Next Steps

HC Deb 20 May 1991 vol 191 cc668-96

[Relevant documents: Eighth report from the Treasury and Civil Service Committee of session 1989–90 on "Progress in the Next Steps Initiative" (House of Commons Paper No. 481) and the Government's reply (Cm. 1263).]

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

Mr. Speaker

A great many right hon. and hon. Members—13 of them—wish to participate in the debate. I ask the four Front-Bench spokesmen to trim their speeches, and Back Benchers to bear that restraint in mind.

5.10 pm

The Minister of State, Privy Council Office (Mr. Tim Renton)

If, a generation ago, a Minister had spoken from the Dispatch Box about a revolution in the civil service, there is no doubt that the next day a cartoon by Osbert Lancaster would have appeared in the Daily Express showing a series of gentlemen in bowler hats with rolled umbrellas at the ready marching from Marsham street or Victoria street towards Whitehall. No doubt, there would also have been a picture of Maudie Littlehampton on the pavement looking suitably amazed. But times have changed in the civil service. Bowler hats and rolled umbrellas are out—if they were ever in—and instead, especially in Departments and offices outside London, the order of the day tends to be jeans and tee shirts with suitably lurid stencils on them. The composition of the civil service today is more like that of Marks and Spencer. More than half the staff are women, most have not been in the civil service for long, and four out of five are located outside London and the south-east. Another key difference is that 95 per cent. of the staff are mainly involved not in taking weighty decisions but in providing service to the public.

A quiet revolution is taking place—a revolution started by my right hon. Friend the Member for Finchley (Mrs. Thatcher)—

Mr. John Garrett (Norwich, South)

An old idea.

Mr. Renton

I am coming to that.

I am delighted to see the Chairman of the Sub-Committee of the Treasury and Civil Service Select Committee in his place. The Select Committee described next steps in its most recent report as the most ambitious attempt at civil service reform in the 20th century. It may also be seen as the latest stage in a process of reform dating back to the Northcote-Trevelyan report of 1854—the basis of today's impartial civil service with competitive recruitment on merit—through to the Fulton report in 1968, which put the focus on management and on the job to be done. That process continued through the financial management initiative in the 1980s, which introduced the idea of delegating budget responsibility to managers, and the Ibbs next steps report in 1988, which gave its name to the policy. Now, in 1991, we have the Fraser report. I believe that Sir Robin Ibbs's contribution to civil service reform is likely to earn him the ultimate accolade—a building at one of the executive agencies for which I am responsible, at the civil service college, called after him; just as Northcote, Chaucer and other famous civil servants have had buildings named after them at the college in Sunningdale.

Mr. Spencer Batiste (Elmet)

What an accolade.

Mr. Renton

I thank my hon. Friend for his enthusiastic support for the suggestion.

Mr. Tam Dalyell (Linlithgow)

Will there be an Ingham building at Sunningdale for studying the arts of prime ministerial press secretaryship? Does the Minister approve, under the new reforms, of civil servants in the most sensitive positions publishing 400-page books about the very recent past? How does Bernard Ingham's book, "Kill the Messenger", fit in with the civil service reforms?

Mr. Renton

The hon. Gentleman has not waited long to make his obvious intervention. Reading the Crossman diaries, with which the hon. Gentleman will be familiar —indeed, he features in them—one is hardly struck by the Labour Government's detached, balanced and fair approach to the civil service. As the hon. Gentleman will remember, the Labour party governed by intervening in the civil service to promote those who acquiesced in their overtly political views. Joe Haines, the famous Labour press officer, might seem to make Mr. Ingham look like a St. Bernard in a Trappist convent by comparison.

I shall return to my main subject, and leave Mr. Ingham and other former press secretaries to one side. First, I pay tribute to the Treasury and Civil Service Select Committee. I am delighted that its Chairman, my right hon. Friend the Member for Worthing (Mr. Higgins), is in the Chamber today. I very much welcome the input from Committees of the House, especially from the Treasury and Civil Service Select Committee. It is fair to say that the development of next steps has been a team effort between the Select Committee and the Government.

The TCSC is about to embark on its fourth annual inquiry into next steps. I realise that this debate may have caused it to postpone its initial sitting. I apologise for that, but the debate flows from a recommendation in the Committee's eighth report of the 1989–90 Session. I very much welcome the recent appointment of my right hon. Friend the Member for Shoreham (Sir R. Luce) to that Committee. I welcome him not only as my predecessor as Minister for the Arts and Minister of State, Privy Council Office, but because I know that he will make a valuable contribution to the vital work of the Committee. It is a pleasure to see that Sussex Members are so well represented on the Committee.

I also acknowledge the work of the Public Accounts Committee on next steps matters. Both sides of the House will recognise and welcome the broad parliamentary support for the aim of next steps. I fully agree with the letter on that subject from my right hon. Friend the Member for Worthing in today's Financial Times. I have already welcomed the contribution made from the very start of the project by the hon. Member for Durham, North (Mr. Radice), and I am pleased to put that on record.

The House will be aware of the excellent progress made in implementing next steps. Hon. Members will know that from answers that I have frequently given from the Dispatch Box over the past few months and from the regular announcements by Secretaries of State in charge of the relevant Departments involved with next steps agencies that have recently been created. Today, more than 200,000 civil sevants are working along next steps lines. There are 50 established agencies, ranging from the Social Security Benefits Agency, which employs nearly 70,000 staff, to the Queen Elizabeth conference centre, which employs 70. There are a further 23 announced candidates so far, and more are to come. The Fraser report, which was published last week, is aptly entitled, "Making the Most of Next Steps". We should pay particular attention to that during the debate.

Setting up agencies is only part of the job. The other side is to make sure that the arrangements work in practice. Sir Angus Fraser, the Prime Minister's adviser in the efficiency unit, the successor to Sir Robin Ibbs, was asked to examine the relationship between Departments and agencies, and how Departments should adapt their size, structure and methods of working in the light of next steps. The Fraser report was published on 16 May, and my right hon. Friend the Prime Minister commented on it in some detail in his written reply to my right hon. Friend the Member for Worthing that day.

The report confirms that next steps is leading to real improvements in the quality of service and better value for money. I shall describe some of those results in a minute, but the key point is perhaps somewhat more intangible —it is that both sides of the bargain between Ministers and chief executives should be strengthened. As my right hon. Friend the Prime Minister said, Ministers must be able to give agencies clear strategic direction firmly related to the Government's policy objectives.

My right hon. Friend the Prime Minister said that they must determine the financial resources that are to be made available, and that they must select and set suitably robust and meaningful targets covering quality of service, financial performance and efficiency. My right hon. Friend also said that they must be able to call chief executives to account for their performance. The role of people in the central core of Whitehall Departments is to provide well-informed and authoritative support to Ministers so that Ministers can do just that. As a result, the number of people at the centre of Departments can be reduced.

On the other side of the bargain, we are seeking personal responsibility and authority for chief executives to run their organisations, since it is they who are responsible for achieving the progressive improvements in performance, quality of service and value for money that we seek. Agencies' delegations and flexibilities can be enlarged as their track record of performance is established, provided essential controls on public expenditure are not jeopardised. I am sure that my right hon. Friend the Member for Worthing agrees. The principle is that the chief executive should have maximum managerial authority to run his agency as he thinks right, unless there are good reasons to the contrary. The process may vary between Departments and agencies.

As hon. Members know, my right hon. Friend the Prime Minister has asked the head of the home civil service to take forward in each Department the ideas in the report, and to do that in ways that fit each activity. The next steps project manager in my Department has been instructed to work with the Treasury and with other Departments to bring that about. The Fraser report says that Departments need to consider their role in support of Ministers in relation to agencies. The three important issues are: first, giving chief executives the authority, responsibility and incentives that they need to deliver better results and holding them to account for their performance; secondly, allowing managers in agencies and Departments to shop around for the best buy for support services; and, thirdly, reducing headquarters staff, especially in personnel and finance divisions. The report says that a reduction of a quarter in the total of such staff in these functions should be sought.

The Fraser report confirms an idea that is at the heart of next steps—responsibility should be firmly placed with one named individual. Personal responsibility and scope to bring about results are surely the ways to release the energies, skills and enthusiasms that are to be found in our civil service.

All this is surely just a means to the simple end of the improved results that we are seeing. I shall give a few examples of the improved results and initiatives that have flowed from next steps and explain why the Government, with the support of the whole House, want to take it forward. Many agencies recover some or all of their costs from charges. The Meteorological Office, which is not always the most favoured organisation in the land, sells tailored weather forecasts, income from which is running at more than £500,000 a year. I shall give two examples of how that is helping the taxpayer and business. Last August, a retailer took Met Office advice that the warm weather would continue and bought stock of over £1 million worth of tee shirts. He sold them all. Ice cream manufacturers and brewers are consulting the Met Office to help improve their forecasts of demand. Many processes depend on weather factors, such as humidity, and by tailoring its forecast to what the customer needs to know, the Met Office is developing new services and new customers.

