CONTRACTS OF LOCAL AUTHORITIES (Hansard, 19 June 1973)

§ Mr. William Baxter (West Stirlingshire)
I beg to move Amendment No. 87, in page 42, line 11, leave out from 'shall' to end of line 17 and insert: 'require that notice of the intention of the authority to enter into the contract shall be published and that tenders be invited from all reputable persons or firms willing to tender, and regulate the manner in which such notice shall be given and tenders invited, but may authorise the authority to exempt any contract from such provision when the authority resolve in a public meeting for special reasons stated in public that such exemption is justified'.

Hon. Members
Hear, hear.

§ Mr. Baxter
I am gratified at the acclamation that the calling of my name seems to have aroused in the House. It is good to be back, especially when the weather is not as good as it was yesterday.
Nothing is more important in this Bill than to try to devise ways and means of ensuring that, when contracts are entered into, they are seen to be just, fair and equitable. One thing that I regret about the clause as it stands is that its phraseology and its intent are not unlike those in the 1929 Local Government Act. We all know from recent incidents and cases how that has affected the fabric of local government, and has even percolated into the heart of Government in this Parliament. There is therefore a need for some safeguard, and the amendment seeks to provide it.
The amendment is simple and much more applicable than the provision proposed by the Government. It would give an instruction to the local authorities to see that all their contracts were given to bona fide firms or individuals supplying the multifarious goods or services required, and to see that all people of good standing in business were given a fair 419 chance to tender for any contract which might be available. No one, I make bold to say, can dispute the correctness of that. But what we have found in the past, and will find in the future if Clause 81 remains unchanged, is that, with selective tendering, shady practice, as it could be called, does occur. I need only mention the Poulson case. From reading the Sunday Times one sees clearly that when a person is nominated for a contract it can give rise to great irregularities.
I believe that the lowering of the standards in local and national government stems from the time when it became the accepted fashion in local government administration to select firms and individuals to carry out contractual work. My experience leads me without doubt to that conclusion. So it behoves all of us to realise the picture as we have seen it and to try and draw reasonable and sensible conclusions from our experience.
This is why I endeavour in my amendment to have open government as such, so that each person or firm will have the same rights and opportunity to tender for the goods and services of the local authorities. If perchance there should be an occasion, as could well happen, when it is necessary to nominate a contractor or firm to carry out special work, the reasons for so doing should be made abundantly clear in a public meeting of the local authority so that the Press can adequately report the reasons to the public at large. Again I would challenge any hon. Member to question the correctness and wisdom of such action.
Because of the size and nature of the work they will be carrying out, the new local authorities will be issuing contracts worth millions of pounds, and in order to make it abundantly clear, and be seen to make it abundantly clear, to the public at large that no underhand work is involved, it is necessary to alter Clause 81.
We all know that the temptations are great and varied. This implies, to my mind at least, that the possibilities of irregularities creeping in could be very evident and could become rampant and be difficult for members and officials of local authorities to resist. Looking at 420 the past problems of graft, there may not be many who can say that it is not extensive. We have all been astonished and dismayed by what has been revealed within the last week or so—that it has become accepted practice in some local authorities to take money to further the interest of a firm or individual. If this became accepted as good practice, the very fabric of our nation could be undermined. This terrible cancer of graft and corruption could destroy the very nation we are proud to serve.
I am not offering a solution for all the problems which confront us, but I say to the right hon. Gentleman that methods must be found to safeguard not only the individuals on local authorities who have been, are and will be incorruptible, but those people, perhaps more than we know, who fall to temptation.
Yesterday, I sought to introduce new Clause 4—Commissioner for Local Authority Investigation—but it was not selected. I sought to introduce it because it is interwoven with this whole question. Anyone who has had any experience of local and parliamentary government must know that many people from time to time come to one telling of certain irregularities that they know or have heard about. I have had that experience. A previous Under-Secretary of State for Scotland in the Labour Government knows the source from which that information came, but there was nothing we could do about it. Despite his exalted position then as Under-Secretary of State for Scotland, and despite my own efforts as what I have always been and am likely to remain, a humble back bencher, nothing could be done, notwithstanding the magnitude of the irregularities which were reported to us.

§ Mr. George Lawson (Motherwell)
My hon. Friend described himself as a "humble" back bencher. Surely he does not want us to accept that this is what he thinks of himself.

§ Mr. Speaker
Order. I do not think that this is relevant to the amendment.

§ Mr. Baxter
If the virtue of humility should rest upon the shoulders of my hon. Friends it would do them a power of good. The egotistical nature of hon. Members often appals me. Since I have 421 been here, the further they have risen in this House to positions of responsibility, the more disturbed I have been to see their action.

§ Dr. M. S. Miller (Glasgow, Kelvingrove)
Here endeth the lesson.

§ Mr. Baxter
Be that as it may. This is a very serious question. We are discussing the reorganisation of local government, but the Bill is only redrawing boundaries and moving people into one area or another. We are not fundamentally changing local government but are merely making it larger and not so local. My amendment departs fundamentally from past practice and would bring to the great mass of the people open contracting and open government which would be at least some safeguard. although small, against temptation. That is the simple fact.
It is with the greatest degree of sorrow that I move the amendment. It was with great worry and consternation that I sought to add new Clause 4 to the Bill. It is my sincere belief that if we do not add such a provision as I suggest, we may see something that no one in their sober senses or on the basis of their Christian faith would want to have in this country—destruction by the rot of graft and deceit.

