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Lord Peyton of Yeovil: My Lords, as my name has been mentioned and I have some part in this, I should say that I have long been a great admirer of the noble Lord, Lord Richard. At the same time, however, I am not at all sure that I should like to have him always as a filter between the sender of information to me and myself. However, in this matter I had no choice. Perhaps I may venture another comment. I have been aware of the interest of people in Somerset as regards these difficult problems which the Government have been facing. I think the noble Lord, Lord Richard, is a bit hard on the Government in condemning this letting-out of good news as soon as it was available. What is always a subject of complaint is when governments let out bad news by Written Answer at the end of a Session.

Lord Richard: My Lords, the noble Lord is being unfair to his filter. I am not suggesting for a moment that these are wrong decisions. We do not know that. I am not in a position to know that. It is not a field in which I have a great deal of expertise. I used to know a little about it many years ago when I was a junior Minister and my noble friend Lord Healey was Secretary of State for Defence. All I am saying is that these are big decisions which are taken by the Government. Parliament ought to have an opportunity to question the Government on those decisions in the usual way. I do not make that point in any great party sense; it just seems to me that this is the only sensible way for the Government to proceed.

The Lord Privy Seal (Viscount Cranborne): My Lords, I am most grateful to the noble Lord, Lord Richard, for his usual vigilance in these matters. I think I am right in saying that up until now the Government have not made a habit of making a Statement on anything except the biggest defence programmes. Trident, for instance, comes to mind. There is a clutch of orders here, decisions on which have been in the balance for some time, as the noble Lord knows. There has not only been the question of which defence systems are to be ordered, but also the timing of the announcement of the order.

There is no doubt at all in my mind that the fact that the decision has been made--and made as swiftly as possible--will be broadly welcomed, particularly in the defence community. If the noble Lord, Lord Richard, would like my noble friend Lord Howe to make a Statement later in the day, in the usual spirit of co-operation which animates our relationship I should be happy to suggest to my noble friend, who is sitting beside me on the Front Bench, that he should do so. I hope the noble Lord will also understand that as we have had no advance notice of his request, it would perhaps be more sensible if we waited until the end of

25 Jul 1996 : Column 1530

the debate on the future of the RAS before my noble friend makes his Statement. I do not see too many noble and gallant Lords in the House at the moment. They might also want some advance notice that the Statement is to be made.

I am also well aware that this is the final day of the Session and a number of noble Lords may feel that there are other calls upon their time at such a late point in the Session. However, as always, I shall endeavour to make sure that my noble friend has some time at least to prepare a verbal Statement. However, I had hoped that the Written Answer he gave to my noble friend would have sufficed. But, as always, I am in the hands of the House.

Lord Jenkins of Hillhead: My Lords, I think that what the noble Viscount the Leader of the House has just proposed is satisfactory both as to substance and to timing. It is also a tribute to the vigilance of the noble Lord, Lord Richard.

Lord Richard: My Lords, it is not the vigilance of the filter; it is perhaps the essence of the coffee that is important in this case. I repeat that I am not sure how I got this information concerning the noble Lord, Lord Peyton, but I am grateful for having had it. I am grateful for what the noble Viscount the Leader of the House has said. Those arrangements are satisfactory. The House and Parliament ought to have an opportunity to scrutinise the matter. I repeat that I am obliged to the noble Viscount.

Lord Williams of Elvel: My Lords, is the Leader of the House saying that there will be a Statement, and if so, when?

Viscount Cranborne: My Lords, if I was even more elliptical than usual I apologise to the noble Lord. I understood that it was the will of the House that there should be a Statement. It is now for my noble friend to prepare himself for that ordeal. I hope that the noble Lord, Lord Williams, will therefore allow him perhaps to make his Statement at the end of the debate which is about to begin.

Recruitment and Assessment Services

11.45 a.m.

Lord Slynn of Hadley rose to move, That this House take note of the First Report of the Select Committee on the Public Service, on the Government's plans for the privatisation of Recruitment and Assessment Services (RAS) (HL Paper 109).

The noble and learned Lord said: My Lords, your Lordships will recall that on 8th March this year there was a debate in the House as to the Government's plans to privatise the Recruitment and Assessment Services. As a result of that debate your Lordships decided that a Select Committee should be appointed to consider the present condition and future development of the public service with particular regard to the effectiveness of recent and continuing changes and their impact on

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standards of conduct and service in the public interest. It was recommended to that committee, in the light of the debate on 8th March on the Government's plans for the privatisation of what I may perhaps be allowed to call RAS, that it should begin by reporting as a matter of some urgency on the specific matter.

It was made quite clear to the committee at that stage that if our report was to be of any use we must complete it before the Recess. That we have done. I wish to pay tribute to the willingness of the members of the Select Committee to hold a number of long meetings, often at inconvenient hours, in order that we could finish before the Recess. We have been much assisted by our two specialist advisers, Professor Richard Chapman and Janet Lewis-Jones, and in particular by our clerk, Mr. Tom Mohan, who has been under considerable pressure during this short inquiry because of the amount of time that was available.

