Local Government Competitive Tendering

– in the House of Commons at 4:04 pm on 3rd April 1984.

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Photo of Christopher Chope Christopher Chope , Southampton, Itchen 4:04 pm, 3rd April 1984

I beg to move, That leave be given to bring in a Bill to make provision for local authorities to put out to competitive tender certain Of their functions and services. My reason for introducing the Bill is that I believe in better value for money in local government. Too many local authorities are still paying well above the market rate for their functions and services, and in so doing they are effectively defrauding the ratepayers. Local government is spending more than £30,000 million a year and employs aout 2·5 million people, and the latest Manpower Watch figures show that the numbers employed are increasing rather than decreasing. I have no doubt that a significant part of the money spent by local government each year —about 70 per cent. of which is on manpower—could be saved if competition was introduced where monopoly prevails at present.

Part III of the Local Government, Planning and Land Act 1980 made a start by making competitive tendering compulsory in some construction, maintenance and highway works. Now is the time to go further. There is a mass of evidence that competitive tendering results in substantially lower costs. Indeed, the figures quoted are staggering. By March this year well over 3 million people in 23 local authority districts were benefiting from the services of private contractors in the provision of refuse collection, street sweeping and associated services. Before competitive tendering, those 23 local authorities were paying £25·5 million for the services. The tender prices were £17·17 million, giving a gross margin of economy of £8·38 million, or 33 per cent. In anyone's language, that is much better value for money than it was. The savings ranged from a high of 50 per cent. to a minimum of about 15 per cent.

Furthermore, during the past two years, 15 local authorities have invited competitive tenders in the same area, and in-house savings have been achieved. The most notable example is Birmingham's refuse collection service. In all but one of those instances, substantial savings of 10 per cent. or more were achieved. All those examples are from Conservative-controlled authorities, and there is every reason to suppose that the percentage savings in Socialist-controlled authorities would be even greater.

Many right hon. and hon. Members on both sides of the House live in the London boroughs of Lambeth and Wandsworth. Two years ago the costs of refuse collection in the two boroughs were roughly similar—£14 a head in Lambeth and £13·10 a head in Wandsworth. Now it costs £16·40 in Lambeth, which is an increase of £2·40, but it costs only £9·30 in Wandsworth, which is a reduction of £3·80. If Lambeth were forced to go out to competitive tender for its refuse collection service, it could reduce unit costs, which are now 75 per cent. higher than in the neighbouring borough of Wandsworth.

The examples that I quoted relate solely to refuse collection, street sweeping and associated services. However, similar dramatic reductions in costs have been achieved in school and office cleaning, school meals provision and other catering services, pest control, vehicle maintenance, garden maintenance, caretaking and architectural services. The list is even longer than that. Most significantly, on no occasion has a local authority been worse off as a result of inviting competitive tenders.

Hon. Members may wonder why every local authority is not eager to take advantage of the savings that can be made as a result of competitive tendering. Birmingham city council has reduced its rates by about 20 per cent. in two years by introducing those market disciplines. Wandsworth borough council has put out to tender sufficient services to produce annual savings in excess of £3 million. In general, if one wishes to identify an efficient, imaginative and cost-effective local authority, one looks for the one that is putting its functions and services out to competitive tender. That is an authority which puts value for money first—even ahead of the cosy alliances of vested interests that too often prevail in our town halls.

The time has now come when the best practices of some local authorities should be extended to all. My right hon. Friend the Prime Minister said in reply to a question last week that she was dissatisfied with progress in this area. Many hon. Members share her view and think that it is now time to shake all local authorities from their lethargy or indifference by imposing a statutory duty to seek competitive tenders. Such a duty already exists in relation to all maintenance work above £10,000 per job and all building work above £50,000 per job under the Local Goverment, Planning and Land Act 1980. The Bill that I seek to introduce would extend those principles into a wider range of local government functions and services.

The Bill is not born out of dogma. Local authorities have common law fiduciary duties to their ratepayers. The Bill seeks to give the fiduciary duty statutory legal backing so that there is a duty to put functions and services out to tender and, save in exceptional circumstances, a duty to accept the lowest tender.

Lord Scarman observed in the case of the London borough of Bromley v. the GLC that fiduciary duty is no more than a common justice". Sadly, it is a common justice that too many local authorities have been ignoring.

