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Mr. Waldegrave : Another letter?

Mr. Meacher : Yes, I am glad that the Minister takes such an interest in the precise sources of information, because I would not want to misrepresent the view of the FDA as his hon. Friend did. The FDA said :

"We remain very concerned about the, in our view, dismissive attitude of Government Ministers to the real problems there are surrounding confidentiality, impartial service, equality of standards, conflicts of interest, and corruption."

On ministerial accountability, far from saying that it was against market testing, the FDA said the opposite :

"To replace ministerial accountability for services by accountability through litigation may seem to be a preferable option to some Ministers, but for those citizens who are unable to buy legal advice in the first place"--

after the changes in legal aid, that will be the great majority "it is doubtful whether it is an attractive one, or even a possible one."

On corruption and conflicts of interest, the FDA believes that market testing is utterly deficient, which is why it says : "Any company which bids successfully for civil service work should be able to satisfy the 1986 Directors Disqualification Act on persons fit to run a public company."

Will that requirement be implemented? The President of the Board of Trade has been silent on the matter so far. I should be glad to give way to him if he will say whether he intends to implement that important requirement. As he does not get up, I shall continue. The FDA also says :

"It is our unequivocal view that all MPs should forego their right to sit on the board of directors, in any capacity whatsoever, of a company which may tender for public work."

Will the President of the Board of Trade legislate to require that to be so? The FDA continues :

"It has also been drawn to our attention that at least one ex-Government Minister has moved very rapidly, on giving up ministerial office, to take up directorships with a company that has won contracts within the civil service."

Mr. Robin Cook : At least one?

Mr. Meacher : Yes, I think that it is considerably more than one. Is not there a whiff of corruption about that? What will the President of the Board of Trade do to stop it? We want answers to those specific questions tonight.

In the cabaret-style, Victorian music hall knockabout that passed for a speech at the beginning of the debate, the

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President of the Board of Trade threw out the silly jibe that the Labour party wanted to regulate everything. That is ridiculous. Of course the Government should dispose of outmoded regulations or update those that are no longer appropriate, but there is a world of difference between that and adopting sweeping deregulation as a blunt instrument across the board. It is one thing to go back to basics, but quite another to go back to the dark ages of unregulated sweatshops, unprotected building sites and uncontrolled markets. Freedom for businesses has to be balanced--a term that the Government do not understand--by securing employees' safety, protecting the consumer against dangerous products, stopping environmental pollution and ensuring decent conditions in the workplace. It is because the Government despicably place cutting red tape above all else, including the lives and the health and safety of ordinary employees and citizens, that we shall vote against the measure in the Lobby tonight.

9.37 pm

The Chancellor of the Duchy of Lancaster (Mr. William Waldegrave) : I join those, including some generous souls on the Opposition Benches, in welcoming my right hon. Friend the President of the Board of Trade back to the House in his most sparkling form. The hon. Member for Livingston (Mr. Cook), with whom I had the pleasure of debating in a previous post, made a characteristic, prickly speech. His relationship with my right hon. Friend the President of the Board of Trade today was a little like that of a hedgehog to a

juggernaut--there was not much left of him after the President had passed over.

I do not know whether it struck my hon. Friends or perhaps even Opposition Members, but the speech of the hon. Member for Oldham, West (Mr. Meacher) seemed to have an eccentric thesis at its heart. He was determined to prove that the public sector had higher standards of confidentiality than the private sector, and he had a leaked letter from the public sector with which to do so. He used not only one leaked letter, but another--there seemed to be something odd about that thesis.

I warn the hon. Member for Oldham, West that it is dangerous to study matters by working only on the basis of stolen letters. The first letter from which he quoted was written in February 1993. It was subsequently shown by parliamentary counsel that the point raised in the letter was wrong--we do not need the powers set out in it to do what we want to do. The hon. Gentleman's use of that letter demonstrated nothing about the debate, but merely countered his own thesis on confidentiality.

There were some extremely good speeches from both sides of the House. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) made a speech that was all the more effective for being quiet and courteous, and obviously coming from the depths of his experience of the constituency. I can assure him that my right hon. Friend the Minister for Industry is, and has been for some months, in genuine and direct contact with the Commission to see whether funds can be made available to the hon. Member's constituency from the shipbuilding intervention fund. I think that the hon. Gentleman knows that, like him, the Government and my right hon. Friend the Minister are taking the matter seriously.

