HC Deb 23 January 1969 vol 776 cc775-98

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Grey.]

9.28 p.m.

Mr. Alfred Morris (Manchester, Wythenshawe)

We are debating this evening a matter which is causing deep and very serious public disquiet in the City of Manchester. The attempt now being made to dismantle the city's direct works department is not only demonstrably against the public interest: it is specifically calculated to benefit private interests at public expense. The attempt is freely described by ratepayers as a bid by councillors to line the pockets of their party's friends and as a matter which merits both urgent consideration by Ministers and the detailed attention of this House

The whole future of the Manchester direct works department is now at risk, not through any failure in its operations, but because of their success. It is a first-class public enterprise, employing about 4,000 employees, and an asset worth millions of pounds to the city's ratepayers. During the past eight years, the department has undertaken work to the value of well over £50 million. Last year alone it did work to the value of £8½ million, compared with only just over £3 million in 1961–62. This is but one of the statistics of the department's escalating success in recent years.

The direct works department's contribution to the housing drive and the clearance of Manchester's slum areas has been enormous. Nearly 10,000 homes have been built by the department since 1961 and the average number of completions during each of the last five years is 1,330. In 1968, while the private builders working for Manchester Corporation fell short of their housing target by 9 per cent., the direct works department exceeded its target by 3 per cent.

In terms of manpower productivity, the department's performance is equally striking. The reported national average per man dwelling is 0.93 while the Manchester direct works department's output during the past five years has been over 8 per cent. higher than this figure. On one recent contract for 79 houses—Hulme 3 contract 540, which was completed three months ahead of time—the figure was 1.14 dwellings per man, or 21 per cent. above the national average.

Nor is this the best example of the department's efficiency. An even more superb example is its recent completion of a multi-storey block of 70 homes in 10 months against the reported national average for such projects of 14 months This is an achievement in which every Mancunian can take legitimate pride.

But as well as houses and flats, there have been schools and a wide range of other public building projects. The Manchester Education Committee can confirm, from certified accounts, that three projects undertaken by the direct works department at St. John's College and Elizabeth Gaskell College would have cost £42,000 more if they had been built by the private contractor who submitted the lowest outside tender. Again, with the C.L.A.S.P. programme of schools and buildings—first serial—involving a cost of £1 million, the public saving from the direct works department's successful competitive tender was nearly £100,000.

By common consent, the work on this group of projects was completed to a high standard and in good time. Officers of the Department of Education and Science, and representatives of the C.L.A.S.P. consortium, have expressed great satisfaction with the direct works department's methods and site arrangements and with the high standard of workmanship achieved.

Many visits and inspections of work in progress have been made by officers of the Ministry and others, including private contractors, to study the department's construction techniques in using composite teams of skilled men trained by Manchester Corporation.

One group of private contractors came from as far away as Scotland and there can be no doubt that the department's outstanding work in this field has been, and will continue to be, an example to many other contractors in the execution of C.L.A.S.P. projects.

In providing a high level of continuous employment for its skilled labour force, most of whom are Manchester ratepayers, the department has done much to stabilise the local employment of building workers. The department adheres to the best municipal employment policies, which are not matched by the private contracting industry at large, and also employs a good proportion of disabled workers, all of whom make a valid and important contribution to its work.

Such is the quality of the department's labour relations that out of about 60 million working hours, time lost in disputes has averaged less than 10 minutes per employee. It is a fact argues the informed and independent Manchester Evening News that the department is regarded throughout the country as one of the finest. Why, then, should it be dismantled? There can be no question of any claim by the would-be destroyers that they have the support of the senior municipal officers who are immediately concerned in the department's work. Sir Harry Page, the city treasurer—no other municipal official in the City of Manchester has a more distinguished record of public service—recently described the department's management as "dynamic" and its central works depôt at Bessemer Street as "magnificent."

In references to the department's capital works activities the city treasurer states: If Direct Works can be shown to have 'broken even' on £16 million worth of work, subject to a slight margin either way, then on the assumption that work allocated to them on tender or by negotiation was as low or lower than the prices offered by private enterprise, the only conclusion possible is that the Direct Works Department has been successful in its capital works activities. Sir Harry adds: The Direct Works Department will not be able to offer to the City the maximum advantages of economical building unless it is allowed to maintain a fairly stable labour force, and to keep its capital equipment and its administration in full employment. Yet it is now proposed to close the central works depot and to take away from the department all capital works other than housing. So far as housing is concerned, notwithstanding the superb achievements to which I have referred, it is proposed to subject the department to tests even more stringent than those which have already been agreed with the Ministry of Housing and Local Government.

