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Having said that, what I have heard does not suggest that the legislation necessarily needs to be reviewed. Under the legislation introduced by this House, the expenses system and the way that it operates is a matter for IPSA. No change in legislation is required to be able to deal with the issues that have been raised in the House. Indeed, in the letter that IPSA recently circulated to Members, it said that it will conduct its annual review of the scheme in the new year and will look at the problems that have been experienced by MPs. It specifically refers to the impact of the scheme on family life, which was raised by Members on both sides of the House, and the impact on Members living in the outer reaches of the London area-indeed, in places that most people in this House probably would not consider were in the London area. IPSA has also said that it will balance its requirements for assurance against the administrative burdens on itself and on Members. That is welcome and shows that it is listening.
Under the Parliamentary Standards Act 2009, IPSA is required to consult the Leader of the House as one of its statutory consultees, and the Government are considering how we can use that opportunity to submit evidence to IPSA. As Members will know, my right hon. Friend the Leader of the House is very familiar with the issues raised with him by many MPs, either privately or on the Floor of the House at business questions.
The Government strongly support the principles of independence and transparency for IPSA, as does the shadow Leader of the House. The review that IPSA is about to undertake is its opportunity to deliver a system that remains transparent, which is probably the best way of determining that Members behave properly, but is also more efficient and less bureaucratic. I am sure that I speak for Members on both sides of the House in urging IPSA to take that opportunity and deliver a system that improves on what we have today.
5.33 pm
Clive Efford (Eltham) (Lab): I should like to associate myself with all the compliments that have been passed to the hon. Member for Windsor (Adam Afriyie), who has done us all a great service in initiating this debate.
I thought, tantalisingly, Mr Deputy Speaker, that you were going to call me after the hon. Member for Worthing West (Peter Bottomley). Since I was first selected to stand against him in 1989, we have seldom seen eye to eye on anything, but today I agreed with every word he said. The fact that IPSA has managed to bridge that chasm should be a serious warning to it indeed.
One of the ironies of the debate is that what initiated this process was a desire to deal with MPs who were in some way feathering their nests at public expense, but what we finished up with is the taxpayer paying out more money to solve the problem of people saying, "Woe betide these profligate and self-serving MPs." We even had the involvement of Sir Thomas Legg, who barely washed his face in the amount of money that he brought back compared with what his investigation cost the House.
What we really want from today's debate, as everyone has stressed, is for IPSA to listen. When my hon. Friend the Member for Manchester Central (Tony Lloyd), the Chair of the parliamentary Labour party, and I met Sir Ian Kennedy, we felt that everything we put to him was
not sticking, and that he was not listening to anything we said about what is necessary for MPs and how MPs conduct their business. He just dismissed everything-he felt that he had all the answers and that he knew what MPs were about. I wonder whether some of the more Eurosceptic Members recognise that the system is akin to the EU. I am neither Eurosceptic nor Europhile, but there is a complete lack of public accountability and civil servants have been let rip, and we have ended up with a huge edifice. Every solution requires more expenditure and yet another department-someone mentioned that there is a new department for dealing with the media and press. Each problem that IPSA comes across seems to mean that it needs to spend more money, so we have now ended up with a very expensive edifice.
My hon. Friend the Member for Bassetlaw (John Mann) was absolutely right to warn us about losing the principle of the independence of IPSA and said that we would do so at our peril. We would be wrong to dismiss that as an attempt by him to create headlines and to be obstructive. We have suffered in the past from fiddling and interference from the Government and Opposition Front Benches-over the years, that created the mess that we got into. We should remember that, under the previous system, somebody felt it appropriate to apply for payment for a duck house. The fact that that claim was not paid is often overlooked, but that someone felt it appropriate to apply in the first place shows how far gone and how wrong that system was.
Mr Gale: I know of no Member of the House who wants to overturn IPSA's independence, in which respect the hon. Member for Bassetlaw (John Mann) was quite wrong. Our problem is that the people conducting the review of IPSA are the people who were responsible for creating the problem in the first place. Would it not be a good idea to have an independent review?
Clive Efford: I would not dismiss that suggestion. I agree with the hon. Gentleman, and disagree with my hon. Friend the Member for Bassetlaw, because no one is suggesting that we lose that principle, but my hon. Friend was none the less right to warn us.
IPSA must set the framework within which MPs operate, but it must be sympathetic to what MPs confront in their daily business, which it has not been, even in respect of its computer system. IPSA told us that we must pay for surgery rents under the office rent heading, but there is no heading for surgery rents, so everything comes out of office rents. I suspect that my constituents who examine the system will wonder just how many offices I have. IPSA did not listen to MPs when it set up that system, but it must listen to this debate and the reasonable arguments that MPs have made, and change fundamentally.
