HC Deb 27 November 1995 vol 267 cc1002-27 8.15 pm
The Parliamentary Under-Secretary of State for Education and Employment (Mr. Robin Squire)

I beg to move, That the draft Contracting Out (Administration of the Teachers' Superannuation Scheme) Order 1995, which was laid before this House on 15th November, be approved. The order will allow my right hon. Friend the Secretary of State for Education and Employment to authorise a private sector company to administer the teachers superannuation scheme in England and Wales. An executive agency in my Department, the Teachers Pensions Agency, administers the scheme at present. The TPA provides a good service to members of the scheme and the Government have never argued otherwise. The TPA has also achieved its key efficiency targets.

Administering the scheme, however, does not come cheaply. It is a huge scheme with almost 1.25 million members who are, rightly, increasingly interested in their pensions. The TPA's running costs last year were more than £15 million; that is big money. We owe it to the taxpayer to see whether we can make savings in those running costs.

I therefore announced on 1 November that the Government were inviting six private sector companies to tender for a contract to administer the scheme. All six companies judged that they could administer the scheme for less money than it would cost the TPA and to at least as high a standard. Inviting them to submit tenders will allow them to show whether they can do so.

Mr. Peter Kilfoyle (Liverpool, Walton)

The Minister has mentioned the six companies that were invited to tender. How did the Government decide on those six companies from the original 14 that had shown an interest in the privatised scheme?

Mr. Squire

The hon. Gentleman may recall that we invited expressions of interest and that we received a significant number. The companies were then invited to complete a 50-page questionnaire and inquiries were made, in the case of the six companies, with clients to establish their reputations and bone fides. As the hon. Gentleman knows from the names of the companies, either they are large companies or they have significant assets.

Mr. Harry Greenway (Ealing, North)

I do not have a direct interest now, but I contributed for 23 years to the teachers superannuation scheme. I was always hugely satisfied with it and, like many teachers, I am extremely worried about any possible change. Can my hon. Friend assure me first, that teachers will lose nothing in pension entitlement as a result of changes in administration and secondly, that the new administration arrangements will be even more efficient than the current ones? If they are to be more efficient, they will have to be extremely good.

Mr. Squire

I assure my hon. Friend that the answer to both his questions is an unqualified yes.

Mr. David Blunkett (Sheffield, Brightside)


Mr. Squire

To take up a sedentary comment by the hon. Member for Sheffield, Brightside (Mr. Blunkett), we have made it clear that we shall let a contract to administer the scheme only if we are satisfied that it will deliver better value for money. I want to leave the House in absolutely no doubt about that. No improvement in value for money will mean no contract. Equally, if a contract could deliver better value for money, we shall want to let one.

Mr. Blunkett

Will the evaluation of "value for money" be similar to that of Yorkshire Water, which is that the customer does not get water but the company gets increased profits?

Mr. Deputy Speaker (Mr. Michael Morris)

Order. That was not in order.

Mr. Squire

I sense that if I were to pursue that avenue—or is it lake?—you would pull me up, Mr. Deputy Speaker.

Members of the scheme naturally want to know what letting a contract would mean for them, and my hon. Friend the Member for Ealing, North (Mr. Greenway) made that point clearly. I should like in turn to make several points of clarification, because there have been some misconceptions with which I have sought to deal in correspondence outside the House. I shall be happier still to make those points clear for the benefit of the House this evening.

First, there is no question of privatising teachers' pensions and, of course, there never has been. Any contract would be for the administration of the scheme only. Whether we let a contract or not, the scheme itself will stay in the public sector. My right hon. Friend the Secretary of State for Education and Employment will remain responsible to the House for the scheme, and she—not any contractor—will retain control over decisions affecting entitlement to benefits under the scheme or the amount of those benefits.

Secondly, letting a contract would not affect the size or safety of a teacher's pension one iota. Indeed, it is impossible for it to do so, not least because the scheme does not have a real pension fund. The pension contributions go straight to the Exchequer, which guarantees the payments to which members of the scheme are entitled. Those payments therefore cannot be at risk. Since a contractor would not be managing a pension fund, he could not make a profit from it. To quote King Lear, Nothing will come of nothing. If we proceed, however, we shall pay the contractor an agreed fee for administering the scheme.

Thirdly, we will not allow the standard of service to fall. Any contract would require a standard of service and performance that will be at least as high as that which the TPA would provide. We shall make sure that any contractor meets that standard, and all six companies intend to do so.

Fourthly, we are absolutely committed to ensuring that the scheme continues to operate smoothly and without interruption. We shall expect—

Ms Hilary Armstrong (North-West Durham)

What will happen at Darlington?

Mr. Squire

I will come to that matter, if the hon. Lady restrains herself for a moment. We shall expect the contractor to deliver good service from day one of the contract. We are satisfied on the basis of the evidence we have seen so far that all six companies are reputable organisations and have access to substantial financial resources, and that relations between their staff and management are sound.

Mr. Kilfoyle

Why are the Government seeking to introduce the measure at this particular time? A next steps feasibility study was carried out in 1990 which investigated the proposal that agency status be given to what was then the pensions branch of the Department of Education and Science. The conclusions of the study were a complete contradiction of what the Government are now saying. What has happened in the intervening five years to change the Government's opinion on the privatisation of the service?

Mr. Squire

We commissioned a report by KPMG, which we received in December 1994. It claimed—among other things—that the scheme could be operated with significant savings. We owe it to the taxpayer to ensure that if significant savings can be made—I have covered the quality of service angle—we should explore those. I should have thought that the hon. Gentleman would support the Government in that.

Mr. Kilfoyle

I am sorry to labour the point with the Minister, but the KPMG report was sought on the basis of only one option, which was the contracting out of the administration of the scheme. I repeat my question. Why did the Government change their mind in the intervening five years? What changed so markedly to lead the Government to commission that report on the basis that there was no option other than privatisation?

Mr. Squire

I can add little to what I have said to the hon. Gentleman, beyond reminding him that the Government seek to make savings to the taxpayer whenever and wherever we can. The size of the pension scheme would alone have given justification for us to return to the matter periodically, and the hon. Gentleman will be aware that the TPA expects to make savings of some 7.5 per cent. in a three-year period.

Mr. Harry Greenway

Just so it is clear beyond peradventure, am I to understand that the administration of the scheme—currently based in Darlington—is to be paid for by the taxpayer? Is the administration not financed out of the scheme itself, and therefore paid for—directly or indirectly—by teachers?

Mr. Squire

I have sought to make a distinction between, on the one hand, a pension fund with all that that might imply and, on the other hand, the simple fact that teachers' pensions are paid, year in year out, by the agency at Darlington. I concede, in light of the sad events of the past decade, that there is the possibility of a pension fund or part of such a fund going astray, but that possibility does not exist in this case. The cost of the teachers' scheme is a straight charge on the taxpayer. Teachers themselves are taxpayers, and if the cost of administering the scheme can be significantly reduced, it is self-evidently in the interests not just of teachers but of taxpayers in general.

Fifthly, we would not allow a contractor to advise teachers whether to join or leave the scheme. Teachers would need to consult an independent financial adviser if they were in doubt, as they do at present.

Sixthly, we would not allow a contractor to use data on teachers for purposes other than administering the scheme. All six companies have declared that they will keep data concerning members of the scheme confidential.

Mr. Don Foster (Bath)

Will the firm which obtains the contract—if any of the six do so—be allowed to seek to persuade members of the TPA to opt for their own personal pension scheme through that company?

Mr. Squire

I shall come back to the hon. Gentleman during the debate on that, as I do not want to give him a wrong answer. If he will wait a short while, I shall answer him.

Seventhly, we would require a contractor to have effective arrangements for considering complaints from members of the scheme. A contractor would have to have an internal complaints machinery. If this failed to resolve the problem, a complainant would have the right to appeal to the Secretary of State. Members would also be able—as they can at present—to seek redress through the pensions ombudsman. There will be at least as much scrutiny of the administration of the scheme in the private sector as there is now.

Ms Armstrong

One of the current problems with the pensions ombudsman is that each of its reports is secret and is not available for public scrutiny because the ombudsman is accountable to the pensions industry. As this is a public scheme, will the Minister undertake that any complaint to the ombudsman will be published and be open to public scrutiny?