§ Mr. Edward Taylor (Glasgow, Cathcart)
The hon. Member for West Stirlineshire (Mr. Baxter) raised a very important matter and dealt with it excellently. However I wish merely to ask two brief questions about the amendment.
It appears that the hon. Gentleman proposes that the principle of selective tendering should be dispensed with unless there is a special reason for retaining it. But what are the implications for the present selective tendering system and the obligations that we have accepted in the Common Market? It has been made clear to us under a directive of the Common Market that contracts involving sums above a certain figure have to be advertised in the digests or bulletins of the European Communities and that all contacting firms in the Community must be given an opportunity to tender.
Will it be possible for a local authority or public body in Britain to carry on with the system of selective tendering for a large contract, bat, in view of our 422 obligation under Common Market rules to ensure that contracts are advertised, that contracting firms throughout the rest of the Community are given a chance to tender? It would be utterly unacceptable if a situation arose in which a public body or a town, county or regional council in Britain said that it was specifying three firms in Great Britain from which it was prepared to consider tenders when the whole range of firms in the other countries of the Common Market were being given an opportunity to tender.
On this amendment, will it be possible to continue with selective tendering in view of this obligation which requires contracts to be advertised throughout the Common Market?
My second question is whether anything can be done about the growing practice in public corporations and in some councils to accept tenders from firms which at the time may be the lowest tenders and accepted as such and then, as often happens, the successful firms say that they have found difficulties of which they were not aware, such as subsidence or faulty ground, and they claim another £200,000 or £300,000. In my own experience as a councillor I have known of such cases. It is always very unfair to those firms which may have submitted larger tenders in the full knowledge that this might happen.
When a fixed-price contract or a contract with escalation is arrived at, if there is a variation in terms because of factors which become clear to the contractor after the job has started, it is very important that there should be some procedure whereby each additional sum has to be authorised by a central body.
In major contracts, by and large it is the case that if there is an additional borrowing requirement the approval of the Secretary of State is necessary. However, in contracts for hospital building let by public bodies or in contracts for schools let by local authorities there is a practice where a contractor can put in a tender which is the lowest one at the time and, having got it, he reports certain adverse factors to the body ordering the contract pointing out that an additional sum is required because he has discovered that the job will be more difficult than was originally thought. Is it possible for any variations 423 in contracts to be approved by a central body in all cases?
I hope that I shall receive answers to those two questions.

§ Mr. Hugh D. Brown (Glasgow, Provan)
When we consider an amendment of this kind, we can adopt one of two courses. We can either ignore it or deal with it.
I do not believe that the Opposition should allow to go unchallenged some of the remarks made by my hon. Friend the Member for West Stirlingshire (Mr. Baxter). I do not presume to speak on behalf of the many hundreds of Labour councillors in Scotland, but I resent my hon. Friend's soft approach when he uses such expressions as …the terrible cancer of graft and corruption. A phrase of that kind is always the headline. However, the small print which follows is: Of course, it may apply only to a few. I object to the use of this technique. Whether we like it or not, its general message is a smear on the overwhelming majority of people in public life who are as straight as my hon. Friend claims to be.
We have to face these matters and to look at existing local authority procedures when considering whether this amendment is appropriate or whether attention should be drawn in other ways to the provisions already in the clause which seem to place responsibility fairly and squarely on local authorities to evolve their own standing orders to safeguard the public interest and the interests of all commercial firms which deal with local authorities.
I appreciate that this is a sensitive subject. However, the Opposition would be failing in their duty if they did not speak up on behalf of the overwhelming majority of Labour councillors up and down the country who do a very good job in difficult circumstances where it is the easiest thing in the world to take away their character and reputation quite unjustifiably and without any evidence.
I have always reacted strongly to smear tactics of the kind used by too many people who ought to know better, especially when they are themselves in business. My understanding of local 424 authorities is that almost every commodity from a bar of soap to a contract for a motorway or express way running into millions of pounds is advertised and tenders are invited. I am not selling anything to a local authoritly, but my understanding is that almost every contract is advertised somewhere in a journal of which anyone interested in putting in a tender is aware when it is being let.

§ Mr. Russell Johnston (Inverness)
indicated dissent—

§ Mr. Brown
Apparently the hon. Member for Inverness (Mr. Russell Johnston) disagrees. I presume that any information to the contrary that he has comes as a result of his experience of the Royal Commission—

§ Mr. Johnston
It is not a matter of my experience on the Royal Commission. I have experience of my own local authority. When a road is to be constructed, the authority limits tenders according to the selective system referred to by the hon. Member for West Stirlingshire (Mr. Baxter). It means that certain firms do not get an opportunity to tender. That is a fact of life.

