HC Deb 19 October 1981 vol 10 cc140-8

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

11.42 pm
Mr. Kenneth Marks (Manchester, Gorton)

My main purpose in raising this debate is to obtain information about the Government's intentions with regard to the Property Services Agency and to call attention to some of the bad decisions already made, without adequate costing of the options.

In the last Labour Government I had some responsibility for the PSA and I am aware of the difficulties involved in the post to which the Minister has recently been appointed. I realise that he may not be in a position to reply to every point that I raise tonight, but I trust that he will write to me on the more detailed matters. I hope, too, that both he and the Secretary of State will keep the House informed of major changes and of the likely costs or savings. The House is entitled to know—indeed, its Select Committees will demand to know—whether changes are justified.

The Property Services Agency was set up by the Conservative Government in 1972 and replaced the former Ministry, which was best known to the public as the Ministry of Works, and the defence departments for building and maintenance. Its task is to provide, furnish and maintain accommodation required for Government purposes—defence establishments such as airfields, barracks and factories, Home Office requirements in prisons, courts and some special hospitals and the requirements of all Government Departments, except the health services—research laboratories, factories, training centers and innumerable offices in the Government service. The PSA also does work for the Post Office and Telecom, and it is responsible for the diplomatic estate overseas. It has provided technical co-operation to foreign Governments and it is responsible for constructional work and some maintenance at United States bases in this country. One of its present undertakings is the construction of the Inter-Governmental Maritime Consultative Organisation building near Lambeth bridge.

The PSA does not itself carry out new building work. Most new buildings are planned and designed by it and put out to contract. About one-third of design work is put out to consultants. I remind the House, however, that the ministerial head and the accounting officer are responsible to Parliament, and in the words of a former PSA chief executive It is necessary to exercise a greater measure of control over consultants than it is in the private sector.

The PSA is also responsible for a vast amount of rented office accommodation and for the purchase and disposal of land and property, particularly that which is no longer required by the Ministry of Defence.

The PSA also has an advisory role in relation to the Department of the Environment and other Government Departments, and to the construction industry generally. It had a chief executive—and a board—until the death of Sir Robert Cox several months ago. Why is it taking so long to appoint a new chief executive? I know of no other Government Department where that has happened. Are the Government seeking to appoint an industrialist at two or three times the salary of Sir Robert Cox?

In addition to the PSA board, I understand that the Secretary of State has appointed an advisory board consisting entirely of people from industry. What has that board said about privatisation and the service in general?

Are the various other reports that are available to the Secretary of State available to the House? New decisions on the privatisation of the PSA are being taken without adequate consideration of costings and public accountability. I shall give an example. The Government propose to reverse the present proportions of design work carried out by the PSA and that put out to consultants. In 1979 the proportion of part 1 projects—that is, projects over £100,000—was PSA 63 per cent. and consultants 37 per cent. I understand that the proportion is now to be the other way round. Does the research justify that, or is it an act of political dogma?

The Prime Minister, speaking about privatisation, said that decisions should be commensurate with sound management and good value for money for the taxpayer."—[Official Report, 13 May 1980; Vol. 984, c. 1052–53.] Does the Minister believe that to be so in the decisions made so far? Do the surveys bear that out? Does the evidence from the professional and technical office cost accounting package bear that out? Does the controlled experiment in the Midland region in the 1970s bear it out?

I understand that a joint Treasury, Civil Service and industry group is examining the matter. Has it given its opinions?

There is evidence that private consultants often choose standards of finishes and quality of materials unnecessarily higher than would have been chosen by PSA design teams. Project cost targets are often exceeded when consultants are used. Will the Minister look again at this major change and ask himself whether the Prime Minister's criteria are being observed? Since the advent of this Government the whole construction industry has suffered badly. But is it necessary to destroy the public design sector in order to bolster the consultants in the private sector?

I deal next with the question of manpower. The so-called planned reduction of the Civil Service is for the PSA unplanned, precipitate and unfair. The strength of the non-industrial staff is already below the April 1982 target. One must question whether it is adequate to carry out the planning and supervisory duties—supervision of consultants and contractors. Despite the rundown that has taken place, professional and technical staff have had their agreements broken in respect of retirement ages. Forced retirements will probably take place in April 1982. If that happens there will be a shortage of well-qualified staff that may hinder the efficient operation of the agency and the necessary checks to ensure that money is being spent wisely.