I am a London MP and my staff are all based in my constituency. I have had the same staff since I was first elected. The inflationary increase in the staffing allowance was not a living increase, so if I had followed that, those staff would effectively have taken a real-terms pay cut. Instead, I vired money from my incidental expenses account into my staffing account to pay them a bonus at the end of the year, which meant that they got a decent salary increase. There is no viring any more, no
spinal column, no incremental increase, and no recognition of the length of service of our staff. I really hope that IPSA takes that on board and rewards our staff.
My right hon. Friend the Member for Leeds Central (Hilary Benn), the shadow Leader of the House, talked about direct payments and we must move to such a system. I know of Members of Parliament who have not spoken in the debate-we should remember that some Members do not wish to pour their hearts out in the Chamber and have the media raking over their personal affairs-who have had to sell their assets to pay their office rent and other costs, and to set up a basic bursary so that they have an account from which they can pay out money before claiming it back. Some Members of Parliament to whom I have spoken have been in tears because of the financial situation in which IPSA has put them. They are not here to speak in this debate, but that fact should not be lost on IPSA.
If IPSA has not been listening to the debate, I hope that it will read it and take on board all the points that hon. Members have made. IPSA should change the system so that Members can serve the public in the way in which we hoped we would when we were elected.
5.40 pm
Mr Edward Leigh (Gainsborough) (Con): As one of the last Back Benchers to speak, I hope that I can say that we have had a good debate. Everyone has said their piece and made a valuable contribution, including the hon. Member for Bassetlaw (John Mann), who is fast becoming a national treasure. If he was not there, he would have to be invented, because his arguments have to be listened to.
The fact is-there is no doubt about it-that we cocked up the system. The thing collapsed, and we have a system that we all know is not working, and that is hugely complex and massively bureaucratic. Above all, it is costing the taxpayer more money-namely £10,000 to administer it before any money is handed out. We are only a small body-a medium-sized company of 600 people-and if this was the private sector, there would be a little accounts department run by half a dozen people. We do not need this vast bureaucracy, so in the few minutes I have to speak, I shall offer a simple solution.
I make no criticism of the staff. As I am pretty hopeless with computers, a very nice young man from IPSA sat next to me last week for two and a half hours while, with two fingers, I tried to claim for about five journeys. My criticism is not of the young people who work in IPSA, but of our Front Benchers, and particularly the three party leaders who got into a bidding war last year and landed us with this mess. By the way, thank God they are backing out of this and leaving it to Back Benchers, because this is a Back-Bench affair-it is nothing to do with Front Benchers. My criticism is also of Sir Ian Kennedy who, with his board, seems to have no conception of how Parliament is run.
My first guiding principle is that the electors want complete transparency, yet we have created a system that is so complex and bureaucratic that it is too expensive to publish receipts that were sought in the first place. It is Kafkaesque. My second guiding principle is that the system should cost the taxpayer less, but this is costing the taxpayer more, so no one is happy-what are we gaining?
There is something of the biter bit here, because for years we have created ever-more complex social security systems to try to regulate people's behaviour. That resulted in massive fraud and error in the Department for Work and Pensions, and now it has come here. Perhaps it is time for us to try to create simpler systems throughout the civil service. That is why I have always argued for a simple system of no-fraud, no-error child benefit-a flat-rate benefit.
We should have a simple, flat-rate allowance like the old London costs allowance, because every single Member of Parliament has to live in London. I say to the hon. Member for Bassetlaw and others that it is not for us to determine what that should be-it would be for an independent body. I would be out of pocket under such a system because, unlike my hon. Friend the Member for Cities of London and Westminster (Mr Field), I need a home in my north Lincolnshire constituency, which is three and a half hours away, as well as a home here, but we all know that the secret of happiness is not to compare oneself to others. Let us have the same allowance for every Member of Parliament.
Duncan Hames: Will the hon. Gentleman give way?
Mr Leigh: I cannot give way because I have been told that I have only three or four minutes.
Such a flat-rate allowance should be taxable so that the Inland Revenue is not involved. There would be no fraud, no possibility of error and no receipts. Every Member of Parliament would get the same.
What we have at the moment is fundamentally anti-family. When my predecessor came to the House, he virtually had to buy his seat, and when he left Newark station, the station master would say to him, "When will your next annual visit be, sir?" Over the past 30 or 40 years, we have created a system in which ordinary people with no private means-people such as me, who have been full-time Members of Parliament for all that time-have been able to devote themselves to public affairs. I am sorry to get personal, but for 27 years I have carted my family up and down the A1 for three and a half and hours in either direction. I have created a small family home in Lincolnshire, and a family home in London. Surely we should allow people to preserve that sort of lifestyle.