Mr. Squire

I shall consider what the hon. Lady says and come back to her at the end of the debate. It is a serious suggestion, and I want to give it proper consideration. Incidentally, the hon. Lady previously made some reference from a sedentary position to Darlington. She may not have picked up on the point that all six companies have confirmed that they would intend to make Darlington the core centre of their operations.

Ms Armstrong


Mr. Alan Milburn (Darlington)


Mr. Squire

It looks as if I have started a competition. I know that the hon. Lady will understand if I give way to the hon. Member for Darlington (Mr. Milburn).

Mr. Milburn

The mention of Darlington is my cue, as the Minister knows. Could he define what core administration means?

Mr. Squire

No, not in the context of the debate. Not simply because the companies have already made it clear that they see Darlington as a key part of their operations but in view of the skill and expertise of the Darlington staff, logic suggests to me that a significant proportion, if not the entirety of the operations, would be based in Darlington.

Mr. Edward O'Hara (Knowsley, South)

As all six companies seem interested in the advantages of the facilities at Darlington, can the Minister assure us that no sweeteners will be offered to any company which takes on the scheme in the form of a cheap handing over of existing facilities?

Mr. Squire

I willingly give that assurance to the hon. Gentleman. Nor would sweeteners be necessary. I am not sure whether he heard my earlier comments. All six companies believe that they can run the operation at least as efficiently, if not more so, and for a reduced cost. There is no question of sweeteners.

Ms Armstrong

Will the Government make it a condition of the contract that the core administration continues in Darlington? Our experience has been too frequent that a commitment is given in the beginning and three or four years later is reneged on.

Mr. Squire

That issue was raised by the hon. Member for Darlington in a recent meeting that I had with him. I am advised that under European Union law, it would probably be illegal to do as the hon. Lady asks. We are not able to specify a particular place. I reassure her inasmuch as I can that, as all six companies have volunteered—they were not required so to do—the information that they would wish to site their operations at Darlington, in a sense her question is unnecessary. We can look at the reality of the thing, but as I know the hon. Lady will accept, we have to stay within the law.

Mr. Milburn

If the Minister says that legally the Department cannot make it a condition of any contract that Darlington should be the location of the business operation of a privatised Teachers Pensions Agency, and if he says that he cannot define core administration, are not the assurances given by the six companies about staying in Darlington meaningless?

Mr. Squire

I understand, and the whole House understands, that the hon. Member for Darlington is in a special position. When he looks at the standing of the companies and the names behind some of them and when he considers the self-interest of the companies in using the expertise currently available at Darlington, he will see why his comment, in fairness, is wide of the mark.

Lastly in my list of details, I confirm that we have no plans to allow a contractor to impose new charges on members of the scheme or their employers for services provided under the contract.

I trust that not only those hon. Members present in the Chamber but people who may subsequently read the report of the debate will accept that the eight points that I have made—eight of the best—allay the unjustified worries that I have heard expressed. I submit that if we let a contract, all parties would stand to benefit. Let me briefly explain why.

First, the taxpayer would benefit, because it would cost less to administer the scheme. There is sometimes a tendency to forget the taxpayer. We should not do so. Everybody is a taxpayer, so everybody, including teachers themselves, benefits if we can deliver public services more economically. There is scarcely an argument there.

Secondly, teachers and retired teachers would benefit. There is every prospect that they would receive not only as good a service as the TPA provides, but a better, faster, more responsive service. We have invited comments on a draft statement of the service that a contractor would have to provide. That draft provides for higher standards than the TPA achieves now. The six companies would expect to exceed even those higher standards over time—again, I submit to the House, a benefit.

Thirdly, the staff of the TPA would stand to benefit from the new opportunities offered. They would transfer to the contractor—if such a contractor were appointed— on their current terms and conditions of employment. All six companies have said that they intend to keep the core administration of the scheme at its current location. All six companies see possibilities for introducing new business. That, if it happened, could only be good for jobs and good, in particular, for those currently at Darlington.

I know that change can be unsettling. When things are working fairly well, it is always tempting to leave them as they are. In such a case, the good can so easily become the enemy of the better. I do not believe that we can or should allow that to happen. We must build on the TPA's success. Our current work is designed to do just that. I commend the motion to the House.

8.35 pm
Mr. Peter Kilfoyle (Liverpool, Walton)

I thank the Minister for taking the trouble to read out the letter that he sent to hon. Members on 10 November. He has added nothing to what he had to say in the letter. He read it extremely well. Perhaps it is a recommendation for literacy campaigns at primary school level.

The teachers superannuation scheme is one of the largest occupational schemes in the country. Currently it has 550,000 contributing members—mainly teachers—258,000 members with preserved benefits—mainly former teachers, including those driven out of teaching by Government policy—and 350,000 pensioners—retired teachers or their widows and children. The key difference between the scheme and other schemes is that it is administered not by the 3,500 employers involved but by the Department for Education and Employment, through the Teachers Pensions Agency.

Teachers, practising or retired, look to the scheme to provide them and their dependants with security in retirement, protection from misfortunes such as enforced early retirement due to ill health or redundancy—there have been a lot more of those in the past six or seven years—and protection for their dependants if they die in service or after retirement. Together with that security, they expect those administering the scheme to deal promptly, fairly and sympathetically with their problems and queries, many of which are of an extremely sensitive nature. They also expect high standards of integrity from those administering the scheme and a response which, within the regulations of the scheme, gives first priority to meeting the members' needs.

While organisations representing teachers receive complaints on occasion about the current scheme, they tell me that complaints about the quality of service from the TPA are rare. Even those rare complaints are resolved promptly and satisfactorily. Indeed, the Minister said that everyone acknowledges what a good scheme it is.

Ms Armstrong

I intervene to declare my interest. I think that my pension, or part of it, is still with the TPA. I am aware that I did not declare that interest when I intervened earlier. I support what my hon. Friend says about the quality of the scheme.

Mr. Kilfoyle

Well said. Teachers were originally apprehensive when the scheme was transferred from the pensions branch of the then Department of Education and Science to the Teachers Pensions Agency. However, in all honesty, it has to be said that in the main those fears proved to be groundless. The teachers believe that the agency has improved the service and dealt efficiently with the proliferation of employers caused directly by the Government's policy of atomising education provision.

Since the TPA was launched in 1992, it is a matter of record that it has performed well. During 1993–94, it was set a target of a 2 per cent. saving in running costs. It achieved 5 per cent. Some 95 per cent. of all written inquiries received a substantive answer within 15 working days. In 99.2 per cent. of cases, retirement awards were processed by the payable date or, if applied for later, within 30 days of receipt of the application. Similar results were obtained for pension calculations. In other words, there is a high quality of service. That is not just my subjective opinion. It is well documented in last December's publication of the fourth annual review of the next steps agencies, which detailed the TPA's performance for 1993–94. One can always make the case, as the Minister has, for yet further improvements, but only on the basis of further investment in the required resources, as opposed to the transfer of administrative responsibilities. Sadly, that latter option is the only one that the Government examined. I put that point twice to the Minister when he spoke, but he could not give a substantive answer as to why that was the only option to be entertained. The Government's only proposal to KPMG was that the administration be left to a private sector company, according to the consultants, on the supposition that major benefits would result.

The Minister's first argument was that it was feasible for the teachers superannuation scheme to be administered by a private sector contractor. Of course, feasibility is not necessarily synonymous with desirability. Lots of things are feasible, but that is no reason for doing them. The proposal is that the administration should be let out to a private sector company on the supposition, according to KPMG, that major benefits will result, despite the fact that 128 out of 131 organisations originally consulted refused to endorse the proposal. It received only three positive endorsements, but the Government still went ahead with it.

The Government say that it is viable for the teachers superannuation scheme to be administered by a private sector contractor. I accept that, but they do not provide any evidence. The only evidence provided is the vague references in the KPMG report to discussions with unidentified organisations and the fact that there are those who are prepared to undertake the task. How can that assertion be tested against such scant evidence? One can assume only that the whole idea is based more on ideology than on objective analysis.

Secondly, the Government insist that the technical means exist for the transfer. That may well be the case, but that does not mean that it will lead to improvements. The Government insist that it will lead to improvements in the efficiency and effectiveness with which the superannuation scheme is administered, but where is the evidence of, as KPMG asserts, a general expectation that cost savings in the order of 20 per cent. or more ought to be achievable over a period of five or seven years"? Will those savings come from the imposition of new charges for services that are free? The Minister says no, but if they are to come from new information technology equipment, why has that hitherto been denied the Teachers Pensions Agency?

