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Mr. Lang : The hon. Gentleman would have enlightened the House if he had read out my reply to the Leader of the Opposition in which I pointed out that my hon. Friend the Under-Secretary of State had made no allegations but merely repeated and reported allegations made by Labour party supporters in Scotland. I further invited the Leader of the Opposition to let us have the evidence accumulated by the Labour party in connection with its inquiry into possible misdemeanours in Monklands district council. I have asked twice for that information, and I am still waiting for a reply from the Leader of the Opposition.

Mr. Meacher : I am glad that the right hon. Gentleman is backing off from what the Under-Secretary said. My right hon. and learned Friend replied to that letter on 3 February, and said :

"Your colleague, Mr. Stewart, was happy to repeat allegations about jobs for the boys'. You must surely be aware that it is a statutory duty on all Scottish councils to ensure that all staff are appointed on merit."

If there is a matter which requires public investigation, it is for the Secretary of State for Scotland to set up a public inquiry. Let us have no more cheap taunts. I will move on.

We know that honours and company political donations are connected. Only 5 per cent. of companies currently donate to the Tory party, and yet more than 50 per cent. of the honours awarded to industrialists since 1979 have gone

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to directors of firms which contribute to Tory funds. I am told by a statistician that there is less than one chance in a million that that is a coincidence.

The role which quangos now play in the patronage stakes is of increasing significance. Let me make it clear at the outset that there is nothing inherently wrong with quangos. There will always be a certain number of them, and quite rightly so. The continued existence of some of them is highly desirable in principle, particularly those such as the BBC, the Boundary Commission, the Local Government Commission and a string of others. Those quangos were set up to be independent from the Government and to exercise their best arm's-length judgment on highly sensitive or controversial matters. I hope that that is agreed on all sides.

There are three worrying things about quangos. First, they are unaccountable, even though they now exercise substantial powers. That is different from the situation in the past. Many of the old quangos in the 1970s were different. They were purely advisory bodies, and some were little more than talking shops. Where they had executive roles, local councillors were often on the board, or a reasonable spread of interests was represented.

Today, quangos are powerful vehicles of patronage, wielding far greater powers and spending far more public money than ever before. Quangos, and to some extent central Government, have taken control out of the hands of local government, urban development corporations, London Regional Transport, higher education, grant-maintained schools and further education. Indeed, quangos have removed any say that local government ever had in the running of the major services of health and training. Those two services spend £19.5 billion a year, which, I submit, is a huge transfer of power from elected authorities to the patronage state.

Mr. Rod Richards (Clwyd, North-West) : The hon. Gentleman quite rightly says that he is concerned about patronage. Will he therefore remind the House who was appointed chairman of Great Ormond street hospital in the last days of the Labour Government in 1979 ? Will he remind the House who that lady was ?

Mr. Meacher : That is an absolutely extraordinary question. The Government appoint those who are chairs of public bodies or of non- departmental public bodies, as quangos are now known.

Mr. Richards rose

Mr. Meacher : I am sorry, but it is one dog, one bite. If the hon. Gentleman is stupid enough to ask such a silly question, he will get a straight answer. The Labour Government made the appointment, as anyone would expect.

The second disturbing thing about quangos

Several hon. Members rose

Mr. Meacher : I am sorry, but if that is the standard of interruption which I am to get, I am not prepared to waste the time of the House with such trivialities.

The second disturbing thing about quangos is the enormous sums of taxpayers' money which they dispose of without any say-so of the taxpayer. They have already taken over from elected local authorities the spending of

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some £24 billion of public money, and it is estimated that, by 1996, they will dispose of £54 billion-- roughly one-fifth of all public expenditure. I submit that for a party that prides itself on safeguarding the taxpayers' money to put sums of that magnitude into the hands of persons who are accountable to no one and nothing except the say-so of the Secretary of State is an act of stunning irresponsibility.

Mr. David Wilshire (Spelthorne) : The hon. Gentleman asserted that local government no longer has a say in the sort of services that he is talking about. Would he care to comment on the fact that in my area to the west of London several Conservative councils put on the agenda for their council meetings the closure of a hospital. They have a say. A Labour council funds a pressure group. Is not that also having a say ?