We are all different-some people have big families, others have small families; some have old families, some have young families-but we need a system of allowances, which I think should be set at a flat rate, and pay that allows ordinary people with no private resources to come to the House and to serve the public. That is all we want to do; nobody comes here to make money or to get rich. We just want to serve the public. We love Parliament, but surely we have to be allowed to do our job and stay with our families. This place should not become the preserve of the rich, as it used to be 30 or 40 years ago. So, away with all this complexity! Away with all this bureaucracy! Just give MPs a decent salary. Every member of the public I speak to says the same. They are sick and tired of this debate; let us end it now.
5.46 pm
Duncan Hames (Chippenham) (LD): I should like to join colleagues in commending the hon. Member for Windsor (Adam Afriyie) for securing this debate and for the tone in which he set it, which has, surprisingly perhaps, reflected well on the House. As a new Member, I have persevered in seeking to catch your eye this afternoon, Mr Deputy Speaker, because although I agree with many of the critiques of the current situation, I do not agree with many of the suggested solutions, including that suggested by the hon. Member for Gainsborough (Mr Leigh).
As a new Member, my experience of this place is that there are many hard-working, dedicated colleagues on both sides of the House, and, having observed their work ethic, I am in no doubt that they perceive their role to be that of a public servant. However, when it comes to our terms and conditions, our mode of operation and even our autonomy in deciding how we provide that service to the public, I have been surprised by the number of colleagues who seem to adopt the mindset of someone who is running their own business. In fact, we have heard contradictory accounts today about who employs whom in this place.
I have run a small business, but as a newly elected Member I could really have done without the freedom and responsibility of choosing my own constituency premises, negotiating the lease and sourcing the necessary equipment for my staff to use. None of that is what I came here to do. I suspect that some Members here might not even feel qualified to do it. We have all this administrative freedom to set things up exactly as we wish, but with that freedom comes administrative responsibility, as well as the unusual transaction requirements whereby MPs pay for everything first and claim the money back in what we have come to refer to as expenses.
I would argue that Members need to realise that, in cherishing that administrative autonomy, they make a rod for their own backs, by turning what for most people are the fundamentals of their workplace accommodation into what for us are treated as expenses. I would rather that we let go of all that and allowed independent, or indeed parliamentary, authorities to provide, manage and pay for our constituency offices-
Duncan Hames: I accept that that view is not shared by other Members, but I have waited patiently to share my view, which I hope Members will at least respect.
In the information published today, there are no expenses reported in my name. That is not because I have shouldered all those costs myself, though my team and I have taken care to limit the costs met by the taxpayer. It is because I have put off using the expenses system as long as I could, as I understood that other colleagues were experiencing what might be called teething troubles. My staff tell me that in those early days it was difficult to get either timely or consistent advice from IPSA personnel, but that the administration of the arrangements is now better than it was. I am sure that as the public start to use the information that IPSA publishes, the need for improved transparency will be apparent.
I agree with the hon. Member for Eltham (Clive Efford), who argued that it would be helpful if we had some clear headings such as "constituency surgeries", rather than the current description of "hire of premises". I would echo the comments of the hon. Member for Windsor in his conclusion-IPSA is mistaken in deciding not to publish receipts.
A similar argument applies to arrangements for MPs' staff. Many are modestly paid, hard-working and share all the job insecurity that we, as elected representatives, have come to accept. The budget for their employment, as was explained earlier, has effectively been cut by 10% since May and unlike other public servants they have no recourse to a professional human resources department and are instead at the mercy of the people management skills of individual legislators. Now that IPSA has deemed it appropriate to set their job descriptions and pay scales, I believe that it should also accept the support responsibilities arising from its emerging de facto relationship as their employer. MPs' staff deserve to be treated as people and as workers and not reduced to an expense.
I recognise the need for the arrangements to be governed independently of MPs, as Members on both sides of the argument have accepted. I look to IPSA to continue to develop a fairer and more cost-effective system. We seem to be agreed about the shortcomings of the situation, but I do not believe that the answer is allowances that offer greater freedom for Members of Parliament or for Members of Parliament to threaten to bring them about.
As I believe I have set out, there is an alternative way forward whereby Members should have more time to spend on their constituents, which is what the hon. Member for Windsor asked for. Basic office accommodation, equipment and HR administration should be provided directly and Members of Parliament should let go and get out of the way.
5.51 pm
Mr Mark Field (Cities of London and Westminster) (Con): No one could accuse my hon. Friend the Member for Windsor (Adam Afriyie) of lacking bravery in introducing this debate. I suspect that not many votes can be found in bringing up IPSA once again, so it is to his credit.