Driving Standards Agency examiners now explain faults to failed candidates to help them understand where they were going wrong. The agency published "Your Driving Test" to help people pass the test and improve standards on our roads. That book is now in The Sunday Times list of best sellers, which says much for the standard of driving in this country. The agency's target was to reduce waiting times for tests in non-metropolitan areas to eight weeks, and it is offering tests on Saturdays.

The Employment Service job club opened on a pilot basis in Pentonville prison. So far 24 people have passed through and nine found jobs. Similar facilities offered via the National Association for the Care and Resettlement of Offenders exist at Holloway and 24 people out of 66 have found jobs. The Employment Service has made the UB40 signing card more user friendly and has related it to getting a job rather than just drawing unemployment benefit. Customer satisfaction will be measured annually among agency customers by means of a survey by the Office of Population Censuses and Statistics.

The recently established Passport Agency has a target to reduce the time taken to process correct applications to within 20 days in January to July and to within 10 days at other times. It is considering differential pricing to smooth out demand over the year, and is planning a new financial regime to help match resources to swings and demand.

The Historic Royal Palaces Agency faced a problem because of the success of the crown jewels as a crowd puller. Long queues were spoiling the day for everyone, so the agency installed video screens, made a film about the crowd jewels and the Tower. It found that some people are so keen to watch it right through that they give up their place in the queue to see the real jewels. That clever idea keeps everyone happy.

The Social Security Benefits Agency, which has just been launched, is setting targets to clear applications for specific benefits within published times—on the same day for crisis loans, within five days for income support and within seven days for community care grants.

Mr. John Garrett

Does the Social Security Benefits Agency have as one of its aims an increase in take-up rates?

Mr. Renton

Its aim is to clear applications for benefits within the times that I have stated, and that should have the effect of increasing take-up. The hon. Gentleman should look at the framework document in detail. If the target is to provide the benefits within such short periods, the take-up is likely to increase.

I disagree with the right hon. and learned Member for Monklands, East (Mr. Smith) who said in the House last week that the establishment of this agency was simply motivated by a desire to reduce costs. Plainly, that is not so. One target relates to the level of customer satisfaction expressed, and that will be verified by an independent national survey of opinions of all groups of customers. The agency will carry out local surveys to identify customer needs, and will introduce customer service managers and a new customer satisfaction measure. All those improvements are clearly aimed at making the service more user friendly, easier to approach and easier to obtain results from.

All the initiatives that I have mentioned, and many more, are greatly in line with the ideas about which my right hon. Friend the Prime Minister spoke in the context of a citizens' charter. They are about responding to the customer, and empowering him, which must be the purpose of empowering agency chief executives.

Next steps opens up what government does. Every agency has a framework document in which its aims and objectives and the targets set by the Minister are published. All agencies are required to report on what they have done and to produce and publish combined annual reports and accounts. Those will be signed by the chief executive and audited by the National Audit Office and will provide unparalleled information on agency activities. The annual reports for 1990–91 will be published from July onwards.

The House will recall that the targets set for agencies last year were included in the first next steps review which was published in October. I shall certainly consider repeating that exercise. All this. means more openness, more information in the public domain for taxpayers, customers and Parliament and, in most cases, this is for the first time.

The Government's privatisation policies continue. The Government continue to keep under review the basis on which Government services are provided. The feasibility of immediate privatisation has been considered and rejected for all agencies so far, with the exception of the National Engineering Laboratory, where it was made clear that agency status was en route to the private sector.

It cannot be ruled out that, after a period of some years, agencies, like other Government activities, may be suitable for privatisation. When an agency is established with a view to privatisation, this is made clear, as in the case of the National Engineering Laboratory. Privatisation and competition are the best friends of the consumer, as my right hon. Friend the Prime Minister has made clear.

Mr. Giles Radice (Durham, North)

What did all that mean? Is the Minister saying that, once an agency has been set up and it has been confirmed that it is not a candidate for privatisation in the immediate future, its future is safe?

Mr. Renton

I do not wish to repeat myself, as other hon. Members want to take part in the debate. I chose my words with care and I suggest that the hon. Gentleman reads them in the Official Report.

I shall take this opportunity to pay tribute to the staff. The next steps policy makes sense to them, and this is another reason why the comments made by the right hon. and learned Member for Monklands, East on 9 May, when he talked about public servants being hounded and pilloried, were wrong. Quite the contrary: the next steps policy reflects a demand for change for the better that comes from the public servants as well as from the outside world—the customers who want a more responsive service and the taxpayers who want better value for money. Agency staff understand the job they have to do and they welcome being set clear targets, and being given the resources and the managerial scope to meet them. Like the people whom they serve, they can relate better to smaller units with clearer identity. The newly published Fraser report underlines the importance to staff in the centres of Departments, too, in having a clearly defined role and the satisfaction of using their abilities and energies to best effect in supporting and advising Ministers.

I also pay tribute to the trade unions, which have already been consulted about proposals to establish agencies, as my right hon. Friend the Member for Finchley said they would be when she announced the proposals in February 1988. They will continue to be consulted about any changes in terms and conditions that are contemplated. There is no central strategy for union derecognition or any proposal to derecognise any union as a matter of policy.

Finally, I must say a word about accountability. Ministers set the targets and tasks and allocate the resources. Parliament and the public can see what they have done and what they have commissioned the agency to do. The chief executive is personally responsible for delivering the results. I am sure that the Fraser report is right to hint that with responsibility go both the reward for getting it right and the blame for getting it wrong.

We are taking great care to get the right people to be chief executives. Open competition is the normal route. Having got the right person for the job, we must have the confidence to let him get on with it. Accountability includes the requirement to be as responsive as possible to the concerns of Members of Parliament. I believe that direct contact between hon. Members and chief executives and appearances by chief executives, on behalf of Ministers, before Committees of the House will improve overall accountability and give a better service to Members and their constituents.

There is a great deal of enthusiasm and pride among civil servants for the work that they do and a strong commitment to providing the public with high-quality services, delivered in a business-like way. Through next steps, we hope to tap this enthusiasm and release the energy and skills of staff. This progressive reform has been introduced and carried forward by the Government. We shall pursue it with zest and popular support.

5.34 pm

Dr. John Marek (Wrexham)

The Minister may pursue reforms with zest until the next general election, but after that there will be a somewhat different view of the reforms, and a different line will be taken by the Labour party. I am glad that the Minister mentioned privatisation at the tail end of his speech, but, with his characteristic lack of incisiveness, he failed to mention the Government's hidden agenda of wholesale privatisation of civil service departments should the Conservative party win the next election.

I welcome the debate. If it were not for the Treasury and Civil Service Select Committee and the Public Accounts Committee, little would be known about the workings of the agency system, as this is the first opportunity that the House has had to air its views on this vital aspect of the civil service and the way in which nearly half of our public services are being administered.

Mr. Renton

I shall not intervene again in the hon. Gentleman's speech, because I know that many hon. Members wish to speak, but that comment is somewhat unjust. After all, my predecessor, with the then Prime Minister, published a report in October 1990. It is a detailed review of the next steps agencies after the first year in which many have been in progress. There is a great deal of detail in it and I have already said that I will consider publishing a similar report, quite apart from the annual accounts that will start to be published from July onwards.

Dr. Marek

I will come back later to that part of what the Minister said. However, this is the first time that the House of Commons has had a debate about agencies. Responsibility for these agencies and their day-to-day running has been shifted downwards to the chief executives without the consent of the House. Questions and letters from hon. Members are answered by chief executives, and this raises questions about ministerial responsibility and the access by hon. Members and the press to the letters that are deposited in the Library, rather than being published in Hansard.

We have had no debate on the shift in responsibility or on the dramatic changes in the way that our civil service operates. We have had no debate on the change in conditions, and its introduction, on those civil servants who contracted to work in the civil service but now work in different circumstances. Why were no pilot studies undertaken before the agency system was imposed on the civil service? When I say "imposed", I mean that. There has been little consultation with those civil servants who have to carry out the so-called reforms, despite the assurances by the right hon. Member for St. Albans (Mr. Lilley), who was the Financial Secretary to the Treasury, during the Second Reading of the Government Trading Funds Bill.

There have been no serious evaluations of the first three years of the workings of agencies—I except from this the efforts of the Treasury and Civil Service Select Committee and the Public Accounts Committee.

We are faced with an increase of 26 agencies on top of the 50 or so already established, so it is time for a serious evaluation to be made.

