HC Deb 23 March 1976 vol 908 cc339-54

10.13 p.m.

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

I beg to move, That the Property Services Agency Supplies Trading Fund Order 1976, a draft of which was laid before this House on 20th February, be approved. This is the third Order to be moved under the Government Trading Funds Act 1973. The first two such Orders brought into operation the Royal Ordnance Factories Trading Fund and the Royal Mint Trading Fund. The present Order applies to what has been known as the Supplies Division of the Property Services Agency of the Department of the Environment and is now to be known as PSA Supplies. All three of these services were specifically named in the Act.

PSA Supplies is the part of the Property Services Agency which is responsible for furniture and much equipment used in Government buildings, and also for other services such as the Government Car Service, large engineering and vehicle workshops and the supply of liquid and solid heating fuel. Its main activity is procurement but where necessary it designs, purchases, supplies, installs and repairs the items it handles, and operates workshops, garages and stores. In 1976–77 its turnover will be about £167 million, but another £119 million will be spent by other bodies directly on buying items through Supplies Division's contract arrangements.

For some time it has been clear that, although PSA Supplies work is closely linked with that of the Agency, it takes the form of a separate trading activity which ought to be accounted for separately and operated on more commercial lines to achieve the best results both managerially and financially. In recognition of this, steps have been taken to separate PSA Supplies finances from those of the rest of the Agency, and it has been financed on its own Vote since 1973–74. At the same time the accounting system has been improved in order to provide a full flow of information for management and financial control and the establishment of costs and prices. It was recognised that the new accountability would work most satisfactorily if PSA Supplies was to be financed from a trading fund, and developments have from the outset been geared to this end.

Articles 1 and 3 provide that the Order and the fund shall come into operation on 1st April 1976. Article 2 defines the terms used in the Order. Article 4 sets a limit of £20 million on the amount which the fund may borrow over and above its originating debt without a further Order being made. This £20 million is designed mainly to cope with the need for working capital and allows for variations in the cash flow and the effects of inflation on running costs and the replacement of assets.

It is not possible to estimate precisely the values of PSA Supplies initial assets until after the trading fund comes into operation, because the total indebtedness will be affected by the value of the net current assets on 1st April. However, the total initial capital is estimated at present to be about £17.3 million. We have made available in the Vote Office a short memorandum setting out the estimated balance sheet as at 1st April 1976 so that hon. Members can have the figures before them.

A Treasury Minute is to be laid before the House shortly specifying as a financial objective that, taking one year with another, PSA Supplies should earn an average of not less than 10 per cent. on average net assets employed at current values. This target may be reset from time to time, but in any case the fund must operate so that it covers interest on its debts. The aim is to ensure that PSA Supplies prices cover the full economic cost of its operations. The financial objective will be only one test of success and will be supplemented by measurements of performance, including comparison of prices, where practicable, or of price movements with outside equivalents.

I hope that hon. Members will join me in wishing PSA Supplies success in its new form, and I commend this Order to the House.

10.17 p.m.

Mr. Michael Latham (Melton)

I am grateful to the Under-Secretary of State for describing the Order. I shall have a number of questions to ask him.

In discussing the Order we are dealing with a specific branch of the Property Services Agency. As the House will be aware, the PSA as a whole is now a very large and significant organisation. Thanks to the diligence of questioning by a number of my hon. Friends, especially the Members for Aylesbury (Mr. Raison), Eastbourne (Mr. Gow) and Croydon, North-West (Mr. Taylor), aided and abetted by myself from time to time, we have established a number of basic facts.

First, the PSA in this financial year as a whole will cost public funds £747 million, of which £100 million will be salaries and other administrative expenses. Secondly, the PSA employed 44,672 staff on 1st January 1976, which was slightly more than on 1st January 1975 but less than on 1st January 1974.

Some services are growing rapidly. For example, on 2nd February 1976 the Minister told me that there were then 490 architects in the PSA compared with 411 in June 1974. Eighteen months ago it had 770 chartered surveyors. The figure now is 859. The value of the new construction work which the PSA carried out in 1975 was £355 million, compared with £251 million in 1973. I shall make some brief comments later on the question of PSA office-letting, though it is not directly germane to the Order.

As the Under-Secretary of State said, within the PSA is the Supplies Division with which we are directly concerned tonight. That organisation employs 4,200 people. Its staff has remained fairly constant over the last few years. The cost to public funds this year will be £34 million compared with £21 million in 1973–74—an increase almost entirely accounted for by increased salaries and overheads.