The Government argue that private contractors will somehow benefit the TPA, yet it has exceeded its performance targets. On what criteria do the Government base their claim that commercial disciplines will have a positive effect on the quality of service? I can conclude only that that is doublespeak for lower-quality service and the introduction of charges for services that were previously free, which the Minister has denied.

As for the staff employed at the TPA in Darlington, what do the Government claim as the benefit of privatisation? The claim appears to be based on the chimerical notion that financial incentives for the staff will improve efficiency, effectiveness and profitability. I contend that those perceived advantages for the staff will come only from reductions in pay and worsening conditions of service, at least for those who keep their jobs. There is no guarantee, however, that the same number of jobs will be maintained, for the reasons of commercial discipline already adumbrated. Indeed, the then Department for Education staff bulletin of 16 June said that further "possible staff surpluses" had been identified in Darlington. Volunteers for redundancy have been sought from 1995–96 onwards aimed at avoiding compulsory redundancy". That is hardly a vote of confidence that the work force can take to heart.

The Minister might argue, of course, that the improved IT will lead to fewer jobs and improved efficiency. If that is the case, I wonder whether he will answer some questions that I tabled for written answer, as to why the Hoskyn's project, aimed at introducing new information technology into the Teachers Pensions Agency, failed and at what cost. I understand that that is a matter of some legal dispute at the moment, but there was an attempt to introduce IT to a very complex scheme through the private sector. It failed miserably. As I understand it, the contract was terminated. What has changed so dramatically that other private sector companies will be able to make similar provision that will work?

Mr. Robin Squire

The hon. Gentleman will find that the answer to his question will be published in either today's or the next day's Hansard. The answer is too complex for me to give him chapter and verse now, although it is not germane to his central issue, which seems to be that, if there has been any private sector involvement and it has gone wrong or has not performed, that of itself eliminates any possibility of considering private sector partnerships anywhere else.

Mr. Kilfoyle

Far from it. I do not suggest that the one naturally follows from the other. What I am saying is that the experience of the agency with the private sector leaves a lot to be desired. It is not merely a question of what happened with Hoskyn's, which subcontracted to an organisation known as UPSI the attempts to update information technology at the TPA. There have been similar, well-documented problems involving the Prudential insurance company, which was contracted to administer the additional voluntary contributions scheme on behalf of the teachers superannuation scheme. That too has been a failure. I am trying to point out that there is no room for confidence in the Minister's assertions that the introduction of IT in itself will necessarily benefit the scheme envisaged.

I also want the Minister to consider the fact that there are nine miles of manual files in the Darlington headquarters. What analysis has he made of the cost of computerising that hoard of information, and how does it accord with his view of increased efficiency and the savings envisaged and, incidentally, the promise in the letter of 10 November, which he read out in lieu of a speech and which was sent to hon. Members on both sides of the House? He said that he is absolutely committed to ensuring that the Scheme continues to operate smoothly and without interruption". Despite the Hoskyn's failure, according to KPMG—the Government's consultants— all of the firms interviewed saw substantial scope to introduce improved IT systems". Will the Minister guarantee that those firms will be able to deliver what KPMG promises? Somehow, I doubt it. Both the KPMG report and the now famous letter to Members of Parliament of 10 November suggest that the promise is a combination of vague assumptions and terminological inexactitude, which give a totally misleading impression of what is possible in terms of computerising the system overnight without any disruption to the TPA.

In fairness—the consultants were given a very limited brief within which to operate—KPMG listed a series of obstacles to the privatisation proposals. From the Government's perspective, the statutory constraints are the easiest to deal with. That is why they have produced these proposals, using the Deregulation and Contracting Out Act 1994 to supersede the Superannuation Act 1972. However, the House will need to be convinced about the other four areas of concern that KPMG pinpointed. The first was the quasi-monopoly position of the TPA"— a certain red rag to this bull of a Government, I am sure, unless the monopoly is a privatised one. KPMG argued that the contributors need protection against unacceptably low standards of service". We have heard from the Minister and other hon. Members that the service is of a very high quality. Where are those low standards of service? If the thing is not broken, why do we need to mend it? The Minister must answer that.

KPMG and, presumably, the Government are convinced that there is not any category of private sector contractor which would be obviously unacceptable". That is a naive view. Frankly, such a claim from the Government is risible. Are we to believe that the private sector is jam-packed only with models of probity and fair play? Have the Government learnt nothing from past experience of what happens when some of these sharks from the City involve themselves?

Mr. Squire

I do not need to comment on the hon. Gentleman's last rhetorical question, but would he claim that every public sector action, local government or national, has invariably been carried out without any fraud or misfeasance?

Mr. Kilfoyle

The question at issue is whether the proposal before the House will do anything to enhance the teachers superannuation scheme. The fact is that it will not. That is the considered view of the 128 organisations out of 131 that refused to endorse the original proposal.

The KPMG report puts across strongly the idea that the proper use of the database of teachers' records is sacrosanct under the Data Protection Act 1984 and the Financial Services Act 1986. Like the Minister in his view on private sector companies coming into the public arena, I have my own area of naivety, and I must confess that this is it. I would love the Minister to enlighten me as to whether those nine miles of manual records are covered under the Data Protection Act 1984. I understand that manual records are not covered; only material kept on computer is covered.

The third concern, even to KPMG, is the potential risk of failure. One option postulated in the report is that there might, in such circumstances, be a smooth transfer to a new operator. The other option is to revert to the control of the Department for Education and Employment. From that, KPMG tautologically declares that such a provision would do nothing to deter prospective bidders, as they would bid only on the expectation of succeeding.

That is absolutely true. Presumably that is why the confidential pre-tendering discussions took place with the anointed six companies. They cannot lose. They set out their terms in private, set the parameters for tendering with the Government and know that if all else fails, the legislation will ensure that someone else—presumably the Government, or rather, the taxpayer—will pick up the tab if they get it wrong. That will all be at the expense of members of the scheme.

Mr. Squire

It will not.

Mr. Kilfoyle

I am willing to allow the Minister to intervene to explain why it will not. If the scheme fails, who picks up the tab? That question must be answered.

KPMG discounts the chances of large numbers of members opting out of the teachers superannuation scheme. Indeed, in the magic letter of 10 November, the Minister said: We would not allow the contractor to advise teachers whether to join or leave the scheme. I accept his word on that, but what of the contractor's agents or the position of consultants who perhaps deal with a contractor who does deal in personal pension plans?

What about the experience of many teachers who have gone into personal pension plans? As the Minister will know, some 8,000 have opted to go back into the scheme because it is so successful. How will the Government guarantee that such second parties will not be able to circumvent the Government's intentions? I do not believe that they can.

We oppose the proposal on the following grounds. It has not been subject to a comprehensive review. Only one option, that of privatisation, has been considered. Both preservation of the status quo and reversion to the DFEE have been ignored. I do not say that they are preferred options, but to have a comprehensive review, all the options must be examined—not just one.

Secondly, the proposal will lead to job losses in Darlington. The people of Darlington and my hon. Friend the Member for Darlington (Mr. Milburn) are in no doubt about that, because only through the shedding of jobs can the putative savings be made. There is no other way in which it can be done. The proposal ignores the cost-effectiveness of the scheme as it now operates, even given the Government's own criteria for successful appraisal. By their standards, the scheme is successful, yet they still want to dismantle parts of it.

The Government's proposal would put a huge and successful scheme on the slippery slope to total privatisation, far beyond that of its administration alone. I do not believe that this is the end game; it is the start of opening up the scheme as a whole to privatisation. I accept that the Minister has said differently. I shall wait and see what eventuates if the Government have their way. The one fortunate thing is that we expect to be in government before that day comes.

The Government's scheme has no support beyond the ideology of the Government and their money-grubbing City friends. It pays no regard to the views of the members of the teachers superannuation scheme, the employees of the Teachers Pensions Agency or the employers of contributors. The Government are so contemptuous of the interests of those groups that they agreed to meet their representatives on 30 November—three days after tonight's debate—when the die will already have been cast. For those reasons, I urge the House to reject the proposal.

8.56 pm
Mr. Alan Milburn (Darlington)

As the House will be aware, the teachers superannuation scheme is run from Darlington by the Teachers Pensions Agency. Therefore, much that I have to say will reflect concerns not only of agency staff but of the whole community in the town.

