House of Commons Hansard Debates for 16 Apr 1993

Mr. John Sykes (Scarborough) : I am pleased to be called to participate in the debate, because for some years I was a councillor on Kirklees metropolitan council. That council was spawned by the Local Government Act 1974. Probably no one knows where Kirklees is, but everyone knows the location of Huddersfield and Dewsbury. Those two towns were fused, like reluctant Siamese twins, by that same Act which sought to destroy the Ridings in my county. I hope that that situation will soon be rectified.

When I left school in 1974, I joined our family company, which was established in 1845. One way or another over the past 150 years, our company has seen many changes in local government. In the context of the debate, it is interesting to examine the meaning of the phrase "private enterprise". At its simplest, private enterprise is the best system yet devised by mankind for the supply of goodtoday for an old-fashioned creed. He told me how Labour regarded business and business men. If he were alive today, would he recognise the present Labour party? He would not, but only because, in his day, that party was made up of genuine working-class socialists, whereas the present rulers of that ailing party tend to be middle-class adherents to sociology rather than socialism. Its councillors want to impose their modish views on race, sex, education and feminism on our local and national life.

Labour is a party of left-wing teachers and lecturers, but even they cannot ignore the fact that, in 1993, from Moscow to Manchester, all around the world, the market is the best possible method of supplying goods and services. The opposite method, the public sector, has been

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proved beyond all doubt to be the worst possible method of supplying goods and services. Today of all days bears witness to the truth of that. Of all the 47 British companies that the Government have put back in the private sector, which one has downed tools today? There is a deathly silence in the House. The answer is that none of them has downed tools, because they are all getting on with the job.

Those companies are not interested in political strikes led by maniacs from the 1970s, who dream of the days when they brought this nation to its knees. The only companies in which strike action is taken nowadays are in the mollycoddled public sector where people are led by union bosses who think that everyone owes them a living, a guaranteed job for life. We see that today in the actions of the National Union of Rail, Maritime and Transport Workers, and the National Union of Teachers, the Confederation of Health Service Employees, the National Union of Public Employees and the National and Local Government Officers Association are adopting the same appalling attitude.

That brings me neatly to the subject of local government, which remains largely the preserve of the public sector. The rigours of the market have been brought to bear in many areas of our previously semi-nationalised public life, with resulting benefits, and it is clearly in the interests of the public to extend such benefits to local government. They need to be extended by the bucketful, especially in the metropolitan areas.

I admit that dozens of councils have already seen the light, but there are many more Labour councils in which there is an inconceivable hostility to business and enterprise. In those councils, the threads of mistrust, rivalry and envy among councillors and officers alike frequently curdle into malice. In such places, the prevailing attitude is that if the council cannot get its nose in the trough, it is not worth going to the trough. While the rest of us in the real world have to get on with making a living by competing in the real world, the vast, gridlocked structure of municipal socialism has clamped itself securely to almost every aspect of local life. Talk of partnership with private enterprise sounds hollow in the corridors of such town halls, but most services for the public can be better handled by the private sector. Business men seeking partnership in such areas are wasting their breath. In the meantime, people living in the areas have to deal with the council across a bewildering range of everyday activities that would be better done by the private sector. It is frustrating to hack one's way through the permafrost of local government processes whose icy grip has atrophied town centres all over the land. There is nothing dynamic or vital about Labour councils and officialdom. They toil between two masters--politics and financial constraints.

Some people say that the Government should give more money to Labour councillors, but those councillors have a voracious appetite for spending other people's money and the worst record for spending it unwisely. It is taxpayers' money, not the Government's. Business has different priorities and invigorating qualities.

Mr. Bayley : The hon. Gentleman represents a constituency in the same county as mine. Why is the borough of Scarborough charging a higher average council tax than Labour-controlled York, and why did it

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charge a higher poll tax than Labour- controlled York? Under the old rating system, why did it charge a higher average rate per household than York?

Mr. Sykes : I shall answer that with great pleasure, because the hon. Gentleman makes my case. Perhaps he is not aware that Scarborough borough council is Labour controlled. That is why the rates are so high.

Mr. Bayley : I do not think that it was Labour controlled when rates existed. It was Conservative controlled at that time, as it was during the period of the poll tax.

Mr. Sykes : The hon. Gentleman should know that the rating system was completely unfair. That is why a Conservative Government had the guts to destroy it and substitute a fairer system.