We received a lot of evidence, although no doubt if we had all the time in the world we could have thought of other evidence to call, and I have little doubt that evidence would have been given in both directions. There may have been some in favour of the privatisation and there may have been some against it. However, I believe that we have collected sufficient evidence for our task. We asked for evidence that we thought we needed as we went along. I believe we have had sufficient to enable us to come to a conclusion. In thinking of a leisurely, long-term report it is possible to exaggerate the advantages which a task without limit sometimes has, particularly in the present case as it seems likely that the horse would have bolted before we could have said--if that had been our view--that the stable door ought to be closed. Although it might have been possible to collect more evidence, it seems to me that we had sufficient for our task.

One other matter caused us some concern. When we were appointed we thought that our report to your Lordships--it was not of course a report to the Government by whom we were not appointed--would be taken seriously by the Government. Otherwise we might have come back to the House and said, "This is an awful waste of time. It is all cut and dried and we had better get on with the remaining parts of our report". However, the noble Viscount the Leader of the House and the Chancellor of the Duchy of Lancaster made plain that our report would be seriously and carefully considered by the Government. It is obvious that for the House to have asked us and our witnesses to spend so much time producing a report on something already fully cut and dried, and on the principle of which we could have had no possible effect, would have been an appalling waste of time. That would have been an exercise in which we are sure the House would not have wished us to indulge.

We were, therefore, disturbed (I have to say) to be told in the course of the evidence that we received from the Deputy Prime Minister that the decision had already been taken and, as he put it,

    "we intend to proceed ... The fact is that we have made up our minds as a Government that the policy of the Government is to proceed with the privatisation of RAS. The steps are in hand, the bidding process is under way".

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Despite that statement in evidence to us, we were, and are, a fairly resilient team; and we decided to go ahead and fulfil what we saw to be our duty to the House. But we fully recognise that the principal, if not perhaps the only reason for privatising RAS was one of government policy: that, as a matter of political philosophy, or political policy, with few exceptions any aspect of the public service which could be privatised should be privatised. The Deputy Prime Minister and the Chancellor of the Duchy of Lancaster made that clear to us.

However, despite that, we equally believed that a committee of this House, seriously set up, seriously constituted and seriously reporting, would be seriously regarded by the Government as to its conclusions. If it were naive of us to come to that view, it is a sad comment on the process in which we have been engaged.

Whether the policy of privatisation is right or wrong or is good or bad was not a matter for our committee. The sole question, as we saw it, was whether in the public interest and from the standpoint of the public service it had been shown that the privatisation of RAS was necessary or desirable. We were required, as we saw it, to come to that conclusion on the evidence that we received. All our witnesses, without exception, agreed that RAS had done an excellent job. Its standards were high. Its activities were increasing and it had a larger turnover and profitability in the last year or two than previously. It was quite plain that everyone accepted that RAS understood what it was doing, being itself a part of the Civil Service, in recruiting those who will become the corps of senior officials in years to come.

Having considered all that evidence, we said in our report:

    "We have seen nothing which suggests that in the work it has done RAS has been anything but successful ... The overwhelming weight of evidence we received was that privatisation was undesirable and unnecessary".
There was much debate about what is called the public service ethos: dedication, loyalty, and commitment to the public service. This was said by many of our witnesses to be a critical factor which had contributed to the high reputation in which the Civil Service here is held both in this country and abroad.

On the evidence we concluded:

    "We believe that there are distinct advantages in maintaining an integrated, in-house recruitment process for the fast-stream"--
that is the brightest of the new graduates who come into the Civil Service--

    "in which all stages of recruitment are carried out by or under the ... supervision of people with experience of the Civil Service and its ethos".
It seemed to us that even if RAS does not control the final selection process--it is done, and will continue to be done by the Civil Service--the activities of RAS would not so obviously be carried out in the interests of the public sector if RAS became part of a recruiting group concerned not just with recruiting for the Civil Service but for private industry; and not only recruiting in this country but for organisations abroad, as is apparently contemplated and indeed encouraged.

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We recognise that there is some risk of a conflict of interest if the new RAS is to deal with both the public service and the private sector. We came finally to the conclusion that no case had been made out for privatising RAS, and that there were, as we have set out in our report, very positive reasons against it.

If, despite this clear conclusion, this clear message from the committee, RAS were still to be privatised, we do not find it possible to comment on all the detail of the various draft contracts which even at this stage are not fully finalised. We could only look at some of the principal safeguards which we thought to be necessary.

I shall not go into those in detail. I mention briefly three or four. We were troubled about the use of details of candidates applying for posts in the Civil Service if this were dealt with privately. We came to the view that the arrangements for protecting candidates' details after they had applied are sufficiently protected in the draft contract.

We were much impressed by the evidence we received about the importance of ongoing research as to the kind of testing procedures which are adopted for this fast-stream recruitment. We recommend that if, contrary to our view, RAS should be privatised, the company or its owners should be contractually obliged to continue this ongoing research into the efficiency of the tests.

We recommend that records should be kept by the Public Record Office as they are now, with certain adjustments, even if RAS is to be privatised.

