HL Deb 18 January 1996 vol 568 cc712-23

3.50 p.m.

The Lord Privy Seal (Viscount Cranborne)

My Lords, I beg to move the Motion standing in my name on the Order Paper.

As anyone with a working knowledge of Parliament will recognise, Her Majesty's Stationery Office has a long and illustrious history. I believe I am right in saying that it is one of the oldest government departments still in existence, since it was established over 200 years ago. The Stationery Office has diversified and grown since then. It has acted as a printer to Parliament for more than 100 years and has established a reputation for providing a service of the highest quality and efficiency.

It has also a long-standing responsibility for legislative printing and the Controller of Her Majesty's Stationery Office is customarily appointed Queen's Printer of Acts of Parliament. As my noble friend Lord Boyd-Carpenter pointed out a moment ago, the Stationery Office also administers Crown copyright and, by agreement with this House and another place, parliamentary copyright too. With my noble friend's permission, I shall return shortly to the matter of Crown copyright. In all those areas, the Stationery Office has demonstrated and indeed enhanced its reputation for quality and reliability, which are now known way across the public sector and beyond.

Of course, if government is to be effective, the functions that I have just described are essential. But equally, they account for only a small proportion of the Stationery Office's business. Financially, it has always had to rely more on the mundane business of supplying stationery, printing services and so forth. In those areas it has consistently been guided by its founding principle of minimising the cost to government and therefore to the taxpayer, while maintaining the standards that its customers expect. The same principle has guided this Government's policy toward the Stationery Office and, I venture to suggest, must clearly be paramount in any decision on its future.

That was why, in 1982, the Government allowed the Stationery Office's customers to use other suppliers. Until then its business had been guaranteed and was paid for by an annual Vote rather than by the customers themselves. After customers were untied from the Stationery Office, the private sector was quick to enter what had been a closed central government market. As a result, the Stationery Office found itself responding to competition with improvements in quality and price. Indeed, it is worth pointing out to your Lordships that there has been no increase in the cover price of parliamentary papers since 1991 and the price of Hansard has indeed been reduced. That is very good news for customers, who have benefited from great choice and lower costs, as well as being good news for the taxpayer.

The new regime faced the Stationery Office with quite a challenge. It found itself competing with suppliers well used to the rigours of the market place and who were not subject to the Stationery Office's public sector restraints. Nevertheless, your Lordships will not be surprised to hear that the staff responded remarkably. They improved efficiency and, indeed, the Stationery Office has doubled the number of transactions that it handles since 1980, while staff numbers have roughly halved. However, it still has to carry the incubus that any government-owned commercial enterprise must carry. It is still subject to public expenditure constraints and so cannot contemplate taking decisions which enable a private sector enterprise to grow and adapt. It cannot raise investment capital without appealing to the Treasury and cannot readily diversify its operations. Most importantly perhaps, it cannot generally trade with the private sector, despite the fact that its own central government market is diminishing.

I believe that those restrictions are certain to damage the Stationery Office's prosperity. Indeed, those restrictions have to some extent already done so. The turnover has fallen by some 10 per cent. since 1990. So, if we take no action now, the future will be bleak and staff numbers will continue to fall. That would be a grave disservice to the staff at the Stationery Office who have built the organisation's formidable reputation and now see their own future in jeopardy. Removing the incubus of government ownership will give the Stationery Office the chance to expand, to compete fully and, if it needs to, to diversify.

That is why my right honourable friend the Chancellor of the Duchy of Lancaster announced in another place last month that the Government intended to privatise the Stationery Office by competitive tender offer by the summer of this year. However, I believe that there will be other advantages flowing from that decision. The office's customers, and by extension the taxpayer, will benefit from greater efficiency and at the same time working in a well-found and prosperous business will offer more real security to the staff. The Government are, therefore, convinced that failure to take action will leave the business in a half-way house, which will harm the long-term interests of the business, its staff, its customers and the taxpayer.

Some have suggested that the Stationery Office should remain within government ownership but that the restrictions on its operation should be relaxed. I cannot help feeling that that is a suggestion without any serious merit. The history of the past 16 years has shown that commercial enterprises in the public sector, which allegedly enjoy the unfair competitive advantages of being underwritten by the taxpayer, with access to cheap borrowing from the National Loans Fund and so forth, do not provide the advantages to their customers and their staff that firms in the private sector provide. In fact, those alleged advantages lead to rather the reverse, to sclerosis for the enterprise and higher taxes for the public.