As I have said, business has different priorities and invigorating qualities that our towns desperately need. The last thing that business needs is a committee, a sub-committee or even an executive sub-committee, because usually anything that a Labour committee touches turns to stone. That is why there are now so many badly run towns, whereas at the turn of the century our local government was an example to the world.

In those days, there was a true partnership between the public and private sectors. The great men who built our great town halls, which by and large are now occupied by left-wing pigmies, built and ran them as a matter of pride and service. It was not because no one in the private sector would employ the people who worked in them, as is sometimes the case today. If a true partnership is to arise, it is vital to get local government back to basics.

Some people could be forgiven for wondering how on earth we ever managed before the Local Government Act 1974. Just as in the private sector, local government needs a bank manager breathing down its neck all the time and, as in the private sector, it needs true competition. Why is it that one can return almost anything to a Marks and Spencer shop if one is not satisfied with the goods, whereas, if one has more than a bin full of rubbish, one has great difficulty in trying to get council bin men to take it away?

Local government needs to realise that the customer is king, which is what the private sector has realised. Like it, before voting for expenditure, councillors must ask themselves, "If I had to dig my hand into my own pocket for this money, would I vote for this measure?" Councillors should be forced to meet in their own time. If that happened, the public would see how dedicated some of their Labour councillors were. Because of the partnership working properly between local government and the private sector, there would be less for councillors to talk about.

I have little hope that many Labour councils will ever come to terms with the importance of consumer-led services. They are interested only in producer-led services. They have closed minds and are interested only in closed shops. It is all done in the name of local people, but never in their interests.

The plain, unvarnished truth is that the vast bureaucratic structure of socialist local government has become one gigantic gravy train. It is saturated at almost every level by Labour party activists, and its top Labour councillors, many of whom one would not pay in washers, are clambering over one another for chairmanships, or

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chairs as we are supposed to call them these days, or for any committee place as long as it has an attendance allowance plus expenses.

County council elections are looming. Conservatives believe in partnership with the private sector and that consumer-led services are the most important of all. We believe that the consumer, the customer, is king, and that taxpayers' money is precious. The public also believe in those things. They share our vision, and that is why they will vote Conservative on 6 May.

11.29 am

Mr. Hugh Bayley (York) : I have no objection to partnerships between the private sector and the public sector. Indeed, such partnerships have been a feature of local government for decades, if not centuries. Many of the most imaginative and innovative partnership schemes have been brought in by Labour authorities. For example, in economic development, metropolitan counties such as West Yorkshire pioneered job creation partnerships between local government and the private sector and brought jobs into their regions. The Greater London enterprise board was established by a Labour-led Greater London council. However, the metropolitan counties and the GLC were abolished by the Conservative Government, partly because the Government did not like those public sector/private sector partnerships.

District councils also have a good track record. My district council, York city council, has brought in innovative schemes that have tied together private sector finance and council finance to build homes for homeless people.

No Conservative Member can give Labour Members any lessons about partnership between the private sector and the public sector. However, it is important that talk about partnership does not become an excuse that masks poor performance by local authorities, whether Conservative or Labour -controlled. Sadly, all too frequently, Conservative-led local authorities fail to perform or deliver value for money.

As I said a moment ago, as the Member for Parliament for York, I live in North Yorkshire county council, which is Conservative led. Its home help service is under-provided--constituents come to me seeking and needing a home help service that they cannot obtain--and hugely over-priced. For people in North Yorkshire on income support, the cost is £2.40 for two visits a week. Home help visits are built on one-hour blocks, but, in a rural area, travelling times mean that the actual visit is probably only half an hour.

For people on incomes low enough to entitle them to housing benefit, the charge is £4.80 for home help services, if they can get them. For people on a slightly higher, but still low, income, who do not receive benefits, the cost is £7.20 a week. Those are high costs for a badly needed service. In a neighbouring shire

county--Labour-controlled Humberside--2 million hours of free home help service are provided to 16,000 people in need.

Let us take the example of the provision of nursery education for three and four-year-olds. In neighbouring Cleveland county council, to the north of North Yorkshire, 90 per cent. of three and four-year-olds attend nursery education provided by the council. In Humberside, more than 60 per cent. of three and

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four-year-olds receive nursery education, but in

Conservative-controlled North Yorkshire, the figure is less than 40 per cent.

