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Deregulation and Contracting out Bill [Money]

Queen's Recommendation having been signified --

Motion made, and Question proposed,

That, for the purposes of any Act resulting from the Deregulation and Contracting Out Bill ("the Act"), it is expedient to authorise-- (1) the payment out of money provided by Parliament of-- (

(a) any sums required by a Minister of the Crown, an office-holder, the Forestry Commissioners or the Intervention Board for Agricultural Produce for making payments under contracts entered into under or by virtue of the Act ;

(b) any administrative expenses incurred by a Minister of the Crown or office-holder in consequence of the provisions of the Act ; and (

(c) any increase attributable to the Act in the sums payable out of money so provided under any other Act ; and

(2) any increase attributable to the Act in the sums payable into the Consolidated Fund under any other Act.-- [Mr. Michael Brown.] 10.28 pm

Mr. Cryer : The resolution is extremely unusual because it not only authorises

"the payment out of money provided by Parliament of any sums required by a Minister of the Crown",

but requires exactly the same authority to be given to "an office-holder". That provision relates to clause 57, which provides that a Minister's powers can be transferred to a person designated by the Minister as an office-holder. It has to be done through an affirmative order, but it is an extraordinary power as people who are not elected to this place or appointed by the Prime Minister can, in essence, carry out all the duties of a Minister of the Crown. There are three relatively minor exceptions to that rule. For example, such people cannot produce delegated legislation.

The House should not approve the motion, which gives a person designated as an office-holder the power to demand money given to him by the measure. We are talking not about authorising a Minister to obtain money from Parliament but about giving money to someone outside Parliament and Government who is appointed by the Minister. [Interruption.] People who are outside Parliament can be authorised to spend money--a serious erosion of Parliament's authority to spend money. From a sedentary position, my hon. Friend the Member for Workington (Mr. Campbell-Savours) asked whether people like him and me would be those designated persons-- termed "office-holder" in the motion. The answer to that question is no, because the Minister would not appoint us. He would appoint people whom he considered to be suitable to carry out the deregulation of the legislation. Experience shows that giving such powers to office-holders outside Parliament has proved less than satisfactory. There have been occasions when giving Ministers the authority to spend money has been less than satisfactory. To take the process one stage further to give authority to the person termed an "office-holder", as the motion provides, seems to be much less satisfactory. That is why we should vote against the motion.

In its eighth report, on the proper conduct of public business, the Public Accounts Committee has guided the attention of the House to the very measures that the Minister asks us to approve in the motion. The office- holders would be akin to the services of PSA

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Services that were required to operate on a fully commercial basis from 1 April 1990. On page 9, paragraph 3 explains what happened. It states that the

"PSA Services' financial system broke down to the extent that they had to charge £65.6 million to their own Vote instead of being able to recover it from their customers."

The motion asks us to give authority to one of the office-holders, if he makes a mess of things, to demand money to spend on whatever service-- deregulation or anything within the terms of the legislation, which is widely drafted. We would be giving carte blanche to the office-holder, whose expenditure would be authorised by the motion. The PSA service is perhaps not the best example. Paragraph 12 on page 11 of the Public Accounts Committee report refers to the Welsh Development Agency, which parallels the office-holder mentioned in the motion. The agency was criticised by the Public Accounts Committee, which at paragraph 14 stated :

"We remind the Welsh Office of their obligations for effective oversight of non-departmental public bodies."

That is severe criticism of a Government body and Minister of the Crown. I shall not go into the details of why they were criticised, but it was for careless and irresponsible control of taxpayers' money in the Welsh Development Agency, which was not controlled by the Welsh Office.

A Minister now asks us to support a money resolution, despite the fact that the improper control of lavish expenditure has been criticised by the Public Accounts Committee, which had to remind the Department of its obligations to contol money. In that context, we should hardly support a money resolution that authorises

"the payment out of money provided by Parliament of any sums required by a Minister of the Crown, an office-holder"

and two other bodies.

Incredibly, the resolution also authorises the expenditure of any sums required by

"the registrar of approved driving instructors".