Mr. Meacher : I am most grateful for that intervention. Perhaps I should allow more interventions like that because what the hon. Gentleman says absolutely makes my point. I believe that the Conservative flagship borough of Wandsworth has decided that health is not a matter which should be left to local quangos but ought to come back under local elected control. That is exactly our argument. If the hon. Gentleman really takes the view that he has just expressed, I hope that he will join us in the Lobby tonight.

Mr. David Jamieson (Plymouth, Devonport) : Does my hon. Friend share my anxiety and that of many people in the south-west about the running of the west country ambulance trust ? It spends £24 million a year of taxpayers' money, yet I cannot obtain an answer from the Secretary of State for Health about the running of the trust. Instead, I am referred to the chairman of the trust. The trust is being run by a chief executive who treats it as his own business. His management style is such that if he had been in the Gestapo he would have been thrown out for unreasonableness.

Mr. Meacher : That is a point which the Chancellor of the Duchy of Lancaster may want to take up when he replies to the debate. In several parts of the country it is difficult to get an ambulance. The target in the citizens charter of 14 minutes for a call-out is not met in two thirds of cases. There is a real problem. I am sure that the Minister will want to respond to that point.

The third disturbing feature of quangos is their membership. Gone are the days when there was a reasonable balance of interest. Let me make it clear that no one on this side of the House will object to Tories or business men as long as there is reasonable balance.

Mr. David Nicholson (Taunton) : Will the hon. Gentleman give way ?

Mr. Meacher : I want to make my point.

The choice today, which is Tory Ministers' choice, is heavily partisan. Do not take my word for it. I am sure that Conservative Members will not. In The Independent on Sunday of 28 March last year, under the headline "What Happened to Democracy", Baroness Denton, then a junior Minister at the Department of Trade and Industry who had made more than 2,000 appointments, said : "I can't remember knowingly appointing a Labour supporter."

The Chancellor of the Duchy of Lancaster (Mr. William Waldegrave) : As Baroness Denton is not a Member of this House and cannot reply herself, I must give the proper reply. She wrote to the newspaper to explain that

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that comment was taken out of context. She explained that not only did she not know whether she was appointing Labour members, but she did not know whether she was appointing Conservative members. She did not look into the political backgrounds of people who were appointed. That is the proper position, and that, I hope, is the position that the hon. Gentleman supports.

Mr. Meacher : That is very interesting. The fact that it got the Minister to his feet shows how sensitive the matter is. We should like to know whether it is true that Conservative central office checks through the best information available about political affiliations and uses that information to make appointments. Is that true or is it not ? [Interruption.] It is not a question of reading papers. Is it true or is it not ?

Mr. Waldegrave : Conservative central office does not make appointments to state offices.

Mr. Meacher : I must say

Mr. Waldegrave rose

Mr. Meacher : Hold on a moment.

Mr. Waldegrave rose

Mr. Deputy Speaker (Mr. Michael Morris) : Order. Let me point out to all Front-Bench Members that when one Front-Bench Member is at the Dispatch Box the other Member must respect that.

Mr. Meacher : Thank you, Mr. Deputy Speaker. The sensitivity, or perhaps the naivete, of that response betrays the extreme concern of the Tory party about the way in which it operates. No one suggested that Conservative central office makes appointments directly. What we believe is that it very carefully obtains the fullest information available and that the information goes to Ministers and is used by them to ensure the situation that exists today, where the membership of quangos--call them what you will--is overwhelmingly Conservative. It is not an accident. It has been determined by careful research. Is that true or not ?

Mr. Waldegrave : Is the hon. Gentleman putting the following proposition to the House, that Transport house and the Labour Whips' office take no interest in appointments ?

Mr. Meacher : All parties in the past have been concerned that a reasonable share of their own supporters achieve these positions. What we see today is something on a completely different scale, the ruthless elimination of everyone who is not of a Conservative persuasion, and it is patently clear from the way that the right hon. Gentleman entirely avoided answering my question that the answer to it is yes.

