Local Authority Services: Contracting-Out (Hansard, 23 February 1981)

§ Lord Gainford
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ Lord Skelmersdale
My Lords, Ministers have stressed in speeches and articles that it is important for local authorities to consider how contracting-out can produce useful economies in the provision of services. The Department of the Environment has commissioned a study of service and pricing decisions for a range of local authority services in England. More specifically, regulations implementing Part III of the Local Government, Planning and Land Act 1980, which will require a wide range of the work of local authority direct labour organisations to be the subject of competitive tender, will shortly be laid before Parliament.

§ Lord Gainford
My Lords, I thank my noble friend for that Answer. Can he give any information as to what assurance ratepayers may have in the future—bearing in mind the reductions in staff of local authorities? Can he say as regards the rumours of considerable increases in rates which are circulating whether ratepayers may look forward to value for money?

§ Lord Skelmersdale
My Lords, the profit motive of course promotes efficiency and thus potential cost-savings for a given level of service. Other potential benefits would include savings on capital investment, less administration and management, and flexibility 889 to respond to variations in work load. Thus I am satisfied that ratepayers will get good value for money from this service.

§ Lord Wells-Pestell
My Lords, can the noble Lord give the House some indication of the local authority services to which he referred and which were implicit in his reply to his noble friend, and say whether he is in a position to know to which local authority services his noble friend referred?

§ Lord Skelmersdale
My Lords, the most normal services which we envisage in this area are the environmental health services, which, of course, include such services as public conveniences, the control of air pollution, cesspool-emptying, and so on. The other particular one we have in mind is refuse collection.

§ Lord Avebury
My Lords, will the Minister consider the particular case to which public attention has been drawn recently of the local authorities with more than 1,000 dwellings lying vacant at a time of severe housing shortage, while the local authorities concerned are refusing to hand these dwellings over to responsible housing associations which are willing to run them for the benefit of the community?

§ Lord Skelmersdale
My Lords, I am not sure that this is implicit in the Question, but I shall of course bring the noble Lord's point to the knowledge of my right honourable friend.

§ Lord Brockway
My Lords, would not the Minister agree that there is very great danger in this proposal? Will it not mean that, when they are not under the authorities in the public service, the motivation of these services would, under free enterprise, become profit?

§ Lord Skelmersdale
My Lords, as I said to my noble friend Lord Gainford, the object of the legislation on direct labour organisations is that they must be seen to give ratepayers and taxpayers value for money. They must be accountable, make efficient use of their assets, and face real and direct competition from the private sector. Our legislation will achieve that.

§ Lord Wells-Pestell
My Lords, may I ask the Minister whether he is aware that we on this side of the House, and I am sure his noble colleagues behind him, congratulate him on the way in which he has answered what I believe is his first Question at the Dispatch Box?

§ Lord Skelmersdale
My Lords, the noble Lord, Lord Wells-Pestell, is very kind. I shall remember his words when we get a little busier later on in the Session.

Viscount St. Davids
My Lords, will the noble Lord agree that the motivation of profit which some noble Lords, including the noble Lord, Lord Brockway, fear may have the effect that a number of people will apply their brains, hitherto not adequately applied, to these activities and actually do them better, even at the cost of a certain amount of profit? Where the 890 thing is not done so well by private enterprise, the noble Lord, Lord Brockway, will there be proved right, but this is the sort of test which we want to take place.

§ Lord Skelmersdale
My Lords, I can assure the House that my brain has been considerably exercised over this matter in the last few days, but basically I would agree with the noble Viscount.

§ Lord Leatherland
My Lords, will the noble Lord advise local authorities to set up costing systems as a result of which they could probably save a great deal of money, as the Birmingham Corporation did 60 years ago when I was put in charge of their costing system for a big department?

§ Lord Skelmersdale
My Lords, local authorities are always very aware of costings, and it is partly as a result of some rather loose costings that have been carried out in the last few years that we have enacted this legislation.