Orders of the Day — Property Services Agency and Crown Suppliers Bill

– in the House of Commons at 4:34 pm on 6th December 1989.

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Order for Second Reading read.

Photo of Mr Chris Patten Mr Chris Patten , Bath 4:40 pm, 6th December 1989

I beg to move, That the Bill be now read a Second time.

This Bill is among the shortest that we shall be introducing this Session; it is none the less significant. It provides measures to allow the sale to the private sector of the Crown Suppliers and PSA Services, which are both parts of the Property Services Agency. The remainder of the PSA will remain within the Government.

The success of the Government's privatisation programme is acknowledged throughout the world—

Photo of Mr Chris Patten Mr Chris Patten , Bath

The hon. Gentleman sniggers. I notice that they have just appointed—

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

It was a guffaw, actually.

Photo of Mr Chris Patten Mr Chris Patten , Bath

They are not guffawing in Poland, where they have just appointed a privatisation Minister. That is a point to which I shall return with enthusiasm later if invited to do so. Having heard the hon. Member for Copeland (Dr. Cunningham) on Sunday explaining, or perhaps not quite explaining, that the Labour party was or was not enthusiastic about privatisation, we once again look forward to hearing clarification of this issue by the hon. Member for Dagenham (Mr. Gould)—his clarifications on share ownership are like no one else's.

Over the past decade, almost 45 per cent. of what was the public sector in the United Kingdom has been transferred to private ownership. As a result, major public corporations have been given greater freedom and their performance has improved beyond measure. The two organisations with which this Bill is concerned are small in terms of privatisation, but they are of considerable significance in the Government's drive to improve the efficiency of the public sector.

In recent years, there have been major changes in the way in which we manage our public services. At the heart of those changes has been the financial management initiative launched by the Prime Minister in 1981. That initiative took as a key principle the fact that the primary responsibility for ensuring managerial efficiency within Government should lie with the spending departments. No longer would concerns about efficiency and value for money rest primarily in the central Departments, in the Treasury, or, for building matters, in the PSA. Responsibility would instead be devolved to the ultimate users; in future the customer, not the provider of services, would decide what should be done—the customer would be king.

Although privatisation rightly has a high profile among our policies for the long-term strengthening of thc. economy, the importance of improving efficiency within Government is no less significant. For example, the PSA has been handling expenditure of more than £3·5 billion and employing resources of its own of more than £300 million. The prospect of improving the efficiency with which such a large block of expenditure is managed clearly represents a major prize.

To apply the financial management initiative to building and property services, the Government decided that Departments should assume their own responsibility for all works and estate services which had formerly been provided by the PSA. Departments would themselves manage the money voted for this work by Parliament and would be permitted to choose their supplier of works services from the PSA or elsewhere. In the jargon, Departments would be untied from the PSA. They have been similarly untied from the Crown Suppliers since April 1987.

As a result of these decisions, the service providers in the PSA and the Crown Suppliers have needed to match their professional skills and property experience with a more commercial responsiveness and speed. They know, as the Labour party might put it, that they must meet the challenge and make the change if they are to keep their work load.

The case for these privatisations has three elements—

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

Before the Minister goes any further, will he help us by explaining how valuable public resources such as property and equipment are to be valued, and who will be given the task of valuing them?

Photo of Mr Chris Patten Mr Chris Patten , Bath

I am coming shortly to the mechanics of the privatisations, but I assure the hon. Gentleman that when property is involved, a proper valuation will be done before any sale, and it will be made public—

Photo of David Winnick David Winnick , Walsall North

I apologise beforehand for the fact that I am off to the Procedure Committee in a moment.

In view of the sweeteners that were given in the Rover case and the strong and justified feeling that corruption was involved, how can we be persuaded that the same degree of corruption will not obtain in future measures of privatisation and of selling off state assets?

Photo of Mr Chris Patten Mr Chris Patten , Bath

I reject the hon. Gentleman's allegations. Had I known that he was going to make them and that he was going to leave in a moment—even for the Procedure Committee—I would not have allowed him to intervene—

Photo of Mr Chris Patten Mr Chris Patten , Bath

But I shall certainly give way to the hon. Gentleman who, as always, will be staying with us, I dare say, for the entire debate—

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Despite the fact that I am also on the Procedure Committee. However, I regard this debate as important.

On the issue of the private versus the public sector, has the Secretary of State been made aware by the Minister of State of what happened two years ago when Richmond house, the DHSS headquarters, was valued? Cluttons, a private sector company, was brought in and charged £44,000 to value the building. It turned out subsequently that an internal memorandum in the PSA had suggested that the same valuation could have been done by its staff for £1,500. Why should the public have to pay an extra £42,500 to use an outside private contractor when the job could be done by a civil servant? Does not that take us to the heart of the argument today? In the end, the public may well end up paying far more for the same services.

Photo of Mr Chris Patten Mr Chris Patten , Bath

Even though the hon. Gentleman has to leave in a moment, he has such an exemplary record of attending debates that I am always pleased to give way to him. I recall that, in the case to which he has referred, the work done involved a particular expertise because of the buildings concerned. I am convinced that, when a Department is managing its own operations and funds, it will make sure that it secures the best possible value for money. That was certainly my experience when I was responsible for a small Department faced with the obligations under the financial management initiative to look after its property interests.

The hon. Gentleman might also note the difficulty in public sector accountancy practice of ensuring that one is comparing like with like. The most important way in which we can secure best value for money in the public sector is to ensure that the customer is responsible for the budget and has managerial responsibility for what ensues.

I return now to the main elements in the argument for privatisations. First, Departments now have delegated authority to make their own choices about the services that they require. That is the way to ensure effective procurement.

Secondly, the PSA and the Crown Suppliers must compete for their work with others who are equally anxious to provide a good service. Thirdly, the PSA and TCS need the freedom to compete effectively and can get it only outside the confines of the public sector.

The House should therefore see that the privatisation of these two bodies arises naturally for the good of the organisations themselves and hence for the good of their staff and customers. It arises out of a simple principle: decisions are best delegated as far as possible to the ultimate users.

Photo of Mr Chris Patten Mr Chris Patten , Bath

I shall certainly give way to the hon. Gentleman, provided he is not going to the Procedure Committee.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

The Minister used the phrase "for the good of their staff". Why does the National Union of Public Employees object so strongly to the proposals? Where is the evidence for saying that it is for the good of the staff? Does the right hon. Gentleman deny that at least in the view of the staff it is not for their good?

Photo of Mr Chris Patten Mr Chris Patten , Bath

I have had the advantage of a meeting with staff unions. I shall come later to the detailed questions about staff because that issue forms an extremely important part of the debate and undoubtedly it will be discussed in Committee. I hope that the hon. Gentleman will have an opportunity to share in the discussions in Committee.

I shall now deal with the two organisations. The Property Services Agency, as it exists at the moment and despite its name, is a large self-contained part of a Government Department—the Department of the Environment. In the past, because it has been both provider and customer for Government works services, it has had many services that are regulatory or essentially governmental, such as, for example, the management of the Government's civil accommodation. However, the great bulk of its activities involves the provision of works and estate services to other Government Departments, just as existing commercial agencies—consultants, estate agents or building contractors—provide similar services for non-governmental bodies.

The PSA has a mixed reputation within Government. It often gets the blame when Government buildings appear badly maintained, although I concede immediately that that can sometimes be the result of its budget having been constrained because of general pressures on public expenditure. In the past, the customer Departments have been free to make the complaints and the PSA was there to receive the brickbats. In future the decisions about what to spend—the point that I made earlier—will lie with the customer departments. If they decide to spend less on maintenance or more on a new building, it will be their own choice. The PSA will be judged on how well it has provided what the customer asked for. That will be good for efficiency in Government and salutory for Departments and the PSA.

In the past, the system of parliamentary scrutiny of public expenditure through the National Audit Office and the Public Accounts Committee and the studies by the Select Committee on the Environment have ensured that any aspects of the PSA's performance which deserved criticism have received wide public coverage. That is wholly reasonable while the PSA remains a Government department. However, we should not allow that proper degree of public exposure to obscure the less well publicised, but regular, stream of work that the agency does so well.

It receives a large number of awards each year for design excellence—there were 22 last year alone—and it is held in high regard by some of its largest and most demanding customers and by many of its potential competitors in the private sector. My right hon. and learned Friend the Lord Chancellor has recently paid tribute to the PSA for its work in the extensive countrywide programme of court building. The United States forces have compared the service that they get from PSA favourably with the service they get at bases anywhere in the world. In 1988–89 the PSA won 11 of the total of 21 awards made by the USAF European Command.

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor

Does the Minister agree that the United States Air Force has said that it is worried about the security implications of privatising the PSA? What will he do about security at military installations and at Cabinet Ministers' houses when the service is privatised?

Photo of Mr Chris Patten Mr Chris Patten , Bath

We are discussing with the Ministry of Defence and United States forces how we can continue to provide as much excellent work for the Ministry of Defence overseas and for United States forces in this country as the PSA provides at present. A great deal of Ministry of Defence work on matters involving considerable security is already carried out by private sector operators. For example, 70 per cent. of the design work for the MOD is carried out under that sort of security umbrella by the private sector. No great principle is being breached here.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

We have figures here given by the unions and I should like the Minister to tell us whether they are accurate. In 1988, the PSA design costs were shown to be 25 to 30 per cent. cheaper than those of private designers. On the related question of estate surveying, the issue raised by my hon. Friend the Member for Workington (Mr. Campbell-Savours), the private valuation of the new DHSS headquarters at Richmond terrace, Whitehall cost 266 per cent. more than a PSA valuation would have cost. Is that correct?

Photo of Mr Chris Patten Mr Chris Patten , Bath

Given the way that accountancy operations are conducted at present when a potential private sector firm is in the public sector, it is extremely difficult to work out the sort of figures that the hon. Gentleman has mentioned. If his figures are correct, this firm will do spectacularly well in the private sector as the result of a trade sale or a management or employee buy-out.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

The Minister misunderstands the point that is being made. As we understand it, valuations are often carried out on the basis of a percentage. Let us look at the district works office, Teddington. The Minister may laugh, but this is a serious matter. The outside contractor charged £193,722 for his work. The PSA valuation for exactly the same work was £92,112—a saving of £100,000 to the taxpayer. That was the difference between the private sector and the public sector for exactly the same work. The Secretary of State cannot brush that aside and say that in future prices can be cut. That difference arose because of the basis of valuation and it is for the Secretary of State to assure the House that that will not happen in future.

Photo of Mr Chris Patten Mr Chris Patten , Bath

I am sure that the Under-Secretary of State for the Environment, my hon. Friend the Member for Southampton, Itchen (Mr. Chope), will be succinct and will do just as well later in dealing with Teddington as he did in the recent Adjournment debate.

As a Minister responsible for a Department, I think that the disciplines of being responsible for one's own budget on matters such as the maintenance of property are extremely good for the taxpayer and ensure that we get the best value for money. That is an important part of the development of the financial management initiative. I look forward to congratulating the management, the employees or those responsible for the trade sale when the PSA operates extremely successfully in the private sector, as it will in due course.

In 1986, the PSA management launched a fundamental review of its responsibilities and organisation, and its relationship with departmental clients. Shortly afterwards, the Select Committee on the Environment under the direction of my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) carried out a study of the PSA, resulting in 1987 in an important and constructive report. Those reviews paved the way for the Government's decision that, from 1 April 1990, all Departments would be fully untied from the PSA and that the PSA's service activities would be managed commercially.

Steps are now in hand to separate the PSA's commercial activities from its governmental responsibilities, so that, from April 1990, the residual governmental activities, such as the maintenance of the Palace of Westminster and the management of the Government car service, will be transferred as a separate unit to the Department of the Environment with its own accounting officer at deputy secretary level. Within these activities, one has already been established as an executive agency under the Government's "next steps" initiative—the highly successful Queen Elizabeth II conference centre. Two others, the main resident function of managing the Government's common user estate, and the small but significant activity of negotiating contracts for fuel supplies to parts of Government and the public sector, were shown in the recent White Paper "Next Steps" as candidates for agency status.

Since the major portion of the PSA is to be a competitive commercial organisation, many hon. Members will need no further convincing that we should aim for privatisation at the earliest opportunity.

For any who are less committed to the principle of privatisation, even after the words of the hon. Member for Copeland on television last week, perhaps I should explain why I believe that early privatisation will be in the best interests of the PSA and its staff. It is a very large organisation—the country's largest building consultancy—which has had the benefit of a guaranteed work load. Suddenly, it is about to face competition. Even if it competes effectively, as I have no doubt it will, it must inevitably lose some of its market share to its competitors. Unless it can compete in new markets, it will inevitably be an organisation in decline. That is not a recipe for a successful operation. Faced with that prospect, the better staff would start to leave, and the quality of service would fall away. The decline would become a downward spiral and customers would suffer. That is not in anyone's interest—not the customers', and therefore not the taxpayers'; not in the PSA's or that of its staff.

It is essential, therefore, that as a quid pro quo for untying the PSA's protected markets, it must be allowed freedom to widen its market base. For the long term, and on a large scale, that is not an attractive prospect for a department within Government. Government is not the place for a fully diversified consultancy. Any organisation that, in the last resort, is underwritten by the taxpayer cannot be allowed the same unrestricted access as a private company to capital; nor can it be allowed to' face the full risks of the marketplace, nor to reap the full rewards.

However, it is right and proper that, for a limited period, and with appropriate safeguards, the PSA should be allowed to compete in the general marketplace to offset its shrinking Government market. That will give the business the opportunity to demonstrate the quality of the service that it can offer so that it can secure a foothold in serving private sector clients to prepare itself for full privatisation.

Photo of Mr Michael Stern Mr Michael Stern , Bristol North West

I am sorry to interrupt my right hon. Friend, who has been interrupted many times already. As he will appreciate, many Conservative Members are always a little concerned when the private sector is opened to competition from what is essentially a state-run and state-supported service industry. Does he agree that an appropriate safeguard might be that, during the short time that the PSA is competing with the private sector from within Government, there should be an automatic reference of its tender price to, for example, the National Audit Office? Would that not be a suitable safeguard against the private sector being forced to compete against a subsidised organisation?

Photo of Mr Chris Patten Mr Chris Patten , Bath

I can assure my hon. Friend that, during the short time until 1992, we shall want to be absolutely certain that the arrangements in place are sufficient to give my hon. Friend and others the absolutely necessary confidence in the operation. I shall consider my hon. Friend's point, but I can assure him that we have that sort of problem very much in mind.

The timing of the sale of the PSA depends on the business being properly structured for sale, and on having the necessary commercial accounting system in place. The appropriate systems are being installed, but that is a major task. Although the earlier the privatisation date the better, the earliest practicable date seems likely to be the second part of 1992. That is a tight timetable given the scale of the changes that are needed, but it is realistic. It also allows sufficient time for the customer departments to prepare themselves for the time when they will obtain all their works services from the commercial market.

That early target date for privatisation will be good for the PSA and for the Departments in concentrating minds on what has to be done. However, for the PSA's management I am inclined to think that the freedoms that come with being in the private sector cannot come quickly enough. The PSA will be a business whose success depend's on its ability to attract, to motivate and to reward good quality staff. Its freedom to compete for those staff in the marketplace will be very important.

Although there is now undoubtedly more flexibility than there used to be to adjust Civil Service pay rates to particular market circumstances and to recognise good performance, that does not go far enough if the PSA is to be able to respond as quickly and as effectively to sudden changes of work load as its competitors can. Privatisation should make that possible. In the meantime, the PSA's management will need to make as full use as possible of the flexibility that does exist in the Civil Service environment and to press for further flexibility when it can justify it.

I hope that the management and staff of the agency will take the time and the opportunity to consider whether they wish to bid for the business themselves. Although the Government will need to be sure, when the sale is made, that a fair competitive price has been obtained, I think that it would be good for the PSA, and good for the commitment and motivation of its staff if there were a strong management-employee buy-out team as well as trade bidders in the competition at the finish. A management-employee buy-out team would have to compete with other bidders, but if it proved successful I should be delighted.

I come now to the other business covered by the Bill—the Crown Suppliers.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

On a point about staff—

Photo of Mr Chris Patten Mr Chris Patten , Bath

I assure the hon. Gentleman that I shall deal with the question of staff in a moment.

The Crown Suppliers is part of the PSA for management purposes, but it operates as an independent business with its own trading fund, supplying furniture and furnishing and related equipment, and operating vehicle hire and document delivery businesses for the public sector.

The Crown Suppliers has been a highly successful organisation. In the 1988 annual accounts, total sales were reported at more than £230 million. Over the years it has developed new ranges of office furniture, most recently one called Laser, which is now bringing in sales of more than £5 million a year. It has supplied equipment to many prestige projects, like the Queen Elizabeth II conference centre.

Over the past two years, the business has changed substantially. Those parts of the Crown Suppliers which were not suitable to be undertaken on a normal commercial basis, or could not be privatised for security reasons, or where value for money could exceptionally be better achieved by retention in the public sector, have been extracted from the business and they are excluded from the sale. Total sales by the businesses that are to be privatised were an estimated £168 million in 1988. That was all business won on its commercial merits. As I have already said, Government Departments are untied, and may purchase where they can find the best value for money.

The business has been increasingly organised on commercial lines. A totally new on-line computer system has been installed this year. In the wake of the decision to privatise, the Crown Suppliers has begun to market its services in the private sector. Since the start of the year, about £600,000 of sales have been made to the private sector. The transport business has won a contract for the maintenance of 150 vehicles belonging to a telecommunication company. These are small beginnings, but there is real promise for growth.

Because the Crown Suppliers already has commercial systems in place, an early sale is possible. Samuel Montagu, the merchant bank advising the Government on the privatisation, has already written to all organisations and management buy-out teams that have expressed any interest in buying the Crown Suppliers and also to all the major firms involved in contract furnishing, vehicle hire and document delivery.

Photo of Mr Chris Patten Mr Chris Patten , Bath

I do not wish indefinitely to come between the hon. Gentleman and the Procedure Committee.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Is it true that the Crown Suppliers has been in breach of European directive No. 77/62 by failing to tender for certain contracts over a value of £92,000 and by extending those contracts? Is it true that the Government's Law Officers have advised the Government that they are in breach of that directive? As I have now raised this matter in the House, which will alert the European Commission, what action will the Government volunteer to take?

Photo of Mr Chris Patten Mr Chris Patten , Bath

My hon. Friend the Under-Secretary will be delighted to answer that question comprehensively when he replies to the debate, and I am sure that he will do so to the hon. Gentleman's complete satisfaction.

We are now considering applications for the purchase of the Crown Suppliers and will shortly be issuing invitations to bid. I am pleased that a number of teams of the Crown Suppliers' staff have expressed an interest in acquiring various parts of their business. I strongly welcome that. It demonstrates the confidence of the staff in the future of the business and in its ability to prosper in the private sector. The Government have offered financial assistance with consultants' fees to assist staff in preparing their bids.

It will naturally be essential to obtain a fair return for the taxpayer from the sale of the Crown Suppliers, but price will not be the sole criterion. We shall be concerned to ensure that its staff are fairly treated, and we shall be particularly interested in bidders' proposals for profit sharing and equity participation. Throughout the sale competition, we shall also be favouring bidders who demonstrate a knowledge of the business and a commitment to its future development. That will help to safeguard the future of the staff; it will also help to ensure that the Crown Suppliers can continue to be a source of competitive supplies to Government.

Before turning to the specific provisons of the Bill, I should say something about the implications of privatisation for the staff of the two organisations. I know from having met the PSA trade unions that there is some uncertainty and concern. I can well understand that, but I assure the staff that their fears are unnecessary: the aim of the privatisations will be to create viable, vigorous competitive organisations in the private sector, with better prospects than they would have if they remained in their present position within the public sector. [Interruption.] As the hon. Member for Workington (Mr. Campbell-Savours) will know from his study of these matters, many previous privatisation Bills have said the same. I am sure that he would not wish to be misled by the explanatory and financial memorandum, and will be interested in what I have to say on the subject.

To put the matter simply, the Government intend that the terms and conditions of service of employees shall not suffer as a result of the transfer of employment. Let me explain precisely what I mean. When the businesses are created, the staff who transfer to them will have their conditions of service protected. Most of their conditions will be preserved identically in the new organisation. The Transfer of Undertakings (Protection of Employment) Regulations 1981—the so-called TUPE regulations—which will apply, will ensure that. They do not cover pensions, for the very good reason that there are so many different ways of handling potential pension provision; however, we shall invite purchasers to offer arrangements for pensions for future service, which—taking all features together—will be comparable with the Civil Service scheme, and we shall take steps to ensure that purchasers' schemes are properly assessed on whether they achieve that aim. Because the old and new schemes are unlikely to be identical, we shall ensure that staff are compensated for any differences. We shall, of course, consult the trade unions about both privatisations.

If staff are to feel confident about privatisation, they must be clear that they will enter the private sector with pay, conditions of service, redundancy entitlements and pensions all safeguarded. Once staff are in the private sector, they will of course be free to renegotiate with their employer for improved conditions, and, if their performance justifies it, they can share in the growing strength of the company instead of being tied to the public pay framework. Their longer-term prospects will depend on their success in maintaining and improving the business.

Finally, let me come to the point made by the hon. Member for Workington, and deal with the specific provisions in the present Bill. It is a short Bill, and I will be mercifully brief. The first and most important point is that the Bill does not seek authority for the sales themselves; it includes technical enabling provisions to facilitate them. The intended method of sale will be to transfer property, rights, and liabilities to companies owned by the Secretary of State, and then to sell the Government shareholding in those companies. The sale of shares, as I said earlier, would be by means of a management-employee buy-out or a trade sale; flotation is not envisaged.

The Bill deals with the problem of technical redundancy. Without this provision, the staff of the PSA and the Crown Suppliers—whose employment will be transferred automatically to the new employer—would become entitled to redundancy compensation as well as keeping their jobs. That would be patently absurd, and the Bill removes the anomaly in clause 2. There are naturally precedents for this provision in earlier privatisations. In case any hon. Members were misled by the explanatory and financial memorandum, let me reassure them that, of course, the Bill does nothing to remove the entitlements of staff to compensation if they lose their employment through redundancy.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

The Bill refers to the Transfer of Undertakings (Protection of Employment) Regulations 1981. I feel that the Secretary of State should tell us in his opening remarks what undertakings he is prepared to give in regard to any person or persons subsequently made redundant under the new private body. What we need are concrete undertakings.

Photo of Mr Chris Patten Mr Chris Patten , Bath

Such persons would receive exactly the same redundancy payments as anyone else. They are not losing their redundancy entitlement, as I explained a moment ago.

The Bill seeks to give me explicit authority to establish companies that are wholly owned by the Crown. It will also provide a framework under which schemes may be drawn up to allow for the vesting of property, rights and liabilities in those companies in preparation for sale. The shares of the companies will then be sold to the purchaser for the businesses under a contract.

In the case of the Crown Suppliers it is intended that the shares will be sold immediately on vesting, but in the case of the PSA it may be desirable for the company to trade for a short period while staying within Government ownership. The Bill allows for that in setting out the necessary financial arrangements in clause 3. It provides for the sales of the businesses to take place at different times, for reasons that I touched on earlier.

I have explained the reasons why we are bringing forward the privatisations today, and the way in which they fit into the general policy of improving the efficiency of the public service. I am sure that they will be good for the Government as customer, good for the business prospects of the PSA and the Crown Suppliers, and therefore good for their staff. They are based on a sound principle, which has been implemented with considerable success across large swathes of what was once the public sector. Only the most hidebound and narrow-minded ideology could object to the principles asserted once more in this Bill and to the attempt to put them again into successful practice.