The Minister is well aware of my concerns, as I have met him and his officials on a number of occasions to voice them. I am grateful to him for the time and trouble that he has always taken. I am also grateful for the support that I have had from my hon. Friends the Members for Liverpool, Walton (Mr. Kilfoyle) and for North-West Durham (Ms Armstrong), and my right hon. Friend the Member for Bishop Auckland (Mr. Foster).

As the Minister is aware, the 375 civil servants who work at the agency in Darlington have faced months of what I can describe only as demoralising uncertainty as they contemplate the potential impact of the handing over of their work to the private sector. It is right at the outset that we should dispose of one issue immediately. What the Minister politely calls contractorisation is in fact privatisation. That is so for a simple reason: virtually all the work of the Teachers Pensions Agency is to do with the administration of the teachers superannuation scheme. Let us not beat about the bush: we are debating privatisation this evening. That is what is before us.

Staff in Darlington are concerned that their jobs will go the way of countless thousands of other jobs, most notably in the privatised utilities, whose workers know what privatisation means for employment; 160,000 workers have lost their jobs since the former public utilities were privatised. If that were to happen to the Teachers Pensions Agency in Darlington, the effects would be serious indeed.

Already, as the Minister is aware, there is grave concern in the town about the impact on employment at the Department for Education and Employment headquarters at Mowden hall arising from the merger of the two Government Departments. However, the biggest fear is that a successful bidder for the teachers superannuation scheme could decide to relocate work away from the agency's headquarters in the town.

I have not been at all reassured by what the Minister thus far has had to say from the Dispatch Box. He was not able to define core administration, or, apparently, enforce a condition on any of the bidders that they retain employment in Darlington. Staff will draw their own conclusions about what the future may hold.

Mr. Robin Squire

I shall not interrupt the hon. Gentleman persistently, but I hope he will address the question why, should the contract go to the private sector, any contractor would wish to overlook its main asset, which would be the quality of the staff at Darlington.

Mr. Milburn

There is no argument about the quality of the staff or the expertise of the people who work at the agency in Darlington, but it is clear from the names of companies that have expressed an interest and been invited to bid that many are large financial institutions. They may well take the view that it would be cheaper, if not beneficial, to move work away from Darlington. That is our concern.

Darlington borough council has estimated that, if 400 posts were lost, an 8 per cent. increase in unemployment would be generated, in a district that already has more people out of work than anywhere else in County Durham. Darlington simply cannot afford to lose the high-quality employment that the agency offers. The agency is a key employer, which is valued by the whole community.

Ministers say—we have heard it again this evening—that all six firms that have been invited to bid have said that they will retain their core administration in the town. That should come as no surprise to anyone. What else could they be expected to say, particularly at this stage in the bidding process? Naturally they want to send out the right noises, because they want to win the contract.

In any case, as we have already heard this evening, "core administration" does not amount to a guarantee that work will not be relocated away from Darlington. The Minister has confirmed that the Department has not made it a condition of bidding that such guarantees are given by each of the six firms. The Minister cannot have it both ways: he cannot say that all the private companies that are bidding are giving guarantees, and then be unable to define what those guarantees mean. But that is what has happened this evening.

It is not surprising that staff at the agency feel deeply despondent about how they have been treated. After all, the Teachers Pensions Agency, in providing a high-quality service for 1.3 million teachers and more than 3,000 employers, has met all the key performance targets that Ministers set for it.

My hon. Friend the Member for Walton outlined some of the targets that the TPA has succeeded not just in meeting but in surpassing in the past few years. He did not mention, however, that the accuracy performance of the agency's staff has now exceeded the 95 per cent. target set for them by Ministers. It is now at 96.8 per cent. That has been achieved against a background in which the number of establishments being dealt with by the TPA has risen dramatically by 42 per cent. during the past year or so.

On anyone's calculations, those are substantial achievements. They have been made by a dedicated and hard-working staff, who have made efficiency savings of 5 per cent. per annum. Obviously, they accept that further improvements can be made in the future, and they are committed to making those improvements if they are given the opportunity. The crucial issue is whether they will be given that opportunity. Their good performance, however, has counted for nothing against the absolute determination of Ministers to force through the privatisation of an agency that seems, in their minds, almost too successful to belong in the public sector. Let us consider the evidence. When it was established as an executive agency in April 1992, staff received an absolute assurance from the then junior Education Minister, my predecessor, Michael Fallon, that there was no intention of moving the agency out of the public sector.

Mr. David Jamieson (Plymouth, Devonport)

A broken promise.

Mr. Milburn

My hon. Friend is right—three years on, and another Government promise has bitten the dust and gone the way of so many before it.

The KPMG report, on which this order is ultimately based, argued for the privatisation approach, but did not even consider the status quo as an option. Thankfully, others took a different, more measured and considered view.

As my hon. Friend the Member for Walton said, the result of the public consultation exercise undertaken by the Department revealed that only three organisations or individuals backed privatisation. However, my hon. Friend did not say that one of those was a potential contractor, which is hardly a ringing objective endorsement of the Government's proposal to hand over the agency's work to the private sector.

By contrast, the 107 organisations that expressed a preference opposed privatisation. Included in the 107 were four petitions, containing 911 names. I should have thought that a vote of 1,000 to three—or 1,000 to two, if one discounts the vested interest—was a clear verdict. I should have expected a reasonable Minister to listen to it, not least because it reflects the views of the agency's customers.

The Minister was right to remind us that the agency's customers are also taxpayers. They are teachers, employers, schools and local education authorities, and they too have an interest in ensuring the running of a well-ordered, well-administered scheme.

Once the consultation had ended, I would have hoped that a Government who were genuinely committed to consultation, prepared to listen and to put common sense above political dogma, would take stock. I would have hoped that the Government would at least pause for thought. Instead, they decided to push ahead with the privatisation exercise, because they dismissed the results of their own consultation exercise.

According to the Department's response, the Government dismissed the views of those consulted on the ground that Their objections to contractorisation are not well founded. The real conclusion to be drawn from this farce is not that the consultees were ignorant, as the departmental document seems to suggest, but that the consultation exercise was a sham from start to finish.

The agency's customers are not the only ones on the record as opposing privatisation. The Minister appears to have a short memory, because, as my hon. Friend the Member for Walton reminded him, just five years ago, in 1990, the Department's next steps feasibility study also concluded against the contractorisation option. We are confronted by an unholy alliance of former members of the Government's Front Bench, teachers, local education authorities and employers who are united against this proposal.

My hon. Friend the Member for Walton asked the Minister what has changed in the past five years, but he received no answer. The answer is simple: in 1995, the lurch to the right by the Government has jettisoned all talk of consensus. The opinion of agency staff, teachers, employers and even that of former Ministers has been jettisoned in the headlong rush towards privatisation. In the Government's mind, there is a simple equation that brooks no opposition: public is bad, private is good—"two legs bad, four legs good".

The triumph of right-wing dogma is being taken to excess in the way in which the privatisation of the agency is being handled. Not only are six companies being invited to bid to run the TSS, in the teeth of considered opposition, but they are being invited to help frame the terms on which they bid.

The Minister has seen a copy of a memo sent to all the staff at the Teachers Pensions Agency in Darlington by P. F. Owen, a senior official in his Department. He explained how the Department is now progressing with the bid process. He said: We shall shortly invite the representatives, teachers and their employers to comment on a draft statement of the services that any contractor would have to provide administering the scheme. So far so good. Similar invitations will go to the staff of the TPA"— an excellent idea— to staff in other parts of the department who have been involved in drafting sections of the text"— that seems sensible— to the trade union side"— and finally— to the six companies that we are inviting to tender. In other words, those six firms are to be given the not inconsiderable advantage of shaping the yardstick against which their bids will be judged. They are having their cake and eating it.

I would be delighted to give way to the Minister if he could tell me why on earth those six contractors, who threaten to steal work from civil servants at the agency, are being allowed to shape the very terms of the contract for which they will bid.

Mr. Robin Squire

I will ignore some of the emotive words that the hon. Gentleman has used, because they do not assist the debate. The answer is that, not least in order to clarify and to avoid any area of doubt, it seemed an excellent idea that the consultation exercise should involve not just the staff but putative tenderers. The Secretary of State retains the final decision on the form and content of the contract. That is clear and unarguable.

Mr. Milburn

Does not the Minister accept that the process of involving the six firms that are prospectively in the frame to receive that contract, in the shaping of the terms and conditions under which they will bid, at the very least calls into doubt the impartiality and integrity of the process? It appears to speak volumes for Ministers' determination to force through that privatisation, come what may.

