HL Deb 31 October 1994 vol 558 cc752-60

6.47 p.m.

Viscount Ullswater rose to move, That the draft order laid before the House on 14th June be approved [21st Report from the Joint Committee].

The noble Viscount said: My Lords, the orders before your Lordships seek to extend compulsory competitive tendering, which, for brevity's sake, I will refer to as CCT, to five new local authority services. Three of the new areas are manual services—parking supervision, vehicle fleet management and security work. The remaining two are in the professional sphere. These are authorities' legal services, and their construction and property services. All five services are the first to be brought into the CCT regime following the Government's consultation paper Competing for Quality, published in November 1991.

The orders before us tonight set out the definitions of the new services, and add them to the Local Government Act 1988, the statutory basis of the CCT regime. Once Parliament has approved the orders, other aspects of the regime, which I will describe in more detail shortly, will be effected through regulations.

Local taxpayers across the whole country are entitled to expect not only that their contributions to the local purse are being spent prudently, but that they receive the best possible value for their money. Experience with manual services such as refuse collection and grounds maintenance, which are already subject to CCT, has shown that competition works. Independent research has found that competition has led to overall costs savings of around 7 per cent. But I regard as equally, if not more important, the report's findings that CCT has also led to an improvement in the management and quality of local services as a direct consequence of the disciplines of competition.

We should be clear that the objective of CCT is to extend competition. It is not designed to bring about automatic privatisation of local authority services. Local authorities' own in-house teams have the opportunity to prove themselves as the best men and women for the job. If they are, then they will continue to do the work. Indeed, many in-house teams have not only proved their worth, but improved their service delivery still further as a result of the competition process.

Local authorities across a wide political spectrum are increasingly adopting new initiatives in service delivery. Those moves are to be welcomed. Those which already have their own market-testing programmes need have no fear of CCT. Other authorities, and there are still a few, are less committed to innovation. Some loudly proclaim their commitment to keeping work in-house at all costs. Their local taxpayers deserve better.

Our decision to extend CCT was confirmed in November 1992. Since then, we have given careful thought to how we should bring professional services into the regime. Those services are at the heart of the authority, and they must match local needs and demands. The competition regime must be flexible, and must recognise the particular needs of each service. To achieve that, we have consulted widely before finalising our proposals.

The competition regime for professional services has been discussed in detail with local authority practitioners in joint working groups. In addition, we sought, and obtained, valuable input from the professions; the law Society, the General Bar Council, the Institution of Civil Engineers, the Royal Institution of Chartered Surveyors and the Royal Institute of British Architects. Although we did not always agree with their views, I am certain that the proposals before this House today are the better for having been fully discussed with the practitioners.

Turning to the draft orders before us tonight, these define the work which will fall within the CCT framework. Taking first the new manual services, the descriptions here are largely self-explanatory. The supervision of on-street parking encompasses enforcement of a wide range of parking controls which were de-criminalised and passed to local authorities under the Road Traffic Act 1991. Vehicle management covers the procurement of vehicles for use throughout the authority, ranging from the mayoral car through to everyday utility vans. Fire and police vehicles are specifically excluded.

Finally, the order defines security work straightforwardly as the guarding of access to buildings and other authority property. In some cases, local authority staff have enforcement powers which cannot be transferred to private contractors. We have no desire to dilute the effectiveness of these powers and intend to make provisions for such work to be exempt from CCT once these orders are in force. The new manual services will be subject to the same; rules as are in place for services currently subject to CCT.

The legal services definition covers all legal work undertaken by, or through, qualified legal staff. It does not include work incidental to other tasks, such as completing or serving of statutory notices by trading standards or environmental health officers.

The definition of construction and property services covers professional work such as architecture:, engineering, surveying and valuation, in so far as they support the authority's construction and maintenance projects and programmes. It also covers the management of property owned, used or managed by the authority, but not local authority owned housing. Noble Lords will recall that the latter was brought into the CCT regime by a separate order, which this House debated on 16th June. The construction and property definition does not, however, include any work of a regulatory or enforcement nature. Nor does it include professional support to such activities.

To avoid undue bureaucracy, we have excluded from the definition individual members of staff spending less than 50 per cent. of their time on any of the professional services.

