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8.14 pm
Ms Oona King (Bethnal Green and Bow): I particularly welcome the opportunity to speak in the debate, given the subject of my private Member's Bill, the Local Authority Tenders Bill, which went through in the previous Session--or rather did not go through. During nine months of negotiations with the social partners, I spent a rather torturous time looking at ways in which we could come to an agreement to push forward best value, which the Minister has now brought before us with the comprehensive package in the Bill, which I welcome.
For obvious reasons, therefore, I would like to restrict my remarks to clause 17. I know that all hon. Members always start by saying that they are going to restrict their remarks and then talk about everything. I will try not to do that.
Clause 17 allows the Secretary of State to change the list of non-commercial considerations that the local authority can take into account when putting a contract out to tender. Before we get too technical, I would like to outline what that means in plain English. Previously, under compulsory competitive tendering, that was not possible. A local authority was able to take into account only the lowest bid essentially. In my experience, that led to a Dutch auction that favoured cowboys, to the extent that many employer organisations now feel that CCT is a great disadvantage and of disbenefit to them; reputable employers are put at a disadvantage. Disreputable employers are able to reduce terms and conditions of employment, reduce wages and thereby get an advantage and win a contract.
That often harms the employers themselves. We have seen numerous instances of employers going bankrupt after they have gone for the cheapest bid that they could and then were not able to deliver the service. The local authority and, most important, the public also lost out.
I would like a move away from the dogma. Hon. Members on both sides of the House have been guilty on occasion of wallowing in dogma. The Bill represents a move from away from that. As the Minister has clearly put it, it is not the means; it is the ends. We want to look at best value. Whoever is able to provide best value and fair employment practices as well has an absolute right to win contracts.
I do not wish to see the previous bias towards the private sector replaced with an unthinking bias towards any other sector, be that public or otherwise, because the
most important point is about quality and standards. It is about how we deliver the service, not who delivers it. I hope that there might be some common ground there.
Mr. Nigel Evans (Ribble Valley):
As ever, the hon. Lady makes it sound oh so reasonable, but clause 17 could be a ticking time bomb because it allows the Secretary of State to re-introduce dogma if he likes and all sorts of non-competitive, dogmatic policies to ensure that, in many cases, private industry is discriminated against.
Ms King:
The hon. Gentleman says that the issues are dogmatic. May I raise some of the particular ones to which he refers, such as equal pay? In my view, that should not be difficult--[Interruption.] You are going like that as if to say--
Mr. Deputy Speaker:
Order. I am not going anything like that.
Ms King:
Thank you Mr. Deputy Speaker. The hon. Member for Ribble Valley (Mr. Evans) was making an indication as if to say that it is unreasonable to suggest that a local authority should seek to uphold good employment practices with public money. That is an issue that does divide the House. Labour Members believe that it is the responsibility of a local authority to uphold good employment practice. I make no apologies for that.
During the negotiations with the social partners, the CBI agreed wholeheartedly--
Ms Armstrong:
Some Conservatives said earlier that the CBI is made up of a bunch of socialists.
Ms King:
It is true that the Conservative party appears to label the CBI socialists, communists or worse even. The social partners agreed on areas where such interventions would be possible and where they would be sensible and in the interest of providing and delivering a better service. I fail to see why the Conservative party finds that so inimical to business because business itself does not. During the Committee stage of my private Members's Bill, I had meetings with many representatives of the business community and I was struck by the fact that they said, "We do not want cowboy contractors to be able to put in a lower bid and cut us out of the loop so that we lose business or go out of business." It was a bizarre "Through the Looking Glass" experience because Conservative Members were arguing against dealing with that. It was rather strange.
The hon. Member for North Essex (Mr. Jenkin) said that he was proud of CCT and perhaps the hon. Member for Ribble Valley (Mr. Evans) shares that view. I wonder whether they are proud of the fact that the courts have ruled that CCT was discriminatory towards women. It was clearly proven. I wonder whether the Opposition Front-Bench spokesmen take issue with the court's ruling. That is an important point but, as is often the case, sadly, there is not a single woman on the Opposition Benches.
