HC Deb 30 April 1996 vol 276 cc890-1
6. Mr. Congdon

To ask the Secretary of State for the Environment what further steps he intends to take to ensure that there is an equality of treatment when contracts are being let under compulsory competitive tendering between direct service organisations and the private sector. [25676]

Sir Paul Beresford

My hon. Friend will be aware that, earlier this month, we issued new statutory guidance to local authorities on compulsory competitive tendering. In addition, we will publish our proposals for changing the CCT system next month.

Mr. Congdon

I warmly welcome that guidance and my hon. Friend's efforts to root out anti-competitive practices in local authorities, but does he accept that many local authorities—especially Labour ones—will do everything possible to ensure that contracts are let to their own direct labour organisations? Will he take further steps to encourage the district auditor service more rigorously to try to root out those anti-competitive practices and to pay special attention to the terms of reference of direct service organisation boards, which appear to be set up to rig the system in favour of DSOs?

Sir Paul Beresford

My hon. Friend is absolutely right. The shenanigans that some Labour and Liberal local authorities get up to dodge the common sense of competitive tendering are staggering. The district auditors, or the external auditing system, have the power to act in many areas, and need encouragement to do so. We shall certainly continue the encouragement, along the lines that my hon. Friend suggests.

Mr. Corbett

Does the Minister recall insisting that Birmingham city council should re-advertise its five housing management contracts when it had awarded them in fair competition with the private sector? Does he realise that that costs council tax payers in the city £1.5 million? Will he foot that bill?

Sir Paul Beresford

The answer is that it was not a fair competition. The fiddling of the books and the shenanigans that went on were incredible—not only in housing, but in other areas, time and again—and the people who lose are the people who pay and the people who receive the services. This is a blow of old Labour, and it is about time that people, including Opposition Members, understood the advantages of competitive tendering.

Sir Anthony Grant

Is my hon. Friend aware that a very good example of the importance of transferring contracts to the private sector may be found in Cambridgeshire, where nearly £2 million has been lost to direct labour organisations by the incompetent, half-baked Lib-Lab county council?

Sir Paul Beresford

There are repeated examples of such cases throughout the country. Bradford is a classic example. By shenanigans, it lost £1.2 million. When it was forced to repeat the tendering process, the new contract went out to the private sector, with a saving of £700, 000.