I commend the Bill with enthusiasm to the House, and I am delighted to see on the Benches behind me some of my hon. Friends who have made it possible for us to present its proposals to the House this afternoon.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith 5:16 pm, 6th December 1989

The Secretary of State began by saying that privatisation was now internationally acclaimed. What he forgot to tell us was that that was because so many companies, both British and overseas, had had their hands in the pockets of the British taxpayer. It is worth reminding the right hon. Gentleman of his own Prime Minister's warning that there is no such thing as Government money; there is only public money—money belonging to the people. Whether that money is the £38 million handed out for the Rover deal or some other handout, it is our money, and it is the duty of the House to ensure that such offers are not made inappropriately. We shall look very carefully at what the Secretary of State has said, to make certain that that does not happen under this Bill.

The Secretary of State has made a thoughtful and careful speech, but—interestingly—one containing an element of schizophrenia. There was a little of the last Conservative Prime Minister—the right hon. Member for Old Bexley and Sidcup (Mr. Heath)—in the Secretary of State's desperate attempt to sell to the employees of the two organisations the belief that all this is in their best interests and that he has their welfare at heart, as well as being concerned for the taxpayer.

There is also something rather insecure about the right hon. Gentleman's desperate attempt to prove himself by pretending that the privatisation even begins to be necessary. Perhaps "insecure" is the wrong word to use the day after the Prime Minister's re-election as leader of the Conservative party; "wobbly" might be better. One is reminded of those vases that people stand on the mantlepiece and dust very carefully in case they fall off—as this one surely will in due course.

The truth is that it is neither necessary nor desirable to transfer these organisations to the private sector. That is the central issue on which the Government have failed to convince us.

Photo of Mr Chris Patten Mr Chris Patten , Bath

Just to be anecdotal for a moment, since the hon. Gentleman is being so courteous in referring to me at such length, I spent Saturday morning talking, among others, to employees of the National Freight Corporation. That experience confirmed to me the advantages of privatisation both for employees and for shareholders. Were I to take the hon. Gentleman through my constituency diary, I could give him many other examples.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

Unfortunately, the Secretary of State can give only one example.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

I do not believe that Conservative Secretaries of State have ever been in love with co-operatives. Once or twice they have pretended to be in love with them. The National Freight Corporation is a good example of a co-operative, but there is no other privatisation that the Secretary of State might draw to my attention that can compare with the National Freight Corporation. The work force—I emphasise the work force, not just the management—wanted to benefit from a co-operative system. A co-operative system of that kind remains loyal to the root benefits of the Labour party.

Photo of Mr Keith Mans Mr Keith Mans , Wyre

Does the hon. Gentleman agree that the Water Research Centre is another example of precisely the same kind of employee buy-out? Will he therefore correct his previous statement?

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

I have not considered the Water Research Centre in the same detail. However, it is not enough to assume that such a buy-out is the same as the National Freight Corporation co-operative. There is a very big difference between the two. Without examining it in detail, one cannot be sure that a management buy-out follows the co-operative principles that were adopted to a very large extent by the National Freight Corporation.

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South

Does my hon. Friend agree that if he talked to some of the former employees at the royal ordnance depot in Enfield who lost their jobs shortly after they were bought out of the public sector by the private sector he would find that they were not so happy?

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

My hon. Friend is absolutely right. There are many examples of privatisation, most notably in the National Health Service, where the treatment of the work force has been deplorable, by any standards. People are being asked to work longer hours for less money and the job is being less well done. The hon. Member for Southampton, Itchen (Mr. Chope) puts privatisation as one of his interests in "Dod's Parliamentary Companion". He ought to be ashamed of what has happened to many cleansing and catering facilities. People have been very badly done by, including the customer.

The Secretary of State said that he believes in delegating as close as possible to the ultimate user. That will require some fairly large about-turns by a Secretary of State who is responsible for local government and housing. Contrary to their claims, the Government have centralised power. No other comparable country in the western world has centralised power to such an extent. The Government determine the extent to which local authorities can raise money. They also determine rent increases and how people's homes should be transferred from one owner to another without the people living in them having the right to independent advice.

So much for the belief in transferring the decision-making power to the user. The Government neither believe in it nor practise it. Tenants are not given the right to independent advice in many of the deals that are struck by Conservative-controlled councils. A council that decides to transfer tenants' homes puts its decision to the tenants. They are forced to choose without having access to independent advice. That is a classic example of abuse of power.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

Before the hon. Gentleman is foolish enough to intervene—I shall allow him to do so, because I am all in favour of a few suicide cases on the other side—he ought to remember that the National Consumer Council has said that tenants' homes should not be transferred without the tenants having access to independent advice.

Photo of Mr Michael Stern Mr Michael Stern , Bristol North West

In the light of the hon. Gentleman's comments, will he put on record his congratulations to the Conservative-controlled Northavon district council, which is balloting its tenants on whether they want their homes to remain in council ownership or to be transferred to a housing association or some other form of ownership? The council has even offered to pay for the independent advice that tenants may wish to take before they reach a decision.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

You would rightly say, Madam Deputy Speaker, that I was out of order if I pursued that matter. [Interuption] Just before the hon. Member for Bristol, North-West (Mr. Stern) loses control, I ought to point out to him that that would be perfectly acceptable if the council provided sufficient money for independent advice. Labour-controlled local authorities were transferring houses long before this Government even thought about it, but that was done only when tenants wanted their homes to be transferred. Rent levels were controlled, there was security and there were other safeguards, too. I very much doubt whether the Northavon district council is doing anything like that.

As for the ideological attempt by the Government to privatise for the sake of privatisation, there were a couple of inquiries whose aim was to decide whether privatisation of the Property Services Agency and the Crown Suppliers should go ahead. The Turton report and the Prime Minister's central unit on purchasing report said that it was not in the public interest to privatise. The hon. Member for, Itchen invented the idea of untying, although nobody has known him ever to untie anything. It suggests a degree of finesse and control that he does not exercise.

The Opposition regard him as the mad axeman of Itchen. Just like children who want to get at their Christmas presents and set about it with an axe in the hope of finding what is inside much more quickly, the hon. Gentleman slipped off bits of the PSA and the Crown Suppliers in order to prepare them for privatisation. However, he could not get the independent reports to confirm that they ought to be privatised, so he did what Conservative Ministers are very good at doing—he changed the question. He said to himself, "I've been asking the wrong question all the time. I've been saying, 'Should we privatise it?' Now the light has dawned. I ought to ask, `How shall I privatise it?". Therefore he brought in outside consultants who said to him, "Yes, if you've made the decision to privatise, this is how you do it." That is how he got round the difficulty of two major reports which said that it was not in the public interest to privatise the Property Services Agency or the Crown Suppliers.

If the Government could not get the answer that they wanted to the first question and had to change it, why has it suddenly become in the public interest to privatise? The Prime Minister's own unit said that it was not in the public interest to privatise. So did the Turton report, to which I shall return. The two important issues are the way in which privatisation is to be carried out and security, to which, worryingly, the Secretary of State hardly referred. However, both issues raise horrendous problems connected with terrorism and the defence of the country.

The Crown Suppliers has an impressive background. In August 1988, Samuel Montagu and Company, on behalf of the Property Services Agency, set out the main aims of the Crown Suppliers. It said: The main aim of The Crown Suppliers is to provide furniture, furnishings, equipment, materials, heating fuels, transport and selected services related to the domestic and operational needs of Government departments and other public sector bodies more efficiently,"— these are the words that I wish to emphasise— economically and speedily than they can provide for themselves or enjoy from any other source. In achieving this aim"— we should note these words from Samuel Montagu and Co.— the Crown Suppliers is required to act in a way which will help industry to improve its standards of design, to operate more efficiently and to exploit new materials and technologies. If that purpose is being achieved, why are the Government privatising the Crown Suppliers? It is not an old report. It was published in 1988, just over a year ago. The Government's case, therefore, looks exceedingly shaky.

The Government tried to undermine the Crown Suppliers and the PSA by going in for what the Secretary of State described as "untying". It is interesting that the Secretary of State has now said that they will be able to compete with the private sector in the run-up. What is deeply disturbing to Conservative Members, such as the hon. Member for Bristol, North-West, is that they have suddenly realised that some of their private company friends may be in trouble because they cannot compete equally with an organisation that has had a good record in terms of delivery to its customers. The Opposition have no objection to organisations being able to compete for various jobs, but it follows that organisations in the public sector should be able to compete with the private sector on a level playing field. The Government have consistently made it more difficult for companies in the public sector to compete effectively in the private sector, especially in the run-up to privatisation. That has turned them into a burden, rather than the advantage that they are at present.

One of the most damning indictments of the Government's policy was the reference by Lord Macmillan to selling off the family silver. He was talking not only about selling off the silver, but about debasing it before it was sold. That is why the Government, in doing so much damage to the structure of public sector industries, have damaged the private sector as well. As the Montagu report pointed out, it is not in the interests of the private sector for privatisation to be carried out in the way that the Government are doing it.

The review by Lord Jenkin, a previous Secretary of State for the Environment in the early 1980s, said that the answer to privatisation should be no, because it was not in the public interest. The Crown Suppliers has been very successful. I quote the words of the hon. Member for Ealing, Acton (Sir G. Young), who was in the Chamber earlier, but has had to leave now, and who was Minister at the time. He said: The Crown Suppliers have had another successful year's trading. Despite the fact that over 65 per cent. of their business is now untied and optional, they have more than met their financial objective for 1985–86. They have achieved this by raising their level of service, speeding up deliveries, reducing resource costs and offering still better value for money for the products and services they provide to an increasing number of public sector customers. This process will continue. They operate of course under the constraint that, as Departments are increasingly free to purchase goods and services elsewhere, the Crown Suppliers are expected to compete for work within the public sector, yet they cannot, generally speaking, seek business outside it as they would if they were a private concern."—[Official Report, 25 July 1986; Vol. 102, c. 572.] Two Ministers have praised the work of the Crown Suppliers and the PSA. The question that arises again is why, if they are so good, the Government are flogging them off? If that is not in the interests of the country or of the taxpayer, whose interests are being met?

It is also worth bearing in mind the independent assessment of the work done, part of which my hon. Friend the Member for Workington (Mr. Campbell-Savours) quoted in an intervention. It said:

  1. "1. Design: In 1988 PSA's design costs were shown to be 25 per cent. to 30 per cent. cheaper than private designers.
  2. 2. Maintenance: In 1988 the Government abandoned its attempt to contract out District Works offices after receiving tenders for the pilot at Southwark which proved to be twice as high as PSA's own costs.
  3. 3. Estate Surveying"—
the section that my hon. Friend the Member for Workington quoted— private valuation of the new DHSS headquarters at Richmond Terrace, Whitehall, cost 266 per cent. more than a PSA valuation would have cost. It is no good the Secretary of State trying to wriggle out of answering those comments by saying that he will deal with them later. These are not new facts; they have been known for a long time. Many people have known those facts and the Secretary of State must know them. Why is he unable to tell us why those valuations have been carried out so much more effectively by the PSA than by the private sector? It is not good enough for the Secretary of State to say that he will come back to that at some stage.

In 1987, a report by David Hencke appeared in The Guardian which implied that the then Chief Secretary to the Treasury—the present Chancellor of the Exchequer—wanted to halt moves towards privatisation. [HON. MEMBERS: "No."] Conservative Members may doubt David Hencke, but the story has never been denied and there are many reasons for believing that it is accurate. The then Chief Secretary was worried that Robert Maxwell or Hillsdown Holdings would bid for the agencies, or large parts of them, and because they themselves provided similar services, they would close down or run down the parts that were not necessary to them. That would have been a classic example of asset-stripping the public sector and that is why the Chief Secretary was worried.

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

But was not the Chief Secretary, to whom the hon. Gentleman refers, also the Chief Secretary when the decision to introduce the Bill was taken a few months ago?

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

Yes, but that says far more about the Chancellor of the Exchequer's uncertain position than about his judgment of the issue. I do not know whether this new and rather temporary Chancellor of the Exchequer will resign over the privatisation of the PSA and the Crown Suppliers, but I cannot see it happening. Let us be kind and say that he fought privatisation hard in Cabinet, but lost. He may find, like the previous Chancellor, that he loses more than just one battle and it will be interesting to see whether he loses the last battle. The Chief Secretary to the Treasury also seemed to be quite a patriot because he recognised that 90 per cent. of the products were made in Britain and he did not want to see overseas producers supplying British embassies and defence establishments.

It follows from all that I have said that the Opposition and, I suspect, many outside the House, will be deeply concerned about the way privatisation is carried out. I acknowledge fully that the Secretary of State has given a detailed exposition of the way in which he wants to carry it out. It follows from what he says that some of the sweeteners that were offered in the case of Rover could not be used in this privatisation. However, there are questions about whether he will hold the shares, at what value they will be sold, at what point in the market they will be sold and whether any other advantages are built into the company to make it attractive. I warn the Government that we shall be watching all this carefully, as will the Public Accounts Committee and the European Commission. There are many reasons for believing that the way in which the Government go about the privatisation will raise considerable alarm and suspicion.

If the Secretary of State does not want to get into the mess in which the Secretary of State for Trade and Industry finds himself after his predecessor set him up so well with the Rover deal, he should consider independent valuation. Some previous valuations are disturbing and I find it deeply unsatisfactory that public money should be used to prime the pump for the private sector. I know many people who would have liked to buy the Rover works if they had known that £38 million would be thrown in.

One might argue about the other reasons why that was done, as the Secretary of State has, but the crucial point with Rover, is that it did not need to be done in the first place, and that would be true of the PSA. Rover was set to make a profit and the PSA seems to be successful, so there is no need for softening up or for spending public money on that. When we see £21 million thrown away on advertising the water industry to soften it up, we have a duty to ask what the public is getting out of that. They see their money being used to soften up an organisation so that the private sector can take advantage of it. That must be wrong, and I can think of no other country that does such things.

We also want to know how the organisation will be split up. I shall have to read the remarks of the Secretary of State carefully, but I think that it follows that there will be a number of organisations that will be sold off and it sounded as if there would be quite a large number—not just two or three, but a half dozen or more. That will make a great deal of difference as to whether there is asset stripping and how viable the organisations will be on their own. It will also control the the question of whether it will be practical for the employees to produce a successful buy-out scheme. It may not be practical unless they are given a wider job, rather than the organisation being split into small bits and pieces. We shall examine that point carefully in Committee.

I am disturbed—all of us inside and outside the House should be disturbed—that the Government have not touched on security. The Secretary of State hardly mentioned it in his speech, yet security is one of the most profoundly important aspects of the privatisation process. I strongly suspect—although for the moment we cannot know this for sure—that one of the reasons why it was argued in successive reports that it was not in the public interest to privatise was that it was felt that security would be affected. Our Government Departments and our armed forces are advised by the PSA on the physical security of their buildings, and that includes advice on counterterrorist procedures. The Secretary of State will know that, although he did not refer to it.

The PSA vets employees and contractors on its sites, and the vetting is tough: one in 10 of the applicants do not get through. Suppose that the private building sector takes over and has access to the organisations' plans. We know that the private building sector prefers to employ casual labour. Who will do the vetting? What will happen at Faslane and Aldermaston, let alone in Northern Ireland—a special example, to which I shall come in a moment. Will the work be done by people who have not been subjected to such vetting? Or will the Government exclude those establishments or arrange for the same people to operate an external vetting system, in which case, we ask again, "Why privatise?" What is the point if the same people are to be used to do the vetting?

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

The Secretary of State is muttering and shaking his head. If my hon. Friend is wrong, would it not be helpful to our debate if the Secretary of State would say so? It would certainly save time in later speeches.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

My hon. Friend is right. I suspect that the Secretary of State has not given sufficient thought to the security aspect. I think that that is the key.

I have an important point to make about the terrorist threat. We have seen examples of what has gone wrong with the privatisation of some of the security services that operate for the armed forces, and we know of the criticisms that followed the Deal bombing. Unless the Government get this privatisation right, they are in serious danger of creating a major threat to the security of our armed forces—to married quarters as well as to main bases.

The security implications are wider than that. Both the PSA and the Crown Suppliers operate in Northern Ireland. The hon. Member for Eastbourne (Mr. Gow), who is an expert on Northern Ireland matters, will appreciate the seriousness of my questions, and he will confirm that in Northern Ireland, the building industry is widely infiltrated by paramilitaries, both Unionist and Republican, who use it to obtain money for terrorist activity. We have known about that for some time, and it is one of the most difficult problems with which we have to deal.

The Secretary of State may or may not know that some of the civil servants who work for the PSA and Crown Suppliers are considered to be "legitimate targets" in the jargon of the paramilitaries. The Secretary of State and the Government have simply not considered how serious this matter is. Do they propose to transfer all those civil servants to the Northern Ireland Office, and if so, I repeat my question: "Why privatise?" Or will they make separate arrangements?

Or will they do what I fear most and play into the hands of the paramilitaries, as they often have despite their rhetoric? The Government have a record of profoundly misjudging political and paramilitary activity in Northern Ireland. The Secretary of State is looking worried and shaking his head. Let him say something then; let us hear something from him about security. Why did he not say in his speech that the security implications of privatisation were deadly serious? I choose my words carefully.

Photo of Mr Chris Patten Mr Chris Patten , Bath

There is a limit to what I shall say on this issue, not because of a lack of knowledge but because there are some things that it would be extremely irresponsible for me to say, just as there are some things that I think it is bordering on the irresponsible for the hon. Member for Hammersmith (Mr. Soley) to say.

Photo of Mr Chris Patten Mr Chris Patten , Bath

Let me follow the point through. There are some of us who, for reasons of our past, take a personal as well as a ministerial interest in the arrangements. I am sure that Ministers and others have experienced security arrangements being made perfectly satisfactorily by the private sector, just as the design and construction of many of our military establishments is looked after by the private sector.

The hon. Member for Hammersmith should be a little careful in his approach to these issues. I repeat that, for personal as well as ministerial reasons, I have even more cause to be concerned about these matters than he has.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

That makes it all the more important that the Secretary of State should answer the question. He should not have introduced the Bill without mentioning security—and do not let the right hon. Gentleman stand there and preach to me about what is and is not a responsible thing to do. Does he really believe that the paramilitary organisations are not aware that privatisation is to take place? Does he really think that people concerned about the defence of this country are not aware of it? Does he think that he can pilot the Bill through Committee without ever talking about security? Is that the extent to which the Government would take their secrecy? He is right that he has been concerned with security issues, as all of us who have been involved in the affairs of the Northern Ireland Office have been concerned with them—in opposition or in government.

It is deeply disturbing that Ministers' cars are not to be privatised although the family homes of armed forces personnel are. I want to know why. It is legitimate to ask, on behalf of every armed forces family in this country and overseas, what sort of security they will have once the PSA and the Crown Suppliers are privatised.

Photo of Mr Keith Mans Mr Keith Mans , Wyre

The hon. Gentleman cannot pursue that argument much further, because large numbers of armed forces families live in private dwellings, miles away from the bases. I think that, on reflection, the hon. Gentleman will agree that his point has nothing whatever to do with the privatisation of the PSA.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

I shall allow the hon. Member for Wyre (Mr. Mans) to get away with that on the grounds of his naivety and ignorance. If he reads the various reports and assessments of the work done—

Photo of Mr Keith Mans Mr Keith Mans , Wyre

Withdraw that.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

No. I meant exactly what I said. The Crown Suppliers and the PSA determine and advise on arrangements to deal with counter-terrorist activities on behalf of our armed forces. If the hon. Gentleman does not understand that, he does not understand what they do.

We did not hear from the Secretary of State whether that aspect of the bodies' activities will be wholly privatised, partly privatised or not privatised at all. We need to know that and it is no good the Secretary of State ducking the issue and hoping it will go away. It will not go away because we are not prepared to gamble with people's lives, even if the Government are. The issue is far too important to ignore.

Let us look again at what the Parliamentary Under-Secretary of State, the hon. Member for Itchen, had to say: For security reasons, I have decided to exclude from the sale the design and procurement of security furniture and equipment and the car service which transports Ministers and senior officials in London."—[Official Report, 28 July 1988; Vol. 138, c. 441.] That is all. We have to forget the families, Faslane and Aldermaston. The Government are concentrating only on the ministerial car service, security furniture and equipment and its design and procurement. That is what we have been told in a public document, but the Secretary of State said that he could not refer to that. However, the Under-Secretary of State has already discussed it and it has been discussed in public. The Secretary of State is trying to hide behind the idea that somehow we cannot discuss security now.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I do not know whether the hon. Gentleman knows, understands or is interested in the fact that most of the married quarters are maintained by private sector maintenance firms.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

Yes, but who advises them about security against paramilitary activities? Will the Minister accept that the PSA and the Crown Suppliers advise them? The Minister should not intervene unless he knows what the debate is about.

The PSA advised on the security on the Prime Minister's home in Dulwich. Is that kind of advice going to be privatised? Will it be excluded from the privatisation? We have heard only one little statement from the Under-Secretary of State, which I have quoted, that certain parts of the PSA will not be privatised. That is not enough and the House would find it unacceptable if those matters could not be discussed in detail in Standing Committee. I put the Government on notice, as I put them on notice about the money involved in the Bill, that we will not put the security factor at risk here just because the Government want a little extra money in an ideologial bid to back their private supporters. That is not good enough and it will not do for the British people.

Relationships with overseas Governments are also involved. Reference has been made to this and I want to refer to a meeting between senior British civil servants and members of the United States air force represented by Lieutenant Colonel Dean Bartel and General Anderson, the officer commanding the 3rd air force. That meeting took place in October in Germany. The United States representatives said that privatisation would cause great difficulties.

We must consider the way in which the American Government's attitude on this issue differs from that of the British Government. Congressional rules specifically forbid the United States air force from using a private sector firm. Work must be placed in a relevant Government Department in the host country. I presume that that rule exists for security reasons, something which the Secretary of State is not even prepared to discuss on the Floor of the House.

Congressional rules also forbid the location of private sector companies on USAF bases. In other words, such companies will not be able to enter those airfields to work. There are PSA works offices based on USAF airfields. Under that rule, PSA works offices on USAF sites would have to be closed after privatisation unless the Secretary of State can tell us that these matters have been considered and debated with the United States' Government and a satisfactory arrangement has been reached. However, that is unlikely because American procurement is based on official United States documentation which cannot be delegated to a non-governmental body.

Lieutenant Colonel Bartel is responsible for USAF civil engineering work. He has expressed himself fully satisfied with the PSA's performance and has said that the United States Government would oppose the privatisation of PSA because of the interference with USAF operational arrangements. He said that the Americans regarded the privatisation of the PSA as a breach of treaty obligations. I do not know how far that goes in the detail of the treaty, but we will have to pursue that in Committee. However, we should not have this Second Reading debate without the matter being referred to. General Anderson said that pressures were being applied at the highest levels to retain the status quo. Again, we will want to investigate that in Committee.

The situation is extremely serious and I will touch on other issues in Committee. However, I want to refer now to environmental issues because it is important that we remember that it was the Secretary of State for the Environment who moved this Second Reading. No doubt the Prime Minister gave him this post because she wanted to saddle him with the poll tax, water privatisation and a sports Bill, none of which he believes in. That was a useful way of curbing his ambitions. It was also useful for the Prime Minister to appoint the right hon. Gentleman because that gave some credence to her green record.

