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Lord Rix: Before the Minister sits down, can he say whether this provision will also apply to firms employing 20 or less in terms of advertising? So long as the advertisement was not offensive, could those firms exclude people with disabilities and get away with it?

Lord Inglewood: So far as those employers are concerned, the duty not to discriminate as defined in the Bill does not apply. I believe the noble Lord's question did not address goods and services. It addressed advertisements for employment.

Lord Rix: It could be either. It could be goods and services or employment. The goods or services might be provided by an employer who employed fewer than 20 people.

7.30 p.m.

Lord Inglewood: Indeed, so far as the provision of goods and services is concerned, there is no threshold involved. It completely falls outside it. The second point on which the noble Lord inquired was whether an employer who employed fewer than 20 people would fall subject to the provisions of Clause 11 of the Bill. Clause 11 expressly states that a number of criteria have to be satisfied.

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I hear the noble Baroness's remarks, but the difference between these Benches and those opposite is that when we make a mistake, we quickly appreciate it. That is not necessarily the case on the Benches opposite. I hope that the noble Lord will allow me to look into this matter. I should like to give an accurate answer. I think that I know the answer but perhaps the noble Lord will allow me to give him an answer later this evening.

Lord Rix: I should be delighted to and I hope that it will be quite clear that companies with 20 or fewer employees cannot discriminate in their advertisements.

Baroness Hollis of Heigham: I too would like to ask the Minister a question. One of the difficulties and reasons why so many of us are anxious to have a national disability commission is that under the arrangements of the council, with individuals going to tribunals and courts, there is no way to take on board what I call third party issues or problems; in other words, where the difficulty is generic. As with the old Press Council, someone could only pursue a problem that directly affected that person as opposed to a generic problem, which may be the case of advertisements. Can the Minister help us on this?

Lord Inglewood: I thought that I had explained our approach to that matter in my remarks. The National Disability Council clearly can consider the general question of advertisements. We do not anticipate that the kind of general queries to which the noble Baroness alludes will be likely to cause problems. However, as I explained, it is open to the council, if it anticipates or identifies the kind of problems to which the noble Baroness refers, to make recommendations to the Secretary of State.

I am now able to give a reply to the noble Lord, Lord Rix. A firm of below 20 employees is not subject to Part II of the Bill and hence will not be covered by Clause 11.

Lord Rix: Before the noble Lord sits down, perhaps I may tell him that I am shaken by that response, for obvious reasons. In fact it means that an employer could place an advertisement in a small local newspaper saying, "No disabled person need apply". If my reasoning is correct, the advertisement could be as flat-footed as that, which is in absolute contravention of the whole principle of this entire Bill.

Lord Inglewood: I should like to emphasise that the guidance that will be provided is intended to be guidance for the good behaviour of employers and others regardless of the size of firm about which we are talking. I do not wish to go over the ground that we went over at some length on a previous occasion. But the Government feel that the burdens that could be inherent by falling within the scope of the Bill compulsorily under Part II are such that they should not be imposed on employers employing fewer than 20 people. That does not mean to say that the Government might necessarily in any way condone the kind of advertisement to which the noble Lord referred.

It has just been drawn to my attention that we ourselves are not aware of discriminatory advertisements which are so blatant as the noble Lord

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suggests. I should have thought that if such advertisements were not appearing now, the chances of them appearing once the Bill came into operation would be that much less.

Lord Rix: I believe that I can give chapter and verse for advertisements that have appeared certainly within the past year saying in effect that no disabled person need apply. The advertisements probably did not use those exact words but used similar wording. I shall try to find evidence and provide the Minister with it, if he so wishes.

Lord Inglewood: I am extremely sorry to hear that the noble Lord has such evidence. Clearly, we should be pleased—if that is the right word to use in the circumstances—to have chapter and verse.

Baroness Farrington of Ribbleton: Surely the Minister can see that there is a difference between some of the advertisements for employment not requiring specific people to be employed as a rule and circumstances in which people are ruled out of consideration before they even get to the job. Surely it is totally wrong for someone to be able to write advertisements in such a way that people know that there is no point in applying, even to be able to prove it to themselves, however small the employer.

Lord Inglewood: I understand the noble Baroness's concern. But it is not helpful to anyone concerned if the advertisement encourages people to come forward who will not be given a realistic chance of getting the job. All of us in our time no doubt have applied for jobs for which we knew that we had no chance of being successful. It does not do anybody a good turn to encourage people to apply for jobs when they are simply not in the running for them.

Baroness Hollis of Heigham: Tell John Redwood!

Lord Carter: It was a most unworthy remark of my noble friend to imply that that certainly applies to Mr. John Redwood.

This discussion has opened up an area to which we might well have to return at Report stage. We are aware of the tribunal route, but it is a very long, winding one. I was struck by two examples under the heading of goods and services. In fact, I have just been given an advertisement which states:

    "I am blind; I am crippled; I am helpless".

It refers to a home for the multiple handicapped. In the middle of the advertisement it says that these people are mercifully few in number but their plight is tragic. I find that an extremely offensive advertisement. It would be interesting to know whether that would be prevented by the Bill.