On the other hand, we must recognise that any change such as the one that is contemplated must he a thoroughly unsettling process for the staff themselves. My right honourable friend the Chancellor of the Duchy of Lancaster has therefore already given an assurance that TUPE will apply at the point of sale to preserve all terms and conditions of employment. The day-to-day relationship between employer and employee will be maintained after privatisation. We shall maintain contact with staff representatives at the Stationery Office and keep employee interests firmly in mind as the sale proceeds.

As a member of the Government, I am concerned that we should make the right arrangements to ensure the future success of Her Majesty's Stationery Office as a business. I hope that I have already made that clear this afternoon. As Leader of your Lordships' House, my object above all must be to ensure that the House is provided with at least as good a service as that which we have received from the Stationery Office while it remained in the public sector. I also share the desire that has been expressed in all parts of your Lordships' House, most notably and recently by the noble Lord, Lord Lester of Herne Hill, that the price of Hansard should not be a barrier to public access to records of our proceedings and indeed the proceedings of another place.

Therefore, it is important for me to emphasise that operationally the day-to-day relationships between the House and the Stationery Office need not change significantly. The House already enjoys a broadly commercial relationship with the Stationery Office and the supply and service agreement which came into force at the start of the year will, I believe, provide a sound basis for agreeing a full contract with legal force.

The Government note the future requirements stipulated by the Offices Committee of this House and indeed by Madam Speaker in another place. We are confident that those requirements can be incorporated in the contracts between each House of Parliament and the new business. Those contracts could quite properly provide for the service to be given from the same premises and by the same staff as at present; for named officers of the privatised business to be accountable for its performance; and for emergency arrangements to be maintained. In short, current arrangements between the Stationery Office and this House could continue unchanged after privatisation if the contract is drawn up to that effect.

Officials of the House are already closely involved in planning for the change and have at the forefront of their minds the safeguarding of the interests of the House. Your Lordships will rightly wish to be kept informed of progress, and it may well be that it is in the mind of the Offices Committee to receive a report on the progress which is being made towards meeting the requirements which it has already set out. Indeed, the Offices Committee may feel that contact with Ministers would help it to safeguard the interests of the House. I am pleased to be able to say that my right honourable friend the Chancellor of the Duchy of Lancaster has indicated to me that if the Offices Committee so wished, he would be willing to be examined by it at its convenience.

Of course, it would be for the Offices Committee, and ultimately for your Lordships' House, to judge whether the necessary safeguards were in place to meet your Lordships' requirements for printing and publishing services. I would not in any way wish to interfere with that—and even if I did wish to do so, your Lordships would deal shortly and effectively with me.

Perhaps I may touch briefly on the question of timing. I have said that the Government aim to privatise the Stationery Office by the summer of this year. Based on previous experience, that will allow enough time, we believe, for us to advertise the sale, to identify prospective bidders, to invite them to make indicative bids and then to chose a shortlist of those to be invited to make the final bids. As always, there is a lot to he done in the time, but we must balance the need for thorough preparation with the need to reduce uncertainty, which, as your Lordships will know, is highly debilitating. I venture to suggest that the position of the House would be strongest if we were able to identify quickly our preferred position in respect of the details of the contract into which we want to enter. We would then be providing bidders with what I suspect would be substantially a non-negotiable requirement.

Some have suggested that we should retain in the public sector not only the small residual body concerned primarily with the administration of Crown copyright—I believe that that is what my noble friend Lord Boyd-Carpenter referred to, and we shall, indeed, retain that—but also that those parts of the Stationery Office which supply the House with its services should be retained as well. That is perhaps superficially an attractive idea, but closer examination leads me to the inescapable conclusion that in the end that simply will not wash.

The principal services provided by HMSO for Parliament are publishing, urgent production and delivery, sales and customer services to buyers of parliamentary publications, innovation and development and close liaison with Parliament's Officers. Under the current integrated arrangements, this work is both profitable and, as the Americans say, prestigious. It offers potential purchasers of the business the possibility of increasing their use of the existing production capacity through expansion into new markets. I would therefore expect privatisation to lead to a downward pressure on costs as they are spread more widely.