The Secretary of State is in some trouble with this Bill. The Parliamentary Under-Secretary of State, in one of his enlightened moments, which are very few and far between—although I would not like to deny him this one—said: The sensitive use of the landscape is central to the role of the PSA. With over 300,000 hectares of land under its management, from Cornwall to the Shetland Isles, as well as many places around the world … the Agency sets and meets high standards. PSA landscape architects work, along with practices of international standing, to bring about sensitive and effective results. It is interesting that the notice of the privatization contained in this Bill appeared immediately next to the phrase in the Queen's Speech: My Government will continue to attach very great importance to protecting the … environment. The environmental side of the PSA will be sold out along with the British taxpayer and the interests of the security of this country.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

Does the hon. Gentleman believe that it would be a good idea for the PSA's expertise in landscaping to be available to the wider private sector?

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

It is already available and it would be even more available if, instead of this absurd privatisation exercise, the Minister said that work could be put out to tender for private sector contracts.

The problem is that the Under-Secretary of State served on Wandsworth council. That council has one of the few hospitals which has not been closed down under the community care programme and the councillors have not yet been put out on the streets. However, they should be. The Minister is trying to live up to an absurd reputation. He seems to believe that privatising and flogging everything off is the only way to influence the private sector. Reports from the Minister's Department show that the PSA raises standards in the private sector. Why does the Minister deny it that role? Why should it be flogged off instead?

I now want to refer to a very important point, which to give the Secretary of State his due, he touched on. We will want to consider staff conditions very carefully in Committee. Redundancy is also important. I understand why the Bill prevents what might in effect in certain circumstances be double redundancy. However, I do not accept that the Bill or the Secretary of State's speech explain what will happen to staff who are moved from the present system in which they have certain guarantees about redundancy to a company with worse standards.

With regard to redundancy and pensions, we should state that staff should not be transferred to a system which is worse than the one they have. We must bear in mind what happened to many workers, particularly in the Health Service and those in lower paid jobs. They were very vulnerable when they were transferred to the private sector which, far from negotiating up their conditions, negotiated them down. A low-paid exploited midnight army of people are doing some of the most essential but most unattractive work in the country. The type of work in the Crown Suppliers and the PSA is different, but the pension rights and redundancy arrangements of the staff are crucial.

In no circumstances should staff be transferred to a private organisation in which their conditions of service, including redundancy money and pensions, are less than they presently receive from the Civil Service. The Civil Service has an honourable record as a good employer. The last thing that we should do is hand over a group of people as if they were goods and chattels instead of people who need to make provision for themselves and their families. Will they be allowed to transfer to another scheme of comparable value without great cost to themselves? Employees should not have to pay more to get the same pension. We shall explore those issues in much greater detail in Committee.

I repeat what I have already said to the Minister. There are two key matters. The first is the unacceptable way in which the Government are handling the funding of privatisation and the way in which they have used taxpayers' money to feather the pockets of many private companies in this country and overseas. It is a misuse of the public's money. The second matter relates to security. It is deeply disturbing, and the Secretary of State did not even consider it important enough to debate.

The Opposition will not play with the security of this country. We will not allow it to be diminished in any way. We will pursue this matter in Committee to make sure that the protection of our armed forces is at least as good as that of Ministers in their cars.

6 pm

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

It is certainly a source of great satisfaction to me and, I hope, to my right hon. Friend the Secretary of State to find clause 6(2) included in the Bill. Alas, it is rare to find a Bill introduced into this House or into another place which extends to Northern Ireland. I have long criticised the procedures whereby almost all legislation affecting Northern Ireland is done by unamendable Order in Council, so I am pleased that this Bill extends to the whole of the United Kingdom.

I felt that some parts of the speech by the hon. Member for Hammersmith (Mr. Soley ) were a little unreal, particularly those parts in which he expressed concern lest there might be a loss of jobs on United States bases following the privatisation of the Property Services Agency. It was not so long ago that the hon. Gentleman's party was advocating the closure of all American bases, so his concern about the possible loss of jobs seems rather unreal. My hon. Friend the Under-Secretary of State will make it clear that proper arrangements will be made to protect and safeguard the legitimate and necessary interests of the United States forces who are stationed in this country at our invitation.

The other part of the hon. Gentleman's speech which I found to be rather unreal was his statement which gave the impression that the security of the United Kingdom depended upon the Property Services Agency. I shall say some generous things—at least they will be intended to be generous—about the Property Services Agency, but to describe it as a major factor in the security of these islands is to overstate the case.

The overwhelming majority of the work that is presently done on behalf of or under the direction of the Property Services Agency is done by the private sector. It is ludicrous to say that, if the Property Services Agency happens to go from the public sector to the private sector, which of course I want it to do, there will be less involvement by the private sector. Following the privatisation of the Property Services Agency, some of its security responsibilities will continue to be carried out by the agency itself, whether in public or private ownership, and some responsibility may be transferred to client bodies.

This is a memorable debate. My right hon. Friend the Secretary of State is the sixth Secretary of State for the Environment in the past 10 years. I had the priviledge to serve under my noble Friend Lord Jenkin of Roding. Each of the former Secretaries of State, even including my right hon. Friend the Member for Henley (Mr. Heseltine), whose absence from our proceedings upstairs yesterday I deplore, had distinguished careers at No. 2 Marsham street. I mean no discourtesy to any of them, but I predict that the record of my right hon. Friend will be no less distinguished than those of any of his five predecessors. His record is already significantly better than those of any of his predecessors. My right hon. Friend has succeeded where each of his predecessors has failed—he has brought this Bill before the House.

I am happy to see in his place my hon. Friend the Member for Ealing, Acton (Sir G. Young), an Etonian baronet from London, not from Clywd, North-West. When I arrived at Marsham street in June 1983, I had the good fortune to find my hon. Friend, who was then Under-Secretary of State with responsibility for the Property Services Agency. I found also that my noble Friend Lord Jenkin of Roding had allocated the Property Services Agency to me. My hon. Friend will confirm that, from the day I arrived at Marsham street until the day I left, I was strongly in favour of bringing the Property Services Agency into the private sector. I shall give way to my hon. Friend if he wishes to dissent.

Photo of George Young George Young , Ealing Acton

I could not miss the opportunity of hearing my hon. Friend's second public performance since our proceedings have been televised. My hon. Friend exhibited impatience when he found that standards in the PSA were not up to his high expectations. He quite rightly pursued the policy of privatisation, which comes to fruition this evening.

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

The tender can wait.

I am grateful to my hon. Friend the Member for Acton for his remarks. I hope that he will catch your eye, Madam Deputy Speaker, before 10 o'clock.

The opening remarks by my right hon. Friend the Secretary of State and by the hon. Member for Hammersmith were characterised by some general references to privatisation. It will come as a surprise to hon. Members to learn that I have always been and remain a strong advocate of putting into the private sector all those aspects of the nation's life that it is not essential to have in the public sector. There may be a legitimate dispute between the hon. Member for Hammersmith and his right hon. and hon. Friends about whether the Property Services Agency must be in the public sector.

The task of maintaining the Government's stock of buildings and responsibility for some of our new buildings, including military buildings, can properly be entrusted to the private sector. It is perfectly proper for the hon. Member for Hammersmith to say, "No. Responsibility for maintaining Government buildings must be with a public sector body." I do not share that view, but it is certainly legitimate.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

As the hon. Gentleman is a strong advocate of privatisation, is it not a matter of dismay to him, and doubtless to the electors of Eastbourne, that, two years ago, the Crown Suppliers was making a profit of about £5 million? Am I wrong in saying that, under the guidance of the Under-Secretary of State, it lost 1 million last year? What a mess the Under-Secretary of State has made of things. Would the hon. Gentleman's constituents in Eastbourne not be extremely angry?

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

I rejoice in the fact that there was profit; I do not rejoice in the fact that there was a loss—

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

That underlines the very point I am making [Interruption.] Well. I have only been a Member of the House for the twinkling of an eye, but in those 15 years nothing has altered the view that I held on arrival—that no special gifts, qualities or abilities were given to Ministers to enable them to run industries and enterprises better than folk outside.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

Is the hon. Gentleman aware that John Stuart Mill coined the phrase.

the deep slumber of a decided opinion"? Should not the hon. Gentleman now wake from it?

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

I shall quote some Mill at the hon. Gentleman— The worth of a State, in the long run, is the worth of the individuals composing it … A State which dwarfs its men, in order that they may be more docile instruments in its hands … will find that with small men no great thing can really be accomplished. So I believe that John Stuart Mill supports my argument rather than that of the hon. Gentleman.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

I hesitate to interrupt my hon. Friend when he is in such erudite flow, but I was worried because he said that small men can offer no great accomplishments.

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

I apologise to my hon. Friend. I was not referring to "small men" in any literal sense.

I was asserting that the private ownership of the Property Services Agency, especially by those who work in it—by worker shareholders—is a concept that has long been dear to my heart. When British Gas was offered for sale to its workers, 99 per cent. of those who work for British Gas took up shares. When British Telecom was offered for sale to its workers, 96 per cent. of those who worked for British Telecom applied for shares. I believe—

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

Yes, I shall give way to the hon. Gentleman, whose decision not to stand at the next election I deplore.

Photo of Mr Martin Flannery Mr Martin Flannery , Sheffield, Hillsborough

The hon. Gentleman is wrong—it is nearly 16 years since he became a Member for the House. I remember going to Ireland with him at the time.

On his point about workers getting shares, surely the con is obvious to everybody? They get the shares as part of a propaganda ploy and in no time at all they are sold to the big boys. The hon. Gentleman knows that as well as I do.

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

The hon. Gentleman has chosen a bad day on which to make that intervention, because today is the day of the sale of the water industry. I am happy to be able to tell the hon. Gentleman that tens of thousands of those who work in the water industry have applied for shares in that industry. There will be a great expansion of worker shareholders in the water industry, for which my hon. Friend the Member for Southampton, Itchen (Mr. Chope) has responsibility.

I warmly welcome the proposal, because it will give those who work for the Property Services Agency the chance to become owners of the enterprise in which they work, but sadly that will not be until 1992. I hope that my right hon. Friend may be able to bring that forward.

Many other hon. Members wish to take part in the debate, so I shall make just one more point. The arrangements in recent years for managing and administering the Government estate have been most unsatisfactory. For many years, the Government estate has been run only by the Property Services Agency, which then had to find somebody else to do the work. It was almost the case that if the washer broke on a tap one had to get hold of the Property Services Agency simply to get a new washer. That procedure was cumbersome. Despite some excellent people working for the Property Services Agency, much of its work—although by no means all—was inefficient, not through the fault of those who worked for the agency, but because the system itself was cumbersome.

Therefore, I greatly welcome the new arrangements that are about to come into force, whereby each Government Department will be responsible for the maintenance of its own buildings and will be able to go where it pleases to find those who will maintain, repair and improve its buildings. I am afraid that many Government buildings, not only in London but throughout the kingdom, are in a bad state of repair, have been poorly maintained in the past and in too many cases provide a working environment that would be unacceptable in many private buildings and private companies. I hope that the new arrangements that my right hon. Friend described will mean that we can bring to a much higher standard of maintenance and repair the buildings in which so many of our civil servants work, because some of the buildings in which some of our civil servants are working are frankly deplorable.

I congratulate my right hon. Friend on the Bill. It has only six clauses and deserves to receive a speedy passage through Committee. I congratulate him warmly on having introduced it.

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South 6:15 pm, 6th December 1989

I listened to the pearls of wisdom from the hon. Member for Eastbourne (Mr. Gow), who is graciously smiling the smile of the crocodile, with the tears to match, but where does that take us? Where is the justification for the Bill?

Let us look at the Bill analytically. The Secretary of State spent a long time on it this afternoon, but he did not justify what is sought to he done. The hon. Member for Eastbourne made a tour de force across his own Benches, but he did not justify what is sought to be done. We must ask ourselves this simple question; will the service provided to the state be more economical in cost to the state before or after this privatisation? That is the only question and the only test.

Let us look at the history of privatisation, starting way back with INMOS and moving forward through the royal ordnance sale, and Rolls-Royce and Rover as they rolled through. What have those sales really done? The state has received a capital sum. We have also seen the sale of the gas, telecommunications and water industries—assets that belong to each and every one of us.

The state received a capital sum, but who received the benefit of that capital sum? Was it the millions of people who do not pay any income tax? Was it the millions who live on social security, or was it those who pay a lot of income tax or who used to pay a lot of income tax, but whose tax rates have been scaled down from 60 per cent. to 40 per cent.? Those people were the beneficiaries. What of the properties, the goods, the companies and the firms that were sold off? What about our assets? Who now has the profits from those?

I will not bore the House by talking about Rover, because that is a scandal itself, but let us look at the royal ordnance factories that were sold off. Enfield is an example of a once thriving works that is now closed. The value of the land was massive and who has been the beneficiary? The state? No. The beneficiary is the company that bought it so cheaply.

Let us look at Rolls-Royce, British Steel and the gas industry. Who has been the beneficiary of those sales? Certainly not the people of this land. The major taxpayers have received tax cuts and ultimately it is they who own those industries today.

I turn now to the Property Services Agency and the Crown Suppliers. I do not intend to follow my hon. Friend the Member for Hammersmith (Mr. Soley) and to discuss security, because that matter can be debated later and elsewhere. I shall simply consider the maintenance of the buildings. Let us take as an example the construction of the courts, where much work still remains to be done. The Truro court, built by the Property Services Agency if my memory serves me correctly, stands internationally recognised. Maidstone is another one. It used the wrong marble, but that does not matter. It may have been the most expensive staircase in history.

Leaving that mistake aside, if in future such buildings are built by private companies, they will take into account in their quotations not only labour and material costs but that other element which any private company tendering for a contract includes—namely, profit. The Property Services Agency does not need that profit element so it does not include it in contracts. Hence the examples of valuations that we were given earlier. The costs were considerably less than in the private sector. That is bound to be. The private sector always includes profit in its figures. It has to worry about the variables, because profit is important. Companies do not trade for nothing; they trade to make a profit. That is a piece of simple economics which seems to escape the Government every time. Plainly, the costs to Government Departments will increase.

Who will benefit from the sale of the Property Services Agency? We know that we the taxpayers, and the millions who do not pay tax, will get nothing out of it. Perhaps in 1992—the timing is significant: just before the next election—there will he further tax cuts funded by the sale of state assets.

How will the Property services Agency be sold off? There is talk of turning it into a company. Fine. What will we do then? Turn it into a co-operative, such as National Freight? Its thousands of employees receive the benefit or profit. Will the Property Services Agency be sold to some boys in the city—for example, construction companies such as Higgs and Hill, Tarmac or Trafalgar? How will it be valued? The Government's track record in valuing assets before sale leaves much to be desired.

Photo of Mr Andrew Hunter Mr Andrew Hunter , Basingstoke

If the hon. Gentleman is so anxious about taxpayers' money. how does he defend a system such as that under which Buckingham gate was constructed where the original estimate was £4£5 million and the completion costs more than £12 million? Similarly, the completion costs of Richmond house were over £1 million more than the estimate. That was a waste of taxpayers' money under the present system.

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South

The hon. Gentleman makes a valuable point, and I am big enough to concede it. If people under-estimate the cost of construction, whether in the public or private sector, a little column called "extras" is added. The building trade is full of such extras. They represent additions and alterations which are usually certificated by the architects. The hon. Gentleman probably knows that from his experience in industry. There were simply wrong estimates of the actual cost. If someone makes a wrong estimate, they are not employed again, or they are sued.

Photo of Mr Andrew Hargreaves Mr Andrew Hargreaves , Birmingham, Hall Green

How often have responsible members of the Property Services Agency or any other governmental or quasi-governmental agency been sued or dismissed for making such wrong estimates?

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South

There is no reason why they should not be sued or dismissed. If mistakes have been made—the Government have been in charge of the agency for the past 10 years—why have they not been inquired into and sorted out? The Government cannot shy away from the problem and say, "We will sell it off to get away from the problems in the future." That is to dodge the issue.

As I was saying, if the Property Services Agency is sold to the people who work in it, they will make a profit. However, I suspect that it will slip down a sleazy road and fall into private hands at a valuation far lower than its true value. The City has been laughing for 10 years. It has bought up Government assets at knockdown prices.

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

It has been the sale of the century.

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South

They got an even better bargain from the Government. The Government cannot value anything.

The Crown Suppliers services embassies abroad and Government Departments. It has developed its own technique.

It lost money last year, but with proper management it is capable of making a profit. Who will benefit? Certainly it will not be the people who will work in it eventually, unless there is an in-house buy-out in which everyone participates. However, I suspect that, because the Government are not fond of co-operatives, that will not be the case. There will be no winners from the point of view of the state, but simply increased costs.

Costs will have to increase, because companies have to make a profit to live. It is simple economics. The cost increases, the state pays more and the taxpayers receive a lump sum but pay for it afterwards. If ever there was a case of live now, pay later, the Government are a prime example. They sell anything to survive today, knowing that someone else will have to pick up the tab tomorrow.

The Bill is not a good Bill. It is full of doctrine and dogma, and it lacks common sense. It is a bill which the next generation will have to meet to pay for the Government's squandering behaviour.

Photo of Mr Michael Colvin Mr Michael Colvin , Romsey and Waterside 6:26 pm, 6th December 1989

We have heard accusations from the Opposition that the Bill is full of dogma, but that is the only true accusation that we could level at them. The charge of Conservative dogma is completely refutable. In their defence all that Opposition Members do is to preach what to us sounds like a greater degree of dogma. Some years ago I noticed that at one of its conferences the Labour party decided to repeal the clause—I think it was clause four—in its constitution which contains provisions for state ownership. That clause may have been dropped from the Labour constitution but nothing that has been said by Labour Members today gives us reason to believe that they have forgotten the dogma upon which so many of their policies depend.

I am pleased to take part in the debate and that the measure has at last come before the House after a long delay. Some of us have asked why so much time was wasted in bringing the Crown Suppliers and Property Services Agency into the private sector, but the explanation given by my right hon. Friend the Secretary of State this afternoon satisfies me. We have talked about efficiency and value for money, but another side of privatisation must be taken into account. It may be described as the social implications of privatisation.

I shall concentrate my remarks on a narrow aspect of the proposals, the knock-on effect of this privatisation on a manufacturer who is largely dependent on the Crown Suppliers as a major customer. I refer to Enham Industries, near Andover. I raise the matter so that the Government may be aware of the effect that privatisation could have on charitable organisations, which could in turn throw an extra burden on to taxpayers, in this case to support disabled people who hitherto have done so much through their efforts in manufacturing to support themselves. Enham Industries is one such organisation. The Papworth centre, near Cambridge, to which it is linked, is another. The well known Remploy factories could be similarly affected by this privatisation measure.

I declare an interest as an unpaid governor of the Enham village centre for the past 25 years. The village is in the constituency of my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell), who is sorry not to be in the Chamber now. He has another urgent meeting to attend and apologises for his absence. He knows the Enham village centre well and has visited it often. Even without hearing what I have to say he wishes to be associated with my remarks.

Enham Industries comprises the industrial and commercial element of the Enham village centre, which is a self-contained community supporting an industrial work force of about 350 people, two thirds of whom are disabled. The centre was founded towards the end of the first world war for the permanent resettlement of disabled ex-service men and their families, with the opportunity to work as an essential ingredient of the rehabilitation process, especially when linked to adjacent living accommodation within the supportive community.

Over the years the village has adapted to changing needs and today it caters for a wide range of physical and other disabilities, including those resulting from illnesses and accidents as well as congenital diseases. To the uninformed observer, Enham looks like a typical English village. That is why it provides such a good environment for the rehabilitation of disabled people. Enham also offers special training and retraining opportunities for handicapped people, particularly the young. Its commercial activities have reduced considerably the dependence of those people on the state. That is something which we all want to see.

Some of that work could be put at risk by the Government's proposals to privatise the Crown Suppliers. There is considerable uncertainty at Enham about the method and precise timetable of privatisation. We have learnt something about that this evening, and I am relieved that my right hon. Friend the Secretary of State wishes to proceed with all possible haste. His motto was certainly sooner rather than later. Fears about the timetable have not necessarily been dispelled by the contents of the Bill or the explanatory note which my hon. Friend the Under-Secretary of State made available to us. I appreciate the Government's need to keep their plans fairly fluid, but it is important for those who work at Enham to have a firm idea about timings.

The survival of the furniture factory, which is the largest unit in the village, is critical to the well-being of the entire village. It has a turnover of £3 million out of Enham's total industrial turnover of £4·5 million. Besides employing many disabled people directly, it supports overheads which enable other disabled people to be employed and has the potential to make money to support some of Enham's other activities, such as a sheltered computer unit and a professional management team who give advice to other employers on the employment of disabled people.

For many years the furniture factory has depended heavily on one customer, the Crown Suppliers. In earlier years, its business was less price-sensitive that it is now and substantial profits were achieved. The money was ploughed back to help the beneficiaries in the village. The risk inherent in over-dependence on one customer was recognised in recent years and every attempt made to rectify it—with, I am afraid, rather limited success, mainly because of the apparent inflexibility of the factory and work force. As a result, they remain about 80 per cent. dependent on the Crown Suppliers to supply their goods to the Ministry of Defence.

Crown Suppliers' work is obtained by competitive tender. The only advantage to Enham as a charity employing severely disabled people is its priority supplier status with Government Departments. Although it competes on price, delivery and other factors, if it does not win a tender, it can still ask to be allocated part of the business on the same conditions as the best tender.

Much of my anxiety for Enham's future hinges on the Government's apparent formula for privatisation. It has been reported that the Crown Suppliers may be broken up into two or three parts, with its furniture side being one major part. I understand that, of its total sales of £230 million in 1988–89, wooden furniture accounted for £40 million and metal furniture for £33 million. Furniture is the main part of Enham village's output.

I should be grateful if my hon. Friend the Under-Secretary of State could be more specific about his proposals for the timing and structure of the privatised concern. The sister organisation to Enham, Papworth village near Cambridge, is in a similar position, with its furniture factory turning over about £1 million a year—not as much as at Enham—yet remaining 50 per cent. dependent on the Crown Suppliers as its principal buyer.

Of particular interest is the position of the Ministry of Defence as the ultimate prime user. Will it use a commercial middle man after privatisation to replace the Crown Suppliers, or will it be able to buy direct? Enham would favour selling directly to the MOD users, but if that part of the Crown Suppliers is to be sold, Enham would favour a management buy-out. I am glad that my right hon. Friend the Secretary of State said that he, too, favoured a management buy-out with an opportunity for the company to continue to deal on a "priority supplier" basis.

Benbow furniture designs is the trademark for Enham's furniture products. It belongs to the Ministry of Defence and is manufactured by Enham through a licence from the Crown Suppliers. What will happen to those trademarks following privatisation? I have a letter from my hon. Friend the Under-Secretary of State who says about them that the Bill also provides for the transfer to the purchaser of Crown copyright attributable to the TCS business. This is likely to include the copyright of Benbow designs. I am not certain that that is strictly true. I was under the impression that Benbow designs belonged to the Ministry of Defence and could be passed to someone else only if it was prepared to sell the licence.

I appreciate that my hon. Friend the Under-Secretary of State will be tempted to say that all these questions are for the Ministry of Defence because it is the ultimate prime purchaser of Enham's output, but he must have a view and we should like to hear it. In particular, we should like an undertaking from him that he will talk to the Minister of State for Defence Procurement to see whether ways can be found to cushion the effect of privatisation on an organisation which has done and continues to do so much to support itself.

