HC Deb 24 July 1985 vol 83 cc1141-6 10.27 pm
Mr. John Fraser (Norwood)

There are many propositions on competitive tendering. The first is that every service or all goods that are bought in by a local authority should be subject to competitive tender. I endorse that proposition, and have helped it by tabling an amendment to the Competition Act 1980, as a result of which local authorities can be accused of anti-competitive practices if they try to have cosy anti-competitive arrangements, for example for demolition contracting. There is no difference between the two sides of the House on that.

The second proposition was adopted by the Government in 1980 with the Local Government Act 1980. It is that direct works departments should be subject to tendering. From that comes a further development in the Government consultative document, which is that some other services should be put out to competitive tendering, not as a matter of choice for an elected local authority, but of compulsion. It includes refuse collecting, cleaning buildings and vehicle maintenance.

Tonight a fourth proposition is being argued, which is that virtually every service run by a local authority should, if possible, be put out to private tender. That seems to fit in with some of the Government's suggestions, for example on housing management, and that the ownership of housing should be placed in the private sector. In other words, there should be limitless opportunities for the private sector to compete.

The Opposition agree that ratepayers are entitled to efficiency from their local authorities. I constantly urge my local authority to be efficient and to get value for money, as I am sure many hon. Members do with theirs. That is why I tabled an amendment to the Competition Bill, as it was.

We are not opposed to direct labour organisations being able to compete on fair and equal terms and being exposed to the wind of competition. For instance, in Sunderland, the passenger transport executive is putting the construction of a bus station out to tender. Previously bus stations were built by the direct labour organisation. We see no reason why the direct labour organisation should not even be able to compete with people in the private sector. That is an excellent idea.

One often sees large scale renovations undertaken by direct labour organisations. One or two houses on an estate bought by people under the right-to-buy legislation might need a new roof as badly as houses owned by the local authority. We see no reason why a direct labour organisation should not be entitled to compete with the private sector on such house renovation and improvement work. The odd thing is that in several contributions to the debate we have not had a single word about such competition from the public sector——

Mr. Lilley


Mr. Fraser

I shall not give way, as I am short of time.

The GLC's supplies department is now being broken up. It has added a great deal to the competitive buying edge of local authorities in Greater London.

Those matters should be subject to the choice and judgment of the local authority, not compulsion. Local authorities are entitled to make a rounded judgment on how they spend their money and provide their services. Those are matters for local authorities chosen by electors who have a vote. If electors do not like the way in which a local authority is conducting its affairs, they can change those arrangements.

Local authorities are also entitled to consider a wider measure of performance than mere price, such as the quality of service and the fulfilment of social objectives. They can take account of employment policies, equal opportunities among different races, and the elimination of sexual discrimination, for example. The real reason for debates such as this, for the one-sided attack on local authorities and the desire to push out to competitive tendering, is that Conservative Members want the private sector to get more noses in the trough and to make more profits. Those profits are made with low pay, lack of security and the Government's 20th century version of slave labour——

Mr. Christopher Chope (Southampton, lichen)

Will the hon. Gentleman give way?

Mr. Fraser

No, because I must press on.

The Government want those profits to be made through the abolition of wages councils. They want to see Tory strength through suffering—the strength of the private sector at the expense of those who work for some of the services put out to tender.

The Government are concerned that not enough noses are in the trough. Even some Tory authorities are cutting off that access to private profit making. Many of the district councils are controlled by the Conservative party. I know what Conservative Members are worried about. Despite all the propaganda and the fact that we have had a Tory Government since 1979, they are worried that the number of local authorities that go out to private tender is dropping in the light of experience. It has dropped from about 12 per cent. in 1982–83 to 11.3 per cent. in 1984. In Scotland, only Orkney and Shetland goes out to tender. Conservative Members are concerned that not enough is happening. In the words of Rodney Bickerstaffe, they know — [HON. MEMBERS: "Oh, him."] That gives the game away. They know the cost of privatisation. In Wandsworth, Merton, Dudley, Eastbourne and Gloucester there have been unswept streets, uncut grass, uncollected rubbish, late, missing or cold meals, thousands of people thrown on to the dole queue and an exploited work force. Local authorities are entitled to make a judgment.

