initiatives designed to secure better value for money. Government Departments have had a continuing programme of efficiency scrutinies run under the supervision of the Prime Minister's efficiency unit. The central unit on purchasing has encouraged development of better methods and greater professional skills. In the Health Service, cost improvement programmes have encouraged health authorities to identify and implement ways of providing services to patients more cost-effectively. The result of those measures alone has been total savings to date of some £3 billion. Such savings have helped to finance steady increases in priority areas of spending as well as reducing costs to the taxpayer.

Improved management can deliver better services at less cost. There is no conflict between greater efficiency and improving the quality of the service. As my right hon. Friend the Chancellor said when he was Chief Secretary :

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"Shoddy public services should not be an option. Nor should they be tolerated."

A key element in the Government's value-for-money strategy has been the delegation of budgets and financial control to units of management and, wherever possible, to individuals. For the Civil Service, the starting point was the financial management initiative. It had one major purpose--to place responsibility for decisions on both spending and costs at the level where operations and activities are managed and delivered. The units concerned, and the people in them, were then to be accountable for the results.

The statement of principle might be simple, but implementation is more complex and difficult. It has required a major change in attitudes throughout the Civil Service, which has responded enthusiastically to the new opportunities and challenges. It has also required a great deal of hard work in redesigning systems and procedures.

Government Departments are large, varied and complex businesses combining policy and executive functions. Those factors have sometimes made it difficult to delegate down the line, to managers at working level, the clear authority to enable them to make the changes that would deliver improved value for money.

Those issues were addressed in the efficiency unit report entitled "Improving Management in Government : the Next Steps". The key recommendation, accepted by the Prime Minister in her statement to the House on 18 February 1988, was that

"to the greatest extent practicable the executive functions of Government, as distinct from policy advice, should be carried out by units clearly designated within Departments, referred to in the report as agencies'. Responsibility for the day-to-day operations of each agency should be delegated to a chief executive. He would be responsible for management within a framework of policy objectives and resources set by the responsible Minister, in consultation with the Treasury."--[ Official Report, 18 February 1988 ; Vol. 127, c. 1149.]

The Next Steps initiative builds on the financial management initiative. It is a major step in delegating responsibility to Civil Service managers within clear parameters. It is designed to deliver services more efficiently and effectively, within available resources, for the benefit of taxpayers, customers and staff. It provides a clear framework for delegation and accountability. That makes possible increased delegation to an agency, and through the agency right down to those directly responsible for service delivery, coupled with accountability for the results achieved. The agencies already set up and the announced candidates are listed in annex A to the White Paper. Taken together, they cover about one-third of the Civil Service. My right hon. Friend the Minister of State, Privy Council Office, will reply to the debate and will deal with any issues that hon. Members may wish to raise on Next Steps agencies, possible candidates and the future for them.

When an agency is set up, it is necessary to look in detail at the financial controls and accountability arrangements within which it will operate. The wide variety of Government functions means that that inevitably has to be done on a case-by-case basis. But the early experience with Next Steps has enabled us to formulate the key general principles that are set out in the White Paper. The Government Trading Bill deals with the aspects of that policy which require primary legislation to implement, and it may assist the House if I outline briefly the coverage of the Bill.

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Clause 1 repeals sections 1 and 2 of the Government Trading Funds Act 1973 and inserts five new sections in it. Section 1 deals with the new powers, which are the central change introduced by the Bill. They would, if Parliament approves the necessary affirmative resolution in each case, allow a trading fund to be established where its revenue consists principally of receipts in respect of goods or services provided, and where it would lead to improved management efficiency and effectiveness. The White Paper--in paragraphs 4.15 to 4.19-- explain how in policy terms the Government propose that those new powers would be used.

Use of the powers would be considered on a case-by-case basis. It is therefore not possible to set out in advance a clear list of candidates. However, among existing agencies, early candidates for consideration as trading funds are expected to include the vehicle inspectorate, Companies house, the historic royal palaces and Warren Springs laboratory.

Section 2 deals with how the originating debt of a trading fund is determined. In particular, it allows for the possibility of varying the originating debt to take account of subsequent changes in assets and liabilities of a fund. Section 2A deals with the issue of public dividend capital to a trading fund. Annex B to the White Paper explains the circumstances in which that might be used. Section 2B deals with borrowing by funds, and in particular allows funds to borrow from Votes as an alternative to borrowing from the national loans fund. It is envisaged that the majority of borrowing by trading funds in the future will be from Votes.