Mr. Gary Streeter (Plymouth, Sutton) rose

Mr. Meacher : No, I will not give way again.

Mr. Jon Owen Jones (Cardiff, Central) : I thank my hon. Friend for giving way, although he may regret it because I want to step in to support the Government. We have an example in Wales which demonstrates that Ministers do not know the political affiliations of members. When the Secretary of State for Wales appointed David Rowe-Beddoe chairman of the Welsh Development

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Agency, one of the most important quangos in Wales, he told us that this appointee had no Conservative connection. We later found out that Mr. Rowe-Beddoe, quite rightly, had put on his CV that he had collected money for the Conservative party when he was in Monaco and was an important member of Conservatives Abroad. But Mr. Redwood told us that he had not read the CV. So there you are.

Mr. Deputy Speaker : Order. Let us have proper decorum in the House. I should be most grateful if hon. Members would remember, when talking about a Secretary of State, that it is "the hon. Member" or "the hon. Minister" or "the Secretary of State".

Mr. John Garrett (Norwich, South) : Oh, come on.

Mr. Deputy Speaker : I do not know who said "Oh, come on", but I should be grateful if he would desist in future. If it was the hon. Member for Norwich, South (Mr. Garrett), I hope that he will desist.

Mr. Garrett : I will certainly desist.

Mr. Deputy Speaker : I am most grateful.

Mr. Meacher : I am glad to see that even in this case, somehow or other, a Conservative Secretary of State managed to make the right decision, from his point of view, even though it was apparently for the wrong reasons or through lack of available evidence.

Mr. Streeter rose

Mr. Meacher : No, I will not give way.

What I want to tell the House now illustrates, in a way, the point that my hon. Friend the Member for Cardiff, Central (Mr. Jones) made. I have here a letter written to Mr. Ahmad in my constituency by the right hon. Member for Sutton Coldfield (Sir N. Fowler), chairman of the Conservative party, inviting him as a director of the Oldham training and enterprise council to make a contribution to Conservative party funds. I happen to know the gentleman very well. I mention this now, not because there is the slightest danger that he might contribute to Tory funds but simply to point to the assumption that if one is a member of a quango such as a TEC one is very likely to be a Conservative supporter.

Mr. Waldegrave rose

Mr. Meacher : I wonder who is making this speech, me or the right hon. Gentleman. It is his fourth intervention, I think.

Mr. Waldegrave : It may be of interest to the hon. Gentleman to know that my association sent a request for funds to my Liberal opponent at the last election, which shows that these requests are not always sent to supporters of our own party.

Mr. Meacher : We shall draw a veil over those comments.

Mr. Peter Kilfoyle (Liverpool, Walton) : Further to my hon. Friend's theory about the membership of quangos and letters soliciting funds for the Conservative party, does that explain the letter sent to the Labour leader of Liverpool city council from the same organisation ? Am I correct in assuming that it is because he is a nominee to the Merseyside development corporation ?

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Mr. Meacher : I should think that that is extremely likely. Clearly, the Tory party is so bereft of funds and so reliant on the comprehensiveness of its appointments to quangos that Tory Members think that they can write to anyone and get some money.

Mr. Peter Bottomley (Eltham) : Will the hon. Gentleman give way ?

Mr. Meacher : No, I shall not give way again.

The Economist got it right. It is not a flag waver for the left, but about a year ago, in an article nicely entitled, "Subsidiarity begins at home", it said :

"What powers Ministers have taken for themselves they are giving to their friends."

Indeed they are. The choice is overwhelmingly Tory men who are in business. Quango board memberships read like a list of Tory nomenclature. For example, analysis of the membership of 372 health trusts, which includes the latest shadow fourth wave of trusts, shows that 61 per cent. of trust chairmen have a business or financial background-- [Interruption.] Conservative Members seem to think that that is right and defensible. In addition, 8 per cent. are either solicitors or barristers, while less than 4 per cent. have a health background.