§ Mr. Brown
I was about to come to the system of selective tendering, which is slightly different. Although it is common practice in general terms for goods and services required by a local authority, on the construction side there are well-known and special difficulties. It may be that hon. Members thought that I was discussing construction contracts, which seem to cause most of the trouble. However in general, to the best of my knowledge all the goods and services requirements of local authorities are advertised, be they for fish, school meals or anything else. That is not to say that the system is perfect and cannot be improved. But on the face of it, apparently it works reasonably well.
Where is this area in which, according to my hon. Friend the Member for West Stirlingshire, there is this graft and corruption? These are serious allegations to make. I served for 10 years on a local authority and for three years as a magistrate at a time when there were, perhaps, more licences granted in the city of Glasgow, for obvious reasons, than in any other period. I resented people who made the remark, "They are all at it."

§ Mr. Baxter
You have said some rather harsh words. I will not go into detail on them but if my new Clause 4 had your support, you did not append your name to it. One of the problems is—

§ Mr. Speaker
Order. The hon. Member must address the Chair.

§ Mr. Baxter
If my hon. Friend had supported that clause he would have noticed that one of the points which I put down was that the Commissioner should be under no legal or other obligation to divulge the name of the informant. This, in my opinion, is the key to the solution of the problem.

§ Mr. Brown
I am aware of the fact that we are not discussing new Clause 4 and that you will rule me out of order, Mr. Speaker, if I speak on it. My hon. Friend did not ask any member of the Committee to promote this on his behalf. It appears that he enjoys coming here in the guise of being discriminated against because you, Mr. Speaker, did not select his new clause.

§ Mr. Baxter
That remark was uncalled for and my hon. Friend should be asked to withdraw. He has no knowledge of my point of view about you not selecting my new clause, Mr. Speaker.

§ Mr. Speaker
Order. We had better leave new Clause 4 where it is and proceed with this amendment.

§ Mr. Brown
It so happens that I do not agree with a word of new Clause 4.
I wish to refer to the more sensitive area of the building and construction industry. This involves enormous sums of money with contracts running into millions of pounds. It is a difficult area and there are some firms which seem to do well.
There is tremendous responsibility on the officials in a department because there are specialist areas. I may think that the firms of my hon. Friend the Member for West Stirlingshire could build anything but I would probably be wrong. When it comes to specialist work, such as roads or bridges or similar projects, I am not in a position as a layman to know, nor am I expected to know, the technicalities involved. The attack, if it is an attack, by my hon. Friend the Member 426 for West Stirlingshire is on the officials and on the advice which they give. Much must depend on them, as well as on the Scottish Office, since most big contracts require the approval of the Scottish Office. No doubt the Minister can answer that point.
The advice is given with the best intentions, given that the officials are acting in the interest of their clients, namely the public. If we disbelieve that, and if it is suggested that the officials are deliberately giving wrong information, or presenting information in such a way, because of their technical knowledge and contacts, that they are misleading elected representatives, then that is a serious charge. This is the point to which my hon. Friend the Member for West Stirlingshire should direct his attention.
Perhaps I am naive, but to work on the assumption that all officials are dishonest and that a system has to be evolved to catch them out is wrong. I prefer to work on the assumption that people are basically honest. It is only when I am let down that I look around to see where, as a result of my experience, I can make some improvement.

§ Mr. Russell Johnston
Would the hon. Gentleman not accept that it is possible that advantage could be given to the established firm, not for anything to do with corruption but simply because a restricted list has to be produced and this gives an in-built advantage to the established firm, thus creating a disadvantage for someone trying to get in?

§ Mr. Brown
I agree. There are two reasons for that. Sometimes officials in local authorities are grossly underpaid in relation to the people with whom they are dealing outside. This is something which we in public life have never faced up to. Therefore some officials, perhaps not as good as their opposite numbers outside, because of the resources factor, tend to play safe and to go for the firm that has earned a reputation, whatever that might be, for reliable work in a specialised area. It is an understandable approach. I do not say that it is right, but it happens.
Consequently there is the impression that some of the smaller firms, who might even be better and well able to cope with the work, are excluded. I have sat on 427 local authority committees—and in Glasgow we are dealing with large housing contracts—where, quite rightly, the City Architect would say, "Firms X, Y and Z have far too much work on their plate. I recommend that you should go for firms, A. B and C." Is that right or wrong? Is that using undue influence? These are the facts of life which people making the decisions have to face.
Of course, there are regular requests from firms asking to be put on a list, to be considered for local authority work. I am challenging not just my hon. Friend for West Stirlingshire, but any hon. Member who thinks that he might have a bright idea about how easy it is to overcome some of the difficulties confronting people in local government, given the assumption that they are basically honest.

§ Dr. Miller
Would my hon. Friend also accept that since the construction industry heads the list of failures from a Scottish and a national point of view it is the duty of the official to try to make an assessment on this point when he advises the council?

§ Mr. Brown
There is an involved procedure under which firms have to give assurances that they have the financial responsibility and viability to fulfil all foreseeable demands likely to be brought about by mishaps that can befall a firm, in the light of some of the things that the hon. Member for Glasgow, Cathcart (Mr. Edward Taylor) mentioned. Anyone who knows anything about the building industry knows that the word will go around that this and that firm is running into difficulties because of the nature of the contracts it has taken on. My hon. Friend the Member for Glasgow, Kelvingrove (Dr. Miller) is right. These are some of the difficulties which give rise to advice from officials which on the face of it could be extremely damaging for some of the firms if it were published.
The hon. Member for West Stirling-shire should recognise, when he is asking in his amendment for all these things to be published, that there are some things which it is not fair, particularly to a firm, to make public. I could not let the amendment pass without making some comments. I do not think that it is practical. Above all I resent some of the insinuation that seems to lie behind its thinking.

