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"Where is the beef?" It soon became apparent that those public-sector bodies had no stake in the local TEC. The local TEC is unelected, unaccountable, undemocratic and packed with unknown business men. It has a poor training record and has been particularly criticised for its attitude towards trainees with special needs. Why? Because trainees with special needs are unremunerative.

How can the policies of a TEC be influenced? How can we remove the incompetent from the boards of TECs? They spend £1.8 billion a year. What logic governs the appointments and remuneration of chairmen of quangos when the chair of the Horserace Totalisator Board is paid £92,000 a year and chair of the Parole Board gets £45,000 a year? Do job descriptions exist for all those posts? Will they be made public? Will the Government allow Select Committees to examine appointees to chairmanships? That issue is supported on both sides of the House. We have dealt fully today with the lack of accountability of quangos. The hon. Member for Wantage referred to the overload on Parliament. My right hon. Friend the Member for Swansea, West (Mr. Williams) made a powerful and expert speech. The hon. Member for Southend, East (Sir T. Taylor) struck a note. I am a European Unionist, but what he said is absolutely true. The democractic deficit in the insitutions of Europe at the moment means that unelected people make decisions that affect the lives of all our constituents. I must concede that. He is quite right. We must introduce new methods of democratic accountability in that system, too.

My hon. Friends the Members for Warrington, South (Mr. Hall), for Liverpool, Walton (Mr. Kilfoyle) and for Birmingham, Hodge Hill (Mr. Davis) spoke of the abuse of power, but, as I said at the outset, there are much more dangerous developments than quangos, for example, market testing or piecemeal contractorisation--a key characteristic of the unelected state. It has been copied here from practice over the past 12 years in the United States. Its bible is "Reinventing government--How the entrepreneurial spirit is transforming the public sector" by Osborne and Gaebler. I have heard it recommended by Ministers. It is a work so vacuous as to attract notice even among American management texts. Essentially, the message of its authors is that Government

"should steer and not row".

That means that Government--local or central--should make policy, but, in general, contractors should deliver public services. That is what many Conservative Members think.

Ministers and, even more unfortunately, civil servants, are happy to admire the huge American market-testing effort, where contractors provide a high proportion of federal and state services. In the environmental protection agency in the United States, contractors not only virtually run the show, but also endorse and approve their own invoices. Conservative Members do not seem to be aware of the enormous backlash in America against contractors now that their nefarious practices are coming to light.

I recommend to the House--it can be obtained from the Library--the recent hearings on Government contract mismanagement conducted by an investigatory sub-committee of the congressional committee on energy and commerce. It tells us of the waste of billions of dollars of taxpayers' money. It tells of the outrageous billing and performance practices of contractors, including the huge corporate contractor who charged for boarding an

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executive's dog, the contractor who charged tens of millions of dollars for what American legislators called "outlandish entertainment" and the construction firms that hire equipment from their executive's spouses.

Of course, it will be argued that those practices could not happen here, which brings us to an important question that I hope the Minister will answer. Who will audit the charges and the performance of contractors who benefit from the market-testing procedures that are run by British Government? Will it be done by Departments, by private auditors or by the National Audit Office? The Comptroller and Auditor General recently told the PAC that the NAO would have no right of audit of contractors, which means that substantial spending programmes currently audited by an Officer of Parliament are put over to private contractors who are not auditable.

It sticks in my throat to read in the Government's amendment about "the increased powers and independence given to the Comptroller and Auditor General".

For 17 years, I campaigned for a more powerful state audit body. For 10 years, I was the only campaigner. I was joined later by my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and one or two Conservatives. That development was resisted tooth and nail by the Government. We sponsors of the Bill that became the National Audit Act 1983 were called into No. 11 Downing street and told that the Queen would be annoyed. We were told by a noble Lord, who at the time was Leader of the House of Commons, that the Queen would be annoyed if greater control of the NAO were given to this Parliament. We were told that the public would be greatly offended if the 700 accountants employed by the NAO were made House of Commons staff.