I can tell the House of my experience as a parent--I say to the hon. Member for Scarborough (Mr. Sykes), unashamedly, a middle-class parent. I wanted my children to have nursery education and we were fortunate enough to obtain it, although not for the whole of the three and four-year period, in the one nursery school in York. That meant a journey across the river, through the city centre to the other side of town for two hours of nursery education for the earliest months and a slightly longer morning period afterwards. My children were able to benefit from that experience because my wife was not in paid employment at the time, and she drove the children, through the rush hour traffic, to the nursery. She drove home, had an hour or so there and then drove back again to pick up the children.

That service was available, if one was lucky, to people who had the time and resources to travel to obtain it. That is in the urban centre of the county in York. The situation in rural North Yorkshire is worse, and the Conservative-led county council has slashed the programme for increasing the availability of nursery education. Labour authorities like Humberside and Cleveland do not need lessons from Conservatives about the quality of services.

Nursery education matters. A recent study--I admit to the hon. Member for Scarborough that it no doubt came from the sociology department or educational sociology department--by Leeds university showed that children who had had the benefit of nursery education performed significantly better at key stage 1 maths and English. The Government have set up the key stages as a way to measure the performance of children, of schools and of local authorities. If they believe in increasing the opportunities for individuals and in the quality of education, they should be doing what the Labour party promised in its election manifesto--establising a programme to provide nursery education for every three and four-year-old whose parents want it.

Such an objective cannot be achieved instantly, but we said in our manifesto that we believe that it would be possible to achieve it by the end of the decade. The rate at which North Yorkshire is going means that we shall be a quarter of the way into the next century before that pledge can be met by that Conservative authority. However, in Labour-controlled Cleveland, it is already met.

Let us look at the police service. In 1979, according to the chief constable's report, just over 20,000 offences were reported to the police, and the figure had fallen for three years running. The most recent figures for North Yorkshire show 50,000 recorded offences, and the number is significantly increasing year after year. Crime in North Yorkshire is spiralling out of control.

What has been the response of the Conservative county council? In the five years of the last Labour Government, North Yorkshire received an authorised increase to the police establishment of 155 officers. In the first 10 years, that the Conservatives were in power, from 1979, North Yorkshire received not one single extra police officer, but crime in that period rose from 20,000 to 35,000 reported offences a year.

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For the first seven of those 10 years, the council did not even put in a bid to the Home Office for more police to curb crime in the county. It was only when Labour county councillors organised a campaign that it did so. Now, after 14 years, the Conservative Government have provided the county with 50 extra officers, compared to the 155 in the five years of a Labour Government.

It is all very well Conservative Members decrying the efficiency of public sector provision, but what other branch of a public service would be expected to deal with a 2.5 times increase in work load with a 4 per cent. increase in officers available to deal with it? Not to devote resources to curbing crime is a false economy for local authorities, for the people-- every one of those 50,000 crimes had a victim--and for businesses. It is in everybody's interest to put the resources into supporting the police in their efforts to tackle crime.

I have compared quality of service. I have compared the quality of nursery education, policing and the home help service provided by Labour and Conservative authorities. People say, "Yes, but there is a price to pay." We heard from the hon. Member for Scarborough about spendthrift Labour councils. We were told that they are always prepared to spend other people's money.

Let us look at the facts. According to the statistical section of the House of Commons Library, which provided some figures for me, the average council tax precept per shire county was as follows. Councils with no overall control had the highest average, with £394 per household ; councils under Liberal control--I see that the hon. Member for Southwark and Bermondsey (Mr. Hughes) has left the Chamber--had the second highest, with £378 per household ; then came Conservative councils, at £372 per household ; cheapest of the lot were Labour-controlled shire counties, at £366 per household.

In my local area and that of the hon. Member for Scarborough, Labour- controlled Cleveland's average council tax per household is £359, Labour-controlled Humberside's average is £366 and Tory North Yorkshire at £368 is the highest of the three. So the statement by the Prime Minister at the Conservative local government conference that Labour councils cost people £100 more is--I am not allowed to use the word in the House--a Scrooge-like economy with the truth. It simply is not so.

