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I should like to detain the Committee a moment by talking about some personal experiences I have had as a Minister letting contracts in the public sector. I authorised contracts for elective surgery, diagnostic equipment and clinical assessments worth hundreds of millions of pounds. There was no requirement in primary legislation to go through the process set out in the amendment because there are umpteen safeguards in common law and European contract law for the process by which contracts are let. You have to go through a very diligent process of specifying what you require and making that information available to all potential providers. As a public body, you are under an obligation to seek value for money in your contracts. There is often a testing process supervised by the Office of Government Commerce and the Treasury. We do not need to lay this down in primary legislation. We are still accountable to Parliament as Ministers when we make those decisions. We can still be hauled before a Select Committee such as the PAC and we still have to answer to Parliament, day in and day out, in questions and parliamentary debates, for our behaviour and conduct in letting those contracts. This is not how to handle this issue. Micromanaging ministerial actions in the area of contracts through primary legislation, as this amendment does, is not how to govern an advanced country.

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Baroness Gibson of Market Rasen: Does my noble friend therefore disagree with the Home Secretary in the other place, who seemed to indicate that he had no problem with the report being placed before Parliament?

Lord Warner: I do not think that I am disagreeing with the Home Secretary, but I do not think that when he made his remarks he envisaged that we would go through such a process even before letting the contract as is provided for in this amendment. Of course, we may have to answer for our conduct to Parliament at a later stage, but this amendment goes further than just a report; it specifies a lot of the detail about how you would let the contract in the first place.

Lord Ramsbotham: I remind the noble Lord, Lord Warner, that the Explanatory Notes set out the framework for what is proposed here. In paragraph 4, they say:

Paragraph 9 says:

In other words, it invites the inclusion in the Bill of the detail on how the Secretary of State will do that.

Lord Warner: I know that we are in Committee and that I am no longer a Minister—although it is beginning to feel as if I were again—but this process of contracting takes place outside primary legislation. Nothing in the Explanatory Notes—and I have read them carefully—suggests to me that we should lay down in primary legislation such fetters on future Secretaries of State in how they engage in contracting.

Baroness Linklater of Butterstone: I support the amendment because it goes to the heart of the anxiety of people in this field about contestability and the process of contracting out probation services. There are concerns about costs and cutbacks throughout most of our public services. It is a constant concern, as the noble Lord, Lord Warner, has already illustrated, and this area is no exception.

The reordering of the Probation Service, which is at the heart of this Bill, reflects in most people’s minds the fear that the Government are looking at reoffending rates, concluding that the figure is very high and costing us all dear, and deciding that savings must be made through alternative providers. That is very simplistic but it is at the heart of the worries in people’s minds. That argument ignores the fact that the Probation Service has done extremely well against the Government’s targets. Only this week it published its latest figures for how it has performed against those targets; they have never been so good. It also ignores the fact that reoffending is an issue that is not solved simply or quickly, particularly when the causes of offending are looked at in any depth.

All this is axiomatic to most people who deal with the problem. It is not a situation which is popular politically, not least because the causes are seldom dealt with by simple punishment and there is no quick fix for changing behaviour. Therefore, whoever manages offenders has to acknowledge this. Dealing with the very complex problems of this group of challenging, dysfunctional human beings requires first and foremost a wide range of skills, knowledge and experience. Generally this does not come cheap. Cutting corners in the interests of economy is likely to be very counter-productive. This amendment would not, as the noble Lord, Lord Warner, suggests, result in micromanagement but would require the Secretary of State to, as it were, unpick the criteria by which arrangements will be made with any provider for making probation provision—it makes clear what these criteria should be. He would be required in an order to set out clearly the factors which determine how the decision on commissioning is made. The amendment is to do with clarity and better understanding. These factors will have to include quality of service as well as value for money and will clarify the priorities which underpin any decision.

It goes without saying that we need a clear commitment in this form, not merely through verbal assurances, that the quality of probation services will not suffer and must come first. This amendment also requires that minimum targets are not set—as has already been argued—for the amount of probation services to be provided by the voluntary or private sectors; particularly given the fact, as we argued earlier in the amendment on charities, that some of the very best practice may be found in small, local, voluntary providers. These may not operate economies of scale but on the basis of quality at a human level. The best way to achieve the highest standards required is to ensure the transparency that this amendment seeks. Thus, it has our full support.