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor 6:39 pm, 6th December 1989

Clause 1 relates to the sale of property, rights or liabilities which are associated with the Property Services Agency and The Crown Suppliers. Clause 2 states that no redundancy compensation will be available to staff who are transferred automatically to a new employer. From clause 3, it appears that the Secretary of State will have shares in the company formed, but the right hon. Gentleman did not make that clear this afternoon. I hope that the Minister will clear up that matter when he replies tonight. Clause 4 relates to the winding up of The Crown Suppliers' trading fund". The Bill is about reducing public expenditure, and Conservative Members have stated that clearly tonight. The right hon. Member for Blaby (Mr. Lawson) made a number of speeches as Chancellor in which he said that it was the stated aim of the Government to reduce public expenditure to below 40 per cent. of gross domestic product. The Bill is a further step towards achieving that objective. Unlike Conservative Members, however, I disagree with it. If the Government choose to follow that path, they must remember the cost involved.

Provision for the privatisation of most of the PSA's designs, buildings and maintenance work has a knock-on effect. What will happen to standards? The hon. Member for Eastbourne (Mr. Gow) was right to say that many Government buildings are not in the best state. I have visited many such buildings, and I must agree with him. None the less, what will happen to standards if the Bill is passed? What standard will be laid down for those buildings erected for Government Departments following the passage of the Bill? Will those standards be better than the existing ones? The newer buildings that have been erected to PSA design are excellent. I visited Richmond house yesterday and it is built to a high standard. Perhaps one can criticise the outside of the building, but inside it is excellent.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Although I might criticise the arrangements for the valuation of Richmond house, I regard it as one of the most beautiful pieces of architecture erected this decade. It is a tribute to the architects who designed it.

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor

I agree that the frontage on to Whitehall is truly excellent, but most of us in the Norman Shaw building must look at the back of it, which is not so attractive. The entire building should look well rather than just the front.

We must ensure that standards are maintained and improved. We are talking about a large business and the Secretary of State has already said that it is worth £3·4 billion per annum. It is a big business to privatise, but the most important consideration must be the PSA employees. It employs 23,000 civil servants, and I am sure that we would all want their well-being to be guaranteed and their conditions of service protected and maintained.

The proposals for the privatisation are some of the most radical to be introduced under the Government's privatisation programme.

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor

Perhaps that is a more suitable word.

The proposals are radical because the Government are going beyond just privatising a nationalised industry—they are striking at the heart of Westminster and Whitehall. They are talking about the privatisation of the services that support the Government, and that is a significant change in comparison with previous privatisations. We must ask whether that quantum leap of privatisation, which strikes at the heart of Whitehall, is desirable. On examination, there remains some doubt as to whether these services are suitable for privatisation.

If the Bill is to see the light of day, safeguards must be built into it in Committee. It is vital to safeguard the pension rights of the staff. The Secretary of State has mentioned that, but we need further evidence that the terms and conditions of the employees will be maintained. If the PSA and the Crown Suppliers become part of the competitive world, what will happen to the 23,000 civil servants who become employees of the new company? Will there be problems of overstaffing, as at present? Will immense cuts be made in the numbers employed? Will such reductions result in a decline in quality of workmanship and design? Will there be many relocations? So far those human-interest questions have not been answered.

It is also important to consider the land holdings and buildings associated with the PSA. We have been told that only the services provided by the PSA and the Crown Suppliers will be privatised, but the hon. Member for Hammersmith (Mr. Soley) mentioned 300,000 hectares of land. I am sure that all hon. Members would like to know the location of those hectares. My guess is that they will be found in most of our constituencies. In the past 12 months some responsibility for land holdings has been handed from the PSA to the Ministry of Defence. I should like to know the extent of that split of responsibilities.

We have already flogged the security horse but it is one of the most critical factors of the privatisation. Over and above the questions that I put to the Secretary of State and the comments made by the hon. Member for Hammersmith, I shall mention a report in The Independent of 19 October that detailed the fears of the United States Air Force about the proposed privatisation. It said: The US Air Force has voiced concern over the security implications of privatising the Property Services Agency, which carries out building work at bases in Britain.Representatives are to meet officials from the agency and the Ministry of Defence in the near future. A USAF spokesman said: 'We currently have a very sound working relationship with PSA and any proposed change would require serious negotiations.' What happened as a result of the meeting with the MOD in October? Has any agreement been made with the USAF as a result? What guarantees were the Government able to give the USAF in the event of the privatisation of PSA? I hope that the Minister will be able to give answers to those questions.

The security angle behind the privatisation relates to Cabinet Ministers' houses and foreign embassies. Given that they are the target of terrorists, their protection is of grave concern. Privatisation of the PSA begs the simple question: can one privatise a service that services Government? That question has not yet been adequately answered in this debate.

The Department of the Environment, which is responsible for the PSA, will have some difficulties as a result of what is going to happen. The services provided by the PSA, including design project management, property maintenance and estate management, are all competitive parts of the private sector. During the Bill's passage, we are duty-bound to ensure that there are safeguards for those operations. The property holdings are to remain in the public sector and the Government will remain the landlord. I hope that I have correctly interpreted the Bill.

Many weaknesses in the operation of the PSA have been outlined. The escalation of costs for the Department of Energy building—which tripled over 18 months—have been mentioned. That shows the necessity of tightening up the PSA management. Whether there is to be a management buy-out in the long-term future is a matter of public interest. It has been forecast that at least 50 per cent. of present PSA business will be lost as a result of competition. Whether the remaining parts of the PSA operations will prove desirable buy-outs for the management will be called into question.

Mention has been made in the debate of the furnishing business and core furnishing, which has a turnover of more than £70 million and on which many people's livelihoods depend. As the hon. Member for Romsey and Waterside (Mr. Colvin) said, the people involved in manufacturing that furniture are involved with charities and the disabled. I am sure that hon. Members would not wish those people to lose part of their livelihood.

The Secretary of State said that some of the Crown Suppliers' vehicles hire services would remain with the Government. Will the courier services and all the transport operations—not just some of them—remain with the Government? What will happen to an extremely desirable residence near Waterloo and one of the future Channel terminals, Wellington house, presently valued at £36 million? Will it be sold off because it is part of the Crown Suppliers? If it is to be sold at a knockdown price, I am sure that there are many sharks willing to take it over and make a great deal of it, because it is in a favourable position.

Why is the Bill being put through Parliament? What is it all worth? If the Government's privatisation programme is to retain any credibility, the Government should produce a balance sheet which has been audited by the National Audit Office so that everyone can be clear of the valuation of these public assets before the privatisation measure goes through so that the public and the House can judge whether this is the proper way to proceed with legitimate matters of public interest. I trust that this will be done and that we do not see the same sort of shabby business as occurred with Rover and Royal Ordnance.

Who will get their hands on some of the services involved? Many of the companies may be building companies. They may win in competition with the PSA or they may wish to get involved in other ways by buying their way in. It is salutary that many of these firms, including Cementation, Taylor Woodrow and Trafalgar House, all support the Conservative party, have a vested interest and might benefit from privatisation. We must regard with suspicion the objectives of and motives for this measure.

The Bill alters the course of Government management which has developed in a direct line since the middle ages when the first public works clerk was appointed to a royal palace. The PSA now looks after 8,000 public buildings. Does the PSA still have any involvement in royal palaces?

The Select Committee on the Environment said that the PSA was inefficient and its lines of communication were too long. The privatisation may be being used as an excuse to try to put right some of these matters. It is legitimate to ask whether options other than privatisation are available to make the PSA more efficient. Alternatives may well exist.

The Bill also involves some aspects of the Secretary of State's career. He has to make a partial commitment to Thatcherite privatisation. He is being clever enough to set up the final stages of the privatisation of the PSA until just after the next general election. It is a good case of the Secretary of State having his cake and eating it.

Photo of Mr Michael Stern Mr Michael Stern , Bristol North West 6:57 pm, 6th December 1989

I am grateful for the opportunity of following the hon. Member for Brecon and Radnor (Mr. Livsey), not because of the usual sour platitudes with which he ended his speech, using the normal Liberal tactic of substituting insults for policy, but because he referred earlier to a subject on which I wish to speak: the position of the PSA staff under the proposed privatisation.

I declare a constituency interest in this matter. There is a substantial PSA office at Westbury on Trym, in my constituency. Many people not only work in that office but live close by. When the former Secretary of State for the Environment, now Secretary of State for Defence, visited my constituency during the 1983 general election and walked the high street of Westbury on Trym he was immediately besieged and almost mobbed by PSA employees worried about the implications of the Alfred report. That report would have caused huge upheavals in the PSA and created the ultimate indignity for a Bristol office by putting it under Cardiff's control.

Substantial numbers still work at the Westbury on Trym office in north-west Bristol and I was anxious to receive as wide a briefing as possible on this measure's effects on the staff. Not surprisingly, I received a briefing from the Government and asked the union if it would supply me with a briefing, which it duly did. I received a briefing from the south-west branch of the National Union of Civil and Public Servants earlier this week, immediately grabbed it and scanned it with great interest. I admit that my interest rapidly waned as I read through it. The document did not give a broad view of the Bill's effects on the union members at the PSA, but was an openly party political document which set out to denigrate privatisation and slag off those of its members who happened to disagree politically with the writer of the briefing. It was a thoroughly scurrilous little document.

When dealing with the interests of the staff—its members—the document says that the business of the PSA will decline automatically as a result of privatisation. Let us forget what we heard this afternoon about the favourable costings that the PSA is able to put forward in privatisation because according to the writer of the document, privatisation has to mean decline because that is what the Labour party says it has to mean. Let us forget that the document is trying to look after the interests of its members who will themselves be responsible for whether the PSA is efficient or inefficient in future. I know, apparently better than the trade union concerned, that many of its members regard the PSA as an extremely efficient organisation and are in no way scared of competition. I find it worrying that the people they pay to represent them have totally the wrong idea of the work they are doing.

It is the union's recommendation that the staff concerned should be quickly offered a choice. One would think that we were talking about the direction in which their careers should go. That is not the case. The choice recommended by the union is between remaining in the Civil Service and joining the new PSA on loan. There is no question in the union's mind that any members of staff, whatever their political outlook, should have enough belief in the organisation for which they have worked for most of their lives to want to join it.

The nub of the scurrilous little document is that the union predicts that those members of staff with "highly marketable skills" will automatically leave the PSA and go to an employer of their own choosing. Neither we in the House nor my constituents live in a slave society. They have the right to choose their employers. I do not find it in any way deplorable that, as a result of the Bill, my constituents should be given the opportunity of selling their skills in the best marketplace. I find it deplorable that the people who represent them should so resent them possessing ambition.

The opportunities opened up in the Bill for my constituents are legion. It has already been pointed out that the PSA will benefit from being able to compete with the private sector in the private sector.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

When the hon. Gentleman consulted those civil servants, did he ask them about morale within the PSA? What did they say about that? He must have consulted them as it is an important issue for the hon. Gentleman. Did they say that morale was good or bad?

Photo of Mr Michael Stern Mr Michael Stern , Bristol North West

I am sure that the hon. Gentleman will appreciate that there is never a simple answer to that question, and I did not receive a simple answer.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Did the hon. Gentleman ask?

Photo of Mr Michael Stern Mr Michael Stern , Bristol North West

Of course I asked, as I meet them regularly. They said that morale was variable. Some older members of staff greatly value their titles and positions as civil servants and are reluctant to see those positions changed. One of the reasons that I welcome delayed privatisation in this case is that it will give an opportunity for older members of staff to work out arrangements which will be satisfactory for them for the short remainder of their careers. If I am chosen to serve on the Committee, I will want to look at that point.

There were and there remain a large number of people to whom I have spoken who are excited at the prospects opened up by the Bill. The Crown Suppliers is excited at the prospects of taking part in the management buy-outs that are likely to come about as a result of the Bill. The answer to the hon. Member for Workington (Mr. Campbell-Savours) is that, as with so many other issues, there is no simple answer.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

The hon. Gentleman said that a person should he allowed to transfer to where he can obtain the highest reward. He also referred to older people who may have two years to go. What about job satisfaction? Did the hon. Gentleman question those people who are now employed by the Crown Suppliers or the PSA about job satisfaction and the fear that they may lose that job satisfaction? Did he question those people with perhaps four or five years to go about their fear that after two years they will not know where they belong? Those issues must be addressed. The prospect of privatisation is causing that concern.

Photo of Mr Michael Stern Mr Michael Stern , Bristol North West

I disagree totally with the final point made by the hon. Gentleman. Of course there are concerns in many different areas. They are not caused by privatisation; they exist anyway. The hon. Gentleman rightly speaks up for the people concerned about the effects on their careers, but he discounts the people—and I have spoken to many—who are excited by the prospects opened up by the change in character of the organisation. They are entitled to just as much consideration.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

The hon. Gentleman said that he believes that morale is mixed. Can he explain why last year a net figure of 500 senior managers left the PSA? Why did they go? Were they happy and contented? Did it have anything to do with the prospect of privatisation?

Photo of Mr Michael Stern Mr Michael Stern , Bristol North West

The hon. Gentleman is seeking to create generalisations where none exists. In any organisation containing 23,000 employees, some will leave in any year and some will be senior managers. They will all leave if they see that prospects are better elsewhere. However, the hon. Member for Workington does not take account of people joining the organisation at the same time.

Photo of Mr Andrew Hunter Mr Andrew Hunter , Basingstoke

My hon. Friend is right. He may wish to know that the Select Committee on the Environment discussed that point with the PSA, which said that it had a recruiting and retaining problem because of competition with the private sector.

Photo of Mr Michael Stern Mr Michael Stern , Bristol North West

I am grateful to my hon. Friend for underlining my point.

Prospects have opened up for my constituents—both present and future employees of the PSA—and are greatly enhanced by the Bill. For the first time, the organisation will be able to go into the marketplace and fully sell the skills that it has built up. That marketplace is not just in Britain but worldwide. The opportunity for the organisation to compete worldwide will be greatly enhanced by the Bill. I suspect that that is what is interesting many of those employees who are keen to share in the overall organisation. It is a unique organisation that has been held back by its position as part of the arm of just one of the world's Governments.

Many of my constituents are worried about their conditions and prospects under this change, but I welcome the Bill on their behalf. I have no doubt that it will create more opportunities for more people than there would ever have been had the PSA remained in public hands.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow 7:10 pm, 6th December 1989

If selected, I look forward to serving on the Committee examining this Bill and I hope that the hon. Member for Bristol, North-West (Mr. Stern) will serve on it, too. This Bill is a can of worms and there is a great deal to be said about it.

As the parliamentary debate goes on, it often happens that more issues are raised. I have a great respect for the hon. Member for Bristol, North-West; he and I are both involved in the promotion of chess, but I beg him to realise that, although he may be right about some people being excited by the prospect, a great many others are deeply worried about what is happening.

On 24 April 1989, I raised this subject by asking whether Ministers would honour the commitment given to this House by junior Ministers that the pensions of the staff of the Crown Suppliers upon privatisation will be comparable to those they are entitled to under the principal Civil Service pension scheme. The hon. Member for Southampton, Itchen (Mr. Chope) replied: When tender invitations are issued, prospective purchasers will be invited to offer pension terms to transferred staff broadly comparable to those in the principal Civil Service pension scheme. Detailed future pension arrangements will be a matter for the purchaser to discuss with the Government in the course of the sale."—[Official Report, 24 April 1989; Vol. 151, c. 412.] That is open-ended.

On 25 April, following a clarification question from me and a holding answer, the Minister said: No decisions have yet been taken upon the detailed criteria which will apply."—[Official Report, 25 April 1989; Vol. 151, c. 526.] We want to see the small print.

On 2 May, in reply to my question about non-industrial staff, the Minister said: my right hon. Friend yesterday met the unions representing the staff of the Crown Supplier."—[Official Report, 2 May 1989; Vol. 152, c. 56.] The Minister has not satisfied the unions in these meetings.

On 16 May the Minister said: The pension terms on offer would be assessed by the Government Actuary."—[Official Report, 16 May 1989; Vol. 153, c. 185.] That is more than an important point for the Committee.

The Secretary of State said this afternoon that, after privatisation, the staff of the Crown Suppliers and the PSA who are transferred will have exactly the same redundancy payments as anyone else. They are not losing their redundancy entitlement". The Secretary of State referred to the operation of the TUPE regulations. He is aware that regulation 7 excludes pensions, but severance arrangements in the Civil Service are enshrined in the principal Civil Service pension scheme. Does the Minister regard severance arrangements as caught by the regulation 7 exclusion? If so, will he or the Secretary of State tell the House whether he is satisfied that he has discharged his full obligations under the relevant European directive?

In the Civil Service, severance entitlements are guaranteed by Act of Parliament. The total obligation of the state towards civil servants in the PSA is estimated at £1 billion.

Does the Secretary of State recognise that the severance obligations are vulnerable in the private sector?

The construction industry is volatile and not known for its integrity in dealings with staff. Are Ministers aware that the union representing senior managers—the Institution of Professionals, Managers and Specialists—has said that it will take strike action to defend severance terms? The Treasury guaranteed severance terms in the ordnance factories and the dockyards. Why are similar guarantees not being offered to PSA staff?

Despite considerable underfunding, the PSA has been consistently acclaimed for promoting standards of excellence. Over the years, it has won numerous awards, ranging from the Europa Nostra diploma of merit for the superb restoration of Richmond terrace in Whitehall—I pay tribute to the late Duncan Sandys for his remarks about the PSA's work—to the Association for the Protection of Rural Scotland special award for the modernisation of Fort George in Inverness. Fort George was a fantastic performance by the PSA, and knowing as I do something about the Scottish highlands, I venture that no other body could have done the work as well. I am sure that the chairman of the Historic Buildings Council for Scotland, who is present, would not deny that.

Photo of Sir Nicholas Fairbairn Sir Nicholas Fairbairn , Perth and Kinross

That was indeed a most remarkable restoration, to which the Historic Buildings Council contributed generously, but the idea that only members of the PSA could have achieved it is phenomenal. The PSA is not restoring Westminster abbey, but no one would deny that that is a remarkable restoration.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

That is open to argument, but my point about the highlands stands.

Do the Government accept that the PSA's design costs have been shown to be 25 per cent. to 30 per cent. cheaper than those of private designers?

As for maintenance, in 1988 the Government abandoned their attempt to contract out district works offices after receiving tenders for the pilot in Southwark which proved to be twice as high as the PSA's costs. My hon. Friend the Member for Hammersmith (Mr. Soley), who spoke excellently, asked about that but did not receive an answer. Is it true or false?

I have had no answer to my question about the private valuation of the new DSS headquarters costing 266 per cent. more than the PSA's valuation would have done. What are the facts? On Second Reading, the House is entitled to know them.

We are also entitled to know what physical assets will be assigned to a privatised body, and on what basis. Will such property and equipment remain in public ownership? Will it be leased to such a body or given it as a sweetener?

I listened extremely carefully to the Secretary of State's opening speech and took down his phrase that flotation was not envisaged. If not, who will own these assets?

I want to say a word about service and value for money. The Minister has conceded that the sensitive use of landscape was central to the role of the PSA. With more than 300,000 hectares of land, from Cornwall to the Shetlands—as well as many other places around the world—under its management, the agency sets and meets high standards. PSA landscape architects work with practices of international standing to bring about sensitive and effective results. However, the privatisation of the PSA will reflect an ill-considered reliance on market forces to conserve and enhance the environment, and will ignore the PSA's critical role. Ironically, the announcement of the PSA's privatisation in the Queen's Speech was followed by the statement: my Government will continue to attach very great importance to protecting the environment. Let us start with the north, although there are endless other examples. What will happen to the ownership of all the Orkney and Shetland brochs? They are of European importance and extend right through Britain. It is not clear who will take over the ownership of royal palaces and so on from the PSA and whether there will be leaseback. The economical use of departmental accommodation requires centralised co-ordination. In the PSA's absence, Departments will end up unnecessarily competing against each other for scarce and costly accommodation with the constraint of central pressures to order the proper use of space. Moreover, the lack of professional understanding in the market place will cause Departments to pay higher rents than necessary.

Do the Government deny that? In its second report for the 1986–87 session the Select Committee on the Environment said: PSA should be allowed to manage the civil office and storage estate more positively to ensure that the estate is controlled strategically as a major property resource. It should also have control over major new construction work in this sector. The unions say that that will not be achieved under the new regime, and they are right. If we are wrong about that, there ought to be some rebuke from the Government.

I should like to raise the matter of quality of service. Departments will have to fund their works organisations either from existing resources, thus undermining the services that Departments are supposed to provide and increasing pressure on their staff, or raise entirely new funding, placing an additional burden on the taxpayer. Departments may use a mixture of those two. The financial pressures on Departments will mesh with the competitive pressures on the PSA to push down standards across the range of Government accommodation requirements. The cheapest is not necessarily the best but Departments will be forced to accept the lowest tenders. Is that denied? I listened carefully to the Secretary of State and did not hear anything in his speech which would contradict that statement.

Will the Minister explain how such valuable public resources as property are to be valued? He did not explain that, nor did he say who will be given that task and how soon such a portfolio will be completed. What assurance can he give the House that such valuations will be able to withstand public scrutiny so ensuring that, bluntly, the public are not ripped off?

Clause 2(2) refers to the Transfer of Undertakings (Protection of Employment) Regulations 1981. What undertakings is the Minister prepared to give in relation to any person or persons subsequently made redundant by the new private body? Like many other parts of the legislation, that has not been thought out.

My hon. Friend the Member for Hammersmith mentioned security; I shall delete from my speech what I proposed to say about that because he covered it so powerfully. However, he was not answered. It is to the credit of the Secretary of State that he normally jumps up to answer a question, but this time he did not. His uncharacteristic behaviour reveals that the matter had not been thought through. My hon. Friend the Member for Hammersmith posed legitimate questions.

I should like to put a precise question to the Secretary of State. Is it true that he has already decided that work on Ministers' residences and official residences will not be privatised? Has he decided that such work will remain with the Government? If there are no security problems in privatising the PSA, why are Ministers' residences, certain royal palaces and the House of Commons being excluded from his privatisation plans? Does he agree that that is a case of double standards—one for Ministers, their wives and families and another for service men and their dependants? The Minister may be able to answer that, but it jolly well looks as if there are double standards.

I am embarrassed that the security of 650 hon. Members and that of those who work with us should be judged on one set of standards while we lay down different standards for other people. If it is argued that those different standards are in no way inferior, the obvious questions to be posed by people outside is, why are they not good enough for people in the House of Commons and the royal palaces?

Photo of Mr Andrew Hargreaves Mr Andrew Hargreaves , Birmingham, Hall Green

As a mere mortal, may I inform the hon. Gentleman that Conservative Members would be quite happy to see those standards improved, because we do not find acceptable the standards that have to be endured in this place and in another place. Some of us would urge my hon. Friend the Minister to go further in terms of the standards provided by the PSA.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

If that is so, why is the House of Commons not being privatised like everything else?

Photo of Mr Andrew Hargreaves Mr Andrew Hargreaves , Birmingham, Hall Green

We are referring not to the House of Commons but to its management and security.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

I do not know whether that means privatising the Serjeant at Arms. This will be seen as double standards, and that is a source of embarrassment. I see that my hon. Friends on the Front Bench agree with me. The matter needs to be dealt with.

Other hon. Members wish to speak, so I will shorten the remainder of my speech. In terms of clause 2(2), will the Minister tell us what provision has been made with regard to the equalisation of pension rights and conditions as contained in the principal civil service pension scheme compared to those that the private body will be required to undertake? That is a rather careful question, and as far as I can make out it has not previously been answered.

