§ The Minister of State, Civil Service Department (Mr. Paul Channon)With your permission, Mr. Speaker, and that of the House, I should like to make a statement about the Government's review of the size and cost of the Civil Service.
We undertook this review for three main reasons. First, we believe that it is in the national interest to reduce the role of Government. Secondly, at a time when public expenditure as a whole has to be restrained, it is right that there should be a contribution from central Government administration. Thirdly, it is essential to examine any large organisation, public or private, from time to time and prune those activities which may have been undertaken for good reasons but which are now less necessary.
This is a report on the progress we have made so far. All Ministers have conducted an initial examination of the activities of their departments to identify the savings which can be made, whether by increased efficiency or by the abolition or curtailment of functions. As a result, we will be making savings right across the Civil Service. The scope for this varies between Departments. At one end of the scale, the Department of Transport has identified savings amounting to some 18 per cent. In other Departments the scope is much smaller, but even in the fields of law and order and defence, to which as the House knows the Government attach a particularly high priority, some valuable savings will be made.
This review will lead to annual savings in Civil Service staff costs of about £212 million, most of which will be achieved by the financial year 1982–83. The net effect on public expenditure will, however, be less than this because some of the savings will come from putting work, which will have to be paid for, out to the private sector. In terms of staff numbers, the savings total some 40,000. This is in addition to the steps we have already taken to reduce expenditure on Civil Service manpower this year, saving some 20,000 posts—60,000 in all. The Government's aim will be as far as practicable to secure the reductions by natural wastage.
628 The savings that will be made by Departments as a result of the decisions I am announcing today will be shown in general terms in a table in the Official Report, and copies are available in the Vote Office. Details of the savings are of course the responsibility of the departmental Ministers concerned.
These are the savings which it has been possible to identify reasonably quickly by examining a series of options across the Civil Service as a whole. The next stage will include a number of policy studies in some Departments, such as the Department of Health and Social Security, and reviews of activities already set in progress, particularly in the Ministry of Defence and the Department of the Environment.
The search for greater economy and efficiency will, of course, go on throughout the lifetime of this Parliament. All Ministers will continue to keep the work of their Departments under close scrutiny and the House will be kept informed of progress from time to time. Sir Derek Rayner will assist in particular projects to improve efficiency and value for money.
I will not try to predict the future size of the Civil Service, but we have reversed the major expansion which took place under the last Government. Our predecessors planned for a Civil Service of 748,000 by April next year. The numbers now stand at 712,000. As a result of our scrutiny, although there may be short-term fluctuations, the general trend from now on will continue downwards.
The size of the Civil Service must always depend upon the duties the Government of the day ask it to undertake. The fact that this Government set out to identify areas in which the range of work can be narrowed, and to improve the efficiency with which the rest of the work is done, is no reflection on the conscientiousness and ability with which civil servants at all levels have carried out the tasks they have been given. I am glad to pay tribute to these qualities, as I am sure is the whole House.
Mr. Wriggles worthMay I begin by challenging the Minister on a factual point that he raised? Many hon. Members will feel that they have heard all this before back in 1970 and 1971, just before the greatest expansion in public sector employment both nationally and 629 locally. It is simply not true to say that the major expansion in the Civil Service was during the period of the last Government.
Is the hon. Member aware that our opposition to the cuts arises from three major factors? First, we believe that they will lead inevitably to higher unemployment in certain areas of the country which can ill afford it. Secondly, we believe that some of the so-called cuts are bogus and unnecessary. Thirdly, in some cases they are damaging to the level of services to the community and in certain instances they may lead to higher costs on the public purse because those services are being farmed out to private enterprise.
Will there be any redundancies as a result of the Government's proposals, and is any legislation necessary to implement them? Can the Minister tell us what Sir Derek Rayner is doing at present? Can he add to the statements made yesterday by the Chief Secretary and himself about Sir Derek's work in marauding Government Departments and will there be further cuts in services as a result?
If one looks at the table of cuts that the Government have put before the House, one finds that there are certain examples of contracting to private enterprise—in taking care of Government property and in the Department of Transport in the testing of goods vehicles—which will not lead to any saving of public expenditure because the overheads and profit margins must be taken into account by the Government in paying for the services. We find this a totally unacceptable method of achieving cuts, both in the number of civil servants and in the level of expenditure.
Once again the electorate has been offered a shiny apple only to find that it has a rotten core in the centre. The public's services will be fewer at the end of the day and they will have to pay more for them.