§ Mr. J. Grimond (Orkney and Shetland)
Although it is perfectly true that the great bulk of local councillors and their officials are dedicated men of impeccable honesty it is none the less equally true at the moment that in certain limited areas of the country some anxiety is being felt, not only about local government but about the whole relationship of government to big business. It is not unreasonable that in a Bill of this kind we should spend a minute or two considering the matter.
Certainly all government is becoming very big business as the Old Testament prophet from West Stirlingshire (Mr. Baxter) told us. This means that there is an obligation on this House to lay down procedures and to ensure that they are workable and reasonable, even if there is a widespread feeling that nevertheless, on the whole, local government is honest. Thirdly, there is this important area which I was glad to hear the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) mention of the position of officials in local government.
It is true that compared with many people they are much underpaid. In my constituency there are local officials dealing with some of the biggest companies in the world. This raises problems for them. There is a tendency for officials sometimes to play safe and to call in advisers. In many cases this is justified but sometimes it raises difficulties and even suspicions as to the basis on which the advisers are working.
As I understand it, Amendment No. 62 covers a narrow point. It is designed to stiffen Clause 81. Essentially it deals only with selective tendering. There are many other aspects. There is the question of granting licences and planning permissions, which can make enormous differences to fortunes. There are those matters to which my hon. Friend the Member for Inverness (Mr. Russell Johnson) referred. This deals only with a relatively narrow band.
The clause lays down certain procedures. Selective tendering is important and the clause does not exclude it. It says that if there is to be selective tendering a case must be made out and published. It would be good for the House if we heard from the Government whether they are satisfied with their general procedures and what objection they have to this procedure.
429 Of course no procedure will guarantee us against dishonesty. None of the procedures here as I understand them will have any effect on such cases of dishonesty as have come to our notice. That does not exonerate us from laying down procedures and making them as wide as we can, especially at this point.
While I have great doubts about selective tendering, certainly as a general principle, I would like to hear very much from the Government whether they think that this amendment will strengthen and clarify procedures and, if they are defending selective tendering, other than in special cases which I wholly accept and which are exempted by the amendment, what are their reasons for feeling that the widest possible tendering could not be accepted?

§ Mr. Younger
I ought first of all to say two things about the subject of graft and corruption which the hon. Member for West Stirlingshire (Mr. Baxter) mentioned and which was taken up by the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown). There are, I feel, two things which the House would like said at this point. First, as was said yesterday, we should be very careful that in quite rightly discussing these important matters we do not inadvertently give the impression, damaging to many good and honest men and women in local government, that this is the norm, because it is not so. We should make that point clear.

§ Mr. Baxter
I never said that it was.

§ Mr. Younger
I was not suggesting that the hon. Member did say that. I ask him to believe that. I was merely saying that when we discuss these matters we should make it clear that there is a balance we ought to preserve.
The second thing I wish to say is that everyone in this House would, I am sure, at all times want to take any steps he could reasonably take to ensure that we reduce any such evils as have been outlined to their absolute minimum, and if possible eliminate them altogether. I think those two things have to be said before we start.
The solution to these wide, very important and worrying problems which the hon. Gentleman outlined in his amendment is basically to abolish the selective 430 tendering procedure. This is a perfectly fair point of view and I know that the hon. Gentleman, with his wide experience in these matters both personally and as a Member of Parliament, feels very strongly about it.
I should perhaps outline briefly to the House why these procedures take place and, since the right hon. Member for Orkney and Shetland (Mr. Grimond) asked me to do so, why I do not think that, whatever other effects it would have, the suggestion of the hon. Member for West Stirlingshire would in fact reduce to any appreciable extent any corruption which he may be worried about.
I think it would create major difficulties in the smooth, efficient and convenient running of local authority tendering procedures for the many large and important contracts which they undertake. It is not necessary to take long about this because the principles of the matter are quite clear. Perhaps we can just look briefly at the selective tendering procedure from two points of view—first, from the point of view of contractors who may be engaged in this type of work and who may wish to tender for such work from local authorities; and secondly, from the point of view of local authorities themselves.
As regards the position of contractors, I absolutely accept that, particularly for contractors who are trying to break into the field of local authority contract work, it can make some difficulties, as the hon. Member for Inverness (Mr. Russell Johnston) said a few moments ago, because it is that much more difficult to break into a new field if there is selective tendering. But I think it must also be accepted that if the selective tendering procedure became very exceptional, as the hon. Gentleman would have it by his amendment—and the physical problems of the procedure he has outlined would, in my opinion, make it very exceptional indeed—then it would be found that open tendering would be very much the norm and the vast majority of contracts would be on open tender.
I suggest that contractors and people involved in these fields would find that this was a major administrative burden and a major expense for them, because they would be doing all the work of tendering and scheduling for a large number of contracts, many of which they would 431 have little chance of getting. I do not pretend that this is the be-all and end-all of the argument, but I suggest that one of the effects would be to create very much bigger costs and difficulties for contractors generally in trying to get into this field.