What is more, we were eventually told by the Tory Chief Secretary to the Treasury--who is now a Commissioner in Brussels, and had fought us throughout the process--that in no circumstances would he allow the National Audit Office to be allowed, as a constitutional principle, to pursue state funds wherever they went. That is still the case. If the Chancellor of the Duchy is so keen on the state audit system, why does he not allow a change in the system so that the Comptroller and Auditor General can pursue state funds wherever they go?

It is not uncommon for contractors to discover and claim new charges after they have won a contract and cannot easily be dislodged. That is what is happening in this country right now. For example, the General Motors subsidiary EDS appears to have won the market test for providing information technology services for the Inland Revenue, without an in-house bid being allowed. EDS--which I believe was founded by Ross Perot--will take over some 2,000 Inland Revenue staff.

However, EDS has already said that it may want up to £50 million for redundancy payments to Inland Revenue workers who refuse alternative work, or refuse to relocate from Telford to the EDS office near London airport. Will the Minister tell us where the liability lies for those redundancy payments? Will any worker in the Inland Revenue--

Mr. Jacques Arnold : Will the hon. Gentleman give way?

Mr. Garrett : I am asking the Minister the questions.

Mr. Arnold : I am asking you a question.

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Mr. Garrett : Does the hon. Gentleman mean that he is asking you a question, Mr. Deputy Speaker?

Will any worker in the Inland Revenue who refuses to relocate be deemed to have resigned and therefore not qualify for a redundancy payment on civil service terms? That is a plain question. When the contract is officially awarded, one monopoly public provider--an accountable civil service unit-- will be replaced by a monopoly private provider, accountable to the board of General Motors. Once the contract is awarded, how can it be cancelled?

The Inland Revenue provided no costings of the present arrangements, so how do we know whether EDS is cheaper? Will the Minister place the costings in the Library, so that we can find out? We know what EDS bid and we would like to know whether this represents a saving. If any savings are achieved, they must be at the expense of the jobs, or the terms and conditions, of civil service staff. For example, civil service equal opportunities will not apply to EDS ; it will be obliged to obey equal opportunities law, but not equal opportunities in the civil service.

EDS will control all computerised tax records for individuals and companies in the United Kingdom. What arrangements will be made to ensure that the confidentiality to which we have been accustomed will be maintained by the private contractor? The same question must be answered in regard to the proposed privatisation of the Insolvency Service of the Department of Trade and Industry, which has a great deal of sensitive information.

In general, market testing has not been a great triumph for the Government. In 18 months, tendering has been completed for £700 million worth of work--less than half the target amount. Savings of £100 million are claimed, compared with a target of £375 million ; but the savings exclude the costs of abandoned market tests, which have already cost the Department of the Environment £500,000. They also exclude the huge costs of consultants--£37 million--in the setting up of market testing. They exclude efficiency losses from the transfer of work in the course of what amounts to a hostile takeover--which always leads to loss of efficiency. In all, the true savings are probably less than £40 million.

Even when an in-house bid wins a market test--44 per cent. of in-house bids have won--the market test must be repeated every three years. When people's jobs are up for auction every three years, what happens to long-term planning, staff development and morale, recruitment and commitment to public service?

Mr. Arnold : Will the hon. Gentleman give way?

Mr. Garrett : I am sorry, but I have no time. I must allow the Minister 20 minutes.

Mr. Arnold : On a point of order, Mr. Deputy Speaker. Is not it in order for the hon. Gentleman to reply to the debate and to my specific questions about Tameside council?

Mr. Deputy Speaker : The hon. Gentleman is responsible for his own speech.

Mr. Garrett : A report by Peat Marwick at the end of January-- [Interruption.]

Mr. Derek Enright (Hemsworth) : The Government are frightened of it.

Mr. Garrett : I do not mind.

