§ 2.52 p.m.
§ Lord MolloyMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
7 The Question was as follows: To ask Her Majesty's Government what are the criteria used to compel regional health authorities to privatise domestic, catering and laundry services.
§ Baroness TrumpingtonMy Lords, health authorities are not being compelled to contract-out these services. Rather, they have been asked to seek competitive tenders, including in-house tenders, for these services and to place the work with the lowest tenderer. The Government consider that this will ensure that these services are provided as cost effectively as possible, so that any savings made can be devoted to patient care services. I am sure the noble Lord, Lord Molloy, will appreciate the importance of that aim.
§ Lord MolloyMy Lords, is the noble Baroness aware that I am indeed appreciative of what she has said? The great shame is, of course, that that is not what is really happening.
§ Lord MolloyMy Lords, may I ask whether the noble Baroness is aware that the members of the Cornwall Health Authority were threatened with dismissal if they did not obey the diktats of the Ministry, notwithstanding the fact that the workers in that authority had submitted an in-house scheme which would have saved the authority no less than £500,000 a year on laundry services? That was rejected and a private firm was given the job, which made an increase and not a saving of £50,000. Is she aware that when the local health authority protested in this land of freedom they were threatened with dismissal? Would she therefore not agree that it is about time that the Government saw that their policies were properly instituted and carried out?
§ Baroness TrumpingtonMy Lords, I imagine that the noble Lord, Lord Molloy, is referring to a newpaper article which got the whole matter quite wrong. In Cornwall tenders for laundry services were sought from private companies, and there was an in-house estimate based on a single new laundry at Poole, which was to serve most of western Cornwall. A full financial appraisal has been carried out which demonstrates that a tender made by a private contractor is the cheapest solution. The health authorities were advised to place the contract with the contractor.
§ Lord AveburyMy Lords, in comparing private tenders with in-house costs, will authorities be asked to bear in mind that many of the overheads associated with the in-house conduct of these services will still have to be borne by the regional health authorities even though those services are contracted out?
§ Baroness TrumpingtonMy Lords, the appendix to the circular makes it clear that a tendered price must be held to as the budget for the service in question. Only increases that would have been permitted from an outside contract would be allowable. The whole process is subject to internal and external audit.
§ Baroness Gardner of ParkesMy Lords, would my noble friend confirm that in a number of instances in-house tenders have been submitted and are being accepted by the health authorities?
§ Baroness TrumpingtonMy Lords, I am grateful to by noble friend for that statement.
§ Lord EnnalsMy Lords, is the noble Baroness aware that the option of privatisation has always been open to health authorities ever since the National Health Service started? The main point is that it has not usually been effective, cost-effective or more effective. Secondly, may I ask the noble Baroness whether it seems to her right that private firms which submit tenders are going to be relieved of value added tax, while charities—which do invaluable work for the National Health Service and the social services—are not excluded from VAT? Does this not seem grossly unfair?
§ Baroness TrumpingtonMy Lords, in answer to the first part of the noble Lord's question, the object of tendering and of having a cost appraisal exercise is to determine the most cost-effective way for health authorities to provide these services. Contracts will be let only where it has been established that standards would be maintained and where savings are to be made by doing so. As I said before, any revenue saved would be available for additional patient care services.
I do not think the two examples in the second part of his question are really relevant, but the story about past contracting and VAT has been a mixed one: some failures and some successes. In some cases imprecise specification of requirements and lax monitoring has and an adverse effect. The imposition of VAT on service contracts was also a disincentive to placing work with outside contractors; but this will now be reimbursed, as the noble Lord said. These points have been covered in the circular.
§ Lord EnnalsMy Lords, I am sorry to press the noble Baroness on this, but since there has been great pressure in this House and in another place that charities which provide a social service should be excluded from the payment of VAT, does it not seem to her to be unfair that that should be denied but that VAT should be relieved in respect of the private companies which manage to secure tenders with the National Health Service?
§ Baroness TrumpingtonMy Lords, may I suggest that the noble Lord puts down a Question about that, because I believe it is a different one from the Question that we have been talking about today.
§ Lord Mackie of BenshieMy Lords, would the noble Baroness answer the question put by my noble friend Lord Avebury? It is very important that the overheads are taken into account when the costing is being done, but if the overheads cannot be saved then surely a wrong decision could be taken?
§ Baroness TrumpingtonMy Lords, I am not sure whether I am still answering the question, but I will endeavour to do so. The services will be contracted out only where savings can be made by doing so. It is not 9 possible to quantify the extent of these savings yet. I do not think I am answering that question but I am giving some useful information. Recent experience shows that there are some very worthwhile savings to be made. Twelve contracts let recently will save health authorities £1½ million a year. Perhaps we might call it a day on that one.
§ Lord MolloyMy Lords, might I ask the noble Baroness this question. If she is not aware, ought she not to make inquiries and should not the Minister of Health also make inquiries when there is grave consternation from all the professions in the health service concerning this ramming of privatisation down the throat when it is not necessary and when it produces bad results? Why does not the Minister of Health see the secretary general of the Confederation of Health Service Employees and representatives of the BMA? Also, could the noble Baroness let me know in writing whether there are still extant documents alleged to emanate from the DHSS or from the Minister's office saying that privatisation must take place irrespective of whether it is more efficient or saves money?
§ Baroness TrumpingtonMy Lords, perhaps the noble Lord, Lord Molloy, would care to read my original Answer, when I said that health authorities are not being compelled to contract out these services.
Lord HawkeMy Lords, is it true, as the noble Lord, Lord Molloy, said, that when threatened with privatisation the existing staff offered to do the job for £¼ million a year cheaper?
§ Baroness TrumpingtonMy Lords, I am afraid I do not know the answer to that.