Nobody would deny that business men have a contribution to make to the running of social services, but to pack those bodies with three or more business men out of every five members, when only one in 25 has health expertise, is taking bias to the point of absurdity. The reasons for packing those quangos, which, judging by some of their members, should be called "egos"--extra-governmental organisations--are all too clear.

Is it a coincidence that Sir Christopher Benson was appointed chairman of the Housing Corporation when he also chairs the Sun Alliance, which donated £50,000 to the Tory party in 1992 ? He is also associated with MEPC and the Costain Group, both of which also made substantial donations to the Tory party. Is it a coincidence that Mr. Neil Clarke was appointed chairman of British Coal, when he was formerly chief executive of Charter Consolidated, which gave £26, 000 to the Tories ? Is it a coincidence that Sir David Nickson was appointed chairman of Scottish Enterprise, when he is also a non-executive director of three companies that contribute to Tory party funds, including £70,000 from Scottish and Newcastle Breweries and £53,000 from Hambros ? Is it a coincidence that Sir Nigel Mobbs was appointed chairman of the Department of Trade and Industry advisory panel on deregulation, when he is also chairman of Slough Estates, which gave £44,000 to the Tories, and also vice-chairman of Kingfisher, which donated £25,000?

I could go on and on. [Hon. Members :-- "Well, go on then."] Conservative Members want to hear more. I am pleased to oblige. The chairmen of more than 20 public bodies have been appointed by Tory Ministers and are associated with companies that donate generously to Tory party funds. They include the takeover panel, the Welsh Development Agency, the Port of London Authority, the London Tourist Board, Highlands and Islands Enterprise, the Top Salaries Review Body, the Medical Research Council-- [Hon. Members :-- "Name the people involved."] I shall certainly name all those involved and am glad to do so. The Independent Television Commission is another such quango. Those important public bodies are now so stuffed with Tory workers--that was a Freudian slip, as I meant to say

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Tory worthies, but they certainly work for Tories in view of the way in which they busily contribute to Tory party funds--that one genuinely wonders whether "quango" really stands for "quite assuredly now Government-orchestrated".

Mr. Graham Riddick (Colne Valley) : Monklands district council issues two types of job application forms : green application forms, which receive preference, are handed out to the relatives of local Labour councillors ; and other application forms for everybody else. Will the hon. Gentleman join me now in condemning that practice ?

Mr. Meacher : I am struck that Tory Members, who are desperately anxious to derail this debate, can find only a single issue to raise. I have already dealt with that perfectly adequately. The power lies with the Secretary of State to set up a public inquiry if he so wishes.

On the corporate dimension, large, extremely lucrative contracts are often awarded without tender to a small group of favoured companies on the inside track which usually contribute to Tory coffers. Everyone now knows about the notorious £234 million Pergau dam project. It was not just a "very bad buy", as the permanent secretary called it, as a sweetener for an arms deal. He was overruled by the Prime Minister and the Foreign Secretary, no less, because it offered a huge construction contract to Balfour Beatty and Cementation, which are also major contributors to Tory party funds. Over the past 15 years, £250 million of taxpayers' money has been allocated to foreign aid projects which the National Audit Office assessed as unviable or poor value for money. The beneficiaries of those projects, all with substantial aid grants, have been firms known for their Tory party loyalties. The projects include a power station in Bangladesh built by GEC; another construction project in Malaysia built by Biwater; two power stations in the Sudan built by NEI; and two power stations in Burma built by John Brown Engineering. The point is that most of those companies have received £50 million or more from the aid and trade provision. That is taxpayers' money intended for the relief of world proverty, but the Government have diverted it so that the principal beneficiaries are their own corporate donors.

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

Mr. Meacher : I will give way when I have concluded this point. There could not be a more blatant example of the manipulation of public money to procure private money and influence for themselves. We now know that what Lady Thatcher meant by "batting for Britain" was back to basics-- the basics of the Tory party. She meant "back to my place where the Tory party funds are being stored".