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I want to give an assurance to my hon. Friend the Member for Meriden (Mr. Mills). He made an extremely good speech that opened up the debate. He reminded us of the transformation in British industry over the past 10 to 25 years which means that, in two or three years, we shall again be a net exporter of motor cars--a fantastic achievement. As my hon. Friend said, new methods of co-operation between management and work force are being developed by a forward-looking industry.

My hon. Friend raised the issue of the trademark Bill, on which he is an expert. It is the Government's intention that the Bill should deal with the counterfeiting problem that he mentioned. I know that he will want to study the Bill ches, virtually none of the Opposition Members raised their eyes to the wider world scene--for example, the issues of the general agreement on tariffs and trade. One or two Opposition Members did so, but they were very few. They did not mention the development of the great, new free trade area in north America or issues that are far more important than many of the parochial ones dealt with today

Mr. Garrett : We are interested in British jobs.

Mr. Waldegrave : British workers' jobs depend on those wider issues far more than on some of the whingeing that we have heard from Opposition Members today. My hon. Friends did not make those mistakes, nor did the hon. Member for Gordon (Mr. Bruce) who acknowledged that we are talking about issues that are at the heart of the future of our country, though he disagreed in other respects.

My hon. Friend the Member for Woodspring (Dr. Fox) and, in a characteristic speech, my right hon. Friend the Member for Shropshire, North (Mr. Biffen) conveyed most eloquently the fundamental point of the debate : that, as world trade opens up and we fight for free trade, if we in Europe undermine it all by rebuilding our own extra costs and controls on a European basis, we will destroy jobs in Europe and in Britain. Although it is right to look at what goes on in Whitehall and in town halls here, it is essential that when we talk about regulation we consider all the extra burdens that can and do come from Europe. My right hon. Friend the Member for Shropshire, North wanted a Euro inferno of controls--a phrase that resounds nicely. My hon. Friend the Member for Surrey, East (Mr. Ainsworth) made the same point in relation to GATT.

Let us consider, as did some of my hon. Friends, the junction at which the country finds itself. We are out of recession for the sixth successive quarter. Forecasts from the European Community, the Organisation for Economic Co-operation and Development and the International Monetary Fund all say that the United Kingdom will have the fastest growth rate of any EC country in 1993-94. In the three months to September, industrial production was almost 3 per cent. higher than in the same period in the previous year, while our partners in Europe--it is nothing in which to rejoice--are still going sharply backwards. The year-on-year figures for falls in industrial production are minus 1.7 per cent. in Italy, 3.2 per cent. in France, minus 8.2 per cent. in Germany, minus 10.1 per cent. in Belgium and minus 3.3 per cent. for Japan. Remember

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when the Opposition used to say that there was something uniquely British about the recession, as we had caused it? I suppose we have somehow also caused those far deeper recessions in other countries. As my hon. Friend the Member for Hertfordshire, North (Mr. Heald) reminded us, we now have falling unemployment that is below the European Community average. The figure for our employment is 10.3 per cent. --far too high, but falling. The European Community average is 10.6 per cent. on the same basis and rising.

The economist Gavyn Davies, whose opinion I believe is respected as independent by the Opposition as well as by the Conservative party, described what the recession in retrospect has turned out to be in an article in The Independent on 25 October. He said that it did not fit the cliche of being the longest or deepest recession since the 1930s, a recession of similar length to that of the period from 1979 to 1981 and about half as deep.

With unemployment still far too high, the concern is now that the recovery is well based and that it lasts. That is why a debate now about competitiveness is well timed, as my hon. Friends the Members for Wyre Forest (Mr. Coombs) and for Somerton and Frome (Mr. Robinson) re- emphasised. The export performance has been very good over the past year, but we must work to maintain it.

The economy is growing steadily, with inflation at a 30-year low, productivity at record levels and unit wage costs--ultimately the most important aspect in terms of trade--are falling. Inflation stands at 1.4 per cent. and it is hard to remember that the average inflation achieved by the last Labour Government was 15.5 per cent. Our inflation rate has been below the EC average for more than two years and since December 1992 it has been below the G7 average for the first time in 10 years. Inflation has been below 2 per cent. throughout 1993.

The productivity of the whole economy is at a record level and rose by 4.4 per cent. in the year to the second quarter and in the first quarter of 1993, manufacturing productivity grew faster in the United Kingdom than in any other G7 country--by 4.9 per cent. Strikes are at their lowest since records began. Unit wage costs fell by 0.6 per cent. over the past year.

