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Lord Richard: My Lords, I am grateful to the Minister for setting out the arguments for this change. I am bound to say that my initial reaction was, "Here we go again".

The Government have been informed that I proposed at the outset to say something about the Recruitment and Assessment Services. The Chief Whip on the other side was so informed by my noble friend the Chief Whip on this side this morning. I do so in view of the evidence given yesterday by the Minister's right honourable friend Mr. Freeman to the Select Committee set up by this House following the debate on the RAS. It is no doubt much in the mind of the noble Earl, Lord Howe. The Government were roundly defeated. After that defeat the Select Committee was set up. It was agreed that the RAS would be one of the first issues that it should consider. Considerable pressure was put upon Ministers--I am sure that the noble Earl will remember this too--to give an assurance that they would delay a decision on the RAS until after that committee had reported and the House had had a chance to consider the report. Clearly that was the view of the House. But if one reads the words that the noble Earl uttered, there was no commitment to that effect. I accept that; I checked Hansard again today. But clearly that was the impression left, certainly on this side of the House and I suspect on many of those who voted against the Government on that Friday afternoon.

What has happened? Despite the setting up of that Select Committee, the Government have proceeded. In the debate which took place in the other place on 22nd May, a portmanteau resolution on the Civil Service was put down. It was the very last day of the parliamentary Session. Included in that Motion, among a number of other matters, were the words:

"That this House ... also welcomes the Government's policy with regard to the privatisation of the Recruitment and Assessment Services, with the proposed safeguards to protect the quality of Civil Service recruitment".--[Official Report, Commons, 22/5/96; col. 293.]

The Minister's right honourable friend Mr. Freeman spoke in that debate. The issue of the relationship between the Government taking a decision and the setting up of a Select Committee of this House was raised. At col. 300 Mr. Freeman said this:

"Any conclusions of the Committee that are relevant to the privatisation of RAS will be carefully considered. I give the House and the Committee an assurance that I shall treat the deliberations seriously".

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Later my right honourable friend Mr. Derek Foster, speaking for the Opposition, asked:

"Would it not be sensible to defer any progress on the privatisation until the Select Committee has given the Chancellor the benefit of its full deliberations?"

Mr. Freeman replied:

"It depends what the right honourable Gentleman means by 'progress'. I assume that the relevant Select Committee will report before the summer recess and that I shall have the opportunity to study its recommendations and perhaps even discuss the matter again. Therefore, we shall not conclude the process until that has occurred".

Later on he said at col. 302:

"When that Committee reports, I shall consider its recommendations with care and respond in due course".

However, in the next sentence, he said:

"Meanwhile, we are adhering to the privatisation timetable, which is aimed at a successful completion later in the summer".

As I understand the evidence that he gave yesterday in public to the Select Committee, tenders have been put out; 12 offers have so far been received and the Government are drawing up a short list of three. How, with one breath, the Government can do that and with the other breath say that they will consider the recommendations of the committee with care and respond in due course is frankly beyond me. The Government clearly gave the House the impression that they would wait. Now it is clear that they have not waited and they will not wait. The argument that they will give proper consideration to the Select Committee report, while at the same time behaving as they are in proceeding with the process to the extent that they have, is disingenuous, and frankly, treating this House with contempt.

I look to the Minister to try to clear the matter up tonight. Are the Government prepared to give the Select Committee's report proper consideration? By "proper consideration", I do not merely mean, "Yes, of course we won't conclude everything in the sense of dotting every 'i' and crossing every 't' until the report has been received". I mean give it proper consideration on the merits of the issue. So far, I see nothing in the Government's statements to show that they are prepared to do that.

I turn to the regulation before us. It is yet one more example of the Government's intense commitment--intensity almost to the point of passion, it seems to me--to a dogma of privatisation which seems to be accepted by no one else. Who is dissatisfied with the present arrangements? Certainly not the consumers. The people who are subject to the Civil Service pension scheme seem to be unanimously against the proposed changes. The reactions of the Council of Civil Service Unions and the Civil Service Pensions Alliance show that they are both vehemently opposed to the order. The truth is that there is no support for the order from civil servants, Civil Service pensioners or deferred Civil Service pensioners. It is not often that I am in the position of praying in aid the words of a former Conservative Prime Minister, but I commend people to read what

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Sir Edward Heath said on the issue in another place. He concluded by saying that he thought the Government were making a grave mistake and he used the word "dogma" on a number of occasions in relation to government policy. The only people who favour this are the Government.