Mr. Redwood : The hon. Gentleman has used an entirely specious argument. Is he not aware that, band for band, Conservative councils cost considerably less? My right hon. Friend the Prime Minister drew the right comparison--£100 less in the middle band compared with Labour councils. All that the hon. Gentleman is telling the House is that there are more low-band properities in some Labour areas. We give them much more grant to compensate for the fact that they have more low-band properties. Let him come clean with the House and tell the truth to the nation : Conservative councils always cost less, and band for band a lot less.

Mr. Bayley : Bluff and bluster will not do. What the Minister is saying--

Mr. Irvine Patnick (Lords Commissioner to the Treasury) : Give us facts.

Mr. Bayley : Yes, I will give the facts. If we compare one group of council taxpayers in band D with another, the Minister's figures are right. But an independent group of

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advisers such as the House of Commons Library statistical section, which does not bear allegiance to the Minister's Department or his party, or to the Labour party, says that the Government's figures are fallacious and specious, because they simply look at band D. The truth is that the cost per household is lower in Labour counties. That is what people have to pay and that is what matters to them. They are not interested in airy-fairy averages for one band. The Library has given the independent, unbiased figures, which show that overall Labour councils cost us less.

In my area, too, the Labour councils cost people less. The Minister's argument that Conservative-controlled authorities are in the south where house prices are high, and Labour-controlled authorities are in the north where house prices are low, does not hold water, because the three examples that I have used are all in the north.

The Minister's argument does not stand up. He can bluff and bluster as much as he likes, but it is not true that Conservative councils cost less. We should go to an independent source for the true figures, and that is what I have done. I have used not a Labour party source but an independent source.

Mr. Redwood : Does the hon. Gentleman agree that it is unfair to bring the House of Commons Library service into the argument? It has provided extremely good information in response to the questions asked by hon. Members. Of course, if he asks what are the averages, without taking into account different house values for different bands, he will get one answer. But it is an entirely misleading answer to the question, "Which council gives better value for money?" Band for band, the Conservative councils always set lower council taxes than Labour.

Mr. Bayley : All I can say is that the Minister is a better politician than a statistician. I am comparing across all the bands. The Minister is selecting certain groups of the population and comparing them. I am comparing across the board. The figure that matters is the figure that people pay, and that is the figure I am using.

The choice is not only between cheap and expensive

services--although services cost less in Labour areas--but between better and worse services. As I have shown in my examples, people receive better services in Labour county councils such as Cleveland and Humberside. Those councils provide nursery education for a greater proportion of the population. Humberside provides a home help service free of charge for a greater proportion of the population. How can the trick be achieved? Labour authorities provide better services at lower cost. The answer is obvious. Anyone who has been in business as I have--I set up and run my own business --knows the answer : it is achieved by being more efficient. The figures prove that Labour authorities are more efficient, because they provide better services at less cost.

Conservative Members talk about the need for a partnership between the private and public sectors, because they believe that private sector provision will always be more efficient. They should look to Labour authorities, some of which have resisted compulsory competitive tendering yet have produced better services at less cost than Conservative authorities that have fallen head over heels for CCT.

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If Conservative Members are looking for efficiency, they should tell their colleagues in Conservative-led local authorities to look at the efficiency record of Labour-led local authorities, as well as looking at the private sector. Conservative councillors have a lot to learn from better-run Labour local authorities, and they should learn those lessons if they are serious about improving the services to people in their areas.

11.46 am

Mr. Iain Duncan-Smith (Chingford) : I am grateful to the Government for giving me the opportunity to discuss services in local authorities. Perhaps I should say first that one of the greatest problems for Labour- controlled authorities is that they have a split view of what their role is in life. They seem to be confused about whether it is to provide services or jobs. Time and again, we hear the cry that they are defending the jobs of those who work in local authorities. Time and again, they are caught having to decide between providing services and supplying jobs.

Labour authorities have the confused idea that if they do not provide the jobs, no one else will provide them. That is a great fallacy, because the private sector will take on the jobs that are required to provide the services. Surely the most important factor is that it is the role of the local authority to provide good quality service at the cheapest price possible for those who live in the area.

The key is the amount of money that is spent or given by Government to local authorities. I was glad that my hon. Friend the Minister mentioned in his excellent opening speech that some £33,000 million is raised and given to local authorities. That is hardly what one would call a small amount. It is a substantial amount. It is high time that local authorities understood that they should spend the money carefully and provide a good service.