This is why the department's employees are now so angry and anguished. They are told that their "magnificent" central works depôt will be sold as a going concern, that where necessary jobs will be found for them by private builders, and that there is no need for them to worry. But what many local Conservative politicians and their friends in private contracting seem incapable of understanding is that the employees have a strong sense of pride in what they and their department have achieved for the city. They are as reluctant to accept the proposed surgery as a healthy and unwilling heart donor. For they are working people with a social conscience and are as concerned for the public interest as many local Conservative politicians are concerned for the private interests of the contractors who stand to benefit at the expense of ratepayers and taxpayers alike.

Moreover, the employees recall that during last year the city council's direct works committee, strongly deprecating Press statements about the department's uncertain future, unanimously agreed to inform the Press that … such statements, which are totally unfounded, are proving to be extremely harmful to the department, the department's staff and operatives, and to the City Council and should be withdrawn. This statement was made on behalf of the direct works committee last June and was subsequently approved by the council. If the dismantling of the department is now approved by the council, the Press will be vindicated and the council will be vilified, since the unanimous statement of six months ago would then appear not only untruthful but designed to mislead the public.

The employees are also fully aware of what Aims of Industry has said about the department, just as they are aware of the reply made to that organisation by one of the most honourable participants in this whole disreputable affair. In its attack on protected municipal monopolies, free from competition with private firms Aims of Industry states, in a recent leaflet: The Direct Works Department's costs for house-building have not been checked through direct competition for five years. The reply came from Councillor Frederick Harrison, the Conservative chairman of the direct works committee, who has been courageously at odds with his party over the department's future. Sharply dismissing Aims of Industry's leaflet, and emphasising that the department has been an important money-saver for the ratepayers, Councillor Harrison told the Press: Everything we have done has been checked and double checked over many years, and to say that we have not been in competition with outside contractors for five years is nonsense. Nor was the local Press in any way influenced by external propaganda. My own constituency newspaper—the Wythenshawe Express—emphasised the point that what will weigh more strongly with most ratepayers is the proven fact that Direct Works is saving the Corporation large sums of money by building at lower costs than private builders.

Mr. Speaker

Order. I hesitate to interrupt the hon. Gentleman. He will come to some Ministerial responsibility for what is happening in Manchester, I hope.

Mr. Morris

Mr. Speaker, I have sought to explain the background of the very deep concern that there is on this matter in the City of Manchester. I shall certainly be explaining that taxpayers as well as ratepayers are very concerned in this issue.

The city treasurer, for his part, had already pointed out that, in terms of competition, it is not the private contractor but the direct works department that competes under handicaps. To a joint subcommittee of the council's direct works and finance Committees, he reported: A contractor can, if he considers it opportune, quote what is in effect a cut price for a job if he wishes to keep a labour force together and to employ his equipment to the full. The Direct Works Department must not only submit realistic estimates, but must also disclose publicly the outcome of every contract which it undertakes. The Aims of Industry leaflet was a shabby piece of misrepresentation, and it was wholly appropriate that it should have been answered by Councillor Harrison. But there are other and more detailed facts about competitive tenders which deserve attention in this debate.

Thus, at a joint sub-committee meeting held on 17th December, 1968, the department's would-be destroyers put forward and carried a conclusion that the appropriate committees of the council should consider … the reallocation of certain non-housing contracts (e.g. the Airport Fire Station and Wythenshawe Civic Centre) on which very little or no work has yet been done.

Mr. Speaker

Order. The hon. Gentleman has not appreciated the point which I made. This is not a meeting of Manchester City Council. He must come in some way to Ministerial responsibility. I understand that there is some, but he must show it.

Mr. Morris

I am making an assumption, Mr. Speaker, and I do so to save the time of the House. The assumption is that loan sanction is required for many of these projects. For example, the Department of Education and Science has a large stake in what is being done in regard to schools.

My hon. Friend the Joint Parliamentary Secretary, who will reply to the debate, does not have access to documents which, in my view, are of great importance for a consideration of this matter by the House, and it is to give the background that I am speaking of what has happened up to now in committees of the city council. I have told my hon. Friend the Parliamentary Secretary that I realise that the Government, for their part, will wish to watch carefully the interests of taxpayers, and I am trying as far as I can to inform him of what has recently occurred in the City of Manchester, where this matter is regarded as a considerable public scandal.