§ Mr. ChannonI am not at all surprised that the hon. Member finds this unsatisfactory and unacceptable. The truth is that all Labour Governments since the war have expanded the size of the Civil Service and all Conservative Governments have reduced it. The hon. 630 Member made a simply astonishing comment that the major expansion in the Civil Service took place in 1970–71. During the last Conservative Government the size of the Civil Service fell. After the Labour Party won the 1974 general election, the size of the Civil Service rose by 48,000, almost within months.
§ Mr. ChannonThe right hon. Member says they are phoney figures, but they are his own published figures. If they are phoney, it is no wonder he is sensitive about them. When we arrived in office there were 733,000 civil servants. The right hon. Gentleman had planned for 748,000 by next April. We now have 712,000. That is not a phoney figure; it represents a genuine saving. My right hon. Friends and I believe that we need a smaller and more efficient Civil Service so that the general public can get their services in the most efficient way at the least cost to public expenditure. Therefore, this statement will benefit members of the public, not hinder them. All Labour Governments increase the size of the Civil Service and all Conservative Governments reduce it.
§ Mr. Maurice MacmillanI congratulate my hon. Friend on what he has succeeded in doing so far. In his future examinations, will he consider putting more work out to contracton tender—and encouraging local authorities to do so as well—rather than merely hiving it off into unofficial public bodies as that does not mean any real saving? Will he accept that where this has been done abroad substantial savings have been made, both in manpower and in money? Will he also agree that this depends on the service concerned—whether it is national or local—reducing its overheads? Finally, will he reconsider the role of the Civil Service Department in terms of linking it more closely with the public spending department of the Treasury?
§ Mr. ChannonCertainly I shall consider everything that my right hon. Friend has suggested. I shall consider particularly the point about putting contracts out to the private sector. However, that should not be done at increased public expenditure. Subject to that proviso, my 631 right hon. Friend's points are interesting and I shall examine them carefully.
§ Several Hon. Members rose—
§ Mr. SpeakerOrder. I shall be able to call many more hon. Members if those who are called ask just one question.
§ Mr. Charles R. MorrisIs the Minister aware that, while he will have support from these Benches for identifying genuine waste and inefficiency in the Civil Service, we believe that he was being slightly disingenuous in highlighting a cut of 18 per cent. in the Department of Transport and in the same breath talking about a cut of 40,000 people in a Civil Service administration of 500,000? Out of that total, a 40,000 cut is more in the region of 8 per cent., not 18 per cent. Is it really right for the Minister to make a statement which excludes three major Departments of the Civil Service—the Ministry of Defence with 120,000 civil servants; the Department of Health and Social Security with 100,000; and the Home Office with 30,000? That is literally half the Civil Service.
§ Mr. ChannonThe right hon. Gentleman has not quite understood what I said. I said that there was a saving of 18 per cent. in the Department of Transport. I did not say that it was 18 per cent. over the Civil Service as a whole. I also said that there are already 20,000 fewer civil servants in post than there were when we won the election. Under these measures we plan a further reduction of 40,000 as our interim first step, and this will mean a total reduction of 60,000.
§ Mr. Lennox-BoydDoes my hon. Friend agree that if there were less reluctance in some areas of the Civil Service, such as the Department of Health and Social Security, to introduce computers, there would be further scope for staff reductions?
§ Mr. ChannonI shall discuss the whole question of computers and the new technology with the staff and I shall certainly bear that point in mind.
§ Mr. James A. DunnHow many of the posts affected by the Minister's announcement today are in the regions? Is he aware that his statement today was 632 in the possession of some of his officials in Liverpool early this morning?
§ Mr. ChannonI cannot give the exact breakdown among the regions at the moment because this is a matter for my right hon. Friends in charge of Departments. As soon as I have any information, I shall try to give it to the hon. Member.
§ Mr. Richard WainwrightIs the Minister aware that the bare table of savings, which is all that he has produced in support of his statement, is a mere summary of totals of absolute figures? The solitary percentage expressed in his statement is the one that suits the Government best because it is the highest.
Will the Minister provide a more reasonable degree of information to the House, the press and the public particularly paying attention to the following facts? How many of the staff being saved are chiefs and how many are Indians? What proportion of the staff savings is the result of contracting out to private firms? Will the Minister give an absolute assurance that cost estimates for the Civil Service presented to this House will be presented Department by Department and not in one indiscriminate lump?