If, on the other hand, we were to retain the parliamentary business in the public sector, we would quickly see its costs rising. It would no longer benefit from economies arising from a shared infrastructure. It would not he well positioned to win other business to fill its spare capacity. The lower prices which we have recently achieved for parliamentary publications would he increased, while potential further price reductions, which could be in prospect as a result of the increased competitiveness of the Stationery Office in the private sector, would vanish.

The Government will seek a buyer who will maintain the independence and integrity of the present Stationery Office. Under no circumstances will we offer the printing and publishing businesses separately, and we shall maintain the provision to Parliament and other customers of an integrated service. We will publish the shortlist of buyers in due course, and I repeat that we shall continue to discuss with the authorities in this House and in another place the nature of Parliament's needs and how they can best be met.

As I have said, I believe that sale to the private sector is the only realistic course which safeguards the interests not only of this House and the Stationery Office, hut also its staff, its customers and the taxpayer. Without it, decline looks horribly inevitable. I therefore commend the Government's plans to the House.

Moved, that this House take note of Her Majesty's Government's plans for the future of HMSO, including safeguards proposed to meet Parliament's requirements for printing and publishing services.—(Viscount Cranborne.)

4.4 p.m.

Lord Richard

My Lords, I am grateful that the House is having a debate on this matter today. As your Lordships will remember, when the Government made a Statement on this some time before Christmas there seemed to be a general feeling that we should have an opportunity to look at this matter in greater detail. I am glad that we are now doing so.

I listened to the noble Lord the Leader of the House with interest and attention, as I always do, but I am bound to say that I found his speech strong on allegation but a bit short on evidence. It is all very well for the Government to say, "We think that this is what ought to happen", but at some stage I think that they have to produce evidence to show why it should happen.

There are, I think, four points that the House should consider this afternoon. First and pre-eminently, have the Government established a case for this privatisation? Secondly and associated with the first point, what are the alternatives? Thirdly, what are Parliament's interests and requirements? Fourthly—this is indeed important—who is to decide? What are they to decide? When are they to decide it, and how are they to decide it?

As I have said, the first two points are connected and I shall try to deal with them together. It is for the Government to establish the need for a change of the magnitude which is proposed. On the face of it, Her Majesty's Stationery Office is doing a good job, competing effectively and providing a first-class service. Indeed, it is that very competence and efficiency which would prove attractive to the private sector, but it is no response for the Government merely to say, "We think that it should he privatised". They have to estahlish some substantial arguments to justify that statement otherwise it is a policy based solely on dogma and I had hoped that the political argument nationally had moved beyond that.

In answer to the question, "Who wants this privatisation?", it is difficult to find anyone who wants it, except Ministers. The staff voted on it and 95 per cent. were against it. The management, judging from some minutes I have seen recently, is acquiescent but hardly enthusiastic. There is no great upsurge of demand for change in the status of HMSO from within the organisation itself. I do not detect any great cries of "Freedom now" from the workers as they march through Norwich behind banners proclaiming, "Free us from the shackles of Government". That does not seem to be the approach of those most connected with the Stationery Office itself. Therefore, as far as I can ascertain, I repeat that there is no demand for any change in the status of HMSO either from within the organisation or from its customers.

If that is so, perhaps we should look elsewhere for the reason why. Is it to be found in the trading and financial position in which HMSO now finds itself? Are there any reasons there why this proposal suddenly becomes desirable? I think not. Through the Cabinet Office, the Government published an information pack on 30th November last year. The present position of HMSO was described as follows—these are not my words but are, I repeat, taken from the information pack which comes from the Government and the Cabinet Office: HMSO's staff has responded well to the new challenges and opportunities this is since 1980— and the business was refocused, resulting in an increase in sales and costs being driven down". That is exactly what the Government are demanding that the whole of the rest of British industry should do.

The information pack continued: The experience of Trading Fund operation made HMSO a prime candidate for Executive Agency status under the Government's 'Next Steps' initiative, and this was achieved on 14 December 1988". Again, the following are not my words, but come from the information pack which describes the present state of HMSO: A number of business developments took place during the period 1989 to 1993 including:

improved productivity through the introduction of a new pay and grading system with performance pay linked to key targets". All the buzz words are there, words so beloved of the market-oriented Government opposite.

