HC Deb 24 July 1985 vol 83 cc1126-40

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

9.18 pm
Mrs. Angela Rumbold (Mitcham and Morden)

My objective in initiating this debate is to persuade the Government to consider including in the 1985–86 legislative programme a measure that would compel all local authorities to put perhaps all of their services out to some form of competitive tendering. At present some functions are supposedly undertaken by the private sector. I intend to persuade the Government to consider measures designed specifically to prevent the evasions which are practised and which negate seriously the philosophy behind my proposals.

A simple change in management procedures would Lead to significant financial savings in the services rendered by local authorities to ratepayers and taxpayers. All taxpayers and ratepayers contribute to the money spent by local authorities. The savings would be considerable, and obviously the delivery of the service can be as efficient and effective, if not more so, through the private sector. The margin of choice within the private sector would be sufficient to benefit all local authority services and their recipients—taxpayers and ratepayers.

There are already cases of privatisation and of putting local authority services out to tender. Since about 1980 local government has moved in that direction. Southend was probably the first local authority to privatise rubbish collection. It bravely decided to put rubbish collection out to private tender to see whether its in-house service was effective and, if it was not, to see whether the private sector services, which were beginning to be drawn to the attention of local authorities, could be more cost effective. Southend proceeded and discovered that it was a good idea. Because of that, other authorities, mainly Conservative-controlled ones, were persuaded to discover whether savings could be made, while maintaining cost-effective and efficient services.

The approaches of local authorities were hesitant because it was a new area for them. The advice of their senior officers was negative and they were told that there would be considerable public relations and trade union difficulties. Moreover, local councillors and politicians everywhere tend to be conservative and careful, and to believe that their accountability to ratepayers is such a burden that they must be absolutely certain that their proposals are carefully thought out and will not place a greater burden on taxpayers and ratepayers, whom they are supposed to serve.

Mr. Richard Tracey (Surbiton)

My hon. Friend may be coming to one of the most powerful arguments for privatising services, which is the borough of Wandsworth. Such savings have been made there that its rates are now half of those in the neighbouring borough of Lambeth, which persists with the services of its staff.

Mrs. Rumbold

I had every intention of coming to that point, not merely regarding the significant savings made in the London borough of Wandsworth by its brave entry into private sector transactions, but my London borough of Merton, whose courageous leader has led it into new private sector tendering, which has brought considerable savings.

I want to make this point absolutely clear, because it is important. When we talk about the effectiveness of local authorities tendering for services in the private sector, we must always accept that part of the philosophy behind that is to seek financial savings as well as good services and to look for the lowest tender, which had been the practice of every local authority which has gone out to and had dealings with companies in the private sector.

I urge the House to consider carefully that there is always a possibility of councillors, advisers and others making mistakes from time to time. The private sector is not always the absolute panacea. However, the possibility of a mistake and of having to retender is no reason for not pursuing the theory and, I hope, the practice of going out to competitive tender. Local authorities would always be able to extricate themselves from a tender that was proving less than satisfactory. I hope that they would always be able to go back to the market place to get a more suitable tender should the one that they have chosen prove not wholly satisfactory for the ratepayers in the delivery of services.

All that can be clearly demonstrated by boroughs such as Wandsworth and Ealing, which followed Merton in the last financial year and put out to tender its catering services and part of the provision for meals on wheels. The saving was over £700,000 on a £2 million contract — an extensive saving. At a time when local government is rightly under pressure to seek ways in which to reduce expenditure, but does not want to endanger the services that it delivers, it should examine more effective ways of delivering those services. It has been proved beyond doubt that the private sector can help in that regard.

Wandsworth has gone to the private sector for street cleaning, vehicle maintenance and other public cleaning services, and saved more than £1 million on a contract worth nearly £3 million. Many other district and county councils make similar or smaller savings in that way.

This is only the fifth year in which serious attempts to put out to tender have been made and become fashionable. The record of privatisation shows that many local authorities, of which there are well over 500, do not put any of their services out to tender in the private sector. Many have tried to do so and have then retracted. That is an even worse sign that local government lacks the motivation and is suffering from inertia, and therefore needs Government pressure to make it imperative that local authorities put their services out to competitive tender in the private sector.