Ms Armstrong

I wonder whether my hon. Friend would like to ask the Minister whether he will publish the comments that were received from the six companies, so that we are able to judge precisely the effect that they have on the subsequent contract.

Mr. Milburn

My hon. Friend's idea is welcome, and extremely sensible. If the Minister were prepared to accept it, it would help to dispel some of the doubts. I hope that, if the Minister has an opportunity to catch your eye again, Mr. Deputy Speaker, he will answer the question asked by my hon. Friend.

However, I now reach the crucial issue. We have heard much about value for money for the taxpayer. We have heard that the people who currently run the agency, and who, the Minister acknowledges, do so successfully, have been denied the right to bid against the private sector for that work. How is it possible to compare like with like, when the people who currently run the scheme are not allowed to bid? The result of excluding the staff from bidding is that the taxpayer is denied a fair comparison between what the private and public sectors can deliver.

Finally, the TSS is a complex scheme, which relies for its success on the scale and expertise of the agency's staff, and the faith of its customers in their integrity and impartiality. Handing the scheme over to untried but commercially interested private sector organisations risks losing both. In my opinion, it is a risk not worth taking.

The TPA is a public sector success story. Instead of privatisation, agency staff in Darlington should be allowed to build on their considerable record of achievement. That is what they want; it is what teachers want; it is what employers want. I hope that the Minister listens for once.

9.11 pm
Mr. Don Foster (Bath)

Recent Government legislation in respect of pension schemes has attempted to increase the power that is given to pensioners and deferred pensioners. Therefore it is perfectly appropriate, in a debate such as this, that we, in deciding which way to vote, take special notice of the opinions of those people who are the customers of the Teachers Pensions Agency. I am sure that many hon. Members have received as much correspondence about that issue as I have. The overwhelming majority of the people who have written to me have expressed considerable anxiety about the proposals that we are debating.

I hold very much to the view, "If something ain't broke, don't fix it," yet the Government are attempting to meddle with something that definitely is not broken. Indeed, Sir Peter Levene, the Government's adviser on privatisation issues, recently said that if a private sector company achieved 85 per cent. of its objectives, it was performing excellently. As the hon. Member for Darlington (Mr. Milburn) said, the TPA is already achieving all its targets and is outstripping its objectives by more than 95 per cent. Indeed, the Teachers Pensions Agency, set up, as Members will recall, as long ago as 1992, has met and/or exceeded all the efficiency targets set for it by Government.

Several hon. Members have mentioned the report produced by the consultants KPMG, and some have said that that report suggested that it might be possible to make savings of approximately 20 per cent. However, that report, as those who have read it will testify, gives no evidence to support that view except unsubstantiated claims made on behalf of the various private companies that have been consulted, many of which may be involved in the process of attempting to take over the administration of the scheme. Incidentally, it seems a little unwise to be considering administrative changes at the very time when the TPA will be dealing with numerous requests from part-time teachers for retrospective membership of the scheme.

I said at the beginning of my speech that we should take account of the users of the scheme. Indeed, as the hon. Member for Darlington said, we should take much more note than the Government are of all those—including users of the scheme—who were consulted about the proposals. As we know, 131 organisations were consulted, 128 of which refused to support the privatisation; more than 100 directly opposed it. Only three organisations supported it, one of which—as has been pointed out—was a potential bidder for the contract. Moreover, teachers' organisations are unanimous in their opposition to the move. They do not want the scheme to be run for profit by a private contractor. It is also opposed by employers, teachers, civil service trade unions and—importantly—the staff of the TPA.

As we know, in 1990, the Department rejected the notion of letting a contract for the administration of the scheme—no doubt sharing the view that the TPA could make all the improvements that a private sector contractor could make. The whole consultation has been a sham. I noted that, from a sedentary position, the Minister denied a suggestion that he is to meet teachers' representatives in three days' time to consult on the plan; perhaps he would like to confirm that.

Mr. Robin Squire

Let me tell the House—for purposes of clarification alone—that we are discussing an enabling order. I have already made it clear that any decision is still months away, and during that time I want to continue to meet staff members. In that context, I look forward to the meeting to which the hon. Gentleman has referred.

Mr. Foster

Surely that illustrates the concern that many of us feel. Yet again, the Minister has openly admitted that this is enabling legislation—when the Government have not the foggiest idea what the details of their proposals will be. The Minister is seeking the House's permission to go ahead and develop the scheme with a blank cheque, and—as he admits—he still has not engaged in detailed consultation even with the representatives of teachers, who are those most likely to be affected.

The Government's White Paper "The Civil Service: Taking Forward Continuity and Change" stated categorically that there should be a five-year period between reviews after the creation of an agency. As hon. Members will recall, the agency was created in 1992, only three years ago. That is yet another example of rapid changes in Government thinking.

Many who have expressed concern about the proposal have done so because they believe that management in the private sector will create a number of risks. Many are anxious about, for example, the possible loss of an independent and impartial role. The Minister may wish to confirm, or otherwise, that the TPA currently has powers to determine whether members of the scheme should receive benefits in certain defined circumstances, such as ill health, and how much they should receive in those circumstances. If the agency indeed has those discretionary powers, there is a danger that a contractor may decide to say no simply because an increase in the amount of work would result, reducing the profit.

It is also feared that the work involved in letting the contract would be expensive, and that transferring administration of the scheme to the private sector would lead to a loss of continuity and experience. Many people are concerned about their ability to seek redress in the event of poor service or maladministration. The Minister has said that it will be possible to appeal to the Secretary of State or to go to the pensions ombudsman. I hope that the Minister will respond to an earlier query about whether inquiries made to the pensions ombudsman and the handling of such inquiries will be made public.

People are also concerned about the possible mis-selling of personal pensions. I acknowledge that, in his letter to all hon. Members, the Minister gives an assurance that the Government will not let that happen. However, I hope that the Minister will give greater comfort to those who are worried by explaining how he would prevent mis-selling and what action he would take if the firm, its agents or subcontractors attempted to use the database of TPA members as the basis for selling on various personal services, including personal pension plans.

Other hon. Members have questioned whether the 20 per cent. saving that the consultants allege may be possible in a five to seven-year period will be delivered. There is no clear evidence in the KPMG report that it will. Perhaps the House should recall that the TPA has plans to cut its own costs by 7.5 per cent. each year for the next three years. In three years—not five or seven years—that would result in the savings that the KPMG report envisages.

Mr. Squire

There is no argument between the hon. Gentleman and me on that point. He has my assurance that we are anticipating savings over and above those that are built in.

Mr. Foster

I am very glad to hear it, because we can then go a step further. Those working for the TPA have made it absolutely clear that, if the Department were to give them the financial support to enable them to introduce the level of information technology equipment that undoubtedly will be used by the private contractors, they, too, could make or better the savings that are envisaged by the private sector.

I believe that this is a privatisation too far. [Interruption.] I shall give way if the Minister wishes to intervene. I believe that it poses a real threat to quality and to impartiality. The private sector companies will seek to profit from the scheme, with clear implications for the standard of service that members receive. Teachers have worried about their jobs and their pay in recent years and now a black cloud is hovering over their pensions. The Government's devotion to privatisation has outweighed the reasoned arguments against the change, and therefore I do not believe that it should be supported.

9.22 pm
Dr. Robert Spink (Castle Point)

While we have heard some interesting speeches by Opposition Members, I believe that they have represented the vested interest rather than the public interest in this matter. Their accounts of the Government's proposals have been tendentious and I do not think that they have reflected properly the Government's actions and proposals, which make a lot of sense to me.

Something must be said in support of the teachers, who work very hard with great dedication and care. By and large, they are motivated by vocation rather than by money. Therefore, they deserve a good, well-administered pension scheme, and in that regard, they have nothing to fear from the Government's proposals.

Labour Members have not yet recognised the great benefits that privatisation has brought to this country in the past two decades. Many industries that used to cost the taxpayer many millions of pounds—£50 million per week is an often-quoted figure—now deliver great benefits. They pay corporation tax and they deliver better services to their customers.

Mr. Kilfoyle

Has the hon. Gentleman read the KPMG report, and if he has, what did he think of its detailed conclusions?

Dr. Spink

I am grateful to the hon. Gentleman for bringing me back to my speech. I shall demonstrate to him that I know what the KPMG report revealed.

