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Lord McIntosh of Haringey: My Lords, at 50 minutes' notice.

Earl Howe: My Lords, I am aware that the invitation to the noble Lord, Lord McIntosh, was very much at the last minute; and I apologise to him for that.

Lord McIntosh of Haringey: Then do not say "all sides of the House".

Earl Howe: My Lords, the noble Lord, Lord McIntosh, should have been invited a few days earlier along with other noble Lords and I must express my regrets that he was not.

Baroness Williams of Crosby: My Lords, I thank the noble Earl for giving way. I shall be brief. I, too, was invited at 50 minutes' notice. Can the Government give us an assurance that in future briefing of this kind will be available to people from all parties in the House and not on a very different timescale one side from another?

Earl Howe: My Lords, the invitations that I issued a few days ago were to Peers from all sides of the House. I now acknowledge that that should have been a longer list. I am sorry that the noble Baroness was also one of those affected.

Lord Jenkins of Hillhead: My Lords, I have to add that I was not invited at all.

Earl Howe: My Lords, again I express my regrets to the noble Lord.

Lord Richard: My Lords, I am sorry to pursue this, but the noble Earl says that invitations were sent out to Peers on all sides of the House. So far as I and my

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Chief Whip know, no one from the Labour Party received any information other than at 50 minutes' notice to my noble friend.

Earl Howe: My Lords, I think lessons have been learnt from this. My intention was that noble Lords, even those as experienced as the noble Lord, Lord Bancroft, might have learnt (as they say in the legal profession) something to their advantage from such a meeting. I regret that we could not have discussed the issues across the table simply in order to allay unnecessary concerns.

There has been a running theme through many of today's contributions. A number of noble Lords voiced concerns, I believe, based on a misunderstanding of the relationship between RAS and the Civil Service Commissioners. RAS was one of the two organisations created in 1991 to replace the Civil Service Commission. The second organisation was the Office of the Civil Service Commissioners, which was established at this time to support the work of the independent commissioners. Here, as many noble Lords have adverted, the history is perhaps worth noting briefly. The origins of the Civil Service Commission will, I am sure, be well known to those noble Lords with an interest in the history. It was in 1854 that the Northcote-Trevelyan Report identified patronage as one of the main causes of the service's then endemic inefficiency and public disrepute. The report recommended the use of open competitive examination to test the merit of those seeking appointment to the Civil Service.

The Civil Service Commission came into being to assist the first Civil Service Commissioners to run examinations and to give approval to the appointment of those duly qualified. The years up to 1920 saw the commissioners' powers extended gradually to cover nearly all appointments. Specially prepared written examinations were at the time supplemented by methods such as interview and assessment centres.

The Civil Service Commission retained its independent existence as a government department for many years. In 1968, on the recommendation of the Fulton Committee Report on the Civil Service, the commission was merged with the personnel management divisions of the Treasury to form the Civil Service Department. The Minister for the Civil Service became responsible for the rules on recruitment to the service. The commissioners were responsible for advising the Minister on those rules.

By 1982, the commissioners had delegated to departments responsibility for recruitment to most junior Civil Service posts. However, the commissioners retained responsibility for the selection of middle and senior level staff representing about 15 per cent. of the Civil Service.

In 1991, new Orders in Council extended departments' and agencies' responsibilities to over 95 per cent. of recruitment. However, all recruitment to the Civil Service, whoever carried it out, still remained subject to the Minister for the Civil Service's rules on selection. As I mentioned in my opening speech, those rules require selection on merit through fair and open

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competition. I stress that RAS and the Office of the Civil Service Commissioners were established as two discrete, separate organisations to replace the Civil Service Commission.

Further changes to the Orders in Council last year returned to the commissioners the responsibility for interpreting the key principles of selection based on merit through fair and open competition and completed the process of devolving responsibility to departments. The commissioners now oversee only the most senior appointments.

The criticisms levelled by some noble Lords appear to conflate RAS's role as a recruitment agency performing an operational role acting for departments with the regulatory role of the Civil Service Commissioners. Those roles were once combined in the Civil Service Commission. As I said, they are now quite separate.

The noble Lords, Lord Callaghan and Lord Hunt of Tanworth, complained that there had been insufficient discussion of this proposal, which I believe they described as historic. This is, I acknowledge, an important change. But I think that it is stretching the language a little far to describe it as historic. The rules and responsibilities for Civil Service selection will not be changed. The Government's commitment to preserving Civil Service integrity is absolute, and I have explained how we expect to achieve this. Customers and the Office of the Civil Service Commissioners have been closely consulted on their requirements in the work leading to the contracts. They will also be closely involved in the selection of the new owner.

However, let me say this in response to your Lordships' concerns about the way in which the proposal was announced. Noble Lords asked me in Oral Questions on 15th February why the announcement had not also been made in your Lordships' House at the same time as in another place. As the House will know, many announcements are made only in another place. But in view of your Lordships' particular interest in the Civil Service, the Government accept that the announcement should also have been made in your Lordships' House. That it was not is something I regret.