§ Mr. ChannonThe hon. Member refers to a number of points. If he cares to put down a question about percentages, I will certainly give him the figure for each Department if that is what he wishes. As to the savings as a result of putting out work to the private sector, it is impossible to say exactly how much that will cost or what the net savings will be. The net annual savings as a result of the decisions announced today will not be less than £150 million. Together with the £100 million in Civil Service costs already served this year, that totals £250 million. In addition, the Government's revised plans for dispersal will bring savings of another £200 million.
§ Mr. OnslowHaving argued consistently for a reduction in the size of the Civil Service since I left it 20 years ago, I congratulate my hon. Friend most heartily on what he has started to do today. I put it to him, and to the Civil Service that the real test of a conscientious and able servant of the public is that he should 633 seek to do his job more quickly, more efficiently and at least cost to public funds rather than be interested in the size of his empire while he is serving and his pension when he retires?
§ Mr. ChannonI entirely agree with my hon. Friend. I have been encouraged by the support that I have received from many civil servants for the Government's efforts.
§ Mr. Donald StewartWill the Minister explain, in the light of his declared objectives, why he is so reluctant to put into effect quickly the intention to transfer civil servants from London to Scotland? Does he realise that it will be much cheaper in Scotland because accommodation is less costly and there is no London weighting allowance or other factors involved? There would be immediate and permanent savings.
§ Mr. ChannonThe right hon. Gentleman will remember that I made a statement about this in July. On the specific points about the dispersal of jobs to Glasgow I am in touch with my right hon. Friend the Secretary of State for Scotland as a result of a question from a Scottish Member yesterday.
§ Mr. StrawIs the Minister ruling out compulsory redundancies in any circumstances? When he mentions short-term fluctuations in the figures, does he recognise that the increase in the number of elderly and unemployed people might mean an increase in the short term in the number of staff employed to pay out social security benefits?
§ Mr. ChannonIn answer to the latter part of the hon. Member's question, I am not sure that that would be the case. There are bound to be fluctuations in a large service of this kind as circumstances change over the years. I am not by any means ruling out compulsory redundancy, but I hope that there will be few. The Government are not looking for redundancies. We hope that reductions will be achieved, in the main, by natural wastage.
§ Mr. McCrindleDoes it remain the policy of the Government to continue with the inflation proofing of public service pensions? Does not the presentation of the social security Bill, altering 634 the basis of future increases to civilian pensions, give the Government the opportunity to reconsider a policy which cost a great deal of money over the past few years?
§ Mr. ChannonMy hon. Friend raised this question yesterday. These are wide issues outside the scope of this statement, but I will certainly consider what he said.
§ Mr. CrowtherWill the Minister explain how there can be any kind of saving of public funds by the abolition of nearly 9,000 posts in the directly employed labour force of the Department of the Environment and the putting out of the whole of the work involved to private contractors? Does he admit or deny that cost relativity exercises in the past have shown that the directly employed labour force is extremely competitive as against private enterprise?
§ Mr. ChannonDetailed questions about the Department of the Environment should be put down to my right hon. Friend. I have shown in the table the sort of cost and staff savings that it is hoped to achieve in the Department of the Environment. As I said in my statement, a number of other reviews are going on in that Department which, I am sure, will result in useful savings.
§ Mr. Eldon GriffithsDoes my hon. Friend accept that the one sure way of continuing the excellent start that he has made today is to ensure that the Government and this House do not lay more legislation and more responsibilities upon the Civil Service? Will he explain the apparent paradox that the more computers bought in order to save labour costs in the Civil Service, the more spokesmen need to be hired to explain why those computers do not work?
§ Mr. ChannonI agree with the first part of my hon. Friend's question. As to the second part, I think that he has, uncharacteristically, mildly exaggerated the case. Useful savings have been made by the installation of computers. We intend to proceed along those lines and I hope, in the interest of the staff and the country, that there will be further useful savings.
Mr. MeCuskerI do not share any fears about attempts to reduce the size of the Northern Ireland Office, as 635 distinct from the Northern Ireland Department, which does the real work of government in the Province, but can the Minister assure us that when he further considers the separate Civil Service in Northern Ireland we will have a statement in the House from the Secretary of State for Northern Ireland?
§ Mr. ChannonI had better discuss that matter with my right hon. Friend because I do not know what he has in mind. As to the Northern Ireland Office, in view of the special circumstances in Northern Ireland, the hon. Member will find that the savings there are very small.
§ Mr. SainsburyIs my hon. Friend aware that there is a widespread belief that in addition to the commendable measures that he has already referred to there remains considerable scope for improving the efficiency of the Civil Service, particularly in office management and routine administration? Is he satisfied that sufficient attention is given to these somewhat mundane aspects of the work of the Civil Service at every level? Is enough central guidance and help available to Departments to assist in improving efficiency in these routine matters?