The Government invited six private sector companies to tender for a contract to administer the teachers superannuation scheme in England and Wales. Those tenders were invited because the Government considered that letting a contract would provide better value for money than retaining the administration of the scheme within the public sector. The Government have tried and tested that philosophy and it has been proved for almost two decades.

All six companies have declared that they would seek a fee for administering the scheme that is lower than the expected costs of the Teachers Pensions Agency, which currently administers the scheme, so there are real benefits for the taxpayers. Last year, the TPA's running costs were more than £15 million—not an insignificant sum. We owe it to the taxpayer to find out whether we can make savings and if we can, we should do so, but we must be satisfied that a private sector company will deliver better value for money than the TPA. I am happy with the comfort that the Minister has given the House on that point.

Any contract would concern only the administration of the scheme; the scheme itself would remain in the public sector on its current statutory basis. The Secretary of State would remain responsible to Parliament for the scheme and would continue to be advised by his civil servants. Letting a contract would not affect the size or safety of the teachers pension in any way. As we have heard from the Minister tonight, the scheme does not have a real pension fund. Instead, payments are made to and from the Exchequer.

When he replies to the debate, can my hon. Friend confirm that any contract would require a standard of service and performance at least as high as that currently provided by the TPA? Will he undertake to monitor the contractor's performance to ensure that?

Will my hon. Friend also confirm that he is absolutely committed to ensuring that the scheme continues to operate smoothly without interruption and that the contractor would not be allowed to advise teachers whether to join or to leave the scheme, so that the problems that arose with the mis-selling of personal pensions could not occur? We heard the misgivings of the hon. Member for Bath (Mr. Foster) on that matter and I am sure that my hon. Friend will want to give us some comfort.

Will my hon. Friend give us some guarantees about the use and protection of data within the scheme? I am pleased that all six companies have declared that they will keep data confidential and I am sure that that will he the case, but we still require some guarantees. I seek some assurances that a contractor must have effective arrangements in place to deal with any complaints about the administration of the scheme. We know that there are no plans to allow a contractor to impose new charges on members of the scheme or employees and I am grateful to my hon. Friend for that.

Finally, the resolution does not demonstrate a negative attitude to the TPA. It is widely accepted that the TPA provides a good service to its members and I am grateful to the Minister for confirming that once again. We now intend to build on the success of the TPA and the affirmative resolution, which I recommend that Members support, represents a positive move in the administration of the scheme and in the good stewardship of public finances that is absolutely essential.

9.25 pm
Mr. Edward O'Hara (Knowsley, South)

The debate shows the enormity of the power that a Minister can take unto himself under the Deregulation and Contracting Out Act 1994. It is shown in the sheer scale of the function that the Government propose to privatise—and I use that word deliberately.

The teachers superannuation fund is one of the biggest such funds, with 1.25 million participants. The public will note that the Government are contracting out that enormous scheme without primary legislation and with inadequate consultation and review. Not least, that will be noted by the 1.25 million teachers and retired teachers who have a direct interest in the matter. I declare my interest as a lifelong member of the Association of Teachers and Lecturers. I have a pension under the teachers superannuation scheme.

The issue was first raised in February and there was some correspondence at the time, but it has become more prominent recently because people have begun to realise that the Government have come to the end of their charade of consultation. I visited schools in my constituency and canvassed teachers—the people most affected by the proposal. The reaction was one of anger at the principle of the proposal and at the lack of consultation.

I received a letter from a teacher in a school in the constituency of Knowsley, North. The school will be coming into my constituency under the boundary review and at one time I was chairman of the board of governors. I know the teacher, Marjorie Sumner, well. She teaches at the Prescot county primary school and is one of the unsung heroines of the teaching profession—a dedicated and good teacher who has spent 30 years in her locality.

Mrs. Sumner wrote to me today saying: I am writing to you, as you are my Member of Parliament"— she lives in my constituency— to express my opposition to The Governments proposed Privatisation of the Teachers' Pension Scheme. I have taught for my local L.E.A. for over thirty years, paying into a Superannuation Scheme, without option, on the understanding that my teachers retirement pension would be secure. Having devoted myself to the teaching profession for all my working life I have implemented the National Curriculum with enthusiasm and expertise spending many hours discussing, preparing and presenting resources for colleagues. As the Government did not think things"— the national curriculum— through, a great deal of time, work, effort and money have been totally wasted and I now feel very let down by The Government once again by them proposing a drastic change in the administration of the Teachers' Superannuation. I feel I must voice my objection to the lack of consultation and liaison with Teachers. Marjorie Sumner is by no means a political activist; she is not militant in any way. She is a rank-and-file teacher, moved to anger and disgust by the Government's proposal.

I have some questions for the Minister, some of which have already been raised by my hon. Friends. Cost-effectiveness does not equal efficiency, as has been proved with compulsory competitive tendering in local authorities. What about the cost savings that could be available to the present Teachers Pensions Agency through the introduction of information technology? What about the costs of contracting out in relation to redundancy payments? We can be sure that there will be redundancies and they come at a heavy cost. What about the costs of the scheme in future years?

Once the scheme is contracted out and the facilities taken over, the position will be similar to that in local councils when the refuse collection service was taken over. If the Government are not satisfied with the service at any time in the future, they will not have the core facility available to enable them to take it back. As we have seen with other privatisations, once the tender is let, the negotiating hand is with those who hold the tenders because they have the resources to carry out the function.

What we have here is a short-term ledger benefit. It is probably an illusory benefit when we take into account the start-up costs of the scheme in terms of redundancies, write-downs and, if the facilities at Darlington are not taken over, the drag on resources to maintain the facilities. There are long-term costs in terms of efficiency and in the loss of jobs to the Darlington area.

I have a question to ask the Minister that no one has asked so far. He said several times that he has been given to understand that all six of the organisations that were consulted would probably keep the core function in Darlington. What does that mean? Does it mean, for example, that basic data input operations, such as basic keyboard work, could be subcontracted out to the Philippines? I should like an answer to that question, and perhaps the Minister will have the opportunity to answer in his reply.

The Government are all about short-term ledger benefit, and that is what the order is all about. The order is all about upheaval in one of the major superannuation funds to attain an ephemeral saving of £15 million in running costs. Horace said: Parturiunt montes, nascetur ridiculus mus", which means that mountains go into labour and a ridiculous little mouse is born. Perhaps it is an edible dormouse—a chocolate mouse, a tasty morsel—that makes an infinitesimal contribution to the tax cuts with which the Government are seeking to bribe the electorate.

9.36 pm
Mr. Kilfoyle

With the leave of the House. I know that the Minister is anxious to answer the many points that have been made. May I commend him for the magical letter of 10 November to which many of us have referred? The letter was so good that the hon. Member for Castle Point (Dr. Spink) made it seem like a remedial reader—something that should be used more often by Conservative Members.

I should like to ask the Minister two serious questions arising from the debate. First, it is recognised by all hon. Members that the Teachers Pensions Agency has been extremely cost-effective and efficient in dealing with the teachers superannuation scheme. On that basis, if no other, why was it frozen out from bidding for the work? The Government know that the TPA observes commercial disciplines and that it has shown in practice how effectively it can compete with anyone in the private sector.

Secondly, will the Minister announce whether he will publish the notes of the discussions that were held with the chosen companies that led to the terms, conditions and excuses set out in the letter of 10 November?

9.38 pm
Mr. Robin Squire

This has been an interesting debate, although I sense that Opposition Members did not either read my famous letter, which is now to be immortalised—I cannot wait for the video—or take into account the comments that I made earlier.

I begin by thanking my hon. Friend the Member for Castle Point (Dr. Spink) for his comments. I share his praise for teachers, and I can confirm that they have a good pension scheme. The scheme is not in any way at risk as a result of the order. As for confirmation of each of the points that he rightly mentioned, I have to save time—Opposition Members will get a little agitated if I go over them—so I confirm them all, as indeed I did in my opening speech.

I shall try in the time available to answer each of the questions asked, beginning with that asked by the hon. Member for North-West Durham (Ms Armstrong). She asked whether complaints to the pensions ombudsman would be published. The answer is no, because—[HON. MEMBERS: "Shame."] When I have finished, hon. Members may be able to withdraw the "shame". Quite a few people who complain to the pensions ombudsman may not be willing to have the facts and detail of that complaint made public. If, however, they wish to make it public, they have, with great respect, any and every way so to do.

