Civil Service

Part of Prayers – in the House of Commons at 11:22 am on 28 October 1983.

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Photo of Alan Williams Alan Williams , Swansea West 11:22, 28 October 1983

It is a pleasure to stretch my legs. The Minister obviously believed it appropriate to introduce a programme for the life of a Parliament and beyond with a speech for the life of Parliament and beyond. It was an interesting and fascinating exercise in longevity, if not effectiveness. It is a precedent for the speech that I am about to make.

As I listened to the Minister for 52 lengthy minutes I recalled a speech at the Oxford Union by someone whom the right hon. Member for Taunton (Mr. du Cann) might remember. His name was George Gammans and he came to the Oxford Union when he held the exalted office of Assistant Postmaster-General. The holder of that job was always noted for his high quality of oratory. After speaking for 40 dreary minutes Mr. Gammans said of some issue: "You may well ask how long it can go on. I can tell you that it could well go on for the rest of your natural days." This morning I remembered that sentence.

I congratulate the Select Committee on its report. There is no doubt that the Select Committees have proven themselves more than adequately. They are a tremendous addition to Parliament's armament for probing and checking the Executive. I congratulate the right hon. Member for Taunton on his role in establishing the status of his Committee. I also congratulate my hon. Friend the Member for Motherwell, South (Dr. Bray). He said that he was not willing to be a neutered political animal. We served in Government together in the 1960s. If there is one thing that my hon. Friend has never been it is a neutered political animal. He has always had an independent mind. He even left the Government to publish a book on Government statistics because he wanted to be able to write freely.

The Minister spoke of what has happened since the Conservative Government came to office. He said that a transformation of attitudes had taken place. I agree with him. I invite the Minister to look at the correspondence column in The Times today. Unfortunately the views of the lady referred to by the general secretary of the Inland Revenue Staff Federation include unparliamentary language so I shall not quote them.

Hon. Members should be worried at the disintegration of morale. The right hon. Member for Taunton referred to it, but he is too loyal to his party to put it in strong terms. He implied that morale had suffered. That is understandable with the successive bashings that it has taken. There can be no doubt that one of the arch culprits is the Prime Minister.

The right hon. Member for Taunton said that the Civil Service had never been so heavily criticised. That is correct. Much of the criticism in the past few years has come from the Dispatch Box. From the content and tone of his speech I judge that the right hon. Gentleman was making an attempt at rehabilitation. The message must be heard in the Civil Service unions with whom apparently the Government now want to make peace. It is about time. Enough damage has been done in the past four years.

Morale has disintegrated under arbitrary manpower cuts. I say "arbitrary" because, as the Minister admitted, the target figures for the cuts were set before the levels of unemployment and the pressures of demand on the employment and social security offices were even envisaged. The figures were irrelevant to the functional needs of the service.

Morale has crumbled as a result of a grossly mishandled dispute, which could have been settled much earlier for the same sum at which it was eventually settled. The cost of over £700 million in interest charges on uncollected taxes is still being met by the Government. Morale has collapsed because of the charade over Civil Service pensions, which has been fuelled by the Prime Minister in the House.

The right hon. Member for Taunton said that most criticisms of the Civil Service had been unfair, thoughtless and from people who should know better. He said that such criticism was contemptible. I could not put it better myself. I hope that the Minister will draw that opinion to the Prime Minister's attention. I think that she deserves every word of it. The right hon. Lady castigated faithful ex-employees for daring to draw the pension that successive Governments had negotiated and agreed. She rejected the advice of the Government Actuary because it did not confirm her prejudices on the funding of those pensions. She set up a rigged committee and then spurned it when the logic of its findings did not confirm her prejudices. The Scott committee came out with its conclusions, but they did not confirm her preconceived ideas. Her role has been a miserable and destructive one in terms of the Civil Service and its relationships with the Government. She arbitrarily and unilaterally tore up, without consultation, a 25-year-old pay system introduced by a Conservative Administration in the 1950s. Then, in an about-turn, she abolished the Civil Service Department.