Only one metropolitan borough outside London —Solihull — is actively involved. At least nine county councils have not put any of their services out to competitive tender. Even Conservative councils, which should be ideologically sympathetic to the concept, are far from a good example. That is a matter of some shame.

It is important to explain why councillors find it difficult to steel themselves to go out to tender. Many hon. Members will be familiar with the problems. A group of councillors decides to venture into the private sector. The imperative is usually the need to live within a budget. The councillors tell the officers that they have the brilliant idea of putting catering, cleaning or street cleaning out to tender. Many private firms are quick to attract local authorities.

The process is complicated because the officers tell the councillors that the idea is good and that the officers will make a report. Six weeks later, the report says that the idea is excellent and could achieve X or Y savings. The councillors think it is all good stuff and then turn over the page and see the big but. They are told, "If you follow that course, councillor, you will have problems with the work force. You will not make savings for at least two years because the redundancy costs will be enormous. Anyway, the direct labour force could probably come up with just as good an offer. Frankly, councillor, it would be better not to bother."

Many councillors will then consider that there is an election in 18 months and that they do not want difficulties with the work force and an adverse press. The easiest thing is to agree with the officers. The private firm then says that it has taken on board all of the on costs and other things in the complicated tender documents.

The councillors reply, "We will take the offer from the in-house people because, although we shall not make quite the same savings, it is better to keep our people and easier and safer for us."

That is the problem — there is no compulsion for local authorities to go out to the private sector. If local authorities have to go out to competitive tendering, councillors would concentrate less on protecting direct labour and more on getting the best services. There would be plenty of competition because there are plenty of people in the private sector who want to provide local authority services.

We must not set our sights too low in terms of what can be put out to competitive tendering. We have limited ourselves to manual functions such as council house maintenance, street cleaning, rubbish collection, park maintenance, school meals and some social services meals. But that is not nearly enough. Many more local authority services could be put out to competitive tender. There are many accountants, solicitors, surveyors, estate agents and architects in the high street, yet very few of them are employed by local authorities to do a complete job. It is possible to envisage a situation in which the high street professionals are just as much involved in local authority dealings as are the manual workers.

It is high time that we looked at in-house services. I wonder how many administrators in town halls disappear from council lists when contracts for rubbish collection, street cleaning, maintenance or school catering are given to private contractors. I am not saying that local authorities are not good at reducing the number of people that they employ. They have a very good track record. Indeed, it is far better than that of the Government who are supposed to be dedicated to the principle of reducing——

Mr. Jim Craigen (Glasgow, Maryhill)

If I follow correctly the hon. Lady's logic, does that mean that the jobs of the town clerk and the director of finance will be put out to tender?

Mrs. Rumbold

I am not opposed to the idea that eventually councils could spend most of their time looking at competitive tenders and very little time looking at whether or not they will have 17 or 18 meetings each month.

Mr. Michael Brown (Brigg and Cleethorpes)

My hon. Friend may care to know that when it was Labour controlled the Humberside county council decided to dispense with the services of its chief executive.

Mrs. Rumbold

I am grateful to my hon. Friend. Many councils have toyed with the idea of dispensing with their chief executives, and many of them have done so. I have not found that many of the authorities that dispensed with the services of their chief executives have been won over to the idea of reappointing them.

Mr. Jeff Rooker (Birmingham, Perry Barr)

Apart from Birmingham.

Mrs. Rumbold

Yes, indeed, apart from Birmingham. That says something about the efficiency of local authority chief executives. I hasten to add that I have no prejudice against chief executives. The chief executive of Birmingham is an excellent gentleman who does his job, I am sure, just as competently as when he was the chief adviser to the Association of Metropolitan Authorities.

It is important to realise that nothing in local government is absolutely sacred. There is nothing sacred about any of our bureaucratic services. We must make it seem important and necessary for local authorities to consider competitive tendering. The sooner we do so, the better will be the services that are provided for the consumer. The ratepayer should be given every possible consideration.

I have no objection to paying some form of local tax, but the local rate or tax that is administered by locally elected councillors, for whom I have a great deal of admiration, should be spent to the best effect upon those who are least able to help themselves. It should not be squandered on massive bureaucracies when those in the private sector could do the job just as effectively for half the price. I urge the Government seriously to consider introducing some form of legislation as early as possible to make competitive tendering an absolute necessity for local government.