The quotation continues: improved motivation and flexibility through organisational restructuring to devolve responsibility and flatten the management structure". I gather that flattening the management structure is considered a desirable thing—at least, that seems to be what is advocated in this document. And: and the introduction of business driven flexible working hours". All that, HMSO has done. It goes on to tell me that there has been an: optimisation of business procedures by the introduction of Total Quality Management. HMSO"— your Lordships will be glad to hear— will be ready for company-wide registration under ISO 9000 in 1996. Most business units within HMSO have already achieved accreditation". I do not understand a word of that, but I am sure, due to the fact that it is presented so clearly with such a clarion cry of triumph in the memorandum, that it is obviously something that is thoroughly desirable, and which we should praise HMSO for having achieved.

What is more important, what HMSO has achieved—I quote from the document—is: reductions in overhead costs and lead times, by the simplification of critical business processes; a new focus on customer care to maintain customer loyalty; and the introduction of a pioneering public sector electronic trading system". I have had a little fun with the memorandum so far, but I urge your Lordships to listen to the next paragraph because, in a sense, it is the starting point for the argument we are having today: Over the past 15 years HMSO's turnover has risen from £260 million per annum to over £375 million per annum. Over the same period staff numbers have been reduced from 6,300 to 2,900, with the result that sales per head have increased from £41,000 to £121,000. Since 1980 HMSO has met or exceeded the financial targets set by Treasury Ministers in all but 1991 and 1994 when it fell marginally short due to exceptional redundancy costs". That is the verdict on HMSO in the memorandum pack produced by the Cabinet Office.

If one were looking for as good an account of a public sector success story as anyone could find, this would seem to be it. HMSO is highly regarded by its customers and suppliers and it has, by and large, met, or exceeded, the financial targets set by Treasury Ministers (even of this Government). It has developed considerable expertise in a number of areas in its 200 years of operation, resulting in a highly competitive business which functions well and in respect of which there seems to be universal approval. It is, in short, a very good record of an efficient public service, which inevitably invites the question: why on earth change it?

The argument put by the Government, and repeated again this afternoon by the Leader of the House, is that it is necessary to privatise HMSO because it faces an influx of competition from the private sector in the future—competition which, so far as I can see, up to now it has met successfully—and that in those circumstances there is a risk—it cannot be put higher than that—that the business will decline unless it can widen its markets. The memorandum from the Chancellor of the Duchy of Lancaster to the Finance and Services Committee of the other place then concludes—baldly, if I may say so, and with no supporting argument: privatisation will therefore"— I invite your Lordships to note the word "therefore"— offer the best chance of a healthy and dynamic future for HMSO and its staff". Where is the evidence for that? Certainly none is provided. The argument is not that HMSO faces those problems now, but that it might in the future. It is supposition that that will occur, and it is even greater supposition, built upon supposition, that the only way in which that can be dealt with is by privatisation, which will offer the best chance of a future for HMSO and its staff.

If it he thought that no public service can he unshackled because of its public nature—the noble Viscount repeated that again this afternoon—I would like to refer to what has been happening in the Post Office. When it became clear that privatisation of the Post Office was unpopular both in Parliament and with the general public, the Government then fell back upon arrangements which allowed the Post Office to compete more openly with the private sector and to seek new markets—exactly what they say they cannot do in respect of HMSO. If it is necessary, and I am not convinced at the moment that it is, why cannot the Government follow the Post Office's example?

I have to conclude therefore that the case for this privatisation is quite simply not made out. HMSO is in a unique position because of its parliamentary work. It is essential to the working of Parliament that there should be a flow of parliamentary documents and Hansard which is at least as efficient as that which takes place now.

As the House will know—it has been referred to already this afternoon—this has been a matter of some discussion both here and in the other place. Madam Speaker wrote to the Lord President of the Council setting out a number of safeguards and guarantees which, in the view of the other place, it will be necessary to receive before it can decide whether satisfactory arrangements have been made for the future provision of services to Parliament. The Offices Committee of this House has also considered the matter, and its views are set out in the report which has already been referred to this afternoon. It is important for the proper function of Parliament that those safeguards are provided and that those undertakings are given and can be trusted. Otherwise I would anticipate that the House would not he prepared to sanction the proposal.