We were much exercised by the position of the intelligence and security services. Would it really be right for recruitment to the intelligence services to be conducted by a privatised RAS? We came firmly to the view that the intelligence services should be wholly excluded from the activities of the new RAS, if RAS is to be privatised.

Finally, we recommended that more attention should be given to the position and future of those members of the staff of RAS who would be affected by the privatisation. We think that the Government should look again at the future of the staff who may not wish to remain with the privatised RAS but who may find that they are equally unable to stay in the public sector.

These are matters of detail. The real question for us was not whether, if RAS were privatised, the new RAS would become bigger, and its owners richer--perhaps it could. The real question was: had it been shown that RAS would provide, or would be likely to provide, a better service for the public sector?

Our conclusion is clear. The case for privatising RAS has not been made out and there are positive reasons against it. In their evidence, Ministers recognised that there are exceptions to the general privatisation policy that activities for the public sector should be carried out, so far as possible, by the private sector. I have to say that, on the evidence we received, I doubt whether there can be many clearer examples of an activity which should be treated as an exception and left in the public sector than RAS itself. Accordingly, our report concludes by urging the Government to reconsider the whole matter. I beg to move.

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Moved, That this House take note of the First Report of the Select Committee on the Public Service, on the Government's plans for the privatisation of Recruitment and Assessment Services (RAS) (HL Paper 109).--(Lord Slynn of Hadley.)

12 noon

Viscount Cranborne: My Lords, needless to say, I am extremely grateful to the noble and learned Lord, Lord Slynn, for undertaking the onerous task that he has and to the members of his committee. I know that he is not exactly the idlest Member of your Lordships' House. He has many other things to do, particularly in his judicial capacity. It is typical of the way in which he addresses himself to public service that he so cheerfully undertook an onerous task.

I am also grateful for the speed with which the committee reported. In view of some of the remarks that the noble and learned Lord made this morning, I hope that to some extent I can convince him and the House that the Government have read his report with considerable care and take what he has to say extremely seriously.

I was able to confirm to the House on 10th July that it was the Government's intention to give rapid consideration to the committee's report and we have had a week in which to examine it and respond. As the noble and learned Lord said, the report concludes that the committee remains unconvinced, to put it mildly, that the privatisation of RAS is necessary or desirable. I would, however, point out that the success of the Government's privatisation policy is reflected in the number of countries now privatising public businesses. I am only too well aware that the committee considers that RAS is not just another public business. However, RAS is responsible only for the operational aspects of recruitment. The recruitment selection decisions will remain with the Civil Service after privatisation. The assessors for the selection boards will continue to be approved by the Civil Service and will continue to include many current and former civil servants. The decisions on the success or failure of candidates at those stages will therefore remain a public sector responsibility.

The committee questioned whether privatisation was proposed because of performance failures by RAS. As the noble and learned Lord pointed out, the position is the reverse. The performance of RAS is, the Government feel, an excellent base on which the new business will be able to prosper and expand. So the Government are clear that as a centre of excellence in recruitment and assessment services to the public sector, RAS should be released from the constraints of public ownership and set free to develop in the private sector. As a result, it will be free to build on its present share of Civil Service recruitment and to provide services to new customers.

We are also grateful to the committee for its consideration of the privatisation process and for its detailed recommendations. The committee's work will help to ensure that the privatisation is completed in a way which will bring the greatest benefits. Indeed, the

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report states that some of the safeguards in the fast stream contracts were introduced following the committee's meeting with my right honourable friend the Chancellor of the Duchy of Lancaster.

I can report that the Government are able to agree, either wholly or in spirit, with almost all the recommendations contained in the report. We accept, in effect, nine out of the 10 recommendations made. With the permission of the House, I wish to address the specific points made in turn.

The report questions the work involved in administering the fast stream contracts once they have been let to the new company. RAS delivers its fast stream services to customer departments under the guidance of what is known as the Customer Consortium, for which the OPS acts as a secretariat. When the Customer Consortium was established in 1995 the intention was that the group could act as what is known in the jargon as an "intelligent" customer in its own right. The Government accept that the consortium will need some additional support as a result of privatisation.

The plan is that that support will be provided by the OPS through three additional posts. Most of the roles mentioned in the report already fall to the consortium and the OPS, as a result of running the existing fast stream schemes. Those roles will continue and intensify after privatisation takes place. In addition, the OPS will have a new contract management role. We believe that all that can readily be handled by the anticipated three extra posts.

The report suggests that there are no obvious benefits from this work and that it will be more expensive. The Government are confident that privatisation will provide better value for money for the taxpayer than the current arrangements. My right honourable friend the Chancellor of the Duchy of Lancaster will, of course, continue to assess it carefully when final bids are received, as will customers for fast stream recruitment.

The Government agree with the committee that the privatisation should not be completed if the final bids do not represent good value for money. I owe it to noble Lords to try to give an assessment of how that value-for-money evaluation will be made. The arrangements have already been carefully defined, in consultation with the fast stream Customer Consortium. First, bidders have been assessed against a strict quality threshold. All the short-listed bidders have passed that requirement. Secondly, a financial analysis is being prepared to compare the final bids with the cost of retaining RAS in the public sector over the next five years. The analysis of the bids will take account of the proceeds from the sale, the fixed prices quoted for the fast stream contracts and the additional monitoring costs.