The Labour Government wrote in their 1977 Green Paper: It is in everyone's interest that local services should be provided as efficiently and economically as possible. Waste, extravagance and inefficiency lead to higher taxes and lower standards of services. I agree with that proposition. I hope, therefore, to have the support of all hon. Members in seeking leave to introduce the Bill. It is the key to better quality local government services at much lower cost.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North 4:12 pm, 3rd April 1984

I rise to oppose the motion. So that it is on the record, I want to inform the House that I am sponsored as a Member of the House by the National Union of Public Employees. If any hon. Member cares to look at the Register of Interests he will see that in it. If hon. Members look in the register at the entry for the hon. Member for Southampton Itchen (Mr. Chope) they will find that he registers himself as a member of the greatest closed shop of all time, that of barristers, but he fails to inform the House whether a statement in The Observer of 13 November last year that he was engaged as a parliamentary consultant for Grand Metropolitan is correct.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Is the hon. Member seeking to intervene?

Photo of Christopher Chope Christopher Chope , Southampton, Itchen

Yes, Mr. Speaker. I informed the House about November of last year that there was no truth whatsoever in that article in The Observer. Indeed, many Opposition Members retracted their allegations against me. I am surprised that the hon. Member for Islington, North (Mr. Corbyn) is not willing to do the same.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I would point out to the House that hon. Members would be very wise to stick to the merits of the argument and not to indulge in personal comments.

Hon. Members:


Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

I think the House——

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. In terms of good order, if the hon. Member accepts what has just been said, I think it would be wise if he withdrew his remark.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

Of course I accept what the hon. Member has said, but it would have been clearer if he had told us that he was not involved in any organisation that is seeking to promote the privatisation of public services.

Photo of Christopher Chope Christopher Chope , Southampton, Itchen

I make an unequivocal assertion that I am not involved in any group that is involved in this issue. I am a barrister and a Member of Parliament, and that is the limit.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. Please let us deal with the merits of the argument and nothing else.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

The House will be aware—this the hon. Member for Itchen cannot refute—that for many years he was the leader of Wandsworth council, which has a disastrous record in the provision of public services and the destruction of jobs in that borough. There are hundreds of people in the dole queue in Wandsworth who have very deep feelings against the hon. Member for his work in destroying their jobs and their livelihoods. There are also many people in Wandsworth who rue the day that his party won control of that borough and provided them with such appalling and expensive services. His guiding light and mentor has been an organisation called the Adam Smith Institute.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

If the hon. Gentleman is about to say that we should deal with the merits of the argument, I agree with him.

Photo of Mr Richard Hickmet Mr Richard Hickmet , Glanford and Scunthorpe

On a point of order, Mr. Speaker. I was going to make that point. Furthermore, I wanted to ask for a ruling from you as to whether it is in order for the hon. Member for Islington, North (Mr. Corbyn) to conduct this disgraceful attack, which has no basis in truth on my hon. Friend?

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

The House and the hon. Gentleman, although he is a relatively new Member, well know that every hon. Member takes responsibility for his own speech. Again, I ask the hon. Member for Islington, North (Mr. Corbyn) to stick to the merits of the argument. This is a ten-minute Bill and he may speak only briefly in opposing it.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

The reason why I point to Wandsworth council as an example is that the hon. Member for Southampton, lichen was the leader of that council during its drive for privatisation. If the hon. Member is seeking to make the rest of the country like Wandsworth council, then the rest of the country should know what things are like in the bitter experience of Wandsworth. Other people need to know how many jobs have been lost and the waste of money that has resulted in Wandsworth because of privatisation.

I shall give just one example; I would quote more if I had more time. A contract was entered into by Wandsworth borough council with Pritchard Industrial Services Limited for gardening services. On competitive tendering, the firm won the contract with a tender which was allegedly £30,000 cheaper than the direct labour tender in competition to it. I have to inform the House that less than six months later £138,000-worth of penalties had been incurred by Pritchard. I quote from the report of the leisure and amenities services committee of 27 October 1983 on the director's action: In view of the continuing backlog of work existing on 21 October and the inability of the contractor to meet the specification, I consulted with the chairmen and subsequently on 26 October I notified Pritchards Industrial Services Limited by letter that the council was terminating the garden maintenance service contract with effect from 1 November 1983". That was after gardeners with many years of loyal service to Wandsworth borough council had been forced out of work and this contract had been imposed on the borough. The people of the borough were treated most disgracefully.