Photo of Mr Richard Holt Mr Richard Holt , Langbaurgh

The other questions were careless ones.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

The others were pertinent; I never ask careless questions.

In terms of clause 3, is it the intention of the Secretary of State to hold any shares or part shares in the proposed privatised body? I have ears like Jodrell bank and distinctly heard the Minister say to his parliamentary private secretary, "Never answer his questions." What limits are the Government likely to place on their proposals? Clause 4 is about the Crown Suppliers. Can the Secretary of State advise us about the order and extent of the liabilities that he seeks to extinguish?

In Committee, the debate will become more and more interesting, because some of us will keep an open mind and will continue to ask questions until they are answered. We shall make as much parliamentary difficulty as we can if Ministers are reticent. If they are forthcoming and frank, the Bill will go through Committee like lightning.

Photo of Mr Andrew Hargreaves Mr Andrew Hargreaves , Birmingham, Hall Green 7:30 pm, 6th December 1989

I am grateful for the chance to catch your eye Mr. Deputy Speaker, especially as, unfortunately, because of other commitments in the House, I shall probably not have the pleasure of joining the hon. Member for Linlithgow (Mr. Dalyell) in serving on the Committee to which he is looking foward so much.

I wish to make a few comments on the hon. Gentleman's remarks about standards of security. My hon. Friend the Under-Secretary is aware of recent incidents at premises under the management of the PSA in which I and my hon. Friends work. The incidents concerned breaches of security such as theft, the rifling of hon. Members' cabinets and so on. They were brought to the attention of my hon. Friend, the Serjeant at Arms and others whose busines it is to know about such matters. There might just as well have been bombs.

I ask the hon. Member for Linlithgow to pay attention to this point, as he referred to double standards of security. Conservative Members are concerned about the standards of security, and no doubt will be urging my hon. Friend to assure us that, in not transferring these specific services to the private sector, he can undertake that they will be improved by the PSA.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

The hon. Gentleman is not giving a fair crack of the whip to those who have a duty to manage our security. We put them—quite rightly—in a difficult position because we tell them that we are prepared to take certain risks to ensure that the democratic process is as open and as public as possible. They must balance the security throughout the Palace; that is not the case for Ministers.

Photo of Mr Andrew Hargreaves Mr Andrew Hargreaves , Birmingham, Hall Green

I respect the hon. Gentleman's view, but I do not think that it applies to the office accommodation of hon. Members. It is a problem that needs to be addressed.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

The hon. Gentleman is a valuation expert.

Photo of Mr Andrew Hargreaves Mr Andrew Hargreaves , Birmingham, Hall Green

Indeed I am, and I make no bones about it.

The hon. Member for Brecon and Radnor (Mr. Livsey) referred to the whole process of privatisation. The Opposition have previously referred to privatisation as selling the family silver, but this valuation expert considers that we are selling the silver duster and improving it, the better to preserve the silver.

The whole question of privatising the PSA is one of efficiency. The hon. Member for Brecon and Radnor asked why the legislation was being introduced. The simple answer is that we require these services to be provided more efficiently and more cost-efficiently. For the benefit of those Opposition Members who tend to be a little sceptical, I shall cite a personal example that I have brought to the attention of my hon. Friend the Under-Secretary. In the car park some nine months ago, my car was unfortunately reversed into a pillar by one of the attendants. It took the PSA almost nine months to find out who employed the attendant and who was responsible and, subsequently, to arrange for insurance cover to be paid.

That is not the standard of efficiency that hon. Members would applaud. It is the very inefficiency that the Environment Select Committee referred to when it said that the PSA was inefficient. It is my experience, and that of many of my hon. Friends, that that is true. It is in an effort to improve that efficiency that we are embarking upon this legislation.

We are discussing, especially in the case of the Crown Suppliers, the provision of such items as light bulbs and fuel. We might as well be talking about the provision of cabbages. Surely the Opposition are not suggesting that only the PSA can provide this House or other Government institutions with cabbages—[Interruption.] As one who has stood on the rostrum selling such objects, I assure hon. Members that they can be provided with equal skill, to better effect and more cost-efficiently by the private sector.

The hon. Member for Brecon and Radnor referred to striking at the very heart of Whitehall. Many of my constituents—and, I am sure, many others—would welcome a fresh approach to the provision of services and the management of facilities around Whitehall. I have been ashamed by the shoddy condition of Government buildings. I have escorted senior foreign bankers—one, alas, was blown up the other day—to the Treasury. It is a disgrace compared with the Treasuries of other countries, which in a former existence I have visited either on official business or unofficially. I do not refer in particular to the outside of the building, which although not magnificent is reasonably well preserved; it is the inside of the building that shames me.

I urge hon. Members to reflect on what this legislation attempts to achieve—an improvement in the management and the provision of such items as light bulbs and heating oil. To say that only the PSA can supply those items is nonsense. There may be parts of the PSA—and I bow to the superior knowledge of my hon. Friends—which, for security and other reasons, might be better in the public sector, but surely not the provision of light bulbs and heating oil. It is crazy.

Photo of Mr Andrew Hargreaves Mr Andrew Hargreaves , Birmingham, Hall Green

Because there is a perfectly good marketplace in which to buy such items direct and more cheaply, which means better value for money. My constituents want cheaper services to Government and therefore lower public expenditure.

I rest my case in saying that there is good reason for privatising the PSA and the Crown Suppliers, and I urge my hon. Friends to support that view.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington 7:37 pm, 6th December 1989

The hon. Member for Birmingham, Hall Green (Mr. Hargreaves) made an interesting speech, which takes me to the heart of my case. I always try to be extremely objective about commercial matters—[Interruption.] Oh yes I do. Those hon. Members in the Chamber this evening, especially my hon. Friends, who have heard my comments on Finance Bills and trade and industry matters generally will know that I have sometimes dissented from a position because I felt that arguments about efficiency, effectiveness and delivery were crucial. However, I have never accepted the premise that efficiency in delivery of service is necessarily the monopoly of the private sector. I cannot intellectually come to terms with that as a proposition.

Photo of Mr Andrew Hargreaves Mr Andrew Hargreaves , Birmingham, Hall Green

I would appreciate it if the hon. Gentleman could also include in his remarks the concept that competition tends to lead to great efficiency in companies bidding for the same contract. It sharpens the acuteness with which they attempt to do the job. I am sure that the hon. Gentleman appreciates that.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

I accept that and I shall deal with the question of competition when I speak about the Crown Suppliers. I shall draw the hon. Gentleman's attention to a report of the Public Accounts Committee and appendices to evidence that we took on these matters some 15 months ago.

The proposition that the man who buys a cabbage in the private sector can necessarily acquire better terms than the man who buys a cabbage in the public sector is quite ludicrous. Whether I worked in the private or in the public sector would not influence in any way the efficiency and effectiveness of my operations as a buyer for a commercial organisation.

Photo of Mr Andrew Hunter Mr Andrew Hunter , Basingstoke

The hon. Gentleman is embarking on an argument for the PSA's efficiency. He must bear in mind that he is flying in the face of the findings of the Select Committee on Environment.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

I do not suggest for a moment that the PSA is my ideal example of absolute efficiency. My case is that the efficiency with which problems are handled in any organisation manned by mortal human beings such as myself, who can work equally well in either sector, is entirely dependent on motivation. If those in the public sector are motivated in the right way—

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

I would willingly give way if I had time, and perhaps I can deal with the hon. Gentleman's point in private conversation. I have a good deal to say this evening, however, and I do not wish to detain the House unreasonably at such an early hour.

Let me ask the Minister to take the advice offered by President Bush last year at the Republican convention in the United States, which I was fortunate enough to attend. Turning to his opponent, the President said, "Watch my lips." I hope that the Minister will watch mine very carefully, as I should like him to address many of my remarks specifically in his reply.

In my interventions this evening, I have persistently argued that in this instance the public sector provides a cheaper service than the private sector. [Hon. Members: "Nonesense."] We are starting the debate in the knowledge that the party with the most votes to deploy at 10 o'clock tonight believes that my view is nonsense. Let me draw hon. Members' attention to the third report of the Public Accounts Committee on the Property Services Agency and management of the civil estate. Questions were asked, and the Committee was subsequently provided with information by the accounting officer, Sir Gordon Manzie.

I asked about a report into in-house and out-house design work done by the PSA. My question was: Is it true that the latest Semple Sweett comparison into in-house out-house major design work shows that PSA are 25–30 per cent. cheaper than private consultants on major design work? The question concedes a little to the Government, and I shall therefore read the reply in full so that we can consider the implications: The original Sweett/Semple review in 1983 concluded that there was likely to be an additional cost of about 10–20 per cent. in putting work out to private consultants. However, the review also concluded that it would always be more economical for a proportion of the design work to be carried out by the private sector, in particular to give the agency flexibility to deal with fluctuations in its workload. The latest management update of the Sweett/Semple review is still under consideration. When finalised it will cover the 44 year period to March 1987 and allow for the introduction and extension of fee competition for work done by private consultants. But the only really accurate and valid basis for comparison of in-house and out-house costs will not be available until the Agency is moved to a system of full commercial accounts, underpinned by much improved management information and accounting systems. I understand that those systems of "full commercial accounting", underpinned by much improved management information and accounting systems", are currently being put into place, and that computerised programme is being used in the Department. If I am right, will the Minister confirm that that programme has now been subjected to 1,900 modifications, that the whole system is a disaster and that it is making it almost impossible to evaluate the relative costs of in-house and out-house work?

These are internal departmental matters, separate from the propaganda of the debate. The Minister has come to the House with a proposal to privatise the agency, without having even established whether his proposal will save money: that, at any rate, is what was said in a recommendation that the Government accepted, provided by Sir Gordon Manzie for the use of the Committee.

On the Crown Suppliers, however, the answers given to us are far clearer. Let me quote from evidence provided by Sir Gordon and contained in the appendix to our report. Sir Gordon is in the Chamber this evening, and no doubt is nodding vigorously.

A paper was produced by the central unit on purchasing, which followed a review of the future of The Crown Suppliers undertaken by a team of officials led by the Cabinet Office. The Cabinet Office review team concluded on the information available to them that whilst privatisation would be possible"— it is always possible— it would not, in their view, be in the pulic interest. I understand that that review team is one of the most prominent committes in the land, that it is at the very heart of Government and that it advises the Prime Minister; but it says that privatisation would not be in the public interest. Those are not my words.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

I presume that that is someone like the man who went to Australia some years ago.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

My hon. Friend has now established the identity of the person involved.

The evidence continues: They recommended that The Crown Suppliers should be retained as a central purchasing agency in the public sector with rather greather autonomy in accounting and staffing matters, but that further consideration should be given to contracting out certain of their non-procurement activities." I am reading all this because that is what is says, although I may not agree with it. The thrust of the recommendation is "Keep it in the public sector.The Central Unit on Purchasing came to a similar conclusion about the central procurement function, but made rather more radical suggestions about The Crown Suppliers' other activities. A request by Dr. Oonagh McDonald"— the former Member of Parliament for Thurrock— that a copy of the paper by the Central Unit on Purchasing should be placed in the Library was refused by Sir George Young"— the hon. Member for Ealing, Acton, then a Minister in the Department— because it was not in a form suitable for publication. What that really means is that the paper was embarrassing, that it should not be read by the public and that the union should not have access to it, because it reinforced its case.

I asked another question, about the study of the feasibility of privatisation by Coopers and Lybrand in association with Samuel Montagu, and the study of the options other than privatisation by Mr. Dewi Jones. They were commissioned because Ministers believed that, taking into account the wider commercial benefits"— again, I am quoting Sir Gordon's reply— privatisation might prove to be a valid option despite the conclusions of the earlier reports. The Parliamentary Under-Secretary of State"— who is now in his place but who is not watching my lips— responded to a request by Mr. Tam Dalyell for these reports by saying that summaries had been placed in the Library; the full reports were not proposed for publication because they contained commercially confidential information. That was the second occasion on which Ministers were hiding the truth from Parliament because they did not want the case against privatisation to be put, based on accurate information produced by those who had had the opportunity to go into the Department and evaluate what was in the best interests of the general public. The Crown Suppliers Board prepared a commentary for Ministers on the Dewi Jones report. Again I quote Sir Gordon: This was an internal document commenting on a commercially confidential report and"— in the words of Sir Gordon— was not intended or suitable for publication. I can presume only that that is yet another example of Sir Gordon having to defer to the Minister's instruction not to publish information that might be highly embarrassing to the Department.

I understand that there is another matter to which I might briefly allude at this stage.

A team of staff of The Crown Suppliers, who are assembling a bid for all or parts of the business of The Crown Suppliers, asked for assistance with the cost of consultants' fees. The Government has agreed in principle that assistance should be given for some of these costs but no decision has been reached on the level of assistance to be provided. I understand that that is a precedent. I hope that the Minister will comment upon it.

The Government do not want the truth to come out. The privatisation is being driven through by a Minister who is determined to foster his reputation as the grand privatiser of everything in the private sector. However, he has a small problem on this occasion. He has always promoted himself as effective and efficient and as a leading light in the formulation and promotion of the Government's privatisation policies, but the Minister has turned the Crown Suppliers, which was a highly profitable organisation, right round. In 1987 it made a profit in previous years. The Minister has turned the Crown Suppliers into a loss-making organisation. A profitable state concern has been turned into a loss-making state concern.

In desperation, therefore, the Minister now comes to the House to propose the privatisation of an organisation that he has been unable to manage effectively. He may say that he is not responsible for the Crown Suppliers management, but I understand that he has attended board meetings on privatisation. He takes an almost day-to-day interest in what goes on in the Crown Suppliers and at PSA generally. If I am wrong, I hope that the Minister will correct me. I understand that he has a permanent monitoring role.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I do not have a permanent monitoring role, in the sense of being a Crown Suppliers executive. It has an independent board that consists of full-time employees and non-executive directors. I have occasionally attended board meetings. I attended my first board meeting earlier this year. I hope to be able to be at another one later this month. I have attended a few other board meetings, and I accept my share of responsibility for the Crown Suppliers' performance. In the last year for which there are published accounts, Crown Suppliers made a profit of over £3 million on its trading activities.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

The Minister's information perhaps updates that which I have, but there are those who will have heard what he has said. If what he has said can be challenged, it will be challenged on the Floor of the House during Question Time on environmental matters.

I remind the Minister what happened last year when he was tripped up over Richmond house. He knows what happened. On that famous evening he answered for the Government. We were well-briefed for that Adjournment debate. We knew that he had spent over £40,000 on a service that we knew we could have provided for him, if only he had asked us for our advice, for £1,500. If there had been a Labour Government throughout the Richmond house affair, the taxpayer would be over £40,000 better off, but because there is a Conservative Government who are obsessed with privatisation and contractorisation, public money has been lost.

Photo of Sir Nicholas Fairbairn Sir Nicholas Fairbairn , Perth and Kinross

Will the hon. Gentleman give way on this matter?

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

No. There is plenty of time. We shall return later to it.

We caught the Minister out last year and we may have caught him out again this year. Does he remember that on 8 May he answered a written question from me, in which I asked the Secretary of State for the Environment whether the Crown Suppliers continue to comply with established public procurement procedures and relevant EEC/GATT regulations. The Minister answered: Yes."—[Official Report, 8 May 1989; Vol. 152, c. 355.] That was a very clear answer. I understand that no sooner had he given me that answer than there were phone calls to him from the Department asking, "Minister, are you sure that you haven't misled Campbell-Savours with that rather odd reply?" I understand that it was not true. Legal advice was taken by the Department. The Minister might care to intervene to deny what I now say.

I understand that for the last two years the Crown Suppliers has systematically avoided European Community requirements to open its supply contracts to competition throughout the European Community and has done so in the full knowledge that its actions could not be defended either in the European Court or, if contested, by European commissioners, in the same way as European commissioners will now contest the subsidies paid to British Aerospace in the Rover takeover.

The Minister is fully aware of the Crown Suppliers flagrant disregard of the Government's international treaty obligations. He has chosen to hide the information from Parliament by not giving direct and clear answers to questions on these matters. The European Community supplies directive 77/62 requires that Government contracts for the purchase of goods valued at over £92,000 are put out to tender and that such contracts are advertised in the EEC Journal. The reasons will be obvious to the House. Probity, fair trading, free competition and obtaining the best value of public money are among them.

For the past two years, however, the Crown Suppliers has been in flagrant breach of the regulations on numerous occasions over contracts for furniture and furnishings totalling tens of millions of pounds. When such contracts come to an end and further substantial quantities of the same goods are required, tender competition should be organised and advertised in the European Community Journal. Instead, contracts have been extended in clear breach of EC directives and the standard of public accountability that the House expects has clearly been breached. I stand to be corrected at any stage in my contribution, but I have been told that more than 120 contracts have been extended in that way.

I had some notes on Community rules on this matter, but they seem to have disappeared, so I cannot comment on them. I wanted to place them on the record. Perhaps one of my hon. Friends will ask me to give way.

Photo of Mr Brian Sedgemore Mr Brian Sedgemore , Hackney South and Shoreditch

Would my hon. Friend care to develop the Richmond terrace affair, as I was the hon. Member who raised the matter on an Adjournment debate and I received no satisfactory answer at the time? The Minister used to be on Wandsworth council and he claimed to be a value-for-money person. He is now more adept at wasting public money than anyone cares to mention. When my hon. Friend has talked about that, will he draw the parallels between the Rover sale to British Aerospace and the extension of the 122 contracts that do not accord with the EC directive? If he will comment on that, we can then have another intervention from a Conservative Member and I shall come to help him look for his papers.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

They were here all the time. In reply to my hon. Friend, the matter of Richmond terrace remains for those who study Hansard to read well into the future and I am sure that they will draw the same conclusion as I have. Richmond terrace is a very beautiful building, but it was a very nasty contract.

As I understand the arrangements within the Community, contracts can be awarded under open or restricted procedures or, in specified circumstances, under a negotiated procedure. In open procedures, all suppliers who are interested in the contract can submit tenders. In the restricted procedures, tenders are allowed only from suppliers who have been invited to participate. Negotiation procedures allow contracting authorites to negotiate with one or more suppliers of their choice. In certain, closely defined circumstances—and it is on these matters that the Minister will have to comment later—they can do so without prior publication of a tender notice. We may be looking at those areas tonight and I am sure that the Minister will want to be clear about them because we shall be checking to see whether his comment is strictly correct.

Except in such closely defined circumstances, there must be a call for competition by means of a prescribed tender notice published in the official journal of the European Community, allowing minimum time scales for responses by candidates or by tenderers. When a contracting authority makes an award, it is required to send a contract award notice to the journal for publication and to record details of the award for inclusion later in a statistical return.

On the technical specifications of the contracts, whether or not procurements are above the thresholds in the directive, the contracting authorities have obligations under article 30 of the treaty of Rome. The Commission takes the view that decisions of the European Court of Justice mean that where there are no European standards, contracting authorities must consider products from other member states manufactured to a different design, but having an equivalent performance on equal terms with products meeting national or other preferred standards.

There are special procedures for dealing with matters of urgency. The directive provides that purchasers may use the negotiation procedure without prior publication of a tender notice in so far as is strictly necessary when, for reasons of extreme urgency brought about by events unforeseeable by the purchaser, time limits laid down for the open and restricted procedures cannot be met. The circumstances involved must not be attributable to any part of the contracting authority.

The directive provides separately that when urgency makes the normal time limits impractical, the time limit for the receipt of requests to participate shall not be less than 15 days from the day of dispatch and that the time limit for the receipt of tenders shall not be less than 10 days from the date of the invitation to tender. Purchasers should not abuse these provisions—I hope that the Minister is listening—which the European Court, the Commission and, where relevant, other signatories to the Government procurement agreement are likely to give a narrow interpretation.

Many of my hon. Friends are concerned that European Court requirements, Commission requirements, parliamentary decisions and whatever has any connection with the European Community are issues that are too often discarded by this Government.

Photo of Mr Brian Sedgemore Mr Brian Sedgemore , Hackney South and Shoreditch

I want to be clear about what my hon. Friend is saying. The Prime Minister tells us constantly that we do not have a level playing field in Europe and that all the other countries are cheating. Is my hon. Friend saying that Britain is cheating?

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

I have been on my feet for 20 minutes and I have spent 10 or 15 minutes on this matter. The Minister has had the opportunity to intervene to put me right, yet he has not. He is looking for his notes, and I am sure that Sir Gordon is being consulted most vigorously on the matter and that he is enjoying himself immensely.

The directive does not include any provisions for enforcing compliance and it is left to the Commission to take action against a member state under article 169 of the treaty for failing to implement the directive properly. The Commission has said that it intends to do so more vigorously where the directive appears to have been breached and that where a breach is established, any Community funding conditional on compliance may be withheld.

In theory at least, judicial remedies for injured suppliers may already be available in the United Kingdom. Compliance ought to be challenged. It is of increasing importance in the negotiations in Geneva on the improvement and broadening of the Government procurement agreement and suppliers from other signatory countries can be expected to become increasingly aware of the available remedies.

I have references in my notes to the threshold being £92,000, which is the equivalent of 130,000 ecu. I want to know whether the rules have been breached. I understand that the rules were breached and, despite consulting Sir Gordon and having had a most vigorous consultation, the Minister has still not been able to get to his feet to tell me whether the rules have been breached. The breaching of rules is a major issue within the Department. Legal advice has been taken on the matter and the legal advice is that the rules have been breached. Yet the Minister is still not tempted to come to his feet. I am sure that the European Commissioner responsible for these matters will be examining what I have said in my modest contribution tonight, yet the Minister still refuses to make a comment at the Dispatch Box.

I understand that sweeteners have been provided at the insistence of leading members of the management buy-out team in the case of the Crown Suppliers. The Minister has encouraged that bid and financed it from public funds. That breach continues today even though top lawyers at the Department of the Environment have advised that it is in clear breach of the treaty of Rome to which the Government are a signatory. There would be no defence if the European Community became aware of the breach and decided to prosecute the Government—if it had that power. I hope that the European Community takes action.

Photo of Mr Brian Sedgemore Mr Brian Sedgemore , Hackney South and Shoreditch

Before my hon. Friend moves on, can he tell us whether he is claiming that it is Ministers who have deliberately flouted European law, or is he claiming—which would be a serious matter in this Chamber—that Sir Gordon has condoned the flouting of European law either tacitly or overtly?

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

I think that the Minister has condoned the flouting of European law in this case and hoped—as Lord Young hoped—that no one would ever find out.

There is another matter that I want to raise, which I regard as somewhat controversial. An allegation has been made that the Civil Service is being brought into disrepute. As a member of the Crown Suppliers board, the Minister has sat idly by while members of the management buy-out team have indulged in activity which is highly improper for public servants. I put the allegation to the House. I do not know in any great detail what the evidence is, but I have been given vigorous assurances that what I am saying is correct. It seems that one of the people involved accepted an invitation from a manufacturer called Pentos to attend an all-expenses-paid weekend at this year's British golf open. When that fact was discovered, he said that his attendance had been authorised. I understand that it had, indeed, been authorised—by another member of the management buy-out team. The justification was to provide reassurance to a major manufacturer but that same manufacturer had already been provided with hundreds of thousands of pounds' worth of reassurance in the form of numerous extended contracts. It is thus alleged that someone involved in the management buy-out had an improper relationship with a company that was a contractor to the Crown Suppliers.