Mr. Waldegrave : If I could show that trades unions gave money to the Labour party, would it mean that the appointments by the last Labour Government of trade unionists to boards were wrong ?

Mr. Meacher : Of course it would not. No one is complaining that companies contribute to the Tory party. But when trade unionists contribute to the Labour party, they do so on the basis of having a political fund that has been voted for. When companies contribute to the Tory

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party, it is done without the assent of shareholders. There is no ballot and it is not a democratic process. That is an important difference.

There is another significant difference between the public policies of the Tories and their private dealings. In the public realm their line is compulsory competitive tendering, which is enforced to the limit ; in the private world it is negotiations and secret deals. I have here a list of all the aid and trade provision awards that were made in 1992. There were 15 of them, but only one was made on a competitive basis. The right hon. Gentleman has a few questions to answer about this matter too. As he opens up large new markets for the private sector, through market testing and the privatisation of public services, perhaps he can now tell the House--if so, I shall be very glad to give way--why he would not even allow an in-house bid for the huge Inland Revenue information technology contract that he awarded to a foreign company. If he genuinely believes in openness and fairness as these very large markets open up, how can he justify not even allowing an in-house bid ?

Mr. Waldegrave : The House has debated the "Competing for Quality" programme several times. It is perfectly clear that when it is right to take a strategic decision to contract out, it would be misleading to staff to waste their time with an internal bid. That is set out in the policy and in the White Paper.

Mr. Meacher : Those are weasel words from a characteristically more clear-minded man. It is perfectly clear that, in the case of a huge contract where special interests attach to the Tory party, all the philosophy about openness goes out of the window completely. If the system of honours, Government placemen, patronage and favoured contracts in exchange, directly or indirectly, for money worked in the public interest, it would not be so objectionable, but it patently does not. First, the loss of public accountability is a fatal weakness. Instead of quangos having more rigorous procedures because of the lack of election, they have less. None of the members of these appointed bodies is liable to surcharge. Most of the bodies are not required to hold their meetings in public. Many, such as grant-maintained schools and training and enterprise councils, make their own arrangements for audit, which the Audit Commission recently condemned as

"counter to principles which normally apply to the expenditure of public sector funds, principles which should not be surrendered lightly."

In addition, quangos are not subject to the jurisdiction of ombudsmen, and they are excessively secretive. That, of course, is only following the Government line as set out to the Scott inquiry just a week ago by a Treasury solicitor, who said :

"It is damaging to the public interest to have any decision-making process exposed."

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

Mr. Meacher : I am only too willing to give way, but I think that the right hon. Gentleman's behaviour is an abuse of the House. He must have been on his feet seven times in the course of my speech, and he is about to make his own contribution.

The line taken in the words I have just quoted was repeated and endorsed as a philosophy of the Government

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a few days later by the Secretary of State for Defence. This suggests that "quango" might translate as "questions addressed with no Government openness".

Secondly, a system of Government private appointments and contracting out has not produced greater efficiency. If the argument for efficiency were made, we should have to take account of it, but it is not.

Mr. James Paice (Cambridgeshire, South-East) : Will the hon. Gentleman give way ?

Mr. Meacher : No. I have given way many times.

The right hon. Gentleman likes to claim that there have been savings of £100 million. What he does not say is that the cost of private consultancies has been at least that much-- on the basis of some estimates, nine times that much. When extolling the merits of private contractors, the right hon. Gentleman likes to cite experience in the United States, where private contracting has been commonplace since the Reagan regime of the early 1980s. That experience is very interesting, and I have had a look at it. What it shows is that, far from improving the level of public service, the policy has resulted in wasted money, falling standards of service and exploitation of public sector workers, who have become increasingly demotivated and subsequently less productive.

