I am sure that hon. and right hon. Members—at least those on the Opposition Benches—are acutely aware of the financial squeeze being applied to their fire and rescue authorities by central Government. Indeed, two years ago, my hon. Friend Mr Wright raised the point that Cleveland’s government settlement was the second worst in the country. However, I fear that many Members and the public might not be aware of this Government’s support, both financial and political, for proposals to take front-line fire and rescue services out of the public sector.
The Minister may say that this is not the case and that these services would remain under local authority control. However, the community interest company in the case of Cleveland fire authority, is already registered at Companies House as a separate entity, and managers are stating that an expansion of the existing CIC is the vehicle they intend to use for the formation of a “public service mutual”.
Recently, fellow Cleveland MPs and I met the Cleveland fire authority. Let me make it clear now that the categorical statement from the chair and other members was that they would do nothing that would lead to the privatisation of the service. However, the chief fire officer said that any contract would be subject to competition after the initial contract awarded to any mutual expired. He said at that meeting that the initial contract could be for anything from three to nine years. My hon. Friend Alex Cunningham and I have been greatly concerned about what the chief fire officer—along with, if I may add, firm Government encouragement—had proposed.
I congratulate my hon. Friend on securing this important debate. I am sure he agrees that the Cleveland fire chief responsible for the area that probably has the highest fire risk in Europe is ploughing a lone furrow with his proposals, given that other fire chiefs throughout the country are dismissing the mutual model, and firefighters themselves are convinced that competition law would soon open the way for private companies to take them over and put profits—
Motion lapsed (
Motion made, and Question proposed, That this House do now adjourn. (Mr Swayne.)
That took me a little by surprise, Mr. Speaker.
I am expecting my hon. Friend to agree with me that the Cleveland fire chief responsible for the area that probably has the highest fire risk in Europe is ploughing a lone furrow with his proposals, given that other fire chiefs throughout the country are dismissing the mutual model, and firefighters themselves are convinced that competition law would soon open the way for private companies to take them over and put profits before people—for the second time of asking.
We probably got it the first time, and certainly the second.
I think you will agree, Mr. Speaker, that it was such an important point that it had to be made a second time. I shall develop my response to it during my speech, if my hon. Friend will allow me to do so.
In Cleveland, the chief fire officer is exploring the possibility of spinning out the fire brigade. The whole range of fire and rescue services activity, including emergency response, is being examined for the purposes of being “spun out”—to coin a Government phrase. The proposal is being supported by Ministers in the Department for Communities and Local Government and by the Cabinet Office, which is spending over £100,000 on the legal advice that will be necessary for the pursuing of such a restructuring.
I thank the hon. Gentleman for his generosity. He was at the same meeting with the fire authority and the chief fire officer that I attended with Alex Cunningham. We discussed these matters then, and I think that the main concern among all the MPs who were present was to ensure that the employment rights of the people who work for the fire service were protected.
The hon. Gentleman has mentioned the organisations that he thinks are backing this proposal. Will he acknowledge that it is the Labour-run fire authority that is pushing it, and the Labour chairman of the authority who thinks that it is such a good idea?
We understand that, under the recent regulations introduced under the Government’s own Health and Social Care Act 2012, the TUPE regulations are worth about 90 days in practice. As for the hon. Gentleman’s claim that the Labour authority is pushing the proposal, the Labour chair actually said “If we were properly funded, we would not even consider going down this route.” As I shall make clear, this is a devolved blame game initiated by Ministers to thrust a mutilation of the concept of mutualisation on the people in Cleveland.
Thank you very much.
Many operational issues arise from the proposals, relating to, for instance, local, regional and national resilience. I understand that the Fire Officers Association, the Chief Fire Officers Association and the Fire Brigades Union have raised them with officials in the Department for Communities and Local Government. I shall focus on four specific concerns. The first is the apparent lack of employee support for the proposals, and the uneasy lack of public awareness. The second is the sheer lack of transparency on the part of both the Government and the fire authority's senior officers. The third is the question of whether a spun-out brigade would raise additional revenue. If so—as a caveat—would such a spin-out have an adverse impact on existing local economy arrangements? Finally, and most importantly, I want to discuss the real risk that these proposals could lead to the privatisation of front-line fire services on Teesside.