I now want to talk about the third way. I am waiting for Conservative Members to groan because they did so very nicely earlier on. Unfortunately, the notion of the third way is often met with derision. I used to be a trade
union officer and, during negotiations with employers, when we were unwilling to find any common ground we both lost out. I cannot understand the refusal of certain Conservative Members to accept that in the past we have said, for example, that the public sector is good and the private sector is bad and that we should move away from such views. That is what the third way means and it is clearly incorporated into the Bill. I welcome that and I hope that, at some time in the future, Conservative Members will also welcome it.
There is a coincidence of interests between employers and employees. As I have said, reputable employers and many employees suffered under CCT. Changing that system will benefit both those groups. It is about building on what has been termed the new employment agenda, which explicitly recognises that the way in which employees are treated has an impact on the quality of the services provided to the community. If one cares about the service that the community receives, hopefully one would care about building upon a new employment agenda, which has been outlined in the memorandum from the social partners. That memorandum states:
Clause 17 allows the Secretary of State to change the list of prescribed non-commercial considerations. All the social partners agree that the current regulations must be reformed. They have already agreed on a list of areas where it would be legitimate to ask questions about a contractor's employment record and are currently discussing the details for putting that into operation.
Mr. Evans:
As somebody who has never thought that the third way had anything to do with "The Kama Sutra", I must say that the hon. Lady has obviously given this much thought. Why cannot this be put into the Bill so that it can be properly debated in the Chamber, in Committee and in the other place? If the Government already know what the non-commercial activities are to be, let us have them up front and in the Bill.
Ms King:
When the social partners spent more than nine months seeking a negotiated agreement on what could be put forward and the Government have said that, in consultation with the social partners, they will decide on the list, I cannot see any merit in the hon. Gentleman's objections. The areas on which the social partners have agreed include quality, training, health and safety, disability and racial equality, equal pay and gender equality. Those are all issues which, no doubt, make the Opposition squirm. The social partners have recognised that those areas have a valid place and I hope that Conservative Members might recognise that.
Mr. Robert Syms (Poole):
There are certain political realities in local government. One is that, the further one is from controlling national government, the more one is in favour of freedom for local government. I listened carefully to the speech made by the hon. Member for Torbay (Mr. Sanders). I agreed with much of what he said until he began to talk about proportional representation, which is not a panacea to bring about improvement.
The Government took office with an agenda stating that they must get rid of competitive tendering and some of the other dreadful things that the Tories introduced, such as capping. They have suddenly realised that if they do that, a degree of control will slip. As a result, those things have been redesigned. The chains may have been taken off, but other chains have been introduced to replace them.
My hon. Friend the Member for North Essex (Mr. Jenkin) noted earlier that there were 27 new powers in the Bill. That is instructive. This is a technical Bill that could be used by a future Secretary of State to control local government however he wished. The criteria are more general than under the previous Government, when issues were more overt and up front.
I am proud of my 14 years service in local government. Local government is a good institution with some capable people. It is probably as efficient as Whitehall and national Government and probably scrutinises more. I spent hours in committee crawling over relatively small sums of money. That level of scrutiny of Government expenditure is not evident in this Chamber. Local government is sometimes unfairly run down, even by my party. It has a good reputation.
Many people have an affinity with their local authority, particularly in old established boroughs such as Poole, which has celebrated its 750th anniversary. There is also strong affinity with local government in many shire counties and metropolitan areas. The Government should pay special regard to that. I am not a great enthusiast for regional government, because it would be an artificial creation. I would far rather have more power passed down to local authorities, allowing people to make mistakes on occasions, but to make them in their own communities. That would be better than creating artificially large regional government institutions.