We all faced difficulties through IPSA's teething problems-even me, as a central London MP. I have no need for a second home, but obviously I have had an office to run, like all other Members. My big concern is that all parties promised the British public a new politics in May's general election, which was supposed to draw a line under the calamitous expenses scandal. I am increasingly alarmed that after everything there is a sense among the public that the political class still do not get it. We will have some high-profile High Court cases and I am sure that we will see a number of parliamentarians imprisoned in the course of the next six months. The whole issue will not go away quickly.
I did not agree with much of what the hon. Member for Chippenham (Duncan Hames) had to say, but my biggest concern is for many of the new intake and I am glad that he took the opportunity to give us his views today. I know that many of the new MPs to whom I have spoken are suffering the most and are suffering
genuine hardship. I feel that, in a way, they are paying for the sins of a past generation under the old system, which was so disastrous.
I have to say-I know that I will be the only person saying this-that I agreed with quite a lot of what the hon. Member for Bassetlaw (John Mann) had to say. We have crossed swords on this over the years. He is right that the Executive and their insistence on taking control of these issues has led us down a path to disaster.
I am sorry to say to my hon. Friend the Member for Gainsborough (Mr Leigh) that this is not just about the most recent party leaders-it goes back some 30 years. The use of allowances as a substitute for salary increases, in particular, had been independently recommended and was used by successive Governments going back to the mid-1980s.
After the Derek Conway case of January 2008, we had a promise that there would be root-and-branch reform, but there was nothing of the sort. We collectively had the opportunity at that time to make the changes and we all felt that we could continue to pull the wool over the public's eyes and went through the calamitous collection of High Court cases in which the Speaker's Commission-including some senior parliamentarians in this place and in the House of Lords-took the view that we should fight that fight. It turned out to be an absolute calamity. At that juncture, the freedom of information case concerned only 12 Members and former Members, but once it had gone to the courts the whole situation was opened up. It turned out to be an absolute calamity, and we have ourselves to blame.
My biggest concern is, again, for the new generation of MPs. Because of a genuine sense of hardship and a sense of frustration about the whole process, I would not be surprised if quite a few did not stand at the next election. We will have a lot of one-term MPs, and voluntarily so, which is a terrible indictment of the fact that we have not got the system sorted out correctly. It has been a catalogue of disasters.
I have some sympathy with what my hon. Friend the Member for Gainsborough said. In the House of Lords, a daily allowance is paid across the board, without any need for receipts or for an IPSA-type bureaucracy. I know that that is not an ideal scenario, but it seems to me that if their lordships have gone down that route and it seems to be working pretty well, we should not necessarily exclude it ourselves.
I wish to say one last thing about IPSA's workings. It has promised that there will be a review of the broad issue of salaries early next year, in conjunction with the Senior Salaries Review Body. I know that the Minister spoke earlier, but I wish to say-I hope he is listening-that I hope he will now be able to provide assurances to all Members that we will not go down the route of the Executive taking control of these matters yet again, and therefore having ever more incentives, albeit that it would be much more difficult to have incentives as salary substitutes.
I hope that when IPSA comes up with its report, as it is bound to do by the end of next year, that report will not sit gathering dust either in the Speaker's Office or at No. 10 Downing street, but that the Government will act on it immediately to ensure that it is properly published and that the recommendations are implemented without amendment.
We have had a very interesting debate, and I know that my hon. Friend the Member for Windsor would like to say a few final words in summing up, but I finish by saying that I hope we will be able to make some genuine progress on IPSA and on the whole issue of salaries, so that we can put this squalid episode into the past.
5.57 pm
Adam Afriyie: With only a couple of minutes left, I should just like to say a few quick things. First, the debate has been held in a measured and considered tone. All the contributions, perhaps bar one, have been very well considered and put forward in the interests not of the current Parliament and current Members but in the interests of the future of Parliament. We want to ensure that this place will be diverse and welcoming to people with young families, and to those who are not as affluent as others and cannot afford to fund their own way here.
It seems to me that if the motion is passed-there are questions about that-Parliament will have made a very clear statement. It will have said, "Please, IPSA, we beg you, we urge you: come up with a simplified scheme that delivers what Parliament requires to function for the next 10, 20 or 30 years." It will also have said, "If you do not come up with such a scheme, Parliament will be prepared to act." In order to act, Parliament will need to be sure that there is time available for legislation. Members are aware of my Parliamentary Standards (Amendment) Bill, and I shall make a big, bold, open offer to Front Benchers that if they wish to use it as a vehicle to open up the process they are very welcome to do so either tomorrow or later. I hope that they take up the offer.