I am a great supporter of contracting out through compulsory competitive tendering, as all Conservative Members must be. It has forced authorities that, until we pushed the measure through, refused to entertain the thought that the private sector should have any involvement in providing services. As we heard earlier from my hon. Friend the Member for Teignbridge (Mr. Nicholls), Mr. Jeremy Beecham has said that CCT has opened his eyes to the improvements in cost and quality of delivery.

That is important because it is the compulsory element which has changed matters dramatically for many people in the Labour party. It has made them realise that there are other ways to deliver services and that the private sector is capable of delivering them at least as well as local government, and in most cases much better.

The Local Government Act 1988, which extended competitive tendering to six areas--including refuse collection, street cleaning, buildings cleaning, ground maintenance and catering services--is to be greatly welcomed, not least because it has opened the eyes of many Labour-controlled councils to the idea that services can be contracted out.

I was intrigued by the results of the research on compulsory competitive tendering commissioned by the Department of the Environment from the Institute of Local Government Studies at Birmingham university. It showed some significant benefits. More than 20 per cent. of contracts have now been awarded to private companies ; competition has led to the streamlining of the direct service

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organisations of local authorities, thereby cutting waste and bureaucracy ; and there has been a manual staff reduction of between 17 and 20 per cent., achieved largely without compulsory redundancy. We should remember that initially the doom and gloom merchants in the Labour party were shouting about massive compulsory redundancies, but that has not happened. The research also showed annual average cash savings of more than 6 per cent. and an improvement in the quality of services.

I want to dwell for a moment on the record of my local authority, Labour- controlled Waltham Forest. It has fought the concept of competitive tendering tooth and nail. Because it has dragged its heels, it now needs to search for savings. It failed to find those savings by embracing the excellent concept of CCT initiated by the Conservative Government.

The council imposed a series of very high community charges, but its inefficiency in collecting them resulted in its having to impose additional surcharges year after year on my constituents in Chingford--yet they tend to be the sort of people who pay their community charge on time and in full. The council continually refuses to embrace competitive tendering to make the necessary savings, despite the fact that there have been some significant savings in other councils.

It is interesting to note that, although the allotments section of the council's recreation department has a budget of only approximately £50,000 a year, the overheads for running that section are some £26,000 a year. By anybody's standards, that is absurd. It is one area that just illustrates how the intelligent use of competitive tendering would help. It also highlights the nonsense of the policies followed by the Labour-controlled council.

By comparison, when that council was forced to contract out the Leyton leisure lagoon, great savings were made. Pressure had to be put on the council to do that because it had fought the idea tooth and nail. The savings meant that the subsidy per swimmer dropped from £6 to £3, and I hope that eventually it will disappear altogether. The council did not want to do that, but it was forced to do so under great pressure from local people and the local Conservative group, resulting in a saving of £156,000.

Mr. Harold Elletson (Blackpool, North) : I am interested in my hon. Friend's remarks about his local council. My local council in Blackpool is also Labour controlled. In the old, happier days, it had a Conservative council, which proposed the introduction of CCT. I well remember the howls of anguish from the Labour party ; it was as though the Conservative party had tried to introduce some new form of Armageddon. Of course, no one now talks about the standard of service being provided because there are excellent street cleaning and parks services, which are provided by private sector organisations. In the old days, when we suggested the introduction of street cleansing services, from the reaction of the Labour party one would have thought that we were trying to introduce ethnic cleansing.

Mr. Duncan-Smith : I agree with my hon. Friend, who is right in what he says.

I have been trying to show that had my Labour-controlled council embraced CCT a little earlier and more vigorously, it would not now be in such financial

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difficulties. It would have already made the necessary savings while improving the quality of services, which in so many areas are well below standard.

I must tell my hon. Friend the Minister that the experience of Waltham Forest shows that centralised services such as the direct service organisation and direct labour organisation have not been restructured. We must do something to force local authorities to do that. It is all very well to make savings by contracting out building and highway works, catering and so on, but the central organisations remain staffed and manned very much in the same way and in the same numbers as before. All the other areas therefore have to bear the extra costs of still having a large group centrally administering something which, to a large degree, no longer really exists. We must find ways to force local authorities to change the structure across the board. If they will not do it through common sense, they must be driven to do so, or the council tax payers of Chingford will end up paying extra for services from which, quite frankly, no one reaps any benefit.