The Minister may argue that if the 60-year-olds do not take early retirement there will not be room for youngsters to join the agency for training and subsequent employment. The Minister has no intention of maintaining the intake of youngsters. I reserve my strongest criticism of the Secretary of State for that area. In Liverpool, Blackpool and, no doubt, Croydon, he has spoken of the need for proper training for youngsters. He poses as one of the progressives in the Conservative Party, but the cuts that he has made in his Department and those that he has forced on local authorities give the lie to that.

Four months ago the Manpower Services Commission published "A New Training Initiative". It was sponsored by four Cabinet Ministers and urged an improvement in vocational education. The appeal from the Cabinet Ministers argued that progress depended on positive steps being taken by individual employers. Their appeal has fallen on the deaf ears of the Secretary of State. New craft apprenticeships in PSA were more than 200 in 1979. That figure was reduced to 179 in 1980 and to 58 in 1981. O-level technical apprenticeship recruitment in 1979–80 was 249, in 1980–81 it was 50, and this year it will be 21. Presumably, next year it will disappear altogether.

When I was at the Department I took a particular interest in the training schemes. The PSA has a high reputation in that area. Not all its trained people stay with it, but in an industry that is far from perfect in its training system the Department showed that it recognised that there was a Government function for all Government Departments and that the Government had a responsibility for education and training. I understand that the Secretary of State feels that education and training are not his job but belong to private enterprise or the MSC. What guarantee is there that private enterprise will provide the alternative training? I suggest that the record of industry does not lend itself to the belief that it will do so. Youth opportunities programme schemes are no alternative to the adequate training given by the PSA.

On 11 September the then Under-Secretary wrote to me about the reduction in training and apprenticeships. He said that the lower intakes reflected the agency's reduced requirements for design staff and the need to look in future primarily for management and maintenance of the estate. Will the Minister privatise the estate management and maintenance areas also? Have there been any experiments in that area? If so, what are the results? What monitoring is being carried out by the Department?

The PSA professional and technical staff especially fear that what has happened to apprentice and student recruitment is a foretaste of what may happen to the PSA generally and that the Government eventually intend to destroy the professional and technical disciplines within the PSA. Certainly, if it is to be given the job of only passing on contracts to consultants, the Department will not keep good, qualified people. I urge the Minister to think again. The PSA and its predecessor Ministries were not established by Left-wing Socialist Governments. Previous Governments have recognised the need for a strong public body for Government and defence works. I urge the Minister to fight the unwarranted cutback in the PSA, especially the destruction of its training programmes.

11.55 pm
Mr. Doug Hoyle (Warrington)

I cannot add much to the case that has been so ably presented by my hon. Friend the Member for Manchester, Gorton (Mr. Marks). However, I support my hon. Friend's contention that the Government's case cannot be justified by a lack of efficiency on the part of the agency. Indeed, it is highly efficient. The Minister should not follow a doctrine of cuts purely to satisfy the supporters of his party. There should be more reasoning than that. The Minister should not follow mere dogma. Of course, the Government have promised their supporters that they will make cuts in the Civil Service.

I have a special interest in the cuts that are being made in Warrington, which have been recommended in the United Kingdom territorial organisation report. The report called for a 10 per cent. cut in the Property Services Agency. That cut has already been achieved. Why are the cuts taking place twice over? They are not necessary.

The other day I received a letter of 9 October from the Secretary of State for the Environment. He referred to his special interest in the problems of Merseyside. He said that he would be setting up a task force in Liverpool to help him in his work. As he made clear in his letter, it will cover a wider geographical area than the Merseyside metropolitan county. It will cover the whole of the Merseyside special development area. Even more important from my point of view is the fact that it will cover Warrington, Runcorn and Skelmersdale new town.

Why add to the problems of the area, including those of Warrington, by going ahead with the cuts? The clients in the area are well satisfied with the services that are provided. My hon. Friend referred to that in some detail. The agency is efficient and effective. Why go ahead and damage the structure of the service? The only reason for doing so is to satisfy the claims of the backwoodsmen that the Government must carry out their policy. There can be no justification for taking such a course. I hope that the Minister will announce that after considering all the facts and the strong case presented by my hon. Friend the Government have decided that they will not go ahead with their plan.