I come now to what the city treasurer said on 9th January this year. Perhaps I should preface my remarks from now on, Mr. Speaker, by saying that these are projects which require loan sanction and, therefore, are matters which rightly concern right hon. and hon. Members. The report of what the city treasurer said is in these terms: On the Question of the withdrawal of work at the Airport Fire Station and the Wythenshawe Civic Centre, the City Treasurer suggests that the City Council should not take this step, certainly not on the Civic Centre. A considerable amount of preparatory work has been done on Wythenshawe Civic Centre. The approved estimate for this job as against the next lowest tender is as follows: Direct Works tender—£1,374,238. Next lowest—£1,524,476. Previous capital schemes of the Direct Works Department do not show grounds for doubting the genuineness of the Direct Works tender, or its likely outcome. The cost of building the civic centre by direct works is, therefore, £150,238 lower than the lowest tender submitted by private enterprise. This fact was known to the Conservative councillors who voted for and carried the conclusion of 17th December, 1968. But they were in no way inhibited from wanting to saddle the ratepayers with the huge extra cost of succumbing to the demands of the Conservative Party's allies in private contracting. Whether or not anything more is heard of the joint subcommittee's conclusion, it will ever be recalled by responsible opinion as the nadir of local government in the City of Manchester. It will, unfortunately, also be widely regarded as an example of local government at its sleaziest.

My hon. Friend the Joint Parliamentary Secretary will also wish to consider a decision taken last week by a subcommittee of the city's education committee. Reversing a previous decision the sub-committee decided to ask the city council to spend an estimated £8,000 extra on reallocating a school-building contract to a private firm in Nottingham whose tender was higher than that of the direct works department. The Conservative chairman of the sub-committee, Councillor Harold Tucker, told the Press: It was felt the difference was marginal and that since the Direct Works Department had already built three series of schools and private enterprise had received only one contract, private enterprise should be given another contract to preserve the balance. If all contracts go to Direct Works, there is a danger that private enterprise will not tender in future and competition will be eliminated. I hope that my hon. Friend will take careful note of what Councillor Tucker said.

Rarely does one come across a more classic case of "jobs for the boys" and I challenge Aims of Industry to publish Councillor Tucker's remarks in its next leaflet. For never has it been more frankly admitted that it is private enterprise that needs political protection when it comes to competition with the Manchester direct works department.

As my hon. Friend the Member for Manchester, Openshaw (Mr. Charles R. Morris) has pointed out, the gift of about £8,000 of the ratepayers' and taxpayers' money has to be compared with the controlling Conservative group's so-called saving of £5,000 on reducing cleaning standards in schools and with its "saving" of £4,500 on school library books.

Mr. Speaker

Order. I am a former local government man myself, but the hon. Gentleman must come to Ministerial responsibility and tell us what he wants the Minister to do about the issues he raises.

Mr. Morris

I shall ask the Minister for a public inquiry and to look carefully at the additional costs, which I am now explaining from the Manchester point of view.

My hon. Friend the Member for Openshaw, like my hon. Friends for other Manchester constituencies, is extremely anxious that all the implications of the threatened dismantling of the city's direct works department should now be fully and urgently investigated by all the Ministers concerned. And there is very good reason for this anxiety. For the squandering of taxpayers'—as well as ratepayers'—money is involved in the recent decisions taken by committees and sub-committees of the council.

My hon. Friends representing Manchester constituencies have been approached again and again by constituents who want to know whether the Conservative councillors who have been voting for unnecessary public expenditure can at any stage be surcharged for so doing. Furthermore, they are under very heavy pressure to demand a full and thoroughgoing public inquiry into all that has happened.

To entrust any successful public enterprise to a Conservative majority is like leaving Fagin in charge of the till. The question of party attitudes to public versus private enterprise is, of course, highly germane to any discussion of this affair. Much of the Conservative Party's money derives from private concerns which stand to benefit from the wrecking of efficient and expanding public enterprises like the Manchester direct works department. Such firms are not believers in free competition. On the contrary, their most compelling need is to smash any successful non-profit-making competitors.

This is, however, only a subsidiary question tonight. The real issue concerns the taking of decisions which are demonstrably against the financial interests of ratepayers and taxpayers and the need now for an urgent and impartial investigation. For what is being attempted is deeply unworthy of Manchester's reputation and besmirches the fine traditions of public service in the local government of the city.