As the right hon. Member for Taunton rightly said., morale is a key factor in efficiency and effectiveness, and this is understood in the Army and industry. That is why we face a service in which there is unprecedented inefficiency and ineffectiveness that is not the fault of the officials involved. Today, we have been treated to what the Minister clearly sees as a Government success story. All things are relative. By the Government's standards this might be a success story, but I hope to demonstrate that by any normal standards it could hardly be seen in that light.

The Minister tells us that the Civil Service now has the lowest level of manpower since the second world war, regardless of the fact that demand for the services that it supplies happens to be at the highest levels since the second world war. The Government have tried to achieve these objectives through manpower cuts, hiving off and privatisation, but this has resulted in a lower standard of service to the public. The cuts have been achieved by the financial sleight of hand of passing costs from one part of the public sector to a different part of the public sector and at the cost of unbelievable inefficiency bordering on bureaucratic chaos.

In November 1982, a report of the Treasury and Civil Service Select Committee said that 50 per cent. of the previous 12 months' savings had been achieved through general streamlining, including a lower standard of services and the dropping or materially curtailing of a function. As we look at one sector after another of the Government's activities we see, as a result of the cuts in the past four years, lower standards of service to the public. It is not just lower standards for the public generally but, all too often, lower standards to the most needy. Those able to defend themselves are looking after themselves.

There is an illogicality about so much of this. It was in 1980, early in this process, that the chairman of the Board of Inland Revenue pointed out to the Government that £3 billion was being lost to the Government through the black economy. In their own financial statement and Budget report in 1981–82 the Government said that on VAT alone they were being denied between £120 million and £200 million of tax due to them. That is a massive loss of taxable income to the Government, and this was before they imposed the continuing round of interest charges on uncalculated taxes.

Against this background of clear and obvious evasion of tax obligation, 400 VAT control posts have been cut. Now, over half of the people who pay VAT will not have been visited within the three years during which they have to keep their records. Thus, they will not be visited before they are entitled to destroy their records. This is despite the fact that one in three of the checks have revealed underpayment. The Inland Revenue staff has been cut by 12,000 since 1979, but the PAYE backlog is still costing the Government £10 million a month on top of the £700 million to which I referred earlier.

The Government have cut the numbers of staff by 12,000 despite the fact that in 1982, the Public Accounts Committee report said that the 1,870 investigatory staff in the Inland Revenue had produced £173 million-worth of extra taxation income. Small wonder that the report concluded that these figures suggest strongly that substantially more investigation staff should be employed by the Inland Revenue. As we recorded in our Twelfth Report 1980–81, the immediate yield in additional revenue as a result of the activities of present staff is at least four times the cost of their salaries. Although, in cost benefit terms, these people were able to yield in income to the Government four times what they cost the Government, the Inland Revenue is still suffering major cutbacks. Such is the new efficiency that the Government have created in the Inland Revenue that, as the letter to The Times says, there is no prospect of the target of in-depth examination of only 3 per cent. of self-employed accounts, 1 per cent. of companies', being met. What will happen to these already massive figures of tax evasion and loss? Day in, day out, year in, year out, they far outweigh the figures of gain that the Minister has claimed for the Government. With 12,000 Revenue staff gone and another 3,000 likely to go in the next six months, we find that, in July this year, when the Revenue carried out its count of outstanding correspondence, there were 5 million pieces of mail awaiting reply in the tax department. Some 1,800,000 were over two weeks old and nearly 250,000 were over two months old. With 12,000 jobs gone in tax offices in July, there were 1·25 million more letters waiting to be answered than there were in April, a 34 per cent. increase in three months.

The tax office arrears were up 42 per cent. on April and 36 per cent. on July of last year. However, according to the letter in The Times today, faced with a backlog of 5 million items of correspondence waiting reply, what economy has the Minister made? He has put a ban on recruiting typists. No doubt it will be quicker if the Inland Revenue staff do the letters in longhand. To this existing chaos the Minister is about to add new cuts—in fairness to him it is one of his colleagues, but nevertheless in the same Department—by saving 600 clerical posts. This system is called "selective record-keeping" and means that the tax files on 22 million people paying PAYE will be destroyed. That is quite an economy campaign. There will be desk folders, but the system will have problems.