11.58 pm
The Under-Secretary of State for the Environment (Sir George Young)

I am very grateful to the hon. Member for Manchester, Gorton (Mr. Marks) for giving the House the opportunity to discuss the future of the Property Services Agency. I had hoped that my transfer from the DHSS would mean that I should not spend quite so much time on Adjournment debates. If the way in which I have started after the Summer Recess is any guidance, my hopes will be cruelly disappointed.

The hon. Member for Gorton was the Minister responsible for the PSA during the last years of the previous Labour Administration. I remember seeing him on a constituency case. He greeted me with patience and courtesy. He took a close interest in the welfare of the agency and its staff. But it is clear from his remarks that there is a misunderstanding towards the PSA. I hope that in the time available to me I shall be able to give him and his hon. Friend the Member for Warrington (Mr. Hoyle) some reassurance.

A year ago my right hon. Friend the Secretary of State for the Environment made his views about the PSA clear in an address that he gave to senior staff. If the hon. Gentleman will bear with me, I shall quote from my right hon. Friend's address. It will help to clear up some of the doubts and misunderstandings that he has expressed.

My right hon. Friend said: The PSA has an important role in the management of the Government estate—indeed, a vital role in support of the Armed Forces and serving the operational needs of Government. The question is not whether the work needs to be done but how it is done and by whom. I want to see PSA enlisting the resources of the private sector across the whole range of its work—and working with the private sector so as to stimulate it and improve its performance. There is immense scope here for a positive and constructive approach. I want to see PSA as a thoroughly professional and efficient organisation, managing the Government's vast portfolio, managing the Government's building programme and acting as a strong influence for good on the quality of the environment and on the construction industry. This does mean change—in attitudes, responsibilities and working methods. But it also means that I see a strong positive role for PSA. Undoubtedly, far more of the work will actually be carried out in the private sector but the tasks of managing the Government estate and supporting our defence capability will remain huge and essential.

In the light of those undertakings, what the hon. Member for Gorton said about destroying professional and technical expertise does not stand up. That is not our intention for the PSA. The assurances given by the Secretary of State are proof of that.

The Government are the largest property owners in the country and have the largest building programme. We currently have about 700 major new projects in construction and a further 1,360 in planning. The district works offices place nearly 2 million job orders for maintenance and minor works each year, and there are about 17,000 land transactions annually, including acquisitions, leases, rent reviews and disposals. The PSA provides these services to civil departments throughout the United Kingdom and Northern Ireland, to British forces at home and abroad and to the Diplomatic Service worldwide.

The hon. Member asked me about the chief executive. I agree that it is now urgent to find a successor to Sir Robert Cox. I have had discussions with senior officials in the short time that I have been at the Department, and I am satisfied that measures are now being taken to secure a replacement in the near future.

The hon. Member also asked about the advisory board. Last December, my right hon. Friend invited Mr. Nigel Mobbs, chairman of the Charterhouse Group and Slough Estates, to chair the PSA advisory board. The board provides a range of advice to Ministers and to the agency on PSA operations. Among the aims that we hope the advisory board will help us achieve is to ensure that the PSA deserves and receives due credit for what it does.

The hon. Member devoted much of his speech to privatisation or contracting out. As he knows from his time in office, the PSA has traditionally looked to the private sector to carry out much of its work. All major new construction and the bulk of its maintenance work is undertaken by private sector contractors. A proportion of its varying load of design work has always been put to private sector consultants and currently stands at 37 per cent. Some of the PSA's work is particularly suitable for contracting out and it is our policy that the agency should put an increasing proportion of its design work to consultants and its maintenance work to contractors. But this is not simply an exercise in reducing the number of civil servants.

We see the agency using its patronage positively to support the construction industry, improve its performance, and equip it to compete more effectively in world markets.

The speed at which this transfer to the private sector can take place is naturally limited by the rate of wastage in the PSA staff numbers and by the size of client Departments' future programmes.