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Mr. Andrew Mackinlay (Thurrock) : The Government are corrupt.

Mr. Nigel Spearing (Newham, South) : What about Castle Point?

Mr. Deputy Speaker : Order. The House must settle down.

Mr. Garrett : A report by Peat Marwick at the end of January--this is not the Labour party research department, this is Peat Marwick--said :

"The contracting-out of public services to private firms is likely to trigger an explosion in fraud and corruption."

They should know. It continued :

"Backhanders and slush money will flood public agencies as firms try to cut themselves into lucrative government contracts." Government contracting out of services puts at risk a public service tradition that has stood the country in good stead for more than 100 years. That all adds up to falling standards in public life. We have a head of the home civil service who tells the Scott inquiry that Ministers are accountable but not responsible- -a meaningless concept. When I observed recently to a permanent secretary that the Department of Social Security Benefits Agency did nothing to increase the take-up of benefits, which one would think that it would do if it was helping public service, and that some benefits had take-up of only 60 per cent., he said to me :

"Sixty per cent. is a good market share."

I must admit that I have been quite friendly with every Minister for the Civil Service since they were invented as a result of the Fulton committee, which I served, in 1968--a long time ago, 26 years--but I have never come across a Minister such as the one that we have. We have a Chancellor of the Duchy who has been publicly humiliated by the Scott inquiry and will soon be left twisting in the breeze by the Prime Minister, and quite right too. We have a Government service, once the envy of the world, which is becoming riddled with jobbery and croneyism. Ministers should be ashamed. I ask the House to vote for the motion before us.

9.41 pm

The Parliamentary Secretary, Office of Public Service and Science (Mr. David Davis) : I start, a minute or two late, by paying a tribute to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the Chairman of the Public Accounts Committee, for the work that he has done. Conservative Members at least take it seriously. We do not treat it simply as a party political bullet to fire across the House whenever it suits us.

I must first put right some of the revisionist history of the hon. Member for Norwich, South (Mr. Garrett), who has just spoken. He sought to rewrite history on the subject of the National Audit Office. I am perfectly willing to believe that he campaigned in the 1970s for many years against the Labour Government to get that instituted. There was indeed a PAC reprt calling for that. I remind the hon. Gentleman, however, that in 1980 a Green Paper on that subject was issued by the Conservative Government. In 1981, a White Paper on that subject was issued by the Conservative Government. As the hon. Gentleman said, it went through. I think that Norman St. John-Stevas, that well-known Labour party member, carried it through, and an extremely well-drafted measure it was too when it was passed.

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In addition, we also set up the Audit Commission, in the teeth of Labour opposition because it attacked their own little private ponds that they do not like to speak about. That is something else that the Labour party never did in office. The Labour party, while in Opposition, is good at speaking about freedom of information, for example, and doing nothing about it, all the time that it is in office, or about many other measures. It is very good at that type of thing.

We also introduced the public bodies document that has been referred to today, which, contrary to what the hon. Member for Oldham, West (Mr. Meacher) said, lists the appointments and what the appointees are paid. It is time that he started to read his brief more carefully.

More seriously, the hon. Member for Oldham, West talked about introducing quangos--as he called them--with more powers than ever before. He clearly has a short memory, or perhaps he was overloaded during his time as a Minister, but it was, of course, Labour that introduced the National Enterprise Board. What were the parliamentary limits on the National Enterprise Board? Its parliamentary limits were solely its borrowing limits. Unlike all our non-departmental public bodies--I use their proper name--which are open to the Public Accounts Committee and accountable to Parliament through ministerial responsibility, the NEB was not quite so open.

The NEB was established under the Industry Act 1975. The draft operating guidelines were published in March 1976 as the board began work but Parliament was given no opportunity to debate the draft. The first debate took place in January 1977. The NEB's books were not open to the Comptroller and Auditor General. Where was the audit in that? Only two three-hour periods of PAC examination were allowed into its financial activities in March 1977.

