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Noble Lords: Hear, hear!

Lord Pearson of Rannoch: They seem to make sense even of some of my own speeches in your Lordships' House and I have great confidence that they will manage to do so with this one.

I would have thought that with modern technology, to which my noble friend Lord Northesk referred, the additional printing is probably not all that expensive. I hope that my additional suggestion can be borne in mind and perhaps comprise part of the future service, which I have every confidence will be as good as the one we have received so far.

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6.30 p.m.

The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe): My Lords, this has been a useful and lively debate on a subject which I well recognise to be of direct importance to your Lordships' House and another place. I listened carefully to all the views expressed and I am grateful to all noble Lords who have spoken. In particular, I wish to add my compliments to the noble Lord, Lord McNally, on his maiden speech. Delivered so soon after his arrival in your Lordships' House, it is a happy foretaste of elegant and trenchant contributions from him to which we can look forward.

Noble Lords: Hear, hear!

Earl Howe: Listening to the debate today, I detected two principal themes in the concerns expressed about the Government's plans to put HMSO into the private sector; first, the need to do it in the first place and, secondly, once the process is taken forward, the mechanisms which might be put in place to safeguard the interests of Parliament and HMSO's employees.

The opening speech of my noble friend the Leader of the House took us through much of the terrain in detail and with clarity. I do not propose to repeat what he said. However, it is clear that there are matters on which your Lordships would welcome further elucidation and I shall do my best to provide it.

These days HMSO is not just, as it once was, a purchasing agent and a printer for Government. It is a substantial, multifarious, commercial enterprise, competing actively with the private sector in areas as diverse as IT procurement, the provision of own-brand contract stationery, the provision of all types of reprographic services and the supply to government and the public of a wide range of publication. Its turnover in 1995 is estimated at £375 million.

However, at the same time as it is gaining in efficiency terms, its core market, the central government market, is shrinking. It cannot trade generally with the private sector, being specifically prohibited from doing so, nor, even if that prohibition were to be lifted, could it do so in all equity as part of government. In those circumstances, HMSO, effectively underwritten by taxpayers in all that it did, would enjoy unacceptable competitive advantages while at the same time putting taxpayers' money at commercial risk.

The decision to privatise is therefore not in any way a product of dogma, as the noble Lord, Lord Richard, and others suggested. As my noble friend Lord Jenkin so eloquently argued, it is the natural and sensible consequence of a situation which sees a business trying its hardest to prosper and to compete fully with the private sector but which is unable to do so because it is constrained. It is constrained from seeking wider markets and constrained from being able to invest, to borrow or to expand its activities should it choose to, because of the artificial operating environment attendant upon public sector ownership.

In those circumstances, privatisation is the only remedy which will safeguard HMSO's business and the jobs which accompany it into the long term.

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Furthermore, it is the one course which is in the best interests of customers and taxpayers because of the savings it is likely to facilitate. That has been proved time and again.

It is in the latter context in particular that your Lordships can find considerable reassurance on the questions which most closely affect this House. A more efficient Stationery Office able to spread its costs over a wider base will deliver better value to its customers. As a most prestigious customer of HMSO, as well as being a financially important one, Parliament is in an unrivalled position to insist through the contract which it enters into with its publisher and printer that cost savings resulting from privatisation should be reflected in the prices charged to the House and to the general public. We have already had a taste of what might be achievable. As my noble friend said at the outset, the price of Hansard has come down, after remaining unchanged since 1991, directly as a result of HMSO's internal efficiencies. My noble friend Lord Burnham remarked that in 1979 Hansard was priced at 45 pence. Yes, it was, but it was also very heavily subsidised, which is no longer true.

It is through a legally binding and enforceable contract that each House of Parliament can stipulate precisely the level of service it requires from its printer and publisher. Indeed, that applies to all customers of the privatised Stationery Office. Furthermore, the buyer of HMSO will have to be fully acceptable to Parliament before either House concludes a contract. The shortlist of bidders will be published.

However, the effective delivery of services to Parliament will not rest simply on legal obligations. No new owner will put at risk the relationship that he has with his most prestigious customer. He will wish to ensure that that customer remains a satisfied customer. Indeed, without the parliamentary work other business would be less secure and less efficiently executed, creating a greater risk of future job losses. It will be of key importance.