For a Minister who is trying to simplify matters to ask the House to approve a money resolution that gives carte blanche to the registrar of approved driving instructors as well as those peculiar "office-holders" who, under the terms of the resolution, include "the holder of an office the remuneration in respect of which is paid out of money provided by Parliament"

is a dangerous precedent to set.

I opened my speech by saying that this was an unusual money resolution. From time to time, I comment on money resolutions, the majority of which do not extend to this degree. Parliament's powers, which are supposed to be safeguarded carefully, are twofold : first, the right to control revenue from taxation ; and, secondly, the right to control expenditure. Those rights will be taken out of Parliament's hands.

Mr. Campbell-Savours : I am worried. My hon. Friend has drawn my attention to the interesting clause 57 and how it would apply in this case. Will the traditional role of the accounting officer change if the money resolution operates as my hon. Friend suggests? Will the accounting officer, who would normally be the permanent secretary, have to give evidence to the Public Accounts Committee?

Mr. Cryer : The clause would not allow an accounting officer to hold his usual powers. As my hon. Friend said, the accounting officer is normally a permanent secretary. Under the Exchequer and Audit Control Departments Act

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1886, the accounting officer has the duty, obligation and power to draw the Comptroller and Auditor General's attention to expenditure with which he disagrees.

An "office-holder" could be a contractor--let us say, Seedy Services Ltd., set up by half a dozen Conservative Members--

Mr. Fatchett : Ex-Conservatives.

Mr. Cryer : My hon. Friend is right. Four or five Conservative Back- Benchers with an inside knowledge may set up Seedy Services Ltd. and put forward their case to the Minister in order to undertake the services listed in the Bill. The accounting officer has a duty to report to the Comptroller and Auditor General and allow the Public Accounts Committee to examine expenditure which the Comptroller and Auditor General recommends to the Property Services Agency. Money resolutions such as this are the defining characteristic that allows an accounting officer to go to the Secretary of State and say that he does not agree with the expenditure. That is a powerful check within a Department.

Mr. Campbell-Savours : I wonder whether Ministers have it in mind that office-holders would give evidence to the Public Accounts Committee.

Mr. Cryer : There is no doubt that office-holders would fall under the general powers of the Select Committee to require persons to give evidence before it and papers to be presented. If the PAC required an office-holder to attend, presumably that office-holder would be required to do so under the general powers of the Select Committee system.

Mr. Campbell-Savours : I served on the Public Accounts Committee for 12 years and I do not recall one occasion when we took evidence from anyone other than a civil servant. If a change is to be introduced, Ministers should make it clear at the Dispatch Box today.

Mr. Cryer : My hon. Friend will recall that the Child Support Agency, which is a good illustration of the powers contained in the money resolution, referred to an office-holder--a person appointed to carry out the duties of a Minister. Ministers who introduce an ineffective Act which produces great bitterness and anger among ordinary decent people who are meeting their responsibilities should be accountable.

The equivalent of an office-holder in the Bill and money resolution has been appointed--Ros Hepplewhite. If we write to a Minister or table questions in the House about office-holders and accountability in respect of the money resolution, will we get a reply from a Minister?

When we write to the Child Support Agency we are told by a Minister that the chief executive has been asked to reply. We then get a letter from an assistant to the office-holder because she is out of the office. I do not know whether that is the characteristic experience of my hon. Friends, but I do not get letters from Ros Hepplewhite. She is paid £50,000 and attends the office for 36 hours a week. That seems to be a generous payment.

If that is the position that the office-holder will occupy, my hon. Friend has lighted on another reason why we should vote against the money resolution because it stands for the diminution of day-to-day parliamentary accountability.

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Parliamentary questions by Back Benchers are universally accepted as an important method of accountability. There has been a long argument lasting two of three years about placing the letters from the executives of the variouis agencies--the equivalent of office- holders under the money resolution--on the record. At first, they were put in the Library ; now, some are incorporated in Hansard . It was a long struggle and we do not want more diminutions. It is unsatisfactory to receive letters from office-holders or directors of executive agencies instead of directly from Ministers. Ministers are elected and reply at the Dispatch Box to debates on Second Reading. Secretaries of State start the legislation. Ministers should answer any charges through questions and cross-examination in the House.