Section 4A deals with winding up funds. There have been suggestions in some press reports that increased use of trading funds is designed to prepare more activities for privatisation. There is a grain of truth in this, but only a very small grain in that trading funds are a suitable regime only for the more commercially-oriented Government activities, and it is commercially-oriented activities that are likely to be most suitable for privatisation. But as the White Paper makes clear, the policy remains that described by my right hon. Friend the Prime Minister on 24 October 1988 :

" Next Steps' is primarily about those operations which are to remain within Government. I cannot rule out, however, that after a period of years agencies, like other Government activities, may be suitable for privatisation".--[ Official Report, 24 October 1988 ; Vol. 139, c. 14. ]

I should therefore make clear that section 4A is intended to deal only with cases where activities cease altogether, where funds are merged, or where they are better financed by other means within the public sector, and not with privatisation.

Mr. Dalyell : What does the Minister mean by this see-sawing? How does that proposal fit in with the proposals for the Property Services Agency?

Mr. Lamont : The Bill does not cover the Property Services Agency privatisation and the PSA is not listed in the annex. The PSA is the subject of separate legislation and my comments do not apply to it ; they apply to the bodies covered in the annex.

Dr. John Marek (Wrexham) : That is an important point. Will the PSA not be run as a Government trading fund before it is privatised?

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Mr. Lamont : It will not. The PSA and the Crown Suppliers are subject to separate legislation and a separate policy which will be considered in Standing Committee.

Clause 2 deals mainly with minor and consequential amendments, but it and clause 3 also deal with important improvements in reporting and accounting arrangements.

Clause 4 deals with a separate matter which has been encompassed conveniently within the Bill. Clause 4 takes advantage of the opportunity to remove from the statute book a 1946 power over private sector corporate borrowing which is largely a dead letter already, and will be wholly a dead letter from next April. Clause 5 deals with the short title, savings, repeals and extent.

I want to conclude by drawing the attention of the House to the important provisions relating to reports and accounts. A major objective of the Next Steps initiative is to reinforce accountability to Ministers and to Parliament by clarifying managerial responsibilities. That applies to all agencies, whether or not they become trading funds. The enhanced role and accountability of agency chief executives and the introduction of framework documents are essential parts of this.

For trading funds, the 1973 Act provided for each fund to produce annual commercial-style accounts which are audited by the Comptroller and Auditor General and laid before Parliament. The Government consider that the opportunity should now be taken to strengthen those reporting and accounting arrangements. The Bill therefore proposes bringing the Treasury's powers of direction over accounts into line with those in more recent legislation and it contains a new requirement for the production and publication of annual reports. Such reports will include, in particular, a review of performance against financial, efficiency and quality of service targets. Parliament will thus have available to it consistent annual reports and accounts for each trading fund.

For agencies that are not trading funds, the Bill would extend section 5 of the Exchequer and Audit Departments Act 1921 in a way that would give the Treasury powers to require the production of commercial-style accounts for any agency. Those would be audited by the Comptroller and Auditor General and laid before Parliament. As the White Paper explains, the aim would be to use these powers so that agencies which were not trading funds would supplement the appropriation accounts by commercial-style accounts prepared on an accruals basis and including balance sheets.

The proposals will increase the information available to Parliament and to the general public. The way agencies are run and managed will become more open, and their performance against the targets that they have been set will be made clear. This is an important step in increasing accountability to Parliament and more widely, and one which I believe will be welcomed by this House. The Bill may appear to be narrow and technical, but I hope that I have made it clear that it has major implications for the working of Government Departments and for the public sector. As such, I commend it to the House. 5.18 pm

Dr. John Marek (Wrexham) : The Chief Secretary to the Treasury said that the Bill may appear to be narrow and technical, but it nevertheless has important consequences for the way in which the Civil Service is run. I agree with him. In some respects, the Bill has come before the House

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as a result of a deficiency in the Government Trading Funds Act 1973 and because it is not as easy to set up Government trading funds as the Government would like.

The Chief Secretary outlined his view of the proposals. His interpretation of the Bill may be correct. However, another view may follow from the fact that the Government are obsessed with their dogma of privatisation. If the Tories win another election, perhaps many Government agencies will be liable for privatisation in subsequent Parliaments. [Interruption.] As my hon. Friends say, there is not much chance of that. But anything, however unlikely, is possible. It is true that, no matter how unprofitable it may be for the country, if something can be sold or even given away with an added backhander if necessary--for example, a green dowry which may cost about £1 billion, or a sweetener if Rover or British Aerospace is involved--the Government believe that the sooner the plans are laid to do so the better.

The second view is that the Bill is a step along the road to breaking up the Civil Service and preparing large sections of it for eventual privatisation. There is also a third view. It follows from the premise not that the Government are obsessed by their privatisation dogma but that they are obsessed by their cost-cutting and so-called efficiency dogma.

Mr. Norman Lamont : Shocking.

Dr. Marek : The Chief Secretary says, "Shocking." Nobody is in favour of spending more money than necessary, but there is a trade-off between spending money and delivering a service to the public. [Interruption.] Before Conservative Members laugh too readily, they should remember that anybody who has wanted a passport in the past year or two will not understand what they are laughing at. People returning from the continent must wait for an hour at Dover because there are not enough Customs officials. They will not understand why Conservative Members are laughing about this important matter. It is not about spending as little money as possible. It is about spending the right amount and giving the right service to the public.