A report to the Prime Minister called "Improving Management and Government: The Next Steps"—the Fraser report—may be the next step along the road of trying to ensure the triumph of party political dogma, but it is a wild leap in the dark for good government. The integrity and skills of our civil service are highly regarded throughout the world. We have a reputation second to none, yet the civil service is now being fragmented in a way that could undermine one of the great foundations of our country.

Agencies may be the right way forward—the Labour party does not deny that. However, to deny debate, consultation and reassessment is a serious matter. In the hands of the right Government, agencies will be an asset, but in the hands of the wrong Government, whose motivation is one of profit before service, the consequences for the country could be devastating.

I come now to what I believe has been the main motive behind the introduction of these agencies—not the quality of service but how costs can be cut so that privatisation can follow.

Basically, the agencies were set up to cut staff and, where possible, to cut pay. The Treasury has worked on the principle of paying civil servants as little as it can get away with, and not a fair rate of pay to motivate civil servants and encourage them to do their jobs properly. That principle does not apply at the top end of the civil service, however. The head of the civil service will be paid £104,750 per annum. It will not be difficult to fill posts such as that.

Sir Norman Fowler (Sutton Coldfield)

I am having difficulty in following the hon. Gentleman's argument, which betrays a lack of understanding and knowledge of the civil service. Surely agency agreements recognise the skill of civil servants and devolve management accountability to a lower level. Surely that is what civil servants have been asking for over a long time. Will the hon. Gentleman answer a straight question: is he in favour of that devolution or is he not?

Dr. Marek

The right hon. Gentleman seems to be under a misapprehension. The report is about enabling chief executives and not devolving powers lower down the scale. The right hon. Gentleman says that the civil service has been asking for the establishment of agencies. He should be more specific and tell the House who has been asking for that. It is not something that appears in the Fraser report.

Sir Norman Fowler

Will the hon. Gentleman give way?

Dr. Marek

No. Let me finish my point first.

Sir Norman Fowler

The hon. Gentleman asked me a question.

Dr. Marek

I ask the right hon. Gentleman to sit down. I shall give way, but first I want to make my point. The right hon. Gentleman will take the time of others who wish to contribute to the debate if he insists on intervening.

As I have said, I should like to know who within the civil service has been asking for changes to be made. The answer to that question is not to be found in the Fraser report.

Sir Norman Fowler

I shall not intervene again after asking whether the hon. Gentleman seriously believes that either the employment service or the benefits service is opposed to this new policy development.

Dr. Marek

The benefits service is far more interested in having decent buildings in which its staff can provide proper services for those who are seeking support. My hon. Friend the Member for Norwich, South (Mr. Garrett) intervened during the speech of the Minister of State. The right hon. Gentleman could have responded by saying that one of the quality of service conditions will be that any claimant will be told all his or her rights. If the right hon. Gentleman had made that statement, I would have been heartened, but unfortunately I heard no such statement. I do not suppose that I shall ever hear a Minister make such a statement, and that summarises the difference between the Opposition's approach to agencies and the Government's approach.

I said before the right hon. Member for Sutton Coldfield (Sir N. Fowler) intervened that, in some circumstances, agencies could lead to an advance in administration within the civil service, but I have no hope that that will ever be achieved while the Government are in office. The most important factor is the delivery of a high-quality service. There has been no serious evaluation of quality and no proper examination of the sort of structure that is best for the provision of high-quality public services. No attempt has been made to compare the advantages of a national civil service with the supposed advantages of agencies.

In the opening of his report to the Prime Minister, Sir Angus Fraser says that there is general agreement that the next steps initiative is progressing well. I do not know who it is who is agreeing, and for what reasons. Where are improvements to be found in quality of service as a result of the changes? If there are improvements, can it be proved that they are the result of the move to agency status, or were they already in train in the pre-agency world? Could they have been achieved without establishing agencies?

In most agencies, unions are not meaningfully consulted when it comes to establishing targets. I agree, however, that they have been consulted in the course of arriving at framework agreements. The unions are not allowed an input into the corporate planning process in most agencies. Market research hardly qualifies as real user involvement. Some agencies have made half-hearted efforts along this road, but most have not. Overall, too little attention has been paid to the development of sophisticated measures of quality, while too much attention has been given to cost cutting as a supposed answer. The arbitrary and obligatory 1.5 per cent. or 1 per cent. saving while maintaining efficiency demonstrates the emphasis that has been placed on cost cutting.

Morale in the agencies is not high everywhere. In what remains of the rest of the civil service, there is a widespread feeling that agencies are being introduced at a rate that may destroy the impartiality and integrity of civil servants, along with their dedication to quality of work and service to the public.

At the end of the day, civil servants are at the sharp end: it is they who deliver the service. Their views should count when it comes to determining the ways in which services should be delivered. Unfortunately, their views are not taken into account. No amount of window dressing can make the quality of service better at the point of delivery. If the window dressing consists of glossy brochures that promise the earth but fail to deliver, it is worthless.

The framework document that relates to the Passport Office refers to an appropriate level of fees to recover the full costs of providing these services. I was not surprised when the Minister talked about differential charging, because that is the Government's theme. It means that, if someone can afford to pay, he will receive a first class service, while those who cannot afford to pay will get a second class service. That applies to the hospital service and education, and the theme is now the same for the civil service. There is the triumph of political dogma over the provision of a proper service for all our people.

The aims, functions and objectives set out in the framework document that relate to the Passport Agency would be rewritten by a Labour Government. There is far too much secrecy in the executive agencies. In some agencies, the corporate and business plans are confidential documents. These include the Building Research Establishment, the Central Office of Information, the Central Veterinary Laboratory, Companies House, the Laboratory of the Government Chemist, the Land Registry, the Meteorological Office, the Veterinary Medicines Directorate and the Warren Spring Laboratory.

There are other agencies in which either the business plan or the corporate plan is a confidential document. There are examples where the personnel management memorandum, or its equivalent, is a confidential document. Such examples include the Central Office of Information, the Information Technology Services Agency, the Laboratory of the Government Chemist and the Meteorological Office. Why is there such secrecy in these agencies?

The Minister made great play of the claim that the unions are always consulted. If they are consulted, let them have copies of I he documents to which I have referred—and let the House have copies as well.

At the end of the day, I believe that the Government want privatisation. I do not believe that they will be content with administrative change. That ultimate goal is an immoral goal. Information must be made available to the general public, and services must be provided at a price that the public can afford, and guarantees cannot be given under privatisation. If services become a charge on democracy, we shall be treading a dangerous road.

If anyone is in doubt about eventual privatisation, I shall reinforce my argument by the use of a few quotations. The next steps report says that ultimately some agencies may no longer be within the civil service. On 24 October 1988, the then Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), stated: I cannot rule out, however, that after a period of years, agencies, like other Government activities, may be suitable for privatisation."—[Official Report, 24 October 1988; Vol. 139, c. 14.] I note that some Conservative Members are nodding. I hope that that will be reported in Hansard.

Mr. Rupert Allason (Torbay)

Is the hon. Gentleman saying that he and the Labour party are utterly opposed in principle to the privatisation of all the departments in question, whatever the merits of the argument for taking that course, or is he saying that some departments, such as the Public Record Office, might merit privatisation?

Dr. Marek

The hon. Gentleman must mention a few merits. Perhaps we can discuss merits when he comes to contribute to the debate. He may wish to develop the theme. I shall be interested to hear exactly what he has to say.

I shall quote Mr. Peter Middleton, the then permanent secretary to the Treasury, who gave evidence in 1988 to the Select Committee on the Treasury and Civil Service. I refer to the second volume of the Committee's eighth report, in which Mr. Middleton is reported as saying: becoming an agency may be a step to privatisation later; it is all part of getting a more commercial attitude. There we have it. Mr. Middleton added: I think this is particularly true of the various trading funds". Last week, the Minister said: We have never said that 'next steps' … is necessarily the end of the road. It is right that some parts of the civil service should be considered for contractorisation and that other parts should be considered as candidates for privatisation." —[Official Report, 13 May 1991; Vol.106, c. 17.] That is in line with the Fraser report and with the next steps initiative in respect of a wholesale contracting out of the support services.

I believe that the Government have a hidden agenda, and it will be interesting to see whether they are honest enough to make it public to the civil service, and to say that, if they win the next general election, Her Majesty's Stationery Office, Passport Office, Ordnance Survey, the Meteorological Office and the DVLC will be on a list of likely privatisations. Perhaps the Minister will give a straightforward answer when he winds up, because that would be welcome, one way or the other.

The problem with commercialisation of the kind advocated in the Fraser report was cited by the chief executive—as I mentioned when the right hon. Gentleman who is a Member for a midlands constituency intervened earlier in my speech.