The committee also recommends that we consider strengthening provisions in the fast stream contracts regarding the use of candidates' details before they have applied for the fast stream. I wish to reassure the House that the OPS will continue to be responsible for marketing the fast stream scheme. That will include, for example, the annual university "milk round" to generate applications for the Civil Service. So the committee's

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concern that candidates may be influenced by the company to take other jobs at that stage does not, I suggest, arise.

The new company will process applications and administer the selection process. We agree that safeguards are necessary to protect information on candidates and to prohibit the contractor from using candidate details for purposes other than recruiting to the fast stream. We do not believe that the company would risk those large and prestigious contracts by misusing information. However, following earlier expressions of concern from the committee, we have added to the safeguards in the contracts to protect information on individuals who have contacted the company in relation to the fast stream but have not yet applied, and to forbid the use of failed candidate information for three months after candidates have failed.

The committee recommends that an annual report should be made to the Civil Service commissioners, explaining exactly what use has been made of candidate details for those candidates who have applied for the fast stream. The Government agree with the aim of that recommendation, but so far as implementation is concerned, it is the Customer Consortium rather than the commissioners which is responsible for such aspects. So the contract requires the new owner to report to the consortium on each competition with details of the numbers of successful and unsuccessful candidates. That information will be published in the annual report on the Civil Service Fast Stream which is issued annually by the OPS. In addition, the OPS, on behalf of the Customer Consortium, will have full access under the fast stream contracts to records and information for audit and monitoring purposes.

The report rightly recognises that under the fast stream contract RAS will be obliged to undertake regular research to ensure that the fast stream tests are kept up to date and developed further. Professor Bartram, in his report for the OPS on the fast stream made similar recommendations on the need to analyse the short-, medium- and long-term validity of this recruitment process. We endorse the importance of such research and assessment and agree with the principle of the committee's recommendation. However, we believe that it is mainly customer departments which should conduct any long-term reviews of the scheme's effectiveness. It is departments which are best placed to assess the performance of those recruited through the fast stream scheme. The new company will be required to maintain the necessary records to ensure that such evaluation can take place. It might also be appropriate for the results of those evaluations to be published in the annual fast stream report.

The report recommends that the new company's role in research should be controlled by the Government. We agree. Under the fast stream contracts the company is required to undertake regular research--using suitably qualified staff--into tests, exercises and other aspects. The contract specifies that this research is needed to ensure that the fast stream schemes comply with the principles of selection on merit by fair and open competition; comply with equal opportunities on race and gender; maintain the relevance and usefulness of the

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questions and exercises; and reflect the highest recruitment and assessment industry practices. That is a clear set of performance requirements. The OPS will also be able to require all necessary documentation to conduct the sort of independent research to which I have referred. We believe that this will prove an effective and efficient means of ensuring that the necessary research continues to be carried out.

We are also able to agree on the need to retain candidate records. The fast stream contract requires the new owner to hold on to all necessary information on successful candidates for at least 20 years. The new company will be required to maintain the same records in relation to recruitment schemes as are presently required.

The report discusses the issue of ownership, particularly foreign ownership, and the implications should the new owner of RAS change at some later date. I hope that I can offer some reassurance on how, in effect, we can meet those concerns. The fast stream contracts contain provisions which enable the Government to terminate the contracts should the owner of RAS or its parent company change. The Government would be able to decide whether they were satisfied with a proposed new owner or parent company. If the Government were not satisfied, the change of ownership would be extremely unlikely to proceed because of the prestige and financial importance of the fast stream scheme. The scheme accounts for one-third of the business.

The committee also raises the question of recruitment to the Security Service and GCHQ. The noble and learned Lord also emphasised that point in his remarks. This is a very sensitive issue which we have considered fully. The report suggests that all such recruitment should be retained in government. However, this would deny the Security Service and GCHQ the benefits of recruiting through the fast stream scheme, which provides good access to high-quality graduates. However, the new company will not be responsible for the final selection decisions on recruits. Those decisions will remain with the Security Service and GCHQ. They have both been consulted and I am informed that they are content with those arrangements. The Government do not therefore feel that they can accept that recommendation.

The report also raises concerns over the ability of the Government to bring the fast stream staff back into the public sector should that be necessary. We, of course, consider that would be an unlikely requirement as the new owner is being selected according to stringent quality and financial criteria. But I understand the committee's concerns and accept that we should be prepared for that risk, however small it may be. The contracts have termination provisions that require the owner to provide the OPS with certain information on the staff carrying out the services in the contract, together with records and information as to the operation of the contract. The Crown, of course, retains ownership of all fast stream intellectual property and tests. If TUPE applied then the staff could transfer back to government.

Finally, the report requests that further consultation take place with staff. Since the announcement, the staff have been kept fully informed of progress. My right

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honourable friend the Chancellor of the Duchy has visited the staff in Basingstoke to hear their concerns. He will visit them again in August to hear their views once they have had a chance to interview the short-listed bidders and before a decision is made on the final bidder. Their views will be taken into account at that stage. I should add that the major customer departments were consulted before the decision to privatise was taken. The Fast Stream Customer Consortium has been closely involved in drawing up the arrangements for the fast stream contracts and in other aspects of the privatisation process.

