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7.40 pm
The Chancellor of the Duchy of Lancaster (Mr. Roger Freeman): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
- 'welcomes the Government's policy with regard to the privatisation of HMSO and the proposed safeguards to protect standards of service to Parliament and other customers.'.
Last December, I informed the House of the Government's plans to privatise Her Majesty's Stationery Office during 1996. I said that the intention was to seek to bring that transaction to a conclusion in the summer.I have said that consistently, and that timetable has not changed.
I should like to remind the House of the key reason for privatisation--to chart a more optimistic course for expansion of the business if the commercial freedom of the private sector became available. I should like to develop that argument. HMSO is, and has been for some 16 years, a fully commercial trading fund, operating from within the public sector and subject to the full rigour of public expenditure control, but, at the same time, having to compete for business from departmental and parliamentary customers, which are all perfectly free to take their custom elsewhere to private sector suppliers. Some of them have done so, obtaining perfectly satisfactory services. HMSO, meanwhile, has become more efficient in response, producing savings for all concerned, for which I pay tribute to the efforts of its management and staff.
Mr. Patrick Thompson (Norwich, North):
My right hon. Friend has referred to the harsher climate in which
Mr. Freeman:
During my remarks, I hope that my hon. Friend will discover that I can satisfy him on both counts. First, I hope very much that as many of the redundancies as possible will be on a voluntary basis, although I cannot give any guarantees. The redundancies have been under way for the past several months and must continue, for reasons having to do with the trading conditions of HMSO, which I shall outline. I shall sketch out the financial problems that HMSO is now facing.
On the second point, I hope that I can give my hon. Friend the assurance he seeks. I hope that he will bear with me; if is dissatisfied with the remarks that I have carefully crafted to give him as much assurance as possible, perhaps he will intervene again--with your permission, Madam Deputy Speaker.
The public sector HMSO is caught in an unenviable position. It is necessarily subject to the constraints that apply to all Government bodies to protect taxpayers' money. It cannot trade significantly outside the public sector. Its borrowing strategy is controlled by the Treasury, and the range of its activities is restricted by its trading fund order. That means that if, in the normal course of business, HMSO wished to borrow money commercially to provide a new service to a new market, it could be prevented from doing so. However, those are precisely the sorts of decisions that its competitors can and do make quite routinely.
The consequences are obvious. HMSO is losing business, and therefore staff, because it cannot match its unfettered private sector competitors. Its turnover fell by some 10 per cent.--
Mr. Gerry Sutcliffe (Bradford, South):
Will the Minister give way?
Mr. Freeman:
I shall be happy to give way after I finish this section.
HMSO's turnover fell by some 10 per cent. between 1990 and 1994, and trading conditions are becoming increasingly difficult. In June 1994, the then chief executive forecast that 30 per cent. of jobs would be under threat if HMSO increased its competitiveness.
Mr. Garrett:
Will the Minister give way?
Mr. Freeman:
I shall give way to the hon. Member for Bradford, South (Mr. Sutcliffe) first and then to the hon. Gentleman, if he will allow me to finish this brief section.
Since that forecast, HMSO has lost about half the total jobs that were forecast as under threat. Several hundred more jobs are still under threat. HMSO needs the freedom of the private sector to compete on equal terms for public and private sector work. Such trading opportunities will mitigate those job pressures and, if a privatised Stationery Office is successful in marketing, will mean that more jobs will be available than would otherwise exist.
Mr. Sutcliffe:
Did not the 1992 commercialisation study and subsequent events result in the contraction of
Mr. Freeman:
The current circumstances under the trading fund orders permit HMSO to use its marginal capacity to win business in the private sector. That is a relatively new permission, which, so far, has been used for £250,000 of turnover. It must inevitably be limited because it is for marginal capacity.
Mr. Garrett:
Will the Minister give way?
Mr. Freeman:
In a moment; I am answering a question.
The marginal capacity does not relate to the main thrust of HMSO's business. In a moment, I shall explain why it is important to retain that restriction. I do not want to see competition between a state-owned body and private sector suppliers on unequal terms.
The second part of the hon. Gentleman's question is a perfectly legitimate point of political difference--the Government have one view and the hon. Gentleman has another. On his second point, about the more recent lifting of restrictions, I must admit that I misunderstood the situation. Because of the most recent relaxation in trading fund status, HMSO can win public sector business abroad, not private sector business. I apologise for my misunderstanding of that point.
Mr. Garrett:
The Minister, even though he knew the facts, was being less than open with the House, because HMSO has obtained contracts with the German post office and the French department of employment. It is not merely a question of getting private sector work, because HMSO can get public sector work in Europe. I know that the Minister has just said that, but he did not say it last time, and he had not said it up to then because he was emphasising the scope for HMSO getting private sector work.
The Minister has also not mentioned the fact that, for the first time, HMSO has developed its own corporate style and Banner trademark. It therefore has an opportunity for its own branded goods, which is a development, and a much better prospect of getting public sector work throughout Europe.
Mr. Freeman:
On public sector work outside United Kingdom, the hon. Gentleman will agree that, so far, the record is relatively limited.
Mr. Freeman:
Yes, it is limited so far. My argument is that the vast bulk--well over 95 per cent. of HMSO's turnover--is domestic--
Mr. Freeman:
I think, realistically, the main bulk of HMSO's business will be domestic.
Mr. Tony Lloyd (Stretford)
rose--
Mr. Freeman:
The Government have decided that a state-owned business should not be allowed to compete
Mr. Sykes:
Will the Minister give way?
Mr. Freeman:
I will certainly give way to my hon. Friend after I have given way to the hon. Member for Stretford (Mr. Lloyd).
Mr. Lloyd:
Until the regulation change, I was sponsored by the Graphical, Paper and Media Union; I do not want there to be any doubt about that. Can the Minister explain to the public why the Government have an ideological blind spot in that, when privatisation occurs, HMSO can compete even though it will almost certainly be at the expense of pensions and other working conditions of the people there, yet the Government will not allow the rosy future for HMSO advocated by many people inside and outside the House if it is given commercial freedom? Why cannot HMSO be allowed to compete properly in the public sector?
Mr. Freeman:
We hold it as an important tenet that a state-owned company such as HMSO has three clear advantages. First, it borrows at the gilt rate and not at the commercial rate. Secondly, it does not pay corporation tax whereas private sector companies do. Thirdly, it has the guarantee of the Treasury--of the state. It cannot go bankrupt; it cannot go bust.
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