The policy of contracting out design work is, as I have explained, based primarily on the broad benefits to be achieved by greater interchange between the public and private sectors. We are, of course, concerned to ensure that the transfer of work to consultants gives value for money and achieves good results.

The hon. Member mentioned staff reductions. One of the main purposes of the mergers that led to the creation of the agency in 1972 was to maximise efficiency and produce economies of scale. Nine years ago the PSA had about 47,000 staff. When this Government took office that figure had been reduced to 39,000, and it now stands at about 33,000. So the policy of staff reduction or cuts, as the hon. Member for Warrington phrased it, was carried out by the previous Administration, and the figure fell from April 1974, when it stood at 42,916, to 38,575 in April 1979. By 1984 we expect staff numbers to have been reduced still further, to just over 28,000. These reductions have been achieved almost entirely by natural wastage and have been facilitated by the contracting out to the private sector of work formerly done by civil servants.

These are undoubtedly major savings, and I pay tribute to the way in which the agency has contributed to the reduction in civil servants' numbers to which the Government are committed. The range of clients served by the PSA and the services they demand are unchanged. The fact that the PSA continues to provide an effective service to its clients in this period of rapid readjustment reflects great credit on the staff. I am also encouraged by the readiness of the PSA to accept new responsibilities and to adapt to the new working methods that these changes have entailed.

With regard to student intake, the PSA's student recruitment policy has over a number of years been geared to securing a supply of trained professional and technical staff to meet its projected needs for staff in the design and maintenance fields. The student intakes have provided the prime source of the PSA's recruits in several design disciplines and have ensured that the agency has made a very full contribution to training effort related to its requirements for staff. At present there are about 450 full-time students employed by the PSA in the architectural, engineering, surveying and technical disciplines who are undergoing training of up to three years prior to becoming qualified. The PSA also provides a number of opportunities for sandwich course and vacation students to gain practical experience while undertaking a college course. In addition, the PSA sponsors some of its best technicians for courses leading to professional qualifications.

The demand for professional and technical staff has declined over the past two years because of the need for the PSA to contribute to the reductions in the size of the Civil Service, and in particular because of the decision to place a much larger proportion of new design work with consultants. This latter development has particularly affected requirements for design staffs, and the PSA's intake of students in the design disciplines has been reduced to fit the future pattern of demand for staff and to avoid training people who cannot subsequently be employed in the public sector in a permanent job.

This year the agency recruited 15 graduates in the surveying and engineering disciplines and 21 O-level student draughtsmen. The hon. Member produced other figures for student intake. Perhaps I may be allowed to write to him about them, as they do not tally exactly with the figures that the Department has given me.

The requirements for future years are under consideration in the light of a detailed analysis of our staffing requirements, and representations from the trade union side will be fully considered before we take any final decisions, as will the remarks of the two hon. Members this evening.

The PSA has been carrying out a review of its future need for craft appprentices and for aprentice training, but the results of that review are not yet available.

I am aware of the concern about the measures that we are taking to lower the retirement age for certain members of staff over 60. These measures are necessary to deal with surplus numbers in certain disciplines and to correct the serious imbalances that have arisen recently, but the measures are being applied flexibly to avoid hardship.

We are now considering the report of a study of the PSA regional organisation. That report recommends a number of changes in the structure and the staffing of the PSA's regional and area offices. Some of the more modest changes have already taken place. This is naturally of great concern to the staff, and we have given the trade unions the fullest opportunity to consult their members on the results of the study. The consultation process has now been completed and my right hon. Friend will have the benefit of the considered views of the trade unions before he reaches any decisions.

I hope that I have been able to assure the hon. Members on the broad role of the PSA, although I understand their reservations about the reductions in the numbers directly employed by the PSA.

Both hon. Members raised a number of more detailed points, and perhaps I could generously accept the offer to deal with them in correspondence.

I conclude by saying how very impressed I have been, in the short time that I have been at the Department, by the quality of work of the PSA and the very high standard of staff that I have come across. I look forward eagerly to working with them over the next few years and bringing to fruition some of the very important projects that the PSA is now undertaking on behalf of the Government and other public bodies.

Question put and agreed to.

Adjourned accordingly at nine minutes past Twelve o'clock.