HC Deb 15 October 1975 vol 897 cc1338-9
3. Mr. Sainsbury

asked the Secretary of State for the Environment whether he will recommend local authorities to increase the proportion of competitive tenders for major works in direct labour departments, in the light of the report from the Chartered Institute of Public Finance Accountancy.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong)

The efficiency of direct labour departments should be tested in competition with private contractors. My hon. Friend the Minister for Housing and Construction announced yesterday that we are establishing a departmental working group on the organisation and operation of local authority direct labour departments. It will consider the report of the Chartered Institute of Public Finance and Accountancy.

Mr. Sainsbury

Does the Minister accept that it is the ratepayers or taxpayers who pay if the use of direct labour departments results in increased costs? Does he not, therefore, agree that there is no need to delay the implementation of the proposals in the report by appointing an inter-departmental working party?

Mr. Armstrong

My Department has always ensured that there has been competition. Direct labour departments have operated in the competitive sector and, indeed, saved ratepayers a great deal of money.

Mr. Loyden

Is my hon. Friend aware that in Liverpool, at present, there is a vast amount of overspending on a number of sites which have been in the control of private enterprises and not of direct works departments? Is he also aware that the direct works department in Liverpool has accomplished much for the building programme of Liverpool, to the satisfaction of the authorities?

Mr. Armstrong

Yes, I accept what my hon. Friend said. We are anxious to see the maximum possible expansion of efficient direct labour departments.

Mr. Speed

Will the Minister say which of the main recommendations in the report he does not wholeheartedly endorse?

Mr. Armstrong

As the working group was set up only yesterday, the hon. Gentleman is expecting a lot when he asks me to comment.

Sir W. Elliott

rose—

Mr. Speed

On a point of order, Mr. Speaker. The Minister has not replied to my question.

Mr. Speaker

Order. That is not a point of order.

Sir W. Elliott

I am sure that the Minister is aware of the present high level of spare capacity in the building industry in the north-east of England. Therefore, will he use his maximum persuasion on local authorities in that region to put out major contracts for competitive tender?

Mr. Armstrong

I am aware of the situation. I visited both Newcastle and Sunderland during the recess. We are doing what we can to encourage an expansion of work, and it is being done in accordance with the guidelines, which insist on direct labour organisations competing with the private sector.