I am a member of the Co-operative party, and a supporter of co-operatives and mutuals. I believe that if a mutual is to function effectively, it will require the support of its members, and that measures should not be forced on a work force. I am not at all convinced that that would be the case in Cleveland, given that the proposals appear to be very much management-driven. The only letters I have received from firefighters in my constituency about this matter strongly oppose the proposals. Indeed, at a single meeting attended by more than 250 firefighters, approximately half the uniformed service in Cleveland, there was unanimous opposition to them. The FBU, which represents some 85% of uniformed fire service workers, has identified a total lack of demand from staff for employee ownership in the fire sector. Instead, there has been “overt hostility”, except from a “smattering of principal managers”. Indeed, I doubt whether there is support even among principal managers, with 40 English chief fire officers and fire chief executives adding their names to the CFOA’s pre-consultation response, which highlighted major concerns with these proposals.
Even the language used by those promoting the model seems to have been redefined to address the level of employee support. According to the FBU, the model was originally promoted as a John Lewis-style, employee-owned mutual. However, that was only until it became apparent that employees did not want ownership, and nor would they be afforded shares as per that model. The title changed to an “employee-led” mutual, until the vast majority of employees indicated that they did not support the model, and that the only employees who did were a select group of senior managers. The latest title employed is a “locally led” mutual, which in effect acknowledges employee opposition and in doing so employs the term “mutual” as a misnomer.
Interestingly, one senior local manager has indicated that 51% work force support is the threshold required, although FBU legal advice suggests the fire authority has the ultimate say. It is difficult even to assess the extent to which any spun-out fire brigade would in fact be a mutual, with the authority’s senior officers showing a total disregard for transparency in these proposals. In the authority’s meetings, just about everything related to the proposals has been transacted under “confidential business”, making it impossible for me, my hon. Friends, the media or the public to scrutinise them. Although I believe that the authority will be putting out a business plan to public consultation in due course, I fear it may be presented as a fait accompli. It is indeed remarkable that the authority’s officers, prior to spending tens of thousands of pounds of taxpayers’ money, did not consult stakeholders to ascertain the appetite for these proposals or involve them in setting the terms of reference for the creation of any business plan.
The Minister may want to say that the authority’s integrated risk management planning has previously stated that it would explore alternative business models, which it did, but only in the most generic terms. What it has not done so far is consult in detail the people of Cleveland. It has not even indicated whether this would be subject to detailed consultation as part of the ongoing IRMP process.
The Government are doing all they can do to prevent us from analysing these proposals. The fire authority’s senior officers are also providing the bare minimum they can under freedom of information legislation. When my office requested copies of these briefings and their assessment of procurement options for spinning out the brigade, they declined to provide a copy. Amazingly, they argued that it was not in the public interest to do so.
I note my hon. Friend’s comments about the failure to publish the pre-consultation responses. Does he share my concern that the proposal fundamentally to change the basis upon which our fire and rescue service is delivered is being progressed beneath a veil of secrecy? If the scheme is such a good idea, should it not be subject to open and transparent scrutiny, with comprehensive information being shared among all interested parties?
I absolutely agree with my hon. Friend, who himself has had to get FOIs and put those letters of information into the House of Commons Library, due to the lack of transparency.
One of the main genuine reasons why some members of the fire authority are even considering going down this route is their belief that it would mitigate some of the cuts, due to the spun-out body’s ability to bid for private contracts. Also, one of the chief fire officer’s stated aims is job creation. The areas the CFB is exploring are not related to core FRS activity; indeed, these are services currently provided by other sectors. The CFB proposals seek to replace these “others” by providing the same service with their existing work force, thus removing other workers from employment. That in no way can be described as job creation; in fact, it is the very opposite. However, nor do I believe that this would raise any further revenue.
I congratulate my hon. Friend on securing what is a vital debate for our area. Can he confirm that there is nothing to prevent the community interest company from bidding for existing work? Can he think of anything that, in an effort to secure additional revenue streams, would prevent the current situation from continuing, compared with what a mutual or private model can do?
At the meeting mentioned by James Wharton, the main thrust of the chief fire officer’s argument for seeking a mutual model was to avoid corporation tax. If that is the sole purpose of pursuing the mutual model, one has to assume that the mutual is making a profit, but I want to go into that in more detail. Spending £198,000 from the Department of Health’s social enterprise investment fund, the brigade created an arm’s length company, the Cleveland Fire Brigade Risk Management
Services community interest company, to bid for contracts from the private and public sector, with any profits to be given to the brigade. However, it operated at a loss of £38,000 in its first year and has already lost a major telecare contract that it had secured six months previously. I am no mathematician, and I do not know what the corporation tax yield would be for the Treasury on a community interest company running at minus £38,000, but with the CIC struggling to make a profit as it is, I fail to see how spinning out the brigade would generate any more contracts or revenue than the current arrangement.