All those figures give us hope that the Government's work over the past 10 years is paying off in long-term gains to competitiveness. Our firms and our managers are playing their part, although, as my right hon. Friend the President of the Board of Trade said last night, there is still much more to do. There is much more to be done in research and development by the private sector. Only the few best invest at the levels we would like to see in the long-term. Even during the current recession, however, there have been some good signs. Research and development have been cut by less than in any previous recession in British industry, and the so-called R and D scoreboard showed a 6 per cent. increase in private-sector spending over the past 12 months. It is on that basis of a new approach to R and D on the part of British industry that our White Paper proposals build a new partnership between Government and industry. The hon. Member for Wolverhampton, North-East (Mr. Purchase) recognised the importance of that development : he welcomed the White Paper, and congratulated us on it.

The private sector's work is vital ; our whole future rests on it. It is not enough, however. People must manage their firms properly, generate wealth and go out to win orders

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around the world. The first Lord Stockton, Harold Macmillan, once said, in a famous phrase, "Exporting is fun." I suspect that it is not all that much fun to win orders around the world from the Taiwanese, the Japanese and the rest and then to come back and find that the British Government are wasting your money by running their own organisations less efficiently than you are running your companies. That is why we must have a relaunched and re-energised campaign to save money in our management of the public sector--and my Department is taking the lead.

As my hon. Friend the Member for Surrey, East pointed out, it is no use the private sector generating the wealth if we in the public sector do not spend it properly. It is not that we are not spending enough : we are spending £250 billion a year, which is 40 per cent. of gross domestic product--too high a proportion--and more than £10,000 per household. It is vital, therefore, that we obtain the best possible value for money.

The hon. Member for Dundee, East (Mr. McAllion) announced the Government's policy position as though it were a dreadful thing. The more he read out, however, the more common sense it seemed that we should first examine every function and establish whether it is necessary. If something is not necessary, let us not do it : let us not take money from the taxpayer and waste it. If it is necessary, let us ask ourselves whether the function should best be privatised and put into a market where the benign forces of competition will produce the best outcome, or whether it should be contracted out. If we need to retain responsibility for it, must we use our own people, or can we obtain better value for money by contracting it out to the private sector? If the answer is not clear, let us test. That--as the hon. Gentleman rightly said--is what market testing is all about. As the hon. Gentleman fairly said, and as I emphasised again today, in a market test the playing field should be level. The in-house teams should have a fair crack of the whip--and they do. In the first year of market testing, which saved the taxpayer £100 million, in-house teams won more than half the tests.

The hon. Gentleman talked a great deal of inaccurate rubbish about the small matter of the office services market test in my Department. It was a perfectly ordinary market test, with an in-house and an out-house bid. If the hon. Gentleman is going to be a paid consultant on these matters, perhaps he should check the basic facts before giving them to the House.

The programme that we have launched--privatisation where that is right, contracting out where it will produce better value for money and market testing to establish whether the best supplier is in-house or out-house-- has now been built into a formidable system of public-sector reform. The Times --which, I am sorry to say, is not always a supporter of the Government nowadays, although we hope for better in the future--wrote recently :

"Considered together, these reforms are the most comprehensive overhaul of British administration since the Northcote-Trevelyan reforms of the 1850s."

The reforms are already bringing great benefits in terms of cost- effectiveness to the public sector and to the taxpayer, as my hon. Friend the Member for Somerton and Frome pointed out. I can give one or two examples. Customs and Excise, for example, market-tested VAT debt management. The contract was won by the in-house team--the civil servants

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--with savings that were suggested to be £3 million per annum. That is enough to deploy 150 customs officers in the fight against drugs or in the fight against illegal arms shipments. I am sure that the whole House will wish to congratulate Customs and Excise on today's success in Northern Ireland.

I can give an example from my Department. The in-house team won the contract for the printing and distribution of Hansard --which is close to the heart of everyone in the House--with savings of £400,000 per annum. That has enabled Her Majesty's Stationery Office to declare a price freeze on Hansard and other routine policy papers during the life of the present Parliament.

I have to ask the Opposition, under what possible argument is it wrong to achieve those kinds of gains in efficiency and cost-effectiveness for the taxpayer and the people who use such services?