We should consider what companies are undertaking the work. Reckitt Cleaning Services does cleaning for local authorites and hospitals and has interests in other parts of the world. It has interests in South Africa where it employs 2,000 staff. It has just opened a new factory outside Johannesburg. It is investing in South Africa when many firms are taking investment out, sometimes under pressure from their Governments, as a sign of their disagreement with what is happening there. A local authority is entitled to say that it does not want to employ a firm that wants to invest in South Africa.

There is worse——

Mr. Michael Forsyth (Stirling)

How does it make its profits? Selling mustard.

Mr. Fraser

I will tell the hon. Gentleman how it makes its profits. Virtually all of its employees in local authority cleaning servics are employed for less than 16 hours a week. That is deliberate—they therefore have no protection against unfair dismissal and have few labour rights under their terms of employment.

Mr. Forsyth


Mr. Fraser

I shall not give way.

ICC Cleaning Services has been employed by some local authorites. [HON. MEMBERS: "NUPE."] Yes, I am quoting from a NUPE document. I am very grateful to NUPE. I am sure that I am as grateful to NUPE as the Tory party is to ICC Cleaning Services, the parent company of which gave £3,250 to the Tory party in 1984, which won a contract to clean schools in Shepway. Officials had to alert Kent county council to the fact that there were uncleaned schools and that the firm had to draft in cleaners from London and Essex because a local recruitment drive had failed. There were headlines in local papers saying: Cleaners Crisis May Shut Down Schools. Heads of schools were worried about the operation of that firm.

We should consider how these cleaning firms make their money. I shall give some examples of the grave abuses. Staff are employed part-time, so they are subject to instant dismissal. In one well-known case, the staff were subject to dismissal even for taking a tea break. There has been outright refusal to recognise trade union membership, as happened, for example, with the Victoria Cleaning Company. There has been a case of compulsory weekend work in a six-day week for which the remuneration was only £62.90 — I refer to ISC. Other companies have given no holiday entitlement.

In many cases, the profit is made by lowering the pay and conditions of employees. A local authority, which has a social objective, not a profit objective, is entitled to make a judgment about proper terms and conditions of employment and about what is in the best interests of the community as a whole, rather than just shareholders.

Office Cleaning Services is a typical company. A Conservative Member of Parliament is one of its parliamentary consultants. Wages in that company have been driven down while the director's pay increased by 42 per cent. in 1982–83. In direct labour organisations, more than the price for the job has to be taken into account. There are other social responsibilities such as training. One of the results of competitive tendering has been a 36 per cent. reduction in apprentices being trained by local authorities. We do not need any lessons from the Government. On capital finance for local authorities, a member of the Audit Commission was able to tell the Government: If I were asked to design a system that would produce more waste and inefficiency to control capital expenditure it is not immediately certain to me what additional complication I would build in". We know the reason for this assault on local government. It is an assault on their democracy and autonomy and it is intended to bring profits into private purses at the expense of the pay and conditions of working people who are already badly off.

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

The hon. Member for Norwood (Mr. Fraser) started his speech quite well. He reminded us that when he was in office he was on the side of the consumer, championing their interests against the vested interests of other large organisations. He even made a passing criticism of the extravagance of Lambeth council, but towards the end of his speech there was a Pavlovian over-reaction. Having to listen for an hour and a half to six speeches from my hon. Friends was obviously too much for him.

There was a lot of emotional ranting about snouts in the trough and a list of what he regards as abuses. But what about the abuses on the other side? Look at what is happening in Southwark's social services department; look at the abuses in Liverpool city council, where there is far too close a relationship between the direct labour organisation and the councillors; look at the restrictive practices in Lambeth. The hon. Member for Norwood said that these matters should be left to the good sense of the local authorities, but as my hon. Friends showed during the debate, a whole range of abuses have been introduced by local authorities to make sure that a choice cannot effectively be made.

For example, in Chesterfield Mr. Ernest Grosvenor, a caterer, has been barred from catering for next month's banquet for the new mayor of Chesterfield because he provided tea and sandwiches for the police during the miners' strike. Mr. Bill Flanagan, the Labour leader of the council, said: Mr. Grosvenor has been blacklisted for feeding policemen drafted into the area to confront strikers during the pits dispute. If one looks at what Labour councillors get up to in order to avoid the existing regulations, it is no argument to say that this should be left to the good sense of local authorities; where there is a good case they will put it out to tender; otherwise they will leave it to the DLOs. In Burnley, the DLO put in a bid that was £90,000 higher than the contractor's bid, but it subsequently reduced it, by various means, to bring it below the outside figure. I received in today's post some minutes from Councillor Lobenstein, a Conservative councillor in Hackney, giving details of how Hackney had abused its position and reduced its price, after all the other tenders had been opened, in order to get a particular item of work.

