Market Testing (Hansard, 6 December 1993)

§ 35. Mr. Nigel Evans
To ask the Chancellor of the Duchy of Lancaster how much Government activity will be market tested in 1993–94; and what was the size of the 1991–92 programme.

§ Mr. David Davis
We plan to subject central Government activities costing more than £800 million to competition in the 12 months to 30 September 1994. This is a 30-fold increase over the 1991–92 outturn of just under £25 million.

§ Mr. Evans
I am extremely grateful for that reply. Will my hon. Friend encourage all Government Departments to examine further ways in which they could increase market testing and embrace it vigorously? As he has already mentioned the Inland Revenue, will he welcome its decision to enter negotiations with a private company to introduce market testing in its strategic information and technical services?

§ Mr. Davis
I welcome that company, as I have already said. The programme has delivered virtues and benefits throughout Government services and does so not only in terms of the direct public services that we have already mentioned—it delivers the capacity to give wider service, including perhaps more defence, which was discussed at the weekend.
One example of the improvement in efficiency that has arisen in Departments, even though it has not yet got as far as market testing, was the maintenance of the main battle tank. It used to take 34 weeks to maintain but now takes only 19. That means that there is a cost saving and a benefit to the people who use the main battle tank.

§ Dr. Howells
It is a pity that the Minister did not also quote the sums which, between 1991 and now, each of the Departments that had pushed out its charters and its market tests had spent on management consultants. Before he does any more of that, will he speak to the Secretary of State for Wales, who reportedly called in the heads of the quangos and the next steps agencies in Wales and warned them that they were to cut off the gravy train to the management consultants who had been doing very well out of that exercise?

§ Mr. Davis
Perhaps the hon. Gentleman should address the latter part of his question to the Secretary of State for 18 Wales. In my Department the costs that were incurred at the beginning of the market testing programme were matched 4.4 times over by the savings that arose. That has been the experience right across the board—four times or better.

§ Sir Giles Shaw
Does my hon. Friend believe that in setting priorities for market testing in Government activity he should use some type of scientific endeavour? Would he consider using technology foresight, for example, as a method of choosing the areas of Government activity in which he wants market testing to occur?

§ Mr. Davis
My hon. Friend's suggestion is ingenious. In the process of market testing we discuss with the Departments the areas in which they think that they will obtain the most value for money and the best service provision improvement. That has turned out so far to be a very effective process.

§ Mr. Flynn
Does the Minister recall telling me on 25 October that the First Division Association of civil servants was supportive of market testing? Subsequently he received a letter from the secretary of the association, saying that she could not conceive how he could possibly have reached that conclusion because of the letters that she sent to him before and after his answer. Will he now honestly admit, without quoting selectively from those letters, that he has seriously inadvertently misled the House and will he now apologise, because the First Division Association of civil servants very much opposes the present system of market testing?

§ Mr. Davis
Perhaps the hon. Gentleman would like to hear what I have already written to him and told him. I was speaking from memory last time, but I am now speaking from the text. This is Elizabeth Symons, writing to my right hon. Friend the Chancellor of the Duchy of Lancaster on 26 May: Perhaps I should make it clear from the beginning that the FDA does not oppose the principle of market testing; indeed there is much in your recently published pamphlet devoted to the subject with which our members would agree. The public sector cannot be immune from reform, and should not hold itself aloof from new management methods, where such methods can be shown to be delivering better standards, and better value for money for service users and for all tax payers.
To put the matter absolutely in context, Elizabeth Symons went on to say that she thought that the Government were not taking sufficiently seriously some items, such as confidentiality and several other issues. We take all those issues absolutely seriously and will continue to do so when we make this programme work through the next several years.