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privatisation when more than half of last year's programme is still uncompleted, even though £25 million of taxpayers' money has been spent on it?

Why is the right hon. Gentleman so confident that the exercise next year will be about value for money when last year saw Mailforce sending 84,000 annual tax advice packs to the wrong addresses, Group 4 losing a string of prisoners, expensive RAF Tornados being seriously damaged by a private contractor and privatised Astra skills centres running up thumping debts and ending up in the hands of a proven fraudster?

If the right hon. Gentleman is as interested in value for money as he claims, why did he recently override an in-house bid at the Driver and Vehicle Licensing Agency at Swansea that was £1 million cheaper than that from the private contractor? Is it not clear that the whole obsession with privatisation has a great deal more to do with political dogma than with greater efficiency and better services? Is it not now clear beyond doubt that any savings that have been made are the result not of improvements in quality of services but overwhelmingly the result of cuts in jobs, pay and terms and conditions? Will the right hon. Gentleman confirm that the £100 million savings that he mentioned have come wholly from reductions in the living standards of civil servants? On that point, is he aware that recent changes to the Transfer of Undertakings (Protection of Employment) Regulations 1981 has led John Hall of the CBI's competing for quality committee to say :

"If this clause goes on the statute book, then there will be little point in our members getting involved in public sector tendering"? If the potential for cutting costs by reducing wage levels has been virutally removed, will the right hon. Gentleman tell the House where he expects cost savings to come from in future?

The right hon. Gentleman says that he is in favour of fair competition. In that case, why is it that, when the work of the Inland Revenue information technology office was market-tested, he disallowed any in-house bid, despite an excellent record in delivering work on time and within budget? Why has the right hon. Gentleman said nothing about the risk to confidentiality posed not only by his proposals today but by the other eccentric proposals to privatise taxpayers' records and the Patent Office? Will this not undermine the fundamental right of citizens to guaranteed privacy? Finally, with regard to the legislation that the right hon. Gentleman announced, how will he ensure the public and parliamentary accountability of private contractors carrying out work formerly undertaken by civil servants under the direction of Ministers? Will this not mean replacing the ethic of public service for essential functions by contractors operating solely in the pursuit of profit?

Mr. Waldegrave : The hon. Member for Oldham, West (Mr. Meacher), in that long list of questions, made one thing clear--he is not one of those who are called modernisers in the Labour party. He is the old-fashioned dinosaur who represents nothing but the producer interest, and on this occasion the interests of the civil service unions and not those of the users of services.

There is no question of the dissolution of the civil service. There are 550,000 central Government civil servants--hundreds of thousands more than there were 50 years ago. They provide services that cover a hugely expanded range. It is essential that we modernise the civil service to recognise the fact that it is now a supplier of


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goods and services and not the small policy advisory service that it once was. The Labour party is simply out of date on those matters.

The figures of savings that I gave are net of the expenditure on those contracts. If one takes the example of my Department, there was expenditure of about a quarter of what was necessary to get that saving. One in four-- repayment of the investment four times over in the first year--is a remarkable investment, and very good value for money.

On the DVLA, as the hon. Gentleman should know, there will be a market test with an in-house bid next year.

On ideology, the hon. Member is out of touch with the people in his party in local government who, in spite of our efforts, are actually running some services.

Mr. Skinner : What about Westminster council?

Mr. Waldegrave : Yes, we would rather that they were all run by good Conservative councils. None the less, there are Labour people who actually run things--unlike the hon. Gentleman--who know that what he is talking about is complete nonsense.

For instance, listen to Jeremy Beecham, Labour leader of Newcastle city council, who has gone on the record as saying :

"the development of service-level agreements between the provider of central services within authorities and client departments have caused a re -examination of performance, with generally beneficial results".

Or Margaret Hodge, former Labour leader of Islington council : "Real improvements have been achieved through competitive tendering".

Or Dr. Lawrence Silverman, Labour leader of Berkshire county council :

"If the private sector can provide computing, payroll and other financial services cheaper than the in-house bureaucracy, then we owe it to the people of Berkshire to make these savings".

Labour people outside in the real world are rather more up to date than the hon. Gentleman.