The solution to the challenges that we face with IPSA, and to the impediments to getting to the House,
lies with Front Benchers. I hope that they will take the opportunity to allow the motion to be passed, so that Parliament has spoken. I beg to move, That the Question be now put.
Question put forthwith ( Standing Order No. 36), That the Question be now put.
That this House regrets the unnecessarily high costs and inadequacies of the systems introduced by the Independent Parliamentary Standards Authority (IPSA); calls on the IPSA to introduce a simpler scheme of office expenses and Members' allowances that cuts significantly the administrative costs, reduces the amount of time needed for administration by Members and their staff, does not disadvantage less well-off Members and those with family responsibilities, nor deter Members from seeking reimbursement of the costs of fulfilling their parliamentary duties; and resolves that if these objectives are not reflected in a new scheme set out by the IPSA in time for operation by 1 April 2011, the Leader of the House should make time available for the amendment of the Parliamentary Standards Act 2009 to do so.
Business without Debate
Committee of Public Accounts (Amendment of Standing Orders) (no. 1)
That Standing Order No. 148 (Committee of Public Accounts) be amended in paragraph (1), as follows:
in line 7, after 'records', insert ', to sit notwithstanding any adjournment of the House'.- (Mr Bacon.)
committee of Public Accounts (amendment Of standing Orders (No. 2)
That Standing Order No. 148 (Committee of Public Accounts) be amended in paragraph (1), as follows:
in line 8, after 'time to time,', insert 'to appoint specialist advisers either to supply information which is not readily available or to elucidate matters of complexity within the committee's order of reference,'.- (Mr Bacon.)
UK Passport Contract
Motion made, and Question proposed, That this House do now adjourn. -(Mr Goodwill.)
6 pm
Mr Michael Meacher (Oldham West and Royton) (Lab): For the past 40 years, the British passport has been produced in my constituency, first by Her Majesty's Stationery Office, then, when it was sold by the Government to venture capitalists, by Security Printing and Systems Ltd and, more recently, by 3M, which acquired the latter company in 2006. 3M has, to date, invested more than £20 million in the facility. I should add that the British passport is an intensely technical document, which has more than 120 overt and covert security features, ranging from reflective inks and holograms to features that only a trained eye or forensic examination can detect.
Having 40 years' experience in producing this highly technical product to consistently high standards is no mean feat, and it was therefore gratifying for the staff at the production facility to learn that the Identity and Passport Service was rated as the top-performing public sector organisation by its customers. The survey carried out by the Institute of Customer Service was based on responses from 26,000 members of the public, who rated the IPS above names such as Royal Mail, the Driver and Vehicle Licensing Agency and the Post Office. The chief executive of the IPS, Sarah Rapson, said on 13 April:
"This is a great confidence boost and confirms yet again that we have strong foundations in place to deliver the exemplary service we provide to our customers."
How strange then that the Home Office is willing to dispense with that 40-year track record and put at risk the strong foundations to which Sarah Rapson was referring by taking the contract away from the incumbent and placing it with a company, De La Rue, whose track record in producing passports is limited and whose experience in producing passports to the volumes required by the UK is non-existent.
The appetite of Britons for overseas travel is as strong as ever and more than 6 million British passports are produced a year, the vast majority of which are renewals. The current set-up and production capacity at the facility means that, on average, passports are delivered to customers in a matter of days after the submission of their completed application. The quality is consistent, and quality assurance procedures are rigorous and regularly audited. I can say without risk of rebuttal that De La Rue, to which the British passport has been entrusted, has no great track record in the production of this quantity of passports.
It is well documented-I do not wish to dwell on this but it has to be said-that De La Rue has not exactly been short of problems this year. Its chief executive resigned in June following production issues at its banknote paper plant, which involved its employees falsifying documents-the Serious Fraud Office is currently investigating that little matter. Another SFO inquiry took place in 2007, during which the homes of employees were raided, and the company has also faced accusations of fraud in Kenya and price fixing in the US in the past 10 years. One has to ask whether this is really a company to which we should entrust the production of the British passport.
Let me turn to the awarding of the contract with De La Rue in June 2009 and the circumstances surrounding it. As has regrettably become the case in large Government procurements, this process is tortuously complicated and prolonged. Consequently, it is extremely expensive for the participants and for the person paying the bill, which in this case is the taxpayer.
There were a number of unsatisfactory elements to the procurement that in my view seriously call into question the integrity of the entire process. The first, which was well documented in the media at the time, was the role of Gill Rider, a non-executive director of De La Rue who was also an official in the Cabinet Office responsible for the recruitment of senior civil servants. One of the civil servants whom Gill Rider had a hand in recruiting was James Hall, who at the time of the procurement in question was the chief executive of the Identity and Passport Service. Another was Bill Crothers, who was the chief operating officer of the Identity and Passport Service at the time of the procurement. James Hall and Gill Rider had been colleagues together at Accenture for many years before joining the civil service, while Bill Crothers was also a recruit into the civil service from Accenture.
