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Mr. Eric Pickles (Brentwood and Ongar): Does the hon. Gentleman therefore believe Sir Jeremy Beecham, the head of the Local Government Association, when he said that there can be no doubt that compulsory competitive tendering brought much benefit to local government, increased efficiency and reduced costs? Is Sir Jeremy wrong in that assessment?
Dr. Whitehead: I was referring to the original claims which were made by those who instituted CCT. They talked about huge savings and huge increases in services. I have emphasised that many council workers have
worked hard, with their local authorities, to ensure that, within the terms presented, to them CCT was a success in that services and efficiencies were maintained.
Several studies, particularly that of the London business school, have demonstrated, among other things, that if we take into account the transactional costs of CCT--those things that were taken out of the equation when the original claims were made by Government as to the successes that CCT would introduce--it is not possible to identify the savings that the previous Government suggested. Furthermore--
Dr. Whitehead:
I ask the hon. Gentleman to bear with me while I make my point. I shall then let him intervene again.
If a service is removed from local government and taken into the private sector for contracting, there is strong evidence that costs arise once there is not a public sector yardstick against which the private sector can compete. Consequently, private sector cartels have arisen in the long term in CCT provision. There is strong evidence that there are such cartels among CCT providers. That is evidence that refutes the claims made by the original proponents of CCT.
Mr. Pickles:
Sir Jeremy Beecham is a respected figure in local government and a respected member of the Labour party. Is he right or is he wrong? Yes or no?
Dr. Whitehead:
I was attempting to set out for the hon. Gentleman the fact that the claims originally made by the Conservative Government about CCT have proved not to be right in practice. The result of the long implementation of CCT is that a number of things have changed. Sir Jeremy Beecham was reflecting that fact. If we examine the overall results of both fundholding and CCT, it is apparent that the results have been destructive in terms of public service delivery and ethos. Fundholding has introduced buying and selling into what should be a straightforward relationship between the doctor and his or her patients. Fundholding has led to a two-tier NHS, and the idea that the patients of those who did not opt for what Conservative Members assured us was a voluntary move to fundholding are not treated in the same way as fundholding doctors' patients.
Fundholding has undoubtedly led to a large increase in bureaucracy, not only within GPs practices, but because transactions outside GP practices have had to be accounted for within the internal market that has been created within the NHS. It has led to additional duties for doctors. They have had to run what, in effect, are small businesses, when many of them wanted to ensure that they delivered the best possible medical service to their patients.
Fundholding has led to decisions on patient lists and on drug availability that set the market and doctors' clinical judgments against each other. Although the evidence points in many directions, the suspicion remains that in some cases, in order to balance the books, some fundholding practices appear to have attempted to remove from their lists patients who proved to be costly, awkward or difficult. All those outcomes contradict the basic idea of what a doctor's relationship with his or her patients should be.
Compulsory competitive tendering has led to the effective casualisation of much of the local authority labour force. It has made local authorities unable to respond effectively to the needs of their communities once contracts were fixed. If the material circumstances changed, if the local authority wished to take a different role in its relationship with the community, or if the community made different requests of the local authority, nothing could be done, because the contract had been given out and that was the end of the matter.
CCT deeply damaged the democratic process, as it was unclear who was responsible for a particular service. I know of many instances in which members of the public experienced great frustration when they went down to the town hall to complain and were passed on, properly, to a contractor who they did not believe had anything to do with the service. When they sought redress, they were told that the contract had been given out, the matter was the contractor's responsibility and they must deal with the contractor.
As I said earlier, CCT led to the development of large transactional costs as the client side monitored the process of tendering and policed its outcome, whether or not the internal labour force won the contract or the contract went out to an external organisation.
All those destructive effects will be avoided through the measures announced in the Gracious Speech. The development of primary care groups will enable various professionals--not just doctors but, as we have heard, nurses and some specialties--to become involved at local level. We know that the multifunds--forerunners of primary care groups that were set up in Southampton--brought in specialist clinics to allow the participation of various specialties at immediate ground level, enabling them to co-operate to provide a better service.