Mr. Keith Mans (Wyre) : Does the hon. Gentleman agree that one good way of ensuring that we spend the right amount of money on a service is to create just the sort of trading fund that the Bill would allow?

Dr. Marek : I will come to that point because it is the whole object of the Bill. Certain things will be acceptable in certain circumstances if a fund is run correctly and if there are clear guidelines on how a chief executive should run it. Such an agency could deliver a service and be subject to greater scrutiny by the House. I am not prepared to believe that the Government will do anything along those lines. The Government's intention is to try to save as much money as possible.

The third view is that even this Government cannot privatise large sections of the Civil Service and that their ultimate intention is to commercialise services that are presently provided by the Civil Service.

Agricultural Development Advisory Service officers charge farmers, even though it may discourage some farmers from using that service and could also be to the detriment of the farming industry and the public. A system of low charges may ensure that farmers do not capriciously or unnecessarily seek advice, but if a trading fund is

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formed, such services must be operated taking one year with another without making a loss. Charges could become very high and farmers would not use services as much as they should. Without any shadow of doubt, that would be detrimental not only to the farming industry but to the public as a whole.

The third view is that charges will be increased by the Government from time to time so that people will eventually pay the total cost of services provided and a commercial operation will result. We have heard that Government trading funds will set certain Civil Service activities on a more commercial basis. Of course we could set activities on a more commercial basis, but would the service to the public become better or worse? Several documents have been published over the past three or four years, but that point has not been addressed by the Government.

The Opposition are hostile to the Bill in so far as it seeks to achieve any of the aims expressed in the second or third views to which I have referred. We are profoundly suspicious about the first view which the Chief Secretary pressed upon us. There will be some advantages in some situations, and I will comment on them later. Let us assume that the first view is correct and the Government have no intentions in respect of overtly commercial activities by agencies operating trading funds. It is all very well considering matters case by case, but we have no clear idea of how much of the Civil Service the Government want to turn into agencies, although figures such as three quarters have been given in evidence to various committees in the past. Equally, we have not heard how many trading funds will be instituted. The passport office is one candidate [ Hon. Members :-- "Hear, hear."] Again many Conservative Members shout, "Hear, hear." There is a fee for passports. At present, there is an unacceptably long delay for new or renewed passports. Of course that delay does not apply to Members of Parliament, because the Home Office manages to provide us with a 24-hour service. Hon. Members have nothing to complain about, but the public have a lot to complain about. Except in cases of extreme urgency, people must wait weeks on end.

Let us suppose that the passport office is to be run as a trading fund. What will be the cost of a passport? At the moment, primary legislation would be required to change the cost of a passport. I hope that the Government will correct me if I am wrong, but I understand that primary legislation would be required to change one of the crucial ingredients of the operation of a trading fund in the Home Office. Who will decide the level of charges? A certain sum was decided many years ago, and no doubt inflation has taken its toll and somebody in the Treasury advises the Home Office from time to time on what it should be in future.

If a trading fund is instituted, the passport offices would have to look after themselves and take one year with another and not make a loss. The cost of a passport could be prohibitive. If the cost of passports is not to be prohibitive, members of the public will have to wait an unconscionably long time. Most members of the public would say that a week's delay would be reasonable in the case of a new passport and they would not see any reason why a renewed passport could not be delivered by return post or perhaps one extra day at most. Because the work is seasonal, an accountant managing the trading fund would advise a month or six months waiting time in spring

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or summer and would say that the backlog could be made up in the winter. That is largely what happens at present and if there were a trading fund, where would there be an incentive to do anything different? It would be a choice between providing a service for the public or being able to operate the trading fund so as to have a black figure on the bottom line.

Perhaps the cost of issuing a passport could be deemed to be too high and it might be decided to pass the total cost to the public. If that happened, the Government would have to provide funds out of general taxation to avoid a permanent backlog. The ultimate horror would be a two-tier system. Those who wanted a passport quickly and by return of post would have to pay double or treble for the privilege. Of course such things are not unknown under the Government because those who have the money are able to take advantage of such services while the rest of us have to wait.

Mr. Dalyell : My hon. Friend is speaking about a trading fund. The Minister answered my hon. Friend's query by saying that the PSA was not relevant. Paragraph 8 of the Property Services Agency's report on the management of the civil estate says :

"The Property Services Agency are considering the introduction of commercial accounts and a trading fund to give clear information to clients and Parliament. Improvements in their information systems are necessary, however, and although significant interim improvements are being made their strategy is unlikely to be implemented before the 1990s."

That shows that my hon. Friend's question is highly pertinent to the debate.

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