The hon. Gentleman also tried to say that market testing was a Tory plot to divert money to companies that fund Conservative central office ; that was virtually what he said. That is odd because 60 per cent. of the market tests went to in-house teams. Perhaps the First Division Association is a Tory front organisation. I shall bandy the facts with the hon. Gentleman any time he likes. There was a proper bidding process.

Mr. Garrett : What about the cases where no in-house bid was allowed and where the contract went to a single contractor, such as the bid for the Inland Revenue information technology?

Mr. Davis : I recommend that the hon. Gentleman reads our White Paper which outlines the hierarchy that the contractors had to go through. There were £100 million worth of savings from that programme. The hon. Member for Oldham, West asserted that nine times that amount of money-- £900 million--was spent on carrying out the consultation. I am sorry to say--

Mr. Meacher : The figure to which I was referring, and which appears in Hansard, was the total figure for all consultancy contracts. The figure was between £100 million and £900 million. While I am on my feet, I ask the hon. Gentleman to explain why, in the case of the Driver and Vehicle Licensing Agency, the Chancellor of the Duchy of Lancaster refused to accept the in-house bid even though it was £1 million cheaper than that of the private contractor?

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Mr. Davis : The hon. Gentleman does not understand the difference between a benchmarking enterprise and an in-house bid. His colleague asked about redundancy costs. The £100 million was net of the attributable costs of the market testing exercise and the redundancy costs.

Mr. Garrett : How many redundancies will there be?

Mr. Davis : Redundancy costs, where they occur, will be in the charter White Paper, which will be published very soon. He can look forward to it. I am happy to give it a free advertisement. The hon. Gentleman also asked about the audit of contractors. It just goes to show how little he understands what the process is about. What we are after with market testing is the best quality and the least cost. That is clear and transparent. One almost does not need an audit to better the quality and measure the cost. The hon. Gentleman also mentioned EDS Scicon, which is being negotiated with the Inland Revenue, and asked why an in-house bid was not allowed. That is a fair and reasonable point, which deserves a fair answer. The reason is simple. One of the strategic considerations was allowing the best possible career opportunities for the people who work in that operation. The only way in which that would be allowed and achieved is if they go into the private sector-- [Interruption.] --and give their business the chance to grow with the best possible technology, which is certainly not available in the in-house arrangements.

The Labour party is the low tax party. It throws away the idea of £100 million in the current year and another million--

Mr. Straw rose --

Mr. Davis : I am short of time.

Mr. Straw : I am grateful to the hon. Gentleman. All of us are bemused by the tautologous phrase "strategic considerations". Is he claiming that the only way in which dedicated civil servants who had been working for the Inland Revenue for years and years could have improved their career prospects was by being compulsorily transferred into a private sector company, which was not competed against by the public sector ?

Mr. Davis : I shall be quick to answer. In the information technology area, in which there is a great deal of external market to be won, there will be enormous gains for the staff.

I wish to try to respond to a few of the points which were raised in the debate. The right hon. Member for Swansea, West (Mr. Williams) corrected my right hon. Friend about the dismissal of Baroness Macleod. I shall briefly read a report from The Daily Telegraph of 27 June 1978. In talking of the National Gas Consumer's council under the past Labour Government, it said :

"The removal late last year of Lady Macleod, widow of the Conservative Minister Mr. Iain Macleod, as chairman of the council is only the most notable of Conservative casualties.

She was replaced by Mrs. Naomi McIntosh, pro-Vice Chancellor of the Open University and a former Labour member of Haringey borough council.

The change upset a Labour-Conservative balance at the top of the organisation established as deliberate policy when it was set up by the Conservatives in 1972."

That makes that point clearly-- [Interruption.]

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Mr. Deputy Speaker : Order. The Opposition Front Bench Members were listened to in a reasonable way and it is only right and proper that they should listen to the Minister in a reasonable way.