As the House will be aware, the Order is made under Section 1(3) of the Government Trading Funds Act 1973. When my right hon. Friend the Member for Sidcup (Mr. Heath), as Prime Minister, first announced the setting up of the PSA in a Written Answer on 5th May 1972, he said: It is intended that wherever possible units of accounable management will be introduced."—[Official Report, 5th May 1972; Vol. 836, c. 217.] There were two antecedents behind the idea—the concept of accountable management in the Report of the Fulton Committee, which recommended this, and the Conservative Government's White Paper on the Reorganisation of Central Government which called for large functional departments containing within their accountable units of management.

The 1973 Act provided that a series of Crown services, including the Royal Ordnance factories and the Royal Mint, should be set up as separate trading funds if the House agreed to affirmative Resolutions. I understand that both organisations have been the subject of such Resolutions already.

To assist my understanding of the matter, I read through the parliamentry proceedings on the 1973 Act. It was an interesting experience. The Bill was first considered in a Second Reading Committee on 19th June 1973. It appears to have been rather a shambles, due partly to a strike at Her Majesty's Stationery Office and partly to the fact that some Members had been appointed to the Committee only the day before. A total of three Labour Members spoke, none from the Front Bench, and none either in favour or against the Bill.

The Committee stage on 3rd July 1973 was an absolute model of how not to explore a Bill in detail. It began at 10.30 a.m. and concluded at 10.32 that same morning. No amendments were moved and the only discussion that took place involved two Conservative Members, who thanked the Chairman for fulfilling his arduous duties so brilliantly. Not until the Report stage, and later in another place, was the Bill seriously discussed. Some 90 per cent. of the discussion revolved around the question whether the Ordnance Survey should become a trading fund, a proposal which was originally in the Bill but which the Conservative Government dropped by way of amendment in another place.

In so far as it was possible to discover the attitude in principle of the Labour Party to the Bill—a task that did not prove easy even from the most diligent study of Hansard—it seems to have been summed up by the comments of the hon. Member for Ashton-under-Lyne (Mr. Sheldon) who has now, of course, been translated to the Treasury as Financial Secretary, when he said on 23rd July 1973: If this is a device to ensure that these are units of accountable management left on their own with a greater independence, everybody will agree that this is a useful and worthwhile development."—[Official Report, 23rd July 1973; Vol. 860, c. 1321.] The principle of this Order must be acceptable to both sides of the House, since it was a Conservative Act and is now apparently acceptable to the Government. That is well and good, but it does not mean that the Order should be approved without the Minister answering questions about why this should be done now, how it will work and whether the staff of the PSA are able to cope with the new responsibilities.

The first and most vital question is the nature of parliamentary accountability. In the Second Reading debate on 19th June 1973, my hon. Friend the Member for St. Ives (Mr. Nott) said: While the trading fund organisations will no longer be directly financed from Votes … it would be open to the Expenditure Committee, or one of its sub-committees, to investigate them if it so wished."—[Official Report, 19th June 1973; Vol. 858, c. 630.] Section 4(6) of the Act specified that there are to be accounts, and that they will be presented before 30th November each year. However, Section 4(6)(a) states that the accounts should be in a form approved by the Treasury". I should like an assurance from the Minister that the accounts will be in plenty of detail and will clearly show the use of resources by the Supplies Division by way of a balance sheet and a profit and loss account, which will enable the sharp-eyed to calculate a return on capital employed. In particular, we want to know at what value the assets are being written into the new balance sheet. Will they be at market value or historic cost?

That brings me to my second question—namely, the return which is to be sought. When my hon. Friend the Member for St. Ives spoke in the Second Reading Committee on 19th June 1973, he said: In a case where the organisation is a sole supplier to the Government—and most of the organisations are primarily concerned with providing services and goods to the public sector—there will be a direct relationship between the trading fund and Government Departments. In this case, where we are talking about the fixing of financial targets and prices within the public sector, the principle to be observed will be that the price charged to other Government Departments should reflect the opportunity cost of using the capital. Currently that would mean that the goods sold would be priced in such a way that the organisation would obtain a return of 10 per cent. on the current value of the assets employed."—[Official Report, 19th June 1973; Vol. 858, cc. 630, 648–49.] The Minister in opening the debate tonight said that 10 per cent. was to be the figure on this occasion. I am doubtful about that. My hon. Friend put forward that figure two and a half years ago, and the rate of inflation has changed quite a bit since then. A figure of 10 per cent. as a target could arguably be said to be a net loss in real terms. We are talking about a pretty high outlay. As I understand it, the turnover of this company, if such it could be called, as measured by the value of services provided by the Supplies Division appears to have been £248 million in 1975–76 as compared with £132 million in 1973–74.