I accept that Gill Rider stood down when the matter was raised in the Home Office, but not before, and that was two thirds of the way through the two-year procurement process. Furthermore, she remained a shareholder of the company throughout. In addition, representations were made to me immediately after the announcement of the tender result in June 2009 by 3M, which said that it had found some of the processes used in certain phases of the procurement to have lacked fairness. It is only fair to add at this point that 3M was somewhat reluctant for me to secure this debate, because of its fear that raising such matters could compromise its relationship with the Home Office, a customer with which it has always had a tremendously strong relationship. I want to make it clear to the Minister that the reason I have done so is that the Government are unaccountably playing down or disregarding an enormous financial gain to the Exchequer-more than £100 million-at a time when they are also saying that colossal spending cuts have to be made, which seems perverse to say the least. Also, a large number of jobs will be lost to the UK-probably more than 100-at a time when the Government are desperate to stop unemployment rising, which again seems perverse.
Another disquieting aspect to the procurement process was the fact that former De La Rue employees sat as part of the technical selection panel on the bid. That surely cannot be right. Those people-presumably they were holders of deferred De La Rue pensions-should surely have been excluded on the grounds of a conflict of interest. In addition, on each occasion during the competitive dialogue phase, when each company had to express and present its ideas, 3M was asked to present before De La Rue. I do not want to make too much of that, but there was no drawing of lots or any other randomising procedure to balance out the advantage at a particularly sensitive stage of the process. I would add that, frankly, I am dissatisfied that the senior officials advising the Minister on our representations to him about a retender were precisely the same as those who were involved in the original reallocation of the contract. To me, that does not exactly suggest a genuinely independent
re-evaluation of the issues. I mention these matters not to rake over the coals, but to explain and justify my strong belief that the original procurement was seriously flawed and that the new, non-exclusive passport contract should be retendered.
On 14 July, George Buckley, the chief executive officer of 3M wrote to the Home Secretary to make the case for retendering the contract. That offer was made-I think one can readily admit this-in response to the difficult economic circumstances that the country faces and to the call by the Government for proposals to save money. The offer was to reduce the cost of the new contract by £100 million over the life of that contract. That included savings from the change in Government policy on having secondary biometrics within the passport. In the current circumstances, £100 million is not a sum to be sniffed at. It is not far short of 1% of the entire reduction in spending cuts that the Government hope to make in this fiscal year; a reduction of that magnitude cannot be dismissed or disregarded.
On 4 August, a perfunctory letter-I say that with feeling because I have seen the letter from John Collington, a Home Office official and yet another Accenture employee-failed to acknowledge the new, reduced contract offer. That was not only negligent but dismissive, publicly indefensible and even contemptuous. On 15 September, accompanied by some members of 3M's management, I met the Minister-I am grateful to him for that-to discuss a new cost model for the new UK passport contract. At that meeting, the same offer was made again in detail and was subsequently confirmed in a letter on 17 September from 3M's UK managing director Jim McSheffrey.
The commitment was to reduce the cost of the passport contract by £100 million-from £400 million, where it is today, to £300 million for the 10-year-period. That was achievable due to the change in specifications, with secondary biometrics no longer being required on the UK passport, and by allowing costs to be spread over a number of future international contracts. I am fully aware that the Minister is sceptical that a saving as high as £100 million can be achieved, but my answer is that, although I cannot go into details now, for reasons of commercial confidentiality, the detailed breakdown of that £100 million is provided in specifics and in full in the letter of 17 September, which, of course, the Home Office has.
On 28 September a reply to 3M's offer letter was written by the Minister's Department and sent under his signature. I note that I was not copied into the reply, despite having instigated the meeting, but I shall not make much of that. The reply says that there is no
"convincing argument to change current arrangements".
There is an ample case to be made for retendering the contract. The risks-given that there is an incumbent supplier still in place that is able to produce at volume-are minimal. Also, 3M produces all UK passports in the UK, thus maximising UK jobs and minimising the security risks of transporting blank passports from abroad, whereas De La Rue proposes to produce a proportion of the passports in its production facility in Malta.
If the contract goes ahead without retender, more than 100 jobs will be removed from the current operation. I understand that only a tiny fraction of those employees
will find employment under the new contract. In addition to the £100 million that will be lost to the Exchequer if there is no retender, there will be a further cost to the Exchequer of more than £5 million in severance payments.