The most important reason I, along with my hon. Friends the Members for Stockton South, for Hartlepool (Mr Wright) and for Middlesbrough (Andy McDonald), object to the proposals is the scope for privatisation that they permit. I cannot confess to being an expert on the technicalities of European public procurement law, but if the brigade were to be spun out, it would seem almost inevitable that once the initial contract has expired, the authority, as a commissioner, would be obliged to open the process up to competitive tendering, with social value legislation offering little protection. The authority’s senior officers have refused to provide my office with information about the procurement routes it is considering, but none of the “no market”, “joint venture”, “in-house incubation” or “competitive tender” options discussed on the Cabinet Office’s mutuals taskforce website offer protection from competitive tendering in the medium or long term.
There does not appear to be an appetite from senior officers in anywhere but Cleveland for spinning out the brigade, but the necessary changes to the Fire and Rescue Services Act 2004, which the Minister attempted to push through the Regulatory Reform Committee in a legislative reform order, would, in his own words,
“enable fire and rescue authorities in England to contract out their full range of services to a suitable provider”.
That is precisely why we are here tonight. My hon. Friend makes the valid point about letters on separate issues appearing before the Regulatory Reform Committee with no prior warning. That suggests something going on behind closed doors that we have still not been able to get the documents on in any proper manner.
I presume these providers could be in the private sector as well as the third sector, which could obviously have effects throughout England. The Minister confirmed that view to the FBU’s parliamentary group only recently. The Labour party supports mutuals, as do I, but the Co-operative party and I feel that this is a wholly inappropriate application of the model. The application does not appear to be the end in itself, but merely a stepping stone to further change. I am sure the Minister can see the difference between mutualising a bailed-out, formerly privately owned bank and mutualising a life-or-death public good such as a fire service.
I am sure the Minister has a series of quotes ready to fire at me accusing me of scaremongering, but before he does that, I would be grateful if he can clarify one simple point in his response. Specifically, will he absolutely guarantee that if the brigade were to be spun out, a few years down the line, it would not be subject to competitive tender? That would be despite the fact that Cleveland’s own chief fire officer stated that any contract would be subject to competition after the initial contract awarded to any mutual expired. If the Minister can confirm this, will he please inform the House which procurement route would permit this?
Thank you, Mr Speaker, for calling me to speak.
“From foundation trust hospitals to co-operative trust schools, we are already seeing the benefits that new mutual organisations are bringing to public services. These can provide the efficiency gains of the private sector whilst providing…democratic accountability, giving users, employees and other stakeholders a real say in how their organisations are run. If we are serious about creating a new politics, then giving ordinary people real power over the services that they rely on is the best way to do it.”
Those words are from the website of the Co-operative party—the party with which the Labour party is in formal coalition.
I will go further. The Leader of the Opposition has also endorsed mutuals and co-operatives, and Tom Blenkinsop said that he does too. The Leader of the Opposition endorsed them in local government in a pamphlet on that very topic. The Labour party’s own local elections launch praised councils for
“pursuing new co-operative models of service and delivery.”
I suspect that a party that was true to its word would seek to support Cleveland fire brigade in its mutual bid, rather than playing politics with it.
Today’s public sector faces huge challenges, and the services that are delivered remain as important as ever. With that in mind, I am somewhat surprised—just as some Members might have been after hearing those quotes—that Opposition Members have been arguing for months in the public domain, and again in the Chamber tonight, against Cleveland’s desire to mutualise. Although I have been lobbied continuously by my hon. Friend James Wharton and although Ian Lavery has approached me in a meeting, I am surprised that the hon. Member for Middlesbrough South and East Cleveland, if he feels so strongly about the issue, has not come to see me to talk to me about it or to raise any of the concerns that he has just raised tonight. If he felt that strongly, I would have thought that he would have come to see me or asked to see me some time ago, when I could have explained the situation to him. We have done so publicly on a number of occasions and I will do so again tonight.
Fire and rescue authorities, like other organisations, need to innovate and to change in order to make the efficiencies that they want and need to find while continuing to deliver excellent services to the communities they serve. Being open to new ways of working is an important part of that and we are supporting those fire and rescue authorities that want to innovate and look for new delivery models, such as locally led mutuals.
At their heart, mutuals will give front-line staff a real stake in the ownership and governance of the organisations they work for. Giving front-line staff the power to do their jobs in the way that they know is best, as well as the power to be responsive to the needs of individuals, can create better, more efficient public services while feeding the benefits back to communities.