Here I ask for the Minister's help. Despite the virtual use of a wet towel, I have not been able to reconcile those figures, which the Minister gave me in a Written Answer on 5th March, with the figures in the Estimates, Class XIV, Vote 2, for 1975–76, which appear to show a net trading surplus of £. million on receipts of £124 million. Perhaps the Minister will therefore tell us what the return has been for each of the last three years and whether it has met any target at all, let alone a 10 per cent. target. It would also be helpful to know exactly what the total receipts from all sources of the Supplies Division have been, and what the actual profit or loss was for each year.

I also notice that a considerable proportion—£110 million out of £248 million this year—of the supplies provided by the Division goes to bodies other than the Government themselves. Is a separate rate of return calculated for them? If so, what is it?

I turn next to the management structure and the question of accountability within that structure. If the new Agency is to run like a business—and the House should remember that two very successful business men, Mr. Herbert Cruikshank, late of Bovis, and my hon. Friend the Member for Hove (Mr. Sainsbury), who is still very much of Sainsbury's, were greatly involved in establishing the PSA itself—it needs business thinking behind it. I note from replies to me that the Controller is to run it subject to the Chief Executive of the PSA. How much management independence will he have? Will he report direct to the Chief Executive? Will he have access to Ministers? Above all, how much discretion will he have over pricing policy? Will the Treasury determine this for him, or can he make the decisions himself in accordance with commercial considerations? If the prices are all to be determined for him, he is really not a manager at all.

Another question of detail that I should like to put to the Minister is this. Section 2(2) of the 1973 Act allows for the concept of public dividend capital to be used to match or provide the initial net assets of a trading fund rather than a loan from the National Loans Fund. My hon. Friend the Member for St. Ives made it clear on Second Reading in 1973 that whether or not this system would be used would depend on the circumstances of each individual case. Perhaps the Minister will tell us what is intended here.

That brings me to the major matter of commercial competence. In this regard I must say that I was very disturbed at the answer I received from the Minister for Housing and Construction on 5th March. I asked him, how many of the Supplies Division of the Property Services Agency have direct commercial experience in bulk purchasing on behalf of companies or other organisations outside the public service prior to joining the PSA; what proportion they represent of the total staff of the division, excluding secretarial and clerical grades; and what proposals he has for increasing the number with such experience if the division is set up as a separate trading fund. The hon. Gentleman replied, The purchasing staff are civil servants normally without outside experience but familiar with the Government procurement and contractual policies and practice to which they are required to adhere. Generally about 40 per cent. of the non-industrial staff of the Supplies Division possess professional or technical qualifications relevant to the services provided and have had commercial or industrial experience in their field. No change in method of recruitment is envisaged. If the 40 per cent. of the division with commercial experience are not actually doing the purchasing, as the Minister's reply implies—which is after all, the sharp end of the business—what are they doing? Are they administering, or making great strategic decisions? Where we need the practical experience is at the buying end, where the money actually goes. I hope that the Minister will look at the question of commercial expertise again.

It was because of the need for commercial expertise in bulk buying policy that I also asked the Minister, on 5th March, which outside organisations he consulted before he made the Order. The hon. Gentleman replied: No such consultation was necessary or called for under the Government Trading Funds Act 1973."—[Official Report, 5th March 1976; Vol. 906, c. 779.] That is literally true but it is a somewhat disingenuous answer when Section 1(4) of the Act specifically places a duty on the Minister to consult appropriate persons if he wants to set up a trading fund for any organisation other than funds listed in Section 1(3)(a) to (e) inclusive.

I should have thought it wise for the Minister to take wide soundings of experts in bulk purchasing before making this Order, even if he had no statutory duty to do so. All the wisdom of the universe does not reside in the PSA. The Comptroller and Auditor General has recently been critical of the Agency for spending £8.7 million on converting four newly-leased office buildings in London before it used them. We have clear evidence in the Public Expenditure White Paper that the amount of Government office space for which the Agency is directly responsible will rise from 59.5 million sq. ft. in 1975 to 65.9 million sq. ft. in 1979, an increase of nearly 7 million sq. ft. in about five years. In the development industry, the PSA is known as the developers' friend.