The Inland Revenue has had an unusual burst of honesty and openness on this matter, and in a press release admitted that the change might cause problems, as the loss of 22 million files might well do. As we would expect, the Inland Revenue has investigated the matter and in a press release it said: what those cases will be, how many there will be … we cannot yet see. In our view this is a consequence of the (new) system for which there is a price to be paid. In other words, without consultation with the staff and on an inadequate pilot study the Government are unleashing a new system in relation to PAYE taxpayers when they have admitted they cannot forecast the problems that it will create.

I can tell the Government of some of the problems that it will create. The people whom they did not consult, the people who work in the offices, have taken the trouble to try to tell Ministers-not that the Ministers have listened. It will be impossible to deal with complaints properly. It will be harder for taxpayers to check their tax affairs, particularly some years back. There will be extra delay because the papers will be scattered around various offices. Evasion will be made easier. The work of Members of Parliament and the ombudsman—we all know how many tax cases we have to deal with—will be made more difficult because of this administrative saving that the Government are making, doing away with 22 million of their tax files.

This proposal has the makings of a repeat of another masterpiece of Conservative efficiency—the housing benefits scheme. When it was introduced, it was heralded as saving 2,300 DHSS staff and as a great saving in manpower. The Government failed to point out that it would probably lead to the need for as many staff again in local government, but local government has to pay for that, so why worry about it? As far as the Government are concerned, it is a saving, but it is not a saving as far as we, the taxpayers and ratepayers, are concerned. However, that is irrelevant, because the Prime Minister can say that she has kept a meaningless commitment about manpower figures.

The scheme that the Government introduced to save 2,300 staff is so complex that the Department of Health and Social Security, before it washed its hands of responsibility in helping with rents, produced a booklet—"booklet" is an inadequate description; it was a book of over 100 pages—merely to explain how this simple little scheme works. Nevertheless, although it was so complex, and against the advice of the local authorities, the Government rushed ahead. After all, the Government had a timetable to keep, with dates on which they had to reach their targets for cutting down manpower. So, despite the advice from the local authorities that the scheme was complex and that they needed time to train new staff in the requirements of the scheme, the Government drove it through. I wonder how many hon. Members have not received complaints from constituents about the workings of the scheme.

Months after the scheme was introduced, many private tenants still have not received an assessment, and many of them have received little or no benefit. As a result of this economy on the part of the Government, not only is there the chaos that the hon. Member for Stockton, South (Mr. Wrigglesworth) described, but the needy—the people that the scheme was intended to help; 2 million of them—will lose financially. it is another example of the needy paying for arbitrary staff economies at the centre.

Another dogmatist brainchild was the sickness benefit scheme. I was tempted to say that it was a scheme of which you, Mr. Deputy Speaker, have an almost unique knowledge, but it is unfair of me to make that comment. In came the sickness benefit scheme to save 5,000 Civil Service jobs in the Department of Health and Social Security. Now the very employers, particularly the small employers, whom the hon. Gentleman said had benefited from this enormous cutback in filling in forms giving statistical information to the Government, say that they need the time to fill in all the forms that they have to fill in for the sickness benefit scheme. They have to keep records of who has been paid, who has not been paid, why they have not been paid, and the qualifying days. It is little wonder that the chairman of the National Federation of the Self-Employed, speaking on behalf of his 50,000 members, said: We object strongly to the fact that we shall be acting as unpaid civil servants". In a way, it is rather poetic that one of the organisations that had been howling for a cutback in bureaucracy now finds itself recruited to aid the cutback of that same bureaucracy.

We must not forget the sick. After all, the scheme is devised to help them, but perhaps that is a mere peripheral consideration. Under this scheme, many of them are far worse off than they were under the scheme that it replaced.