There was another theme in many speeches. Some noble Lords, including the noble Lord, Lord Callaghan, and the noble Lord, Lord Jenkins, saw fit to accuse the Government of arrogance and an unreasoning adherence to dogma. I find that line of argument disappointing. In fact, I find it difficult to take seriously. In my opening speech I endeavoured to show not only that there is a compelling rationale for privatising RAS but that now is the right time to act on it.

However, I will say this. At the heart of this debate is a philosophical divide--a divide between those who believe that when we look at the boundaries and the spread of the state owned sector there should be a strong, indeed a natural, presumption, in favour of the

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status quo. There are those of us on this side of the House who believe that state ownership is a dead hand; that the size of the public sector is too large; that if there is no need for a business enterprise to be in the public sector then, allowing for proper safeguards, it should not be there; and that the success of past privatisation speaks for itself. To that extent, this is an issue of principle.

But each case for privatisation has to be examined on its merits. In RAS we have an enterprise with a front rank expertise in graduate recruitment. It is operational and administrative in nature. The standards to which it is required to operate are not self generated; they are imposed from outside by the Civil Service Commissioners and by customers. RAS cannot spread its cost base as a normal business might do because it is constrained from selling into wider markets. It cannot raise capital, it cannot spend or invest without close Treasury scrutiny and approval.

I say to my noble friend Lord Peyton that that is not a criticism of the Treasury. As he knows well, if you believe, as the Government do, that public spending and inflation need to be controlled, it is necessary to have rules in place which ensure that the disciplines are respected. I say to the noble Lord, Lord Bruce, that it is not fair to allow a state-owned business to compete with the private sector while enjoying the guarantee of the taxpayer. The choice with a state-owned business is to live with the constraints--and sometimes that is the right course--or to look at other ways of delivering the same service. That is the answer to noble Lords who ask "Why are the Government doing this?" The prospect before us with RAS is to remove the constraints, to allow RAS to seek better economies of scale by broadening its customer base, to allow it to hone its skills in the private sector and thereby to offer better service and better value for money to the customers it serves. That is not a criticism of its performance now, it simply underscores the constraints with which it now has to live.

A number of noble Lords appear to accuse the Government of a concerted attack on the Civil Service. Nothing could be further from reality. I do not believe that there is a Minister or former Minister who has not had cause to appreciate the integrity, impartiality and professionalism of our Civil Service and to understand the pivotal role that the Civil Service plays in our national life. However, governments have a duty to protect the interests of the taxpayer and to ensure that public services are delivered effectively. To fulfil that policy involves a process which inevitably leads to anxieties among the civil servants most closely affected. The Government take those anxieties seriously. But to argue that government policy is in some way anti-Civil Service is nonsense. Still less is it credible to argue that the privatisation of a self-contained business like RAS can be prayed in aid of that view.

The noble Lord, Lord Jenkins, expressed the opinion that the Government have reduced the attractiveness of the Civil Service as a career. That is an odd observation because applications to join the Civil Service have generally increased significantly in

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recent years. The noble Lords, Lord Bancroft and Lord Allen of Abbeydale, referred to the treatment of the RAS staff. The staff of RAS are being kept informed of progress through regular staff meetings, information bulletins and such communications. The acting chief executive and senior managers will work closely with the Cabinet Office's financial and legal advisers to ensure that the business is presented for sale in the most favourable light. The Government fully recognise that this is an unsettling time for the staff of RAS. We attach great importance to ensuring that staff are treated fairly and that their rights are fully respected in the process.

The noble Lord, Lord Henderson, referred to the House of Lords and House of Commons Clerks. As a matter of fact, I understand that the views of those responsible for the Clerks in both Houses have been sought and that arrangements that take into account their requirements are being drawn up.

The noble Baroness, Lady Williams, asked whether staff would be able to move ahead of the sale. Staff will be able to apply for other jobs within the Civil Service, subject, as now, to the agreement of the management that they can be released. RAS managers will consider each case sympathetically on its merits, but they will need to maintain the viability of RAS ahead of the sale. To date, no application has been refused.

The noble Lord, Lord Bruce, asked what advice was sought from Messrs. Coopers & Lybrand. Coopers & Lybrand were asked to advise on the feasibility of privatising RAS. In particular, they were asked to advise on the likely extent of interest from purchasers, who those purchasers might be and a possible timetable for privatisation. It is a private document because much of the report covers commercially confidential information.

The noble Lord, Lord Bancroft, indicated that all large PLCs retain graduate recruitment in-house. That is less and less the case. The point is significant. There is an emerging trend in the market for placing high calibre graduate recruitment in the hands of quality recruitment firms. A number of top companies have begun to do that and we are confident that it can be done with the Civil Service in a way which preserves and enhances the quality of selection procedures and does not erode them.

The noble Lord, Lord Bancroft, said that he felt that the timetable was too fast. I believe that it is important not to extend for too long the period of uncertainty for staff and customers. However, I have already assured your Lordships that speed will not be at the expense of quality. Customer departments have agreed that a five-year contract is likely at best to provide the services required for most fast-stream recruitment. Bids will be invited to purchase RAS and to price a contract to cover fast-stream recruitment. That contract is expected to cover a five-year period, although that is for negotiation.