I should like to repeat my gratitude to the noble and learned Lord, Lord Slynn, and the committee for their careful work and useful advice. I am only sorry that the Government and the Select Committee should disagree on the principle of privatisation. I should say that we expect to receive final offers in August and to announce the preferred bidders in September.

Before I sit down, perhaps I may say something that I should perhaps have said at the beginning of my remarks. I am sure that I am not alone in this House when I say that I greatly look forward to the maiden speech of the noble Lord, Lord Gillmore of Thamesfield, who, I know, will become a very great ornament to this House. I look forward to that skill for which he is notorious in other spheres, and with which he manages to skirt controversy, during the course of his maiden speech.

12.16 p.m.

Lord Jenkins of Hillhead: My Lords, I can at least agree with the noble Viscount on one matter; that is, in looking forward to the speech of the noble Lord, Lord Gillmore, who will combine the double experience of having been Permanent Under-Secretary of the Foreign Office with having been a member of the Select Committee.

We have had a fairly rough end to the Session. Relations in this House, even before today's decision and debate, have been more strained between the parties than at any time since I came here. I cannot say that the response to the report is likely to ease that position. The Government's handling of this matter has been an almost unbelievable story of dogma, arrogance and dissimulation.

In March we had a debate in which the speakers, with the exception of the Minister and one Back-Bencher, were unanimously against the Government and their proposals. Those who were against the Government included one former Prime Minister, one former Chancellor of the Exchequer, three former Conservative Cabinet Ministers, one non-Conservative former Cabinet Minister, three former Permanent Secretaries, plus one Secretary of the Cabinet, one head of the Civil Service and one former Principal Private Secretary to the Monarch. So there was a substantial spread on that occasion. There was also one former Clerk of the Parliaments.

We then had a Division in which, with very large numbers voting given that the debate took place on a Friday, the Government were beaten by two to one, a size of adverse majority which I believe is without recent precedent in this House against the Government.

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It was then agreed--and the Lord Privy Seal was very helpful in this matter--that the Select Committee on the Civil Service should be asked to produce an interim report on the specific issue of the future of the RAS. It was asked to do so quickly so that its views could be taken into account before a decision was reached. The committee exactly discharged that mandate and gave us the report on 19th July. We are very grateful to the noble and learned Lord, Lord Slynn, for the work he did as chairman of the committee and to its other members. We had the assurances of the Lord Privy Seal that full account would be taken of the report. Those assurances were repeated by the Chancellor of the Duchy of Lancaster in early evidence to the Select Committee.

That report was not merely "nearly unanimous", as was the March debate in this House; it was unanimous without qualification. No member, no Conservative dissented. The report was as forthright as it could be:

    "We do not consider that the case for privatising RAS has been made out. There are, even in the context of the Government's policy on privatisation, positive reasons against it. We urge the Government to reconsider the matter in the light of the factors mentioned in the report".
That is as ringing and clear a recommendation as it is possible to imagine.

If I may say so, to this central issue, as opposed to some peripheral ones, the Lord Privy Seal did not apply himself in his speech at all this morning. It is not the least engaging feature of the Lord Privy Seal that he knows when he has a bad case and when he has a good case, and his style of speaking is very different in the two circumstances. There is no doubt at all what was his judgment of the position in today's debate.

So that was the view of the report of the Select Committee, as unanimously and as clearly expressed as it could be. And what happens? What happens is that the caravan of dogma moves relentlessly on.

But in order to appreciate the full enormity of the Government's behaviour, one has to read Mr. Heseltine's evidence to the committee. At the time, I heard he had given a rich performance, but as I gathered that it was on the afternoon following the morning when he had covered himself with glory in his cross-talk cabaret act with Mr. Mawhinney, I thought that perhaps he might be suffering from a mixture of exuberance and embarrassment and should not be taken too seriously. But such amused tolerance could not survive a reading of his evidence.

What did he say? Not merely did he contradict the assurances of the Lord Privy Seal and the Chancellor of the Duchy and tell the committee, effectively, that it was wasting their time. Caesar had spoken, and that was the end of the matter.

But still more serious in my view--and not known to me at the time until the evidence was published--he undermined what until then had, I think, been the central, if unconvincing, plan of the Government's case, which was that the public service ethos and the traditions of the British Civil Service would not be undermined by the privatisation of RAS. Mr. Heseltine, per contra, on the contrary made it clear that this was precisely what he wanted to do and what the

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Government wanted to do. When asked what were the restraints from which he wished to free RAS, he listed at number three,

    "the whole ethos of public sector life".
And lest there should be any misunderstanding, he added:

    "I think one of the things we are trying to do is to change the culture of the Civil Service".
And just for good measure he scouted any idea that any civil servants are activated by any special sense of public duty or service.