Baroness Howarth of Breckland: I apologise for not being present at the beginning of this debate and for missing this riveting discussion on two Committee days. I feel rather as though I am diving into a very deep end. I have questions about the amendment. I understand the heart of it and the need to ensure quality of services. However, I do not understand why that quality can be provided by only one sector.

I was the deputy chair of the National Care Standards Commission. When we were looking at elderly persons’ homes it was clear to me that the difficulties faced by local authorities in service delivery were just as great as those faced by the private and voluntary sectors. Those difficulties were the reason that local authorities closed homes long before the private sector did so. As the noble Lord, Lord Warner, pointed out, we can all trade those sorts of stories. However, that is not the issue. The issue is about quality and levels of resource and the authority to ensure those.

Like the noble Lord, Lord Warner, I am afraid that I have real anxieties about managing through statute. I have criticised this Government on a number of occasions for doing just that—trying to micromanage through statute. I think that is what this measure would do. I may have missed something and I should be grateful if someone can help me, but I do not understand what the measure means. Does it mean that we assess quality only when this provision is undertaken by the voluntary or private sectors? I would take offence at that. We have to provide a level playing field for all contracts, whether undertaken by the public, private or not-for-profit sector.

I do not understand the situation regarding minimum targets but I understand the heart of the matter. I declare an interest as the deputy chair of the Lucy Faithfull Foundation. The Home Office owes us a great deal of money, so I know all about the difficulties of commissioning and it not happening on time. Therefore, I have a vested interest, if you like. It is inappropriate not to recognise that when you set a contract, you set it with a budget. I am sure that Members on the Front Bench opposite support that strongly. You have to assess what you want to achieve for the budget that can be given.

We in the Lucy Faithfull Foundation were recently told that, due to the delays caused by the Bill, our contract for probation services could not be renegotiated so we would have to renegotiate what we could give for the contract. That seems a sound and sane way forward in agreeing contracts, but it is all management; it is all to do with day-to-day business on the ground. I would find it difficult to support the amendment for the very reasons that the noble Lord, Lord Warner, eruditely outlined: this is to do with how you make the service run, not the strategic context in which the legislation is set.

Lord Northbourne: I support what my noble friend has said. We are talking about a change of ethos to that of a business contract. We have to be satisfied that, in negotiating contracts, the weaker participant is not exploited, as has happened. I know of charities that have undoubtedly been exploited by local authorities and others, sometimes by a local authority going back on its word, and sometimes by its not paying up on time. Very often it is by the local authority treating the charity or other organisation as a waste-paper basket; when it has too many clients it passes them on, but when it does not have enough it keeps them all for itself. Those sorts of thing have to be covered, and I should be much happier if the noble Baroness could assure me that there would be some legal help for small charities and organisations negotiating contracts.

Baroness Howe of Idlicote: The more I listen to both sides of the argument on the amendment, the more persuaded I am that reassurance is needed. The Secretary of State has the power to do all that is set out. We know from previous systems that effective voluntary organisations have run short of funds on many occasions, so the past has not been perfect. However, as this is all being left up in the air, the amendment seems crucial, not least the words,

That phrase is there to be part of the measurement. For the rest of us out there in the public who are concerned to see that this is effective, and that we are well protected and well served so far as rehabilitation is concerned, arrangements to publish reasons why an organisation was chosen are crucial. They would certainly protect the weaker partner; if something was delivered to the Probation Service, the weaker partner would need to know exactly why.

I am sorry that this situation has happened and that everyone has become so confused about the exact meanings and how you measure these things. I am sad to say that, whether due to delays in bringing this forward or uncertainty whether a Bill is needed at all—so far as I can work out, practically everything that has been discussed could have been done already under existing arrangements—I am in favour of the amendment.