Sir Norman Fowler

I represent the constituency of Sutton Coldfield.

Dr. Marek

I thank the right hon. Gentleman for reminding me.

Mr. Renton

What a disgraceful lack of knowledge.

Dr. Marek

The Minister may say that, but I come from Wales, and from such areas the midlands look rather far away.

The Fraser report provides for an enabling of the chief executive. The Minister is said to be in a "quasi-contractual relationship" with the chief executive. That phrase was first coined by the Treasury and Civil Service Select Committee, but it is rather an unfortunate one. I should not wish for anything but that the chief executive should be completely responsible to the relevant Minister. A "quasi-contractual relationship" could be the first step in breaking that link and could lead to privatisation later. That is why agencies were first introduced.

When Labour is elected to office, we shall make certain arguments for agencies. One is that they can provide Parliament with a better insight into their activities, as well as better services. However, agencies require fairly rewarded, properly trained and highly motivated staff. They also need boards of management with staff representation.

Mr. Allason

The hon. Gentleman means union representation.

Dr. Marek

The hon. Gentleman has got it in one. Agencies need a clear statement of the policies under which they operate, and clear service quality targets that can regularly be met.

The Fraser report does not argue for any of those. It is time-locked in a web of political dogma, which has surrounded agencies since they were first established. The next Labour Government will lay that aside, and the next steps project manager will be given another job.

Mr. Terence L. Higgins (Worthing)

I am somewhat astonished by the hon. Gentleman's remark that dogma has surrounded the agencies since they were first established. On the contrary, the general feeling is of all-party agreement that there is a strong case for going along the agency route. I find it strange that the hon. Gentleman is taking the line that he is.

Dr. Marek

There is no case for going along the route of the Fraser report. I do not accuse the right hon. Gentleman of indulging in political dogma: I accuse the Government. There is a case for changing the nature of the agencies so that they provide for fairly paid, well trained and highly motivated staff—but that is not guaranteed, and it is unlikely to come about, if the spectre of privatisation looms over the heads of many civil servants working in the agencies.

If privatisation is on the cards—I firmly believe it is —the possibilities are endless. I suppose that someone would have to tell Sid, and then the Government could use the profits to make more tax cuts for the benefit of the rich, instead of sharing out the benefits to all. That would be another waste of resources on the scale of North sea oil.

The Government seek to develop a leaner, fitter civil service. We all know what happened to the economy. The Government began their term in office with one recession and are leaving it with another. The Government were supposed to cultivate a leaner and fitter industrial base, but we know what confronts manufacturing industry today. We are again in a recession, and there is no fat to cut. Are further cuts and more privatisation what the nation needs? I do not think so for a moment.

Agencies would be very different under a Labour Government. The present Government may succeed in putting a gloss on the surface of the many problems confronting the Civil Service, but if it cannot deliver, the gloss will fade, and we shall be left with the dull fragments of what was once a proud service—and that would be a tragedy. It is high time that the Government called a general election, so that Labour can start to repair the damage.

5.54 pm

Sir Richard Luce (Shoreham)

When I had the privilege of being Minister of State in the Privy Council Office, the hon. Member for Wrexham (Dr. Marek) was Opposition spokesman on civil service matters. I enjoyed our exchanges, but he appeared to be in a confused state of mind as to the purpose behind the creation of executive agencies. I confess to failing to convince the hon. Gentleman of their value. Even more confusing today is that the hon. Member for Wrexham does not appear to have consulted the right hon. and learned Member for Monklands, East (Mr. Smith) or his hon. Friends on the Treasury and Civil Service Select Committee—all of whom now appear strongly to support the principle of executive agencies.

The hon. Gentleman also does not seem to understand the purposes of the agencies, which are to improve the quality of service given to the public and give the taxpayer better value for money. That is what most concerns the Government. One of the side effects of providing an even better service will inevitably be greater job satisfaction within the civil service—so, of course, there are spin-off benefits. However, the Government's first concern is to improve the quality of the service.

Having given evidence to the Select Committee over four or five years, sometimes to my right hon. Friend the Member for Worthing (Mr. Higgins) and sometimes to the hon. Member for Durham, North (Mr. Radice), I am relieved to serve now as one of its members—as poacher-turned-gamekeeper—in order that I may continue to take an interest. There is no shadow of doubt about the scale and importance of the reforms.

The public's perception of the civil service has been moulded by the long-running television series, "Yes Minister", and they still believe that the mandarins tell Ministers precisely what to do and what to say, and that they really run the Government.

Mr. Gerald Bowden (Dulwich)

They do.

Sir Richard Luce

My hon. Friend says that there is some truth in that belief. However, I will tell him that, within two weeks of my becoming Minister of State in the Privy Council Office, Paul Eddington came to see me, not about civil service matters but about the arts. I grew rather confused by the case that he was making, so I asked him to pause for a moment and to clarify a particular point. I asked him, "Is this what you really mean?" There was a long pause and eventually he answered, "Yes Minister." That led me to believe that I had not quite asserted my authority in the office, but I trust that I did so after that.

My right hon. Friend the Minister effectively explained that we have come a long way since the significant Northcott-Trevelyan reforms of the last century, which provided for fair and open competition, promotion on merit, professional standards, service loyal to the elected Government of the day, and impartial in that sense. Those principles remain. Sir Charles Trevelyan referred to sickly youths whose parents and friends endeavour to obtain for them service in the employment of the Government as a soft option leading to an early public pension. His purpose was to change the climate and to establish those standards of fair and open competition, and of loyalty to the elected Government, that have survived to the present day.

Recent years have seen the publication of the Plowden and Fulton reports, both of which referred to the need to improve civil service management which was badly lacking. That led in the early 1980s to the delegation of management responsibilities through the financial management initiative, and from there to the Ibbs report, which pointed out that 95 per cent. of the people who serve in the home civil service are dealing with the provision of services to customers of one kind or another, which is highly significant and interesting in itself. Ibbs advocated, as my right hon. Friend the Minister stressed, the need to delegate responsibility. The more that one delegates the more likely one is to achieve better management of resources, better value for money, better accountability and clearer targets, all of which are necessary to help us to improve the quality of the service.

The reforms are crucial and therefore we are talking not merely about the quantity of money available to public services, but about how we can more effectively improve existing services with given levels of resources. I am glad that, despite the speech by the hon. Member for Wrexham, there is bipartisan support for the principle of delegation of responsibility—or I should like to believe that that is the case.

Our first duty is to the taxpayers and to the customers that we serve—in most cases they are one and the same. Today we have a chance to take stock of the two reports, the so-called Fraser report and the Price Waterhouse report of March this year, which reviewed the way in which the agencies are progressing. There are now 50 agencies with 210,000 civil servants, and another 23 candidates for agency status. There is growing staff enthusiasm for the existence of the agencies and, therefore, more job satisfaction. It is just under three years since the first agency was created—the Vehicles Inspectorate—and we are beginning to see the first signs of improved performance and better customer service. The fact that so many of the agencies carry out customer surveys is a sign of an attitude of mind that is changing fast and of a different cultural approach.

I strongly support and commend the work of my right hon. Friend the Minister of State and I am sure that he would allow me to congratulate Mr. Kemp, the project manager, who has given admirable momentum to the implementation of those significant reforms.

I refer especially to the answer given by my right hon. Friend the Prime Minister in Hansard last week, when he referred to the need to ensure that agencies select and set suitably robust and meaningful targets covering quality of service, financial performance and efficiency; and call chief executives to account for the performance. He stressed that This means strategic advice and direction"— from the Minister, but— not day-to-day involvement."—[Official Report, 16 May 1991; Vol. 191, c.248.] That is an important statement of the way in which we have to continue.

I stress the importance of delegation of authority. The key to success is to delegate authority for the management of resources to chief executives, and thereby to the team that serves under him. Of course, overall financial control must be imposed from the Treasury, the Government and the Department. We must agree on overall resources and then delegate the day-to-day operation to the chief executive.

I noticed in the Fraser report a strong reference to the experience of the private sector and to the value and the need to delegate as much as possible, setting clear guidelines from the centre, but leaving the chief executive to get on with the job, which will be crucial to success. The Fraser report also stresses that we must untie support services to enable better value for money and that we must reduce the number of headquarters staff in the personnel and financial divisions. If one is delegating authority one cannot need so many people at the centre.

As part of the delegation process, those executive agencies must have more freedom to decide how it is best to proceed as regards flexibility on pay and the provision of performance bonuses. The second aspect of the problem is performance targets, which are crucial. The House, on behalf of the country, must be able to judge the performance, progress, value for money and quality of the service provided by agencies, through clearly established targets for quality, financial matters and efficiency.