The noble Lord, Lord Jenkins of Hillhead, entertained us all with his customary verve and style. I know that running through his amusing and discursive rhetoric he intended to make a serious point. However, I must say to him with all respect that rhetoric is no substitute for logical argument. He referred to HMSO as a proper appurtenance of the state. On what basis? He said that the Government were putting our civic traditions at risk. That, I suggest, is silly. We are talking about a Stationery Office; no more and no less.

I listened with great care to the speech of the noble Baroness, Lady Dean. The noble Baroness was correct in saying that HMSO is a diverse business. It employs about 2,900 people across England, Wales, Scotland and Northern Ireland. When HMSO's customers were freed from the tie to HMSO it did indeed have to win business. In order to do so, it had to improve efficiency and to reduce costs. It was inefficient and costly until the discipline of competition was brought to bear. HMSO is certainly not a lame duck as it stands, although I believe that its best days in the public sector

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are probably over because the market is changing. But it may well become a lame duck if it stays in the public sector.

The noble Lords, Lord Richard and Lord Jenkins, compared HMSO with the Post Office and suggested that there was a way short of privatisation to bring the Stationery Office the benefits for which we are looking. The analogy with the Post Office is not sound. HMSO and the Post Office are different organisations, as my noble friend Lord Jenkin of Roding concisely argued, with quite different markets. The solutions to optimise their future must be tailored according to their circumstances and not according to dogma. I need hardly add that I am not here today to discuss the Post Office, but I can say that the solution for HMSO which we are here to debate is privatisation. As I said, that solution will give the best opportunities for the future.

The noble Lord, Lord Jenkins of Hillhead, asked why HMSO cannot be given more freedom in the public sector. I was surprised that he, of all people, with his long experience of government, should be asking that question. To allow HMSO carte blanche to borrow investment capital and take other commercial risks would overturn the public expenditure disciplines which quite properly exist to protect the taxpayer. That is the first point. At the same time, the fact that HMSO was ultimately underwritten by the taxpayer means that its competitors would rightly suspect unfair competition. It is worth observing that, as a trading fund, HMSO benefits from cheap national loan fund borrowing and from not having to pay corporation tax on its profits.

I should say to the noble Lord, Lord Bruce, that there is no presumption that Next Steps agencies should remain in the public sector. All agencies are reviewed every five years to assess whether they should be abolished, privatised, contracted out or remain in the public sector.

Perhaps I may correct one factual part of the speech of the noble Lord, Lord Jenkins of Hillhead. He said that there had been staff reductions of 7 per cent. since 1990. In fact, during the past five years, staff reductions have been over 15 per cent. If one looks at the picture since 1980 when the staff numbered 6,300, the reduction amounts to about 60 per cent. over 15 years.

The noble Lord, Lord Jenkins, asked what redundancies might be in prospect once privatisation takes place. I am sure that he will understand that no guarantees can be given as regards future staffing levels at the Stationery Office. However, in June 1994, the then chief executive warned that there could be further reductions of up to 30 per cent. That is the future in the public sector. While there may be reductions in the private sector, as I have argued, the long-term future will be more secure because of the opportunity to grow in wider markets.

I can say emphatically, in particular to my noble friend Lord Jenkin of Roding, that the past 16 years of Conservative government have made a thing of the past the difficulties arising from industrial disputes. My noble friend was absolutely right in what he said because, thanks to the policies of previous Conservative administrations, industrial relations problems are very much a thing of the past.

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The noble Lords, Lord Richard and Lord McNally, place stress on having further parliamentary scrutiny of the Government's proposals. There are two strands to that point: the first is the selection of the buyer; the second is the proposal itself. The Speaker in another place made clear to my right honourable friend the Chancellor of the Duchy that the selection of a buyer is for the Government and not for the other place. The question for Parliament is with whom it should contract for its services and on what terms.

I can say to the noble Lord, Lord Richard, in particular, that the information memorandum will indeed be made available to your Lordships. This House will be treated the same as the other place. The Clerk to the Offices Committee will be sent a copy of the information memorandum when it is available. That will be a commercially sensitive document and there will need to be certain conditions attached to its handling. But I hope that that is some reassurance to the noble Lord.

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