There is little point in electing people to the House of Commons unless we maintain the scrutiny and examination that we were elected to carry out. The money resolution provides an evasion of that responsibility. It is alarming that authority is being given to bodies, persons and individuals outside the House to spend money raised by taxpayers.

I recall suggestions during the 1970s and early 1980s that we should nationalise on a large scale through delegated powers and enabling legislation. The press were up in arms ; they said that we would be turning the country into a Marxist state overnight. That was simply untrue, but there is no balancing criticism from the newspapers today at the erosion of parliamentary democracy that the Opposition consider important. We want to enable the scrutiny to continue.

I should like to refer to another case on which the Public Accounts Committee commented. It is the case of Wessex regional health authority--an outside body provided by a Minister with money voted by Parliament. We are told :

"The authority acknowleded that a fundamental conflict between their interests and those of Wessex Regional Integrated Systems Ltd arose when the authority appointed a director of the company with whom the regional health authority had a contract to supply computer services to act as regional information systems manager. The authority also allowed a secondee from IBM to advise them on the purchase, without competition, of an IBM computer for £3.3 million at a time when it could have been purchased for £500,000 to £1 million less."

If this money resolution is approved, will that sort of scandal occur again and again and again? How will the Minister hold such people to account?

It is quite true that the office-holders will be appointed, under clause 57, by order. That clause says :

"(1) this section applies to any function of a Minister or office-holder--

(a) which is conferred by or under any enactment ; and

(b) which, by virtue of any enactment or rule of law, may be exercised by an officer of his".

Under the existing system, where a Minister of the Crown delegates power to a senior civil servant the Minister continues to be responsible. We all know the tried and tested formula whereby, if we claim that civil servants are becoming too powerful, the Minister says, "Civil servants should not be attacked as they cannot answer back. I am the Minister responsible." The Minister allocates duties to civil servants but is himself accountable to the House of Commons.

When a duty goes outside, to an office-holder, direct responsibility is diminished. The Minister is shaking his head. I hope that he will say that the office-holder will be just like a civil servant, in which case all the questions tabled by Members will be answered by the Minister, and

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the method of expenditure will be the same as previously. Why, therefore, should the money resolution contain a reference to "any sums required by a Minister of the Crown, an office- holder"? Thus a person in addition to the Minister will have authority to receive payment out of moneys provided by Parliament.

This is a matter of considerable concern. The Public Accounts Committee has produced a quite damning report entitled "The Proper Conduct of Public Business". My hon. Friends will have read that report, and I shall not go through all the cases with which it deals. I have already mentioned one or two of them. The Committee mentions cases in which there has been a less than adequate standard in the expenditure of taxpayers' money. In the case of IBM, it is clear that there was a degree of favouritism, if not downright corruption, when a person from IBM recommended a computer that would cost the taxpayer more than £500,000, and possibly as much as £1 million, extra. We want some autonomy, subject to tight ministerial control. But a move right out to private contractors acting as Ministers means that the only accountability that we have disappears. As has been said, we have a system whereby the accounting officer can report to the Comptroller and Auditor General. That is a very powerful weapon in the hands of the accounting officer, who is normally the permanent secretary. It is a threat intended to guide expenditure--a threat that the Labour Government had to withstand several times between 1974 and 1979. When the Department of Industry financed Concorde, there was no minute from the accounting officer about the expenditure--research and development costs were £1 billion. The only three minutes ever recorded concerned the workers' co-operatives in Liverpool--at KME--at Meriden and in Scotland, at the Daily News.

We are talking about a powerful check on expenditure. Like my hon. Friend the Member for Leeds, Central (Mr. Fatchett), I believe that that check should be retained, so that it can be carried through in the Public Accounts Committee. That is a reaction, however. The money has already gone. In the case of Wessex health authority, the computer has been installed, and is probably barely working ; it will probably be discarded and sold to a technical college for about £10. The money has gone, and a report has been produced saying that it should not happen again.

The motion produces a basis for repeating the errors of the past. We do not want the PAC to examine things and report to the House that they are wrong. We want a secure system to be installed beforehand. The Government claim to care a great deal about taxpayers' money, although they do not seem to mind handing over large chunks of it to their friends through private companies. This may well be such an occasion--which is why it is so important for checks to be made on motions such as this. The Minister did not give a very good response in his winding-up speech ; I hope that he will give a comprehensive account now.