There is a similar dispute about privatisation involving a firm related to those contractors going on in Barking general hospital. A subsidiary company called Crothalls has announced that as of this year it will no longer pay Whitley council wages to staff that it employs in that hospital. Their wages will be cut. The basic wage will disappear. The hours of work will be reduced, but staff will be expected to do exactly the same amount of work. Conservative Members who preach to the House and to the country at large about the benefits of privatisation are forcing people on low wages to do appalling jobs that they would not think of doing themselves.

I should like to tell the House of the cost of jobs lost through privatisation. The motive for profit is not a motive for saving on the public purse, because those who become and who remain unemployed are a charge on the public purse. The motive for privatisation is to put money in the pockets of private contractors. It is as simple as that. I shall quote from two places. In Southend, where the refuse collection service previously employed 297 people, after privatisation the number is 213. In Wandsworth, the relevant figure has been reduced from 316 to 196. I can only speculate about what has happened to the others. I can only speculate about the devastation to their families as a result of their being forced out of work. In Wirral district council, the reduction is from 456 to 254.

The way in which profits are made is simple. In local authority employment, under national agreements, workers enjoy a 39-hour week with 20 days holiday, 26 weeks on full pay in the event of sickness, followed by a further 26 weeks on half pay. Grand Metropolitan offers six weeks sick pay at nine tenths the basic wage and nothing beyond that.

The sordid litany goes on, with companies touring the country trying to get local authorities to hand their contracts to private enterprise, and they are operating with some strange bedfellows. One firm has a parent company. Waste Management International, registered in Bermuda, which has been found to be inadequate in its storage of toxic materials in a lagoon in Ohio. The disaster which is being caused to people there could be introduced here.

With all the propaganda and parliamentary and local authority lobbying that has gone on for local authority direct labour contracts, it is interesting to note that few have been handed to local authorities. Twice as many——

Photo of Mr Harry Greenway Mr Harry Greenway , Ealing North

On a point of order, Mr. Speaker. May I draw your attention to the fact that the hon. Member for Islington, North (Mr. Corbyn) has been speaking for longer than my hon. Friend the Member for Southampton, lichen (Mr. Chope) in presenting the Bill? In any event the hon. Gentleman has not even touched on the subject of education.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I appreciate that the hon. Member for Islington, North (Mr. Corbyn) has spoken for longer than the hon. Member for Southampton, lichen (Mr. Chope), largely because of the number of interruptions. I am watching the time carefully. I trust that he will now bring his remarks to a close.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

I shall do that, Mr. Speaker. The vast majority of councils which have even considered privatisation have found against it because they want control over their destiny and staff and do not want to hand those to private profit and exploitation. They do not wish to sell off the capital assets that go with their services.

Those who believe that privatisation brings savings should consider where the profit—for example, of the cleaning company called Exclusive, of nearly £1 million on a turnover of only £25 million—comes from if not from the public purse and the exploitation of the workers involved. Those of us who have experienced the problem of trying to repair council estates that were jerry built by half-baked contractors appreciate the value of public service and the motive that goes with it.

I trust that this afternoon the House will reject this tawdry move to impose the standards of Wandsworth on the rest of the country.

Question put, pursuant to Standing Order No. 15 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):

The House divided: Ayes 167, Noes 170.