9.39 pm
Mr. Neil Hamilton (Tatton)

The House should be grateful to my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold) for introducing the debate. She spoke for the vast majority of Conservative Members. Indeed, 205 hon. Members have signed early-day motion 895, in the name of my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant), which states: That this House believes that, in the interest of obtaining better value for money, local authorities should be required by law to submit to competitive tender a wider range of their functions and services. I hope that the Government will pay attention to the strong feelings among Conservative Members, and will recognise our disappointment if the Queen's Speech in November does not contain a provision to extend contracting out and privatising in local authorities. It has been of great benefit to the ratepayers in the authorities where it has already been tried. My hon. Friend the Member for Mitcham and Morden, with her customary eloquence, deployed the arguments with irrefutable logic. I hope that that view will be shared by my hon. Friend the Under-Secretary of State and that, even if he cannot leak the details of the Queen's Speech in public, he will at least give us a hint of what it will contain.

The argument behind our request that local authorities should be required to put out contracts to tender is that councillors are trustees of ratepayers' money. The little empires over which they preside, with their chief officers and all their employees, are not there for their benefit or to boost their pride; they are there to serve ratepayers and to provide value for money. Competition inevitably produces a downward pressure on costs and an upward pressure on standards. If that spur is removed, there is bound to be a diminution in standards and an increase in costs. That benefits no one except those who derive their incomes from the inefficiency which it disguises.

Those municipal empires should be broken up where there is palpably no will among those who are presently responsible to break them up. That would be in the interests of ratepayers and of those who benefit from the services provided by local authorities. Therefore, I disagree with my seven hon. Friends who signed an amendment to early-day motion 895, saying that it would be an attack on local democracy. It would be precisely the opposite. It would achieve what is desired by ratepayers in many parts of the country, even in areas that are Conservative-controlled, but which they are being denied.

There are many theoretical arguments to show why competition would be likely to reduce costs and improve standards. The experience of the private sector should be ample evidence. Many companies do not have so-called direct labour departments, because they believe that it is much more efficient to contract out their cleaning services and office maintenance provision. The reason is that contractors must provide high standards. If they do not, they will lose the contract. During the contract period, they may render themselves liable to penalties. With a direct labour department, it is almost impossible to apply discipline, because it is difficult to dismiss employees. However, it is easy to end a contract or to sue someone who has breached a contract. The person who purchases the services provided by a contractor removes from his overheads the worries and other complications that arise from running an in-house service.

As my hon. Friend the Member for Mitcham and Morden so eloquently explained, considerable cost savings can be made. As a ratepayer in the borough of Wandsworth, I am well aware of the great benefits that I have derived from the eight years of Tory control. That was first under the leadership of my hon. Friend the Member for Southampton, Itchen (Mr. Chope), who can be said to have pioneered this drive to efficiency in local government. This was recognised by Her Majesty, who made him an officer of the Order of the British Empire. We might extend the honours system to encourage councillors to provide the benefits provided by my hon. Friend for myself and other Wandsworth ratepayers as an alternative to making competitive tendering compulsory. This might be a more efficacious way to achieve the beneficial results that we all desire.

The difference between the borough of Wandsworth and the borough of Lambeth, part of which is represented by the hon. Member for Norwood (Mr. Fraser), is marked. They have similar populations, about 250,000 inhabitants, but the number of staff employed to provide identical services is radically different. In Wandsworth, for example, there are 1,300 labourers, whereas in Lambeth there are 3,500. In Wandsworth, there are nearly 3,000 non-manual workers, whereas in Lambeth there are over 5,000. The borough rate in Wandsworth is 26.44p in the pound, whereas in Lambeth it is 129.34p in the pound. Between 1979 and 1983 Wandsworth decreased spending by 6 per cent. whereas Lambeth increased spending by 69 per cent.

The costs of the services provided by the authorities are directly responsible for the difference between those two figures. For example, refuse collection in Wandsworth costs £8.70 per head a year, whereas in Lambeth it is more than twice that—£17.58 a head. Caretaking costs £8.81 a head a year in Wandsworth and £25 in Lambeth. Street clearing costs £3.38 a head a year in Wandsworth and £9.17 a head a year in Lambeth.