The old DLO in Waltham Forest did not send out its invoices for well over a year, or even longer, with the result that when it finally did so it was not paid because people said that they could not recall ever having had the service, leaving £3 million of unpaid invoices. The commercial acumen of some of those organisations is quite staggering. There is a whole mine of information like that sitting in Waltham Forest.

I am glad that the Government are considering extending CCT and have set out some of the key areas in their document "Competing for Quality". Private firms will have a fair chance to compete for local authority contracts. There will be a separation of client and contractor responsibility to ensure that those conducting the competitive process have no direct interest in the result. The timing of various stages within the tendering process has been laid down to ensure that outside contractors have sufficient time--that is important--to prepare bids. One of the ways in which local authorities have managed to get around CCT has been by giving contractors little time to put a sensible bid together.

Again looking back to the Waltham Forest experience, prior to the local mananagement of schools, the council was very quick to get out the four- year school cleansing contracts--but it did it for all 70 to 80 schools in the borough, so that any contractor that did not have the necessary capability at that stage found it impossible to bid for the contract at such short notice. I am glad that the Government intend to ensure that the contractors will have time to prepare their bids. To ensure a level playing field for those tendering, the items that a local authority can or cannot take into account in the tender valuation will be specified. I am glad that local authorities will have to publish rigorous internal accounting covering any white collar work that they undertake.

Local authority sebecoming confused. More and more, local authorities are realising that by making savings and improving services, they are doing what they are meant to do--making sure that local residents do not pay more than they should for services that are dispensed in their name to those who need access to them. Local authorities must provide local services as cost effectively as possible. That does not mean that they must

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provide jobs in the local area. Those will come as a result of the local authority being the best provider of the service or of its being decided that the private sector is the best source of the relevant service.

I fully welcome all that the Government are doing and only urge them strongly to ensure that local councils such as my own can be directed further and faster in the distribution to the private sector of essential services.

12.1 pm

Mr. Jamie Cann (Ipswich) : My background is in local government, as a member of Ipswich council since 1973 until May last year. I was fortunate, or unfortunate, enough to become leader of that council at the same time that Margaret Thatcher became Prime Minister, so I know that of which I speak.

Ipswich council has an interesting history. At the time of the last war, Ipswich county borough--known then, and even today by some older residents, as the corporation--ran all the services now run by Ipswich borough council Suffolk county council, and Anglian Water. It produced its own electricity and gas, looked after the town's poor and needy, and had an embryonic health service. Nationalisation and the establishment of the Department of Health and Social Security took some of those powers away, but from the 1940s until the early 1970s the corporation ran Ipswich.

It was a partnership in that business men served on the council, and the council worked with business men. The council drained marshy areas and then sold or let that land for business use. It was a fully functioning, local democracy--a partnership between all the people in the town and the corporation. It is totally beyond me why that arrangement had to be changed in the early 1970s. It was only after the so-called reforms of 1974 created so much duplication between Anglian Water, Ipswich borough council and Suffolk county council that concern was expressed about the cost of local government. Right hon. and hon. Members in all parts of the House will acknowledge that it is true of their own areas.

Since those so-called reforms, there has been pressure on local government finance from central Government of all political colours. The situation became much worse in 1979, when Mrs. Thatcher became Prime Minister. That was partly to do with the fact that her dear dad, Alderman Roberts, was kicked off Grantham council, and she never forgave local government.

A war was waged by central Government against local government during the whole of the 1980s. I take heart from one or two comments by Government spokesmen recently to the effect that that war may be coming to an end.

One tactic was to use the word "partnership" instead of "privatisation", which is what is really meant in many cases. The Government say that they believe in partnership between local authorities and the private sector and between central and local government. I will cite one or two examples of the Government's assertions not being reflected by their actions

I refer first to compulsory--not compulsive--competitive tendering. Ipswich objected to being compelled to adopt that policy, but it was the law so Ipswich complied and got on with it. Ipswich won its own building works

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and street cleansing contracts--it collects its own bins. It maintains all the services provided by its own direct labour organisation.

In addition, the authority has tendered outside Ipswich and maintains Liberal-controlled Colchester's housing stock. It also landscapes parks and gardens in other areas that have

Conservative-controlled councils. Competitive tendering has been a success for Ipswich council, for the moment--but if one delves deeper, one sees that it will not be that way for ever, because the Government have not established a level playing field for compulsory competitive tendering.