Why do I say it is wrong? First, Civil Service morale is low and is getting lower. There is a deep sense of insecurity now felt in Civil Service ranks and the proposal adds to the feeling of insecurity. Civil servants want their Civil Service pensions to be administered by civil servants. There is no reason at all why they should not have it. Secondly, I say that it is wrong because the existing system works well. In another context, one hears a great deal of the American phrase which I do not like: "If it ain't broke, don't fix it". I wish that the Government would take that to heart in this context as firmly as they appear to do in relation to another one.

Is the scheme working properly? It has been examined, there has been an efficiency scrutiny report. What did it say? Paragraph 23 states that the present scheme, because of its size, achieves great economies of scale. Paragraph 24 points out that the PGO's unit costs are currently around £16, which is broadly in line with what the private sector would charge for a large-scale pension paying service. It costs no more than an equivalent private scheme.

The report goes on to state that most large employers with above, say, 1,000 staff run their own employees' scheme and administer it in-house. The pension, consulting and insurance firms manage many schemes for employers but most of these are schemes of less than 1,000 members, a few are between 1,000 and 2,000 members and a small number are larger than that. Where larger schemes are contracted-out--and there is a handful of examples--it tends to be for particular reasons reflecting a strategic decision on the part of management. The report goes on, in paragraph 52, to produce a draft which suggests that above about 20,000 staff, in-house operations are actually cheaper than contracting out.

Finally, paragraph 56 states that it is thought that the efficiency of contracted-out pensions and administration is likely to improve significantly over the next few years as new technology is introduced. That is the current position. It works well and the people affected by it are on the whole remarkably satisfied with it.

Thirdly, the proposal is wrong because there is still confusion as to its scope. The noble Earl put right the confusion that was left by his honourable friend Mr. Willetts in another place, who ended the debate by contradicting what he said at the beginning of it. As I understand it, the order relates to the administration of the Civil Service scheme. Administration covers such activities such as scheme induction, calculation of benefits, answering inquiries, maintenance of personnel data, processing applications to buy added years or pay additional voluntary contributions and paying pensions. So let there be no doubt about it, the Minister has confirmed tonight--and I am grateful for it--that the Paymaster is included within the scope of the order.

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The only thing that still causes me confusion is a Written Answer given by the Minister's right honourable friend Mr. Freeman in another place on 25th March 1996. He was asked by Mr. Peter Luff whether, when he expected to make the order, he would make a Statement. Mr. Freeman said:

"Approval of the order by Parliament will enable Departments to market test their day-to-day administration of the principal civil service pension scheme, and associated schemes. Occupational pension arrangements for civil servants will continue to be provided through the PCSPS".--[Official Report, Commons, 25/3/96; col. WA 449.]

I am not sure what that means in the context of the speech that we have just heard from the noble Earl. The Written Answer continues:

"Market testing of the administration function will not affect pension benefits in any way".

There we have the ritual genuflection to Conservative Party dogma: "Competition will ensure value for money, the focus on performance outputs will help raise the quality of service to scheme members". We have heard that before.

The Written Answer continues:

"Decisions on the timing and method of competitive tendering will be for each employing Department to take".

Is that still true or will they now be taken by the Government?

"It will be open to existing service providers, such as the Paymaster agency, to compete on a value for money basis".

Then occurs the sentence which I do not understand:

"Responsibility for management of the PCSPS--and associated schemes--including setting the rules, will remain within government".

Responsibility for management? What is the difference between "management" and "administration"? Is there some distinction which I do not quite appreciate? I do not see how the Government can at one time privatise the administration of the scheme and at the same time claim that the responsibility for management of the scheme will remain within government. If it is intended that the management will remain within government, then what is to be privatised? If it is intended that management should go with administration, how could Mr. Freeman make the statement that he did?

Doing the best I can, for the life of me I cannot see the purpose of the proposal. It seems to me to fly in the face of logic, administrative good practice, good man management and the wishes of the people who are most affected by it--namely, the pensioners. Why on earth are the Government doing it?

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