Also, it occurred to me while listening to the Minister that I saw an advertisement some years ago which referred to the state of this country under a Conservative Government. There was an advert in the Guardian which showed a clapped out, broken down Britannia in a wheelchair. I thought that that advertisement was extremely offensive. I do not say that it was inaccurate in what it said about the Conservative Government, but it was extremely offensive to use the wheelchair analogy.

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I shall not press these points now. We have opened up an interesting area and I can see the Minister looking rather worried. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 128A not moved.]

Lord Mackay of Ardbrecknish: I beg to move that the House do now resume. In moving this Motion, I suggest that the Committee stage should not begin again before 8.30 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

Sale of Goods (Amendment) Bill [H.L.]

Read a third time, and passed, and sent to the Commons.

Local Government Act 1988 (Competition) (Defined Activities) Order 1995

7.39 p.m.

Viscount Ullswater rose to move, That the draft order laid before the House on 8th June be approved [22nd Report from the Joint Committee].

The noble Viscount said: My Lords, I beg to move. This order extends the scope of compulsory competitive tendering to three further white collar services: financial, information technology and personnel services. That completes our programme for the extension of competitive tendering to white collar services begun last year when this House approved other orders extending CCT to legal, construction and property services.

Few doubt that competition can stimulate efficiency in the provision of public services and in many cases can offer significant financial savings. Local authority manual services have already been subject to competitive tendering for up to 15 years. We estimate that that has resulted in savings of over £400 million for local taxpayers. There is no reason why the discipline of competition should not also bring better value for money to local authority white collar services: the lawyers, architects and accountants at the heart of the local government machine.

The Government first proposed extending competitive tendering to local authority white collar services in a consultation paper issued in November 1991. Since then we have engaged in a thorough and informed debate on detailed proposals with local authority representatives and other interested parties. This process has been much more than a polite formality where decisions have, in reality, already been taken. The regime has been substantially modified as a result of the valuable input of local authority representatives and the various joint working groups which have been considering CCT extension. While it would be wrong to pretend that local authorities see eye to eye with the Government on the

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value of CCT, nevertheless I know all parties agree that the extensive consultation on CCT extension has been a valuable and constructive process.

The statutory competitive tendering regime we are putting in place for white collar services is based on that set out in the Local Government Act 1988. Put simply, local authorities cannot undertake certain work in-house unless it has been awarded through fair and even-handed competition. In developing the white collar regime, we have undertaken a thorough view of all aspects of the statutory framework for CCT to ensure that it meets the needs of white collar services. Of necessity there are rules. I hope that those rules are flexible enough to recognise the different approaches individual authorities may take to providing white collar support services.

The order before us this evening defines the new activities to be brought into the regime. Once Parliament has approved the order, then we will bring forward further regulations setting out the timetable for competition and the proportion of work which local authorities are required to expose to tender.

Turning to the services addressed in the order before us today, I should like to describe to noble Lords the regime we are putting in place for each. I should at this point note that we are consulting separately on the application of CCT for those services to police authorities, and my right honourable friend the Home Secretary will bring forward separate proposals shortly.

Taking first financial services, we have drawn up a comprehensive definition of a broad range of activities which may be brigaded together as financial work. These range from internal audit through accountancy services to frontline tasks such as the administration of council tax or benefits. We will expect local authorities to have exposed 35 per cent. by value of this work to competition, a figure which was deliberately chosen to allow a degree of flexibility in deciding what work should be put out to competition.

My honourable friend the Parliamentary Under-Secretary of State announced on 18th May that metropolitan authorities and London boroughs, the first local authorities to be required to expose financial services to CCT, would be allowed an additional six months to prepare for CCT. The timetable in shire authorities depends on the outcome of the local government review and, where appropriate, subsequent reorganisation in their area.

Second of the new services to be subject to CCT is information technology. This definition captures the procurement, development and programming and maintenance of IT systems, but does not impinge on the users of IT. Much of the work described here is readily suited to competitive tender, and indeed many authorities already buy in from outside suppliers a range of services. We are asking authorities to expose 70 per cent. by value of IT work to competitive tender. As with our other services, they will be able to take into account the value of work which has already been outsourced. The implementation timetable for IT CCT places this service at the end of the extension programme, reflecting the fact that decisions taken on IT could be

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heavily dependent on the outcome of competition for services such as finance which are major users of information technology.

The last of the new services this House is considering this evening is personnel. Once again, the definition is relatively straightforward and includes services such as human resource management, training or health and welfare work. We have agreed that certain work is not suited to competitive tender. We therefore intend to exempt from CCT the operational training of fire fighters, training undertaken by local authorities on behalf of TECs and personnel work undertaken as part of consortia for the pre-imposed qualification training of social workers. The private sector of course has a role to play in all those areas, but not through CCT.

Following consultation, we also reduced to 30 per cent. the proportion of work which authorities will be expected to expose to tender. This is to acknowledge that many elements of the defined activity for various reasons may not be readily suited to tendering. In practice, most local authorities have already brought competition to bear on many aspects of personnel services and CCT will not pose any particular new problems. For that reason we have concluded that the implementation timetable should remain as was originally set out in our consultation paper. The first authorities will be expected to implement personnel CCT by October 1996.