Direct labour organisations must make a 5 per cent. return on capital, but the private sector does not--and it does not attempt to do so in hard times. The council must make a profit every year, or it would be in danger of being closed down. That is not true of the private sector. Successful councils such as Ipswich have been threatened by the Audit Commission for competing outside their boundaries. It is said that, in effect, a council DLO can compete only for its own work in its own geographical area--and that if it loses a contract once, it will lose it for ever and the service in question will be closed down. No one can argue that that it is a fair way of asking council workers to compete against private sector workers.

As I said, for the moment Ipswich council is winning those battles, but the first battle that it loses will mean that a whole raft of jobs will be lost and the service will be transferred for ever from the public to the private sector. That is the Government's real agenda.

Ipswich council, as with councils of all political colours, has always attempted to work with the town's private sector, but has consistently found itself blocked in those efforts by Government regulations--though, to be fair, I suspect that many of them are Treasury driven. One example is Wherstead road in Ipswich, which became congested. There was a factory nearby surrounded by a large area of land which the factory did not need.

About six years ago, that factory had financial problems, so the council bought the land, which amounted to five and a half acres. Together with Conservative-controlled Suffolk county council, Ipswich council reached an agreement whereby, instead of knocking down half of Wherstead road, a new road would be taken through that open land. Agreement was then reached to have ownership of the land transferred to Wimpey, which would build a number of homes for sale, a number for transfer to housing associations to rent and a number to Ipswich council to include in a sheltered scheme.

That was a perfect example of co-operation between two authorities--one Labour and one Conservative, a housing association, and a private sector builder. The project was blocked by the Department of the Environment on the ground that it was a barter deal. Five years later, we still do not have all the homes that could have been built under that scheme. That is not an example of the Government helping, being a partner with local government, or aiding local government to work in partnership with the private sector. I cite a more recent example. Ipswich council has a terrible homelessness problem. In line with Government thinking, the council decided to lease homes from private individuals to let, rather than put the homeless into bed-and-breakfast accommodation. It leased 100 homes for that purpose. There are a number of other homes that it wants but cannot lease because the owners want to lease

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them for much longer than three years. Why cannot Ipswich council lease them for more than three years? Because it runs counter to the Government's capital expenditure controls. The scheme, which would help the private sector, the council and the homeless, is blocked by the Government.

Ipswich council has a 10 per cent. stake in the Building Preservation Trust --not a big organisation which involves a group of people and the council. Every year it buys an old property of value to the town, does it up and resells it. The proceeds are then used to buy the next property--often with a profit. As that scheme involves the council, even though it is a minor party, it comes under Government capital expenditure controls, which makes it difficult for the trust to operate. All those factors show that the Government want to stop councils doing things, not encourage them to do things with the private sector.

Some 20 years ago, when I first became involved in local government, people who could not afford houses went on a council house waiting list and within a year or so they obtained one. Such houses were reasonably cheap, well maintained by the local authority and popular with the people. However, that is now a forgotten dream in Ipswich as the council has not been allowed to build homes for goodness knows how long.

We were told that the private sector would take up the slack, It did : it built many four-bedroom, two-bathroom, double-garage homes that people could not afford to buy or rent. It did not produce low-cost rental properties. The Government's housing programme is a total failure. At least they decided to transfer some resources from the councils to housing associations so that they could become the prime producer of low-cost rented homes, but that has not happened. The homes are becoming more and more expensive, the Government grants are being reduced every year and housing association rents are starting to move out of the low-cost band. In Ipswich we are having great difficulty in allocating housing association properties. People would rather wait for council houses. The failure of the Government's housing programme has prevented us from working with the private sector to produce low-cost homes and is making the position for the housing associations even worse. It seems to many of us that when the Government talk about housing provision they believe that it is all right for the housing associations, private individuals and building firms to produce homes for sale, but never, in any circumstances, for the council to build homes for rent. Why not? We need homes and they are not being produced by anyone else.

The Government's care in the community policy has not yet come about. The Minister made great play of the fact that the Government have handed responsibility for care in the community to councils, as though that were an act of faith. In fact, they have handed care in the community to councils, but not allocated them sufficient money to do the job properly. I prophesy that in the next year our surgeries will be full of people whose needs have not been properly assessed because the council cannot afford to provide for them or whose needs simply will not be met. That will be the result of the budgetary shortfall of care in the community, which will affect hon. Members

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