Mr. Garrett : Will the right hon. and learned Gentleman confirm that yesterday the head of the civil service told the Select Committee on the Treasury and Civil Service that market testing is currently running at half its target level? Although the Minister can talk about cuts in expenditure, is it not the truth that he has not cited a single case which has shown an improvement of service as a result of market testing?

Mr. Waldegrave : I have given the hon. Gentleman some examples, and I will give him some more if he so desires. Is not a price freeze that enables the authorities in the House to spend money on other valuable things a gain in quality? I think that it is.

As to the former matter, hon. Members of the Opposition have not yet made up their minds whether this is a huge and dangerous programme or one that is not going anywhere. From their point of view, they would do better to recognise that it is a huge and important programme.

That was re-emphasised yesterday by the fact that the Inland Revenue has chosen its preferred supplier for its information technology for what is arguably the biggest piece of out-sourcing ever by a Government in the western world, certainly in Europe--£1 billion or so over a number of years. That out-sourcing had the most stringent confidentiality tests attached to it, including a condition that no data should be handled outside this country.

As to the argument that the hon. Member for Oldham, West used in relation to confidentiality, it is extremely unwise to assume that those in the private sector who owe a duty of confidentiality--and who are still covered by the law and the criminal offence of the release of any information--are less likely to behave properly than those in the public sector. Most people in this country work in the private sector. They are as honourable and behave as well as people in the public sector. I do not belittle those in the public sector by saying that.

We have often given examples, which have never produced any serious response from the Opposition, that many of the most dangerous and valuable secrets in the defence field have been generated by the private sector, and held there quite safely. The hon. Member for Oldham, West should not pursue those arguments that seem to imply that there is something inherently untrustworthy about those who work in the private sector.

In the eccentric part of his speech where he demonstrated the confidentiality of the public sector by reading from leaked letters, the hon. Gentleman seemed to

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say that there was something odd about the fact that we appeared to say that if we needed to change the law to do something, we should bring forward an Act of Parliament to do so. That is what we will be proceeding to do in due course, and it will be debated by the House. If something is not currently within the law, and we need new legal powers to deal with it, that is how we should set about it ; we should pass a law and debate it before Parliament. I am not sure what point the hon. Gentleman was trying to make in that respect. I have said many times that we will seek to extend the Carltona principles in order that we can delegate. It is not clear at the moment whether we can delegate only to civil servants. As I have said many times before, in the House and in public, for the purpose of clarity we should extend those principles. There is no particular rhyme or reason why work on payroll can be delegated, but not in regard to some pensions. That should be looked at individually, to see what is best for those who use the services and best for the taxpayer. That is a change in the law that we will propose, and which will be debated before the House.

The Labour party is in a muddle on contracting out and market testing, except for the hon. Member for Oldham, West, who is in no muddle. He has always been against it. I pay tribute to him on his complete consistency on the matter. He said from the start that all the contracts in the health service, which have enabled it to save £150 million a year for patient care, should be cancelled. Perhaps he still believes that. He is, however, more and more out of step with those in his party who are rather more forward-looking.

The hon. Member for Blackburn (Mr. Straw) is on record as saying : "There is a wide acceptance that the division between contractor and provider that compulsory competitive tendering has produced is sensible. It has meant that in areas of basic services there are now clear definitions of what services should be provided."

According to Dr. Lawrence Silverman, who is the Labour leader of Berkshire county council, albeit temporarily-- [Interruption.] From his sensible comments, he sounds a good Tory. The hon. Member for Oldham, West should learn from him, because he speaks common sense. He has said :

"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 and put the money saved into direct services."

That is what rather more up-to-date Labour people than the hon. Member for Oldham, West have said. As Joe Rogaly said in the Financial Times :

"Labour continues to be perceived as the party of bureaucracy. Labour's mission appears to be the maintenance of bureaucracy. It is as if it has not only missed the public sector reform bus, it never saw it coming."

I believe that is right.

As Lord Jay, my colleague at All Souls, once said, Labour remains the party that believes in its heart of hearts that

"The gentleman from Whitehall knows best."

One notes the use of the word "gentleman". That is what the Labour party still believes in its heart of hearts, but that is not surprising since a large number of Opposition Members are sponsored by the unions concerned with deregulation. That point was made robustly by my hon. Friend the Member for Scarborough (Mr. Sykes).

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It is obvious that the Labour party will miss the bus once again on the deregulation campaign, just as it missed all the buses to do with privatisation, market testing and efficiency in the 1980s and the early 1990s. The Labour party is now getting itself into position to defend every last regulation brought forward by every last pressure group.