The Earl of Listowel: There is one area of reassurance that the Minister might be able to offer. Again and again I hear from people working in the field providing services that if only more operational people—those who have to put things into practice—were involved in commissioning services, it would improve the process significantly. It would be helpful if she could say something about that or perhaps write later about how it would be ensured.

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Baroness Gibson of Market Rasen: I say to the noble Baroness, Lady Howarth—I have tremendous respect for her knowledge and expertise in this area—that the amendment is not designed to differentiate between the private, public and third sectors on value and quality; it is an attempt—perhaps a clumsy one—to clarify the present situation. This debate has shown that more clarity is needed, and perhaps my noble friend will be able to provide some reassurance.

Lord Bassam of Brighton: I have listened to the debate with great interest and care. The noble Baroness, Lady Gibson, touched on what is at the heart of noble Lords’ concerns—to seek further clarification on the way in which the process will work, how arrangements will kick in, how the system will operate on the ground and to reassure those operating in the field how commissioning and the development of a mixed economy of provision in this sector will operate. I well understand that concern.

Like the noble Lord, Lord Warner, the debate took me back to a time when in local government I had to deal with CCT, the development of the contracting out of services from the local authority sector and embracing the private sector. Rightly, one of our concerns at that time was that there might be a compromise on quality, given the demand for further economies. We were right to make that argument at the outset. Over time there has been a development of thinking that has established the importance of specifying quality in contracts at the outset; that principle is at the heart of our consideration. That is where we have come to in this debate—the need to understand what quality means when we specify contracts.

I understand the concerns that have been expressed in this debate. The noble Baroness, Lady Linklater, talked of cost-driven cuts and of her concern that they would impact on the way in which the service is developed. It is not our objective simply to drive down costs. That is not what this is about. It is not our objective to seek to cut the service—far from it. If noble Lords look at the history of this Government, they will see that we have invested in the Probation Service. Before we came into office, there had been a period of disinvestment, particularly in training. I argue that we have a good story to tell on training provision, and in the past few years we have invested some £40 million extra in training and reinstated its importance and value—and the Probation Service has access to it. We have used that to ratchet up the quality of services. This is not a cost-driven and cuts-driven exercise.

However, there was much in our debate with which I agreed. I understood and agree with the spirit behind the amendment of the noble Baronesses, Lady Gibson and Lady Stern, and the noble Lord, Lord Ramsbotham. As I made clear during our debate on Amendment No. 49, we are resolutely opposed to the setting of targets for the amount of provision to be made by any particular type of provider. I underline that we are not simply embarking on an exercise of setting targets for the amount of provision to be put out to competition and for contestability. That would run counter to what we are trying to achieve in this Bill, which is aimed squarely at enabling services to be commissioned from the best available provider.

In our previous discussion, I quoted what my right honourable friend the Home Secretary said on the subject in the other place. His words put our intentions beyond doubt. Indeed, I find it difficult to see how we could justify any other approach, and that is one reason why I am surprised that some Members of the Committee, including the noble Baroness on the opposite Bench, continue to argue for primacy for the public sector.

I remind noble Lords of the principles that we want to underpin our approach to commissioning and contracting. As I said, the overriding principle is that we want to commission from the best available provider, but how will we decide who that is? The exact factors will depend on the individual circumstances but I reassure the Committee that “best available” does not necessarily mean “cheapest”. Of course, value for money will be a key factor, and we would all argue that that is right as it is the public purse that we are talking about. However, the overall aim is not to save money but to raise standards and further the aims set out in Clause 2(4), which we debated in considerable depth last time we met.

Therefore, we are looking at solutions which improve the quality of services provided to offenders, victims and communities and support end-to-end offender management. We will discuss standards in more detail under a later set of amendments but I can say now that we will expect all providers, from whichever sector, to deliver to the same high standards. That does not mean that we will expect them all to deliver in exactly the same way, because we want to foster innovation and creativity—I think there has been an acceptance from all sides of the Committee today that we need to develop innovation and creativity in this sector—but we will also ensure that there is a basic set of minimum standards with which everyone will comply.