I hope it will prove useful if I give a brief summary of other aspects of CCT for legal services, and construction and property services, not provided for in the orders before us. These will instead be provided for in regulations which will be made under Section 6(3) of the Local Government Act 1988 once the orders are in force. The Government announced in June their decisions on these matters, following full consultation, so none of what I have to say will come as a surprise to local authorities. All our decisions follow careful consideration of the basis upon which competitive tendering is best conducted for professional services.

A comprehensive approach to the definition, such as the one we are adopting, means that some of the work defined may not necessarily be suited to competition. It will, for example, be necessary to retain certain skills in-house, perhaps to offer an "expert client" capability; to support corporate management; or because the work forms part of an authority's statutory responsibilities. The CCT regime for professional services recognises that by requiring that only a proportion of work is exposed to competition, with each authority free to decide what work to market test.

For legal work, that proportion will be 45 per cent. That work cannot be done by the authority's own staff unless it has first been won through competition. For construction and property services, the relevant figure is 65 per cent. These are challenging but I think fair figures. I should make clear to the House that we do not see these merely as a starting point. We have no intention of ratcheting up the percentages over time.

In addition, the regime we are putting forward recognises that some work undertaken in-house has nevertheless already been subjected directly or indirectly to competitive pressures. For example, work already won through a rigorous voluntary testing exercise, or support to existing DSOs, will be offset against an authority's obligations under the CCT regime. And I should emphasise that work already contracted out, no matter how the award was made, will be taken into account.

Those percentages are of course a matter of judgment. But they were arrived at following a careful evaluation of the various options available. And we intend to allow smaller authorities a safety net to protect in-house work up to £300,000 in value for legal services, or £450,000 for construction and property services.

I know that there are different opinions on our proposals. It is clearly impossible to satisfy everybody. But we have weighed carefully all the arguments and I am certain that we have achieved the right balance between what is desirable to open to competition, and what should be kept in-house.

I mentioned earlier that the nature of the new professional services needs to be reflected in the way competitive tendering is conducted. We have reviewed the statutory framework governing the conduct of CCT to ensure that it recognises those differences, and strikes the right balance between setting up a truly competitive regime and meeting the operational requirements of authorities.

In particular, we have made clear that authorities will be permitted to make their own qualitative judgment in balancing the price of individual tenders against the quality of proposals put forward. At our request, the local authority associations and professional bodies worked together to draw up advice for authorities on this important aspect of CCT. The Government has already commended the resulting document to local authorities.

We are keen to bring the benefits of competition to these new services as soon as possible. London boroughs and metropolitan districts in England will be in the vanguard. They will be required to comply with the CCT rules for the new manual services from October 1995, and for legal and construction and property services from April 1996.

English authorities which are being reviewed by the Local Government Commission will only be brought into the extension programme once decisions on their future have been taken and, where appropriate, changes have been implemented. That will give the new unitary authorities time to develop their own strategies and programmes for service delivery. My right honourable friend the Secretary of State for Wales has announced that CCT extension will take effect from April 1998 in that country. My right honourable friend the Secretary of State for Scotland is at present consulting Scottish authorities on their proposed implementation timetable.

I should end by pointing out that CCT applies not just to local authorities, but also to certain other bodies such as police and fire authorities, statutory joint committees and waste authorities. We have considered carefully the position of each of these bodies and will be modifying the regime as necessary.

We have sought to construct a regime which is flexible, workable and takes into account the special nature of professional services. We have consulted widely at all stages of the regime's development and I am confident that we are now putting in place a regime which will widen competition without constraining innovative approaches to service delivery at the local level. The result will be greater efficiency and improved quality of services, benefiting whole communities up and down the country.

I commend these orders to the House. I beg to move.

Moved, That the draft order laid before the House on 14th June be approved [21st Report from the Joint Committee].—(Viscount Ullswater.)

Lord Dean of Beswick

My Lords, it will be no surprise to the Minister to know that on behalf of my party I certainly do not welcome these orders.

We have just had a 10 or 12-minute speech, but the contents of these draft instruments would normally have been before us in a very comprehensive Second Reading debate on a Bill.

This particular modus operandi that the Government now have totally bypasses the normal functions of another place and your Lordships' House in deciding each particular issue on its merits. It is no secret that my party, and I think the Liberal Party, when these proposals were first mooted, after consulting the local authorities—and that is whom we are mainly talking about—were bitterly opposed to them.