To return to the lists of questions, TUPE has been no threat to the programme whatsoever. Many of those bidding for central Government services --for example, in information technology--have found TUPE helpful. People have transferred with their terms of service protected--often finding, incidentally, that in the private sector the terms and conditions of service are better than they are in the public sector.

We shall take a decision about the Inland Revenue shortly. There are two bids for Treasury Ministers to evaluate, and they will compare those bids against the service that is currently provided and get the best value for money and the best quality of service for users and taxpayers. Of course we must closely examine any contract that involves the handling of confidential information to ensure that safeguards exist. There is no inherent reason why private sector workers should be less trustworthy than public sector workers, and it is extraordinary to suggest that they should be so.

Finally, on the bogus point of parliamentary accountability, for years services have been provided to Parliament and on behalf of Parliament by private sector contractors. The rules of ministerial accountability remain absolutely the same for them as if the services are provided in house, and nothing in what I am saying changes that one jot.


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Mr. James Couchman (Gillingham) : In considering what parts of the Inland Revenue's work may be market-tested, does my right hon. Friend agree that the Inland Revenue, especially when it has gone on fishing trips, has indulged in some of the most appalling excesses in dealing with small businesses and private individuals? Does he agree that, with proper training, the private sector can deal just as effectively with people's tax affairs as the public sector has demonstrated for many years?

Mr. Waldegrave : I agree with my hon. Friend, in that, if the relevant Ministers take the decision to contract services out, they will seek to increase quality ; and there is nothing inherently impossible in finding good private sector contractors to do that work properly. They will take the decision, in that case and in all the other cases that we are considering, on the basis not just of money but of quality of service.

Mr. Matthew Taylor (Truro) : Can the Secretary of State explain why the announced programme of £1.5 billion has become a less than £1 billion programme in practice? Can he explain why the 25 per cent. savings that he suggested would result from the programme have become only slightly more than 10 per cent. savings? Has he read the annual report of the National Audit Office, and can he explain why the head of the office suggested in that report that contracting out leads to weak financial monitoring, lack of clear lines of responsibility, conflict of interest and improper application of financial controls? Will he set up a review into the costs of his programme, as it does not seem to be meeting his own efficiency targets?

Mr. Waldegrave : The head of the NAO said no such thing. He said that those were important matters which must be examined in every case-- they can be and will be. There is no reason whatsoever why the British Government and civil servants cannot become just as good at handling the process of contracting out as British local authorities and many other Governments around the world.

We have made savings way above 25 per cent. I have a list showing that some are more than 50 per cent. I have one example from the Stationery Office in my constituency, where an in-house bid won. That refutes the hon. Gentleman's slur that the White Paper is all about lowering people's living standards.

The staff suggested that a move to new premises would provide a better service and save £800,000 a year. It was their idea and shows the benefits that can be achieved for services by asking those on the front line for ideas and challenging them to be innovative.

Mr. James Paice (Cambridgeshire, South-East) : Is it not rather peculiar that people who would not think twice about going out to tender to have their car repaired, their house built or their drive mended have a totally different approach to public services? Why are people happy to be careful about getting value for money when it is their money, but when it is taxpayers' money they are far more cavalier and seem to be more concerned about the jobs in the civil service?

Mr. Waldegrave : It is a very high duty on the House, and on Ministers who report to the House, to get the best value for money when there is a great battle to preserve front-line services in every area. If we are wasting money on the bureaucracy in our Departments, it is a serious


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matter. If, by exercising a challenge to the in-house teams that the "competing for quality" initiative represents, we can produce real savings which can then be ploughed back into the services for which the House votes, that is what we must do.

I agree with my hon. Friend. The answer to his question is that once again, when push comes to shove, the Labour party represents not the users of services, but always the producer interest.

Mr. Terry Davis (Birmingham, Hodge Hill) : If the right hon. Gentleman means what he says about competition, why have the Government refused to allow those who work in the Inland Revenue to compete with private business by bidding for their own work under the £2 billion contract for the computerised operations of the Inland Revenue?

Mr. Waldegrave : As the hon. Gentleman well knows, as a former member of the Inland Revenue Staffs Federation, there are two bids which will compete with each other and with the in-house service. The contract will not be put outside unless there are clear gains of quality or value for money over the service as provided at present.