In opening this debate, my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold) put the case absolutely correctly when she said that the Government are not insisting that everything should be put out to tender, because that is not a universal panacea. She said that outside contractors should be invited to put in bids in competition with the DLOs to see who could provide the best deal for the ratepayer. I do not understand how anybody can possibly object to that.

As my hon. Friends made clear, good, efficient DLOs have nothing to fear from Government policies that have already been introduced, or from those that my hon. Friends urge us to implement. Indeed, in 1975 the then Under-Secretary of State in my Department—a Labour Minister—said that the efficiency of the direct labour departments would be tested in competition with private contractors. That is exactly what my hon. Friends have been urging the Government to do for the last hour and a half. The emotional response of the hon. Member for Norwood to the sensible and realistic package of proposals put forward by my hon. Friends does him no credit.

My hon. Friend the Member for Tatton (Mr. Hamilton) reminded us of the contrast between the rates paid in Wandsworth and in Lambeth, a point that was followed up by a number of my hon. Friends. Ever solicitous of the fortunes of Ministers in the Department of the Environment, my hon. Friends urged us to find popular legislation which the Department could introduce and which my hon. Friends could support with a spring in their step in the Division Lobby. The right-to-buy policy was introduced by my Department. That has been successful. Many of my hon. Friends have urged my Department to introduce very quickly more legislation to build on the initiatives that we have already introduced. I thought I detected some impatience among my hon. Friends about legislation from my Department. After the abolition Bill and rate capping, I thought they might have seen enough of Ministers from the Department of the Environment. However, I was heartened to hear my hon. Friends say that they want even more legislation from the Department, which they would be more than happy to support.

May I outline the position that we have reached? As my hon. Friends know, in February this year, we sent out a consultative document with some proposals for building on the initiatives that we have already introduced, and extending the obligation to go out to tender to several other services. We have received about 400 representations. Nothing in them has affected our determination to proceed down this path. We are convinced that it is right and, what is more, we have seen growing evidence from other commentators in this area that more should be done.

For example, in a recent publication, the Chartered Institute of Public Finance and Accountancy reported: Competition offered by private contractors has undoubtedly contributed towards the general improvements in performance measures of council operated refuse collection in recent years. Speaking of the existing DLO legislation, the chief executive of West Midlands metropolitan county council —a well-respected officer on local government—said: The DLO legislation has resulted in increased efficiency and improvements in accountability that were long overdue. Those who run the DLOs in local government say that, for the first time, our legislation has enabled them to manage, instead of being at the mercy of spendthrift councils and militant unions. Of course if is far easier to terminate an unsatisfactory agreement if one puts services out to tender than it is if one relies completely on in-house services, which are often dominated by local government trade unions.

The Municipal Journal, which does not always support the Conservative Government's initiatives, states: It is regrettable that these improvements"—— the improvements in the DLOs— resulted from initiatives taken by Government rather than local government professionals. The question is not whether there should be competition, but how we can extend it.

My hon. Friends asked me this evening to give commitments about the Queen's Speech in a few months' time. Their argument is that we must build on the momentum of tendering and extend the advantages to other services. My hon. Friends will understand if I say that it is not within my gift to outline the proposals in the Queen's Speech. That is for others. As I am sure they know, there are always more bids for legislation than can be accommodated, and the Government will have to take some hard decisions. I say that on the day when the House has voted, with a fairly substantial majority, to rise at the end of this week—not a day too soon, in my view. We must weight the merits of the legislation that has been urged on us this evening against other attractive packages, which I know my hon. Friends hope will be included in the Queen's Speech.

Of course my right hon. and hon. Friends in the Government have noted the substantial number of Back-Bench Members who have signed early-day motion 895. That is eloquent testimony of the strength of feeling that has been demonstrated in tonight's debate. I shall ensure that my right hon. and hon. Friends are made aware of those strong feelings.

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