Social Security Benefits: Administration (Hansard, 22 July 1996)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, the Secretary of State for Social Security announced on Friday three initiatives for further involvement of the private sector in delivering social security benefits. These are the administration of the child benefit centre; management partnerships in three Benefits Agency areas; and the launch of the procurement process for a new information technology strategy. These improvements to administration will not change any individual's benefit entitlement. As I announced on 28th June, we are also seeking to transfer ownership and management of the department's estate to the private sector.

§ Earl Russell
My Lords, as the Secretary of State so generously timed his Written Answer at 4.30 p.m. last Friday to allow us to question it today, can the Minister explain how the Secretary of State has discovered the 1169 philosopher's stone, which has eluded his predecessors for four centuries, so that it is possible for a monopoly provider to provide a public service for private profit without ripping off the consumer?

§ Lord Mackay of Ardbrecknish
My Lords, I suppose that the noble Earl is referring to the decision to see whether it is possible to outsource the administration of child benefit. We on this side of the House, unlike the noble Earl, believe that private enterprise has a lot going for it that state suppliers do not have. One of them is efficiency and effectiveness. We will be looking at the possibility of putting out a contract with the private sector to administer this benefit to our specification. From previous experience, we are likely to achieve savings in administration. In addition, as the IT system of child benefit requires to be updated and modernised we will have the expertise of the private sector to help us to do it.

§ Lord Avebury
My Lords, can the noble Lord confirm that Mr. John Beckwith, chairman of the Premier Club, which offers to provide lunch with the Prime Minister for £100,000 and advises businessmen on how to break the law by not declaring these as political contributions in their accounts, is on the short list of bidders for the DSS premises? How does the Minister square that with his conscience?

§ Lord Mackay of Ardbrecknish
My Lords, the noble Lord, Lord Avebury, should not believe everything he reads in the newspapers. A short list will not be drawn up until after 2nd August. Mr. Beckwith and a number of other companies have expressed an interest in the project and have asked for papers. Whether or not he returns those papers or makes the short list remains to be seen. With regard to the other part of the Question posed by the noble Lord, I did not think there was anything illegal about individuals helping political parties. Perhaps the noble Lord is jealous that his own leader cannot command the kind of dinner party interest that would bring in the level of funds that has been talked about.

§ Lord Tebbit
My Lords, does my noble friend agree that the magic words to be uttered in response to the original Question are perhaps "direct labour organisations"? Does my noble friend recollect that only a few years ago most noble Lords on the opposite side of the House regarded direct labour organisations as wonderful things and said that if anything was done to them the whole fabric of government would collapse? They have just moved their ground a little. In another five years they will have caught up with this initiative, too.

§ Lord Mackay of Ardbrecknish
My Lords, my noble friend reminds me of wider issues. For many years the parties opposite appeared to believe firmly in the public sector. Over the past 17 years we have privatised many companies, much to the disgust of the parties 1170 opposite. The noble Earl, Lord Russell, still appears to believe in nationalisation and that the public sector is much better than the private sector.

§ Baroness Hollis of Heigham
My Lords, exactly why do the Government seek to privatise the administration of child benefit? It cannot be to save money, because child benefit is the cheapest of all benefits to administer. The cost of administration is now only 2p. in the pound. It is hard to believe that anyone in the private sector can emulate that. Clearly, there is a hidden agenda—perhaps it is not well hidden—for the breaking up of the Civil Service. Is this also a back-door method of closing rural post offices because they will lose important chunks of business?

§ Lord Mackay of Ardbrecknish
My Lords, I am delighted by the last part of the Question put by the noble Baroness. This matter was dealt with in the press release which the noble Earl leaked to the world on Friday. Rural post offices are already in the private sector. The proposals that we have made with the Benefits Agency and Post Office Counters Ltd. in order to pay benefits by the plastic card method reinforce our commitment to keeping open rural post offices. Further, the administration of child benefit at Washington has absolutely nothing to do with the payment of child benefit at rural post offices. It is a pity that the noble Baroness does not recognise that.

§ Baroness Hollis of Heigham
My Lords, does the Minister guarantee that mothers will still be able to collect their child benefit in cash from post offices?

§ Lord Mackay of Ardbrecknish
My Lords, what mothers will get is a card which looks very much like the one I have in my hand. That card will enable them to go along to any post office or sub-post office the length and breadth of this country and receive the child benefit to which they are entitled. I am appalled that the noble Baroness should be raising scares like this.

§ Baroness Williams of Crosby
My Lords, can the noble Lord confirm that one of the front-running contenders for the contract for the administration of child benefit is a company called EDS which previously ran the Child Support Agency payments and is currently before the courts in Florida for the way in which it has handled affairs over there? Can the noble Lord assure the House that those facts will be taken into consideration before any decision is made?

§ Lord Mackay of Ardbrecknish
My Lords, the announcement seeking expressions of interest was put out only on Friday. I do not have a clue who will respond to it. I can neither confirm nor deny what the noble Baroness said because no one has yet responded.
1171 It is only Monday. In any case, it seems to me that the noble Baroness, like other noble Lords opposite, is pretty conditioned to being hostile to private enterprise.

§ Viscount Waverley
My Lords, if privatised, would those staff continue to have discounted terms at the Westminster gym?

§ Lord Mackay of Ardbrecknish
My Lords, I have to admit that I would never go near a gym, Westminster or anywhere else, so I am afraid that I cannot answer that question.

§ Earl Russell
My Lords, instead of generally philosophising about the private sector, will the Minister address the question I asked in my first supplementary about the monopoly provider? Does he recall on Second Reading of the Water Bill the noble Lord, Lord Harris of High Cross, saying that he was in favour of a private monopoly if it could be done without injuring the consumer? Has it been?

§ Lord Mackay of Ardbrecknish
My Lords, as far as concerns child benefit, what will be asked of any company which is invited to do that work will be that it pays the right benefit to the right person at the right time. We shall be monitoring that carefully. We shall lay down the standards. We will ensure, as we all do when we employ the private sector to do whatever it is, that the project is delivered at our specification and at our price.