Mr. Campbell-Savours : Under the training programmes of the old Department of Employment, the Comptroller and Auditor General could, in effect, follow public money all the way to the trainee. All along the line- -particularly when the skill centres existed--there was an

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element of accountability for public moneys, right down to the last instructor, who was basically paid by the state for the skills agency.

Today, that arrangement does not exist. Accountability for public moneys extends only as far as the last civil servant in situ. The moment that the money is transmitted from the training and enterprise council to the training contractor, the National Audit Office can go no further. Interestingly, the NAO visits TECs but seems to go no further than that point. Is that not an example of what happens when functions previously performed by civil servants are privatised? Is not an element of accountability lost?

Mr. Cryer : I shall be interested to learn from the Minister how the NAO will examine office-holders. He mentioned the Department of Employment ; the PAC refers to that Department, and to monitoring expenditure on the technical and vocational education initiative. The Department accepted that there was not adequate scrutiny. If there is not adequate scrutiny within government, what will it be like outside government, at one stage removed? It will be even worse.

We know the proclivity of certain private enterprise organisations and their members to line their pockets. It appears that, without adequate control, the bent and corrupt will have a field day. I hope that that will not happen, but it is a possibility.

Mr. Campbell-Savours : Will my hon. Friend give way?

Mr. Cryer : I must demur. Debates on money motions are becoming increasingly popular.

10.53 pm

Mr. Illsley : I want to raise the question of compensation for market authorities. I mentioned it earlier, but I would like to hear a more detailed explanation from the Minister. Will compensation be available to authorities that will lose their market franchise rights as a result of the Bill, and have the Government made allowance for that compensation?

Let me quote from a letter written by the Department of the Environment to the National Association of British Market Authorities in March 1991. The letter deals specifically with compensation and states :

"It was also made clear to the Commission that we had received very few complaints about market rights and that in 1987-88 the Government had reviewed the system."

In a written reply to a question tabled by the hon. Member for Romsey and Waterside (Mr. Colvin) on 31 March 1993, a Minister said that the Department of the Environment had received 15 complaints about local authority markets in the two years since January 1991. I am sure hon. Members will agree that that is a very small number. It therefore seems that we are to spend a great deal of money on deregulating local authority market rights although there have been very few complaints about the markets. It appears that much of that money could be spent on compensation claims made against the Department. The Minister shakes his head, but I shall read on. The letter from the Department of the Environment stated that it had been concluded that

"legislation would be needed to abolish all market rights and that franchise rights, which are treated as property in English law, could not be compulsorily appropriated without compensation."

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Under English law, market rights are treated as property. That was the Government's advice to the association when it was decided in 1991 not to go ahead with deregulation. At that time, the Government concluded that compensation would be payable in respect of the rights that were being appropriated. What has changed since then and, in view of the likely cliams, why is there no reference to compensation in the Bill or the motion?

The Department's letter to the National Association of British Market Authorities continued :

"Expropriation without compensation would also seem to infringe the European Convention on Human rights which requires compensation for expropriation of a person's possessions'. In view of the requirements to pay compensation, the scarcity of complaints, the minimal part that markets play in United Kingdom trading activity and the possible damage to centuries of tradition and heritage that abolition would cause, the Government decided not to pursue the question of abolition any further."

That was the position in 1991 and, as far as I am aware, nothing much has changed since then. The question of compensation is still open.

NABMA has already told the Minister that it is likely strenuously to oppose any deregulation of market franchise rights which does not include the payment of compensation. In its submission to the Government, it stated :

"While the Government may decide to legislate to deny local authorities compensation the Association wish to make it clear at this stage that such a proposal would be strenuously opposed." I take that to mean that there will be a legal challenge to the Government on the basis of the position outlined by the Department of the Environment in 1991, which was that compensation should be payable.

The Government have argued that there is no case for compensating local authorities because there is an idea that, as public bodies, local authorities should not receive compensation for any deregulation of their rights. However, NABMA has challenged that notion and I agree with that challenge. The Government have changed their mind since 1991. The property rights of local authorities are the same as those of private individuals. I believe that compensation claims will be laid at the Government's door. Indeed, the association mentions taking the matter to the European courts. In its submission to the Government, it stated that the Government had ignored the principles set out in the Department of the Environment's letter of 1991. It continued :

"It appears to the Association that if such a proposal is pursued then there is an opportunity for making an application to the European Courts."