We are beginning to have evidence from the Vehicles Inspectorate, from HMSO, Companies House and others of improved services and of better value for money. The House has a singularly important part to play in that regard and I was glad that my right hon. Friend the Minister of State stressed accountability to the House and the right of Select Committees—not merely the Treasury and Civil Service Select Committee, but also departmental Select Committees—to summon chief executives to enable them to account to the House for their performance and to allow hon. Members to challenge them.

The hon. Member for Norwich, South (Mr. Garrett) is a strong believer in the legislature challenging the performance of the Executive and that is the purpose of the exercise and what Select Committees should be doing. Good chief executives should welcome that opportunity to get across their achievements.

There is no uniformity in the system of executive agencies and nor should there be. Each agency is a different size and type and they should be tailor-made for requirements. Some agencies run on gross running costs, some on net running costs and others on trading fund status. It depends on the nature of the agency and how far it can be run on commercial or semi-commercial lines.

I am surprised that the hon. Member for Wrexham goes on about privatisation. The Government's approach is quite straightforward. If the service is better suited to privatisation and thereby a better quality of service is provided, that is the first option. If it is considered that that is not the case, the next option is for it to go to an agency. In due course, it may turn out to be more suitable for it to be run on a privatised basis and I believe that that will be the case with the National Engineering Laboratory. The key question that we must ask ourselves is what is the best means of improving the quality of service to the public and getting the best value for money? That is the first and only question that we should ask ourselves.

I am glad that there was an open competition system for half of the first 34 agencies. It is important to establish that principle across the board, so that we have the opportunity to recruit the best chief executives to run the agencies, whether from the private sector or from the civil service, and we must move towards that, although I am glad that 14 chief executives come from outside the service. The executives appointed from inside the service are certainly of very high quality.

Finally, I must stress the interplay between management and policy advisers, as it is crucial for there to be a constant interchange between the two. The quality of the advice given by policy advisers to Ministers will be enhanced by their having had management experience in the agencies. However complex it may be to provide that, it is absolutely essential to the success of the service, and I strongly advocate that we consider ways in which we can ensure that people move from one to the other.

We must never lose sight of our main objectives in this exciting and major reform of the civil service this century: better service for the public and better value for money. In the process, we will achieve an even more professional and dedicated service, which will do an even better job.

6.7 pm

Mr. Giles Radice (Durham, North)

I welcome this debate but, frankly, it is long overdue. It is a pity that it should be taking place three years after the agency reforms started. Perhaps it is also a pity that it is taking place in the run-up to a general election.

I shall begin by referring to the involvement of the Sub-Committee of the Treasury and Civil Service Select Committee and thanking the Minister of State for his words. As we can see from this debate, bureaucracy-watching has always been a minority sport. Like the mandarins themselves, Members of Parliament are usually much more comfortable with policy issues than with questions of management; but I, and I think many hon. Members in the Select Committee, thought that the next steps changes were far too important to be left to the Executive alone, and that there should be a parliamentary input.

The Sub-Committee, under the auspices of the Treasury and Civil Service Select Committee—I am glad that its Chairman, the right hon. Member for Worthing (Mr. Higgins), is present—was involved from the start. We held annual hearings on the developments in the next steps programme. We have issued three reports, and we shall hold further hearings in the next month or so. We hope to give our fourth report to the House before the summer recess. The Select Committee's close involvement in a major bureaucratic change is, arguably, unique in the relationship between Parliament and the Executive.

The Select Committee has called the next steps initiative the most ambitious attempt at civil service reform in the 20th century", which I think is right. The changes could affect not only 75 per cent. of the civil service, but also the way in which a wide variety of essential services are delivered to the public. It is very much in the nation's interest that these services are delivered with maximum efficiency. As we said, a well-managed state is in the interests of all its citizens. Surely that can be agreed between the parties.

The agency idea has not come out of the blue. It should have been mentioned—I do not think it was—that it is built on the Fulton idea of accountable units. It was pointed out in the Fraser committee report that there is a straight connection with the Fulton committee, which was set up by the Labour Government in the 1960s. I am glad that my hon. Friend the Member for Norwich, South (Mr. Garrett) is present, as he played a distinguished part in drawing up that committee's report. The Fulton committee concluded that, to function effectively, members of large organisations, including Departments, should have authority, unitedly and individually. It was essential, in Fulton's view, that that authority should be clearly defined and that civil servants have responsibilities for which they can be held accountable.

The Ibbs report used the Fulton concept as a basis for proposing the policy of devolved agencies to handle the majority of the Government's business. So far, the next steps reforms have got off to a pretty good start. Since 1988, 50 agencies will have been set up by the end of the year. The next steps programme will apply to nearly half the civil servants by the end of the year.

I agree with my hon. Friend the Member for Wrexham (Dr. Marek) that it is too early to make a considered assessment. It would be foolish for us to do so, because some agencies, especially the biggest and most controversial such as the Employment Agency or the Social Security Benefits Agency, are only just up and running, and are still in their infancy. However, the next steps changes are beginning to prove their worth.

I should like to pay tribute to the project manager. He and his team have done a good job on their remit. It is not right to refer to the jobs of civil servants, who are acting under the instructions of Ministers, as though they are taking an independent initiative—they are not. Those who ask for a non-partisan civil service cannot, at the same time, say that we will sack or shift individual civil servants.

Mr. Batiste

Hear, hear.

Mr. Radice

That also applies to Conservative Members. In the past few years, under the premiership of the right hon. Member for Finchley (Mrs. Thatcher), many of us feared that the civil service was becoming politicised. Journalists talked of a "Thatcherite Satrapy" when referring to the civil service. Thank goodness that has not taken place, although people such as Sir Bernard Ingham behaved in a political way and should have been political appointments, as the Select Committee implied in its report. However, the civil service is still non-partisan. Its head has made it clear that he wants it to remain so, as has my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). It is not for us to criticise the actions of individual civil servants when they are acting under the instructions of Ministers.

I welcome the speech that was made by my right hon. and learned Friend the Member for Monklands, East to the Royal Institute of Public Administration. He said that an incoming Labour Government would not seek to reverse the changes made: I do not think that there would be merit in a new Government seeking to uproot all the plants in the garden, re-arrange their roots and then, having planted them again, expect them to grow well. He is absolutely right. He also pointed out that the framework agreement, which sets out the responsibilities and duties of an agency, can be changed by an incoming Government. The agency idea is politically neutral. It is administrative technology that can be transmitted from one Government to the next. This key idea behind the agency reform was endorsed by the head of the civil service when he told us that transmission is a simple matter that is allowed for in a review of a framework agreement. The Labour party supports the agency reforms partly because we could change the framework agreement to allow objectives to reflect the values of an incoming Labour Government.

There is a wider message. If a Government are embarking on far-reaching changes, especially a change involving the civil service, it is essential to have consensus; otherwise the reforms are likely to be reversed by a successor Government. I hope that the Government take notice of what I am about to say: it would be extremely foolish if, having taken the trouble to set up civil service agencies, they then decided to embark on a programme of privatisation. It has been rumoured in newspapers that the Conservative party may do so if it wins the next election.

I hope that the Government do not want to privatise sitting agencies, and that the Minister's vague words meant that they would not do so. Such a development would undermine the undoubted consensus on next steps, and could endanger the success of the reforms.

Mr. Renton

I take the hon. Gentleman's points about the consensus. For that reason, I paid tribute to the work of the Treasury and Civil Service Select Committee, which included the hon. Gentleman and my right hon. Friend the Member for Worthing (Mr. Higgins). However, is there consensus in the Labour party on this matter?

I read the speech made by the right hon. and learned Member for Monklands, East (Mr. Smith) with much interest. The hon. Member for Wrexham (Dr. Marek) gave me the strong impression that he was distancing himself from the next steps process. That shows the great divide on this matter in the Labour party.

Mr. Radice

My hon. Friend the Member for Wrexham made it clear that he was in favour of the agency reforms, but that, under a Labour Government, they would take a different shape. As the right hon. Gentleman knows, the framework agreement allows that to happen, because the objectives of an agency can be changed. Different people may put their words differently. As I said, it is a pity that this debate is taking place in the run-up to a general election. That is the fault not of my hon. Friend, but of the Government, who have delayed the debate, despite our telling them many years ago not to do so.

If the Minister is trying to maintain the consensus, it would be foolish of him to stir the party political pot. I advise him not to do so.

Mr. Renton

The intra party political pot.

Mr. Radice

I have not done that. The Minister should not look a gift horse in the mouth. He should accept support, wherever it comes from and not complain, because he is quite lucky.