§ Mr. Baxter
I have a personal acquaintance with this as I am the managing director of a firm, and the fact of the matter is that no obligation rests upon a firm or its personnel to ask to tender if they do not wish to do so. If they ask for the opportunity to tender and get the schedule of quantities, be it for building or for the supply of materials, they must feel they are in a position to supply those services. So the question whether the firm would have too much work to do in filling up the schedules, and so on, does not arise.

§ Mr. Younger
I absolutely accept that point, but I think the hon. Gentleman would agree that if when tendering for major contracts one were doing so in company with 10 or 15 other firms, one would in the long run incur very much greater expense and achieve fewer successes than if one were tendering Against perhaps five or six other firms. I make that point as one that must be borne in mind.
Let us look for a moment at this procedure from the point of view of the local authority. I quite accept that, if the procedure suggested by the hon. Gentleman were to be a great improvement and advance and very much desired for other reasons, the administrative difficulties would presumably be set aside. We would not worry about them. But I would make the point in passing that the procedure which he is outlining here would make matters more difficult for local authorities in that they would have to go through a more cumbersome procedure and assess and evaluate a larger number of tenders, and that this would create more costs and more difficulties for them.
But the real point is that surely, from a local authority point of view, there has to be selection at some point. The only question is whether the authority selects at the tendering stage by selecting a number of firms to tender and choosing from among them, or whether in an open 432 tender it invites all and sundry to tender, in which case it still has to select because it does not necessarily follow, if all and sundry are invited to tender, that the lowest tender will be the one that is accepted, since there is the question not only of the lowest price but also of whether the firm has the resources and the ability to carry out the work.
Of course, there are many cases in which we all know that the firm concerned will have the resources to carry out the work, but there are also cases in which the firm might consider that it had the resources but the local authority might feel that it had not—and might be right, because there are cases, as many of us know, in which a firm tenders, feeling it can undertake the work, gets the contract and then falls down on the job because it is too big—

§ Mr. Baxter
It is not unusual for firms to get a job and then fall down on it with the present method of tendering, but there is an easy way of overcoming that difficulty. There is the method of asking bona fide firms to produce a bond of fidelity showing that they are capable of carrying out the job. Secondly, there is the method of asking for the accountant's report of the financial standing of the firm. It is quite within the wit and ability of the local authority when firms have asked for an opportunity of tendering to decide whether they have the personnel to do the job. I hope the hon. Gentleman will remember that local firms, sometimes quite large firms, have certain obligations to the community as regards employing apprentices, and when the selecting is done at the present time the employment situation for local boys and girls, particularly boys, is being undermined, because inevitably the large firms which are selected for the various jobs round and about Scotland are in all probability based in England. I hope the hon. Gentleman will devote some time to that point.

§ Mr. Younger
What the hon. Gentleman says is, of course, true but I think he will agree that it is not only a question of whether the firm concerned is financially competent to undertake the work. There are many cases in which the local authority has to assess whether 433 it is technically competent. There have been plenty of cases in our experience over the past 10 to 15 years of contracts being given to firms in perfectly good faith which they have turned out not to be able to do. I am not suggesting, of course, that the hon. Gentleman is involved in anything of this sort.

§ Mr. Baxter
This is not a personal question at all. It is of great importance to the whole of local government in Scotland. I direct the hon. Gentleman's attention to the fact that the largest firm which failed in Scotland recently was a firm that had been recommended to the local authorities by his own Department in Edinburgh to undertake certain contracts. If he goes to the registrar of companies and looks at its past balance sheets he will see that it never should have got the contracts for which his own Department recommended it.

§ Mr. Younger
I note what the hon. Gentleman says and I bow to his knowledge since he is a person who is involved in these matters. I am only trying to outline as briefly as possible some of the difficulties in what he is suggesting.

§ Mr. Tam Dalyell (West Lothian)
Is the Under-Secretary sure that the Scottish Office thinking is right on the issue of capability? May I remind him of the Edinburgh Opera House contract? It will be within his recollection that the Scottish Office argued that in the case of a particular firm it did not seem at one stage to have the capability—I am referring to the design firm—to do a particuar job. If it had had the capability then, by definition, it would have been extremely fair. Surely there is an argument for giving contracts to firms which are not carrying people they need not carry at a particular time. I have doubts about the question of capability and the whole philosophy behind it.

§ Mr. Younger
Those are considerations which have to be taken into account. I will not comment on the particular case that the hon. Gentleman mentioned, because it has not been my responsibility. No doubt he could investigate that directly if he wished.
434 I am not suggesting that there is no sense in the amendment that the hon. Member for West Stirlingshire has put before us. However, it is my duty to try to make clear why it is the Government's view that to make selective tendering rare or exceptional would not be in the best interests of either the firms involved or the local authorities.
I respect the hon. Gentleman's views that he has outlined on graft and corruption. However, I do not think that what he is suggesting would make any substantial difference to any of these problems. I do not think that the amendment would have the effect that the hon. Gentleman wishes. Indeed, it would create difficulties in the conduct of affairs when tendering for contracts.