On the design side, the performance and morale of the PSA was so "mediocre", in the word of the Report, that the Matthew-Skillington Committee set up by my right hon. and learned Friend the Member for Hexham (Mr. Rippon), but only partly implemented by the present Government, recommended a complete shake-up of the system.

I mention these things only as examples of how the PSA is open to sharp criticism for its management and performance and why special care should be taken to ensure that the right degree of expertise is available for Supplies Division.

That brings me finally to the question of personal accountability. In a debate on 20th March 1974, initiated by my hon. Friend the Member for Croydon, North-West on the Consolidated Fund Bill, I suggested that accountability should involve the right to hire and fire. If it did not, because the people involved were all civil servants, it was not really accountability at all.

Dealing with this point on Second Reading on 19th June 1973, my hon. Friend the Member for St. Ives said: Within the trading funds, there will be a strong motivation to run each trading fund successfully and to some extent the promotion of those concerned with a particular trading fund will be very closely involved with the success which they make of their work. They are members of the Civil Service, and clearly if they make a success of running a trading fund, promotion will be open to them in the Civil Service."—[Official Report, Second Reading Committee, 19th June 1973; Vol. 858, c. 648.] That is fair enough. No doubt the Expenditure and Public Accounts Committees would deal sharply with any obvious incompetence which came to light through the Comptroller's inquiries.

But—here I emphasise that I am speaking for myself and not for my party—more thought needs to be given to this aspect. It is not satisfactory if the worst that can happen to any incompetent managers of a Government trading fund is that they are made secretaries of Royal Commissions or pushed off into a more obscure job. My hon. Friend spoke of promotion for those who succeed. I think that we need to look harder at the question of those who fail.

We are discussing an organisation with a great deal of public money at its disposal. It is being set up in a new form under a Conservative Act. Therefore, in principle we wish it well, but we reserve the right to scrutinise its progress very closely through all the normal sanctions open to Parliament. Our duty to the taxpayers demands nothing less.

10.34 p.m.

Mr. Geoffrey Dodsworth (Hertfordshire, South-West)

The House is grate- ful to my hon. Friends the Members for Eastbourne (Mr. Gow) and Melton (Mr. Latham) for their questions and cross-examination, which have elicited some of the information that has been helpful in formulating a sensible approach to the debate.

It was clear in the remarks of my hon. Friend the Member for St. Ives (Mr. Nott) in moving the Second Reading of the Bill that the key to this matter is control. He said: The Appropriation Accounts by themselves do not provide an adequate basis for assessing the performance of a trading organisation, and a system of management control suitable for a trading operation is not readily reconcilable with the cash system inherent in Votes."—[Official Report, Second Reading Committee, 19th June 1973; Vol 858 c. 625.] Amen to that. There is a great deal to be said for a total overhaul of the whole system of Government accounting.

I must say that the brief comments of the Minister rather suggested to me that there needed to be an overhaul of our procedure now. It may be that I did not catch the full sense of the hon. Gentleman's remarks, but I understood him to say that the assets to be taken over were £17.3 million, or thereabouts. He said that we would not know until 31st March what we would be taking over, but that it was that sort of figure.

I thought that the hon. Gentleman also said that it was not possible to differentiate the public dividend capital element from the loans amount. I am concerned to see that we carry out the proper provision of the Act under which the Order is made. After all, Section 2 refers to the appropriation of the assets and liabilities of the fund at values determined by the Minister in accordance with Treasury directions. It would be helpful to know what precise assistance has been received by the Minister in arriving at this arbitrary guess of £17.3 million. It would be helpful if we could have a clearer definition of the instructions which were received.

If we knew how the sum was made up, we could approach the question of the way in which the assets were valued. We had a rather brief version of what was contained in the matters to be dealt with through this Order, but if we are to take seriously our responsibilities for financial management and control, we wish to know the basis on which assets are being valued and the different classifications of assets. After all, it is one thing to be involved in the valuation of plant; it is quite another to be involved in the classification of work in progress, and yet another to look at the value of debtors. I cannot say that the Government's record in these matters is very happy and this is one matter about which we should like to know more.

I should also like to know how many people are likely to be affected by the Order. I understand that this is only a section of the Property Services Agency. On the last figures that I saw, it employed more than 60,000 people, some of them overseas. How many people are affected by the Supplies Division?

