Outsourcing: Value for Money

Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office – in the House of Commons at 12:00 am on 27 June 2018.

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Photo of Afzal Khan Afzal Khan Shadow Minister (Home Office) (Immigration) 12:00, 27 June 2018

What recent assessment he has made of the value for money of outsourcing public services.

Photo of David Lidington David Lidington Chancellor of the Duchy of Lancaster, Minister of State (Cabinet Office)

Recent business cases submitted by Departments for approval show savings to taxpayers from outsourcing in the range of 9% to 30%.

Photo of Afzal Khan Afzal Khan Shadow Minister (Home Office) (Immigration)

A recent Public Accounts Committee report found that after more than 25 years the Treasury still has no data on whether the private finance initiative model provides value for money. People in my constituency are concerned about back-door privatisation and the kinds of PFI contract often used in hospitals, which leave staff in the dark, not knowing about the security of their jobs. Will the Minister review PFI contracts and privatisation across all Departments in the light of the PAC report’s findings?

Photo of David Lidington David Lidington Chancellor of the Duchy of Lancaster, Minister of State (Cabinet Office)

Let us consider this:

“It simply would not have been possible to build or refurbish such a number of schools and hospitals without using the PFI model.”—[Official Report, 14 November 2007; Vol. 467, c. 665.]

Those are not my words, but those of Gordon Brown, the last Labour Prime Minister.

Photo of Craig Mackinlay Craig Mackinlay Conservative, South Thanet

My right hon. Friend might be aware of a petition in Gibraltar for it to have an MP elected to our Parliament. The petition now has close to 10,000 signatures, which is almost half the electorate of the rock. Will he therefore consider backing my private Member’s Bill to give Gibraltar the option of electing an MP to this place and reward Gibraltarians for their unwavering loyalty?

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Chair, Commons Reference Group on Representation and Inclusion Committee

That is an extreme case of shoehorning in a particular concern, but it suffers from the disadvantage of bearing absolutely no relation to the question on the Order Paper. The hon. Gentleman has made his point in his own inimitable and mildly eccentric way, and we are grateful to him for doing so. Let us have a question that is in order.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

On a serious point, many of my constituents were affected by the collapse of Carillion. How confident is the Minister that the big four accountancy firms have learnt their lessons for the future?

Photo of David Lidington David Lidington Chancellor of the Duchy of Lancaster, Minister of State (Cabinet Office)

Clearly, criticisms have been made of the major accountancy firms by Select Committees of this House and others. The appropriate financial services regulator keeps this under review, and it is for the regulator to decide what, if any, steps to take.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office), Shadow Lord President of the Council

With 2,300 jobs down the pan and the taxpayer paying £148 million to clean up the Carillion fiasco, how can the Minister give such complacent responses on value for money? Will he now admit that earlier Front-Bench assurances from those on his side of the House that the burden of Carillion’s collapse would not fall on the taxpayer have turned out to be incorrect?

Photo of David Lidington David Lidington Chancellor of the Duchy of Lancaster, Minister of State (Cabinet Office)

No, I would not accept that at all. We have said from the start that our priority has been to keep public services running. We have paid the costs of the official receiver to enable the contracted operations to continue; the schools have been cleaned, and the meals have been served in schools and hospitals, by those providers. It is the lenders, directors and shareholders in Carillion who have taken the big financial hit, and rightly so.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office), Shadow Lord President of the Council

The fact of the matter is that the Minister has admitted that £150 million has been paid to the liquidators. We see that his commitment to value for money has no credibility when we consider that only one civil servant is monitoring 700 taxpayer-funded contracts, with £60 billion in assets. The Government are sleepwalking from one outsourcing disaster to the next. Will he now accept the widespread public view that he should abandon his obsession with outsourcing?

Photo of David Lidington David Lidington Chancellor of the Duchy of Lancaster, Minister of State (Cabinet Office)

The report by the Select Committee on Work and Pensions and the Select Committee on Business, Energy and Industrial Strategy concluded that the directors, not the Government, were responsible for the fact that Carillion failed and that the Government had made a competent job of clearing up the mess. I refer the hon. Gentleman again to the fact that independent research commissioned by the last Labour Government showed savings to taxpayers of, on average, between 20% and 30% from outsourcing, compared with undertaking tasks in house. That is money that can go back into frontline public services.