HC Deb 20 February 1968 vol 759 cc204-5
4. Mr. Costain

asked the Minister of Housing and Local Government whether, in the light of the Government's economy measures, he will now withdraw his department's Circular 50/65 and recommend to local authorities the need for tighter financial control over their direct labour building departments.

31. Mr. Rossi

asked the Minister of Housing and Local Government what steps he will be taking to safeguard ratepayers against overspending by direct labour departments of the kind that has recently come to light.

Mr. Greenwood

I do not intend to withdraw Circular No. 50/65. I am pursuing the question of financial control and management with the local authority associations. In considering applications for subsidy and loan sanction for direct labour schemes, the Department takes account of the past performance of the direct labour organisation concerned. Direct labour schemes are subject to the same cost yardsticks as schemes undertaken by contractors.

Mr. Costain

Does the Minister appreciate that the output per man year from direct labour, as shown by his own statistics, is the equivalent of £2,674 a year, whereas that from contractors is £3,300 a year? Is not that a major deficiency? How does he propose to tie in his expanding economy with efficiency if he does not allow efficiency to take its natural course?

Mr. Greenwood

I believe that direct labour organisations in most cases are extremely efficient, but local authorities should appreciate the need for very strict and firm financial control of them. The hon. Gentleman has no doubt seen the report of the District Auditors' Society, which is in the Library. I am in discussion with the local authority associations with a view to issuing a manual for local authorities on direct labour organisations.

Mr. Rossi

Has the Minister not gathered from case after case concerning direct labour schemes—Camden, Southwark, Liverpool and so on—that the lesson to be learned is that a local authority cannot control a commercial enterprise of this kind in the same way as private industry can, and that the result has been a loss to the ratepayer in each lamentable case after the other?

Mr. Greenwood

The hon. Gentleman is wide of the mark. The number of local authorities with the kind of experience to which he refers is a very small percentage of the whole. Improvements can be made, and I am determined that they shall be drawn to the attention of the local authorities.

Mr. Molloy

Is my right hon. Friend aware that the massive housing problems which we have had for decades are the result of the ineptness and failure of private enterprise, and that in the main the improvements are the result of local authorities' efforts via their direct labour building forces?

Mr. Greenwood

Both the local authorities and private enterprise have been doing very well under a Labour Government.