§ Mr. ChannonA great deal of effort goes into attempts to improve efficiency, though I am sure that my hon. Friend is right to suggest that more could be done. I shall turn my attention to this issue in the next few months.
§ Mr. TilleyIs the Minister aware that the cuts are already causing distress and hardship in my constituency where a dispute about staff cuts in the DHSS has led to the suspension of many members of the CPSA at the Kennington office? The result is that increasing numbers of people in that area have no income because they are not receiving Giro cheques. Today the chairman of the local social services committee told me that she is seriously considering setting up emergency food centres—or soup kitchens—to ensure that there is no hunger at Christmas in families which include many children and old people. Will the Minister announce, in humanity, that he will reverse the social security staff cuts decision before the hardship that I have described spreads to other parts of the country?
§ Mr. ChannonI am extremely sorry to hear what the hon. Member has said. However, he is surely drawing the wrong conclusions. He should join me in saying that it is wrong for anyone to refuse to carry out their duties properly. Civil servants who refuse to carry out their duties may be sent home if they are not doing the work for which they are paid by the public. I hope that the hon. Member deplores such a situation as much as I do.
§ Mr. BrothertonI welcome my hon. Friend's statement about the cuts in the Civil Service. Three times today he used the words "Defence Department". Will he assure the House that the cuts will not affect the defence of the realm and that they will not affect our election manifesto commitment to strengthen our defence forces?
§ Mr. ChannonI give my hon. Friend an absolute assurance on those points.
§ Mr. Clinton DavisWill the Minister indicate what the term "reduction in marine functions" means? Does it mean the delegation of essential safety work from the marine division, with its international reputation for independence, to the private classification societies? Is the Minister aware that if that is so the Opposition will strenuously oppose that? We take the view that savings compromising safety are totally unacceptable.
§ Mr. ChannonI note what the hon. Member says. This is a detailed point about the work of that Department. I hope that the hon. Gentleman will be good enough to table a question to my right hon. Friend.
§ Mr. Bruce-GardyneI congratulate my right hon. Friend on making a fine start. Will he confirm that Departments were asked to contemplate savings of 10 per cent., 15 per cent. and 20 per cent., and that the measures that he has announced today represent rather more than half of the lowest of those figures? How soon will that target be achieved?
§ Mr. ChannonA target was never set. Options were put forward so that we could examine the exact consequences. As a result, savings of well over 10 per cent. have been achieved—and I mentioned the Department of Transport in particular. This is the first stage of the exercise. We 637 are keeping the matter under review. The House will be kept informed of progress in achieving still further staff savings.
§ Mrs. Renée ShortHow many reductions will be in the scientific Civil Service, which in the last five or six years has been run down? Is the Minister aware that much of the work done by that service could not be done by a private office?
| Civil Service Manpower | ||
| Table of Savings | ||
| Department | £ million (at 1979 survey prices) | Staff (approximate) |
| Ministry of Defence | 41.0 | 7,500 |
| Various economies and placing some work currently done in-house out to contract (in particular cleaning and catering); administrative economies from such measures as changing the arrangements for paying salaries and wages and for bill paying; further changes in arrangements for quality assurance, involving greater reliance on industry. | ||
| Foreign and Commonwealth Office and Diplomatic Service | 6.0 | 425 |
| Closure of some overseas posts; reduction in the size of the largest overseas missions and in staff numbers in the United Kingdom. | ||
| Overseas Development Administration | 2.1 | 235 |
| Reductions in staff and programmes in headquarters and at the Scientific Units. | ||
| Ministry of Agriculture, Fisheries and Food | 4.1 | 470 |
| Simplification of capital grant schemes and other minor savings. | ||
| Department of Industry | 7.9 | 1,290 |
| Conversion of National Maritime Institute into a non-governmental Research Association or other industrial research laboratory; programme cuts at remaining Industrial Research Establishments; reductions in regional organisations mainly resulting from revised regional package; staff savings following expiry of Industry Schemes; and reductions in statistical, Establishment, and support services. | ||
| Department of Trade | 3.1 | 455 |
| Changes in companies registration; reduction in some export promotion and commercial relations activities and in various civil aviation and marine functions; continuation of transfer of work to the European Patent Office; abolition of the Metrication Board. | ||
| Office of Fair Trading | 0.3 | 70 |
| Extension of validity of consumer credit licences. | ||
| Export Credits Guarantee Department | 0.8 | 145 |
| Computerisation for short-term business, and other procedural changes. | ||
| Department of Energy | 1.0 | 145 |
| Reductions in activities of the Offshore Supplies Office, the Gas Standards Branch, and other services. | ||
| Department of Employment | 10.9 | 2,575 |
| Further savings from computerisation, fortnightly attendance and payment, and administrative improvements in Unemployment Benefit Offices; extending qualifying period for unfair dismissal to one year, dropping permanent scheme for short time working compensation and other savings. | ||
| Manpower Services Commission | 20.2 | 3,400 |
| Reductions in employment and training services. | ||
| Health and Safety Executive | 2.2 | 260 |
| Selective reductions in activities. | ||
| Advisory, Conciliation and Arbitration Service | 1.1 | 100 |
| Extending qualifying period for unfair dismissal to one year, and other savings. | ||
| Department of Transport | 13.1 | 2,480 |
| Changes in the operation of Vehicle Excise Duty, in arrangements for inspection of heavy goods vehicles, and other savings. |
§ Mr. ChannonI cannot yet say what the exact savings will in any branch of the Civil Service because there must first be detailed examination by all Departments. I share the hon. Lady's view of the importance of the work of the scientific Civil Service. I shall bear in mind what she has said.
