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Robinson, Mark (Somerton)

Roe, Mrs Marion (Broxbourne)

Rowe, Andrew (Mid Kent)

Rumbold, Rt Hon Dame Angela

Sackville, Tom

Scott, Rt Hon Sir Nicholas

Shaw, David (Dover)

Shaw, Sir Giles (Pudsey)

Shephard, Rt Hon Gillian

Shepherd, Colin (Hereford)

Shepherd, Richard (Aldridge)

Shersby, Sir Michael

Sims, Roger

Smith, Tim (Beaconsfield)

Soames, Nicholas

Speed, Sir Keith

Spencer, Sir Derek

Spicer, Sir James (W Dorset)

Spicer, Michael (S Worcs)

Spink, Dr Robert

Spring, Richard

Sproat, Iain

Squire, Robin (Hornchurch)

Stanley, Rt Hon Sir John

Steen, Anthony

Stephen, Michael

Stern, Michael

Stewart, Allan

Streeter, Gary

Sumberg, David

Sweeney, Walter

Sykes, John

Tapsell, Sir Peter

Taylor, Ian (Esher)

Taylor, John M (Solihull)

Taylor, Sir Teddy (Southend, E)

Temple-Morris, Peter

Thomason, Roy

Thompson, Sir Donald (C'er V)

Thompson, Patrick (Norwich N)

Thornton, Sir Malcolm

Thurnham, Peter

Townend, John (Bridlington)

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Column 720

Townsend, Cyril D (Bexl'yh'th)

Tracey, Richard

Tredinnick, David

Trend, Michael

Trotter, Neville

Twinn, Dr Ian

Vaughan, Sir Gerard

Viggers, Peter

Waldegrave, Rt Hon William

Walden, George

Walker, Bill (N Tayside)

Waller, Gary

Ward, John

Wardle, Charles (Bexhill)

Waterson, Nigel

Watts, John

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Wells, Bowen

Whitney, Ray

Whittingdale, John

Widdecombe, Ann

Wiggin, Sir Jerry

Wilkinson, John

Willetts, David

Wilshire, David

Winterton, Mrs Ann (Congleton)

Winterton, Nicholas (Macclesfield)

Wolfson, Mark

Yeo, Tim

Young, Rt Hon Sir George

Tellers for the Noes: Mr. Timothy Wood and Mr. Timothy Kirkhope.

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Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments) and agreed to.

Madam Speaker-- forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House welcomes the increase of 38 per cent. in average incomes and the rise in spending of all income groups since 1979; welcomes the fact that the United Kingdom has fewer people claiming unemployment benefits and more jobs than any other major European country; welcomes the creation of a new Department for Education and Employment to improve further Britain's skill base and competitive position; applauds the £700 million package of measures to improve incentives to work for those on benefits and increase the rewards of work for lower-paid families; welcomes further initiatives, such as the Jobseeker's Allowance, the Back to Work Bonus, and the pilot of an Earnings Top-up for childless people on low earnings; believes that supplementing low pay to help people into work is preferable to destroying jobs through a statutory national minimum wage and the social chapter; and recognises that improving opportunity and the reward for effort is less socially divisive than encouraging dependency and the politics of envy.

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Competition (Local Government)

10.15 pm

The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford): I beg to move,

That the draft Local Government Act 1988 (Competition) (Defined Activities) Order 1995, which was laid before this House on 8th June, be approved.

The order completes the Government's programme for the extension of compulsory competitive tendering to white collar professional services by adding financial, information technology and personnel services to the statutory CCT regime. It also amends the current definition of building cleaning to including the cleaning of police buildings.

CCT has, of course, brought many benefits to local taxpayers in the past 15 years, but perhaps more significant in the longer term have been the improvements in service quality and efficiency brought about by better management and a clearer strategic focus. Not least have been savings which we estimate at well over £400 million. The Government first set out their intention to extend CCT to white collar professional services in November 1991. Since then, we have been engaged in a thorough debate with local authority

representatives on the framework for white collar CCT. Parliament approved orders defining the first of these--legal and construction and property services--in November last year.

On 18 May, we announced to the House details of the regime which would apply to the remaining services described in the order. The definitions are part of a package which also includes the competition percentages for this work, revised rules for tendering and the implementation timetables, all of which will be set out in further statutory instruments once the order receives Parliament's approval. In many cases, decisions on these matters have entailed careful judgments which balance the need to bring competition to bear on white collar services with the operational flexibility that individual authorities rightly seek. I intend to monitor closely the implementation of white collar CCT, and will undertake to reconsider any aspect of the regime if there is hard evidence of problems in applying the new rules.

We have met many of the concerns of local authorities in putting together a challenging but, I believe, fair regime. CCT will not impose a rigid model for service delivery, but instead will encourage innovation, improved quality and greater value for money. The onus is now on local authorities to respond positively to the challenge of competition.

I commend the order to the House.

10.18 pm

Mr. Eric Illsley (Barnsley, Central): As the Minister pointed out, the order defines the activities to be included in the Government's latest extension of compulsory competitive tendering to financial services, information technology services and personnel services. The Labour party has some misgivings about CCT. We would like to raise one or two issues this evening and persuade the Minister to respond to them.