§ Dr. Miller
I do not agree with the over-emphasis placed by my hon. Friend the Member for West Stirlingshire (Mr. Baxter) on graft and corruption, but I think that he has a point in asking the Under-Secretary to consider selective tendering in the light of Scottish firms compared with national firms. I hope that the hon. Gentleman will indicate that his Department is not militating in any way in favour of national firms because, as my hon. Friend said, this has an adverse effect on local employment, among other things.

§ Mr. Younger
It is not for me to say which firms my Department considers are good or bad. Within our many responsibilities for the Scottish economy we take into account the problems of Scottish firms and always try to do our best for them in the context of what we are doing.

§ Mr. Dalyell
It may be that we are polite when we do not mean it. I understand the hon. Gentleman to say that he respected the views of my hon. Friend the Member for West Stirlingshire (Mr. Baxter). Which of my hon. Friend's views does the Scottish Office respect? Was it in the context of what he said about graft and corruption or his real knowledge of the building industry? May we get that straight?

§ Mr. Younger
The hon. Gentleman and I have different conceptions of what is meant when one says that one respects the views of other hon. Members. I hear many strange views expressed in this 435 House, with many of which I profoundly disagree.

§ Mr. Norman Buchan (Renfrew, West)
Then the hon. Gentleman should say so.

§ Mr. Younger
But I respect the right of hon. Members, even those who in my view talk complete nonsense—I am not referring to anyone who has spoken in the debate—to make known their views. That is what I meant. I hope that is clear.
I was asked by my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor) to answer two direct questions. The first referred to the effect of EEC directives on these matters. The EEC system of restricted tendering, as it is called, which will become operative here on 1st July 1973, is similar to the system of selective tendering that we are now operating. It will require the advertisement of all works contracts over £415,000 in value, but the selection of those to be invited to tender will still rest with the awarding body—in this instance, the local authority.

§ Mr. Edward Taylor
Does my hon. Friend mean that public authorities in Britain will choose perhaps three firms to tender for a job and at the same time will have to publish every contract in the Journal of the European Economic Communities? Surely that is "nutty".

§ Mr. Younger
We are bound to advertise that a contract above a certain amount is being put out to tender. Thereafter, under the normal selective tendering procedure, a certain number of firms—not necessarily three—will be invited to tender. It is similar to our procedure. It should not present any difficulties to us.
My hon. Friend asked about circumstances changing during the course of a contract and extra finance being requested by the contractor. This can happen on any contract, not just a local authority contract. Usually contracts provide sums for contingencies to take account of unforeseen circumstances, such as difficult subsoil conditions, mentioned by one hon. Member. Such sums are not paid unless unforeseen circumstances arise. We cannot lay down hard-and-fast rules on these matters. Local authorities and other bodies must rely 436 on advice from their professional advisers to make sure that the original tenders are absolutely fair one with another. Thereafter, snags or difficulties which may arise must be dealt with as they occur.
I suggest that the House should not accept the amendment. I recognise that there is some public concern about the matter, but we should realise that the vast majority of work within local authorities is carried out in an upright, excellent and careful manner.

§ Mr. James Dempsey (Coatbridge and Airdrie)
I should like to refer to one point that the Under-Secretary of State did not mention. It seems that we are debating the principle not so much of selective tendering as of the nominated contractor versus the competitive contractor. This appears to be the issue under consideration.
Frankly, I am at a loss to see why we should abolish the one and not the other. Circumstances arise in which I concede that it is desirable to have a nominated contractor. But these circumstances are being generalised in many respects. In consequence, competition is slowly fading from public works programmes, especially in my part of the country.
Only a few years ago I criticised my colleagues, when they were in Government, because three colleges of education had been built and not one competitive tender was advertised for. As a matter of fact, an English firm was seconded to build those colleges. One was built in Hamilton, in the centre of Lanarkshire, where there was and is high unemployment. Yet no construction firm in Lanarkshire was given an opportunity to tender for those contracts. I thought that not only unwise but wrong, and I said so.
As a local councillor I have a great deal of experience of contracting, although I do not have the practical knowledge of my hon. Friend the Member for West Stirlingshire (Mr. Baxter). He is a first-class practical man on this subject and I always pay close attention to his views.
There is a tendency among some local authorities and, unfortunately, some Government Departments—I am criticising not only the Scottish Office, but other Departments—to accept nominated tenders when competition should be the order of the day.
437 Recently my local trades council adopted a resolution of protest at a decision by the education authority to go all out for a nominated tender by a firm in the East of Scotland, thereby denying local firms in the County of Lanarkshire the right to compete for that contract by issuing schedules of quantities and tendering in the hope that one of them might get the job. The complaint of my trades council was that my area had the second highest unemployment rate on the mainland of Scotland. We have some of the most reputable construction firms in the United Kingdom, yet not one of them was given an opportunity by the education authority to tender for a new comprehensive school. I am pleased to say that, so far, the Scottish Office has not decided this issue. At least the Scottish Office has been acquainted with the feelings of my trades council and myself about this situation.
6.30 p.m.
In the light of all the circumstances, when urgency is not the keynote on this particular school, I hope that the Minister and the Department concerned will take the wise decision that a contract of that nature, valued at about £1½ million, should go to competitive tender.
I take this opportunity of expressing that point of view because the building industry—management, employees and local trade unionists—is very much concerned with this sort of development. I recognise that there will be exceptions when nominated contracts will be regarded as wise and judicious temporary expedients. I shall not criticise the Minister when he adopts such tendering on those grounds, but it should be kept to a minimum, and should, where possible, be avoided altogether.
We are all human, and suffer from the same human feelings. We all have blue-eyed darlings. We have them inside and outside Parliament, in business and industry, and in every aspect of community life. If we did not, we should not be human. It is only fair, therefore, that we should protect individuals from some of the emotional qualities. I am not speaking of irregularities, or alleging any misdemeanour on the part of individuals, but not everyone is a saint in this life. There are also sinners.