So out of the words of the Deputy Prime Minister, who appears to be able to make other Ministers dance like puppets on a string, in his words and in his stated desire, go 143 years of the successful Trevelyan-Northcote tradition which has produced a widely envied British institution of unique quality.

This would be an arrogant display of executive power for a newly elected government, dripping with mandates and sitting surrounded by a vast and fresh majority in the new glory of the Front Bench in the other place. It recalls the "We are the masters now" statement, which most improbably, as it now seems, Lord Shawcross delivered himself of in 1946. At least Lord Shawcross did have the cohorts behind him, whereas now we have a government who for years have commanded the lowest level of popular support in history, with a totally insecure parliamentary majority, who nearly every day are flaking off a new piece of disintegration, and yet insist, against all the evidence, against the views of every other party, as well as neutral opinion, in forcing through this bit of petty, yet vastly damaging, dogma. It really is a monstrous piece of behaviour.

When the obituaries of this government come to be written, which I hope will not now be long delayed, this will stand out as the most unnecessary, inexcusable and irresponsible of their dying squawks.

12.26 p.m.

Lord Gillmore of Thamesfield: My Lords, it is with a sense of great privilege, but, I am bound to confess, overwhelmingly with a sense of deep trepidation, that I speak today. I am sure that your Lordships will all recall--some perhaps a little more dimly than others--the occasion of your Lordships' maiden speech. For a former public servant, and particularly for one who was the accounting officer of a department of state, the occasion is singularly daunting.

The Palace of Westminster is inevitably linked in the mind to the stress of inquisition at the hands, not always the most merciful of hands, of one of your Lordships' Select Committees or of a Select Committee of the other place. So, more than many, I have cause to be grateful for the generous and courteous conventions which attend a maiden speech.

Also, in deciding to speak today I have been particularly mindful of one of the most important of the conventions referred to--not without a hint of challenge, I think, by the noble Viscount the Lord Privy Seal--that a maiden speech should not venture into the quicksands of contention. Had the report of the Select Committee not been unanimous, I would certainly not have sought

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to intervene, and your Lordships would have been spared these few minutes. But thanks in great measure to the concise skill of the Select Committee's chairman, the noble and learned Lord, Lord Slynn of Hadley, the committee's report is endorsed by all its members, and consequently your Lordships are not to be spared.

In a debate on a different subject earlier this week, a noble Lord referred not to the conventions of this House but to its ethos. From my brief but I hope attentive experience of the past few months, I think I can say that one would have to be of singular insensitivity not to be aware that such an ethos is real and present. But in this, if in nothing else, your Lordships' House is not unique. I would like, if I may, to say a few words on a subject already mentioned by the noble and learned Lord, Lord Slynn of Hadley, and the noble Lord, Lord Jenkins of Hillhead, which runs like a thread through this report and in the evidence given, both oral and written, and which I am sure will be a leit motif in the further work of the Committee--the ethos of the public service.

"Ethos" is perhaps a rather grand word for a relatively simple idea. My dictionary defines it as the characteristic spirit or attitude of a community or group. In the case of the public service, this ethos derives directly from the great Northcote-Trevelyan reforms of the 1850s. Many of those who gave evidence to the Committee defined it in some detail. Others said that it was unquantifiable but quite distinctive. The former referred to characteristics of integrity, loyalty, impartiality--political impartiality, in particular--trust, objectivity and fairness. They drew particular attention to a system of recruitment which is not only based on merit and equality of opportunity, but is sufficiently open and transparent to justify public confidence in its inherent fairness.

That is not to say that on each and every occasion every public servant without exception has lived up to those high ideals. That would be absurd. Nor is it to say that the public service should be frozen, unchanged and unchanging in a world that no longer exists. In truth, the Civil Service has seen its fair share of reform and change in the past decade and a half. The buzz words of modern management techniques have hummed up and down the corridors of Whitehall as never before: management by objectives; next steps agencies; contracting out; privatisation; delayering; flattening command structures; empowerment; fundamental economic review strategies; and so on. With those reforms has come a reduction of nearly one-third in the number of permanent staff, the majority of whom are now employed in executive agencies.

It would be hard to argue that many of those changes have not brought real improvements. On others, perhaps, the jury is still out. But it is important not to confuse changes in management techniques with changes in the ethos. British cavalry regiments no longer ride into battle on horseback. They drive hugely sophisticated armoured vehicles stuffed with electronic wizardry and with fire and control systems. But I doubt whether anyone would seriously argue that the ethos of British regiments has changed or should change simply because the tools of warfare have changed. Their

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morale, integrity, loyalty, dedication and sense of duty are different matters. The same is true in the civilian branches of the public service.

I realise that for some, and I think it is a small minority, those characteristics--I dub them qualities--smack of yesterday and old hat. They may even be regarded as removed from the hard-nosed and aggressive realities of today's world, and perhaps even be untrendy.

Of course there are lessons to be learnt from the private sector. Many of the reforms that have taken place in the public service derive directly from the example of private enterprise. But I for one do not believe that the ethos of the public service is or should be the same as the ethos of the private sector. I speak as one who has worked in both. To each his own, and that is right and proper.