If the hon. Gentleman will bear with me, I will answer that question directly: it is on the assumption that the chief fire officer can go down that route in the first place. I made a statement to the FBU parliamentary group—the hon. Member for Wansbeck was there—in which I made it clear that we would not go down the route of allowing somebody to privatise a front-line fire service. I will return to that point in a few moments.
The Minister is talking about the requirement for the fire service to innovate. As Tom Blenkinsop said, the process for Cleveland was stimulated by an £8.9 million funding gap. Does the Minister accept that organisational tinkering, which raises serious concerns that are, I think, shared by all parties in the House, is perhaps not as good a route as looking at different ways of putting additional services through the infrastructure of our fire service and its assets? Would taking that route not solve the problem and address some of the concerns that have been raised by Opposition Members?
It is absolutely right that a number of different authorities are looking at different ways of moving forward and at how they work. I will discuss that in just a few moments, if my hon. Friend will bear with me.
Let us look at some examples. City Health Care Partnership community interest company in Hull provides front-line health services. It has delivered £600,000 worth of savings a year while delivering a significant improvement in patient satisfaction and a number of new services. Since it mutualised in 2011, Project Salus, a provider of children’s and youth services, has grown by around 30% and increased spending on front-line services by 10%.
The Government have a role to play in encouraging innovation and efficiency in the public sector and in creating the right conditions for organisations to explore options such as becoming mutuals. We are creating new opportunities for public sector workers to take over the running of services in many areas, including health services, adult social care and social work, youth services, Sure Start children’s centres and probation services.
In the last two years the number of public service mutuals has jumped from just 10 to 70 under this Government, not a Labour Government, delivering so far about £1 billion-worth of public services. There has previously been support from across the political spectrum for co-operatives and mutuals in local government, although I appreciate that tonight in some areas, for reasons of political expediency, that seems to have changed. Indeed, the Communities and Local Government Committee recently called on the Government to do more to support the development of mutuals and co-operatives in local government.
The Minister is extolling the virtues of mutualisation for this service, but on
“Whilst we can see why the mutual delivery model may be attractive for some public services, we are concerned about its suitability for the delivery of an emergency service.”
We are talking about putting out fires; we are talking about mutualising, on the road to privatisation, to put out fires. Can the Minister not understand why people think this is not the right route to go down?
I am not going to respond to personal digs, but I will say that I met the Minister’s predecessor on more than one occasion about concerns relating to the CIC. Opposition Members were concerned about that and wanted to be constantly fed information so they could know what was happening and disseminate information to their constituents. However, in recent months we have certainly not had that from this Department.
“If that means we cannot move on mutualisation, we will not move on mutualisation—if that means privatisation of the fire service. Have I left any room for manoeuvre?”
Would the Minister like to comment on that?
Yes, that is absolutely the position, which is why I said that the hon. Gentleman is somewhat behind the times. We have made our position very clear, and in the six months or so that I have been involved in this issue, he has not approached me on it. I was also slightly surprised today when I spoke to the Labour chairman of the fire authority to learn that he had not been approached by the hon. Gentleman about tonight’s debate. I spoke to the chairman today to pay him the courtesy of confirming our position and what I would be saying.
It is disappointing that Her Majesty’s Opposition have not, on the whole, been supportive of mutualisation in the fire and rescue service. It is all very well Opposition Members making comments such as those that the hon. Gentleman just made, but the reality is that they have not been supportive whereas this Government are looking to do what we can to help mutuals move forward.
The Labour party has been distorting our support for fire and rescue authorities that are considering mutualisation by painting it as privatisation. As the hon. Gentleman himself eloquently outlined, we have made our position very clear: if this allows for privatisation, we simply will not let it happen. Mutualisation transcends the old binary distinction between in-house and privatised public services. Cleveland’s own local authority chairman, who is a Labour councillor, has described these claims as “scaremongering”. There has been an orchestrated campaign of misinformation in the media, which has wrongly played on peoples’ fears, and I want to correct that today. For the Labour party to start a campaign to stop something that was never happening in the first place is an achievement even for it. My aim is to support fire and rescue authorities in delivering excellent services to their communities, and I will do all in my power to help them do that.
I genuinely hope the Minister will take this opportunity to stop the strategy of stonewalling, as a result of which we have received no answers to freedom of information requests or questions in this House, and answer the final question in my speech: will he guarantee that there is no route via mutualisation that will allow for privatisation, as outlined by the chief fire officer to us at a recent meeting? I ask that as the Conservative party is currently in the throes of anger over Europe and is enthralled by European competition law that allows privatisation of a public sector service.
