Market Testing (Hansard, 6 December 1993)

§ 31. Mr. Garnier
To ask the Chancellor of the Duchy of Lancaster what representations he has received urging him to impose a moratorium on the market testing programme.

§ The Parliamentary Secretary, Office of Public Service and Science (Mr. David Davis)
First, the Chancellor regrets that he cannot be here today. He is attending a conference in Brussels of the Council of Ministers, discussing the future of the framework for research programmes.
The Council of Civil Service Unions has asked me to impose a moratorium. I note also that early-day motion 2587, dated 3 November 1993, called on the Government to halt the market testing programme.

§ Mr. Garnier
I am grateful to my hon. Friend for that answer. Does he agree that a moratorium would be a grave setback to other welfare spending projects? Has not the present system enabled £100 million worth of savings to be made—savings that will continue to be made every year? Will he confirm that, in encouraging market testing, he is, contrary to the behaviour of the Labour party, which is backed by trade unions, putting the public first and not the providers?

§ Mr. Davis
My hon. Friend is right. That sort of money would pay for a couple of hospitals, 50,000 primary school places or 10 secondary schools. All those items of expenditure would be in the public interest, as is low taxation, although the Labour party never seems to learn that.

§ Mr. Garrett
Why does not the Minister call for a moratorium on market testing until it can be shown to have led to any improvement in service to the customer? That is the one element missing from any statement that Ministers make on market testing. They cannot show that it leads to an improvement in service to the customer.

§ Mr. Davis
As ever, the hon. Gentleman is wrong. The market testing programme carried out this year was followed up by a review by my Department, with the managers of the individual services, asking what has happened to the quality of service provision. In every case, it was at least as good as that preceding it and, in 32 per cent. of cases, it was better.

§ 32. Mr. Jenkin
To ask the Chancellor of the Duchy of Lancaster if he will indicate the size of his Department's 1993–94 market testing programme and what it was in 1991–92.

§ Mr. David Davis
The size of the market testing programme for the Chancellor of the Duchy of Lancaster's Department in 1993–94 is some £23.7 million, which is about the same as for the whole Government in 1991–92, and some 30 times higher than in their own earlier programme.

§ Mr. Jenkin
I congratulate my hon. Friend on the good example set by his Department in saving money and improving services to its customers. Does he agree that it is necessary to find service improvements and cash savings through the market testing programme, to enable the Government to achieve the public expenditure totals that they set themselves in the Budget? Is not it also important to realise that that can be done while improving quality for the customer?

§ Mr. Davis
My hon. Friend is right. Our programme has identified savings of some £5 million, which is about 28 per cent. on the base cost of what has been addressed and roughly four times the cost of the analysis programme. We have heard a great deal of barracking from the Opposition about worse service or the absence of quality improvements. I will give them one example that centres solely on service improvement. I refer to the Strangeways prison market test, which was one by—

§ Mr. Garrett
Group 4?

§ Mr. Davis
No, by the in-house team. That programme made small cost savings but improved the service delivered. It provides prisoners with 35 hours work per week and 60 hours of structured activity. When I think 14 about it, structured activity is the opposite of what was happening at Strangeways the last time that I saw it on television.

§ Ms Eagle
Will the Minister admit that many people's experience of market testing—for example, in the health service—is of managers giving themselves massive salary increases? Given the scandals involving the misuse of huge amounts of public money, particularly in places such as Wessex health authority, will the Minister acknowledge that the public are wary of the much-trumpeted advantages of market testing? They see it as just another way of making a quick buck for the Government's friends.

§ Mr. Davis
The hon. Lady has wandered off into the realm of health service reforms, but my answer to her is entirely in line with the remarks of members of the Opposition Front Bench. They ask, "Ask the customers." For every 100 people treated by the health service before the reforms, 115 are treated now. That is the acid test of any reform.

§ Mr. John Marshall
Does my hon. Friend agree that the value for money is much more important than jobs for the boys and that where market testing and competitive tendering take place, the customer gets a better service at less cost to the taxpayer?

§ Mr. Davis
I agree with my hon. Friend and add to his point about jobs for the boys. Sometimes, the virtues of the market testing programme are lost in the propaganda that flies across from the Opposition. The last component of this year's market testing programme was the Inland Revenue's decision to award an information technology contract to EDS-Sicon. It is worth reading the four key objectives of the selection process: Substantial improvements in cost-effectiveness of IT servicess. Improved speed of delivery in development and enhancement of systems. Rapid access to 1990s skills, tools and technologies. The final objective—although this is jobs for the boys it also means benefits for the boys, and girls—is to "optimise career opportunities" for the 2,000 existing information technology staff. Market testing can be a programme by which everybody gains.

§ Mr. Meacher
The Minister confuses objectives with achievement. If the Government really believe in fair competition between the public and private sectors, why are they still trying to wriggle out of the TUPE regulations by claiming that this is a matter of subsidiarity? Does not that make it obvious that the Government know that the private sector can only win on the basis of lower pay and worse terms and conditions for employees, not on the basis of greater efficiency? When the private sector cannot win even on that basis, is not the whole exercise reduced to farce when the Minister refuses to accept an in-house bid that is £1 million lower—as at the driver and vehicle licensing centre in Swansea—or even refuses an in-house bid altogether, as with the Inland Revenue's information technology work? It is clear that that has nothing to do with efficiency but has everything to do with political dogma.

§ Mr. Davis
I shall answer the six or seven questions that I can remember. The first question was on the DVLA. The exercise to which the hon. Gentleman referred—the so-called £1 million lower exercise—was a bench-marking, theoretical exercise. In case he is worried about that, I inform him that the DVLA will be allowed to bid for 15 the contract in the next year or so. I do not think that he was listening to what I said about the EDS exercise. One of the points that emerged was the great benefit to staff as a result of EDS being able to find more work and introduce better technology. That helped staff and kept them in their jobs with more and better prospects. Not everybody in the private sector views TUPE as difficult. Indeed, Mr. Cox of Hoskyns has said that TUPE is an advantage because it gives some security in dealing with staff.