In other words, the Government will be challenged in the courts in this country and in Europe. If those compensation claims are successful, it could lay a substantial bill at the Government's door.

It is useful to consider the most recent Bills about market rights--the Bexley London Borough Council Bill in 1986 and the Redbridge London Borough Council Bill in 1991. I recall them well ; I spoke in one of the debates. A private Bill came before the House to establish a market in the Redbridge area. At the time, both private Bills--one relating to Bexley, the other to Redbridge--made allowance for compensation before they left the House. The authorities that were affected by those Bills received compensation.

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The House of Commons has, therefore, acknowledged recently that compensation shall be payable to a local authority in respect of the loss of market rights. That is a very recent precedent and I think that the Government will be required to follow it.

As I said earlier, many local authorities are members of the National Association of British Market Authorities. I said earlier that I wrote to all 133 of them. Of all the replies that I received, not one agreed with the Government's proposals. Every one of the local authorities disagreed, partly because those local authorities were denied any form of consultation by the deregulation task forces.

One of the authorities informed me that the direct income that it received each year from its market was £750,000. If one multiplies that by the number of market authorities in the country and by the number of years' trading that authorities will lose, the compensation bills start to add up.

The motion ought to take account of that compensation, which the Government are likely to have to pay.

11.4 pm

Mr. Alan Milburn (Darlington) : My hon. Friend the Member for Barnsley, Central (Mr. Illsley) has mentioned the serious compensation problems that arise from the Bill and some of the shortcomings in the motion. He has spoken eloquently about the difficulties that it will cause market traders and the apparent lack of compensation from Government. My hon. Friend could have gone a stage further because, as a result of the Bill, there will be a number of potential losers who could rightly demand a compensation package from Ministers, yet there is nothing to that effect in the motion.

First, market traders are potential losers--for example, the traders at the Darlington market. I met local market traders earlier this week and was informed that there were about 140 full-time employees and 200 part-time employees. Darlington's indoor market, which has been well-established for many years, is professionally managed and provides high standards of consumer care. Similarly, there are 200 stalls in the outdoor market. Each of those small businesses is potentially implicated by this deregulation measure. I ask the Minister, on behalf of those traders, what compensation will be available to each of those small businesses in the event of the door being opened to cowboy operators, operating on the outskirts of town, artificially undercutting the legitimate business work of the established market traders in the Darlington market?

The Bill, and the motion, will not only affect the traders. As in other market towns, Darlington's market acts as a magnet for shoppers into the town centre in general, and I know that there are some worries among town centre traders about the potential loss of income that will arise from the measure. Yet I see nothing in the way of a compensation package for large or small companies operating in Darlington town centre.

The third set of potential losers are the people about whom I am sure that all hon. Members are concerned--the ordinary consumers. They now have certain guarantees, because the traders who operate in Darlington market are legitimate. People know that those traders are not fly-by-night merchants, here today and gone tomorrow. They are there permanently, because they have an investment in the town centre market. The same cannot be

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said for car boot sale operators, or some of the unscrupulous private market operators. They really are here today and gone tomorrow, and when they disappear consumer rights disappear with them.

When things go wrong, consumers will start to bang on the Minister's door seeking compensation. At the moment, in the unlikely event of anything going wrong they can call on any of the stall holders in Darlington market and seek compensation face to face. That will no longer be true if the measure is passed and the more unscrupulous cowboy operators start doing business in towns such as Darlington.

The fourth set of potential losers should concern the Minister even more. He will know that many of the unscrupulous cowboy operators do not bother to declare their earnings to the Inland Revenue or to register for VAT. With the public sector debt so high and taxes rising, I should have thought that the Minister would be concerned to ensure that the maximum sums flow into the Treasury's coffers. Yet the Bill gives the potential for precisely the reverse to happen. That should be a source of concern to the hon. Gentleman. The fifth set of losers are the general public. The Minister knows that when the markets are opened to unscrupulous traders--especially some of the car boot sale operators whom we all know about, because our constituents have lobbied us and the police have warned us about them--a market in stolen goods will be opened up. Will there be an increase in crime, in house and car burglaries, as a result of the Bill and will there be consequential additional demands for financial compensation from the Government?