Perhaps I may make one slightly peripheral point. I note that when Mr. Freeman gave evidence to the Finance and Services Committee of the other place in November he gave an assurance that he would supply to the Committee Clerk not merely the information pack but the information memorandum. However, in a letter to my noble friend Lord Dubs, dated 4th January this year, the noble Baroness, Lady Blatch, said: It is normal practice that this document is restricted to serious bidders and then only after they have signed a wide-reaching confidentiality agreement". I have to make the basic point that I assume that the treatment of this House will be similar to the treatment of the other place. If the Select Committee of another place is to see that information memorandum—Mr. Freeman gave that firm assurance (he gave it twice actually)—then it must be right that the Offices Committee here should see it too. I should be grateful if the noble Earl, Lord Howe, will give that assurance when he replies to the debate.

My last point is on the decision-making process. It must be right that Parliament should be consulted fully as to whether or not it approves of this type of legislation. Mr. Freeman has assured the other place that it will be involved with the decision as to who will he the eventual purchaser. Again, I assume that that will apply to this House too. We need to be clear about this aspect of the matter. Since the Government tell us that there is no need for primary legislation to proceed with this privatisation, how do the Government envisage that Parliament's approval should be given?

I assume that there will have to be a full debate on a Government Motion to approve, which, by its very nature, would be debatable, and upon which there could be a vote. Perhaps I may say quite clearly to the Leader of the House that we for our part do not regard today's proceedings as being in any way the definitive debate on this proposal. We are today discussing some of the principles behind the proposed sale; we are in no way giving our approval to the sale itself. I hope that the Government will confirm that also.

Finally, perhaps I may say that the more I look at this matter, the more I have come to regard the whole affair as a piece of dogmatic nonsense. HMSO is doing well. All the evidence proves that. It should be left alone to carry on providing the quality of service that Parliament and the country have come to expect.

4.19 p.m.

Lord Jenkins of Hillhead

My Lords, in the course of preparation for the debate I studied with even more care than I normally bestow upon that publication, Hansard for 13th December of this House and for 18th December of the other place. Hansard is of course a publication fairly central to the debate, but nonetheless it was those particular exchanges to which I paid attention.

Studying both of them left two strong impressions in my mind. First, in your Lordships' House I have never heard the noble Baroness, Lady Blatch—she was here a moment ago, and I wish that she were here now—less certain of herself. She is normally well briefed, lucid, and full of self certainty—indeed to an extent that she always hints that anyone who disagrees with her is guilty of some sort of delinquency. On 13th December she was extremely hesitant. Indeed, the noble Viscount the Leader of the House was very emollient and low-key today.

I turn to the other place. Apart from the fact that the Government appeared to have no support from the Conservative Back-Benchers who spoke, with I believe one exception, one was struck by the fact that the Chancellor of the Duchy, the Minister primarily responsible, was trying to ride two manifestly incompatible horses. His first proposition was that if the Stationery Office were to be saved from a dismal future of inevitable decline, it had to be set free from all trammels of government. It had to be a free-ranging beast of the free-market forest. Immediately afterwards there were great assurances that, because it would continue to perform its parliamentary functions in an exemplary way, the nature of the contract would have to maintain the most rigid control over how the company performed in the future. The Chancellor of the Duchy said that the two Houses of Parliament would be entitled to lay down the location of the press, the staff and the way in which the business was structured and organised. There is such a manifest contradiction between those two propositions as to make it one of the most nonsensical arguments that one can imagine.

What supporting arguments were put forward? The first was that the unsatisfactory nature, so it was alleged, of the present regime was supported by the fact that the workforce had declined from 3,400 to 2,900 during the past five years. I wonder whether any Member of the Government or anyone opposite would like to guarantee that under privatisation the reduction in the workforce would be no more than 7 per cent. over the next five years. If any previous privatisation is any guide, what with so-called rationalisation (the hiving off of less profitable parts) the decline in the workforce is much more likely to be of the order of 30 or 40 per cent. than it is to be of the order of 7 per cent.