Sir Michael Marshall (Arundel) : Does my right hon. Friend accept that there will be a welcome for the progress that he has announced, but that there has been criticism of a number of what seem to be disincentives to those seeking to bid for out-sourcing? Does he accept that there is concern about the way in which specifications are drawn up, in such a way that they appear to be favouring the existing task rather than opening up more imaginative opportunities? Does he also accept that there is some concern about the way in which some of the tenders have not been allowed full access to information about the tasks being done in house, thus making true comparison difficult? Finally, will he assure the House that, in all cases, the 17.5 per cent. VAT which applies to outside tenders has been disregarded in making proper comparisons?

Mr. Waldegrave : On the latter point, I can confirm to my hon. Friend that, as set out in the original "Competing for Quality" White Paper, the VAT is taken into consideration in such a way that the playing field is level.

My hon. Friend makes a point that I have heard from one or two outside contractors, and I shall make one general point. As both sides of the competition appear to claim that the field is sloped against them, I suspect that that means that it is pretty level. The fact that 57 per cent. were won in house and 43 per cent. out shows that the competition must have been broadly fair.

My hon. Friend touches on some real points. The purpose of our policy is to attract innovative bids from the private sector, and we must not over- specify the contracts. We are interested in the outputs--the actual service provided to the customers. We must allow innovative bids from both the private sector and in house, and must not over-specify. We are becoming better at that as Departments become more familiar with the process.

Mr. Dennis Skinner (Bolsover) : Why not market-test the Government? Certainly, if this Minister was market-tested he would be out on his neck. When the Scott inquiry ends, he will be out on his neck anyway.


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The right hon. Gentleman talks about a £100 million saving in public services. However, in an attempt to shift power and democratic control away from local government, the Government have set up a commission under John Banham to abolish certain authorities in and around counties, the result of which will be to remove competition, because there will then be only unitary authorities. It is costing £1.1 billion to finance that commission. Would not it make more sense to scrap it rather than go down the road of market testing?

Mr. Waldegrave : The hon. Gentleman may recollect that the Government of the country was market-tested recently, and his party lost.

Mr. Phillip Oppenheim (Amber Valley) : Has my right hon. Friend had an opportunity to read a document entitled "The Citizen's Charter", written in 1921 by Herbert Morrison--then secretary of the London Labour party? The document states that the best way to improve public services is to introduce competition. Does not that show that no amount of tacky red plastic roses, sharp suits or slick PR can disguise the fact that, far from progressing, Labour is regressing?

Mr. Waldegrave : I am interested in what my hon. Friend says. I shall read that document if he would be so good as to lend me his copy. The point my hon. Friend makes is absolutely fair. I made it about Labour councils, but it is also true that the parliamentary Labour party has gone steadily backwards, despite its modernising image, on all these matters.

Mr. D. N. Campbell-Savours (Workington) : Does the right hon. Gentleman understand that the quality and integrity of the British civil service are the envy of the world? Wherever Members of Parliament go throughout the world, great tributes are always paid to our civil service.

The public are clearly hostile to what is happening--the development of what many of us can only describe as the spiv state. The right hon. Gentleman referred to the honesty of people in the private sector, but the issue is not honesty, but loyalty. To whom are the new servants responsible? It is clear that they are responsible not to the state but to the private management that controls them.

Mr. Waldegrave : I do not know whether the hon. Gentleman has ever worked in the private sector or outside the House.

Mr. Campbell-Savours : Yes, all my life.

Mr. Waldegrave : I am sure that the hon. Gentleman was loyal to his employer and observed proper confidentiality. I certainly did when I worked in the private sector. Presumably he seeks votes from private sector workers, so it is hardly helpful to him to pursue his line of argument.

The hon. Gentleman is wrong about public support. In the summer, we published an opinion poll showing that about 70 per cent. of people questioned answered yes to the question, "Should services be provided by the private sector if value for money is found to be better there than in the public sector?" It is interesting that two thirds of those working within the public sector took that same view.

Mr. Eric Pickles (Brentwood and Ongar) : In my right hon. Friend's statement, he cited a list of Labour


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luminaries in local government who now favour compulsory competitive tendering. I offer him a further name--that of the hon. Member for Blackburn (Mr. Straw). In Trality services? We want to look at the way in which services are provided and test them against the needs of the market. So often, all that the Government do is provide services because they have always provided services, without looking for value for money. We pay an average of £230 a week to civil servants, so we have the right to ensure that that money is well spent.