The hon. Member for Bath (Mr. Foster), speaking for the Liberal Democrats, asked a question about the ability for personal pensions to be sold to members of the TPA. I assume that he meant those within the scheme, not the staff. I emphasise what I thought I had made clear, but obviously I had not: the contractor will not be able to use data that he holds on members of the scheme to seek to sell any financial schemes.

The hon. Member for Liverpool, Walton (Mr. Kilfoyle) asked whether manual records will be covered by the Data Protection Act 1984. Manual records will be covered by a confidentiality clause in the contract. If those records are computerised in due course, they will of course be covered by the Data Protection Act.

Further to that point and on the same issue, the hon. Member for Bath asked what would happen if the contractor or its agents misused the database. That would be a breach of contract and would be treated very seriously indeed.

The hon. Member for Darlington (Mr. Milburn) understandably spoke on behalf of many of his constituents and his point was emphasised by at least one other hon. Member. The agency is already committed to making significant savings in this and the next two years. The hon. Gentleman can also guess, although it is not absolutely certain, that, logically, those savings may have staffing implications. That is scarcely a strange suggestion to make.

We are considering how best to safeguard the interests of staff at Darlington. If it is decided to allow the private sector to run the scheme, that would, for reasons that I advanced in opening, give significant promise of long-term stability to staff at Darlington.

It is common ground between the hon. Member for Darlington and me that the quality of staff is high, and I emphasise what I said in an intervention: that precisely because the quality is so good, it would scarcely be in the interests of any incoming contractor to consider not locating its business at Darlington. That is where the knowledge and expertise has been built up and where—obviously—it would remain.

Mr. Milburn


Mr. Squire

If the hon. Gentleman will forgive me, I will not give way. I was generous in giving way. I am conscious that I have only two and a half minutes left and I am trying to deal with quite a few other questions. There will be opportunities to raise matters outside.

The hon. Members for Darlington and for Walton said that it was disgraceful—or words to that effect—that the TPA had not made a bid. It could have done so. Its staff or management could have launched a bid to buy the agency, but they chose not to do so. That was their choice. They were not required to do so, and they did not do so.

The hon. Member for Darlington asked, and I tried to answer, why companies should be consulted on the draft requirements. I shall try one more time to convince him. Administering the scheme is a complex operation—that much at least should be common ground between us. We want to give the companies the chance to clarify any points that are unclear. They may also be able to suggest improvements to draft requirements, drawing on their commercial expertise. I confirm, however, that there is no question of watering down the requirements and that there is no suggestion that the companies would seek to do that.

The hon. Member for Bath also asked what discretion the contractor would have in making decisions on entitlements. I can confirm that the Secretary of State would retain control over decisions that affect entitlement to benefits under the scheme or the amount of those benefits.

I will write to hon. Members on points that I have not covered. In essence, there is a choice tonight. There are only two reasons for rejecting the order. The first is that hon. Members have not understood the order and the safeguards that are built into it—I am afraid to say that that may be so—and the second is that hon. Members, especially Opposition Members, are still against the private sector. Despite all the honeyed words of the Leader of the Opposition, who says that Labour has now changed, the reality is that it has not and that is why Labour Members will vote against the order.

It being one and a half hours after the commencement of proceedings on the Motion, MADAM SPEAKER put the Question, pursuant to Standing Order 14B (Proceedings under an Act or on European Community documents).

The House divided: Ayes 244, Noes 205.