Instead of competing, GPs and other primary health carers will be able to collaborate in the running of services. Resources overall will be used to best advantage. Best value will allow local authorities to engage in the method of service delivery most suited to the service, the area and a productive dialogue with the local community. Any business man understands that much better results will be obtained from a long-term relationship with a contractor, whoever that may be, by growing and altering the contract according to how he wants the service to develop, as opposed to the regime of the brown envelope, which destroys everything that has been achieved and makes it necessary to start all over again.
Local government will be reconnected to local communities. Before a service is decided on, local government officials will have to discuss with the community what the targets are and how the service should be delivered. The local authority will be required to justify to its community and to the Audit Commission--a fact that was apparently unknown to the right hon. Member for Henley--what the service will comprise.
Mr. David Rendel (Newbury):
Welfare reform is heralded as one of the central measures of this year's Queen's Speech, and has been heralded as one of the Government's principal measures, so I am rather concerned that there was nothing in the speech about some of the most important aspects of welfare reform.
One example is the issue of compulsory second-tier pensions, which I believe is still unresolved in the Government's mind. As my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) pointed out, there is no mention in the Queen's Speech of the Child Support Agency. I hope that that was an unfortunate omission.
Where are the means of tackling poverty, social exclusion, and health and income inequalities? Other hon. Members have noted that those are also omitted from the Queen's speech. I would have expected the Government to begin to tackle those issues.
The Liberal Democrats support the principle of welfare reform because we believe that the current system contains a number of significant deficiencies. It traps people in benefit, yet it fails to deliver effective help where it is most needed, not least because of the sheer complexity of the benefits system. As we have heard, there is the continuing problem of fraud and the waste of money that it causes.
However, we reject the argument, to which the present Government and the previous one were happy to subscribe, that there is a spending crisis in social security. We should never forget that in Britain we spend rather less on social security than most of our competitor countries in Europe. The real problem of welfare spending is not that we are spending too much overall, but that not enough of the money reaches those in greatest need.
The Secretary of State's answer is to repeat the phrase
I shall deal with the Bills proposed in the Queen's Speech. The publication of the Bill to introduce the working families tax credit will, I hope, clear up many of the detailed concerns that we and others still have. The Liberal Democrats are concerned that the Government still does not know how they will deliver the credit. For example, how will it work for someone who has several employers?
Although the principle may be laudable, where is the evidence that tax credits are a positive work incentive? Evidence given to the Select Committee suggests that the Government are acting on a hunch. Tax credits have not
always worked in other countries. I was surprised to discover that the Tories oppose the measure. After all, they planned to introduce a similar credit in the 1980s, but failed to do so when they could not overcome the arguments about purse-into-wallet transfers and the large burden on businesses. Sadly, the Labour Government have not solved those problems either. It is sad that they have taken up a failed Tory policy, but it is ridiculous for the Tories to claim that they want nothing to do with it.
On the cuts in benefit that will result from some of the measures in the Queen's Speech, the changes to incapacity benefit are a clear example of the Government's gradual abandonment of the contributory principle. Means-testing incapacity benefit claimants who have occupational pensions simply punishes those who have made provision for their future. Do we want to provide such a disincentive to saving? The cuts involved, which represent a real loss of cash to people who may have considerable medical problems, are huge. Let us compare that with what the previous Secretary of State said.
On 28 March 1997, following a meeting with the all-party disablement group, that group and the then Secretary of State issued a joint press release which stated:
"work for those who can and security for those who cannot"
so often that it is beginning to sound like a mantra. He must grasp the nettle and make the basic philosophical decision, which he and his Government do not seem to have made yet, whether to extend means testing, with all the associated disincentives to work and to save, or whether to focus purely on getting people back into work. His Government will not make real progress with welfare reform unless and until he and they make that decision.
"The savings to incapacity benefit would come through getting more people into work, not through reducing the level of incapacity benefit, or entitlement to it."
What a contrast that is.
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