The noble Lord, Lord Kennet, asked what protection there might be against takeovers of the new RAS. The fast-stream contract will entitle the Government

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to withdraw the contract in such an event; hence, only a subsequent new owner acceptable to the Government would wish to proceed with such a takeover. It is obvious that any new owner would wish to ensure that the main customers were fully satisfied.

The noble Lord, Lord Allen of Abbeydale, expressed his opinion that the prime aim of the new company would be to make a profit. He thought that that was inappropriate. That is an extraordinary statement. The new company will need to ensure that it satisfies its customers through providing good services. Without such satisfied customers, the company will not have a secure basis for making a profit. The two are opposite sides of the same coin.

The noble Lord, Lord Moore, said that he thought that privatisation would damage the quality of the Civil Service. Let me simply underline to him that RAS's customers, the departments, are keen to ensure that the quality of Civil Service intake is maintained. It has to be. They will be closely involved throughout the privatisation.

A key criterion on selection of the new owner will be its understanding of the requirements of the Civil Service. All recruitment carried out on behalf of the Civil Service customers will need to meet the requirements of the Commissioners' Recruitment Code. The new owner will have every interest in maintaining its capability in the area.

In a similar vein, the noble Lord, Lord Bancroft, voiced the fear that freedom to sell in wider markets would mean poorer service to existing customers. The contractual terms will carefully define the levels of service to be provided for existing customers. Developing new services for customers and so on will inevitably bring benefits to Civil Service customers. We are confident that the new owner will build on, and not diminish, the reputation of RAS for excellence.

The noble Lord, Lord Jenkins, asked me what would happen if RAS were to lose the contract. I hope he did not think me discourteous for not answering him earlier, but I felt it was perhaps more appropriate to do so at this point. If customer departments had concerns about the performance of the new RAS, the first move would be to ensure that new RAS took steps to solve any problems. However, in the unlikely event that significant problems persisted, then a new competition for the contract would need to be held. Experience of contracting out government services in this and other countries shows that careful initial selection of private sector contractors ensures that continued good service is provided. Private sector providers are keenly interested in continuity, to provide the quality of service sought by customers.

Why is it necessary and important, as the noble Lord, Lord Kennet, asked, for RAS to compete in the private sector? RAS will benefit from the freedom to use its expertise in new markets, subject to the important controls that I have described. It has already demonstrated its ability to win new customers within the wider public sector. Full freedom to compete in

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the private sector will allow it to build on its success as a centre of excellence and further develop its services to the benefit of all its customers. We are confident too that with this freedom we shall be able to secure best value for money for Civil Service customers and for the taxpayer. That is the duty of government. The Government are committed to ensuring that the sale is conducted on a basis that not only maintains the standing of RAS as a high quality recruitment agency, but also guarantees that the quality and integrity of the recruitment that it carries out is maintained.

I very much hope that the noble Lord, Lord Bancroft, will not press his amendment. I believe that, contrary to what he said, I have done justice to his position. I have to say that I do not believe that he has done justice to mine. I very much hope that he will reflect.

1.20 p.m.

Lord Bancroft: My Lords, in concluding the debate, I once again promise to be brief. I am immensely grateful to all noble Lords who have spoken on an historic occasion, particularly those who have done so at considerable personal inconvenience. There were a number of other Peers, and a bead-roll of extremely well known Peers in public affairs, who would otherwise have spoken. I could read out their names, but I shall not do so.

The noble Earl sought to sum up the debate and I congratulate him on his temerity. Were I to emulate him, it would be with a markedly different perspective. But time does not permit. We are here discussing a matter of high policy and, with deep respect to the noble Earl and the noble Baroness, not a mechanical weeding business.

Perhaps I may say a few very brief words about the business of the briefing meeting. The Government seem to have panicked (if I may use that verb) at the last moment when they saw the weight of the list of speakers. I was kindly invited to a briefing meeting which was also to be attended by the noble Lord, Lord Allen of Abbeydale, and three Conservatives. I replied to the letter on Wednesday--though it did not reach me until Thursday--because I had been told of its contents. I am very sorry that the noble Earl did not receive my reply. It seemed to me inappropriate that I should go to a briefing meeting that evening only hours before the debate, as the matter had been in the public domain and the parliamentary domain since November last year.

I noted very carefully the noble Earl's extremely gallant remarks. I had hoped that he would offer to have the matter reconsidered by Ministers and that the results of that reconsideration would be brought back to Parliament for debate. However, he has not done so.

Let me be frank with the House. At this point in my life there are very few matters, apart from my family, about which I can feel passionately. One of them is the future integrity of the public service and

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in particular the Civil Service. Many of us devoted our lives to it. In the absence of any assurances of reconsideration or of parliamentary debate, I have no alternative but to divide the House.

1.23 p.m.

On Question, Whether the said amendment shall be agreed to?

Their Lordships divided: Contents, 124; Not-Contents, 64.

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