The Government's narrow concept of efficiency—the right hon. Member for Taunton was right when he said that we should talk about effectiveness more than efficiency—is pursued regardless of the effect on the people that they should protect, the people who most need their protection. In 1979, for example, the date when the hon. Gentleman started his review of the changes that have taken place, we had 952 factory inspectors in Britain, and the Government promised that an extra 200 would be added to the staff because of the work loads. We now find that, far from the extra 200 who were promised, 100 of the inspectors who were there have gone. The result is that fewer than 5 per cent. of workplace accidents are investigated. The Health and Safety Executive staff has been cut by 700 in three years. So, when the new asbestos regulations came in—we should remember that 50,000 people will die in the next 30 years from the effects of asbestos—the work related to those regulations could be carried out only by dropping other HSE work. Seven hundred people will die in accidents at work each year, over a quarter of a million suffer severe occupational injury at work, and 900 die from industrial diseases. The Health and Safety Executive estimates that the total cost is more than £2 billion a year, and as a result of the work of the HSE, between 1974 and 1983 the accident rates fell by a third. If ever an organisation has justified its existence, this one has. Yet if the request from the Department of Employment in January this year is met, the HSE will have fewer staff than it had when it was set up.

We see the same thing in the Mapower Services Commission. The tragedy is that young people are lured into crackpot schemes in industry that have not been properly set up, because the MSC does not have the staff to ensure that the youngsters are working in a proper environment. There have been tragic cases of youngsters maimed and killed simply because the manpower is not there for these organisations to carry out their work. These economies are not only false but unforgivable, because they have been executed with a cynical disregard for their effect on life and safety.

Even the most needy of all do not escape the Prime Minister's obsession with manpower cuts. In the two years to 1982, the numbers claiming supplementary benefit rose by 34 per cent., yet in the three years up to 1982, at the time the increase was taking place, the staff administering it was cut by 6,000 and next year is due to fall by a further 11,000. Yet the Government cry crocodile tears because people are not claiming the benefit to which they are entitled, because there is not the uptake that there should be for some of the more obscure benefits. Is that surprising when one looks at the changes that have been introduced while Ministers profess concern for the disabled at the Dispatch Box? Ministers go back to their Departments and make administrative decisions that ensure that those who are ignorant of the system remain ignorant. For example, the unemployed used to be visited within four weeks of making a claim at a time when they also had earnings-related income. That meant that they were then probably better off in their redundancy. The unemployed were visited in the first four weeks of making their claim to ensure that they were made aware of their benefits. Such a visit now takes place once a year, normally towards the end of the year.

Postal applications have been introduced, which is fine for those who understand the system, who happen to be average, ordinary and literate, without any unusual problems, who understand the forms and are not frightened by them, and if we overlook the fact that the Government's pilot studies have shown that there is a high incidence of error and delay as a result of switching to those forms. That is another move that ensures that those whom the Government say need help are actually finding it increasingly difficult to obtain that help when they go or write to the local offices.

Visits to pensioners used to be once a year but they are now to be once every four years and it is doubtful whether even that programme can be sustained. Yet those are people who are most likely to have great difficulty in understanding their entitlement. The west midlands county council—although other areas have similar levels of unemployment the accelerated growth in unemployment there has been unequalled—was forced to observe that the welfare benefit system in its area was nearing breaking point because of the huge demands being made on it through soaring unemployment.

At a time when need is most desperate the Government are making it more difficult for people to obtain services. As a poetic side comment, it is probable that operation Major in Oxford would never have been needed if the old system of home visits had been in operation, thus preventing the fraud that took place. Indeed, my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris), who is sorry that he is not able to be with us today—we all know of his work over the years with the disabled—has told me that in his experience the disabled suffer particularly from the changes that have taken place as a result of the so-called improved efficiency in the Department of Health and Social Security.

Attendance allowances are now taking on average 13 weeks to process. Supplementary benefits, particularly the special benefits such as dietary and heating benefits, of which many people are unaware, are the very benefits that are most important to the elderly. Because they are not now receiving the benefits that they used to receive from the DHSS, increasing numbers are being denied the entitlement that Ministers assure us that they want them to have.