In supporting the next steps reforms, I am not hiding the fact that there are major problems of implementation; we must accept that. Some of the problems were covered in the three reports of the Select Committee, and some were covered in the recently published Fraser report, which the Select Committee will want to consider. It will want to take evidence from Sir Angus Fraser. He has said —we have said so, too—that clear framework agreements are required. Some of those agreements are not yet clear enough on objectives, duties and responsibilities.

Within the agreement, management must have sufficient independence, because that is the point of the agency reform. At the same time, the management must be made accountable and the only way to do that is to have proper performance indicators. However, performance indicators are in their infancy. We do not have a fully developed sense of what they should be, and in particular, we have not established sufficient output indicators. My hon. Friend the Member for Norwich, South is an expert on such matters, and I look forward very much to his remarks.

It should not be a question of cost cutting. As we said in our latest report, we should like some of the benefits to be invested in improved services to the general public. I agree that the appointment of good chief executives is absolutely key, and that it should normally be done by open competition. I am glad to see that that point was endorsed by the Fraser report.

The role and size of core Departments is another problem, epecially as it is likely that there will be job losses within them. It would be foolish to pretend that that will not create great difficulties. The role of the Treasury and whether it supports the agency idea is an issue: I hope it does, but I am not absolutely certain. There is a need for a monitoring unit over and above the project team to consider developments, to assess whether we are fragmenting the civil service too much and whether we are creating agencies without any general co-ordinating principles.

The nature of the civil service is also an issue. What sort of civil service will remain once all the separate agencies have been created? Will the heads of the agencies be able to become policy advisers? We do not yet know. I believe that they ought to, but I do not know what will happen. These are tricky and important issues, and we shall consider them and others in our report to the House before the summer recess.

The next steps reforms raise in an extreme form the problem of how civil servants are to be made accountable for their actions to Parliament. The classic formula of exclusive ministerial responsibility has, for many years, proved unsatisfactory as a means of ensuring the accountability of civil servants. The range of Government business is so extensive that no single Minister will know in detail everything within his Department. Hence the growing number of appearances of civil servants before Select Committees, which I welcome. That has become such a special feature of parliamentary life that we have a rather esoteric set of Government rules governing the appearance of civil servants—I think that they are called the Osmotherley rules.

The next steps reforms create a new dilemma. The chief executive will be given specific operational responsibility by the framework agreement, but the Minister will remain responsible for the overall terms of the agreement. For example, if an hon. Member wishes to take up an operational matter with the Minister, he or she will be referred to the head of the agency. That seems logical. Ever since I have been a Member of Parliament, I have taken up social security cases directly with the local office manager. That is the most efficient way in which to get answers, and that is the way I have always operated. However, until now I have always been able to refer the matter to the Minister if I am not satisfied with the local manager's reply. That is a weapon available to hon. Members, but they will not have it in future, because the Minister will always say that the matter is one for the agency under the framework agreement. Our questions will be referred to the agency, and we will have no recourse to the Minister even if the problem raises wider issues. The House will have to consider that matter carefully and the Select Committee will have to consider it carefully in our coming report.

There are also different issues with the Select Committees. Originally, we recommended that chief executives should give evidence directly on their own behalf to the Select Committees. We were told that that was a matter for overall ministerial responsibility, and the Government proposed a compromise whereby Ministers remained formally responsible but, in practice, agency heads answered for their delegated responsibilities. That seems a sensible approach. It is also welcome that chief executives, such as agency accounting officers, are financially responsible to the Public Accounts Committee. But these changes put pressure on Select Committees, and I question whether they are in a good enough position to carry out their responsibilities.

Select Committees have been slow to question chief executives. Part of the problem is that we do not yet have a generally accepted set of performance indicators, so it becomes difficult to ask meaningful questions about the work of agencies. If the performance indicators can be developed, perhaps the Select Committees will be in a stronger position. It is important that those Committees can make chief executives responsible for their stewardship.

We must learn as we go along. Accountability is in its infancy, but there is a strong case for arguing that parliamentary accountability of agencies will need to be supplemented by a strengthened system of administrative justice, a more powerful ombudsman and a freedom of information Act.

Mr. Allason

Will the hon. Gentleman give way?

Mr. Radice

No, because there is very little time.

Next steps is a promising reform and hon. Members, particularly those on the Treasury and Civil Service Select Committee, have a responsibility to see that it succeeds.

6.26 pm

Mr. Spencer Batiste (Elmet)

One of the clear lessons of the Government's successful privatisation programme in the 1980s was that people freed from the constraints of the governmental system were then often able to make dramatic transformations in the quality of services and the effectiveness of the organisations that they ran. Some executive functions of Government are not now suitable for privatisation and they may not be in the longer term. But we must consider the lessons of the privatisation programme for the structure of government and implement the reforms that will enable similar improvements to be made even if the process falls short of full privatisation.

We should ask ourselves how the interests of customers and good management can be met within the overall and inevitable constraints of the governmental system. We must shift the focus of the managers of governmental executive responsibilities away from looking to their backs, in order to shelve responsibility, and passing on those responsibilities higher up the civil service—almost always ultimately to the Treasury. Instead, we should refocus their attention on giving a better service to their customers and better value for money.

Until I heard the hon. Member for Wrexham (Dr. Marek), I had understood that the next steps agencies had widespread support as the right way forward. When the hon. Gentleman reads his speech, he may find that the balance of it gave a different impression, even though some of his remarks undoubtedly suggested support for the principle of the next steps agencies. The Government have an ambitious programme—by 1992, 50 per cent. of civil servants will work in agencies and, in the longer term, the objective is for 90 per cent. of civil servants to work in agencies. Such an ambitious programme will succeed only if it has the widest support among all parties.

My particular interest was focused on 26 April this year, when I, with a number of others, had the privilege of going to the forensic science laboratories at Wetherby on the occasion of the official launch of its next steps agency. Of course, there was trepidation—anybody facing major changes in the way in which his organisation is structured and run will inevitably look to the future with a measure of trepidation—but I found great enthusiasm for the freedom that the people felt that they now had in the running of their affairs. I was particularly heartened by the way in which the members of the forensic science service, as well as their major customers—the police force—talked about how the service could be improved, how the police could get better value for money and how the detection of crime could be advanced. That is what this process is all about.

How can the process be advanced more generally? Clearly, the maximum devolution of authority downwards is necessary. With that must go the maximum possible devolution of budgets. The provision of incentives for success—however one may phrase that—is an integral part of the process. If there are not rewards for success, the temptation to go for the easy life will always be great.

It is important that support services should be fully costed and that the managers of these agencies should be free to shop around for the best value. There must be tough auditing and complaints procedures. I refer not just to accountability to the House, to which the hon. Member for Durham, North (Mr. Radice) referred, but to accountability to the public. The public need a strong complaints procedure, with a view to ensuring that, at their end, the objectives of the next steps agencies are properly fulfilled. Clearly, inherent in that are strong, published performance targets. These targets change from time to time; they are indeed moving targets. Clearly, the agencies, as they develop in certain directions, will find new objectives on which they must focus.

As other hon. Members want to take part in this debate, I shall heed your strictures about brevity, Madam Deputy Speaker. I shall refrain from referring to many of the fascinating subjects that have been raised in the debate. Suffice it to say that the great political debate of the 1990s will focus on the way in which public services can be made more effective, with a view to delivering better value for money and better service for the people for whom they are intended. The core of that debate is in the citizens' charter proposals that the Prime Minister has floated. Many of the proposals at the core of the citizens' charter are now being developed, extended and experimented with in the next steps agencies. As those agencies succeed, so will the whole process of providing better services for the public.

6.32 pm

Mr. John Garrett (Norwich, South)

I must confess that I have mixed feelings about next steps agencies, as I had a hand in their origin. Twenty-four years ago, a group of which I was a member reported to the Fulton committee that Departments should be divided into budget centres; executive areas with measurable output, which we now call agencies; and responsibility centres handling legislative policy and ministerial support work, which are now called core departments. As a result, Fulton produced a definitive text on agencies. Paragraph 150 of the Fulton report says that the achievement of accountable management depends upon identifying or establishing accountable units within government departments—units where output can be measured against costs or other criteria, and where individuals can be held personally responsible for their performance. Of course, because of bitter Treasury opposition those ideas came to nothing.

The concept next surfaced in a Fabian tract written in 1973 by myself and my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), in which we proposed the widespread establishment of departmental agencies. This tract was called—believe it or not—"Administrative Reform: The Next Step". The present agencies go much further than we had in mind. We never believed that, on such an issue, the Treasury could be so effectively handbagged. Like Fulton, we saw departmental agencies as bodies that would develop better information and budgetary systems and would enable the development of a cadre of professional top managers in the civil service. The main aim of Fulton, in constructing accountable management, was to break the power of the mandarins —the Oxbridge public school classicists and historians who ran the civil service—and replace them with managers. Unfortunately, that aim has never been fulfilled, and top management in the civil service is as socially and educationally exclusive as ever.