9.49 p.m.

Mr. Frank Taylor (Manchester Moss Side)

This debate clearly brings out the fact that this is a problem of the difference between free enterprise and Socialism. The Labour Party in power in Manchester for many years increased the size of the direct works department, wrongly and expensively so for the ratepayers. There is no doubt about that. A direct works department, like many other such bodies, does not have to fight for its existence. Every man, foreman and executive on the job knows that the cost, whatever it is, will be met. This does not happen in private enterprise, which must struggle for existence and must make ends meet, because if it does not it will cease to exist. That is the main difference. If there is no profit motive or incentive that must be met, there are liable to be excessive costs, which has happened time and again not only in other local authorities but in Manchester as well.

The hon. Gentleman said that the local authority department has to produce realistic reports of the outcome of every job. I did not want to bring this up but I must refer him to 1960, when Manchester Corporation was hauled over the coals when it was discovered that costs were allocated to different jobs in order to disguise the true cost of contracts carried on in Manchester.

Mr. Alfred Morris

I was quoting the city treasurer of Manchester, than whom there is no more distinguished municipal official in that city.

Mr. Taylor

I am endeavouring to quote facts. One of the problems in tenders is that, to be effective, they must be truly democratic. They should be true tenders, open to free enterprise. But there have been known cases in this country in which tenders from private enterprise have been made available to direct works departments so that those departments could undercut them if they wished, and that is unfair.

Mr. Kenneth Marks (Manchester, Gorton)

Is the hon. Gentleman suggesting that this happens in Manchester?

Mr. Taylor

I was going to say that I hoped that it did not happen in Manchester. But it is a risk and we all know it. [Interruption.] I am interested not only in the comparison of tenders undercutting private enterprise but in the ultimate cost of the job, which comes to a very different figure time and again. [Interruption.]

Mr. Speaker

Order. We have listened to one side in stony silence. I ask the same for the other side.

Mr. Taylor

I do not mind barracking, Mr. Speaker. The fact is that it is the cost at the end which matters and that we have had innumerable cases in Manchester where contracts have been given to the direct works department and along have come supplementary estimates later which have thrown the original estimates out of gear.

I hesitate to do so, but I must refer to our near neighbour, Salford, which had the sorry record of £500,000 missing and where no one could blame anyone. I would hesitate to think that Manchester might find itself in the same boat.

I hope that the central works depôt will be closed as early as possible, for the simple reason that this department, on figures available, cannot hope to exist unless it spreads among neighbours outside the bounds of Manchester and could, therefore, become effectively a corporation producing for the North, so that it would seem probable that all building in Manchester would have to be restricted to departments which would use its products. This would kill private enterprise and in the end would kill prices.

There are many other reasons that I could put forward to resist and refute the statements made by the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris), but I refer only to his comment that he hopes for a public inquiry. So do I. It will reveal a lot of facts which the country would care to know.

9.54 p.m.

Mr. Will Griffiths (Manchester, Exchange)

I rise with relish to deal with the speech of the hon. Member for Manchester, Moss Side (Mr. Frank Taylor) and I shall do so in a short intervention because I hope that it will be possible for some of my colleagues also to speak. I shall also endeavour to relate my remarks strictly to the accountability of the Minister's Department. But first I must deal—and this is relevant—with some of the hon. Gentleman's remarks.

The whole House will admit that it is a perfectly legitimate argument that building and certain works should be carried out either by a works department or by private enterprise. What would surely unite every hon. Member, and certainly every member of a local authority, is a consideration of what gives the greatest material benefit to the people they represent. That should be the criterion. The hon. Member for Moss Side said that the policies which were initiated by the then Labour majority on the Manchester City Council had increased expense to the ratepayer. It is perfectly proper for him to have regard to the interests of the ratepayer, and we in the House of Commons have to defend the interests of the taxpayer. Manchester Corporation has decided that in future the direct works department is to concentrate on house building and it has removed capital projects such as those mentioned by my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) from the department's purview.

Let us examine the view of the hon. Member for Moss Side in relation to the single instance of the Wythenshawe Civic Centre. The direct works department and private enterprise tendered for this very large contract. It amounts to £1,500,000 and preliminary work has already started. The Government have to give approval, for they have to give loan sanction and therefore are directly concerned and so the taxpayers' money is involved, as is the ratepayers' money.