Mr. Alan Williams : To remind the Minister of what I said earlier, far from arbitrarily dismissing Lady Macleod, in fact, she had a second term of office. I reappointed her when I was the Minister dealing with consumer affairs. She had two terms of office, one under the Conservative Administration and one under the Labour Administration. It was only after the second term that she was replaced.

Mr. Davis : I rest on the point that a balance established under a Conservative Government was destroyed by a Labour Government. I also want to take serious issue with a number of Opposition Members who misquoted Baroness Denton. I shall quote what she has said because the misquotation has been used to imply some level of political selection which simply does not exist. Her letter said : "Your article quoted me out of context and gave a very misleading impression.

It would be helpful if your report had explained that my lack of having knowingly appointed a Labour supporter' to a public appointment was due to the fact that my discussions with candidates concentrate on the needs of the post and what skills they can bring to it. I do not question them on their political persuasion." As a reaffirmation of that, many Opposition Members made the point that they have tabled many parliamentary questions on that subject. One answer to one of those questions was never mentioned-- the answer to a question of what was known about the political affiliations of the people who are listed on the public appointments central unit. The answer was that the political affiliation was known of 13 per cent. of the members. The reason why such a small number of political affiliations were listed was that we do not ask. We do not know and we do not need to know.

Mr. George Howarth : Will the hon. Gentleman give way?

Mr. Davis : I am afraid not.

Many funny statistics have been cited today--some by the right hon. Member for Swansea, West--mostly by changing the basis of the numbers being used. I have heard next steps agencies being cited as quangos. Yet next steps agencies consist solely of civil servants and are responsible to Ministers. So they are not within the remit. Even if all the public bodies listed were included, the assertion that there are more members of those than members of local elected bodies would still be untrue if we took out the tribunals and advisory bodies. More than half of the people concerned are on tribunals, which are apolitical and clearly directed towards the purpose of making judgments outside the political arena. It is clear that many hon. Members today got the argument wrong.

Mr. George Howarth : Will the Minister give way?

Mr. Davis : Not now ; I have given up enough time.

My right hon. Friend the Chancellor of the Duchy of Lancaster gave the House a sobering reminder of Labour's appalling record on public appointments in the 1970s. He talked about the 39 members of the TUC council who held 180 appointments--not just a few, but 180. Twenty-seven

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appointments went to the Transport and General Workers Union alone ; we heard the list of Jack Jones's 13 public appointments. I would not object to that if those old union warhorses had been people of enormous merit, or political polymaths selected for their superb skills, but that was clearly not the case. We heared what George Woodcock said--that the criteria were

"seniority, the muscle power of your union and competence"-- in that order or priority. Competence came third after seniority and union power. That tells us something about what the Labour party has asserted today.

That was all too much even for one Labour Member of Parliament, who talked about the gravy train and said that the union boys "seemed to run smoothly from job to job as if they were on a conveyor belt."

[Hon. Members :-- "Who?"] Gwilym Roberts.

When we say such things we are always told that that was all 15 years ago and it does not matter now. I wonder about that. We heard about David Ennals and all the things that he did, and that may have been 15 years ago, but let me remind the House of something rather more recent--the immortal and embarrassingly honest words of Mr. Tom Sawyer, the deputy general secretary of the National Union of Public Employees. In June 1992 he said :

"while we continue to fund the Party we'll have a say--it's crude as that no say, no pay."

From Woodcock to Sawyer the unions have been clear. They pay the bills ; they want the jobs. If Labour got back into power we would see more of the same. More union placemen clogging up lists of public appointments. The unions sponsor every member of the shadow Cabinet and 165 Opposition Members, and they will continue to play a decisive role in the election of the Labour party's leader and deputy leader. The unelected state is sitting on the Opposition Benches--long may it remain unelected.