The reason agencies have made such rapid headway is that they were seen as a vehicle for cutting civil service costs by giving agency chief executives a strong incentive, through performance pay, to reduce staff numbers and by ending service-wide agreements on pay and conditions. The idea was to locate agencies in low-pay areas, and then pay their staffs at the local going-rate.

The document that heralded agencies in 1988 was a slight and inexpert piece of work—16 pages of assertions, and no analysis. This is what it says about Parliament: Presssure from Parliament, the Public Accounts Committee and the media tends to concentrate on alleged impropriety or incompetence, and making political points, rather than on demanding evidence of steadily improving efficiency and effectiveness. I thought at the time that that was a gratuitous and ignorant observation, given all the efforts that all of us make every day of our lives, in the House and on the Select and Standing Committees, to demand improved performance by Departments. We have certainly never been offered it, and we have never secured it except by relentless pressure. Yet, here we have this dismissive attitude to our work in Parliament.

The first wave of these partly independent nongovernmental organisations—"PINGOs"—is now three years old. Their role, responsibilities, objectives and targets are supposed to be specified in framework documents. The early ones were all in relatively non-controversial areas: quasi-commercial work, where a framework document is not difficult to draw up. Her Majesty's Stationery Office, the Meteorological Office, the royal parks, research institutions, vehicle licensing, and so on. The only one in the first wave which was in an area of social policy was the Resettlement Agency, existing to provide board and lodging for persons without a settled way of life. The framework document for that body should have been a rather subtle instrument, but it did not even mention the size of the problem with which it had to deal, or what it proposed to do for its clients. Its only target was to abolish itself.

Now, a number of agencies are involved in social policy, having joined the Resettlement Agency. The largest of these has to do with social security benefits. They raise much more significant matters of public policy and parliamentary accountability. Decisions affecting thousands of our constituents have been handed over to a subsidiary of the Department of Social Security. Now we have the Fraser report, which raises more questions than it answers. I should like to put to the Minister a number of direct questions arising from it.

The first question concerns the treatment of staff. I have here three letters sent last month by the Office of the Minister for the Civil Service to the Council of Civil Service Unions. I shall leave the Minister sufficient time to reply to the questions that have been put to him, and I hope that he will answer this point. The effect of the letters from the officer to the council is to deregulate annual reporting, deregulate promotion procedures and deregulate redundancy procedures. In effect, they abandon long-established redundancy agreements. More civil servants are being made redundant than at any time since the 1950s. Is it the intention to abandon all staff agreements on conditions of service in agencies? Paragraph 2.8 of the Fraser report proposes to give chief executives freedom to manage staff and resources in all areas, with a few specified exceptions. What are the exceptions? Perhaps the Minister will answer that question.

Secondly, we come to the framework documents, which are clearly crucial to the management of agencies and to which several hon. Members referred. Paragraph 2.4 of the Fraser report says that there should be agency targets and that they should measure financial performance, efficiency —both of which mean cost cutting—and the quality of customer service. Why does it not mention effectiveness in reaching out to those who could benefit from the services? Is it not the job of the Social Security Benefits Agency to increase benefit take-up rates? Is it not the job of the Training Agency to reach those people who need training but are not getting it? Will those targets be set?

So far, the Treasury and Civil Service Select Committee has had two entirely different answers from two different Ministers on that point. When the Chief Secretary to the Treasury, now the Chancellor, was asked whether it was legitimate for the new Social Security Benefits Agency to try to increase the take-up of benefits, he said: I would not see that as a feature. When asked the same question, the right hon. Member for Shoreham (Sir R. Luce), then Minister for the Civil Service, said: In principle 'yes' and they arc perfectly entitled to set that as a target. What is the truth? Thirdly, the Fraser report refers to cuts in headquarters staff of some 25 per cent. It quotes reductions in industry, under a similar devolutionary approach, of some 50 per cent. Those cuts will come in personnel and finance divisions, which happen to be the two places where civil service management is weakest. The report even talks about redefining the size and role of the Treasury and the Office of the Minister for the Civil Service. I never thought that I would see a Government report on "downsizing" the Treasury.

What is the size of that group in the civil service which is to be reduced? In the 30 main departments, it can hardly involve fewer than 100,000 staff members, virtually all working in London and living in the capital and its suburbs. When will they go? Will they suffer from deregulated redundancy arrangements?

Fourthly, it is the aim of the Fraser report to devolve personnel work from the centre and from the Office of the Minister for the Civil Service to the individual agencies. The Office of the Minister for the Civil Service will be cut, as I assume that the Minister will seek to set an example by reducing headquarters staff. When personnel work has been devolved, what will happen to central equal opportunities initiatives? There are no members of ethnic minority groups in the civil service in grades 1, 2 or 3 and only five in grade 4. Women form 48 per cent. of civil service staff. They form 74 per cent. of the lowest clerical grade but 5 per cent. of grades 1 to 4. How will those problems be addressed when the civil service is a collection of 100 small businesses, with no power at the centre to impose equal opportunities guidelines?

Fifthly, why is the civil service still regulated by Order in Council—the royal prerogative? Surely it is obvious that we need a civil service Act to govern the employment and conditions of civil servants. The royal prerogative was used to deny civil servants trade union rights at GCHQ. A civil service Act should define the duties of civil servants to serve the Crown rather than the Government of the day. It should also define the rights of civil servants to belong to trade unions and the duties of an accounting officer. At present, the accounting officer memorandum, which lays down the responsibilities of permanent heads of department, has no legal standing. The only statutes that apply to an accounting officer are those under the National Audit Act 1983.

Will the terms and conditions of service of civil servants be legislated for, or will they continue to be governed by royal proclamation? Will the civil service continue to be an entity? If it ends up as 100 agencies and 20 or 30 core departments, there will have to be an active and professional department for the civil service at the centre. Surely there is no question but that the arts and the civil service should be combined in the portfolio of one Minister. That shows what the Government think of the arts and the civil service. It is a ridiculous combination.

Which of the agencies will be privatised? I happen to have two in my constituency—Her Majesty's Stationery Office and the Central Computer and Telecommunications Agency. Having joined the civil service, my constituents should like to know how many of them will end up working for private companies. The two agencies which I mentioned are sufficiently commercial to be chosen for privatisation. If there were a list of forthcoming privatisations, as I am sure that there is, right at the top would be HMSO—so long as the Government could find a way to subsidise parliamentary documents—and the Central Computer and Telecommunications Agency.

The Government boast of efficiency but, when one studies the background to their recent policies, one sees extraordinary inefficiency and huge cost of administration in relation to returns. The poll tax, the social fund, student grants and chasing errant fathers for maintenance are examples of such policies. There has never been legislation with such a low benefit-to-cost ratio. Civil service policy is not the only example of retrogression. Recently, there has been a growth in quangos. I remember when the Government were a great hunter of quangos but nowadays, instead of talking quangos, we have spending ones carrying out training, regulating gas, water and electricity and controlling pollution. Few of those expensive quangos are accountable to Parliament. Will the Minister explain their accountability?

Agencies are neutral. They can be used by a Labour Government for advancing the conditions of the people and for providing better services to the customer.

Alternatively, they can be used to cut costs—as these agencies will be used. They may be like HMSO or the Charities Commission. Under the Government, they will drive down the living standards of their workers and will not actively seek to improve their services. If anything, they make worse the real problem of the civil service—its divisions on grounds of social class. It is still overwhelmingly dominated by mandarins. The cadre of the permanent sector is now more socially exclusive than it was in 1900. In last year's fast-stream entry, 55 per cent. of entrants had Oxbridge arts degrees and one came from a polytechnic. The Government have made no impact on that problem.

The tradition of the gentleman amateur in top management in British Government has done our country incalculable harm. It is a tradition that is indifferent to quantitative analysis, management and junior staff. That is the real problem in the civil service, and the Government have done nothing to broaden the formation of senior civil servants. Agencies are irrelevant to that problem and, although they could be used to improve quality, the Government will use them to cut costs. Under a Labour Government, they would be used to improve the quality of service, particularly in social policy, to outreach the service to potential customers, who now receive no service at all.

6.47 pm

Mr. Rupert Allason (Torbay)

The question that the Opposition must answer on their ambiguous approach to this issue is whether they believe in putting first the interests of staff or those of the consumer. Next steps seeks to attain a complete change in culture within the civil service. Every hon. Member knows that dealing with the civil service—whether it is a matter of trying to get a passport in time or a replacement driving licence—is like dealing with a brick wall. We are trying to achieve a dramatic change.