Will my right hon. Friend urge Labour Members to tell their friends in the trade unions that tomorrow's strike is a waste of time? It is not about improving the public sector ; it is about trying to wreck the public sector.

Mr. Waldegrave : My hon. Friend is right. He also makes the point that the hon. Member for Blackburn is often much more sensible than he pretends to be. He quotes him rightly ; this is about value for money and providing the best quality of service that we possibly can. Those running the services on behalf of parties in all parts of the country well understand that.

The sums that my hon. Friend quoted as being paid by every citizen in the country towards the support of the public sector are correct. It is right that we should seek to provide value for money in return for expenditure on those huge resources.

Mr. Harry Barnes (Derbyshire, North-East) : Privatisation, agency agreements and quangos have taken power from the House and its ability to check the executive. These proposals, and the contracts that will follow them, will also take away many of those powers. The Minister's position has arisen because there was a gap in the number of issues that could be dealt with by his Front Bench--the Government having scrapped the Department of Energy--and he has been given a non-job in connection with charters.

My hon. Friend the Member for Newport, West (Mr. Flynn) had to push to get answers from the Benefits Agency. Answers were published in Hansard , but should be produced not by the Benefits Agency but by the Ministry. When will we return to a position in which the House can check the executive and seek to control it ?

Mr. Waldegrave : I am not sure how my Department relates to the Department of Energy in the way that the hon. Gentleman describes. The hon. Member for Oldham, West (Mr. Meacher) and the public sector unions clearly regard this policy as important. I agree with them. It is an important policy for which to answer to the House, and important because it will secure better quality and value for money for taxpayers and users of services.

Nothing in the policy detracts from the accountability to, and power of, the House. If services are provided by private contractors or civil servants in house, the accountability to the House remains the same, just as it does in local government if exactly the same thing is done.

Mr. Peter Luff (Worcester) : Does my right hon. Friend agree that it is important to emphasise that it is a question not of cheaper services, but of better services ? That is the


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purpose of market testing. Does he further agree that that is often achieved by a better specification of the service to be provided by the public or private sector ?

Contrary to what the hon. Member for Oldham, West said in his scandalous opening remarks, Group 4--which provides a prison escort service--is a classic example of such a better service. Group 4 has lost precisely half the number of prisoners who were lost when the service was provided by the public sector, and it is also cheaper.

Mr. Waldegrave : My hon. Friend is right. As in other matters, the hon. Member for Oldham, West is out of date in his briefing. Others who lobby me about these matters have given up using that as an example, because it is true that Group 4 has done better than its predecessors in the public sector.

The fundamental point that my hon. Friend makes is right : this is about value for money, about cash and about quality. In 30 per cent. of the cases reported by Departments as part of the initiative, they have been able to report clear improvements in quality of service and value for money.

Mr. John McAllion (Dundee, East) : Has the Minister read early-day motion 2587 on the Order Paper today? It calls for an immediate halt to market testing in the civil service, and was signed by more than 100 hon. Members in one night. Tomorrow, 300,000 civil servants will take part in a national strike protest action against market testing. Will the Minister answer the charges that privatisation in the civil service threatens not only the quality of public services but the confidentiality and impartiality of public servants? Above all, it threatens the accountability of those public servants to the elected representatives of the people, who sit in the House.

Mr. Waldegrave : The hon. Gentleman is completely wrong. I have spoken to no Government around the world--on the centre-left, on the centre -right or of any other persuasion--who are not following a similar path. I was in the United States last week, where Vice-President Gore is introducing competition in public services in the same way. I have read the early-day motion. It confirms what I said earlier--that the hon. Gentleman and his hon. Friends simply represent the public service unions, in a short -term sense, and do not think about the users of the services.

Mr. Peter Ainsworth (Surrey, East) : Will my right hon. Friend join me in wishing the hon. Member for Oldham, West (Mr. Meacher) many happy returns of the day, but not many happy returns of the tired, self-serving opinions that we have heard this afternoon? Does my right hon. Friend agree that every contribution that we have heard from Opposition Members--I include the representative of the Liberal party who is here, the hon. Member for Truro (Mr. Taylor)--has served to underline the fact that, time and again, they put the interests of the trade unions before the interests of the public? Will my right hon. Friend join me in condemning their position?