Mr. Eddie Loyden (Liverpool, Garston) : Is my hon. Friend aware that many prosecutions have taken place in the areas where the car boot markets operate? In Liverpool there has been an unending series of prosecutions, which confirms my hon. Friend's argument about the downward trend in the regulation of that aspect of markets.

Mr. Milburn : My hon. Friend is right, and it should worry us that there is no mention of that in the money resolution. Nor is there any mention of the subject raised by my hon. Friend the Member for Barnsley, Central--the idea of a compensation package for local authorities. In Darlington, for example, the markets generate revenue surpluses of about £300,000 per annum. All that could disappear overnight when the undercutting and the sale of cheap goods that the Bill promises starts. The money resolution is inadequate because the Bill itself is inadequate.

11.8 pm

Mr. Fatchett : My hon. Friend the Member for Bradford, South (Mr. Cryer) talked about the ways in which the House could make various office- holders and Ministers accountable, the potential waste of public money, and the need for scrutiny by the House. He mentioned various mechanisms, but another mechanism available to an aggrieved member of the public is to go to the Parliamentary Commissioner. Hon. Members who were present for the earlier debate will have heard the hon. Member for Rugby and Kenilworth (Mr. Pawsey), who is Chairman of the Select Committee on the Parliamentary Commissioner for Administration, ask whether the Minister would exclude the Parliamentary Commissioner from the definition of

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"office-holder" under clause 57(2) and 57(3). In other words, the Parliamentary Commissioner thinks that the current definition would allow the role of the Parliamentary Commissioner to be privatised and given to independent contractors. The House will have noticed that in his wind-up speech the Minister failed to deal with the point. It may be that he was short of time or that he failed to remember that point. In the eight minutes still available--[ Hon. Members :-- "Six minutes."]

Madam Deputy Speaker (Dame Janet Fookes) : Order. We have roughly three and half minutes.

Mr. Fatchett : In the three and a half minutes available, will the Minister answer the specific point about the Parliamentary Commissioner?

11.10 pm

Mr. Neil Hamilton : I will answer the point put by the hon. Member for Leeds, Central (Mr. Fatchett) first. My right hon. Friend the President of the Board of Trade gave a clear statement of our intentions in respect of statutory office-holders and I do not intend to repeat what he said except to make clear--I think that he referred only to the Comptroller and Auditor General--that we shall ensure that office-holders, including the ombudsman, cannot be compelled to contract out by the making of an order as it will be for them and them alone to give authority to any contractor appointed to carry out their functions, and that they could refuse to do.

I can therefore assure the hon. Gentleman that there has never been any intention or desire on our part to compromise the independence of these constitutionally important office-holders. Our legal advice was that the position was perfectly secure in any event. If any of the office-holders did not wish to avail himself of the opportunity provided by the enabling power in the Bill to contract out certain of his functions, those functions would not be contracted out. I hope that those assurances will be helpful and that discussions may conclude the matter to the satisfaction of all concerned if the hon. Gentleman is still not satisfied.

On the points raised by the hon. Members for Barnsley, Central (Mr. Illsley) and for Darlington (Mr. Milburn), compensation does not arise in the case of markets where the privilege is owned by the local authorities because the European convention on human rights does not apply to public rights. Compensation is not intended because there is no justification for buying out undesirable monopoly rights owned by local authorities. I do not accept for one moment all the prophecies of doom and gloom that the hon. Members gave us this evening. They talked about cowboy operators. When I was a boy and used to go to Saturday morning cinema, the cowboys were the good guys. I suppose that it is not politically correct to refer to Indians in that respect today. I can assure the hon. Members that their fears are entirely illusory. I cannot believe for a minute that local authorities will have justifiable claims for compensation, even if such compensation were available. I have no doubt that we shall debate those matters at inordinate length in Committee. That is an encounter to which I greatly look forward. I hope that the hon. Member for Darlington will be there with me in the long watches of the night.

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