Nobody visiting those two boroughs would think that Wandsworth's provision of services is any less expensive than it is in Lambeth. The difference in cost is accounted for entirely by the differences in efficiency. One could go through the services that Wandsworth has either contracted out or privatised and compare that with Lambeth and other boroughs and come to the same conclusion. I fail to see what arguments can be deployed against making it compulsory for local authorities to provide value for money in the provision of services for their ratepayers.

It is a mystery to me why, given the difficulties that the Department of the Environment has had with local government in recent years, particularly with rate capping, we have not fastened upon this before now as a means of keeping the rates down, thus obviating the necessity to introduce rate capping, which has been controversial. Such a move would not be controversial except for those who have something to hide or an empire to defend and are frightened of opening themselves to the spur of competition with somebody who would be more efficient in providing the same service.

We know how defensive the unions can be. They employ not logic but the bully-boy tactics that we saw in the miners' strike. In Wandsworth, some appalling examples of violence occurred in the early years when the council was contracting services out. Machinery was vandalised, lorries burnt out, sugar and sand put into fuel tanks of vehicles, tyres slashed, hydraulic systems severed, depots and offices burgled, papers and work rotas stolen. This abominable story occurred in other local authorities. Where such people cannot succeed with argument, rationality, logic and experience, they will resort to the bully-boy tactics which have happily proved ineffective but which, for those who had to suffer them, are frightening.

Mr. Peter Lilley (St. Albans)

Did the National Council for Civil Liberties demand an inquiry into these actions in the same way as it did in the miners' strike?

Mr. Hamilton

I regret to say that my knowledge of the National Council for Civil Liberties is hearsay only. I am not a member of that organisation, and will probably now be disqualified from membership, as its concern for civil liberties seems to be rather partial.

The experience of recent years is clear. It must now be in the interests of all ratepayers to oblige authorities to put contracts out to tender. Nobody is saying they have to be awarded to private enterprise, because if a direct labour organisation can produce a competitive tender, the work can be awarded to it. Many factors then have to be borne in mind to decide whether the contracts are being awarded on the same terms, but the evidence from authorities around the country appears to be that the requirements placed on contractors are much more onerous than those placed upon the direct labour organisations. Some of my hon. Friends who are hoping to speak might dilate upon that.

I will content myself with those few remarks, and seek to reinforce what I said at the beginning to my hon. Friend the Minister: there will be grave disappointment in the country if we do not take this radical but beneficial step which will benefit ratepayers and will also at the end of the day electorally benefit the Conservative party. That is not something which in present circumstances we are entitled to ignore.

9.51 pm
Mr. Peter Lilley (St. Albans)

I congratulate my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold) on having the inspiration to call this debate, and on the eloquence with which she has deployed her powerful arguments, ably seconded by my hon. Friend the Member for Tatton (Mr. Hamilton).

I must declare an interest. I am a ratepayer, and as such I have a vested interest in keeping my rates as low as possible and keeping the quality of my services as high as possible. There is only one conceivable way in which those twin objectives can be reached, and that is by improving the efficiency with which services are provided. There is only one way in which the efficiency of services can be improved, and that is to give those who provide and manage the services a financial incentive. The most likely way to achieve that is to follow the suggestions in this debate and introduce compulsory competitive tendering for local authority services.

There is ample evidence that competitive tendering works when it is applied. There is even evidence that it works when it is merely sniffed at. In every case where local authorities have suggested looking at compulsory tendering, savings have been found with almost miraculous ease by those providing the services in-house. Trade unions came forward with suggestions for improvements in manning which they had long resisted, and managements came forward with suggestions for new techniques and new ways of approaching problems which they had for years failed to suggest to elected members. If the smell of competitive tendering produces those desirable results, tasting it is likely to be even better.

The second piece of evidence that competitive tendering works is that it is applied by commercial companies. I recently visited a number of companies in my constituency and had the pleasure of eating in their canteens. In each case I asked the management who had provided the canteen facilities and I was told that management had contracted it out to the most efficient and most competitive supplier. I was told that that had been done not simply to save money on the service but also to save time and involvement in supplying a facility which was necessary for the staff, in which management had no particular expertise and did not want to become unnecessarily involved.