As the Minister will be aware, the current contract with De La Rue is on a non-exclusive basis, which means that it can be terminated at any time. A retender could be completed at minimal cost-and rapidly-to gain the benefits to the UK taxpayer of a lower cost contract. It is also the case, as the Minister will again be aware, that there is a requirement to benchmark the contract against other potential suppliers to ensure that the UK Government are receiving, and continue rightly to receive, value for money. That means that the Identity and Passport Service is required to check periodically throughout the life of the contract that it is receiving value for money.
In that context, on 5 October, De La Rue was due to start producing passports in volume. However, although it did produce its first passport on the day due, there has been a need for 3M to continue to produce the UK passport at normal rates owing to a significant slippage in the agreed programme on the part of De La Rue, despite the project delivery dates being a key part of the evaluation. As of today, most of the 3M employees on the contract remain, because the facility is still running at normal volumes, but within a few weeks, presses at 3M will get turned off for the last time. I do not think we can avoid the conclusion that the new contract has been unable to produce passports at the volumes required.
The Government have entrusted, under circumstances that I find deeply dubious, a critical piece of the national infrastructure-the production of the nation's passports-to a company seemingly incapable of doing the job. I do not want to have to take this matter further with the Select Committees of the House, but the Minister should retender the contract before the Government lose £100 million of savings and the country loses more than 100 jobs.
6.16 pm
The Minister for Immigration (Damian Green): I congratulate the right hon. Member for Oldham West and Royton (Mr Meacher) on securing this debate. Given that he made the point himself, I am sure that he will understand that it would be inappropriate for me to discuss detailed areas of commercial information at the Dispatch Box.
I appreciate that the right hon. Gentleman is rightly concerned about the impact on jobs in his constituency. That is understandable and right-any Member of the House would feel the same. The loss of jobs anywhere is to be much regretted. As he said, the passport has been produced in his constituency for the past 40 years. I congratulate 3M and the predecessor companies on the work they did on the passport, and I am happy to reassure 3M that nothing the right hon. Gentleman has said will alter my or the Home Office's attitude to it in any future Government business for which it tenders. We treat all potential procurement exercises fairly and equally, and we look at the competence of those involved and the price they are charging. The right hon. Gentleman is correct also that the Identity and Passport Service provides an extremely good service.
At that point, however, I parted company from much of what the right hon. Gentleman said. He will be aware that the contract for the printing of the British passport was granted under the previous Labour Administration, and I have no reason to believe that the tender process was anything other than fair and subject to open competition. He prayed in aid of 3M Sarah Rapson, but he will be aware that she became the head of the IPS only in recent months, so all the decisions he is talking about, and everything he is complaining about, happened before she became head of the IPS and said what he quoted her as saying, apparently in aid of his argument. At that time, 3M Security Printing and Systems submitted an unsuccessful bid, and the contract was awarded to De La Rue. It was signed on 2 July 2009, and the service commenced in October 2010.
The right hon. Gentleman made an explicit attack on what he described as the integrity of the process. I want to make clear-as, I am sure, would he-that that did not entail an attack on the integrity of those involved. He took the opportunity to name a number of officials, but I am sure that he was in no way attempting to attack their integrity. That would be wrong, and it would clearly also be wrong to attack the integrity of the Minister involved. The right hon. Gentleman said that the process was wrong. He knows, as a former Minister himself, that Ministers are responsible for the process, so attacking the process would be attacking the Minister as well.
The right hon. Gentleman also said one thing that was simply factually incorrect. He said that all the senior officials involved were still there advising me, as a Minister in the new Government. That is not true. James Hall, who was head of the Identity and Passport Service at the time, has retired, which means that the most important official who was involved when the decision was made is no longer there. I think it important to put that on the record.
Mr Meacher: The point that I was making is that the senior officials who attended on the Minister when we made representations to him were closely involved in the original allocation of the contract. I did not say that all the officials who were originally involved were there now, but those who played a significant part are still there, and I therefore do not think the process is genuinely independent.
The Minister questioned whether I had been right to say that the process had not been fairly undertaken. I will not repeat them now, but I presented three, four or five arguments in my speech which need a precise answer rather than just "I am satisfied with the process".
Damian Green: It is not very surprising that some of the officials who were at the IPS a year or so ago are still there. I can reassure the right hon. Gentleman that no single individual or, indeed, small number of individuals could have decided the outcome of the bid. More than 25 evaluators were involved in the process. I am sorry that, when he intervened on me, the right hon. Gentleman did not take the opportunity to make clear that he was not attacking the integrity of the individuals involved. I had given him every chance to do so.