§ Mr. John Smith (Lanarkshire, North)
And those in between.

§ Mr. Dempsey
It is a free country. When the minister met the old tramp the bottom of whose can had fallen out when he was boiling his tea, the old tramp was indulging in an exercise of profanity. The minister said, "If one kneels down and says, 'Our Father', everything will come all right." The old tramp said, "It is all right for you, but it is every man to his own trade." We are dealing with our trade here, which is business, and it must be scrupulous business. The Under-Secretary is a man of great integrity and would stand for nothing but scrupulous business methods.
I want to influence the Minister towards the belief that nominated contracts should be kept to the bare minimum, and awarded only where unavoidable and judicious in the interests of urgency or other specialised circumstances. The general rule should be competition, to ensure that all those who pay rates and taxes should have the right to tender for a contract, hoping that they will get it, not only to maintain and extend their business but, more important, to provide work in areas of high unemployment.

§ Mr. Dalyell
I should like to express a taste for Ministers saying exactly what they mean. We heard the Under-Secretary say clearly that he respected the views of my hon. Friend the Member for West Stirlingshire (Mr. Baxter). It seemed to be a comprehensive respect. I understood the Under-Secretary to say, when challenged, that much of what my hon. Friend was saying was nonsense. If the Under-Secretary respects nonsense, I invite him to say precisely what he means.
There are far too many allegations going around which bring into disrepute with very little evidence, and often with no evidence, people who work hard on councils and in public life. It is about time that a number of people were counted on this matter. It is about time that they asked precisely where the Government stand on this matter. The Scottish Office must have a view. It may be that I have misinterpreted the Minister, but we are entitled to invite him to say clearly and unequivocally what he thinks of the views expressed by my hon. Friend. This is important to many people who serve in public life very well.

§ Mr. Ross
I welcome back my hon. Friend the Member for West Stirlingshire (Mr. Baxter). I hope that he will remain with us during the long hours of the sitting upon which we have embarked. But if my hon. Friend is to persevere only in relation to the success of one effort, and is to let every other effort go, he will not be doing himself justice. We regretted yesterday that my hon. Friend was not present, because we touched upon this subject in his absence when we dealt with the question of trying to prevent corruption by laying down certain regulations in respect of the interests of members of local authorities.
The concentration is always on the member of the local authority. But what about the firm which corrupts the individual? That is just as important. I am sorry that this gets far too little attention. There would be no corruption if there was no corruptor. From that point of view we should have welcomed the presence of my hon. Friend, who could have made a valuable contribution to the debate.
The clause deals with standing orders in respect of building contractors. May I ask the Under-Secretary wherein this departs from the present position? What is the present position? What powers has the Secretary of State in respect of contracts? What powers will he have in respect of contracts if my hon. Friend's amendment is accepted or if the clause goes through unamended? As far as I can see, we are dealing purely and simply with the standing orders of the local authority. After that it is entirely a matter for the local authority.

§ Mr. Baxter
Under the clause as it stands.

§ Mr. Ross
Under the clause as it stands and under the clause as my hon. Friend would have it amended.

§ Mr. Baxter
There is a fundamental difference here. As I have said, the powers of existing local authorities are much the same as those contained in the clause, but the amendment puts some obligations upon the new local authorities to do certain things which at present the old authorities are not compelled to do. In the clause they would not be compelled to do those things.

§ Mr. Ross
I shall come to some of those points, but as far as I can see even the powers laid down in the Bill do not rule out other standing orders, although I agree that they are not specified. It is difficult to say whether they should be compulsory. I have had quite a bit of experience of contracts, and contracts are not given purely and simply by local authorities. Certain major construction contracts in Scotland are given by the Scottish Office, for the building of major roads and such items.
I believe that selective tendering should be limited. My hon. Friend the Member for West Stirlingshire might have been interested in some of the cases which were brought to my notice. I believe that selective tendering should be limited to special cases of large jobs were the work is expensive—and some of them can run into hundreds of thousands of pounds. If a person or a firm has never done a job like it before—for example the building of the Erskine Bridge or the Forth Road Bridge—the question of open tendering becomes very difficult, particularly in view of what is dependent upon the work. Therefore, we have to be certain that the people who get the job have the experience and the reputation upon which confidence can be built.
In Scotland we have been most fortunate in that respect. It is not good enough merely to put into a clause that contracts must be awarded to firms of repute. Some firms of repute have suddenly gone wrong in the past, perhaps because of the tendering procedures they employed or because of their work load, or something else. Some of the contractors in Scotland for whom we have had the highest regard have been affected in this way. It may have been the unfortunate loss of their managing director, as in the case of a firm that became a national organisation and employed a considerable number of Scots in an area where employment was badly needed.
I therefore do not think that my hon. Friend would achieve what he wants, because the words "of repute" do not mean much and if they are written in they will carry their own problems with them.