So I respectfully draw attention to paragraph 69 of the report. The maintenance of the public service ethos and the principles of duty and loyalty at the service of whatever government are in power, principles which by and large have served this country well, are a matter of national interest. Those principles may be of long standing. They may even, alas, be regarded as untrendy. But it would be foolhardy in the extreme to place them in jeopardy. In my submission, we need them as much now as ever we did.

12.34 p.m.

Baroness O'Cathain: My Lords, it gives me truly great pleasure to rise to congratulate the noble Lord, Lord Gillmore of Thamesfield, on a splendid maiden speech. I am quite sure that in the years to come his description of the ethos of the public service will become words of reference.

As the noble Lord spoke, I was reminded forcefully of the first time that we met. It was at a weekend conference at Sunningdale which was attended by senior civil servants. I recall that they were all permanent secretaries. Perhaps I may say as an aside that it was the first time that I felt old--as when policemen look young, you feel you are old. I felt that all the permanent secretaries and certainly the noble Lord, Lord Gillmore, looked much younger than I expected. On that occasion, his contribution was thoughtful, original and quietly made. It made a huge impact on me. Today, there has been a repeat performance. He made a great maiden speech to which we all listened in rapt attention.

The noble Lord has had a sparkling career. After King's College, Cambridge, he started work in the private sector. He moved on to teaching and was then a late entrant to the public service, in his case the Diplomatic Service, in 1970. From that point his career truly went into orbit: overseas postings in Moscow, Vienna and Paris; head of the defence department at the Foreign and Commonwealth Office; visiting professor at Harvard; and the top job--permanent secretary at the Foreign and Commonwealth Office, head of the Diplomatic Service from 1991 to 1994. Now he is back in the private sector. We are all very lucky indeed to have him in this House. We wish him well and know that all his future contributions, which we hope will be frequent, will be memorable.

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It is with a sense of deja vu that I take part in this debate. As many noble Lords will recall, and it has already been referred to, I am the Back-Bencher. I was somewhat of a lone voice on the stance that I took in the debate on 8th March on the subject of the privatisation of RAS. Following that debate, as we have been told today, the Select Committee on the Public Service was appointed. Its first remit was to look at the privatisation of RAS.

The 8th March is not that long ago. In fact, it seems only like yesterday to me because I am still reeling from the metaphorical arrows slung in my direction on that occasion. The 30th April, the date of the appointment of the Select Committee, is an even shorter time ago. I mention those dates because in contrast to the time allocated for investigations carried out by another Select Committee on which I have the honour to serve, this investigation was carried out at breakneck speed. From the very beginning of the investigation, it was obvious that we ran the risk of producing a document that could only investigate the issue in a somewhat hasty and superficial manner. Frankly, I personally did not believe that we should be able to produce a report in such a timescale. We owe a great deal of gratitude to our chairman, the noble and learned Lord, Lord Slynn of Hadley, who managed to drive us at a ferocious pace to have the report concluded.

That situation disturbs me from two points of view. First, the whole subject generates an immense amount of emotional response. There was a great deal of that in the witnesses that we examined. Secondly, there was not sufficient time to take evidence from witnesses with practical experience and professional knowledge of the whole field of recruitment and assessment outside the public service. As RAS was to be privatised, I thought it fairly important that we should have that evidence. I hope your Lordships will not feel that, because the recommendation does not concur with the views that I expressed on 8th March, I am suffering from a huge dose of sour grapes. I am quite ready to change my mind, provided that the evidence I receive supports such a change of mind. In this case, the overwhelming evidence was against the privatisation of RAS. But, in my opinion, we did not have enough time to hear the other side of the story. However, I have to associate myself with the conclusion that the case for privatisation of RAS has not been made out--definitely it has not.

There was something else which disturbed me, and this has already been referred to today; namely, the attitude of my right honourable friend the Deputy Prime Minister. The reality of that afternoon was just as bad as the extract reads in the report; indeed, we now have the evidence. I understand only too well the irritation that can be felt when one is quite sure that a decision is correct and it is questioned by people who do not have the same knowledge. But there are niceties of behaviour which have been established over long periods of time in both Houses of Parliament. I have to confess that I was a little taken aback.

That is all history now. The privatisation of RAS will go ahead and I think it behoves us to be positive about it, wish it a fair wind and hope that the genuinely felt fears expressed during the investigation will not transpire.

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At the risk of boring the House I would like to reiterate the point that I made on 8th March, to the effect that I believe personally that the privatisation of RAS is a good thing, reaching that conclusion by, and I quote, col. 552:

    "weighing up the pros and cons from the perspective of experience in the recruitment and assessment sector both as a user and as a manager of such a function within the normal functions of a commercial business".

Just the other day I spoke about graduate recruitment to the previous Director of Personnel of British Airways, who ran the function until 1st January this year when she was promoted to an even more senior post. She told me that British Airways does sub-contract about 50 per cent. of the activity, and the recruitment in British Airways of graduates would be similar to the fast stream recruitment to the public service. The outsourcing work that they have decided not to do themselves concerns administration, selection, assessment centres and psychological assessments on a one-to-one basis; in other words, the functions carried out by RAS for the fast stream. It is therefore not unusual to do that work outside.