The committee of the Corporation responsible for changing the policy hopes to persuade the council at the February meeting to switch the contract from the direct works department, which put in the lowest tender, to a locally well-known firm, Gerrards, which put in the second lowest, and the extra cost to the taxpayer and the ratepayer will be £150,000. I challenge the hon. Member for Moss Side to relate those facts to his expressed concern tonight for the ratepayer and the taxpayer. Assuming that those who checked the specifications of the contract are satisfied about the ability of the tenderers to meet the design, how can the hon. Member and his friends justify inflicting upon his constituents and mine, for nothing more than what appears to be political prejudice, an extra cost of £150,000 on a single contract?

Mr. Frank Taylor

In many cases the direct works department has taken on jobs, which it has known it had no hope of starting immediately, in order to have a full order book a year hence. That may well be what has happened in this case. The tender of the direct works department might well be £150,000 less, but what the ultimate cost might be is another matter. If there is a delay of only six months in the starting, that will enormously increase costs, which may not be clearly visible, but which will none the less exist.

Mr. Griffiths

I cannot follow the relevance of that argument. The work has already started and there is no question of six months' delay. I am not as arrogant as the hon. Gentleman. I do not profess to know the details of the specifications and the details of the contract; nor does he. However, I trust the judgment of the professional staff employed by the Manchester Corporation who are above politics and who advised the then city council majority that this was the best tender which they had had for the job. That is not from the Conservative Party, or the Labour Party, but from the city's officers.

I content myself with that one example. My hon. Friend on the Front Bench ought to treat this with the utmost seriousness. This is only the beginning. We are just removing the lid from what is a rather unpleasant cauldron. Much that my hon. Friend has said tonight, and I endorse every word—

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made and Question proposed, That this House do now adjourn.—[Mr. Charles R. Morris.]

Mr. Griffiths

—as being absolutely true. I refer to the Bessemer Street works, the good labour relations in the labour force. I hope that we will hear from the Parliamentary Secretary a constructive response, which we can display to the citizens of Manchester as holding out some hope of a reversal of this policy, whether in the form of a public inquiry or through Ministerial action. The Minister has a duty to protect the taxpayer and ratepayer. I hope that we shall have a satisfactory answer.

10.1 p.m.

Mr. Kenneth Marks (Manchester, Gorton)

There is Ministerial responsibility on the part of the Department of Education and Science in that it has allocated money to the local authority for building schools. There is Ministerial responsibility on the part of the Ministry of Housing and Local Government, in that it has to see that expenditure is properly carried out. There is also some responsibility on the part of the Board of Trade in so far as supervision of the Registrar of Companies is concerned, but I will raise that matter direct in Questions.

I see this in two ways. This week I toured the proposed clearance areas in my constituency, and in those of the hon. Member for Manchester, Moss Side (Mr. Frank Taylor). I want to see the houses there replaced by new houses quickly, properly and efficiently. On its record the direct works department has been doing that, while private enterprise has not.

I am particularly concerned about education. In the last two schools in which I have taught—at Ardwick and Blackley—there have been extensions built by a private enterprise contractor. Both are examples that can only be described as unsatisfactory. There have been innumerable cases of schools, housing contracts, abattoir and other developments where the direct works department has had to be called in to finish the job.

Tonight I want to deal particularly with the schools question. On Monday the Manchester education committee considered lenders for the construction of schools. It did not choose the lowest tender and it gave no reason why. It is usual when this is done for the officers who have reported that they do not think the firm submitting the lowest tender to be capable of carrying out the job to give reasons, such as those of time, economy and so on. The opposite is the case here. The Conservative councillors admitted that the direct works department had been more efficient. The councillor who proposed acceptance of the tender said: The very existence of the direct works department keeps tenders very tight, so it is only right that at times there should be some incentive to firms to come in with tenders, otherwise they will cease doing so.

Mr. Speaker

Order. I am interested in what the hon. Gentleman is saying, but he must come to the point about Ministerial responsibility. There is such a thing as local government in Britain. Local authorities have a certain amount of power. He must tell us what comes under the responsibility of the Minister.

Mr. Marks

I want the Secretary of State for Education and Science to order an immediate inquiry into the circumstances whereby the Manchester education committee has proposed to its council that the lowest tender should not be accepted for a particular contract and why it has not given adequate reasons. I urge the Secretary of State to take immediate action.

10.5 p.m.