Then, perhaps, we should consider how good is the Government's record, in consultation with the Division, in arriving at these proposals. What degree of communication has there been? Has there been the real participation and consultation in which many members of the Government believe, as I do myself? We should like to know whether there has been a real attempt by the Department to ensure the full participation of those affected by these changes.

My hon. Friend the Member for Melton referred to the structure of management and control. The Act itself is not very demanding in the timetable that it sets out for the production of the annual statement of accounts. I take it that the year ending which we are discussing will be 31st March and that the Act itself then requests that accounts be produced on 01 before 30th November next following the end of that year, and that they be transmitted to the Comptroller and Auditor General. That seems to be yet another time delay built into the production of this information, and we are starting to be more than six months behind in the examination of the activities of what is supposed to be a financially-managed concern with clearly set financial objectives and targets. I should like to know a little more about the targets that are being set.

My hon. Friend the Member for Melton has referred to the return on capital of 10 per cent., which is very similar to the ordnance factories' rate of return—I understand that the Mint is likely to be able to produce a 15 per cent. return—but it will also be subject to inflation adjustments. I am surprised that, in these inflationary times, the Minister has not seen fit to be able suitably to qualify his rate of return. What is good for the Mint must be good for the Supplies Division. Perhaps 10 per cent., inflation-adjusted, would be better.

What is the Minister's current assessment of the expiry of the amount contained in the Act? Section 2(4) says that the aggregate is a limit of £250 million. Have we any estimate of when we are likely to reach close to that limit? From the figures I have, it looks as though it is probably £90 million. Does that mean that we can expect that it will be reviewed every six years? Have we any idea of the level at which it is operating?

This is merely an illustration of our need to pay close attention to the sums of money which pass through the House regularly late at night. It is a constant source of astonishment to me that, with very few Members present, we frequently pass permitting Orders almost on the nod. That should not be allowed. It is our duty to examine them as critically as we can.

10.40 p.m.

Mr. Robert Taylor (Croydon, North west)

My hon. Friend the Member for Melton (Mr. Latham) was kind enough to refer to our debate exactly two years ago this week on the Consolidated Fund Bill, when I expressed concern about the ever-increasing expenditure of the Property Services Agency. Shall we still be able to examine in Consolidated Fund Bill debates the expenditure of the part of the Agency which is transferred? The answer is probably "No".

I understand that with the removal of the Supplies Division to the trading funds Parliament will be able to examine the accounts only if the Comptroller and Auditor General makes a criticism. Then they will come before the Public Accounts Committee, and the House will have an opportunity to debate the matter when we debate the Committee's reports. Is that appraisal of the situation correct?

In the helpful indication of the opening assets of the Supplies Division there is the item of £6.4 million for stocks. I was not aware that one of the Agency's objects was to build up stocks. What stocks make up that large figure?

I am indebted to the Sunday Telegraph for an article on 22nd February which disclosed that during the past year the Agency bought 555,000 chairs. That seems an enormous number, because it must have had quite a number already. Who will sit on them all? In addition, in the past year it purchased 8,500,000 pieces of crockery. Those are large figures, involving the spending of public funds. I was not aware that it was part of the Agency's duty to invest money in stock of that nature. An explanation is called for.

I shall regret the passing of the Order. Unlike some of my hon. Friends, I regretted the coming into being of the Agency. It was introduced to the House by a Written Answer on a Friday afternoon, which was a regrettable method of setting up such a powerful and big-spending body. However, that is history. We are moving on and dividing the Agency up in a way which takes further accountability away from the House.

10.42 p.m.

Mr. Ian Gow (Eastbourne)

The draft Statutory Instrument is in many ways typical of the development of the control—or perhaps I should say "lack of control"—of the House over public expenditure. It is a serious development. The way in which the House is invited, late at night, to move from a system of annual Vote and Appropriations to the setting up of a trading fund with even less parliamentary scrutiny is a change very much for the worse.

The wording of article 3 is indicative of the attitude of successive Governments to the scrutiny by the House of public expenditure. We are being invited to replace what the Order itself describes as the means of annual Vote and Appropriation with a new trading fund.

Last year, in answer to a Question from me, the Secretary of State said that the expenditure of the Agency in the current financial year would be just under £750 million. In relation to the present level of public expenditure, that may be regarded as mere chicken-feed, and it is clearly regarded by Ministers as a matter not worthy of more than a maximum of one and a half hours' debate at the end of the financial year.

If we are to bring public expenditure back under the scrutiny and control of this House, we should not allow Orders of this kind to pass without at least some of us protesting at the way in which the Government are seeking to erode the traditional rights of Back Benchers to protest at the level of public spending.