In opening, the Minister said that there were widespread benefits and referred to 7 per cent. savings across the board. I cannot go into detail because I did not expect such a comprehensive speech on the two orders being brought before your Lordships' House. I have not brought a note with me and I am responding mainly to what the Minister said.

The Minister said "following consultation"; but I think that it is a mutilation of the language to use the word "consultation". What I term as consultation is going to see somebody about a proposal; and then, if the people involved in the consultation are so against it, the proposal is dropped.

But that is not what is happening here. The Government's idea of consultation since they took office has been to decide on a political plan of action, and then to want consultation with the people affected by it in order to bring it into operation. I have not been in touch with the five professional bodies that the Minister said had been involved in this consultation. I think, off the top of my head, one organisation was the Law Society and another was the Institution of Civil Engineers. However, I seem to recall that the five professional bodies were totally against these proposals. If they were not, perhaps the Minister will correct me.

So there is no point in the Minister saying that the proposals have broad support throughout the country. They do not have broad support at all. The views of the local authorities involved were totally discounted; they were told what they would have to do.

Perhaps the Government had a crystal ball and three or four years ago could see that the way they were going nationally there would be very few Conservative councils left in the country. I think that has a lot to do with what is happening here. Most of the town halls and county halls are no longer under Conservative control. Out of the three sets of elections we have had, the Government lost heavily in the European elections, narrowly won a general election and were re-elected to Westminster with a small majority of seats—which may well dissipate before this Parliament has run its course— and they were completely obliterated at the local authority elections, at county, borough, city and small authority levels.

I believe that what we are looking at now is a vehicle to ensure that the gurus who sit as secretaries of state can dictate an order, pass it down, and it will be obeyed.

I am a product of local government; and if I was a Conservative councillor who had just lost my seat—and a lot of them have—I would never for one moment consider returning with this sort of regime being imposed on local government. It means that councillors will have almost every decision on how to manage their business taken from them.

I do not understand why the Government are carrying on with this exercise. The savings are not as dramatic as the Minister has made out. He has not produced figures—he may have been given some, I am not in a position to challenge them—but one thing that I heard him mention was the question of people who work in security for local government. The organisation which I remember from Manchester, the city that I was associated with, is the parks police. It is not part of this order, but I hope that the Government will set their face completely against any idea that local authorities, of their own volition, should commence to institute a second tier of security control and name it as their own police force. I think that would be disastrous. The job of policing and security should be mainly left to the police forces as we know them, and to the specialist groups and specialist officers employed by them.

I have tried to convey in the few words I have spoken the basic abhorrence of the overwhelming number of people who will be affected by this order. I think it is a negation of the principle of democracy. I make no personal criticism of the Minister because I know him to be a man of honour-—and we have differed across the Dispatch Box a number of times —but does he really think—and do the Government at the other end of the Palace of Westminster really think—that this is an exercise in democracy? It smacks more of what one would have expected in the eastern European authorities before the break-up started there.

Certainly I do not rise in any spirit of welcoming these orders. If there was any possibility within the so-called democratic system that we are supposed to live in I would, on behalf of my party, bitterly oppose them—but democracy stopped before the orders came into the House. On that basis I close my remarks; mat we would, if we possibly could, totally reject them.

Baroness Seear

My Lords, we on these Benches are not, and never have been, against competition. We are not saying that it is not suitable on occasion to have competitive tendering. But what we object to very strongly indeed is that the decision to do it should be imposed on local authorities.

Again and again from these Benches we have accused the Government, with abundant evidence to support it, that they have been undermining local democracy, which is the starting point of all democracy. If you destroy local democracy you destroy democracy itself, over a matter of a very short period of time in all probability. The decision as to whether a service should be put to competitive tendering should, in our view, rest with the elected representatives of that locality, of that local authority, to make their decision as they see fit.

The second reason why I greet the Minister's statement with no enthusiasm whatsoever is that it is yet another example —and we have had so many—of government by regulation. I had thought that we would hear a relatively short statement about a relatively insignificant order and therefore I had no intention of speaking. But there was no such thing. Many of the services that have been mentioned could individually be discussed with very great benefit as to whether or not they should be put out to competitive tendering. In my view, and in the view of my party, this should be a matter for local authorities themselves to decide.