I understand that such activities can be approved, but there are rules governing these matters. I take my text from the staff handbook of the Department of the Environment and the Department of Transport. Under the heading Acceptance of Gifts, Rewards and Hospitality", the handbook says: Working relationships often bring civil servants into contact with outside organisations where it is normal business practice or social convention to offer hospitality, and sometimes gifts, to facilitate useful contact and working relationships. Offers of this kind to individuals or to their families can place civil servants in a difficult position. To refuse may cause misunderstanding, or offence to the giver, especially if the offer comes from an overseas Government or government organisation. To accept could involve criminal liability or otherwise give rise to questions of impropriety or suspicion of conflict of interest. The guiding principles are as follows: The actions and conduct of individuals acting in an official capacity should not give the impression to any member of the public, or to any organisation with whom they deal, or to their colleagues, that they have been or may have been influenced by a gift or consideration to show favour, or disfavour, to any person or organisation.… The conduct of an individual should not foster any suspicion of conflict between official duty and private interests. I understand that the permanent secretary is the final arbitor on advisability of acceptance or refusal of gifts, hospitality and so on and is advised by the director-general of organisation and establishments. The handbook says: The correct course to be followed in the case of proffered gifts or hospitality will be determined by the context in which the offer is made. I want to make it clear that I do not myself make any allegation of impropriety against the civil servant involved. [HON. MEMBERS: "Oh."] Listen to what I am saying. I merely question whether he should have been authorised to do that. That is a fair question.

Photo of Mr Richard Holt Mr Richard Holt , Langbaurgh

Whether who should have been authorised?

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Well, the allegation is that he was authorised to do it. When he was questioned, he said so.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Whoever the civil servant might be. I am sure that the hon. Gentleman would not like to to name a civil servant in the House in connection with such an allegation. Is he really that irresponsible?

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

The hon. Gentleman is making serious allegations. Why did he not write to me about them rather than raise them in the House without knowing whether they are substantiated? He could have given me notice of the matter. It could have been dealt with in correspondence. Surely that would have been a more responsible way in which to deal with the matter.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

The Minister will regret that intervention, because it shows that he is not doing his work. If he checks with his Department, he will find that I raised these matters with the National Audit Office two months ago. The correspondence went to his Department, and he should know the answers. If he does not, he should check with his civil servants in the Box. I have raised the matter, and I should have liked it to have been dealt with before tonight.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

I have received no reply on the detailed allegation. I do not know as yet what the position is. The Minister must know, because presumably the matter came to him. Or has he once again abdicated his responsibility and told his civil servants to get on with it and ignore any complaints from my hon. Friends and myself?

Photo of Mr Brian Sedgemore Mr Brian Sedgemore , Hackney South and Shoreditch

I used to be what is loosely described as a senior civil servant, and, indeed, a private secretary to Ministers in a previous incarnation. I am now a member of the Treasury and Civil Service Select Committee. My general feeling is that standards of integrity in the Civil Service have declined considerably as politicians have interfered in its conduct. I am sure that the example that my hon. Friend has given is correct, and all that I can say is that in my day that attendance would have been regarded as highly damaging to the integrity of the Civil Service, whether it had been authorised or not.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Perhaps the allegation isbaseless. Perhaps it is only a rumour; perhaps it is nonsense. But if it is the truth, the Minister should be asking his Department who authorised and whether, in the circumstances of privatisation, it was correct to authorise.

A note from the chief executive of the Crown Suppliers to all staff, headed "Conflicts of Interest", says: As the sale of The Crown Suppliers approaches, it may be helpful for you to have a note about particular issues that could give rise to a conflict of interest.Staff ConductAs privatisation approaches, and particularly after the purchaser has been selected, there is likely to be increasing pressure to look to the objectives and requirements of the prospective new management. Until the sale has been completed (and indeed beyond for those staff who are seconded to the new owner), all TCS staff will continue to be bound by the rules of conduct applicable to civil servants. These are set out in the Staff Handbook. It is a very good letter. It goes into the special position of, and the separate guidance to be given to, members of the buy-out team. It deals with the question of personal share dealing and staff conduct generally. The gentleman who wrote the letter is obviously a fine civil servant and understands the responsibility that has been placed on hint by the House to protect the integrity of the Civil Service.

Even so, we have the allegation to which I have drawn the attention of the House this evening. I do not have concrete evidence. I simply stated my allegation and it went to the National Audit Office, which will have sent it to the Department. As yet, we have had nothing back. I have identified no individuals but the incident has been pressed upon me vigorously and those who have pressed it upon me sound very convincing. If the allegation is true, something is very wrong. It means that, during this sensitive privatisation period, the Minister is allowing relationships to develop, which, in the minds of the public could be treated with great suspicion.

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Did my hon. Friend understand the Minister to say that the organisation had made a £3 million profit this year, as I did, whereas only last week the staff were informed that the profit indicators for the nine months that have so far been worked this year suggest a projected loss of £1 million this year?

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

While I was speaking my hon. Friend must have taken advice on these matters and he must have been advised by people who know about these things. I am sure that my hon. Friend would not have intervened unless he had concrete information. The Minister must reply to this. We are like postboxes in this affair. Representatives of the work force contact us on the one hand and on the other there are the civil servants. Perhaps we can establish the truth during this debate.

Photo of Mr Richard Holt Mr Richard Holt , Langbaurgh

The hon. Gentleman has made some serious allegations against individuals outside this place and against my hon. Friend the Minister.

Photo of Mr Richard Holt Mr Richard Holt , Langbaurgh

It is suggested that my hon. Friend the Minister must know what every person in his Department is doing. I am sure that the hon. Member for Workington (Mr. Campbell-Savours) will recall that during the tenure of office of my hon. Friend's predecessor, members of the Department were found guilty of corrupt practices and were jailed. There is no way in which my hon. Friend the Minister or his predecessor would want to shield people who are carrying out criminal activities. It is irresponsible of the hon. Member for Workington to come to the House with a load of smears, no names and no evidence.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Obviously the hon. Gentleman has not listened to me. I have reported no criminal activity. I said that I can understand the context in which this kind of activity could happen. I have simply questioned the propriety of a civil servant perhaps doing these things with the authorisation of his chief. If that has happened, it is wrong. I have waited a long time for answers to my inquiries. In desperation I came to the Floor of the House tonight because I want to know the truth. Where taxpayers' money is being allocated to purchase products, equipment and services from industry, the general public and I do not want to believe that there is any possibility of irregularity. I am sure that the hon. Member for Langbaurgh (Mr. Holt) and his constituents would not want to believe that.

If the hon. Member for Langbaurgh, or I, were ever tempted by a bottle of whisky or a food hamper in our Constituencies, I am sure that those gifts would he sent back. Although they are meaningless and insignificant in terms of the income of a Member of Parliament, we know that if the public were aware of them, the reasons for those gifts might be questioned. The public might believe that such gifts are wrong, and that is why we do not accept them. The same is true of public procurement. There must be no question of impropriety even if we understand the context in which these matters arise. Impropriety must not happen and that is why I have raised the issue tonight. [Interruption.] I am sorry that the Secretary of State was not present to hear me tonight, or to watch my lips.

Photo of Mr Gwilym Jones Mr Gwilym Jones , Cardiff North 8:22 pm, 6th December 1989

I listened with great interest to the hon. Member for Workington (Mr. Campbell-Savours). He spoke at great length, and he may now hold the record for making the longest speech in this debate. His filibuster served only to expose the weakness of the Opposition's case with regard to this measure because so few Opposition Members have spoken tonight.

Throughout his overlong speech, the hon. Member for Workington did not advance one positive argument in support of what I would have thought should be the intellectual starting point for the Opposition's case for opposing the measure. I believe that the starting point for any Opposition Member must be to argue why it is necessary for the PSA to remain a nationalised industry.

We must remember that a nationalised industry does not come about naturally because legislation is required to create one. Similarly, legislation is required when a nationalised industry is moved to the private sector. However, any group of citizens can arrange the shareholding for a public limited company.

If Opposition Members were arguing that the PSA should become a nationalised industry, they would surely have argued why that was necessary. The hon. Member for Workington did not do that. However, in that he was not exceptional, because no other Opposition Member advanced any arguments why the PSA should remain a nationalised industry.

We have had a one-sided debate this evening. All the arguments for privatisation and some important reservations have come from Conservative Members. The hon. Member for Linlithgow (Mr. Dalyell) repeated the usual Opposition questions, while making appropriate comments about apprehensions felt by the staff. However, he did not offer any positive arguments why the PSA should remain a nationalised industry. I could not be sure whether the hon. Member for Brecon and Radnor (Mr. Livsey) was in favour of the measure or against it. He referred to the PSA as overstaffed and said that the management needed tightening up. Perhaps his was the unique Liberal position in that he was neither in favour of the measure nor against it.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

It is possible that the hon. Gentleman has not been in the Chamber for the whole debate; if he had been here, he would not have said what he has said. He would have heard me and several of my colleagues quote Ministers saying that it was necessary for the PSA and the Crown Suppliers to be in the public sector because that was in the public interest. Whatever else the hon. Member for Cardiff, North (Mr. Jones) can say, he cannot say that the argument was not made. It was made forcefully and we used the Government's own evidence as to why it was in the public interest for the PSA and the Crown Suppliers to stay in the public sector. Perhaps the hon. Gentleman should address that and tell us why he thinks the Government's reports were wrong.

Photo of Mr Gwilym Jones Mr Gwilym Jones , Cardiff North

The hon. Gentleman should not be apprehensive. I know that he has not been present for the whole debate because he has been out for a good dinner.

Photo of Mr Richard Holt Mr Richard Holt , Langbaurgh

On a point of order, Mr. Deputy Speaker. Is it not out of order for private conversations to take place inside the Chamber?

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Conversations outside the Chamber are beyond my range of vision.

Photo of Mr Gwilym Jones Mr Gwilym Jones , Cardiff North

I can assure the hon. Member for Hammersmith (Mr. Soley) that. unlike him, I have been in the Chamber throughout the debate. He need not be apprehensive. because I will refer to his comments in a moment.

I listened to the hon. Member for St. Helens, South (Mr. Bermingham), who gave us a perfect example of the lawyers' trade. He realised that his case was so weak that he changed the question. Once he had done that, he invented his own answer and claimed that he had proved his case on the most spurious of grounds.

I also listened to the hon. Member for Hammersmith, who spoke for about 47 minutes. On several occasions he said that privatisation of the PSA was not necessary. He said that it was not in the interests of the public sector. On one occasion, he even said that it was not in the interests of the private sector. While he referred to reports, he did not develop one argument as to why it was not necessary. More importantly, he did not address the fundamental question why it is necessary for the PSA to remain a nationalised industry. I invite the hon. Gentleman to read his remarks in Hansard tomorrow morning, when he will find that he did not advance any positive arguments in that regard.

I welcome the Bill as I have welcomed all the government's privatisation measures. However, I still believe that the term "privatisation" is something of a misnomer. I do not believe that privatised companies are made private. They have been taken from state ownership and are now owned by the people. When they were nationalised industries, they were far more private affairs than they are now as public companies. The dead hand of nationalisation has been raised from them. They have become successful public companies, in stark contrast to their traditional condition as nationalised industries.

It is appropriate that we are considering the privatisation of the PSA today. As has been mentioned earlier, the offer on the sale of shares in the water companies in England and Wales closes today. We knew that the privatisation of the 10 water companies in England and Wales would be successful. This day we are seeing people put their seal of approval on that privatisation. Many of the 4 million people who have registered an interest in obtaining shares in the water companies of England and Wales will take up the opportunity to do so. We have seen television reports of the last-minute applications and many people queueing to make sure that they do not miss out on the opportunity to own shares in the water companies of England and Wales. I refer in particular to employees, such as those of the Property Services Agency and of the water companies.

As my hon. Friend the Member for Eastbourne (Mr. Gow) reminded us, perhaps the biggest privatisation occurred when 99 per cent. of British Gas employees bought shares in the company. I remember doing a fellowship with the Industry and Parliament Trust. I was assigned to British Gas before it was privatised. At the start of my fellowship, several employees asked me, "Why do you want to privatise us? We are not a glamour stock like British Telecom." It took about two years to complete my fellowship, and I completed it almost immediately before the sale of shares in British Gas. Attitudes had changed by then. The same employees and many others impatiently turned to me, asking, "When, at last, will we get the opportunity to own shares in our own company?" That was the attitude of British Gas employees, and it is the attitude of water company employees. I am sure that staff of the Property Services Agency will have the same attitude.

The Property Services Agency is an appropriate organisation to be privatised. It is a large, important organisation. It is the country's largest building consultancy, and it has an annual expenditure of £3·5 billion. It has resources of £300 million. Nearly 25,000 people work for the Property Services Agency. Its work comprises five main functions: estate management, in which it is involved in the purchase, disposal and leasing of land for departmental needs; building maintenance; the design of new buildings—reference has been made to 22 awards in 1989; the supervision of construction by outside contractors; and, of course, supply, which is essentially the function of the Crown Suppliers. Among the 22 awards in 1989 was the curiously named Europa Nostra diploma of merit for Richmond terrace. I join hon. Members in paying tribute to what the PSA has achieved in Richmond terrace. It is a good example of an attempt to build a brand new functional building but in a style which is appropriate to its setting in Whitehall. I commend all who were involved in it.

It is appropriate also to mention some other examples which do not hold the PSA to the greatest credit. I have only to think of my own constituency. As some right hon. and hon. Members might know, I have the curious distinction of having in my constituency PD1 of the Inland Revenue—that same Department which handles the taxation affairs of every hon. Member. However, PD1 is sited on a Government block in a surburban part of my constituency. That block contains the most inappropriate high-rise buildings, which should never have been allowed to be built in that setting. They were built some years ago, perhaps before the time of the PSA. I should like to think that the PSA is not to blame for the Inland Revenue complex at Llanishen.

More recently, a new Welsh Office building has been constructed in Cathays park. It is a building of no recognised outside architectural merit. I would not be at all pleased to be associated with the remarks that have been made about it. I wonder whether even His Royal Highness the Prince of Wales might have cast a glance over that great monstrosity, which is totally out of keeping with Cardiff's otherwise fine civic centre.

One of the best cases for privatising the Property Services Agency is contained in a union brief. Like my hon. Friend the Member for Bristol, North-West (Mr. Stern), I have read a brief from the National Union of Civil and Public Servants, which cites evidence from an outside specialist that management has been less geared to commercial aspects of running a business, naturally". It is most unusual that anyone in this day and age should say that it is natural that the management of the Property Services Agency should be less geared to the commercial aspects of running a business. Surely one must be aware of the commercial realities of life these days. One must be aware of the need to achieve and improve a sound economy. How else have we increased spending on the National Health Service, social services and education, improved our defence and provided more police? We do so only by having a sound economy.

The NUPCS brief goes on to refer to no proven commercial information records". That is rather strange. The only answer that is advocated in the brief is that Government Departments should be denied the advantages of competition—that they should be denied the advantage of being able to place their business on the best terms that they can obtain to get the best services at the best price. Instead, they would have to pay the highest price. They would be unable to provide important services because they had to pay the highest price for the PSA. It is nonsense to suggest that, as customers, Government Departments should not be interested in achieving the best return on their money.

The brief goes on to state: More money from the taxpayer has to be found for the Property Services Agency. The hon. Member for Hammersmith started his contribution with a realistic point. He sought to remind hon. Members that there is no such thing as public funding, that it is money from the taxpayer, and that the taxpayer must be remembered. I disagree with the National Union of Civil and Public Servants. If the situation were half as bad as it makes out, we would be considering not privatisation but liquidation of the PSA. I have much more confidence and optimism for the future.

The National Union of Civil and Public Servants brief goes on to state: In 1988 PSA's design costs were shown to be 25-30 per cent. cheaper than private designers. That is strange, because it describes the PSA as an organisation which is less geared to commercial aspects of running a business when it managed to achieve costs 25 per cent. to 30 per cent. lower. Could it be because, as the brief says, the PSA's spending power and market information enabled it to secure substantial price advantages? A little earlier in the brief, the union claimed that these are no proven commercial information records". One statement does not square with the other.

Clearly, the PSA is not the hopeless case that the union would like to make out. It is an organisation with great ability. It has enjoyed great achievements. It deserves to be freed so that it and its employees can rise above being part of a Government Department. The PSA deserves freedom because of the more competitive arrangements in Government building, construction, management and departmental supplies. Departments now have effective procurement arrangements and the authority to make their own choices in obtaining required services.

The Property Services Agency is losing its guaranteed market and it must compete with everyone else outside by providing a good service; otherwise, there would be the bleakest prospects for staff. They would leave for whatever they could find elsewhere, and customers would suffer. The PSA needs freedom to compete effectively and on equal terms, and that can be achieved only by privatisation.

The Bill will create necessary diversification. Inevitably, when Government Departments are able to choose, some business will be lost through competition. The PSA cannot complacently look forward to retaining 100 per cent. of it business—some will be lost. It therefore needs the opportunity to diversify to replace the business that will be lost. One of the most attractive features of the proposal is that that process will enable the removal of the usual Treasury public sector spending constraints from the Property Services Agency.

We know that the privatisation will take some while to complete. It is suggested that it will not come about before the second half of 1992 at the earliest, but steps are already in hand to reorganise the PSA. The commercial activities, which comprise 90 per cent. of its activities, have been separated from its Government functions. Those activities are now being established in four separate operating divisions: PSA building management; PSA projects; PSA specialist services and PSA overseas. I am glad that, prior to privatisation the PSA will have the scope to expand into other markets and those divisions will be valuable first steps into areas in which I expect greater penetration after privatisation.

All in all, that bears out the view that I was given by some staff in Cardiff yesterday—that the path to privatisation is well organised. That brings me to the position of the staff. My hon. Friend the Under-Secretary of State knows of my concern about the PSA in Cardiff, which is situated in my constituency at Gabalfa. About 250 excellent, able and hard-working staff are based there. I understand from yesterday that almost everyone at the PSA at Gabalfa is dealing competently and effectively with an extremely large work load.

In the run-up to privatisation there has inevitably been some speculation in the press. Some has been well intentioned and some has not. Perhaps the most common story has been that the number of PSA officers will be reduced to eight. I was especially concerned about the future of the PSA office in the capital city of Wales. Accordingly, I corresponded with my hon. Friend during the summer recess. I was pleased that he answered my question in Hansard of 2 November, confirming that the office in Cardiff would continue. Indeed, my hon. Friend's actions on the road to privatisation have left open the door not only for retaining the office in Cardiff, but for very much expanding that office.

I see the PSA in Cardiff as growing in line with the growth in Cardiff. We have an exciting expansion programme for the redevelopment of south Cardiff and a large construction programme for the Cardiff bay barrage, which is likely to be an integral part of that redevelopment. The interest that is being shown in the redevelopment of south Cardiff suggests that Cardiff will definitely be one of the sunrise locations. Indeed, I predict that in the next century Cardiff will be the city of the south-western quarter of the United Kingdom. I feel sure that the PSA in Cardiff will grow in line with Cardiff, and perhaps at a greater rate.

I know that the confirmation of the continuation of the Cardiff office has been well received there. It provides the essential framework for the staff in Cardiff to apply their known ability and enthusiasm when taking advantage of the new opportunities and of the open door that is now presented to them.

However, at the same time, we must have the fullest regard for the staff who work in the PSA. Only yesterday a most significant comment was made to me by one employee there. He said that he had not got over his surprise at the fact that he will no longer be working for a Government Department. When he joined the PSA, it was a Government Department, and he had assumed that it always would be. It is important to understand that comment. That employee has completed many years' work for the PSA in Cardiff and others have worked for it for all their lives. We should consider all the staff of the PSA and their natural fear of the unknown and that they might be going into a hostile environment.

It is all very well to talk about great opportunities, about the staff rising up from being Government employees and about the PSA rising up from being a nationalised industry, but we must never ignore genuine anxieties. The staff must he regarded as the PSA's prime assets. The staff are always important in any company, in any industry, but in a service industry such as the PSA, they are especially important and should be given our fullest consideration.

The apprehensions that were spelt out to me yesterday included questions such as: would there be the same conditions of service, the same redundancy arrangements and the same pension provisions? The staff need important reassurances in all those areas. I was told that the staff understood that guarantees had been given in other privatisations, but that no guarantees had been given or could be given in the case of the PSA.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

I am following the train of the hon. Gentleman's argument closely. He is obviously making strenuous efforts to demonstrate the importance of consulting and considering the staff. Will he persuade his hon. Friend the Minister in that context that there should be a ballot for all those who work for the PSA and the Crown Suppliers and that they should decide whether they want the privatisation? Does the hon. Gentleman subscribe to that thought?

Photo of Mr Gwilym Jones Mr Gwilym Jones , Cardiff North

I am sorry, but that would not be an appropriate proposition. The staff have much more important problems that deserve our fullest attention. I have been trying to refer to their apprehensions about their terms of employment, redundancy and pension arrangements. The staff are very concerned because they have the impression that the staff involved in other privatisations have been in a superior position and that they will not be in such a position. I very much hope that that will not be the case because in each of those three areas it is reasonable for the staff to expect the same conditions that have been given to staff involved in other privatisations and to expect that, as far as possible, their terms in those three areas should be comparable. It is reasonable that there might be some variations, but if there were to be any significant variation in, for example, the pension scheme, there should be compensations for the staff.

Photo of Mr Allen McKay Mr Allen McKay , Barnsley West and Penistone

Does the hon. Gentleman agree that clause 2 defines the difference in how people have been treated?

Photo of Mr Gwilym Jones Mr Gwilym Jones , Cardiff North

The hon. Gentleman is going ahead of us at this point. That matter is very much for the Committee to consider. However, perhaps he will join me in putting down the largest marker for trying to ensure that the staff are properly looked after and given all the necessary reassurances and safeguards. They must not be treated any less favourably than the staff involved in other privatisations. I want the staff to go forward into the new PSA with whole-hearted commitment, because I believe that there is a tremendous future for them in the new PSA and I do not want them to be put off in that.

Examples have been given to me of staff in their fifties and sixties in Cardiff. Understandably, they might already be thinking in terms of their own pensions and of retiring direct from the PSA. However, they are now worried about facing an unknown future and about what might happen. They are wondering whether they will be able to retire at the time they had expected and whether they will receive the same pension as expected. They are wondering whether they have any reason to be concerned that a new employer might raid their pension scheme. Younger staff do not necessarily have the same apprehensions and although staff under 50 might think that it will be relatively easy to move to another job, that will not be the case for everyone and for some it may involve moving house.

In every respect, my greatest concern is about the staff, all of whom—both older and younger—deserve the fullest reassurances. I want to be able to look forward to them continuing to be employed on the same pay and with the same hours and holidays and—in this remotest eventuality—that the basis of any redundancies will be the same as it is at the moment. I also want the staff to be able to receive the same pension.

I heard what my right hon. Friend said earlier and I imagine that my hon. Friend the Under-Secretary of State may refer to the same subjects when he replies. I hope that he does, because we cannot over-emphasise the great need to publicise to the PSA staff exactly what will happen and the commitments that the Government have made and must make to ensure that they are properly looked after in the change to privatisation.

I very much welcome the Bill, which has been introduced on a most appropriate day. I look forward to our time in Committee. I believe that it was the hon. Member for Workington who said that the Bill could pass through Committee like a knife going through butter. I hope that it will have a speedy and satisfactory conclusion and resolution so that we can look forward to a successful privatised PSA.