§ Following is the table:
639| Department | £ million (at 1979 survey prices) | Staff (approximate) |
| Department of the Environment and Ordnance Survey | 9.9 | 1,620 |
| Simplification of housing and planning procedures; changes in organisation and programmes; disbandment of Economic Planning research Councils and other fringe bodies; other reductions in functions and support services. | ||
| Property Services Agency | 29.2 | 4,730 |
| Reduction in building and dispersal programmes; contracting out maintenance of government buildings and general economy measures. | ||
| Home Office | 2.9 | 460 |
| Improved efficiency generally and miscellaneous savings in areas other than prisons, police support and immigration control. | ||
| Lord Chancellor's Departments | 1.9 | 450 |
| Savings from improved efficiency, computerisation, and some reduction in services at the Public Record Office. | ||
| Department of Education and Science | 1.0 | 155 |
| Less intervention in matters which are the direct responsibility of Local Education Authorities and other agencies, and modifications in procedures. | ||
| Department of Health and Social Security | 8.3 | 1,705 |
| Measures to improve efficiency and simplify procedures in social security administration. Savings in health and personal social services work through implementation of Government policy for less intervention in the activities of the National Health Service and local authorities. | ||
| Office of Population Censuses and Surveys | 1.3 | 275 |
| Savings in most areas of the department, including statistical, census and survey work. | ||
| Treasury | 0.4 | 40 |
| Abolition of certain functions, including Exchange Control, and other reductions. | ||
| Customs and Excise | 2.3 | 465 |
| Abolition of Exchange Control checks and savings in general administration. | ||
| Inland Revenue | 19.0 | 5,515 |
| Savings from measures in the 1979 Budget and Finance Act; the cancellation of rating revaluation; changes and simplifications in administration and procedures including reduced checking of repayments of tax, a reduction in statistical work, the abolition of continuous referencing for rating purposes, reduced spot checks of local authority valuation work, less information passed to local tax districts, changes in PAYE procedures. | ||
| Department for National Savings | 4.4 | 1,070 |
| Completion of mechanisation of National Savings Bank; termination of British Savings Bonds and industrial group savings. | ||
| Civil Service Department | 2.3 | 280 |
| Reductions in Civil Service Commission and Civil Service College and in various departmental functions and support services. | ||
| Central Office of Information | 0.8 | 140 |
| Savings in the home service and through computerisation and general economy measures, and savings in overseas services including export promotion. | ||
| Her Majerty's Stationery Office | 4.0 | 900 |
| Anticipated reduction in demand for HMSO services; measures to increase efficiency; rationalisation of publications distribution organisation. | ||
| Scottish Office | 3.9 | 600 |
| Reductions in functions, largely in parallel with similar reductions in equivalent Whitehall departments. | ||
| Forestry Commission | 1.5 | 240 |
| Improvements in efficiency, cutbacks in the planned planting programme and reduced provision for public recreation. | ||
| Welsh Office | 1.6 | 235 |
| Miscellaneous savings, largely in parallel with similar reductions in equivalent Whitehall departments. | ||
| Northern Ireland Office | 0.7 | 120 |
| Savings in areas not vitally concerned with law and order. | ||
| Other Departments | 3.1 | 325 |
| Total | 212.2 | 39,000 |