The noble Baronesses and the noble Lord propose placing criteria on the face of a statutory instrument. I am with my noble friend Lord Warner and the noble Baroness, Lady Howarth, here. I do not think that that is necessary or appropriate; it is legislative over-prescription. The overriding aims are already set out clearly in the legislation at Clause 2(4), and we propose to enshrine standards in legislation. We have also made it clear, on the record here in the Chamber, what our overall approach is on targets and best available providers.

The amendment also proposes that the Secretary of State should publish a report explaining the basis on which individual contracting decisions are made. I understand why noble Lords might think that a statement of reason should be made but we are already striving for transparency in this regard. In fact, we treat very few elements of a contract as commercially confidential. The main exceptions are specific elements, such as cost models and intellectual property rights, and our approach in this respect is fully in line with normal commercial practice. However, we place unpriced copies of existing PFI contracts in the Libraries of both Houses of Parliament, and we have provided, on request, information on areas such as financial sanctions and contract costs, with NOMS currently publishing performance data on private and public sector prison providers, as well as probation areas. The National Probation Service performance report is published on a quarterly basis on the NPS website.

It is worth adding that, thanks to the earlier amendments that the Committee agreed, there is now also a requirement for the Secretary of State to publish plans setting out the way in which he proposes to commission services for the following year. Indeed, this requirement will also extend to trusts and other providers in respect of the services which they, too, wish to commission.

We are already putting out a lot of information on the basis on which contracts will operate and be led, so transparency is already there with a lot of the detail that is contained in those publications. We do not think it right to over-prescribe in statute how the contracting process will work but we think that, in essence, we have the right balance. We understand that nervousness may exist in some noble Lords’ minds, but we want to provide the opportunity for creative and innovative aspects in the way in which these contracts develop, because we think that there is added value in that.

I reject the suggestion that this is a cost-cutting exercise; it is not. It is about enhancing the quality of standards. Over time, costs may rise as a product of this, but I do not want to predict that one way or the other. It is important that we secure value for money, that we become more effective in provision and that the service is fully attuned, however contracts work, to the need to reduce offending and reoffending rates. That is the direction of travel of our policy and that is our objective.

Some specific questions were asked. The noble Lord, Lord Northbourne, was rightly concerned about capacity building. We understand that. In the Cabinet Office additional research is taking place and consideration has been given to capacity building in the independent sector. Yes, we shall try to provide some support in that general direction and some of that support is already there.

The noble Earl, Lord Listowel, was concerned to draw, in essence, probably on best example and best practice in commissioning. Yes, we want to ensure that those good practices are widely understood as their value is evident. From my experience in local government, one of the riches that we unlocked through the contracting process and the development of mixed economy of provision was simply that there was a greater sharing of best practice which added value to the way in which services were delivered through different providers.

I have dealt with targets. In earlier Committee sittings, we have made it clear that we have no intention of setting targets for the amount of work to be contracted to other providers. We do not see the need for that. Perhaps I can offer a measure of reassurance to my noble friend Lady Gibson. On commissioning and contestability, who ends up with the work is, in a sense, not irrelevant, but misses the point. If the exercise can be directed to raising standards and improving the quality of provision, surely that is the most important overriding objective. Certainly, in the custodial sector, second time around Her Majesty’s Prison Service won three out of the five market-tested exercises for providing prison facilities and custodial services. Bids for Buckley Hall, Blakenhurst and Manchester were won in-house. We could reasonably argue that that had the beneficial side effect of raising standards in those institutions. That points towards one of the profound benefits of the contracting process.

I hope I have answered the questions and provided a measure of reassurance. The debate has been useful because it has focused on the key issue, which is using contestability to drive up quality in certain areas of provision. It has also focused on the importance of reducing reoffending and using the drive and initiative in the private sector and the voluntary sector to achieve that overriding objective, I hope that, having heard that, my noble friend will feel able to withdraw her amendment.

Baroness Gibson of Market Rasen: I thank all noble Lords who have taken part in this debate, which has been very useful. I thank my noble friend for his very comprehensive reply. I shall reflect on what he has said. For the time being, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 5 [Power to establish probation trusts]:

Baroness Anelay of St Johns moved Amendment No. 55:

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