A welcome change has been made in the driver vehicle licensing centre, and the results of Her Majesty's Stationery Office are gradually being improved. The Meteorological Office also shows every sign of improvement, and Ordnance Survey and Companies House have taken great initiatives.

The Public Record Office is a prime candidate for privatisation. It is a marvellous national asset that should be exploited. I find it offensive when people come to me, having studied documents in the Public Record Office, and ask why documents from the first world war are still classified "top secret" and not available. There should be an immediate change to the Public Records Acts 1958 and 1967 to allow the privatisation of the Public Record Office. We should be able to give the public far better service. They should be allowed to see all documents, unless there is a genuine national security consideration or somebody's life could be put at risk by premature disclosure.

The Public Record Office is a national asset. A good precedent for privatisation was when the BBC decided that it was also a national asset, with tremendous software programming. At one stage, only three people were working in the New York office of BBC Enterprises. It is now a major organisation, working to the great benefit of the BBC.

The Public Record Office is sitting on a veritable goldmine, yet it supplies absolutely free, although not entirely good, service, not just to the British public but to American academics and researchers from overseas. I should like to see the genuine exploitation of all the material. The Government and civil service should ensure that they fully respect the 30-year rule. All material should go from Government Departments to the Public Record Office without being shredded. After 30 years, all that material should become completely available to readers of the Public Record Office. That would mean charging consumers and exploiting a priceless asset and would end the abuse and secrecy surrounding the Public Record Office.

People do not realise that, not only are several Government Departments excluded from the Public Records Acts 1958 and 1967, which means that Government Departments do not have to supply documents to the PRO; material is sent to the PRO after it has been what is euphemistically known as "weeded" by the civil service, and that material also remains closed. There are vast corridors of documents in the PRO that are entirely secret. At present, the PRO conspires with the Lord Chancellor's Office to ensure that that material is never seen by the public. That is a deplorable conspiracy. I should like to see something along the lines of a Freedom of Information Act or a change in the Public Records Acts to enable people—the taxpayers—to be able to see that material.

There is a great principle in the United States: if material has been paid for by the taxpayer, he is entitled to see it. Unfortunately, on this side of the Atlantic, we subscribe to the culture whereby material is not made available to the taxpayer because, if it were, it would mean that, heaven forbid, the civil service would be held accountable for the views and advice it gives to Ministers. That is the key to the culture of secrecy in this country, which a simple change to the Public Record Office or an aggressive approach to next steps could change. The retention of documents in the PRO is absurd.

This week has seen the anniversary of the arrival in this country of Rudolf Hess. How odd it is that, if one wants to read the true account of what happened to Rudolf Hess, one has to go to the national archives in America and pay 15 cents a sheet or to Dzerzhinski square in Moscow and ask the KGB for its version of the documents. They are available in both those places, but the British version of the documents is entirely secret.

If we were to take an aggressive approach to the privatisation of the Public Record Office and impose a 50-year rule, which would satisfy people on the national security grounds of retaining particularly sensitive documents, we could now be reading the documents prepared by the security service in 1940 relating to alleged fifth columnists, pro-Nazis and people who were considered sympathetic to the Nazis in 1940 and a possible danger to the Government of this country.

The PRO is a priceless asset which should be exploited in exactly the same way as the BBC has exploited BBC Enterprises. The BBC has made marvellous programmes over many years. That software has become available and is a source of tremendous financial advantage to the BBC. We should like to see exactly the same thing happen to the PRO. The driver and vehicle licensing centre has just begun on that path by selling some number plates. The Ordnance Survey could do much the same thing and Companies House could follow suit by supplying fast information to consumers.

At the bottom of next steps, and what we are asking for, is not just a change of service, but a change of the culture of secrecy which has so shackled this country and worked to the disadvantage of taxpayers. I should like to see a change, not necessarily for the benefit of the staff of such organisations—many people believe that some of those organisations existed for the benefit of their staff, notably British Rail. We should take an aggressive approach to the next steps agencies which would work to the advantage of the taxpayer.

6.54 pm

Mr. Renton

This has been a useful debate, and I am glad that we have been able to arrange it, as the Treasury and Civil Service Select Committee suggested. I particularly wish to thank my right hon. Friend the Member for Shoreham (Sir R. Luce) for his wise speech, in which he drew on his extremely extensive knowledge of the subject. I am conscious that when he was in the office that I now hold, he oversaw the inception of the next steps policy from its beginnings. Now, as a member of the Treasury and Civil Service Select Committee, he will be able to see how that policy develops in practice. I am sure that the Select Committee, chaired by my right hon. Friend the Member for Worthing (Mr. Higgins), will greatly benefit from the continuing interest and experience of my right hon. Friend the Member for Shoreham in this subject.

My right hon. Friend the Member for Shoreham asked about transferring staff between agencies and policy areas. I thoroughly agree that such transfers are extremely important, and I hope that staff interchange will continue, both for staff development and for management needs. I hope that freedom in pay and personnel regimes, which will be increasingly flexible, will not be allowed to obstruct the transferability of which my right hon. Friend spoke.

I thank my hon. Friend the Member for Elmet (Mr. Batiste) for his speech. I wholly agree that a major part of the political debate of the 1990s will concentrate on better public service for the ordinary, average citizen of the United Kingdom and, I hope, a continuing interesting career structure with flexibility of pay for all those working in the public service. That fits in with the citizens' charter, on which my right hon. Friend the Prime Minister has already made a number of interesting comments and on which a White Paper will come before the House before the summer recess.

I am glad that my hon. Friend the Member for Torbay (Mr. Allason) was able to make a speech. I listened with interest to his not wholly unexpected remarks about the Public Record Office. I wholly agree with him about the need for better service to be the theme throughout the next steps agencies.

I thought that the comments of the hon. Members for Wrexham (Dr. Marek) and for Norwich, South (Mr. Garrett) were disappointing—

Mr. Radice

Come on.

Mr. Renton

It is no good the hon. Member for Durham, North (Mr. Radice) saying, "Come on," because in his saner moods—when he spoke tonight, he was in a good sane mood—he will realise precisely why I say that. The hon. Members for Wrexham and for Norwich, South reminded me of the old saying that none rowed fast, but none so fast as stroke. There is support for the agencies in principle and in detail from the Government and Opposition Back Benchers, as was shown by the hon. Member for Durham, North. There is none—or there is havering—from the hon. Members for Wrexham and for Norwich, South, which is disappointing. I am sorry that the right hon. and learned Member for Monklands, East (Mr. Smith) left the Chamber before being able to be reminded how much he is being let down by the two Opposition spokesmen.

The hon. Member for Norwich, South, despite his long-term interest in the subject, merely brought out the old sayings about mandarins and Oxbridge recruitment to the civil service. Why did he not give a single, constructive and intelligent comment about where the next steps initiative was going?

Mr. Radice

The Minister was not listening.

Mr. Renton

I was listening carefully, and I was extremely disappointed. I realise that the hon. Member for Wrexham does not know a great deal about the subject. As my right hon. Friend the Member for Shoreham said, the hon. Member for Wrexham has often shown confusion on the subject. But I expected more from the hon. Member for Norwich, South, who has served on the Select Committee for a long time. He merely trotted out all the old, trite phrases about next steps.

Dr. Marek

Will the Minister give way?

Mr. Renton

I shall not give way; I have only one minute left and I want to answer some of the points made—

Dr. Marek

rose—

Madam Deputy Speaker (Miss Betty Boothroyd)

Order.

Dr. Marek

rose—

Madam Deputy Speaker

Order.

Mr. Renton

I will not give way, because I want to answer some of the questions—

Dr. Marek

rose—

Madam Deputy Speaker

Order. Will the hon. Gentleman please resume his seat?

Dr. Marek

rose—

Madam Deputy Speaker

Order. I ask the hon. Gentleman to resume his seat. The Minister is not giving way.

Mr. Renton

I wanted to answer some of the questions put by the hon. Member for Norwich, South as I was intending—

Dr. Marek

rose—

Madam Deputy Speaker

Order. This is extremely bad behaviour.

Dr. Marek

On a point of order, Madam Deputy Speaker.

Madam Deputy Speaker

There can be no point of order. The Minister has made it clear that he is not giving way.

Dr. Marek

On a point of order, Madam Deputy Speaker. Is it in order for Ministers not to give way when they make personal attacks on hon. Members?

Madam Deputy Speaker

The Minister has made it clear that he is not giving way.

Mr. Renton

We will carry the process forward with vigour, and I am sure that it will be supported by the civil service and by the whole country.

Mr. Nicholas Baker (Lord Commissioner to the Treasury)

I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.