Division No. 5] [9.45 pm
Ainsworth, Peter (East Surrey) Clappison, James
Alexander, Richard Clark, Dr Michael (Rochford)
Alison, Rt Hon Michael (Selby) Clifton-Brown, Geoffrey
Allason, Rupert (Torbay) Coe, Sebastan
Amess, David Congdon, David
Arbuthnot, James Conway, Derek
Arnold, Jacques (Gravesham) Coombs, Anthony (Wyre For'st)
Arnold, Sir Thomas (Hazel Grv) Coombs, Simon (Swindon)
Atkins, Rt Hon Robert Cope, Rt Hon Sir John
Atkinson, David (Bour'mouth E) Cormack, Sir Patrick
Baldry, Tony Couchman, James
Banks, Matthew (Southport) Cran, James
Bates, Michael Currie, Mrs Edwina (S D'by'ire)
Batiste, Spencer Curry, David (Skipton & Ripon)
Bellingham, Henry Day, Stephen
Bendall, Vivian Deva, Nirj Joseph
Biffen, Rt Hon John Dorrell, Rt Hon Stephen
Booth, Hartley Douglas-Hamilton, Lord James
Boswell, Tim Dover, Den
Bottomley, Peter (Eltham) Duncan, Alan
Bottomley, Rt Hon Virginia Duncan-Smith, Iain
Bowden, Sir Andrew Dunn, Bob
Bowis, John Durant, Sir Anthony
Brandreth, Gyles Dykes, Hugh
Brazier, Julian Eggar, Rt Hon Tim
Bright, Sir Graham Elletson, Harold
Brown, M (Brigg & Cl'thorpes) Emery, Rt Hon Sir Peter
Browning, Mrs Angela Evans, Jonathan (Brecon)
Budgen, Nicholas Evans, Roger (Monmouth)
Burns, Simon Evennett, David
Burt, Alistair Faber, David
Butler, Peter Fabricant, Michael
Butterfill, John Fenner, Dame Peggy
Carlisle, Sir Kenneth (Lincoln) Field, Barry (Isle of Wight)
Carrington, Matthew Forman, Nigel
Carttiss, Michael Forsyth, Rt Hon Michael (Stirling)
Cash, William Forth, Eric
Channon, Rt Hon Paul Fox, Dr Liam (Woodspring)
Chapman, Sir Sydney Fox, Sir Marcus (Shipley)
French, Douglas Mellor, Rt Hon David
Fry, Sir Peter Merchant, Piers
Gale, Roger Mills, Iain
Garel-Jones, Rt Hon Tristan Mitchell, Andrew (Gedling)
Gill, Christopher Mitchell, Sir David (NW Hants)
Gillan, Cheryl Moate, Sir Roger
Goodson-Wickes, Dr Charles Monro, Rt Hon Sir Hector
Gorman, Mrs Teresa Moss, Malcolm
Gorst, Sir John Neubert, Sir Michael
Greenway, Harry (Ealing N) Newton, Rt Hon Tony
Greenway, John (Ryedale) Nicholson, David (Taunton)
Griffiths, Peter (Portsmouth, N) Nicholson, Emma (Devon West)
Hamilton, Sir Archibald Norris, Steve
Hamilton, Neil (Tatton) Onslow, Rt Hon Sir Cranley
Hannam, Sir John Oppenheim, Phillip
Hargreaves, Andrew Ottaway, Richard
Harris, David Page, Richard
Haselhurst, Sir Alan Paice, James
Hawkins, Nick Patnick, Sir Irvine
Hawksley, Warren Patten, Rt Hon John
Hayes, Jerry Pattie, Rt Hon Sir Geoffrey
Heald, Oliver Pawsey, James
Heathcoat-Amory, David Peacock, Mrs Elizabeth
Hendry, Charles Pickles, Eric
Hicks, Robert Porter, David (Waveney)
Higgins, Rt Hon Sir Terence Rathbone, Tim
Hill, James (Southampton Test) Redwood, Rt Hon John
Horam, John Renton, Rt Hon Tim
Howell, Sir Ralph (N Norfolk) Richards, Rod
Hughes, Robert G (Harrow W) Riddick, Graham
Hunt, Rt Hon David (Wirral W) Robathan, Andrew
Hunt, Sir John (Ravensbourne) Roberts, Rt Hon Sir Wyn
Hunter, Andrew Robertson, Raymond (Ab'd'n S)
Hurd, Rt Hon Douglas Robinson, Mark (Somerton)
Jack, Michael Roe, Mrs Marion (Broxbourne)
Jackson, Robert (Wantage) Sackville, Tom
Jenkin, Bernard Scott, Rt Hon Sir Nicholas
Jessel, Toby Shaw, David (Dover)
Johnson Smith, Sir Geoffrey Shaw, Sir Giles (Pudsey)
Jones, Gwilym (Cardiff N) Shephard, Rt Hon Gillian
Jones, Robert B (W Hertfdshr) Shepherd, Colin (Hereford)
Kellett-Bowman, Dame Elaine Shersby, Sir Michael
Key, Robert Sims, Roger
King, Rt Hon Tom Skeet, Sir Trevor
Kirkhope, Timothy Smith, Sir Dudley (Warwick)
Knapman, Roger Smith, Tim (Beaconsfield)
Knight, Mrs Angela (Erewash) Speed, Sir Keith
Knight, Rt Hon Greg (Derby N) Spencer, Sir Derek
Knight, Dame Jill (Bir'm E'st'n) Spicer, Michael (S Worcs)
Knox, Sir David Spink, Dr Robert
Kynoch, George (Kincardine) Spring, Richard
Lang, Rt Hon Ian Sproat, Iain
Legg, Barry Squire, Robin (Hornchurch)
Lennox-Boyd, Sir Mark Stanley, Rt Hon Sir John
Lester, Jim (Broxtowe) Steen, Anthony
Lidington, David Stephen, Michael
Lightbown, Sir David Stern, Michael
Lilley, Rt Hon Peter Stewart, Allan
Lloyd, Rt Hon Sir Peter (Fareham) Sumberg, David
Lord, Michael Sweeney, Walter
Luff, Peter Sykes, John
Lyell, Rt Hon Sir Nicholas Taylor, John M (Solihull)
MacGregor, Rt Hon John Temple-Morris, Peter
MacKay, Andrew Thomason, Roy
Maclean, Rt Hon David Thompson, Sir Donald (C'er V)
McLoughlin, Patrick Thompson, Patrick (Norwich N)
McNair-Wilson, Sir Patrick Thornton, Sir Malcolm
Madel, Sir David Thurnham, Peter
Maitland, Lady Olga Townend, John (Bridlington)
Malone, Gerald Townsend, Cyril D (Bexl'yh'th)
Mans, Keith Tracey, Richard
Marland, Paul Trend, Michael
Marlow, Tony Trotter, Neville
Marshall, Sir Michael (Arundel) Twinn, Dr Ian
Martin, David (Portsmouth S) Viggers, Peter
Mawhinney, Rt Hon Dr Brian Walden, George
Waller, Gary Wilshire, David
Wardle, Charles (Bexhill) Winterton, Mrs Ann (Congleton)
Waterson, Nigel Winterton, Nicholas (Macc'f'ld)
Wells, Bowen Wolfson, Mark
Whitney, Ray Yeo, Tim
Whittingdale, John
Widdecombe, Ann Tellers for the Ayes:
Wilkinson, John Mr. Timothy Wood and
Willetts, David Mr. Gary Streeter.
Ainger, Nick Eagle, Ms Angela
Ainsworth, Robert (Cov'try NE) Eastham, Ken
Allen, Graham Etherington, Bill
Alton, David Evans, John (St Helens N)
Anderson, Donald (Swansea E) Fisher, Mark
Armstrong, Hilary Flynn, Paul
Ashdown, Rt Hon Paddy Foster, Rt Hon Derek
Ashton, Joe Foster, Don (Bath)
Austin-Walker, John Foulkes, George
Barnes, Harry Fyfe, Maria
Barron, Kevin Galbraith, Sam
Battle, John Galloway, George
Bayley, Hugh George, Bruce
Bennett, Andrew F Gerrard, Neil
Berry, Roger Gilbert, Rt Hon Dr John
Betts, Clive Godsiff, Roger
Blunkett, David Golding, Mrs Llin
Boateng, Paul Gordon, Mildred
Bradley, Keith Grant, Bernie (Tottenham)
Bray, Dr Jeremy Griffiths, Nigel (Edinburgh S)
Brown, N (N'c'tle upon Tyne E) Griffiths, Win (Bridgend)
Bruce, Malcolm (Gordon) Grocott, Bruce
Burden, Richard Gunnell, John
Byers, Stephen Hain, Peter
Caborn, Richard Hall, Mike
Callaghan, Jim Hanson, David
Campbell, Mrs Anne (C'bridge) Hardy, Peter
Campbell, Menzies (Fife NE) Harvey, Nick
Campbell, Ronnie (Blyth V) Henderson, Doug
Campbell-Savours, D N Hill, Keith (Streatham)
Canavan, Dennis Hinchliffe, David
Cann, Jamie Hogg, Norman (Cumbernauld)
Carlile, Alexander (Montgomery) Home Robertson, John
Chidgey, David Hoon, Geoffrey
Chisholm, Malcolm Howarth, Alan (Strat'rd-on-A)
Church, Judith Howells, Dr Kim (Pontypridd)
Clapham, Michael Hughes, Roy (Newport E)
Clark, Dr David (South Shields) Hughes, Simon (Southwark)
Clarke, Eric (Midlothian) Hutton, John
Clarke, Tom (Monklands W) Ingram, Adam
Clelland, David Jackson, Helen (Shef'ld, H)
Clwyd, Mrs Ann Jamieson, David
Coffey, Ann Johnston, Sir Russell
Cohen, Harry Jones, Barry (Alyn and D'side)
Connarty, Michael Jones, Lynne (B'ham S O)
Corbett, Robin Jones, Martyn (Clwyd, SW)
Corbyn, Jeremy Jowell, Tessa
Corston, Jean Kennedy, Jane (L'pool Br'dg'n)
Cousins, Jim Khabra, Piara S
Cox, Tom Kilfoyle, Peter
Cummings, John Kirkwood, Archy
Cunliffe, Lawrence Lewis, Terry
Cunningham, Jim (Covy SE) Liddell, Mrs Helen
Dafis, Cynog Litherland, Robert
Darling, Alistair Lloyd, Tony (Stretford)
Davies, Bryan (Oldham C'tral) Llwyd, Elfyn
Davies, Chris (L'Boro & S'worth) Loyden, Eddie
Davies, Rt Hon Denzil (Llanelli) McAllion, John
Denham, John McAvoy, Thomas
Dewar, Donald McCartney, Ian
Dixon, Don Macdonald, Calum
Dobson, Frank McFall, John
Donohoe, Brian H McLeish, Henry
Dowd, Jim McWilliam, John
Dunwoody, Mrs Gwyneth Madden, Max
Mahon, Alice Rooker, Jeff
Mandelson, Peter Rowlands, Ted
Marshall, Jim (Leicester, S) Salmond, Alex
Martin, Michael J (Springburn) Short, Clare
Martlew, Eric Simpson, Alan
Maxton, John Skinner, Dennis
Meale, Alan Smith, Andrew (Oxford E)
Michael, Alun Smith, Chris (Isl'ton S & F'sbury)
Michie, Bill (Sheffield Heeley) Smith, Llew (Blaenau Gwent)
Michie, Mrs Ray (Argyll & Bute) Spearing, Nigel
Milburn, Alan Spellar, John
Miller, Andrew Squire, Rachel (Dunfermline W)
Morley, Elliot Steel, Rt Hon Sir David
Morris, Estelle (B'ham Yaidley) Steinberg, Gerry
Mowlam, Marjorie Stevenson, George
Mudie, George Sutcliffe, Gerry
Mullin, Chris Taylor, Mrs Ann (Dewsbury)
Murphy, Paul Taylor, Matthew (Truro)
Oakes, Rt Hon Gordon Thompson, Jack (Wansbeck)
O'Brien, Mike (N W'kshire) Tipping, Paddy
O'Brien, William (Normanton) Touhig, Don
Turner, Dennis
O'Hara, Edward Tyler, Paul
Olner, Bill Walker, Rt Hon Sir Harold
O'Neill, Martin Walley, Joan
Orme, Rt Hon Stanley Wareing, Robert N
Pickthall, Colin Wicks, Malcolm
Pike, Peter L Wigley, Dafydd
Pope, Greg Williams, Rt Hon Alan (Sw'n W)
Powell, Ray (Ogmore) Williams, Alan W (Carmarthen)
Prentice, Gordon (Pendle) Wilson, Brian
Prescott, Rt Hon John Winnick, David
Primarolo, Dawn Wise, Audrey
Purchase, Ken Worthington, Tony
Quin, Ms Joyce Wright, Dr Tony
Raynsford, Nick Young, David (Bolton SE)
Reid, Dr John
Rendel, David Tellers for the Noes:
Robinson, Geoffrey (Co'try NW) Mr. Jon Owen Jones and Mr. Joe Benton.
Roche, Mrs Barbara

Question accordingly agreed to.


That the draft Contracting Out (Administration of the Teachers' Superannuation Scheme) Order 1995, which was laid before this House on 15th November, be approved.

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