Dr. M. P. Winstanley (Cheadle)

I intervene in the debate as someone who has lived for many years in the greater Manchester area, and been dependent on it, and as the representative of a constituency which, although not in Manchester, is adjacent to it. Under the present electoral system, many of my constituents are voters at local elections in Manchester and own property in Manchester and, therefore, are very much concerned in this matter.

I support the demand of the hon. Members for Manchester, Wythenshawe (Mr. Alfred Morris) and Manchester, Gorton (Mr. Marks) for an inquiry. I should like to see an inquiry set up, because I am not sure what it would reveal. I have not come here wholly committed to the principle of public enterprise as against private enterprise. Nor am I wholly convinced of the universal virtue and desirability of private enterprise. Quite a lot of private enterprise I have not found either as private or as enterprising as I might wish.

However, I come from an area which is not fortunate enough to have a direct works department. The competitive tendering obtained by the Cheshire County Council in respect of contracts has sometimes seemed to me to leave something to be desired. I should have liked to see further elements of competition introduced. The existence of a direct works department can provide a valuable and important stimulus and yardstick to private enterprise, provided that the competition is fair in all respects. Whether it is, I am not sure.

The hon. Member for Wythenshawe made a compelling case. He put a lot of facts on record which should be commented on. If the facts reported by him are correct, it would seem that the balance is very much on the side of the direct works department. But I have heard only his side of the case. It may be that the method of accounting is not as simple as it would seem, and there may be explanations for some of the apparent advantages which he put forward.

The Minister should take advantage of this opportunity to say something about the Government's policy concerning enterprises of this kind in general. Is it the Government's policy to encourage direct works departments, or do they take a neutral and uncommitted attitude? I do not think that they can remain wholly neutral in a matter of this kind. I know, as you have pointed out, Mr. Speaker, that this is a question of local government, but it is of the utmost concern to the central Government, which cannot afford to remain entirely neutral and say nothing. Let us hear what the Government think. Do they think that, on the whole, direct works departments are profitable and economic enterprises? Do they intend to encourage them?

From what I have heard, the direct works department of the Manchester City Council performs a valuable function. I should not like to see it take over a large amount of territory, but I was interested in the remark of the hon. Member for Manchester, Moss Side (Mr. Frank Taylor) on the need for a department of this kind to spread its tentacles rather wider if it is to remain economic. I see no objection to that. If the Manchester direct works department is to flourish, I see no reason why the urban district councils in my area should not have the right to employ it if they feel it economically advantageous so to do, provided that it competes on a sound and equitable basis.

We should like to hear the Minister's comments on these matters. I am grateful to the hon. Member for Wythenshawe for raising this subject tonight.

10.10 p.m.

Mr. Peter Walker (Worcester)

I should like to say a few words, not on the question of Manchester, but on the principle involved in this matter. I was rather surprised to hear the words of the hon. Member for Cheadle (Dr. Winstanley) as a member of the Liberal Party. I would have expected him to follow the cry that the Liberal Party has constantly uttered that power should be delegated from Whitehall to the regional and, presumably, local authorities. I am surprised that on a subject such as this, he suggests that the Government should intervene.

I am also slightly surprised at the attitude taken by hon. Members opposite. I well understand them generally holding the view, as they would as people believing in public ownership and public enterprise, that a direct labour department is a good thing. It fits in with their political philosophy, but not with mine. This is a genuine difference between us.

Mr. Will Griffiths

It is cheaper.

Mr. Walker

The hon. Member says that it is cheaper. I could quote a whole host of examples where, only too late, ratepayers have discovered how expensive a direct works department has been. We could mention all sorts of places, from Salford, Wolverhampton—

Mr. Stanley Orme (Salford, West)

The hon. Member has mentioned Salford. It is interesting that since the direct works department in that city has been wound up, a contract which was taken over by private enterprise is 15 months behind time.

Mr. Walker

Nevertheless, as the hon. Member knows, considerable losses were made to ratepayers as a result of the activities of Salford direct works department. I could go through a long list of direct works departments which have lost money for the ratepayers.