Mr. Waldegrave : My hon. Friend puts his finger on exactly the right point. The Leader of the Opposition has been trying to pretend that his party has changed into a modern social democratic party which looks after the interests of customers and citizens and so forth, but it is still the same old Labour party which, whenever it comes down to it, represents its paymasters in the way that it always has.


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Mr. Paul Flynn (Newport, West) : If it is about quality, why has the Patent Office in my constituency, which has been awarded the charter mark for its brilliant work, been selected for market testing, management buy-out and possible privatisation? The people who work there feel that they have not been given an award but have been slipped the black spot, and they were here yesterday to complain about it.

Does the Minister not realise that some areas of the civil service, such as the Patent Office, have nothing to do with the market but have to serve the public in a unique way? By encouraging innovation and inventions, they act as the guardian of intellectual property. They cannot be run by Megagreed plc or Group 4. Does the Minister realise what he is doing? We still have-- just about--the least politicised and the least corrupt civil service in the world, and the Government will destroy it, bit by bit, for pure ideology.

Mr. Waldegrave : That ideology is one that is shared by many members of the hon. Gentleman's party who are running councils up and down the land. I congratulate the Patent Office on winning its charter mark. The quality of its work is very high, and is no reason why that quality should not be maintained under different ownership. It would have to be if any proposal for a change of ownership was carried through.

Mr. Douglas French (Gloucester) : Every Conservative Member wishes to congratulate my right hon. Friend on the excellent progress that the market testing programme is making. As to the 57 per cent. by value in- house bids which have been successful, is he entirely satisfied with the methods of costing used in those bids? Has he any means of verifying whether those costing methods are accurate and sensible?

Mr. Waldegrave : We will be presenting fuller and more detailed figures in the citizens charter White Paper, probably in February. I am satisfied that the figures are correct. I have no doubt that the Departments concerned will get better at the process of market testing in the years ahead as the programme continues. I am broadly satisfied that the figures are right and that the competitions have been fair.

Mr. Alfred Morris (Manchester, Wythenshawe) : In a parliamentary reply yesterday, I was told that Manchester city council's objections were being carefully considered, together with those of other consultees. What proportion of the consultees does the Minister expect to be content with what he has said today? Will he, in consultation with his colleagues, try to ensure that Manchester has an opportunity to pursue its objections?

Mr. Waldegrave : I think that the hon. Gentleman may be referring to the wrong statement. I do not think that there is any issue about consultation with Manchester city council in particular. I have often consulted the council on a range of matters, but I am not sure that this matter is one for consultation. I am sure that Manchester city council could teach some Opposition Members about the necessity to contract out services in order to obtain the best benefits for the users of such services.

I may have misunderstood the hon. Gentleman's question, in which case we can perhaps have a word about it later.


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Mrs. Angela Knight (Erewash) : Does my right hon. Friend agree that market testing will not only eliminate waste but is the best way of ensuring value and quality in public services? As someone who has recently come from local government, I assure my right hon. Friend that the introduction of competitive tendering for local services results in a real improvement in services to residents, at lower cost.

Mr. Waldegrave : That has been the experience of many local authorities of all political persuasions throughout the country. Central Government will somewhat belatedly reap the same benefits. That should have happened years ago, and in that respect we are catching up with local government--and about time, too.

Mr. Iain Duncan Smith (Chingford) : Does my right hon. Friend agree that we have here the touchstone of difference between the Opposition and the Conservative party? We are about the delivery of quality service at a reasonable and decent price. Time and again, the Opposition fail to realise that the control is in the letting of the contract, not in the giving of jobs. The Opposition are about the delivery of jobs to unions, while we are about delivery of service to the public.

Mr. Waldegrave : My hon. Friend puts his finger on it. These exchanges have been extremely instructive in reminding us that, whatever glitz Labour tries to put on with the help of its advertising agency and the rest, it remains the same old Labour party. My hon. Friend exactly defined the difference between the two parties.