It is not yet sufficiently realised—certainly on the Government Front Bench—how much public expenditure will have to be pruned if we are to stop the disastrous policy of deficit financing. One of the areas at which the House should look is the Agency. One of the principle purposes of the Order is to facilitate public spending without the scrutiny of hon. Members on both sides. It is a further step down the disastrous path not only of Government profligacy, but of something more sinister—the abdication of the right and duty of this House to be the perpetual scrutineer and guardian of the public purse.

10.43 p.m.

Mr. Armstrong

With the leave of the House, I shall reply to the debate.

There is no intention to hide anything or to bring in an Order that will diminish the House's close scrutiny of expenditure.

I welcome the attitude of the hon. Member for Melton (Mr. Latham). He has certainly done his homework, and I congratulate him. I apreciate what he said about wet towels.

I have taken some interest in the Agency, as it has been my responsibility since I moved to the Dpartment. I believe we are getting value for money from this efficient organisation. Of course, that does not mean that it should not be carefully scrutinised, or criticised.

The Order is not meant to hide anything. I welcome the debate. Hon. Members have made serious contributions and deserve a little more explanation. I cannot reply to every point now, but everything that has been said has been carefully noted and hon. Members will receive a reply from me as soon as I have been able to gather together the facts.

PSA Supplies Division will be a separately accountable unit within PSA under the day-to-day management of a Controller, who will be directly responsible to the Chief Executive of the PSA. The Chief Executive will monitor the unit's performance, with the assistance of his Finance Directorate, through quarterly trading accounts and periodic measures of performance. Amongst the public bodies served by the Supplies Division will be other directorates in PSA. These directorates will be in the role of customers and fully responsible for justifying the sums spent on the goods and services they order from the Supplies Division.

The Supplies Division is procuring and/or supplying a wide range of goods and services—about £167 million a year—involving the use of about £17 million of fixed assets and stocks. Although it is a public body supplying other public bodies, its activities are similar in many respects to those of a number of organisations in the public and private sectors which operate a commercial basis. It was thought appropriate and more conducive to efficiency if the Supplies Division also operated on more commercial lines—covering all costs, making provision for depreciation of assets, securing an adequate return on capital employed and having its performance regularly monitored through trading accounts and performance measures, including price comparisons with outside bodies. The aim is to increase efficiency, not to maximise revenue.

The nature of the controls will change, but they will not be less effective. As an organisation the Supplies Division will still be accountable, through the PSA's Chief Executive, to Ministers and to Parliament, and its accounts will be examined and certified by the Comptroller and Auditor General. The form of accounts will bring out clearly the costs involved in its activities, and attainment of the financial objectives and measures of performance will show how effectively the business is run. The Supplies Division will have to satisfy the Treasury and the Civil Service Department on its borrowing requirements and on manpower ceilings, respectively, in the context of annual budgets and a rolling five-year plan. At the same time as the Supplies Division has in this way to account for its performance, Government Departments which buy from it will have to account for their expenditure in the normal way and be subject to normal public expenditure controls and to the setting of standards. Advice has been obtained from consultant accountants on management accounting systems.

Mr. Robert Taylor

Will Government Departments be able to buy from other sources, or will they be directed to buy from the Supplies Division?

Mr. Armstrong

I shall take note of that question and write to the hon. Gentleman.

There will be a 10 per cent. return on assets, valued at market value so that they are not diminished by inflation. Accounts for the years 1974–75 and 1975–76 were based on covering interest at current rates on the current value of assets, and that approximates to the new target. The number of staff in Supplies Division is slightly decreasing, despite the additional duties transferred to it. There is no public dividend capital, because the volume of business is constant.

I was asked about numbers. There are 2,070 non-industrial and 2,140 industrial staff in the Division. The total PSA staff, including the Division, is 21,140 non-industrial and 23,400 industrial. About 10,000 are locally engaged overseas. We cannot run a supplies business without stocks, and £6 million worth is a small amount of stock in relation to the total volume of business.

It will be possible to debate the provisions in the Government Departments' estimates for buying from the Supplies Division, although the Division will not be voted finance.

I am grateful for the very careful way in which the Order has been dealt with. I shall certainly give detailed replies. I hope that the House will now accept it.

Question put and agreed to.

Resolved, That the Property Services Agency Supplies Trading Fund Order 1976, a draft of which was laid before this House on 20th February, be approved.