Irrespective of that argument, I am interested in the view which is expressed against a Conservative council which genuinely believes that the direct works department will cost the ratepayers money. I have looked at some of the facts and figures concerning this direct works department. There are many contracts for which the final figures are not yet available, a workshop which employs one man per 1,400 ft. of the site, and matters such as that. It is suggested that because a Conservative council decides, in my view rightly, that a direct works department should be more limited in its activities and genuinely does this, a public inquiry should be demanded of the Minister. If that were done, it could lead to future developments in the event of there being a Conservative Government and Labour local authorities, and quite frequently local authorities act in contrast to the Government of the day for reasons which we all know. I would hope that if a Conservative Government were in power and Socialist local authorities genuinely decided that it was in the interests of their ratepayers to go in for a direct works department, there would not be a demand for a public inquiry because of what we consider to be the danger of such a policy.

If we are to have local government, we must leave to local government the decisions in matters such as this. If in the views of ratepayers in those local government areas the decisions are wrong and against their interests, they have the electoral process by which to express their views. If, on the other hand, the local authorities are correct, they have the electoral process to support their views.

If every time there are violent political views, as there are on this issue—there is a straight division between the political parties as a matter of principle—there is to be a demand, whether Tory or Labour Governments are in power, for a public inquiry of the Government which happens to be in a doctrinaire fashion against the particular local decision, it would be a sad and tragic day for local government.

Dr. Winstanley rose—

Mr. Alfred Morris rose—

Mr. Speaker

Order. There is too much enterprise. Will the hon. Member decide to whom he is giving way?

Mr. Walker

The hon. Member for Cheadle.

Dr. Winstanley

Would not the hon. Member agree that the purpose of a public inquiry is not to pre-empt people's right to opt for one system or another electorally, but to provide the information so that they may express their choice electorally?

Mr. Walker

Not at all. It can be debated in the council chamber, questions can be put down through the local government process and all the facts put before the members of the committee and the committee of the public works department, whether in Conservative or Socialist councils. All the facts are available to both sides of the council and they can be brought out locally. We can argue about the particular process. I would be only too pleased to do so, but the Minister has only 15 minutes left in which to reply and, doubtless, wants to give us his views.

In principle, I hope that in the interests of local government the Minister will not hold a public inquiry. He may well express his views and those of his party against the action taken by a Tory council in Manchester, but it would be very sad if, in an issue like this, intervention takes place in local government.

10.15 p.m.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl)

As you, Mr. Speaker, properly reminded us, there is such a thing as local government, and my right hon. Friend has no general power to hold inquiries into matters which are under the direct and independent responsibility of local authorities. He is, of course, concerned with the financial implications of some things that happen, but he has no roving commission or roving power. He may, however, hold inquiries, among other things, into applications that have been made for loan sanctions. He can look, for example, at whether the expenditure is justified, whether the scheme is necessary and whether it is economically planned. My right hon. Friend looks at applications and if a future case arose he would no doubt consider whether the circumstances suggested that he ought to have an inquiry.

I wondered whether we could find a way out of the difficulty through the wisdom of the hon. Member for Manchester, Moss Side (Mr. Frank Taylor). He, speaking with wisdom, said that he would welcome a public inquiry. If the city council felt, as they may well feel, that the atmosphere created by this unhappy dispute—the bitterness and the accusations that are being bandied about—is of such a quality that they could take his advice and themselves have an inquiry, my right hon. Friend would do everything he could in providing guidance and, perhaps, finding somebody to hold the inquiry for him. The initiative for such a general inquiry would have to come from the council rather than from my right hon. Friend.

I accept the invitation of the hon. Member for Cheadle (Dr. Winstanley) to say something about the views of my right hon. Friend and of the Government on direct labour. There is an expert working party looking at the problems of cost control and accountability, and their report will be a valuable guideline for future administration. My right hon. Friend has never made a secret of his policy towards direct labour. He has frequently and decisively expressed his confidence in its future. He has insisted that a direct works department must be efficient. In no circumstances would he defend one which had shown itself to be inefficient.

My right hon. Friend the Minister of Public Building and Works, when he was in our Department, had to take some very painful decisions on which he showed his usual courage by telling some direct labour departments that they were inefficient and were not to undertake work beyond their capacity. It follows from that that where a direct labour force is proved to be efficient it should be given every encouragement to develop and provide a profitable service to the public.

I want to make it clear that when we wrote to Manchester asking them to put out to tender the next large housing scheme, it was not intended to imply that the direct works department was inefficient, and we have no evidence which would lead us to differ from the quotations that have been given by my hon. Friend from people who are professionally qualified that it is very efficient, but it was in conformity with my right hon. Friend's general attitude that costs should be checked from time to time. He would say, given that the Department has proved itself by having the lowest tender, that it should most certainly be allowed to do the work.