Our third and, I think, the major objection to the whole system of private patronage and secret deals is that it is wide open to corruption and fraud. The recent Public Accounts Committee report entitled "The Proper Conduct of Public Business" is a scathing indictment--the most scathing in my experience--of the culture of some of these quangos. If the Chief Secretary to the Treasury thinks that foreigners are corrupt, he could have a field day if he were let loose on some of his own colleagues' appointees : the international director of the Welsh Development Agency, who served only nine weeks of a four-month posting to the United States and was then brought home on "gardening leave" for eight months until his fiftieth birthday, when he received a £228,000 retirement settlement ; the so- called independent consultant used by the Wessex regional health authority, who turned out to be employed by IBM, and the subsequent waste of £20 million when the regional health authority was forced to abandon its computer system.

There are so many examples, including the case of the director of regionally managed services for the West Midlands regional health authority, who, according to the Comptroller and Auditor General, should have been dismissed for irregularities but was actually given an £81,000 pay-off. The latest example says it all. In Tory Britain, in the public domain, if one is incompetent, let alone guilty of misconduct, one is unceremoniously sacked. In the private domain one gets a golden parachute. That is what happens to people on quangos who misbehave.

Corruption is not confined to one organisation as opposed to another. Our charge is that the Government's policy of privately appointed bodies with secret meetings, privately arranged audit and an absence of surcharge facilitates--even encourages--corruption and fraud. That is not just my view ; it is also the view of Peat Marwick, whose head of investigation said a few weeks ago :

"More and more outsourcing in the public sector will mean more and more opportunities for procurement fraud. As more and more people outside the main buying departments become involved in the decisions, the scope for fraud grows."

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The power of the unelected state has grown dramatically in the last 15 years. It is still growing, and it should be cut back. The Labour party will bring a large part of the functions of appointed bodies back within the elected control of regional and unitary authorities. We shall subject these bodies to the same surcharge discipline as is applied, quite rightly, to local elected authorities, and we shall impose a much tighter public supervision system such as already exists in many other countries. The Opposition believe that democracy and openness should prevail--not patronage, sleaze or secrecy.

For all the reasons that I have set out, I strongly commend the motion to the House.

4.58 pm

The Chancellor of the Duchy of Lancaster (Mr. William Waldegrave) : I beg to move, to leave out from "House" to the end of the Question and to add instead thereof :

congratulates the Government on the reduction by 36 per cent. in the numbers of Non-Departmental Public Bodies over the last fourteen years as well as on the gains in value for money that have been achieved through the introduction of compulsory competitive tendering in local government and the Competing for Quality initiative in Whitehall ; rejects the proposition that contracting for services implies loss of accountability ; welcomes the continuous improvement in the quality, value for money and responsiveness of public services not least through the implementation of the principles of the Citizen's Charter ; notes that this Government's establishment of the Audit Commission and the increased powers and independence given to the Comptroller and Auditor General have led to more effective control of fraud and waste ; and applauds the Government's continuing commitment to high standards in public life.'.

It is always a pleasure to debate with the hon. Member for Oldham, West (Mr. Meacher). As he obviously did not know the name of the Great Ormond street person who had been appointed in the dying days of the last Labour Government, I shall tell him that it was the excellent Mrs. Callaghan, now Lady Callaghan. I make no complaint about that. The hon. Gentleman described it as a triviality. Such matters are trivialities when they are Labour appointments but deep constitutional issues when they are Conservative appointments. There is another point about which I ought to warn the hon. Gentleman before coming to the main part of my speech. If he is to argue that it is in all circumstances wrong for the Crown to claim public interest immunity for classes of documents of the kind in respect of which he was criticising, he ought to be aware of the fact that the last Labour Government did so on several occasions. I have before me a note of the 1975 Burmah Oil Company case, in which the Crown, in the shape of the Minister of the day, contended that it was necessary for the proper functioning of the public service for all such documents to be withheld. He should learn a little more about that subject before he criticises. [ Hon. Members-- : "What about Scott ?"] Sir Richard Scott knows that and much more about the subject.

My hon. Friends may remember that, during a previous debate, the hon. Member for Oldham, West made a fool of himself by purporting to show, by brandishing a leaked letter from a Department, that the public sector was inherently better at keeping secrets than the private sector. The motion tabled by the hon. Gentleman deplores the increases in spending, but his party has argued for

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