It is tragic that someone should be denied help that exists because he does not know how to obtain it. On other occasions the position becomes farcical. For example, in Bath the Ministry of Defence took the hon. Gentleman's advice and brought in contract cleaners. They were cleaners of considerable ingenuity because they gave each of their staff an extra name. Their staff would turn up one day working under one name and the next day working under another. That might be exciting but it has nothing to do with productivity. However, it has everything to to with avoiding national insurance. It meant that the staff was able to ensure that they never reached the threshold at which they needed to register for national insurance. It also meant, and this should concern the hon. Gentleman as a Treasury Minister, that while the Treasury had the files—it will not in future, so this will not be a problem—it was not aware of its entitlement to tax revenue from those people.

We all know that cleaning women are hardly the most affluent members of the British work force. They are often those who are working when they may be better off drawing social security benefits. They are the people who are trying to keep their pride by working when a job is available even when it may not make economic sense because they could probably do as well out of benefits. What are the Government doing to those people? They are driving them back into the benefit system because they are now telling those firms that are applying for Government contracts for cleaning work that they will not consider any contracts where the wage levels built into those contracts are not lower than the levels that presently apply in local authorities. So this caring Government take those at the bottom of the pile and squeeze them even further.

We have now reached the unbelievable position where as a result of the Government's policy the beneficiaries of the contract work—the employers—benefit from the fact that the Government have dropped the minimum wages clause for contract work. Those beneficiaries are the 20 per cent. in a trade association. There are many rogues in this area. They have recently told the Government that they want the introduction of a minimum wage because the 20 per cent. in a trade association were the more respectable cowboys who are now losing work to even worse cowboys. They now say that it is all well and good to get work from the Government by undercutting Civil Service rates of pay but that it is appalling that other people should take the work from them by undercutting their rates of pay. The leeches on one system are turning around and decrying the fact that they find leeches on their own backs.

Where will it end? What will happen? It is nonsense. In the Department of Employment, accordng to a study on hours of work—perhaps the hon. Gentleman will enlighten us on this if he catches your eye, Mr. Deputy Speaker—more than 25 per cent. of civil servants are working hours over and above those required of them. Officials are working more hours than they are legally required to and they are being told that they must continue to do so on a falling standard of living because their pay must not rise in line with the cost of living. In that same Department there is a shining example for those officals at Minister of State level. There there is a man who receives £5,000 more for doing less work. To be honest, in the Prime Minister's eyes, he is doing worthwhile charity work. She has identified a new, unregistered charity—the Conservative party. He is to be paid a higher salary for doing less work in the Department of Employment. How that must improve the morale of those who advise and work for him; all those who previously looked up to him.

The position is not what we have heard from the Minister today in a carefully tailored presentation. The reality is found, for example, in a report to the Prime Minister on running costs. It was not produced by a rogue elephant or an eccentric, but by Mr. J. S. Cassels, who is well known to both the Minister and the Prime Minister, because he has just been given a new and important role in NEDO. When he wrote the report at the request of, and for, the Prime Minister, he was second permanent secretary in the Manpower and Personnel Office. Therefore, it was not a wildcat operation. Like Sir Derek Rayner, he set up teams in various Departments and sought reports from them on the effectiveness and efficiency of the new systems. In that report to the Prime Minister, he said: The DES report says that meeting the cash limit may well have been: 'at the expense of efficient and cost-effective developments in the department."' That is not very encouraging, and does not quite fit in with what has been said today. Similarly, Mr. Cassels points out that the report of the Department of Trade stated: that the existing procedures have resulted in the cash limit being respected should not be taken as confirmation that resources are being used economically and effectively throughout the Department. Thus, someone right at the centre of things, in the new unit set up by the Government, is far less impressed than the Minister with the outcome of those cuts. As I have said, they have been disastrous for those who need the services of Government.

Reality is not as it was described in that long, turgid presentation of glossed-up claims for increased efficiency in the Civil Service. The reality is that the savings are illusory, and that is shown by the £700 million-odd costs on the revenue front. The accounting that enables the Government to claim such savings would win the respect of professional con men. The real cost is being met by those most in need. The beneficiaries are not the Government or the taxpayers, but the crooks, cheats and tax evaders.