Compulsory competitive tendering was helpful for those in local government who wanted more efficiency. Before the Local Government Act 1988, service standards often did not have to be specified by local government officers. The Act made them think carefully about the service that they were providing and set a market price.
Market prices are not the be all and end all, but it is useful to know what things cost when going out to tender. CCT often generated savings. Sometimes it did not, but it is reassuring in any form of government to test the price of a service. In rural Wiltshire, where I grew up, local authorities, under whatever party, tended to take a
minimalist approach to local government and were not highly overstaffed, so the savings tended to be smaller. However, there were many large urban authorities with large direct labour organisations, some of which did not even have to prepare proper accounts before CCT regulations. Even after the regulations, they found it difficult to do so. They were living off the rate payers and rent payers and sometimes providing very bad services.
A great deal of progress was made under CCT, but perhaps there is an argument for moving on. However, all that one can say about best value is that it sounds like something that we might find in a supermarket, but none of us knows what we shall get from it. To know whether best value will work, we have to see the detail. We have not seen it yet. It is a pity to overthrow the CCT regulations and go for best value, when we may not find out important details until the regulations are drafted.
It will be difficult to measure economy, efficiency and effectiveness without a regime for testing the price. When the details of best value are made known, I hope that there will be more tendering than there currently appears to be. One Labour Back Bencher said that best value was verbiage. That is fair. We shall have to wait and see how the Government fill in the details.
Labour had a manifesto commitment to abolish crude and universal capping. I am not sure that they have done that. The details of the Bill suggest that the new system will be worse, because we are moving towards a more secretive, arbitrary capping system. The big advantage of telling authorities their capping level in advance is that they can discipline themselves to keep within it. If authorities are not told, more of them are likely to be capped because they will step over a mark without knowing that it exists. It is a bit like having a blind auction or an auction of promises, with local authorities guessing where the level is, rather than knowing.
That will lead to all sorts of problems. Making the system less overt will take some of the fairness out of it, because authorities will not know where they stand. Because the criteria will be more general, people may not understand why one authority is capped and another is not. Less clear criteria will lead to more argument in local government. Authorities will be tempted into breaking what will retrospectively be deemed the cap, which will lead to all sorts of difficulties, such as rebilling.
The Conservative Government went through a steep learning curve on capping. They moved away from capping councils after they had set their budget because that forced them to rebill. I fear that the new Government will have to learn some of the same lessons that the previous Government learnt.
I am not sure that we shall get much further forward with the new capping regime. Where people stand will not be as clear. If there is to be a capping regime, it is important that treasurers and officers can advise their members on where they stand with reasonable certainty. I have sat on a local government finance committee and voted to spend up to the cap several times because we knew what the limit was and it seemed sensible to spend up to it. It was a pity that if we underspent we could not roll over the savings year by year. That gave no incentive to make savings.
The proposal for capping over more than one year could well cause problems, particularly if we move to annual elections. If control of an authority which was
capped for years one, two and three changed within that period, an authority under different political control would inherit the capped budget of its predecessor.
The proposal under clause 24 to make an authority pay the excess council tax benefit is also fraught with difficulties. One has only to look at the back of the Library brief which sets the various options. The Government will very much regret that proposal. It is extremely complex and is likely to cause great difficulties in future. I am sure that it will be examined in great detail in Committee. As my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) said, the nearly poor could end up subsidising the poor, particularly in boroughs with houses in categories A and B such as Pennine towns; that could prove disastrous.
"Our approach is based on a determination to construct a new and co-operative relationship between public and private sectors."
That is the third way. It is not a media soundbite. Some people ask what it is. They ask whether it is directions from the motorway or instructions from "The Kama Sutra". There is a great deal of confusion. [Laughter.] I will not go into the various positions one might take on that, but it is straightforward. It does not rest on the shallow grave of a media soundbite, which some people might suggest. In the new culture of partnership, we recognise that the old adage of an eye for an eye leaves everybody blind. Under CCT blind stupidity reigned and all the key actors were set against one another.
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