This order also amends the definition of building cleaning, which is already subject to CCT under the 1988 Act, to include the cleaning of police buildings. Competition can readily be brought to bear on much of this work, although we have acknowledged that certain sensitive areas within police buildings should not be open to wider public access. For that reason, police authorities will be required to expose to tender 80 per cent. by value of cleaning work within each force.

I have this evening outlined to noble Lords the bare bones of the new regime in each of the new services. The detailed regime has, as I have already said, been subject to thorough consultation and should not, I believe, pose any problem for those authorities willing to take on board competition and realise the benefits it may bring. I hope local authorities will respond by adopting a positive approach to CCT. Competition provides an opportunity for local authorities, for their staff and for the private sector. Those who are willing to meet the challenge head on stand to gain. Their reward for thinking clearly about the nature of service provision within their area will, I anticipate, be higher quality services offering local people better value for money. No one can object to that. I commend this order to the House.

Moved, That the draft order laid before the House on 8th June be approved [22nd Report from the Joint Committee].—(Viscount Ullswater.)

8.45 p.m.

Baroness Hollis of Heigham: My Lords, the Minister has explained the statutory instrument. It is perhaps worth making a couple of general points before making a specific point.

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The Minister will be in no doubt that we on these Benches are extremely unhappy about the extension of CCT to white collar services. We do not believe that we need it. Many services have already been tested in the market place and the financial constraints affecting local government over the past few years have pushed costs down to the bare bones. The pressure on blue collar direct service organisations has led to pressure on those support services. The new system, despite some adjustments which the Government have made in response to local authorities, remains extremely complex and bureaucratic.

In relation to more general concerns, first, this will further fragment the provision of local authority services. One of the key justifications for white collar services remaining in-house is the interaction between legal services, advice services, financial services and personnel services to provide a corporate response of local government to its problems. By fragmenting them in this way, one leaves local government less equipped to meet the emerging and changing needs that it will face over the next decade.

Secondly, white collar CCT will create a complex web of contracts because so many of the services overlap. The complex web will also be paralleled by departmental client-contractor split and in the process some of the core values and planning objectives of local authorities will be lost.

Thirdly, I suspect that what will happen under white collar CCT is increasing centralisation at the same time as local authorities are being encouraged, rightly, to bring services closer to the people in the locality. They will have to be brought back into the centre in order to comply with CCT.

Fourthly, there will be severe transaction costs. There will be an increase in the total cost of delivering the service which may not be apparent in the contract price. The local authority associations gave me one such example where, in one London borough, there used to be a single head of legal services and there are now three: one overall head of department, one head of the client side and one of the contractor side. Three senior managers are now required to provide the same service—possibly an inferior service—previously provided through one senior manager.

Finally, we believe that there is a loss of democratic accountability because, once implemented, CCT contracts limit the opportunities for variation and flexibility and the fine steer in service delivery that local authority committees can offer. If a contract is lost to the private sector the opportunities for implementing change, except at a very high price in adjusting those contracts, may be severely curtailed. For example, political priorities may change if a council changes political control. But the council will not be able to change the priorities of that service without paying a high price.

We firmly believe that transaction costs are high, that management time will be diverted from improving service delivery and that there is a loss of loyalty and corporate commitment to the organisation and a concentration on narrow financial targets at the expense of the public service. All the experience in blue collar

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CCT has shown that, disproportionately, the complaints from the public have mounted because the only way those contracts could be won was by cutting pay and conditions of service—unemployment pay, holiday pay, sickness pay, maternity pay and the like. As a result, by pressing down costs, which can only be taken out of employees' wages, CCT has reduced the morale of staff.

There has been a rapid turnover of staff. As a result there has not been the commitment of staff. The staff have been relatively untrained. Consequently, complaints from the public about the quality of service have mounted. It is no accident that a significantly high percentage of contracts that have gone out to private organisations has had subsequently to be called in by the local authority because targets of quality have not been met and a lot of public discontent has been generated. That is one set of problems.

One area about which I am particularly concerned—we argued the point long through the night when we were dealing with the Local Government Bill in Committee—is the extension of CCT to sensitive services like housing benefit. One of the aspects of housing benefit is that one is not just dealing with a mechanical set of calculations as to what benefit anyone is entitled to receive. One is dealing with quite sensitive information which applicants for housing benefit may be very reluctant to reveal when they can have none of the same guarantees about confidentiality, and so on, that they would expect to get from a fully trained and professionalised housing benefit service. We are extremely worried about that. When we debated the Local Government Bill the Ministers at the time tried to assure us that confidentiality would be protected and ring-fenced. That has not occurred and we are extremely concerned about it.

We wish to register our dismay about the unnecessary extension of CCT to white collar services. We wish to register our dismay with regard to the fact that, far from producing value for money, all the evidence shows that public dissatisfaction has mounted and a number of contracts have had to be called in. We wish to register our concern that housing benefit administration in particular will be privatised and that with it there will be a loss of confidentiality that claimants of housing benefit have every right to expect.

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