The Government are still intent on breaking up local government services even though there is now growing evidence that CCT costs more than it saves. CCT is causing

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the loss of tens of thousands of jobs in local government, and it discriminates largely against women. The quality of services provided by local government is falling dramatically as services move into the private sector.

As local government is swamped by bureaucracy as a result of compulsory competitive tendering and the preparation for, in particular, white collar CCT, and the private companies cut the terms and conditions of employees in order to maximise profit, there is increasing concern about the abuses and collusion that appear to be taking place among private contractors.

Experience of blue collar CCT has shown that we can expect more of the same problems next year as white collar CCT is implemented. The Government's insistence on CCT is based on the premise that quality will be improved and costs reduced. The Minister mentioned cost reductions of £400 million; perhaps he will tell us where he obtained that figure, which tends to be contradicted by information available to the Opposition. To us, the opposite appears to be the case: costs appear to be increasing, and quality appears to be declining. The Government's own research found that costs had decreased by an average of some 6.5 per cent., over a range of a 15 per cent. cut through to a 2 to 3 per cent. increase. That has been achieved mainly through the imposition by private companies of pay reductions, reductions in holiday entitlement and, of course, considerable job losses. In-house contracts have been won at a similar cost in jobs and conditions of employment.

It is unlikely that any such cost savings will be replicated in white collar CCTs. The percentage of work to be put out to competitive tender is smaller; the type of work is more quality-orientated; and there is a fear that the bureaucracy involved will far outweigh any savings to be achieved. In fact, the sheer volume of work involved in preparation for compulsory competitive tendering has added some 10 per cent. to the costs--and, in bureaucracy terms, to the value of the contract.

White collar CCT places a greater emphasis on quality than blue collar CCT. Many local government departments have built up technical expertise that will be fragmented with the introduction of white collar CCT; many in-house departments will lose the expertise that they have built up over a number of years. In my view, white collar CCT is unnecessary. At present, there is considerable downward pressure on local government as a result of recent financial settlements: over the past few years, many local authorities have been squeezed, and many of the areas that we are debating have suffered cuts as a result of capping and other Government restraints.

Is compulsory competitive tendering saving money, and does it discriminate against women? The Minister will know of a report compiled by the Centre for Public Services, on behalf of the Equal Opportunities Commission, which published some startling findings. It involved a case study of four services and 39 specific instances, and concluded that, in those four services alone, there have been 74,000 job losses. It also stated that the cost of unemployment, combined with the loss of income resulting from job losses, cuts in hours, loss of holiday retainers and lower wages, was some £41.2 million in the four services.

Gender differences were highly significant, changes in women's employment accounting for £32 million, or 70 per cent., of the cost of increased unemployment and loss of income to central Government. The study calculated

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cost savings to be only about £16.4 million--a sum outweighed by costs of £41.2 million. Nationally, over the four services, we have a figure of £126 million. Put another way, for every £1 million of CCT savings, the cost to the Government and to the public purse--and so to unemployment benefit, family credit and other benefits--is £2 million.

Women's employment fell by 22 per cent., and male employment by 12 per cent. Obviously, a higher proportion of women are affected by CCT. Average hours declined by 25 per cent. The decline in hours and pay means that the weekly earnings of a greater number of women are below the national insurance lower earnings limit, and that those women are often excluded from employment protection.

There is a trend towards multiple jobs. Women have a number of contracts with the same local authority or private contractor, which bring them above the national insurance threshold only when they are combined. Many local authorities and companies are happy for women to remain below that threshold, so that they do not have to contribute to the national insurance fund.

More than 200,000 white collar and professional staff, men and women, will be affected by the extension of CCT from 1996. Four out of five women's jobs affected by white collar CCT are in low-paid grades. Does the Minister accept those findings, and if so, what action does he propose to take as a result of those conclusions? It is obvious that the impact on women's employment is highly significant.

Those problems are likely to be replicated in white collar CCT in personnel, information technology and financial services, as quite a high number of female full-time jobs exist in those sectors. What will the Minister therefore do about that report? Does he accept it, and if not, will he, at the very least, commission his own research? At the very best, he should shelve the whole white collar CCT programme until those issues have been far more thoroughly researched. If he does not accept the report, I should like to hear his reasons why.

On job losses overall, 12 per cent. of local government jobs have been lost. Some 167,000 manual jobs were lost between 1989 and 1993. We come to the issues of efficiency and competition. Local government is required to achieve a 6 per cent. return on capital used in local government. That condition does not apply to private companies--no requirement exists for that 6 per cent. return. Private sector companies can make a loss, and it does not affect the fact that they hold that contract. Surely that is unfair competition and militates against efficiency.

For example, in grounds maintenance, in 1994-95 the contractor AAH Environmental made a loss of £3 million, which was sustained through the parent company AAH plc. The highways direct service organisation of Bradford metropolitan borough council, however, is to be closed from April 1996 because of a loss of £1.18 million in 1993-94, despite the fact that, in previous years, it had achieved surpluses in other activities. That loss, however, cannot be offset in the same way as such losses can be in the private sector.

Having said that, some 85 per cent. of direct service organisations are achieving their target. Those DSOs plough back the profits and surpluses they make from CCT to a far greater extent than Conservative authorities or authorities controlled by other than Labour councillors.

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