Division No. 220][4.22 pm
Adley, RobertBottomley, Peter
Alexander, RichardBowden, Gerald (Dulwich)
Atkins, Rt Hon Sir H.Braine, Sir Bernard
Atkins, Robert (South Ribble)Brandon-Bravo, Martin
Atkinson, David (B'm'th E)Bright, Graham
Baldry, AnthonyBrown, M. (Brigg & Cl'thpes)
Batiste, SpencerBruinvels, Peter
Beaumont-Dark, AnthonyBuck, Sir Antony
Bellingham, HenryBudgen, Nick
Bendall, VivianBurt, Alistair
Bennett, Sir Frederic (T'bay)Butterfill, John
Berry, Sir AnthonyCarlisle, John (N Luton)
Bevan, David GilroyCarlisle, Kenneth (Lincoln)
Biggs-Davison, Sir JohnCarttiss, Michael
Chapman, SydneyMiller, Hal (B'grove)
Chope, ChristopherMills, Iain (Meriden)
Clark, Dr Michael (Rochford)Moate, Roger
Clark, Sir W. (Croydon S)Molyneaux, Rt Hon James
Cockeram, EricMonro, Sir Hector
Colvin, MichaelMontgomery, Fergus
Coombs, SimonMorris, M. (N'hampton, S)
Couchman, JamesMoynihan, Hon C.
Cranborne, ViscountMudd, David
Dickens, GeoffreyNelson, Anthony
Douglas-Hamilton, Lord J.Nicholls, Patrick
Dover, DenNorris, Steven
du Cann, Rt Hon EdwardOnslow, Cranley
Eggar, TimPage, Richard (Herts SW)
Favell, AnthonyParris, Matthew
Finsberg, Sir GeoffreyPawsey, James
Fookes, Miss JanetPollock, Alexander
Forsythe, Clifford (S Antrim)Powell, William (Corby)
Forth, EricPowley, John
Fox, MarcusPrice, Sir David
Franks, CecilProctor, K. Harvey
Fry, PeterRobinson, Mark (N'port W)
Gale, RogerRoe, Mrs Marion
Galley, RoyRossi, Sir Hugh
Gardiner, George (Reigate)Rowe, Andrew
Glyn, Dr AlanRumbold, Mrs Angela
Gower, Sir RaymondRyder, Richard
Grant, Sir AnthonySackville, Hon Thomas
Greenway, HarrySayeed, Jonathan
Griffiths, Peter (Portsm'th N)Shaw, Sir Michael (Scarb')
Grist, IanShelton, William (Streatham)
Ground, PatrickShepherd, Colin (Hereford)
Hamilton, Neil (Tatton)Sims, Roger
Hanley, JeremySkeet, T. H. H.
Hannam, JohnSmith, Tim (Beaconsfield)
Haselhurst, AlanSoames, Hon Nicholas
Hawkins, C. (High Peak)Spencer, Derek
Hawksley, WarrenSpicer, Jim (W Dorset)
Hayes, J.Stanbrook, Ivor
Hayward, RobertSteen, Anthony
Heathcoat-Amory, DavidStern, Michael
Heddle, JohnStevens, Lewis (Nuneaton)
Hickmet, RichardStevens, Martin (Fulham)
Higgins, Rt Hon Terence L.Stewart, Andrew (Sherwood)
Hirst, MichaelStokes, John
Holt, RichardSumberg, David
Howarth, Alan (Stratf'd-on-A)Taylor, Rt Hon John David
Howarth, Gerald (Cannock)Taylor, John (Solihull)
Howell, Ralph (N Norfolk)Terlezki, Stefan
Hunt, John (Ravensbourne)Thorne, Neil (Ilford S)
Irving, CharlesThornton, Malcolm
Jessel, TobyTownend, John (Bridlington,
Jones, Robert (W Herts)Twinn, Dr Ian
King, Roger (B'ham N'field)Walden, George
Knight, Gregory (Derby N)Walker, Bill (T'side N)
Lawrence, IvanWall, Sir Patrick
Leigh, Edward (Gainsbor'gh)Waller, Gary
Lennox-Boyd, Hon MarkWalters, Dennis
Lewis, Sir Kenneth (Stamf'd)Ward, John
Lilley, PeterWatts, John
Lloyd, Peter, (Fareham)Wells, Bowen (Hertford)
Lord, MichaelWells, John (Maidstone)
Lyell, NicholasWheeler, John
McCurley, Mrs AnnaWhitfield, John
MacKay, Andrew (Berkshire)Winterton, Mrs Ann
Maclean, David JohnWood, Timothy
McNair-Wilson, P. (New F'st)Yeo, Tim
McQuarrie, Albert
Madel, DavidTellers for the Ayes:
Malins, HumfreyMr. Michael Fallon and
Marlow, AntonyMr. Christopher Murphy.
Meyer, Sir Anthony
Alton, DavidBanks, Tony (Newham NW)