I have visited a BUPA hospital in my constituency which puts its cleaning service out to tender. It goes much further than the state sector because the cleaners are not only required to clean the floors, but are responsible for ensuring that all the services in the wards and rooms in which they work operate effectively —that light bulbs and loo rolls are replaced, and so on. The hospital gets additional value for money from its cleaning services.

The third piece of evidence that competitive tendering works is that it is already applied by many local authorities that have made well-documented savings on various services by replacing in-house facilities with outside contractors.

In the blissful days when the district council in my constituency was still in the hands of the Tories, it contracted out the cleaning of toilets. In that small aspect of local government, the council saved £20,000 per annum to the benefit of the ratepayer, while improving the quality and cleanliness of the toilets so that people actually used them.

It is noteworthy how far people go to try to conceal the obvious savings that are being made by contracting out services. We saw an extraordinary example of that attitude in the sixth report of the Select Committee on Social Services which said that the £9 million savings made by putting NHS services out to tender constituted a saving of only 1 per cent. The Committee said that that was a derisory amount, but it failed to say that the saving was about 1 per cent. of the NHS budget, but more like 25 per cent. of the budget for the services that were contracted out. That shows the scope for savings if the practice is extended more widely throughout the NHS and among local authorities.

My main purpose is to emphasise that savings made by contracting out services are almost invariably far greater in the long term than those that can be measured in the short term. When a local authority contracts out a service, it makes the easily measurable, short-term savings in increased efficiency, but it also gains the immeasurable long-term benefit of flexibility.

We live in a changing world and demands for services are constantly changing, as are ways of supplying those services. If the supply is in-house, the council is fixed to a method and quantity of provision and it is difficult for it to adapt to changing needs and opportunities. Consequently, one finds throughout local government services that reflect past demands and not current needs. The ability of local authorities to adapt is hindered by the fact that they have a vested interest in the continued provision of a service.

If a local authority has regularly bought in its architectural services and requires less architecture and building for a while, it ceases to buy in so much service. The onus is then on the architects to find work elsewhere, which they are geared to do.

The long-term savings from contracting out are far greater than the short-term savings, which are already large enough to justify our making it compulsory for local authorities to go out to tender much more.

We should consider whether it ought to be compulsory for local authorities that contract out to use an external contractor or whether they should be allowed to continue using in-house services if they can show themselves to be as competitive or nearly as competitive as external contractors. Most of my hon. Friends would accept that in-house services should be allowed to win the competitive tendering process and continue to provide services. The reason why some people would advise against that possibility is that they believe that the contracting-out process is inevitably biased in favour of the in-house service and that no proper measurement can be made of the costs that that service imposes on the ratepayers.

Plenty of contentious costings have occurred in contracting out. In my local area, the North-West Hertfordshire health authority considered contracting out laundry services. It concluded that its in-house supplier was more efficient than any outside supplier. I have received a letter from an organisation called the Association of British Laundry, Cleaning and Rental Services, which claims that the costings of the area health authority concealed the fact that many costs were not taken account of when the in-house facility won the contract. I know many of the people in my local area health authority. They are able and competent people, and I am inclined to believe them rather than this body, with which I have no connections.

If the in-house service is more competitive than the private enterprise competitor, surely the in-house service should be hived off as a separate unit and enabled itself to compete in the market place and to provide the service. If the public sector has built up expertise and ability to satisfy demand more efficiently than the private sector yet can, the in-house services should be liberated to extend their provision. Indeed, my area health authority laundry service already caters for other hospitals from further afield, not just St. Albans. Surely those excellent and efficient local workers should be enabled to operate more commercially, and provide the benefits of their efficiency to other aspects of the Health Service. A similar process should take place in the local authorities when competitive tendering is extended to them.

If the in-house service in an area proves competitive and effective, the law should be changed to encourage and enable it to be set up as a commercial enterprise competing in the market place and extending its skills. I join other hon. Members in urging the Government to recognise that this policy should be a pivotal part of the strategy in improving the quality and reducing the cost provision of the public sector. I hope that legislation will be introduced before too long to ensure that the country and my constituents gain the benefits of compulsory competitive tendering as soon as possible.

10.2 pm

Mr. George Gardiner (Reigate)

I am grateful for the chance to make a brief contribution to the debate, which was opened so admirably by my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold). My hon. Friend has summarised the arguments so eloquently and others of my hon. Friends have amplified them so effectively that there is not a great deal left to say.