Mr. John Cummings (Easington) : This is rubbish.

Mr. Waldegrave : All the work done by Christopher Booker, all the examples written about in the Sunday Telegraph and all the examples given by my hon. Friends the Members for Ludlow (Mr. Gill) and for Scarborough have simply passed the Labour party by. It will go into the trenches to defend every single regulation when it comes to it. There is one exception to the trend, the right hon. and learned Gentleman the Leader of the Opposition. [Interruption.] That causes groans from those below the Gangway, but then the right hon. and learned Gentleman often does that.

Mr. Cummings : I am not the Leader of the Opposition and this is all rubbish.

Mr. Waldegrave : The Leader of the Opposition said recently that the burden on British industry from regulation was putting jobs and businesses at greater risk. He went to the Confederation of British Industry and said much the same.

That rather reminds me of the famous occasion when Harold Wilson went to Portsmouth to make a speech and said, "And why am I speaking about the Navy?" He paused and he said, "Because I am in Portsmouth." [ Hon. Members :-- "The speech was given in Chatham."] I am sorry, it was Chatham. I was just seeing whether the Opposition were awake and they have confirmed the story. Why was the Leader of the Opposition talking about deregulation? Because he was talking to the CBI. When he comes back to the House he will oppose everything that we propose, along with the rest of the Labour party.

The campaign that the President of the Board of Trade has launched is mirrored around the world. I read today about the German campaign on deregulation. The Germans have correctly noted that the advantage that Britain, the United States and other countries have gained over the location of industry is now putting them under extreme pressure. The same thing is happening in Japan.

My hon. Friends the Members for South Hams (Mr. Steen) and for Ludlow made it absolutely clear that we will push this measure through under the leadership of the President of the Board of Trade. We will face opposition all the way from the Labour party, which will stand for public bureaucracy, red tape and for the man from Whitehall or the town hall knowing best.

The Opposition's stance will be of great help to us in the years ahead, as we will be able to remind the population that the Labour party has not changed one whit. It is still the same old Labour party representing the public sector unions against the interests of the consumer, representing the bureaucracies of the past against modern management methods and representing everything that the hon. Member for Oldham, West so passionately believes in. He remains the antique, ancestral voice that believes in all of that.

Question put, That the amendment be made :--

The House divided : Ayes 276, Noes 319.

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Division No. 2] [9.59 pm

AYES

Abbott, Ms Diane

Adams, Mrs Irene

Ainger, Nick

Ainsworth, Robert (Cov'try NE)

Allen, Graham

Alton, David

Anderson, Donald (Swansea E)

Anderson, Ms Janet (Ros'dale)

Armstrong, Hilary

Ashton, Joe

Austin-Walker, John

Banks, Tony (Newham NW)

Barnes, Harry

Barron, Kevin

Battle, John

Bayley, Hugh

Beckett, Rt Hon Margaret

Beith, Rt Hon A. J.

Bell, Stuart

Benton, Joe

Bermingham, Gerald

Berry, Dr. Roger

Betts, Clive

Blunkett, David

Boateng, Paul

Boyce, Jimmy

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (Dunfermline E)

Brown, N. (N'c'tle upon Tyne E)

Bruce, Malcolm (Gordon)

Burden, Richard

Byers, Stephen

Caborn, Richard

Callaghan, Jim

Campbell, Mrs Anne (C'bridge)

Campbell, Menzies (Fife NE)

Campbell, Ronnie (Blyth V)

Canavan, Dennis

Carlile, Alexander (Montgomry)

Chisholm, Malcolm

Clapham, Michael

Clark, Dr David (South Shields)

Clarke, Eric (Midlothian)

Clarke, Tom (Monklands W)

Clelland, David

Clwyd, Mrs Ann

Coffey, Ann

Cohen, Harry

Connarty, Michael

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Corston, Ms Jean

Cousins, Jim

Cox, Tom

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Cunningham, Jim (Covy SE)

Dafis, Cynog

Darling, Alistair

Davidson, Ian

Davies, Bryan (Oldham C'tral)

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham, H'dge H'l)

Denham, John

Dewar, Donald

Dixon, Don

Dobson, Frank

Donohoe, Brian H.

Dowd, Jim

Dunnachie, Jimmy

Dunwoody, Mrs Gwyneth

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