Labour not only gives jobs to union placemen ; it has a sinister style and a set of tactics that it adopts whenever it gets a chance to run everything. The hon. Member for Oldham, West said that the Government had taken greater control of the state and were playing a bigger underhand role. But I shall read the House an extract from The Guardian :

"Mr. Eric Moonman, former Labour MP and chairman of the Islington health authority, north London, said yesterday that he was resigning from the Labour Party over a questionnaire from Mr. Meacher. Mr. Moonman said, I am being asked to spy on colleagues to find out their views and voting records. I cannot see the point of doing this, and I think the investigation would be prejudiced. Some of the people I would be asked to report on are not even members of any political party.'"

Who sent the questionnaires? Who asked Mr. Moonman to spy on his colleagues? Who behaved in what was described in The Guardian as a Stalinist manner? It was none other than the Labour spokesman on public service and citizens rights.

Not content with infiltrating health authorities, Labour has intimidated national health service managers seeking to apply for trust status. Before the last election, the party even threatened to sack hospital managers who failed to toe the line if Labour won the election and refused to go on trusts, so all of their comments about not having a balance are nonsense.

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Mr. Derek Foster (Bishop Auckland) rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to. Question put accordingly, That the original words stand part of the Question :--

The House divided : Ayes 263, Noes 308.

Division No. 146] [10 pm


Abbott, Ms Diane

Adams, Mrs Irene

Ainger, Nick

Ainsworth, Robert (Cov'try NE)

Allen, Graham

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

Benn, Rt Hon Tony

Bennett, Andrew F.

Benton, Joe

Bermingham, Gerald

Berry, Dr. Roger

Betts, Clive

Blair, Tony

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

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

Burden, Richard

Byers, Stephen

Caborn, Richard

Callaghan, Jim

Campbell, Mrs Anne (C'bridge)

Campbell, Menzies (Fife NE)

Campbell, Ronnie (Blyth V)

Campbell-Savours, D. N.

Canavan, Dennis

Cann, Jamie

Carlile, Alexander (Montgomry)

Chisholm, Malcolm

Clapham, Michael

Clarke, Tom (Monklands W)

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

Cunningham, Jim (Covy SE)

Cunningham, Rt Hon Dr John

Dalyell, Tam

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.

Dunnachie, Jimmy

Dunwoody, Mrs Gwyneth

Eagle, Ms Angela

Eastham, Ken

Enright, Derek

Etherington, Bill

Evans, John (St Helens N)

Ewing, Mrs Margaret

Fatchett, Derek

Faulds, Andrew

Field, Frank (Birkenhead)

Fisher, Mark

Flynn, Paul

Foster, Rt Hon Derek

Foster, Don (Bath)

Foulkes, George

Fraser, John

Fyfe, Maria

Galloway, George

Gapes, Mike

Garrett, John

George, Bruce

Gerrard, Neil

Gilbert, Rt Hon Dr John

Godman, Dr Norman A.

Godsiff, Roger

Golding, Mrs Llin

Gordon, Mildred

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)

Grocott, Bruce

Gunnell, John

Hain, Peter

Hall, Mike

Hanson, David

Hardy, Peter

Harman, Ms Harriet

Harvey, Nick

Hattersley, Rt Hon Roy

Henderson, Doug

Heppell, John

Hill, Keith (Streatham)

Hinchliffe, David

Hoey, Kate

Hogg, Norman (Cumbernauld)

Home Robertson, John

Hood, Jimmy

Hoon, Geoffrey

Howarth, George (Knowsley N)

Howells, Dr. Kim (Pontypridd)

Hoyle, Doug

Hughes, Kevin (Doncaster N)

Hughes, Robert (Aberdeen N)

Hughes, Roy (Newport E)

Hughes, Simon (Southwark)

Hutton, John

Illsley, Eric

Ingram, Adam

Jackson, Glenda (H'stead)

Jackson, Helen (Shef'ld, H)

Jamieson, David

Janner, Greville

Jones, Barry (Alyn and D'side)

Jones, Jon Owen (Cardiff C)

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