When I asked why this information could not be conveyed to the Select Committee it transpired that the letter seeking evidence landed on the desk of a member of staff of the recruitment office. If you belong to a large organisation which has a fairly high profile, like British Airways, and is regarded as a successful organisation, I can tell you that you get something like a dozen letters a week looking for information from students who are doing PhDs or postgraduate work on business studies. I guess that what happened to this was that it was dealt with in the same way because the request was not dealt with at the highest level and appeared merely to be what one would call a normal inquiry. Not too many people outside these hallowed walls realise the importance of a Select Committee, and I suggest that when we look for evidence in future there should be some strong comments made to the effect that this is very important and it is in the national interest that the evidence is supplied at the highest level.

Similarly, no headhunters (which of course is the colloquial term for search and select consultants) responded to the letters from the committee. This is a real shame as I believe their evidence would do much to convince the opponents of privatisation that the functions carried out by RAS were not unique, but are functions which are undertaken in the general initial recruitment process in major companies in the country and which are outsourced by many efficiently run organisations who are looking for the best candidates, do not forget, for their own fast stream.

I am aware that there is a strongly held feeling that recruitment to the public service is different. And of course it is. But it is not all that different. The skills and methods used by RAS are used by many other organisations in the recruitment and assessment business.

During our deliberations the fear was expressed that if RAS fell into the hands of headhunters it would be disastrous. It is interesting to note that the shortlist of potential owners of RAS does not include a single

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headhunter, so that concern has been removed, but it does include a company with a long history of developing psychometric testing and with a very strong research function, a company indeed with a proven record of success that I have used in the past. I hope therefore that that information helps the members of the committee who still feel very concerned about the likely future owners--I am not saying that that company is going to be successful--of RAS.

I feel that it is important that we try to take the heat out of this issue and for my part I am grateful to my noble friend the Lord Privy Seal for unknowingly removing the last vestiges of concern I had on some of the recommendations. Although I do not know whether I am right, I believe that the detailed comments of my noble friend indicate that great notice has been taken of our report in the past week, despite the widely held view within the committee that we were wasting our time and whistling in the wind. I continue to take heart from the fact that other privatisations have been most successful. Our public service will use a privatised RAS in the same manner as it uses RAS currently, and I am sure that we shall continue to attract the best brains into the public service even if the case for the privatisation of RAS has not been made.

12.45 p.m.

Lord Taylor of Gryfe: My Lords, first, I wish to express my appreciation to the chairman for his masterly handling of this difficult subject in a very short period and to my colleagues who served on the committee for their spending long hours studying the evidence and evaluating the subject. I want also to add my congratulations to the noble Lord, Lord Gillmore of Thamesfield. It was obvious during the deliberations in the committee that his presence would be of immense value to the House of Lords in general.

Perhaps I may make an apology to the House. To get home by 10 o'clock tonight I have to get a four o'clock train and that is sometimes difficult with a tube strike in London. I have to get to King's Cross, so I apologise to the Minister and to the House if I am unable to remain for the conclusion of this debate.

This has been a deeply disappointing morning. At the first meeting of this committee I suggested that we should proceed no further, that we should advise the House that the Government have made up their mind and that the House should be made aware of the fact that its decisions and its deliberations counted for nothing in this matter. I was convinced by my colleagues on the committee that this was a quite unsympathetic and irrational view to take of the Government's intentions. Subsequently Ministers appeared before us and gave us assurances in connection with our deliberations. Roger Freeman said:

    "I look forward to seeing the conclusions of the Report of that Committee, which I understand will be available before the Summer Recess--and before we complete any arrangements for the transfer of the ownership of RAS. I give my assurance to this place and to the other place that the observations of the Committee will be taken into account and carefully considered".

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It was only on the basis of that kind of assurance that I felt certain that the report would be given due consideration and due weight. Indeed, the Lord Privy Seal, when we discussed this earlier on a Question, said that if this committee produces a show-stopper report, it will be given due weight by the Government. I never quite found out what a show-stopper report was, but if you read the conclusions of this committee, it reads to me like a show-stopper report. It simply says that the case has not been proved.

Apart from the detail of this report there is an important constitutional matter with regard to the role of the House of Lords. We debated in this House the future of the House of Lords, and the Government were very strong and very firm that the House of Lords as presently constituted had an important role to play in the decision making of government.

The House of Lords has considered this matter. The House of Lords has reached definite conclusions. The House of Lords has made its recommendations but, as has already been said, when the Deputy Prime Minister appeared before us he made it abundantly clear that, whatever the pretensions of this House to being a revising Chamber, he had no doubts; he had made his decisions and what the House of Lords was going to consider did not matter at all. I suggest that is a very important matter, duly emphasised by the noble Lord, Lord Jenkins of Hillhead.

There is another, more moral aspect to this matter. When we return after the Recess, the Government may have only six months more left to live. I do not know what the decision of the electorate will be. But the Government are about to produce a shortlist of candidates for this job and to sign five-year contracts with the successful company. Any government which succeeds this Government will have to honour those obligations or pay to discharge their commitment.

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