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Sir Patrick Cormack (South Staffordshire): Does my right hon. Friend concede that, from that point, the price of Hansard has increased to such an extent that people can no longer afford to buy it? That was a direct consequence of the Government's decision.
Mr. Freeman: That was correct at the time. However, I am delighted to inform the House that, as a result of negotiating a new service agreement and of HMSO's responsiveness, the price of Hansard is now falling. I hope that the price not only of Hansard but of other documents supplied to the House and to the other place will continue to fall. That is a function of greater efficiency at the stationery office--I congratulate the management and the staff--and of a tougher and more businesslike attitude on the part of the House and the other place regarding the supply of documents.
Sir Patrick Cormack: My right hon. Friend knows that I am very displeased with the general plans to privatise HMSO. Do not his comments illustrate the good sense of keeping the publication of parliamentary papers properly within the control of Parliament? Is it not impossible to guarantee that if the work goes to a wholly free-standing commercial operation?
Mr. Freeman: I agree with the first part of my hon. Friend's statement. Parliament must control the supply of those immensely important services; I do not dissent from that view. I believe that the House will have greater powers than it has at present through the negotiation and execution of a contract between it and the supplier of the services. The powers would be formalised. I do not believe that any successful purchaser of all the printing, publishing and other allied business of Her Majesty's Stationery Office, as it is now called, would seek to renege from, diminish or belittle the importance of the services that it provides to the House. The contract will be extremely important and I believe that Parliament will be able to control it better than at present.
I am aware of my hon. Friend's concerns in that regard. Although I believe that it would be commercially unattractive to separate the parliamentary from the Crown business, as my hon. Friend has pressed me on that point I shall certainly reflect further on the matter. It may be that, on reflection, I shall decide that some arrangements could be made, but I offer no immediate prospect of a satisfactory solution.
Mr. Tam Dalyell (Linlithgow):
The Minister said that Parliament could control the business better. What methods does he have in mind to ensure that?
Mr. Freeman:
I explained to the House that, for the first time in the history of the relationship between Parliament and Her Majesty's Stationery Office, there is now a formal service agreement. That was signed last week and it will come into effect on 1 January. There is a similar agreement with the other place. It is envisaged that the authorities of the House will enter into a formal contract on behalf of the House with the supplier of those services, in the same manner as many other services to the House--which perhaps are not as significant, but which are subject to normal commercial contracts. I believe that the existence of a public document that specifies the nature and the quality of services, together with the price of those services, represents a better mechanism through which the House can control the supply of the services.
Mr. O'Neill:
In the event that HMSO is unable or unwilling to comply with the undertakings into which it enters, what powers will the House have to excise any damages or compensation from the printer?
Mr. Freeman:
It depends on the provisions of the contract. The House may wish to have the right to veto any change in ownership or to inscribe damages into the contract or it may wish to remove the business of printing Hansard from other printing and publishing business. That is the nature of a commercial contract.
Mr. Nigel Waterson (Eastbourne):
Is it correct that the contract could specify that any future change in the operations of the buyer should be subject to the requirements of Parliament? Although parliamentary business may constitute a relatively small proportion of the new operator's turnover, from a commercial point of view it would be under a great deal of pressure to maintain a good relationship with the House and the other place because any failure to fulfil its requirements could jeopardise the rest of its business.
Mr. Freeman:
It must be right that the dozens of private sector companies that supply services to the House
Mr. Garrett:
If HMSO breaks its contract, all we can do is sue it. Surely the Government should put those requirements into the tender document in the first place.
Mr. Freeman:
I disagree with the hon. Gentleman. It is a matter for the House and not for the Government.
[Interruption.] One may laugh, but, although I shall be responsible for the contracts placed by the Crown with the printer and publisher supplying documents, the precise contractual arrangements are a matter for the House. Speaking on behalf of the Crown, I would envisage that any contract for the supply of such important documents as White Papers, Green Papers and other statements of Government policy would include extremely tough contractual provisions.
Mr. A. J. Beith (Berwick-upon-Tweed):
Let me make it clear on behalf of the House of Commons Commission, first, that the service agreement that the Minister has described is entirely independent of the discussion about privatisation and comes into force on 1 January as a result of work already done. Secondly, on behalf of the House, the Commission would expect to reserve the right to make whatever arrangements seemed appropriate if there were any default on the contract by a private organisation that took over the duties of HMSO.
Mr. Freeman:
I quite accept what the right hon. Gentleman said and I agree with him.
Shortly after 1980, customers--Government Departments--were freed for the first time from the requirement to deal with HMSO and were permitted to use any supplier that offered them the best deal. The results were dramatic. The commercial imperatives placed on HMSO meant that costs fell sharply after it attained trading fund status. That could only be good news for customers. Not only were they now free to shop around but they benefited from the savings passed on by HMSO as a result of its new-found commercial freedom.
That commercialisation also exposed HMSO to true competition for the first time and the private sector was quick to seize the opportunity. Central Government were and remain an attractive market for many of the services provided by HMSO, which soon had to compete with suppliers that were well used to the rigours of the marketplace and, more important, were not bound by the same public sector regulations as HMSO. In retrospect, the management and staff of HMSO rose to the challenge remarkably well and, despite that intense competition, HMSO remains the clear market leader in the supply of printing and stationery to central Government.
Ultimately, however, that competition will work against HMSO if it remains in the public sector. For instance, its governmental status means that it is still bound by restrictions on the prudent use of taxpayers' money, which ultimately accounts for nearly all its income. That rules out decisions that would carry only normal commercial risk in the private sector. It is unable to raise investment capital in ways open to private sector business or to diversify into new markets. Most important, it cannot trade with private sector customers when its own central Government market is in decline.
In such an environment, HMSO would clearly struggle to maintain its position. Although it has generally continued to meet the financial targets that it has been set, its turnover has declined by some 10 per cent. since 1990. A continued cost-cutting programme has led to the reduction of staff numbers by some 600 over the same period. To allow matters to continue in the same vein would be a gross disservice to the management and staff at HMSO, whose efforts have built on the organisation's formidable reputation and who in recent years have found their futures in jeopardy through being unable to compete fairly with other suppliers.
At the same time, to return to the old way of a protected market into which customers were tied would deny those customers and the taxpayers the benefits that they have gained since 1980. It would also imply a wholly unjustifiable lack of confidence in the ability of the management and staff of HMSO to run a prosperous, competitive business.
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