Anderson, DonaldBarnett, Guy
Ashdown, PaddyBarron, Kevin
Ashton, JoeBeckett, Mrs Margaret
Atkinson, N. (Tottenham)Beith, A. J.
Bagier, Gordon A. T.Bell, Stuart
Benn, TonyKennedy, Charles
Bennett, A. (Dent'n & Red'sh)Kilroy-Silk, Robert
Bermingham, GeraldLambie, David
Bidwell, SydneyLamond, James
Blair, AnthonyLeadbitter, Ted
Boothroyd, Miss BettyLeighton, Ronald
Boyes, RolandLewis, Ron (Carlisle)
Brown, Gordon (D'f'mline E)Lewis, Terence (Worsley)
Brown, N. (N'c'tle-u-Tyne E)Lloyd, Tony (Stretford)
Brown, R. (N'c'tle-u-Tyne N)Lofthouse, Geoffrey
Buchan, NormanLoyden, Edward
Caborn, RichardMcCartney, Hugh
Campbell, IanMcKay, Allen (Penistone)
Campbell-Savours, DaleMcKelvey, William
Canavan, DennisMaclennan, Robert
Carlile, Alexander (Montg'y)McNamara, Kevin
Carter-Jones, LewisMcWilliam, John
Clark, Dr David (S Shields)Madden, Max
Clarke, ThomasMarek, Dr John
Clay, RobertMarshall, David (Shettleston)
Cocks, Rt Hon M. (Bristol S.)Mason, Rt Hon Roy
Cohen, HarryMeadowcroft, Michael
Concannon, Rt Hon J. D.Michie, William
Conlan, BernardMikardo, Ian
Cook, Frank (Stockton North)Millan, Rt Hon Bruce
Cook, Robin F. (Livingston)Morris, Rt Hon A. (W'shawe)
Corbett, RobinMorris, Rt Hon J. (Aberavon)
Corbyn, JeremyNellist, David
Cowans, HarryOakes, Rt Hon Gordon
Cox, Thomas (Tooting)O'Brien, William
Craigen, J. M.O'Neill, Martin
Crowther, StanOrme, Rt Hon Stanley
Cunningham, Dr JohnParry, Robert
Davies, Ronald (Caerphilly)Patchett, Terry
Davis, Terry (B'ham, H'ge H'l)Pavitt, Laurie
Deakins, EricPendry, Tom
Dobson, FrankPenhaligon, David
Dormand, JackPike, Peter
Douglas, DickPrescott, John
Dubs, AlfredRadice, Giles
Duffy, A. E. P.Randall, Stuart
Eadie, AlexRedmond, M.
Eastham, KenRees, Rt Hon M. (Leeds S)
Edwards, Bob (W'h'mpt'n SE)Richardson, Ms Jo
Ellis, RaymondRoberts, Allan (Bootle)
Evans, John (St. Helens N)Roberts, Ernest (Hackney N)
Ewing, HarryRobertson, George
Fatchett, DerekRobinson, G. (Coventry NW)
Fields, T. (L'pool Broad Gn)Rogers, Allan
Fisher, MarkRooker, J. W.
Flannery, MartinRoss, Ernest (Dundee W)
Foot, Rt Hon MichaelRoss, Stephen (Isle of Wight)
Forrester, JohnSedgemore, Brian
Foster, DerekSheerman, Barry
Fraser, J. (Norwood)Sheldon, Rt Hon R.
Freud, ClementShore, Rt Hon Peter
George, BruceShort, Mrs R.(W'hampt'n NE)
Godman, Dr NormanSkinner, Dennis
Golding, JohnSmith, C.(Isl'ton S & F'bury)
Hamilton, James (M'well N)Smith, Rt Hon J. (M'kl'ds E)
Hamilton, W. W. (Central Fife)Spearing, Nigel
Hardy, PeterSteel, Rt Hon David
Harman, Ms HarrietStewart, Rt Hon D. (W Isles)
Harrison, Rt Hon WalterStott, Roger
Haynes, FrankStrang, Gavin
Healey, Rt Hon DenisStraw, Jack
Heffer, Eric S.Thomas, Dafydd (Merioneth)
Hogg, N. (C'nauld & Kilsyth)Thomas, Dr R. (Carmarthen)
Home Robertson, JohnThompson, J. (Wansbeck)
Howells, GeraintTinn, James
Hughes, Dr. Mark (Durham)Torney, Tom
Hughes, Robert (Aberdeen N)Wallace, James
Hughes, Roy (Newport East)Wardell, Gareth (Gower)
Hughes, Sean (Knowsley S)Wareing, Robert
Hughes, Simon (Southwark)Weetch, Ken
Johnston, RussellWelsh, Michael
Jones, Barry (Alyn & Deeside)Wilson, Gordon
Kaufman, Rt Hon GeraldWinnick, David
Woodall, AlecTellers for the Noes:
Young, David (Bolton SE)Mr. Robert Litherland and
Mr. Jim Callaghan.

Question accordingly negatived