Photo of Mr Andrew Hunter Mr Andrew Hunter , Basingstoke 8:50 pm, 6th December 1989

In sharp contrast to the hon. Member for Workington (Mr. CampbellSavours)—I note that he is not in his place—I warmly welcome the Bill as the first stage in the privatisation of the Property Services Agency and Crown Suppliers. I regret that the hon. Gentleman is not here because I had it in mind to take up a point that he made towards the beginning of his speech. I believe in privatisation, not per se, as an item of dogma, but for pragmatic reasons. Some industries and services benefit from passing from public to private ownership, and I firmly believe that the PSA and Crown Suppliers are such services.

I acknowledge that my remarks bear in mind the findings of the Select Committee on the Environment. That Committee has had much contact with the PSA, and it annually reviews the main estimates. For a long time, it has urged fundamental reform. I regard the Bill as the Government's response to that demand for reform.

I strongly welcome the Bill. My reasons have already ben put clearly by several of my hon. Friends, including my hon. Friends the Members for Eastbourne (Mr. Gow) and for Cardiff, North (Mr. Jones). Those reasons can be summed up in one word—competition. Competition is wholly good and at present wholly missing. That must be rectified, and that is what the Bill will do.

It is absolutely right that Government Departments should be able to choose where they purchase the goods and services that they require. It will be good for the PSA and Crown Suppliers to have their guaranteed markets removed, because guaranteed markets do no good whatever. Moreover, the measures in the Bill will ensure that, in the few years before privatisation, the taxpayer will obtain greater value for money.

I wish to pick out three specific points of detail. I ask the Minister to note them, because some matters need to be clarified, although perhaps it would be more appropriate to clarify them in Committee.

I note that the Bill and accompanying briefs suggest that the PSA will be reorganised into four operating divisions. One of those will be PSA Specialist Services. Is there really a need for such an operating division? Reference has been made during the debate to the problems of recruiting and retaining staff in the PSA. That is especially true of the most specialist areas where the temptation and lure of the private sector is great. I am of the opinion that the services that PSA Specialist Services would offer can already be provided by the private sector, so perhaps there is no need for further duplication.

A second area of the reorganisation that disturbs me a little is the creation of PSA Overseas, which was the focus of attention earlier. The hon. Member for Linlithgow (Mr. Dalyell) raised the question of security, as did the hon. Member for Hammersmith (Mr. Soley). The speech of the hon. Member for Linlithgow was an important contribution to the debate. I accept the immediate reassurance given by my right hon. Friend the Secretary of State. However, we must go further, and I hope that in Committee we shall receive a detailed reassurance. Security must be considered carefully.

Photo of Mr Andrew Hunter Mr Andrew Hunter , Basingstoke

Another point about PSA Overseas disturbs me. We understand that it is to be created mainly to support Ministry of Defence establishments. The different nature of MOD establishments and their geographical spread means that the creation of one PSA Overseas will not prepare that part of the PSA's activities for competition. Perhaps my right hon. Friend should look more closely and consider a subdivision of PSA Overseas.

A third point which worries me—I shall try to put it constructively—is the emphasis on the length of time that it will take to prepare the operational divisions for privatisation. It strikes me that the best part of three years is a long time. I should have thought that one of the best ways to prepare for privatisation is immediately, or as soon as possible, to expose the operational divisions to the realities of the marketplace and to learn from it. I hope that in due course we shall return to that theme. Why do the Government believe that such a long period is necessary?

My next point relates to points made by the Select Committee on the Environment. I mentioned earlier that it has positively criticised the PSA for several years. I wish to relate those criticisms to the next two years, or the pre-privatisation period. Can my hon. Friend the Minister give an assurance that our anxieties about the way in which the PSA has operated in the past will be removed during the run-up to full privatisation?

The Select Committee's first area of concern was the principle of annuality, which has not been mentioned so far in the debate. The Environment Select Committee concluded that one reason why the PSA did not operate efficiently was that it was bound by the principle of annuality. That is not the case for its competitors in the private sector. It can be argued strongly that, in preparing PSA for privatisation, the rigid annuality under which it now operates must be slackened.

The second area that worried the Select Committee is another instance where the PSA operates artificially, and that is the practice of the property repayment service which is the rates that Departments are charged by the PSA, as a token charge regardless of market reality. Again, the PSA does not operate in market circumstances. Arguably privatisation will increase its efficiency, but one must ask whether the property repayment service aspect will continue during the next two years as the PSA prepares to privatise.

My last point is about project management. My great criticism of the PSA—it is my conviction that it is right to privatise it—is based on the poor assessments of PSA project management. We have already referred to several of these. When I intervened in the speech of the hon. Member for St. Helens, South (Mr. Bermingham), I may have unintentionally misled the House. I referred to the cost of the Richmond house project and to an additional cost of £1 million. That was not the total difference between the estimate and the final cost of the project but merely the 1987 increase. There was a discrepancy between the estimate and the concluding price of £5·7 million on the total project. I apologise to the House for getting the figure slightly wrong.

The project management aspect of the PSA has rightly caused great anxiety.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

Is it not the experience of the National Trust and other ancient monuments organisations that it is difficult to estimate the costs of restoring old buildings? Costs can easily escalate. It is not only the PSA that has problems.

Photo of Mr Andrew Hunter Mr Andrew Hunter , Basingstoke

There is great truth in that, but it is not the entire truth. In these particular projects, there were miscalculations and changes of plan. Even when projects were started, new ideas came in, for example, at Derby Crown court, Richmond house and Buckingham gate. Slack management allowed the projects to spin out over the years as clients demanded one change after another. Public money was at stake. I take the hon. Gentleman's point, but we must look for other reasons why costs escalated so much in the PSA.

My hon. Friend the Minister may be inclined to argue now or in Committee that for Departments the change from being clients to having financial responsibility will increase the efficiency of project management. I hope that that will be the case. The fundamental question is whether reorganisation will improve project management.

I entirely support and warmly welcome the Bill. There are still questions to be answered and points to be sorted out, but I have no hesitation in saying that I am sure that the new regime will be far better than the existing one.

9 pm

Photo of Mr Keith Mans Mr Keith Mans , Wyre

I am pleased to speak about this important measure. I have spent a considerable amount of my life living in buildings which have been well or badly built, or modified, by the Property Services Agency and its predecessor, the Ministry of Public Building and Works.

I shall dwell on two aspects of the Bill. They relate to the Opposition's two main arguments why it is not a good idea to privatise the PSA. First, they argue that security will be compromised, particularly in military establishments, if in future the PSA does not have the same ability to look after security matters. Opposition Members, particularly the hon. Member for Hammersmith (Mr. Soley), are wrong to suggest that the reservoir of knowledge about security matters resides in the PSA and that, if it is privatised, security will be compromised. That argument is fundamentally flawed.

The major point about good security is that people, not organisations, are important. It is to ensure that those who carry out security exercises and checks on buildings are themselves checked properly and have the necessary expertise. The mere fact that they happen to be members of the PSA or its predecessor or that they work in the public sector does not necessarily mean that the task will be carried out competently. One of the problems has been that security has been judged good or bad according to the organisation rather than the people. In the eyes of many, membership of the PSA seems to have been sufficent to judge that security has been adequate. In the past, that has often not been the case.

Security, rather than arguing in favour of keeping the PSA in the public sector, is a good reason for ensuring that client Departments, particularly the Ministry of Defence, take greater direct responsibility for the many aspects of security that have resided in the PSA. In that way we could look forward to better security in future in many areas, particularly buildings, than there has been in the past.

Some remarks made by the hon. Member for Hammersmith about married quarters and accommodation for serving personnel in the three services are way off the mark. The weaknesses in the Opposition's arguments against these proposals are shown by his resort to such tactics. The vast majority of service men live in private accommodation. In the past the PSA advised on the security aspects of new buildings. Now it is not a case of building many more married quarters. The main emphasis now is, and in future will be, on selling them. That, then, is not a good reason to keep the PSA in the public sector.

The other argument advanced by the Opposition, and specifically by the hon. Member for Hammersmith, is that the PSA is running smoothly in the public sector, so why privatise it? One could turn that argument on its head by asking, why keep it in the public sector? People should not have to make an argument to put things into the private sector, but the argument for retaining anything in the public sector needs to be extremely good.

Although we might accept arguments for keeping the PSA in the public sector, its record does not stand up to close scrutiny. More than 10 years ago a senior civil servant wrote an incredibly good book on the sort of mistakes made by the PSA and, before that, the Ministry of Public Building and Works. It was entitled "Your Disobedient Servant". He listed in great detail the shortcomings of the PSA—the overmanning, inefficiency, lack of objectives and total lack of project planning, which my hon. Friend the Member for Basingstoke (Mr. Hunter) also mentioned. During the latter part of the 1960s and the early part of the 1970s, the author sought to put some of those deficiencies right.

I read that book many years ago and I reread it a few days ago. I am certain that the author, if nobody else, could appreciate the need to move the organisation into the private sector to improve its performance. In fact, the PSA's performance is considerably better than it was 10 years ago. In the past, the PSA suffered from a considerable number of shortcomings.

Photo of Mr Allen McKay Mr Allen McKay , Barnsley West and Penistone

The hon. Gentleman has just admitted that the PSA has overcome the shortcomings from which it suffered 10 years ago. He has admitted that the problems of the PSA have been solved. Recently the PSA has given value for money and has proved better than any private sector organisation against which it operated. It has given the service required. If one gets value, service and quality from the PSA, why change it?

Photo of Mr Keith Mans Mr Keith Mans , Wyre

The hon. Gentleman has not quoted me correctly. I said that the PSA's performance had much improved on what it was 10 years ago. That improvement has been achieved because more commercial pressures and greater commercial judgment have been brought to bear on the PSA by the present Government. Such direction was sadly lacking during the Labour Administration. A great deal more, however, can be done and the only way in which to achieve that is to move the PSA into the private sector.

I welcome the idea of client Departments taking more responsibility for the buildings they occupy. The responsibility for the fabric of a building has been left to the PSA. The Ministry of Defence, for example, has not taken responsibility for the fabric of its various service installations. The client Departments will not only be able to use the PSA for the necessary work but will be able to approach other, more competitive organisations. That is a move in the right direction.

The move into the private sector will undoubtedly benefit not only the PSA and its staff, but those organisations for which it has worked in the past. Once the PSA is in the private sector it will be able to expand and to use its expertise. Judging from some of the remarks of Opposition Members, there is undoubtedly a huge market for PSA valuation expertise. According to the Opposition. the PSA can undercut the valuation fees of private companies by a large percentage. It is rather odd. therefore, for the Opposition to argue that the PSA should stay in the public sector, especially as it has the opportunity to expand its valuation services rapidly if it manages to keep its prices down to the suggested true levels it has quoted while operating in the public sector.

My right hon. Friend the Secretary of State talked about the way in which the PSA will be taken into the private sector. I fully approve of, and am encouraged by, his remarks showing that there will be a large measure of employee participation. That is a good direction in which to move. Judging from the experiences of the National Freight Corporation and the water research centre, it bodes well for the PSA if the employees can be persuaded to take part in the buy-out.

It goes further than that. The hon. Member for Hammersmith was less than honest when he suggested that the privatisation of the National Freight Corporation was the only previous privatisation to include an employee buy-out. The water research centre is another example, and in many previous privatisations huge percentages of workers have bought shares, despite pressure from their union bosses to do the contrary. Those examples include British Gas and British Telecom, in which more than 90 per cent. of the work force bought shares. Those work forces want the firms to be privatised, despite the advice not to do so given by their own union bosses.

Mr. Eric S. Helfer:

Why does the hon. Gentleman refer to the elected representatives of the workers as union bosses? Why does he call them bosses when they have been elected? Does he refer to the Prime Minister as his boss? [Hon. Members: "Yes."] He may do, but she is an elected representative. The term "bosses" is used by the hon. Gentleman and his hon. Friends to try to denigrate trade unionists.

Photo of Mr Keith Mans Mr Keith Mans , Wyre

I shall be quite happy to withdraw the word "boss" if it offends the hon. Gentleman so much. The union leaders—or whatever he wishes to call them—gave information to their members which those members did not take. The members voted with their cheque books and wage packets and bought shares in the companies that were privatised. Regardless of the type of privatisation that takes place in the PSA, I suggest that they will do precisely the same thing and show that they want their firms to be privatised.

So far, 29 state companies have been privatised, 45 per cent. of the public sector is now in private hands, and 800,000 former public employees are now employees of private firms. That is what has happened during the past 10 years. I welcome this latest privatisation proposal, and my only regret is that it has come at the end of this 10-year programme, not at the beginning.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton 9:13 pm, 6th December 1989

It is significant that we are again discussing privatisation. Doubtless Conservative Members will not agree that this is Tory party dogma. However, if we look at the history recorded in the research note by the House of Commons Library, we find that, since 1979, no fewer than 33 privatisations have been approved by the Government or are in the pipeline. Tonight, we are talking about the 34th privatisation scheme to have been brought forward—the PSA. The Crown Suppliers are included in the list in the pipeline. British Coal is also included in that list.

We have discussed privatisation twice this week. I cannot understand how Conservative Members can deny that Tories are obsessed with privatisation. That obsession is brought to the House and consideration is given to it before any consideration for the taxpayers or the people working in the industry.

The hon. Member for Wyre (Mr. Mans) and others have said that it is only Opposition Members who are trying to defend and retain the PSA and the Crown Suppliers in the public sector. That is not true. I remind hon. Members of a statement made on 25 July 1986 by the hon. Member for Ealing, Acton (Sir G. Young) who was then a Minister. He said that the review group employed by the Department to review the issue of the PSA and the Crown Suppliers being brought into the private sector concluded, on the information available to them, that whilst privatisation would be possible, it would not in their view, be in the public interest. With all the information available to it and the fact that it accepted that it would be possible to include the PSA and the Crown Suppliers in the private sector, the review group believed that it would not be in the public interest. Therefore, it is not just Opposition Members who are saying that it is not in the country's or taxpayers' best interests that the Crown Suppliers and the PSA should be removed from the public sector. Conservative Members have been saying the same thing.

The same team of officers looking into the matter also recommended that the Crown Suppliers should be retained as a central purchasing agency in the public sector with rather greater autonomy in accounting and staffing matters. The body commissioned to look into the privatisation of the Crown Suppliers thought that it should have greater autonomy in certain matters.

In reply to the hon. Member for Bristol, East (Mr. Sayeed), the hon. Member for Acton said: The Crown Suppliers have had another successful year's trading. Despite the fact that over 65 per cent. of their business is now untied and optional, they have more than met their financial objective for 1985–1986. They have achieved this by raising their level of service, speeding up deliveries, reducing resource costs."—[Official Report, 25 July 1986; Vol. 102, c. 572.] Even when action was taken against the Crown Suppliers to untie it from the guaranteed market to which Conservative Members have been referring, it still had a successful year, increasing business turnover and making the business more efficient and acceptable to the people it was serving.

Photo of Mr Richard Holt Mr Richard Holt , Langbaurgh

The hon. Gentleman has constantly referred back to a report in 1986. Of course, he has not referred to the Select Committee on the Environment that has been looking into the PSA for several years. A number of Labour Members on that Committee have subscribed to its report and there has been no difference of opinion on political grounds. It is notable that none of them is here today to say anything about the PSA, which was recommended for privatisation by the Select Committee.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

A good number of Select Committees are sitting at the moment, and hon. Members on both sides are engaged in Committee business. I was not trying to elaborate on the proposals made by Conservative Members; I was just saying that reports commissioned from independent bodies by Ministers have all stated that privatisation is possible, but not desirable.

On Monday of this week a report was brought to the attention of the House, stating: Britain's most secret military establishment, the Aldermaston atomic weapons establishment, is to be handed over to commercial management. This raises a fundamental issue of national security. The secrets of Britain's nuclear bomb designs are kept there along with many other American secrets, since the atomic weapons establishment is the main agency for Anglo-US collaboration on warhead development and testing. The report calls this contractorisation, which is what the Tories now call privatisation.

My hon. Friend the Member for Hammersmith (Mr. Soley) firmly drew attention to security. It is not only Opposition Members who point out the need for a secure system—the Americans and others who are involved with security are pleading for consideration of the dangers that might arise if everything were put in the private sector, as proposed.

Hon. Members have mentioned the qualities of the 34 privatisations that have been enacted or are in the pipeline. They have also mentioned the golden handshakes that accompany these privatisations. In this context, I draw attention to a recent report on water privatisation which was commissioned from Arthur Collins and Company, financial advisers, who estimated that water privatisation would cost the taxpayer £8·56 billion, and that the income derived from it would be £5·5 billion—a loss to the ratepayers of this country of about £3 billion. Not only taxpayers but a large number of ratepayers will suffer, therefore, because of the Tories' dogmatic atitude to privatisation.

The PSA is the largest Government department to be privatised so far. The Secretary of State said today that some of the reasons for bringing the Bill before the House were efficiency, customer service and a desire to bring the agency nearer to the people.

The Under-Secretary of State for the Environment, the hon. Member for Southampton, Itchen (Mr. Chope), who will reply to the debate, has served on a number of Committees on which I have served dealing with local government reorganisation. On those occasions it was the policy of Conservatives to take services away from people. We argued for hours in an attempt to retain those services in the domain of local government and to keep them closer to the people so that they could be more efficient and more accountable. However, the Secretary of State says that it is necessary to remove services from the public domain and place them in private ownership.

The Secretary of State said that each Department will be responsible for its own budget and that customer services will be commissioned from the PSA, if it continues, or from whoever is responsible for the PSA if the Bill is passed. I am sure that hon. Members who have served in local government realise that often, when cuts have to be made, the first thing to be cut is maintenance. We have seen that in education and in social services. When there are more important matters to be considered, the first thing to be cut is maintenance. If we accept the philosophy of the Secretary of State, many of the public services, including security, will he the first to be cut by many Departments. That is one reason for retaining the PSA in the public sector.

My hon. Friend the Member for St. Helens, South (Mr. Bermingham) admirably exposed the people who will benefit from this privatisation. Neither the workers nor the taxpayers will benefit, because the people who get their filthy hands on the privatisation will benefit most. My hon. Friend spelled that out quite clearly. The Government have given no reason for privatisation except that they believe that the best prospect for the future lies in making unimpeded progress towards privatisation and all the freedom that it can offer.

Photo of Mr Michael Stern Mr Michael Stern , Bristol North West

The hon. Gentleman said that the only people to gain from the privatisation are those who will get their filthy hands on the privatisation. I hope that I quote him correctly. Some of my constituents who are ordinary working people in the PSA have already said that they hope to take part in the buy-out that will result frorn the Bill. Does the hon. Gentleman wish to stand by his statement?

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

If the hon. Gentleman thinks that they are the people who will make the real killing out of the privatisation, he is living in cloud cuckoo land. The hon. Gentleman should look at the report in the Library on privatisation. It reveals in a startling way who makes the money out of privatisation. It is not the people who pick up a few crumbs. The hon. Gentleman should read the report, because it is worth reading.

The hon. Member for Romsey and Waterside (Mr. Colvin) expressed fears about the effects of the Bill in its present form on charities with which he is associated. The hon. Gentleman is not in his place. If he wants to protect those charities and is sincere in his concern about what the Bill will do to the organisations for which he pleaded, he should join us in the Lobby, because the only way to protect those charities is to vote with the Labour party.

I imagine that all hon. Members and many people outside the House have experience of dealing with the construction industry. It is not famous for its integrity, arid we all know the problems that can arise. Government Departments have had the protection of the PSA safeguarding their interests. The Secretary of State and Conservative Members have suggested that each client Department could engage its own PSA—in other words, that there could be many PSAs duplicating services and wasting money—

Photo of Mr Keith Mans Mr Keith Mans , Wyre

Does the hon. Gentleman agree that the PSA's history shows that precisely the opposite is true, and that it did not look after its client Departments? Indeed, in many cases it was far too close to the very contractors in the construction industry about which the hon. Gentleman is now complaining. I am referring to cost overruns.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

The hon. Gentleman should study the report, which refers to the Ministry of Defence and the work carried out on its behalf. It shows that there is protection for client Departments that engage the PSA. Hon. Members have said that client Departments can still engage the PSA to carry out their work. Therefore, the PSA is not so much being taken away as split into a number of PSAs. Services will be duplicated, and that will be a waste of money. No industry would have competition between the various sections within it. The hon. Gentleman is wrong.

It is not only Labour Members who continually plead for the PSA. In May 1972, the Prime Minister said that the inclusion—

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

Nothing has changed in the need for the PSA. The Prime Minister said: The inclusion of the Agency within the Department of Environment will ensure that the Government's practice as a builder and developer will remain in accord with its policies for the conservation and improvement of the environment." That statement is as valid now as it was in 1972. We need to demonstrate a conservation and an improvement of the environment. The best way to do so is to engage the PSA.

Photo of Mr Richard Holt Mr Richard Holt , Langbaurgh

It is apposite of the hon. Gentleman to refer to 1972, because there is a paragraph in the Environment Select Committee evidence headed "Changes since 1972". It shows that the number of people employed has declined from 45,000 to 23,000. Of the work that used to be carried out in 1972, 85 per cent. of the planned maintenance and 100 per cent. of new construction work is carried out by private contractors. There have been vast changes, so it is silly to say that there have been no changes since 1972. The PSA has changed dramatically.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

Let me remind the right hon. Gentleman what I said earlier—that the protection, conservation and improvement of the environment are as important today as they were in 1972. If the hon. Gentleman reads more of the report he will find that, although there are contractors carrying out work on behalf of Departments, the PSA is responsible for the preparation and supervision of the contracts. Despite the slimming down of staff, the PSA's protective influence remains. Not only Opposition Members but distinguished Tory leaders have pointed out the foolishness of that.

My hon. Friend the Member for Hammersmith (Mr. Soley) has exposed a weakness in the case on security—clearly a subject dear to the hearts of Conservative Members. If it is right for the PSA to provide protection for the Prime Minister and other Members of Parliament, how can it be wrong for the armed forces to receive the same service?

Hon. Members have mentioned the protection of staff. What protection will be given to the pension rights of those approaching retirement age? The Minister has been provided with a number of answers by his right hon. Friend the Secretary of State, and I hope that he will explain what will happen to those among the 23,000 staff employed by the two organisations who are worried about their pensions.

I appeal to Conservative Members who oppose the privatisation to join us in the Lobby to vote against it.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment) 9:37 pm, 6th December 1989

There have been two notable features of today's debate. First, it has featured high-quality and, normally, good-humoured speeches. Secondly, it has been the privatisation debate in which the Opposition ran out of speakers—which shows, I think, that it is they who are running out of steam, while the Government are moving forward with a vigorous, radical programme.

No Back-Bench speech was of higher quality than that of my hon. Friend the Member for Eastbourne (Mr. Gow). All who were present will treasure for a long time the unscripted and unrehearsed exchange between him and the hon. Member for Linlithgow (Mr. Dalyell). My hon. Friend reminded us of his long-standing belief that the proper place for the PSA is in the private sector, supporting eloquently a proposition in which Conservative Members all believe—that organisations should be in the private sector unless there are compelling arguments against it. There are no compelling reasons why the Crown Suppliers and the Public Services Agency should be in the public sector.

There have been positive and constructive contributions from many of my hon. Friends. My hon. Friends the Member for Bristol, North-West (Mr. Stern) and for Cardiff, North (Mr. Jones) have constituency interests; a number of their constituents are PSA employees. They stressed the positive approach that many of their constituents have adopted towards that privatisation and the opportunities that it will provide for them with the widening of the market. Important contributions were also made by my hon. Friends the Members for Basingstoke (Mr. Hunter), for Wyre (Mr. Mans), for Romsey and Waterside (Mr. Colvin) and for Birmingham, Hall Green (Mr. Hargreaves). I shall do my best to reply to their points and to those that have been made by Opposition Members.