§ Mr. Russell Johnston
I am sure the right hon. Gentleman will agree from his 441 experience as Secretary of State that it is not only the Erskine Bridges that are subject to selective tendering. It goes much further down the line, to smaller jobs like stretches of about a mile and a half of road. If the right hon. Gentleman is now taking the view that this should not be so and if he succeeded in influencing the Scottish Office that would represent a major change of established policy.

§ Mr. Ross
I do not think it is a long-established policy. It is an approved policy. I can tell the hon. Member for Inverness (Mr. Russell Johnston) of things that cost a lot less than a mile and a half of road. He should remember that one mile of dual carriageway can cost £1 million. If it is a tricky bit of road it could cost a lot more than that.
In certain spheres there is a limited number of people upon whom one can depend. Although I approve of selective tendering, there can be cases where the tenders are so selective that only one of those tendering can get the job.

§ Mr. Dempsey
One is nominated.

§ Mr. Ross
My hon. Friend should not interrupt me, because he is thinking what I have said. This has implications for those who tender as well as those who select. However, let us not give the impression that in Scotland graft is rampant and rife. I had few complaints in the six years when I was Secretary of State. There was plenty of rumours, but we should not seek to give the impression that our present local authorities and past generations of local authority men and women, whom most of us have known, are tainted in this way.
6.45 p.m.
Yesterday a man was sitting watching our proceedings. He was the convenor of the County of Ayr. He was a miner and he has been the county convenor for many years. He told me that the only time he met his wife was when he came in and she handed him his pit clothes, because he worked on the night shift at the pit. He went down the pit night after night, in spite of his onerous duties as convenor. There is a tendency to highlight what some believe is a cancerous growth of corruption, but all too often 442 we fail to tackle the real cause of the trouble.
More often the trouble is related to the unpleasant face of competition in the construction industry. I should like to see a survey into the extent to which public relations officers and offices of construction firms demonstrate far more competition in their generosity than the companies do in their prices. The question is how far they go and what line they use when seeking justifiably to interest people in projects. The trouble lies more within the firms. My hon. Friend the Member for West Stirlingshire is in this business and he knows that I should like to see voices raised within the construction industry to try to curtail this kind of activity. The industry could do it. My hon. Friend has influence there, which I hope he will be able to use.

§ Mr. Baxter
I have probably raised my voice louder than most people, and I have been despised for so doing, even in today's debate. I have done so on a number of occasions. The fact remains that pressure is brought to bear upon building firms to appoint public relations officers, very often from the membership of local authorities. I have had personal experience of that. The convenor of a county told me, "You will get no contracts or schedules in this county unless you have a public relations officer, and I am prepared to be that public relations officer."

§ Mr. Buchan
I wonder whether my hon. Friend the Member for West Stirlingshire (Mr. Baxter) agrees that some of the views being uttered tonight might be better listened to? Hon. Members have a good deal of influence and, as such, we should be prepared to disclose our financial interests if we take that view about local councils. Since the problem is being discussed by Scottish Labour Members of Parliament it would be useful to have an assurance from some of them that they will enter any disclosure of their interests totally and fully before they discuss the faults, or the alleged faults, of councillors.

§ Mr. Ross
If I pursued that line I should be ruled out of order, because we discussed that matter yesterday. If my hon. Friend the Member for West Stirlingshire was not here, that was not 443 my fault. The point that he made was a serious one.

§ Mr. Baxter
A very serious one indeed.

§ Mr. Ross
I deprecate this slur on all county convenors. If a person is not named, people start saying, "Was it so-and-so?" and everyone gets blamed. My hon. Friend has certain privileges in the House, and I regret that he did not go further. If he was not willing to be specific, I regret that he made the statement.
My hon. Friend the Member for Glasgow, Kelvingrove (Dr. Miller) said that in awarding contracts we should show preference for locally-employed labour. I doubt whether the amendment would do that.
I was interested in the reply that the hon. Member for Glasgow, Cathcart (Mr. Edward Taylor) received. When I was Secretary of State and we had a certain amount of unemployment in the North-East and elsewhere, the Scottish Agricultural Department decided to build a ship. I was informed by the Department that I had to advertise the project in the EFTA countries, and that I was tied by contract. I said that I would not do it. I can assure the House that a Scottish firm secured that contract. To put this kind of thing into standing orders and insist on open competition would tie the hands of the local authority. That is what the amendment implies. If open competition were insisted upon in this way, the results might well not be those that are desired.
In many ways I welcome the debate. I welcome the underplaying of the scare headlines about corruption in Scottish local authorities. We probably are purer than most other places, though there may be others just as pure outside Scotland.
I cannot recommend my hon. Friends to support the amendment. It is too cumbersome, and too restricting in ways where my hon. Friend would like it to widen the scope of the local authorities.