The hon. Gentleman can try to spin this whichever way he wants, but he has already eloquently outlined our position. He quoted the Secretary of State and I was present when he said that if there is no way of mutualising without opening the door to privatisation, we will not do it. Cleveland will not be able to go down the road of becoming a mutual with the help of the Government unless we can find a way of doing it that does not open the door to privatisation. That is why I made the point about the Labour party campaigning on a route we were never going down in the first place.
This is very important, because I am sure that a lot of Cleveland firefighters are watching this debate or will follow it up. In my discussions with my hon. Friend, we have talked not only about the risks of privatisation and why the Government are against it, but the employment rights and conditions of the firefighters who work there. Whatever the Government allow to happen, will he confirm that we will protect those as best we can and not let them be put at risk?
My hon. Friend makes a good point. Yes, of course we will.
Let me be very clear about this. Cleveland, a Labour authority with a Labour fire authority chairman, has come to the Government wanting to mutualise. We have said that we will work with the authority if we can find a way for it to do that, should it need the Government to take action to allow it. We will not do that unless we are confident that there is a way to do it that does not open the door to privatisation. That position has not changed since the beginning and it remains unchanged. Cleveland expressed an interest in exploring mutualisation to deliver services. Let us remember that under the 2004 Act, introduced by the Labour Government, many fire services can already be provided through private procurement and through mutuals or other bodies, if they wish it.
The wider sector has shown an interest in having the flexibility to do things differently, and authorities across the country are looking at how they can innovate. In such a scenario the authority would, however, retain its responsibilities in statute for delivering the important public service that fire authorities deliver. A mutual would generally be free from the restrictions of the public sector and be able to design services in a way that better meets the needs of their local communities, harnessing the energies and expertise of the front-line staff who are the real experts in the services that they deliver. Benefits can flow back to the community in terms of a better designed service, delivering it more efficiently and giving new opportunities for community engagement and involvement.
Cleveland identified some barriers that were preventing it from taking this step, and as the Government it is right that we should look into whether we can help to consider this innovative delivery option. We have undertaken an initial consultation with key partners to understand the issues at hand. Following that, we approached the Chair of the Regulatory Reform Committee to consider whether it would be appropriate to make any changes to existing legislation. In my view, raising this issue on behalf of the fire and rescue authorities was essential to inform our understanding of the potential barriers, challenges and benefits to the fire sector. To avoid the topic completely would have been wrong. Just because a question is new and different does not mean that we should be afraid to ask it.
Let me be clear: the No. 1 priority of every fire and rescue authority is, and always will be, preventing fires and saving lives, and this Government will continue to support them in this essential life-saving role.
I am going to make some more progress given the time.
The key point is that we have listened to the responses and, following feedback, we have made it abundantly clear that despite the claims of the Labour party, we are not, as the hon. Member for Middlesbrough South and East Cleveland clearly outlined in the quote by the Secretary of State, selling off the sector. My aim remains to support fire and rescue authorities in exploring new and innovative ways of providing their services, and we are reviewing the options to enable such models without opening up the delivery of key fire and rescue services to outside parties.
No, I will not, in view of the time.
Mutuals are also being considered as part of a wider review generally, in the case of the fire and rescue sector by Sir Ken Knight, whose report will be published shortly. However, mutuals are not the only innovative delivery model that fire and rescue authorities are considering. Some are exploring other opportunities that deliver benefits for their communities, while others are looking at closer joint working and sharing of resources within both the fire sector and the wider blue light community. Increased collaboration and partnership are excellent principles that all parties, whatever their political view, should endorse.
Cleveland fire and rescue authority, and others of its kind, should be lauded for exploring pioneering options for delivering its services for the benefit of its staff and, importantly, the community it serves. It, a Labour-controlled authority, has recognised the need to work in different ways and is seemingly not afraid to try new things in order to meet the challenges that the public sector faces and to do the best for its community.
I hope that I have responded to all my colleagues’ concerns. We may not agree on things, but the simple fact is that the Cleveland authority has asked us to look at something and we have said that we will do so. All parties should be working together to support Cleveland and any other fire and rescue authority that is trying to do something new and innovative for the benefit of its community. This is, and always has been, about giving the fire sector the freedom and flexibility to save lives and to deliver the excellent service that they provide to their communities.
Question put and agreed to.