I am sorry that the contribution by my hon. Friend the Member for Ealing, Acton (Sir G. Young) was so brief. His ministerial experience in the Department of the Environment made him an enthusiastic supporter of these privatisations. It was he who decided in 1986 to seek the advice of an outside financial institution on the feasibility of privatising the Crown Suppliers. In so doing, he helped to lay the foundations of the Bill.

Debating points were made about the reports on the privatisation of the Crown Suppliers. They were published before 1986. The problems connected with privatisation that worried the writers of the reports have been overcome by restricting sales to the commercial parts of the Crown Suppliers. The reports did not take fully into account the potential impact of untying on the Crown Suppliers. It is a commercial organisation. We are strongly of the opinion that it will operate much more efficiently and effectively in the private sector. That has been confirmed by independent outsiders.

The speech of the hon. Member for Hammersmith (Mr. Soley) was predictable. It relied heavily on the tendentious briefing document from the National Union of Civil and Public Servants. The hon. Gentleman resorted to irresponsible scaremongering, particularly when he referred to security.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

I made use of only two bits of the NUCPS document. The rest came from the Library's research document.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I congratulate the hon. Gentleman on the depth of his research.

Opposition Members are absolutely right to emphasise the importance of security. I categorically assure the House that national security will not be prejudiced in any way by these privatisations. A very few activities, not just those related to Ministers and Parliament, will be excluded from the sale and are not covered by the Bill. The vast majority of both the PSA and the Crown Suppliers services that are covered by the Bill are already commonly carried out for the Government by private firms.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

Will the Minister explain clearly why he is so certain that privatisation is all right for security elsewhere but is not all right for the House of Commons and the royal palaces? We shall be accused, whether he likes it or not, of double standards. People will say, justifiably or not, that the House of Commons takes a very different view when those who sit on green Benches are affected.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I do not understand the hon. Gentleman's point. Much of the work in the House of Commons, the House of Lords and the royal palaces is carried out by the private sector. There is nothing wrong about that. There is adequate security. The same procedures will be followed in the future as have been followed in the past.

Mr. Heifer:

The private sector is now active in the House of Commons. Is the Minister aware that the House of Commons is filthy compared to what it used to be when it was cleaned by ladies who came in regularly and who were employed as a public service to look after the House. [HON. MEMBERS: "Talk about security."] I am not talking about security, but about the whole principle. The House of Commons is dirty. Hon. Members should look at it. They will find that that is because private enterprise has been brought in.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

That is a point for the Select Committee on House of Commons (Services). It is stooping a bit low for the hon. Gentleman to attack the staff who work in the House. Most of the construction work that is commissioned by the PSA, including that for the Ministry of Defence, is already contracted out to the private sector. Up to 70 per cent. of the design of new projects is already undertaken for the PSA by consultants in the private sector and it includes a large proportion of work with a high security content. The Ministry of Defence is already familiar with contracting out the manufacture of sensitive defence equipment. On the Crown Suppliers side, secure document delivery and vehicle hire are already carried out for some Departments by private firms. The Ministry of Defence estate will remain in MOD hands, and therefore under the control of the MOD.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

When the PSA and the Crown Suppliers go, who will vet the staff? Will the Minister also deal with the point about United States bases?

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I am not going to be drawn—[HON. MEMBERS: "Answer the question."] I am amazed by the irresponsibility of the hon. Gentleman. I shall not be drawn into saying what arrangements will be made for the vetting of staff. All I can say is that it would be unthinkable for this Government of all Governments to do anything that jeopardised or undermined national security or the personal security of individual citizens, whether or not they work in the armed forces. Conservative Members can say openly that we must be trusted. If the hon. Gentleman wants to bring security matters out into the public domain, I can only say that it is regrettable.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

I charge the Government with being careless about security, as I have on a number of occasions. We know, and it is common knowledge, that the PSA vets staff. The Minister cannot hide behind security. If he is saying that vetting will be carried out by the security services, that is fine, but he must recognise that the manpower consequences of that decision would be enormous. The logical position is to leave vetting with the PSA. I suspect from the answers that he has not even thought about the question, which is a damning indictment of the Government's policy.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I shall say no more about that. The hon. Gentleman may want to develop the point further in Committee, but I hope that after consideration, he will realise that it is not appropriate to discuss security vetting in the House.

The hon. Member for Hammersmith and others made points about the work for the United States forces. The relationship with the United States Air Force is valued by both sides and it is the subject of a Government-to-Government agreement. A study has been put in hand to examine how the formalities of the relationship will be affected once the PSA has been privatised. Whatever the conclusions of the review, I am confident that the unique range of skills developed by the staff to meet the specialised requirements and procedures that are demanded by the client will make it possible for the agency to retain a substantial proportion of the business of the United States forces.

The greatest asset of the PSA and the Crown Suppliers is their work force and, rightly, much of our debate has concerned the staff. I pay a warm tribute to the skill and dedication that all staff throughout PSA and the Crown Suppliers bring to their work. As the Minister with day-to-day responsibility for the PSA for the past three years, I have got to know many of the PSA employees all over the country, and I have also been able to witness the high esteem in which they are held by their clients. There has been a period of considerable change in Government organisation which has put a premium on loyalty and commitment. I am proud of the loyalty and commitment that has been shown by the staff.

The chief executive and second permanent secretary of the Department of the Environment, Sir Gordon Manzie has been mentioned several times during the debate, and it is appropriate that I should pay a special tribute to him, as he will be retiring from the Civil Service early in the new year and as his work has been an important factor in bringing the PSA to its present successful position.

The staff of the PSA and the Crown Suppliers are civil servants. Privatisations involving civil servants give rise to particular issues, and I know that hon. Members will want to examine carefully the proposals that we have and the assurances that we shall be able to give to the staff. Staff of both the PSA and the Crown Suppliers are members of the principal Civil Service pension scheme, which includes provisions relating to redundancy.

That has two important consequences. First, because the staff cannot remain members of the Civil Service scheme when the PSA and the Crown Suppliers are sold, they would, unless special measures were taken, become technically entitled to the redundancy compensation provided for in the scheme. It would obviously not be right to expend substantial sums of public money on redundancy compensation to staff who have retained their jobs. As I have said, their employment will continue with the new owner on the same terms and conditions.

The second consequence is that the redundancy terms are not passed automatically to the new employment, because they were part of the pension scheme. Therefore, special measures will need to be taken to ensure that equivalent redundancy terms are offered to the staff to give them continued protection in future.

Photo of Mr Allen McKay Mr Allen McKay , Barnsley West and Penistone

I have never before seen anything like clause 2. It sets a precedent. In the past, all redundancies resulting from privatisation have been as the Minister described. But now the Government are selling the people with the jobs, which is wrong in any case.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

If the hon. Gentleman had been here to hear the opening speech given by my right hon. Friend the Secretary of State he would have heard the answer to his question. In fact, such provision has been made in almost every privatisation Bill that has come before the House.

The measures that we are taking to ensure that the staff's interests are protected as regards pensions and redundancy are worth explaining in more detail. When invitations to tender are issued, we shall draw prospective purchasers' attention to the terms of the Civil Service pension scheme, as regards both pensions and redundancy. We shall make it clear that we expect them to offer broadly comparable terms for pensions. The terms that they offer will be subject to analysis by the Government actuary. If the pension terms offered by the chosen purchaser are not assessed as being as good as the Civil Service scheme, some means will be found to ensure that the staff are not disadvantaged in terms of the overall terms and conditions of service.

The position on redundancy will be slightly different. We shall ensure, by means of the contract for sale, that the staff will be provided in the private sector with redundancy compensation that mirrors what they have now.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

If the present pension scheme is to be transferred to the private sector, does not that mean that it will in future be a funded scheme? The Government will be liable to pay a large sum to set up that scheme. Will my hon. Friend tell the House roughly what his estimate is of the sum that will be transferred into a funded pension scheme?

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

My hon. Friend draws attention to the difference between the pension arrangements in the public and the private sectors. The job of providing pensions in the private sector will be the responsibility of the purchasers of the organisation, and they will have to take responsibility for providing a fund. At the point of sale all the contributions that have been made so far will be preserved. The money that is available in the public sector to enable the pensions to be paid will be called upon in the future when the pensions become payable in respect of service carried out prior to privatisation.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

The Minister is clearly getting into difficulty again. I am here to help him although I appreciate that he does not always see it that way. The hon. Member for Horsham (Sir P. Hordern) asked quite rightly about the amount of money and how it would he transferred to ensure that pensions do not fall below what staff receive at the moment. There must be some transfer of funds. That was the question: Will the Minister answer it?

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I have answered the question. The employees will retain their existing pension entitlement until the point of sale. Thereafter, the responsibility for their future pension entitlement will be taken up by the new owner. That is perfectly clear and I am sorry that the hon. Member for Hammersmith does not understand it.

My hon. Friend the Member for Romsey and Waterside (Mr. Colvin) raised an important point about Enham Industries and Papworth village. As he said, I have written to him about that. I am sure that the points that I have set out in my letter will reassure the employees in Enham Industries. As my hon. Friend suggested, I will take up the issue with my hon. Friend the Minister of State for the Armed Forces. As I have said, privatisation does not alter the position of the priority suppliers scheme. Therefore, the Bill is in no way bad news for Enham Industries.

Photo of Mr Michael Colvin Mr Michael Colvin , Romsey and Waterside

Has my hon. Friend taken on my principal point, which is that organisations like Enham Industries and Papworth, which are charitable organisations, and manufacturers have done pretty well out of the Crown Suppliers' buying policy over recent years? Will my hon. Friend talk to other Ministers? If preferential treatment is not maintained, the Housing Corporation, the county council social services committees and the Department of Social Security are likely to be burdened with additional costs. My hon. Friend the Minister should alert his colleagues to that eventuality.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

There will not be additional costs for Departments. The priority suppliers scheme will continue as it is now, but the Crown Suppliers will no longer necessarily be the intermediary.

I believe it was the hon. Member for Hammersmith, although I am not sure, who wanted to know how we were going to ensure that the privatisation would be fair. He drew attention particularly to the sale of Wellington house. I can assure the House that Wellington house will be valued carefully prior to sale because it is one of the largest assets belonging to the Crown Suppliers. That sale will be on a competitive basis, thereby ensuring the very best value for money to the taxpayer.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I will not give way, because I have only three minutes left. We have had a long debate and, as I have already explained, Opposition Members were not present to take their turn and we heard a series of speeches from Conservative Members.

The PSA is basically a major building and estate consultancy. The Crown Suppliers is basically a furniture supplier. Neither has a natural place in the public sector. They are commercial organisations which will operate best in a fully commercial environment. The Government will ensure that adequate safeguards are put in place to ensure that the staff who are transferred have equivalent conditions under the new employer.

This is a radical Bill, which will bring major benefits. It facilitates privatisation. In that way, it offers a major benefit for employees because for employees the Bill is a springboard for further success.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

The opportunities offered by wider markets and the disciplines of the private sector will replace the controls and shackles of the public sector. I look forward to the time when 20,000 more employees join the 800,000 who have already moved to the private sector as a result of the Government's privatisation policies. The Bill will give customers increased choice and lead to greater competition and increased efficiency. For taxpayers, there will be better value for money all round. This is a good Bill, and I commend it to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 237, Noes 181.

Division No. 10][10 pm
AYES
Aitken, JonathanArnold, Tom (Hazel Grove)
Alexander, RichardAshby, David
Alison, Rt Hon MichaelAspinwall, Jack
Allason, RupertAtkins, Robert
Amery, Rt Hon JulianBaker, Rt Hon K. (Mole Valley)
Amess, DavidBaldry, Tony
Amos, AlanBanks, Robert (Harrogate)
Arbuthnot, JamesBatiste, Spencer
Arnold, Jacques (Gravesham)Bellingham, Henry
Bendall, VivianHampson, Dr Keith
Bennett, Nicholas (Pembroke)Hanley, Jeremy
Benyon, W.Hannam, John
Bevan, David GilroyHargreaves, A. (B'ham H'll Gr')
Biffen, Rt Hon JohnHargreaves, Ken (Hyndburn)
Blaker, Rt Hon Sir PeterHarris, David
Body, Sir RichardHaselhurst, Alan
Bonsor, Sir NicholasHawkins, Christopher
Boscawen, Hon RobertHayward, Robert
Boswell, TimHeddle, John
Bowden, Gerald (Dulwich)Hicks, Mrs Maureen (Wolv' NE)
Boyson, Rt Hon Dr Sir RhodesHiggins, Rt Hon Terence L.
Braine, Rt Hon Sir BernardHolt, Richard
Brandon-Bravo, MartinHordern, Sir Peter
Brazier, JulianHowarth, Alan (Strat'd-on-A)
Bright, GrahamHowarth, G. (Cannock & B'wd)
Brooke, Rt Hon PeterHowe, Rt Hon Sir Geoffrey
Brown, Michael (Brigg & Cl't's)Howell, Rt Hon David (G'dford)
Browne, John (Winchester)Hughes, Robert G. (Harrow W)
Bruce, Ian (Dorset South)Hunt, David (Wirral W)
Budgen, NicholasHunter, Andrew
Burns, SimonIrvine, Michael
Burt, AlistairIrving, Charles
Butler, ChrisJack, Michael
Carlisle, John, (Luton N)Jackson, Robert
Carlisle, Kenneth (Lincoln)Janman, Tim
Carrington, MatthewJones, Gwilym (Cardiff N)
Carttiss, MichaelJopling, Rt Hon Michael
Channon, Rt Hon PaulKey, Robert
Chapman, SydneyKing, Roger (B'ham N'thfield)
Chope, ChristopherKing, Rt Hon Tom (Bridgwater)
Clark, Hon Alan (Plym'th S'n)Knight, Greg (Derby North)
Clark, Dr Michael (Rochford)Knox, David
Clark, Sir W. (Croydon S)Lloyd, Peter (Fareham)
Clarke, Rt Hon K. (Rushcliffe)Maclean, David
Colvin, MichaelMcLoughlin, Patrick
Coombs, Anthony (Wyre F'rest)McNair-Wilson, Sir Michael
Coombs, Simon (Swindon)Mawhinney, Dr Brian
Couchman, JamesMiller, Sir Hal
Cran, JamesMills, Iain
Currie, Mrs EdwinaMiscampbell, Norman
Davies, Q. (Stamf'd & Spald'g)Mitchell, Andrew (Gedling)
Davis, David (Boothferry)Moate, Roger
Dorrell, StephenMonro, Sir Hector
Douglas-Hamilton, Lord JamesMontgomery, Sir Fergus
Dover, DenMorrison, Rt Hon P (Chester)
Dunn, BobMoss, Malcolm
Durant, TonyMoynihan, Hon Colin
Dykes, HughMudd, David
Emery, Sir PeterNeale, Gerrard
Evennett, DavidNelson, Anthony
Fairbairn, Sir NicholasNeubert, Michael
Fallon, MichaelNicholls, Patrick
Favell, TonyNicholson, David (Taunton)
Field, Barry (Isle of Wight)Nicholson, Emma (Devon West)
Fishburn, John DudleyNorris, Steve
Fookes, Dame JanetOnslow, Rt Hon Cranley
Forman, NigelOppenheim, Phillip
Forsyth, Michael (Stirling)Page, Richard
Fox, Sir MarcusPaice, James
Franks, CecilPatnick, Irvine
French, DouglasPatten, Rt Hon Chris (Bath)
Gale, RogerPatten, John (Oxford W)
Gardiner, GeorgePawsey, James
Garel-Jones, TristanPeacock, Mrs Elizabeth
Gill, ChristopherPorter, David (Waveney)
Glyn, Dr AlanPortillo, Michael
Goodlad, AlastairPowell, William (Corby)
Goodson-Wickes, Dr CharlesRattan, Keith
Gorman, Mrs TeresaRaison, Rt Hon Timothy
Gow, IanRenton, Rt Hon Tim
Grant, Sir Anthony (CambsSW)Rhodes James, Robert
Greenway, Harry (Ealing N)Riddick, Graham
Greenway, John (Ryedale)Ridley, Rt Hon Nicholas
Gregory, ConalRidsdale, Sir Julian
Griffiths, Peter (Portsmouth N)Rifkind, Rt Hon Malcolm
Grist, IanRost, Peter
Grylls, MichaelRowe, Andrew
Hague, WilliamRumbold, Mrs Angela
Hamilton, Neil (Tatton)Ryder, Richard
Sackville, Hon TomThompson, Patrick (Norwich N)
Sainsbury, Hon TimThorne, Neil
Sayeed, JonathanThornton, Malcolm
Scott, Rt Hon NicholasThurnham, Peter
Shaw, David (Dover)Townend, John (Bridlington)
Shaw, Sir Giles (Pudsey)Tracey, Richard
Shaw, Sir Michael (Scarb')Tredinnick, David
Shepherd, Colin (Hereford)Trippier, David
Shersby, MichaelTwinn, Dr Ian
Sims, RogerVaughan, Sir Gerard
Skeet, Sir TrevorWaddington, Rt Hon David
Smith, Tim (Beaconsfield)Walker, Bill (T'side North)
Soames, Hon NicholasWaller, Gary
Spicer, Michael (S Worcs)Wardle, Charles (Bexhill)
Squire, RobinWarren, Kenneth
Stanbrook, IvorWatts, John
Stanley, Rt Hon Sir JohnWells, Bowen
Steen, AnthonyWhitney, Ray
Stern, MichaelWiddecombe, Ann
Stevens, LewisWiggin, Jerry
Stewart, Allan (Eastwood)Winterton, Mrs Ann
Stewart, Andy (Sherwood)Winterton, Nicholas
Stewart, Rt Hon Ian (Herts N)Wood, Timothy
Stradling Thomas, Sir JohnWoodcock, Dr. Mike
Sumberg, DavidYeo, Tim
Summerson, HugoYoung, Sir George (Acton)
Tapsell, Sir PeterYounger, Rt Hon George
Taylor, Ian (Esher)
Taylor, John M (Solihull)Tellers for the Ayes:
Taylor, Teddy (S'end E)Mr. David Lightbown and
Temple-Morris, PeterMr. Nicholas Baker.
Thompson, D. (Calder Valley)
NOES
Abbott, Ms DianeDarling, Alistair
Adams, Allen (Paisley N)Davies, Rt Hon Denzil (Llanelli)
Allen, GrahamDavies, Ron (Caerphilly)
Alton, DavidDavis, Terry (B'ham Hodge H'l)
Anderson, DonaldDewar, Donald
Archer, Rt Hon PeterDixon, Don
Armstrong, HilaryDobson, Frank
Ashdown, Rt Hon PaddyDuffy, A. E. P.
Ashley, Rt Hon JackDunnachie, Jimmy
Ashton, JoeDunwoody, Hon Mrs Gwyneth
Barnes, Harry (Derbyshire NE)Eadie, Alexander
Barron, KevinEvans, John (St Helens N)
Battle, JohnEwing, Mrs Margaret (Moray)
Beckett, MargaretFatchett, Derek
Bennett, A. F. (D'nt'n & R'dish)Faulds, Andrew
Bermingham, GeraldFearn, Ronald
Boateng, PaulField, Frank (Birkenhead)
Boyes, RolandFisher, Mark
Bradley, KeithFlannery, Martin
Bray, Dr JeremyFoot, Rt Hon Michael
Brown, Gordon (D'mline E)Foster, Derek
Brown, Nicholas (Newcastle E)Foulkes, George
Brown, Ron (Edinburgh Leith)Fraser, John
Bruce, Malcolm (Gordon)Fyfe, Maria
Buchan, NormanGarrett, John (Norwich South)
Buckley, George J.George, Bruce
Caborn, RichardGodman, Dr Norman A.
Callaghan, JimGolding, Mrs Llin
Campbell, Menzies (Fife NE)Gordon, Mildred
Campbell, Ron (Blyth Valley)Gould, Bryan
Campbell-Savours, D. N.Grant, Bernie (Tottenham)
Canavan, DennisGriffiths, Nigel (Edinburgh S)
Clark, Dr David (S Shields)Griffiths, Win (Bridgend)
Clarke, Tom (Monklands W)Grocott, Bruce
Clay, BobHarman, Ms Harriet
Clelland, DavidHattersley, Rt Hon Roy
Clwyd, Mrs AnnHealey, Rt Hon Denis
Cohen, HarryHeffer, Eric S.
Cook, Robin (Livingston)Henderson, Doug
Corbett, RobinHinchliffe, David
Cousins, JimHome Robertson, John
Crowther, StanHood, Jimmy
Cryer, BobHowarth, George (Knowsley N)
Cummings, JohnHowell, Rt Hon D. (S'heath)
Cunningham, Dr JohnHowells, Geraint
Dalyell, TamHowells, Dr. Kim (Pontypridd)
Hoyle, DougQuin, Ms Joyce
Hughes, John (Coventry NE)Radice, Giles
Hughes, Robert (Aberdeen N)Rees, Rt Hon Merlyn
Hughes, Simon (Southwark)Reid, Dr John
Janner, GrevilleRobertson, George
Jones, Barry (Alyn & Deeside)Rooker, Jeff
Jones, Martyn (Clwyd S W)Rowlands, Ted
Lamond, JamesSedgemore, Brian
Leadbitter, TedSheerman, Barry
Livsey, RichardSheldon, Rt Hon Robert
Lloyd, Tony (Stretford)Shore, Rt Hon Peter
Lofthouse, GeoffreyShort, Clare
Loyden, EddieSillars, Jim
McAllion, JohnSkinner, Dennis
Macdonald, Calum A.Smith, Andrew (Oxford E)
McFall, JohnSmith, Rt Hon J. (Monk'ds E)
McKay, Allen (Barnsley West)Smith, J. P. (Vale of Glam)
McLeish, HenrySoley, Clive
Maclennan, RobertSteel, Rt Hon David
McWilliam, JohnSteinberg, Gerry
Madden, MaxStott, Roger
Mahon, Mrs AliceStrang, Gavin
Marek, Dr JohnStraw, Jack
Marshall, David (Shettleston)Taylor, Mrs Ann (Dewsbury)
Maxton, JohnTaylor, Matthew (Truro)
Meacher, MichaelTurner, Dennis
Meale, AlanVaz, Keith
Michael, AlunWall, Pat
Michie, Bill (Sheffield Heeley)Wallace, James
Michie, Mrs Ray (Arg'l & Bute)Walley, Joan
Mitchell, Austin (G't Grimsby)Wardell, Gareth (Gower)
Moonie, Dr LewisWareing, Robert N.
Morgan, RhodriWatson, Mike (Glasgow, C)
Morley, ElliotWelsh, Michael (Doncaster N)
Morris, Rt Hon A. (W'shawe)Wigley, Dafydd
Morris, Rt Hon J. (Aberavon)Williams, Rt Hon Alan
Mowlam, MarjorieWilliams, Alan W. (Carm'then)
Murphy, PaulWilson, Brian
Nellist, DaveWinnick, David
Oakes, Rt Hon GordonWorthington, Tony
O'Brien, WilliamWray, Jimmy
O'Neill, MartinYoung, David (Bolton SE)
Patchett, Terry
Pendry, TomTellers for the Noes:
Pike, Peter L.Mr. Frank Haynes and
Powell, Ray (Ogmore)Mr. Frank Cook.
Prescott, John

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).