I am bound to say—and here I know that the noble Lord, Lord Dean, will not support me—that this is yet another example of why it is such a pity that we cannot move amendments to orders. We ought to be able to say that we do not accept part of this order even if it is presented to us in the way that it was. I know what the convention is and that it would be ridiculous to try to do anything in the House with the numbers who are attending at the present time. When I say "We on these Benches" I always have to explain that I am not using the Royal plural. I can only say that I deeply regret that the Government are now so determined to make decisions from the centre rather than devolving them and so determined to do so much by order which ought to be done in primary legislation.

Viscount Ullswater

My Lords, the noble Lord, Lord Dean, said that he could not welcome these orders and accused the Government of trying to bypass the legal process. I thought it right to make a comprehensive introduction—

Lord Dean of Beswick

My Lords, I did not suggest that anything illegal was being done. I was talking about the legislative procedures.

Viscount Ullswater

My Lords, I stand corrected. I meant the legislative process. The noble Lord will understand that both Houses approved the Local Government Act 1988, including the power to extend CCT to the new services. This debate on an affirmative resolution offers the opportunity of debate on these important matters. I thought it right that I should come to the House with an explanation of the orders and the subsidiary regulations that will come along in due course.

The noble Lord criticised the Government for not listening too carefully to the consultation exercise. In my opening remarks I mentioned the number of people whom we had consulted. I would have to admit that the bodies expressed different views and that they were not all supportive. But it is our job to ensure that local taxpayers receive the clear benefits of competition. I am pleased that the noble Baroness, Lady Seear, is with us on that route—at least in agreeing that competition is useful and that there are benefits to be gained from it. We have listened very carefully to the bodies that we consulted and the regime has been modified to reflect a number of their concerns. I do not think I need to go into the detail of the particular modifications that we have made.

The noble Lord, Lord Dean, said that the savings were perhaps illusory. I can say that the amount of cash value savings from CCT is in the order of £115 million. That is a substantial amount, far outweighing the tendering costs. Competition is not just about saving money. It is about maintained or improved standards of work, productivity gains, improved monitoring of work and improved management processes. All of those are important and have been verified by independent research.

The noble Baroness, Lady Seear, wanted to replace CCT with various forms of entreaty to local authorities to deliver better value services. That fails to acknowledge that CCT has already delivered concrete benefits to local taxpayers. As I said in my opening remarks, an average saving of 7 per cent.—

Baroness Seear

My Lords, does the noble Viscount recognise that local people are perfectly capable of reading those figures themselves and of seeing what the authorities have been saving? I am not against them doing that. I am merely saying that it is they who should decide—on the evidence.

Viscount Ullswater

My Lords, the trouble with any voluntary scheme is that only the very best councils will apply meaningful self-denying ordinance and the weaker councils—many of them controlled by the Labour Party—will escape the discipline by setting very low targets. The essential point about CCT is that it is compulsory. Few today would argue that competition can bring many benefits to public services. There are significant financial savings to be had. But more importantly, competition also provides an opportunity for local authorities to develop a clear vision of their role in ensuring that local services meet local needs. The best local authorities have already grasped this opportunity. I commend the Motion to the House.

Lord Dean of Beswick

My Lords, before the noble Viscount sits down, he said earlier that noble Lords ought to have the fullest and most detailed information on orders going through the House. Perhaps I may remind him that if we are dealing with a Bill—and the order is as complicated as any Bill if we want to dot all the i's and cross all the t's—the Opposition are furnished with information about the detailed proposals. I came to the Chamber tonight without any idea of the details of the orders and I think that the same is true of the noble Baroness, Lady Seear. The Opposition ought to have some forewarning of the detail of what we shall be debating if we are to be expected to sit here and let them pass without protest. Will the Minister take that point on board?

Viscount Ullswater

My Lords, I indicated in my opening remarks that the orders were laid in June and July. At the same time as they were laid details of the further regulations were also made public. The noble Lord and his party have had an opportunity to look not only at the orders themselves but also at the regulations which are due to be moved, and into which I confess I went in some detail because I thought it was necessary to expand on the bare bones of the orders. As I indicated in my opening remarks, those details are not new to the House and should not be new to noble Lords because they have received a certain amount of public attention already.

On Question, Motion agreed to.