My hon. Friend the Member for Manchester, Wythenshawe and other hon. Members raised the question of tenders for school building. I have asked my right hon. Friend the Secretary of State for Education and Science about it. He tells me that the local education authority has made no application to him for approval to these projects and, therefore, that they are not formally before him. I am sure that, if and when he receives a submission, he will give it the most careful consideration in the light of any substantial increase in the cost of the work.

As the education account is subject to district audit, excess spending resulting from the transfer of work from a direct works department to a private contractor at a higher price could be subject to objections by a ratepayer at audit. I cannot say whether the objection would be upheld or justified.

1 can well understand the very deep feeling of my hon. Friend about the fate of the civic centre. I know how hard he fought for it. He bullied me. He even ventured to bully my right hon. Friend to obtain loan sanction for it. Eventually, to my personal delight, we were able to agree to it.

Competitive tenders were obtained, of which the lowest was from the district labour organisation. We issued loan sanction in instalments on the basis of that tender. We have had no request from the city council to revise it. If my right hon. Friend found that the council was, of its own free will, proposing a change in the method of work which would add to the cost, I am sure that he would anxiously and carefully consider whether it would be right for him to issue loan sanction for the second instalment, which is due next April. This expenditure would not be subject to district audit. It would come under the responsibility of the council's own auditors. It would be possible, though it is not for me to say how probable, that if the change resulted in an increase in overall cost, it might be criticised at the annual audit.

My hon. Friend quoted from reports which had been made by the city treasurer to the council. I have no reason to question the accuracy of the quotations though, of course, my hon. Friend will understand that these are council documents and that the Department has no direct concern with them. In any event, the city treasurer is literally at the top of his profession. He is the current President of the Institute of Municipal Treasurers and Accountants. It would be impertinent of me to emphasise his standing and authority in these matters. I will only say that, if my hon. Friend is correct, it seems strangely odd that the council apparently should prefer to take their financial advice from Aims of Industry.

In conclusion, I would only say that I speak as an hon. Member representing a Lancashire constituency. My right hon. Friend, too, represents a Lancashire constituency. Manchester is a very great city. The City Council has a worldwide reputation. Many who, like myself, have written and lectured on local government have, in our discussions and readings, learned from the wisdom of the first Lord Simon of Wythenshawe. The title of one of his great books is "The City Council from Within", and it portrays the grandeur, fascination and pride of the great city of Lancashire in local government. He was an outstanding figure in local government in Manchester. I would be sad to think that any change in the standard of local government should in any way sully the reputation of that great city.

10.25 p.m.

Mr. Joseph Ashton (Bassetlaw)

My hon. Friend mentioned Aims of Industry. We are familiar in this Chamber with the pamphlets written by Mr. Hoppie. I hope that Mr. Hoppie will obtain a copy of HANSARD for this evening and include it in his next pamphlet when he ventures again into stating the good and bad things about this type of labour.

I should like to bring one or two points to the attention of my hon. Friend concerning the advantages and disadvantages of tendering by direct labour departments. Although it can be said that direct labour departments, such as Manchester, do not have to make a profit, there is an inbuilt loss in many aspects of their work. A private enterprise firm buying building materials, if it pays within seven days, can in many cases obtain a discount of up to 2½ per cent. Unfortunately, in local government, where payment has to be made through the city treasurer's department, it is usually impossible to get the bills for materials through the respective departments of the town hall within seven days.

In many cases the loss of this 2½ per cent. has to be taken into account when tendering. In other instances, public works direct labour departments are governed by the N.J.I.C. scales. In many cases they have to pay wage rates and sickness benefits plus pension benefits to their manual employees, which is far from prevalent in the building industry.

Mr. Speaker

Order. With respect, this is the case for direct labour. The hon. Member must say what he wants the Minister to do about it.

Mr. Ashton

The Minister was asked to instigate an inquiry, which he said the local authority was prepared to do. I was merely making remarks concerning Aims of Industry and imparting some information, through the Minister, for their attention when they write their next pamphlets. We all welcome the Committee which has been set up by my right hon. Friend the Member for Bermondsey (Mr. Mellish), and an opportunity to debate—

Mr. MacColl

I realise that it is confusing to have so many right hon. Friends, but that was my right hon. Friend the Minister.

Mr. Ashton

I thank my hon. Friend. We will welcome an opportunity to debate this report immediately it is produced

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Ten o'clock.