My hon. Friends gave their own examples and the experience of councils that have gone to privatisation and competitive tendering, starting with the pioneer work at Southend. My hon. Friend the Member for Mitcham and Morden referred to the experience in her constituency. My hon. Friend the Member for Tatton (Mr. Hamilton) gave eloquent evidence of the experience in Wandsworth. These are not isolated examples.

Anybody who consults an admirable publication entitled "The Public Service Review", which is backed up by a distinguished academic council on these matters, and details all the developments in an admirable way, will see a long list of local authorities — apart from health authorities, which are also covered—that have made substantial annual savings as a result of putting out certain works to competitive tendering.

We make a mistake if we concentrate entirely on the financial gains that are to be achieved for ratepayers. In many cases, real improvements are made in the quality of service. As it is so well documented, I refer to the experience of the city of Bath. In 1983, it awarded contracts for four municipal services, street cleaning, domestic refuse collection, trade refuse collection and public convenience cleaning to a private contractor, which got on with the job quickly and efficiently and established good local relations with the employing council and the local population.

It is interesting that six months after the contractor had begun work, the local daily newspaper, the Bath and West Evening Chronicle, which I know well, printed a questionnaire asking its readers what they thought of the new service. Ninety three per cent. said that the service was at least as good as hitherto and, significantly, more than one third said that it was far better. The ratepayers of Bath said that it was a welcome all-round improvement; that the dustmen kept to their scheduled days and were more reliable; that the services were provided by a civil and obliging work force and that in every respect the service that they were receiving was superior to the previous service. In addition, the council will save £1 million over a five-year period.

With those benefits available, why do not more local councils take up the opportunities offered by this policy? My hon. Friend the Member for Mitcham and Morden summarised the sort of restricted choices sometimes put to councillors by their officers. Undoubtedly, the activities of many of the public service unions, organised and coordinated by the National Union of Public Employees in particular, constitute a positive disincentive to local authority leaders wishing to embark on that road.

My hon. Friend the Member for Tatton listed the gruesome experiences of workers in Wandsworth when services were first privatised. Many councillors have said that they do not want to suffer a similar experience. That is why I argue that local councils need the protection of a statutory duty to go for competitive tendering. That will protect them against bullying.

I echo what my hon. Friend the Member for Tatton said. I and many of my hon. Friends will be deeply disappointed if there is not a positive reference to this matter in the Queen's Speech and if steps are not taken in the coming Session to achieve far wider competitive tendering in local council services.

It is an appropriate day to say that I yearn for some popular decisions and popular policies to emerge from our Government. I have the feeling sometimes that my right hon. Friend the Secretary of State for the Environment has, perhaps, forgotten what it is to be popular in the policies that he advances. Perhaps he shies away from it from fear of the unknown. I hope that I am being unfair to him and that in his review of these matters he will recognise that the policy that more than 200 of my hon. Friends have endorsed in an early-day motion will be popular not only throughout the Conservative party but in the country.

10.8 pm

Mr. Michael Brown (Brigg and Cleethorpes)

I echo the remark of my hon. Friend the Member for Reigate (Mr. Gardiner) that more than 200 of our hon. Friends have signed the early-day motion. It is something that my right hon. Friend the Secretary of State for the Environment could embrace in the certain knowledge that on the Conservative Benches it will be a policy which is popular and successful and which will be endorsed in the Division Lobbies.

It has been a difficult year for Ministers at the Department of the Environment. They have had to pilot through contentious legislation. My right hon. Friend the Secretary of State is now invited to envisage legislation for next Session which would have the support of the overwhelming majority of Conservative Members. My hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold) explained, in an eloquent speech containing some fine examples to support the case she was making, why that support would be forthcoming.

My county council of Humberside was Conservative controlled until 1981. I am pleased to say that, after the local elections earlier this year, it is again Conservative controlled. The policy of privatisation was clearly endorsed by the electorate who, having had the opportunity of privatisation removed from them between 1981 and 1985, now recognise the penalty that they had to pay for not having Conservative representation locally. As they voted they recalled the high rate demands that had been imposed on them during those four years.