It was then suggested—and again it was a contradictory argument—that since the commercial considerations have been made more and more to apply to HMSO, beginning in 1980 and reinforced in 1988, the new considerations have been "good news"—a phrase which the noble Viscount repeated today—for the consumer. If one looks back it appears that the main good news for the consumer between 1980 and 1991 was the phenomenal rise in the price of Hansard from 45 pence to £7.50. That does not seem to be a good deal for the consumer during that period. Such a patchwork of contradictory and unconvincing arguments can stem only from a decision which is irrational at its core. The privatisation of HMSO is a twitch on a dying dogma. It is analogous to the supremely irrelevant measures of nationalisation which it was tried to force through in 1975 and 1976, with the IMF at the door and sterling in a very weak position indeed.

The best counter argument from the Government side, which we heard in the Commons debate more than we have heard here today, was that both Oppositions have always been very sceptical of any of the measures of privatisation, even those that have turned out to be successful. As a general argument, perhaps that has a certain force, but it is a profoundly unpragmatic argument. To say that, because a dose of some medicine may in certain circumstances do considerable good, limitless quantities in quite different circumstances must, as a matter of faith, be desirable is certainly a profoundly unpragmatic and ought to be a profoundly "unConservative" point of view. It is not one with which I would have associated traditional Conservative thought.

Nor would I have associated that with the modern development of a growing lack of respect for the state and a desire to strip it of its proper appurtenances. I blinked in amazement at last week's statement by the noble Baroness, Lady Thatcher, that the very existence

of the state is a potential threat to all the moral, cultural, social and economic benefits of freedom. When combined with her claim made in days of greater affluence—no, influence not affluence: the two do not necessarily go together, fortunately—that there is no such thing as society, it does not leave humanity with much prospect other than being a mass of inchoate protoplasms.

If those are the doctrines to be propitiated—and the relentless desire to strip the national state of its necessary services (and, perhaps I may say in parenthesis, its best buildings) suggests that this is so—our whole political and civic tradition is at risk. It is far more at risk from the nihilist Right than there is any question of it being at risk from Brussels.

It also leaves the noble Viscount, who in such a distinguished way carries on the Cecil tradition in this House, in a somewhat anomalous position. If there is one word that I would associate with the traditions of his family—certainly from the time of the first Elizabeth to the end of Queen Victoria's reign—it is "statecraft". However, one cannot have much statecraft without a state and one cannot have an effective state without leaving it some sinews of operation, such as a printing agency and even buildings, which are an expression of its tradition and authority, such as Greenwich and even Admiralty Arch.

At a more local level, it is not a pretty sight to go to almost any market town in England and to see in the centre a post office, mostly purpose-built 60 or 70 years ago in a not exciting but in a decent neo-Georgian style, boarded up and the business pushed into some newsagent in a back street. That would not happen in centralised France and it would not happen in decentralised America either because of the different manifestations of national pride in both cases. But it happens here and it shows the limitation of allowing a bottom-line approach to take over not only in areas where that is suitable but in areas where it is not.

Perhaps I may take another paradoxic example which for me is one fairly close to home. I sometimes thank God that the National Trust is an independent body operating under strict rules about the inalienability of its properties rather than under the direct ownership of this Government. If it had been a sitting target for taxation reductions, the immunity of the sale of its houses and coastline would be far less than it is at present.

I return to HMSO, which I have to keep reminding myself is not a ship. I make no apology for having put the foolishness which is proposed in the context of general thought and behaviour. The consolations that are offered are: first, that some control by both Houses of Parliament will remain over who will be the first purchaser; and, secondly, that if we do not like the parliamentary service provided, we can take away our business and place it elsewhere. But what happens when the first purchaser becomes the second purchaser and is taken over, hived off or goes out of business?

If this privatisation had taken place five or perhaps even seven years ago, by far the most likely purchaser would have been the Maxwell empire. That would have provided an interesting future for HMSO, but would there have been any guarantees for us? What is the value of the opportunity to change when, the specialised services of HMSO having gone, there is no one suitable to switch back to? That would be a foolish and dogmatic scheme at the best of times. In present circumstances, with a tottering Government enjoying minimal support in the country and endeavouring desperately to fend off an election for as long as possible, it is sacrilege to destroy an institution with a 200 year-old tradition of successful public service. To paraphrase the words of Chesterton's immortal satire of an extravagance of Lord Birkenhead, I say, "Chuck it, Cecil".