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Lord Jenkins of Hillhead: My Lords, as the noble Earl will be aware, Mr. Michael Heseltine also gave us one of his primary reasons, to be precise his number three reason, for doing this; namely, to free the RAS from the constraint of the public sector ethos. So if I may say so, Mr. Michael Heseltine delivered a double whammy.

Earl Howe: My Lords, I have already referred to those constraints, and I have to say that I agree with my right honourable friend in the sentiments that he expressed, if not with the precise phraseology.

The central issue is that my right honourable friend said that he fully recognised the dedication of civil servants. He referred to "the best Civil Service in the world". That is an endorsement of my right honourable friend's view of the Civil Service; it is proof of it. He also said that he considered that the same dedication is to be found, for example, in the law, the accountancy profession, the Church, the teaching profession and so on. That was why I suggested respectfully to the noble Lord, Lord Jenkins, that he was seeking to blur a real conceptual distinction.

The noble Lord, Lord Chorley, said that in his view the integrity of the Civil Service recruitment process was threatened by the privatisation. The integrity of that recruitment has been very carefully considered during the preparation for privatisation by both customer

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departments and the Civil Service Commissioners. The Government are content that all the safeguards in place will ensure that that integrity continues to be protected.

But a further area of importance is the degree of consultation with departments before the decision to privatise was taken. Major departments were consulted on options for contracting out all or part, or none, of fast stream recruitment and on potential implications for general recruitment of privatising RAS. The conclusion of the consultation on the options for full or partial contracting out of fast stream recruitment was that all of the options would be technically feasible. A contract for the provision of the whole of the fast stream recruitment and selection process could be written which would give the fast stream customer sufficient control and flexibility to protect essential interests. On general recruitment, departments foresaw no problems in maintaining their role as good employers, nor would they expect to incur any additional costs--for example, the build-up of an internal intelligent customer capability--as a result of privatisation of RAS. Ministers were advised of the views of departments prior to considering Coopers & Lybrand's advice that privatisation would be financially feasible.

The noble Lord, Lord McIntosh of Haringey, referred to consultation with staff. The decision to privatise RAS was made by Ministers in the light of advice that privatisation was financially feasible. It was a decision consistent with the Government's policy to encourage enterprise by releasing potential into the private sector free from the constraints of public ownership. The staff were informed of the decision when it was announced, in November 1995. Since then, management has kept them fully informed of progress. My right honourable friend the Chancellor of the Duchy of Lancaster visited RAS at Basingstoke in May to hear for himself staff concerns about the privatisation. The staff had the opportunity earlier this week to meet the shortlisted bidders and to question them directly on the proposals for the future of RAS and the staff.

My right honourable friend the Chancellor of the Duchy has agreed to visit RAS again shortly to hear staff reactions to the bidders' proposals before any decisions are made on the preferred bidder.

It would have been inappropriate for Ministers to have consulted the staff on the principle of privatisation. That was rightly a decision for Ministers, taking into account the effect of privatisation on the public service and the wider impact on the economy. I suggest that since the announcement we have made every effort to keep staff fully informed of progress, and they are being consulted for their views on the bidders' proposals.

My noble friend Lady Park of Monmouth expressed her concern about staff who do not wish to transfer to the new company and whether they have the option of remaining in the Civil Service. All requests for transfer from RAS to other posts in the Civil Service are being considered sympathetically on their merits. I understand that to date no requests have been refused, but it is important, as the noble Baroness will recognise, in the interests of the staff as a whole and for the future of the business, that RAS is sold as a viable business.

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The noble Lord, Lord Chorley, raised the question of an assurance given to RAS staff by Mr. Trevelyan in 1989 that the creation of the agency was not a first step to privatisation. I do not believe that the criticism which he levelled is a fair one. Government policy on next steps agencies has always been that the move to agency status is not directly a step towards privatisaion.

Lord Chorley: My Lords, I am sorry to intervene but I was only quoting from the report. I made no comment. I just quoted from the report.

Earl Howe: My Lords, I am grateful to the noble Lord and I apologise to him for the fact that I was not here to listen to his remarks. I take the point to which I believe he was referring.

Government policy on agencies has always been that the move to agency status is not directly a step towards privatisation. Where privatisation has been seen as a clear intention for an agency, an announcement has been made to that effect. It has always been part of the next steps initiative that all agencies should be reviewed periodically and that a range of options, including privatisation, should be considered by Ministers to see whether the work of the agency needs to be carried out by the public sector at all or whether it could be carried out better by the private sector.

The noble Lord, Lord Taylor of Gryfe, in a powerful speech, said that in his view matters relating to the Civil Service should be a question of consensus, not of party debate. I believe that the noble Lord is being uncharacteristically disingenuous. We are not talking here of a fundamental Civil Service reform. This does not affect the principles that underpin selection to the Civil Service, to which the Government are committed. We believe it offers Civil Service customers the prospect of further improvement in its recruitment process--in other words, the operational process of recruitment--and in value for money. That is the long and the short of it.

The noble Lord, Lord Taylor, whom I am sorry not to see in his place, also indicated his view that the report had not been given proper consideration, and that my noble friend's assurance not to go ahead with the privatisation if a show-stopper was revealed had not been fulfilled. The Government have carefully considered this report. We have had time to do so. We have accepted, in effect, nine out of 10 of the detailed recommendations. In addition, changes have already been made to the contract as a result of some earlier concerns expressed by the committee. The Government do not consider any show-stoppers to have been identified. But the Government agree, as my noble friend said, that the privatisation should not be completed if the final bids do not represent good value for money.

Lord Wallace of Saltaire: My Lords, I am puzzled as to how on earth one identifies good value for money. This phrase has been used several times. My increasing puzzlement over this entire business is that I can identify extra costs from privatisation, but I am totally unable to identify any savings from privatisation; and the

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Government have so far been unable to show that there will be further savings or profits to the public sector from privatisation. How, therefore, are the Government to discover, and explain to us, where value for money lies?

Earl Howe: The whole question of value for money is a balance of a number of considerations. It is not simply the proceeds from the sale. It involves the extra costs generated by the sale for the intelligent customer, the charges that new RAS will levy on its customers and other considerations besides. The fast stream customers will also wish to look at the prices that RAS proposes to charge once they are submitted. They themselves will need to come to a view on which of the bids represents best value for money. That is a matter of close scrutiny.

Perhaps I may go a little further. The noble Lord, Lord Wallace of Saltaire, and indeed the noble Lord, Lord Taylor of Gryfe, suggested that your Lordships had been sidelined by the Government as the plans to privatise RAS have proceeded. Were that true, I too would be concerned. But the amount of parliamentary involvement in this issue has, by any standards, been exceptional. There have been debates in both Houses. Not only have the Government made every effort to respond quickly to parliamentary concerns but they have also abided by their undertaking to allow your Lordships' Select Committee to report before proceeding irrevocably to a sale; in other words, completion has been postponed from July to September. We responded to the wish of the Opposition in another place for the sale of RAS to be debated there and it is worth repeating that the Commons gave their approval.

My noble friend Lady Park tried to make out that national policy is being made by consultants. In her inimitable way, she is entitled to her bit of fun. But there is a serious point, of which she is well aware; namely, civil servants and consultants both provide advice but Ministers decide.

To the noble Lord, Lord Rodgers, I say that my right honourable friend the Deputy Prime Minister did not take the decision alone. He has overall responsibility, but he conferred with his ministerial colleagues, as it was perfectly proper to do, and ensured that customer departments were consulted before the decision was taken.

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