However, there is a hesitancy to take positive action on the part of some local authorities which are still in pawn, as it were, to their chief executives and chief officers. I confess that the councillors in one of the district councils which I represent and which is Conservative controlled are more frightened of the council officials than of the electorate. I suspect, however, that as we move towards the 1987 district council elections, those Conservative councillors will recognise, as have Liberal councillors, the power of the electorate over the permanent officials.

There is a reluctance on the part of less professional councillors to initiate action which would conflict with that of the permanent officials. I am not criticising councillors who are not particularly professional. They bring to bear their experience of public life and it is important to have that reflected in local authorities. However, they become victims of the power of public officials, and I regret to say that there are some Conservative-controlled authorities in which the non-elected professional official is more concerned for the empire over which he presides than for savings that can be made for the ratepayer. Many disappointed Conservative voters look to the Government to redress the balance where there has been an overbearing influence on the part of public officials over the elected representatives.

I need not add to the illustrations that have been given by my hon. Friends of savings that have been made in recent years. Bath, among other local authorities, has been mentioned. I have with me a list showing every authority that has voluntarily submitted itself to competitive tendering. The document contains the local authorities, contractors and savings that have been achieved, and it is interesting to note that in the financial year 1984–85, the savings totalled £31,106,785. Ratepayers of every political complexion were saved that sum by local authorities which submitted themselves to competitive tender.

The time has come when we have had sufficient experience of competition in this sphere for the Secretary of State to acknowledge that if £31 million-odd could be saved by those local authorities, enormous additional sums could be saved if every local authority tried to achieve similar economies.

I accept that there are some professional well run in-house services that are as efficient as any private enterprise service, but competitive tendering would enable the in-house service to prove its efficiency. Unfortunately, my experience of voluntary competitive tendering is not a happy one. The local councillors of one of the authorities in my constituency decided finally to take note of the electors' voice and to accept competitive tendering. The lowest tender was provided by a private contractor, but the power and the voice of a public official was such that he had an overbearing influence on the councillors. Accordingly, they were minded to invite the in-house service to re-submit a new and lower tender. That is not good practice. Ratepayers should be protected from that experience by legislation, which Ministers at the Department of the Environment have the authority to bring to the House.

A relevant early-day motion has been tabled this year and the same motion was tabled in the 1983–84 Session, when it was supported by over 200 of my hon. Friends. My right hon. Friend the Secretary of State for the Environment richly deserves some popularity and the early-day motions on this issue signal that if the necessary piece of legislation is introduced in the next Queen's speech, it will have the support of the overwhelming majority of Conservative Members and that of the overwhelming majority of ratepayers and voters throughout the kingdom.

10.18 pm
Mr. Gerald Howarth (Cannock and Burntwood)

I congratulate my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold) on initiating the debate. Likewise, I congratulate my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) on having contributed to it in such a spirited fashion. It has been a useful debate and many interesting arguments have been advanced on the advantages of competitive tendering.

One of the most distinguishing features of the previous Labour Government, much to the chagrin of many Labour Members, was their virtual surrender of policy-making to the trade unions. When the Industrial Relations Act 1971 was repealed, the trade unions were given the right to immunity over a wide range of industrial disruption practices. Direct labour organisation and dock workers were given exclusive rights to jobs. Like Cromwell's new model army, trade union organisation became a monster. Finally, in the winter of discontent, it throttled its masters, and in 1979 the Labour Government fell, to be replaced by a Conservative Government. Some of the slogans that appeared at that time illustrated clearly what was going on. When the gravediggers were on strike, the following slogan appeared, "Vote Labour and dig your own grave".

It had become clear at that time to the British public that the monopoly supply of public services in the state sector had concentrated power in the hands of politically inspired union leaders. That led to an undesirable stranglehold over the public, with costly and inefficient services to boot. I put my remarks in this context because contracting out is not designed, as has been suggested by the unions, to line the pockets of private contractors. It has been designed for three specific purposes: first, to ensure that there are multiple sources of supply of services to prevent patients and the public from being held to ransom; secondly, to ensure the cost-effective supply of those services—often saving substantial sums of taxpayers' and ratepayers' money—and, thirdly, to ensure that those who supply the services can have the benefits of working in the private sector

It is thanks in large measure to the efforts of my lion. Friends the Members for Stirling (Mr. Forsyth) and for Southampton, Itchen (Mr. Chope) that the concept of contracting out local authority services has rapidly taken hold. It is true that a number of United Kingdom companies have already been engaged in the provision of ancillary services—for example, Crothall and Co. has been responsible for all the domestic services at Stoke Mandeville hospital for no less than 23 years. There is nothing new about what is happening. Crothall's parent company, Pritchards, and companies like Grand Met are extensively active overseas earning valuable foreign exchange for the United Kingdom.