Mr. John Garrett (Norwich, South) : The Chancellor of the Duchy said that the proposed legislation will represent no departure from established principles. If that is so, for which wholly privatised services are any Ministers now accountable to Parliament? Will the right hon. Gentleman confirm that in no case have the results or performance--rather than the cost and apparent savings through redundancy--of market-tested Government contracts been published? Will he undertake to publish the results in terms of quality of service of market-tested contracts? Finally, will any of the work of administrative grades 1 to 5 be market-tested, or is this a mandarin-free zone?

Mr. Waldegrave : On the first issue, we are talking about market testing where the responsibility for the provision of services remains with the Government and there is no change whatsoever in accountability. If an industrial operation such as British Telecom is sold into privatisation, that is not part of a market-testing programme : it is returning to the private sector something that should always have been in the private sector.

The hon. Gentleman's second point was good. I set out in the code of practice in my Department's open government White Paper that it is right to publish the quality measures that attach to service contracts. I agree with the hon. Gentleman in that respect. As to his final point, a scrutiny study of the terms, conditions, selection and recruitment of the first three grades in the civil service will shortly be published. No doubt we shall subsequently have a good debate, perhaps in the Select Committee.


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Points of Order

4.52 pm

Sir Giles Shaw (Pudsey) : On a point of order, Madam Speaker. I raise this point of order, which relates to events that occurred in the House last night, with some regret, but in view of the scale of the problem and the possibility that Tellers were switched and that votes were spuriously challenged. There was also some difficulty in the Serjeant at Arms obtaining access to the Lobbies at your request, Madam Speaker. As you are the guardian not only of our traditions but of our reputation, would it not be prudent for you to make your own inquiries into what occurred and to give the House your considered advice?

Several hon. Members rose --

Madam Speaker : Order. I can certainly tell the hon. Gentleman and the House in general that I will take no more points of order on that matter. At this stage, I am not seeking an inquest across the Floor of the House. Neither do I want a re-run of what occurred last night, when there was disgraceful behaviour on the part of many hon. Members in an attempt to disrupt our procedures.

I assure the House that it will not be left there. I will make my own inquiries. Some hon. Members believe that the matter should be referred to the Procedure Committee. That is up to them. The House must allow me to make my own inquiries. The matter is best left there.

Mr. Roger Evans (Monmouth) : On a point of order, Madam Speaker.

Madam Speaker : Does it relate to last night's events?

Mr. Evans : It does in the sense that the record of the vote--

Madam Speaker : Order. I have dealt with last night's events. I am being firm. I will take no more points of order on that subject. I shall make my own inquiries as soon as I am allowed to leave the Chair. Leave it to me now.

Mr. Graham Riddick (Colne Valley) : On a point of order, Madam Speaker. You may be interested to know that the Railways Bill has now passed all its stages in another place very successfully.

Mr. Terry Davis (Birmingham, Hodge Hill) : On a point of order, Madam Speaker. I refer to the statement made earlier by the Chancellor of the Duchy of Lancaster and to the subsequent exchanges. The right hon. Gentleman misled the House by confusing an in-house bid from the Inland Revenue with an attempted bid from the people who actually do the work in the Inland Revenue. Must we wait for yet another Scott inquiry before we can show the right hon. Gentleman up yet again for what he is?

The Chancellor of the Duchy of Lancaster (Mr. William Waldegrave) : Further to that point of order, Madam Speaker. I did not mislead the House in any way. I set out the situation exactly as it exists. There are two contracts in, and no strategic decision was taken to contract out. That will be judged against the value and quality of the service provided by those people presently doing the job.

Mr. Paul Flynn (Newport, West) : On a point of order, Madam Speaker. As the defender of Back Benchers, I draw your attention to the way in which the statement was


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introduced on the annunciator, which simply displayed the words "Competing for quality", with no indication of the subject or the Department involved. I do not want to embarrass any Conservative Members, but I asked a number of them whether they knew what was meant by those words and none of them was able to tell me. You, Madam Speaker, always insist that we are in our places to hear such statements. Few Members, unless they know precisely the title of all Government documents, would have been aware that the statement concerned market testing. That subject might be of vital interest to their constituencies, yet right hon. and hon. Members who were in their offices might have missed the opportunity to hear the statement and to question the Chancellor of the Duchy.


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