As the right hon. Gentleman knows, I met him and representatives of 3M on 15 September 2010 to discuss their request for the contract to be retendered on the
basis of the decision of the coalition Government to halt the second biometric in the United Kingdom passport. As I said then and will repeat tonight, I do not consider that either the right hon. Gentleman or 3M has presented any new information that would merit the adoption of such an approach. Nor, in particular, would it be appropriate to put at risk the continuity of the passport operation.
The right hon. Gentleman and 3M argue that savings of £100 million are to be had simply because the form of the passport has been changed through the removal of the second biometric. As I have said, I do not find that argument convincing. Moreover, as the right hon. Gentleman knows, the approach to me was made only a few weeks before the new passport operation was due to begin. The main principle that guides me must be the preservation of the safety, security, smooth running and smooth production of the passport service, and the consideration that the right hon. Gentleman is inviting discontinuity must bear heavily on me as the Minister responsible for the passport service.
As the right hon. Gentleman has admitted, the IPS achieves a high level of public satisfaction in the quality and security of the service it delivers. That relies on its ensuring that all parts of its operation work effectively and efficiently, in the best interests of the customer and the wider interests of the UK economy.
The right hon. Gentleman cast doubt on the process. Of course, the IPS followed the EU procurement regulations process, which was initiated on 19 June 2008 by the issue of an Official Journal of the European Union notice. The award of the new passport design and production contract was necessary due to the current passport contract expiring on 4 October 2010. The Identity and Passport Service announced on 11 June 2009 that De La Rue had won the £400 million contract to produce the new British passport book over the next 10 years. That contract commenced on 5 October 2010.
The De La Rue contract represents better value for money and introduces a new design and improved quality for the customer. In addition, the tender process allowed savings on print costs to be made in relation to the current contract. The IPS ensured that all bidders were offered an equal opportunity to compete against the incumbent supplier, 3M SPSL. The objective of the procurement was to complete a fair, transparent, robust, defensible and fully auditable evaluation exercise that ultimately identified the most suitable supplier to deliver passport services. The supplier produces a secure, high-quality passport, and provides production arrangements at a competitive price.
There are about 48 million passport holders in the UK, which represents 80% of the eligible population. The new supplier is expected to produce up to 6 million passports every year. The current length of the contract ensures that there is the right balance between the level of investment required, the need for good relationships to be fostered, and the need for the IPS to remain flexible and responsive to the way in which the market changes over time.
The procurement process over which the right hon. Gentleman has cast doubt was subject to detailed and thorough assurance from Home Office Commercial, the Office of Government Commerce and an external audit, including a National Audit Office review to ensure that an objective assessment was reached. The awarding of the contract was based on which supplier offered the
best overall solution and value for money, measured against a clear set of evaluation criteria, of which 3M was fully aware and against which it performed during detailed competitive processes.
Mr Meacher: The Minister is talking entirely about the award of the contract. I accept that I made comment about that, but the thrust of my argument was not going back over the past, but looking to the future, and the fact that 3M is offering a £100 million reduction in the cost, which is more than highly competitive and would avoid the loss of 100 jobs. Will the Minister please concentrate his remarks on why that is not acceptable, even if it requires a retender?
The Minister wants me to make a comment about integrity. I referred to the integrity of the process. I did not refer to individuals, but I do think there are serious issues about the conflict of interest of the various individuals to whom I referred.
Damian Green: I am grateful for the right hon. Gentleman's clarification of what he is getting at when he speaks of integrity. I can only observe gently to him that the background of those who were senior in the IPS over a year ago was well known to him and to everyone else at the time. If he is so disturbed about it now, it might have been more useful to his cause to have pointed that out at the time to a Government of whom he was a supporter.
In a sense, that is irrelevant, because any Minister of any Government would try to make the best decision, but if the right hon. Gentleman is disturbed about the process and about the senior officials involved in it, the time to make that point is before a decision is taken, not a year afterwards. As I say, I have absolutely no evidence to suggest to me that anyone involved-the Minister or any of the officials-in a process which clearly I had nothing to do with, deserve any shadow cast over them. The right hon. Gentleman is making such an implication now. All I can sensibly do is observe that it might have been more helpful to his cause if he had made that observation at the time.
The right hon. Gentleman makes the point that 3M says that it could fulfil the contract now for £100 million less. As I have said repeatedly in private meetings and again this evening, I have seen no convincing evidence that backs that up. Again, 3M was given the opportunity to bid for the work at the time. The reasons that it was unsuccessful were fully explained to 3M. There is no economic reason why the IPS should seek to put its operation at risk by reopening a contract that is up and running and working effectively.
I have to end on that point, because that is the most important point for me. I must be responsible for an effective and efficient passport service. Asking me to put at risk-
6.30 pm
House adjourned without Question put (Standing Order No. 9(7)).
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