What has been the record to date? According to the "Public Services Review", which an excellent publication —we can provide you with a copy Mr. Speaker, should you so desire because, if you find the rest of tonight's debate boring, it would make fascinating reading—no less than £31 million in public funds will be saved by using private companies instead of in-house labour to provide public services. Many of those savings have come from the NHS. The Select Committee's report was misleading in this respect. If the savings that have been made so far in the 3 per cent. of hospitals that have put their services out to tender were translated across the board, about £200 million would be saved—a substantial sum.

I welcome the answer that my hon. Friend the Under-Secretary of State for Health and Social Security—the hon. Member for Oxford, West and Abingdon (Mr. Patten)—gave on 29 May when he said: The competitive tendering policy in the NHS is proving a great success. These are real savings in the cost of support services. They are not being achieved by lowering standards. Significant annual savings have also come from local authorities. In Southend, the street cleaning operation has saved £600,000. Under the guidance of my hon. Friend the Member for Itchen about £2,670,000 per annum is being saved. Wandsworth will be the first local authority in London to hand over council estate caretaking to a private firm. That company will employ 23 caretakers and is expected to save the council £400,000 per annum and to give improved services.

It looks as though this is a catching mood, because not only is the Conservative party committed to this policy but the Liberals appear to have jumped on to another bandwagon — this time a sensible one. That is extraordinary. I notice that the hon. Member for Leeds, West (Mr. Meadowcroft) has joined us. It is a pity Liberal Members were not here earlier to hear much that would have enlightened them. Six Liberals on Bristol city council recently supported a Conservative proposal calling for all council work over £20,000 to be open to competition. instead of being handed to the council's direct labour organisation. Last year, the DLO lost more than £2 million. As the Liberal deputy leader on the council said: We don't want to keep the organisation afloat by feather-bedding. It must become viable and efficient. Undoubtedly, those words will haunt his colleagues when they find themselves voting for Socialist measures.

Further progress is threatened for three reasons. First, some Conservative local authorities are reluctant to put their services out to tender. They think somehow that going out to tender is an admission of their inefficiency. A couple of years ago, I asked my father, who was a member of the council of the royal borough of Windsor and Maidenhead, what services he had put out to tender that week. He said, "We have the finest refuse collection service in the country." When I said, "Put it out to tender and then you will see whether it is right" he was less than keen to do so.

Tendering should not be seen as an admission of inefficiency. It is felt that the public sector alone can handle these matters, but we must not forget that the private sector provides our fighter aircraft and our food. The private sector can provide those goods.

The second reason why further progress is threatened is union sabotage. Mr. Sid Cresswell, branch secretary of the Transport and General Workers Union, commenting on his campaign against the privatisation of refuse collection by Rugby borough council, said: We have to meet atom bombs with atom bombs. In many other cases the unions are clearly endeavouring to prevent the privatisation programme from continuing by disrupting it. I hope that Opposition Members will reject that.

The third reason is because of the unfair conditions being imposed on private contractors. I shall cite two examples. First, to compare like with unlike, in-house departments, sometimes intentionally and sometimes in all innocence, omit overhead costs from their tenders. Typically, they include a share of central administration costs, such as payroll, training and recruitment. Other examples abound. Secondly, regarding obstructive contract conditions, NUPE's education pack, Improve Public Services … Shut Out Contractors —note that contradiction—states If action to prevent the council (or by implication health authority) proceeding with tenders fails, then the next tactic should be to make the tendering conditions as tough as possible. Imposing conditions will cost the contractor money and that means (his) tenders will be higher. That is absolutely disgraceful.

Competitive tendering has been a proven road to greater efficiency of operation, reduced burdens on the ratepayer, and better job satisfaction for the employees. To encourage our more timid councillors of all three parties, I hope that my hon. Friend the Parliamentary Under-Secretary of State will take back to his Department the clear message from my hon. Friends and me that we should like to see compulsory competitive tendering in the next Queen's speech.