I have to be cautious how I answer because the order covers a great deal of ground and I suspect that the Churches would support some parts and be less supportive of others. I know that representations have been made about one or two of the points in the order. In one case I have sought to alleviate the concerns by making a change in the order itself. I shall mention that later.
I shall now discuss the main provisions. I am happy to answer any questions about the other provisions during the debate, but it is to a large extent a technical order and I am sure that there are aspects of it into which hon. Members will not wish to delve in too much detail.
I start with what is perhaps one of the main issues—that of competitive tendering. Parts II and III of the order deal with competitive tendering and general administration of public supply and works contracts by education and library boards in Northern Ireland. The Government's policy of subjecting public services to external comparison with the private sector is already well established throughout the United Kingdom. The results of the policy of competition are becoming self-evident. In Northern Ireland, annual savings of about £7·9 million have been achieved in the health service, and in the civil service the exposure of services to competition has realised savings of about £6·1 million per year. Indeed, the benefits of competitive tendering have already been recognised by the education and library boards and most of the activities defined in the order have also already been, or are planned to be, submitted to the competitive tendering process. The savings generated to date by the boards amount to about £1·2 million per year and it is important to recognise that those savings are retained by boards for the benefit of the education service.
Although the boards have been making good progress on a voluntary basis, it is nevertheless necessary, in my view, to provide a firmer legislative framework for the policy.
I emphasise that the order does not cover compulsory privatisation or compulsory contracting out. Boards will continue to be responsible for the provision of services and their direct labour organisations will be entitled to tender for the work. Indeed all the education and library board contracts have to date been won by the boards' direct labour organisations. It is important to understand that boards will specify and monitor the outputs and standards of service they require, whether the service is provided "in-house" or by private contractors. In that way legislation will not mean a lowering of standards, as some people suggest; rather it will provide for greater choice, leading to improved efficiency and better services.
Part III of the order contains important provisions that will bring the education and library boards into line with the operation of competitive tendering of district councils in Northern Ireland. In particular, article 22 will allow my Department to specify information which contractors will be required to provide if they wish to tender for work. That is designed to counter the possibility of fraudulent exploitation of the tendering process, and to act as a filter for any attempts by non bona fide contractors to win contracts. That safeguard will be available, if required, to combat any such threat. I am grateful to the hon. Member for North Down (Sir J. Kilfedder) for his obvious support.
I shall now discuss the second part of the order—article 28 and its related schedule 2—in detail. They deal with the introduction of an option for 100 per cent. capital funding for voluntary schools. I shall explain later why it is an option.
Voluntary schools are at present eligible for 85 per cent. grants on capital works. Many schools are finding it increasingly difficult to meet their share of the capital cost, at a time when additional accommodation is especially required to meet education reform curriculum requirements. Against that background, detailed discussions took place last year with the voluntary school authorities. As a result of agreement reached in those discussions, the order provides that a voluntary school that is prepared to change management arrangements to ensure that no single interest has a majority on the board of governors will be eligible for 100 per cent. capital funding. That is an option for all voluntary schools, whether under Catholic or other management.
The new arrangements will not, and are not intended to, affect the existing ethos of any voluntary school. The trustee parent and teacher representatives are likely to continue to reflect the ethos of the school. Before appointing its nominees, the Department of Education will consult with the Council for Catholic Maintained Schools in the case of Catholic maintained schools and with the board of governors in the case of voluntary grammar schools. No school will be obliged to adopt the new arrangements; that is why they remain optional. All voluntary schools may retain their existing management arrangements, but if they do so capital grants will continue to be paid at the existing rate of 85 per cent. There are obviously cost implications in paying higher capital grant rates. I can confirm, however, that that additional pressure on the education budget has been fully taken into account when reaching decisions about public expenditure allocations over the next three years.