asked the Secretary of State for Transport whether he will make a statement about the transfer of heavy goods vehicle and public service vehicle testing to Lloyd's Register of Shipping.
§ Mr. Tom King
Yes. I have reviewed the likely costs and benefits of the transfer of these functions to a new Lloyd's Register Vehicle Testing Authority, following the negotiations with Lloyds Register of Shipping over the last year.
I have considered the transfer against the Government's stated policy that hiving off proposals must be 552W commensurate with sound management and good value for money for the taxpayer. The total cost of setting up the new authority—including the Department's own costs—would be about £3.5 million plus the cost of compensation to staff who transfer for any worsening of their terms and conditions of employment. The Government were also asked to take on certain contingent liabilities. The estimated operating costs of the new authority in the first year would be significantly above those currently projected for the Department for the same period. There would also be substantial costs to the Exchequer in the first year, including up to £12 million of expenditure brought forward in pension transfers. The Exchequer would receive some £900,000 from the sale of equipment and stores.
Even allowing for longer-term benefits of privatisation in providing a more efficient basic service, and possibly extra non-statutory services, I have concluded that the costs involved make it unwise to proceed.
I should like to express my appreciation to Lloyd's Register of Shipping for its co-operation and all the work that it has done. I have told Lloyd's Register that the Government is prepared to meet approved additional costs necessarily incurred by it in good faith, which I understand to be of the order of £500,000.
I have now decided to conduct an urgent and comprehensive review of the Department's vehicle inspection division with a view to securing improvements in efficiency and in the standards of service provided to the industry. In this connection, most of the expenditure by Lloyd's Register which the Government propose to meet has been incurred on computer and management consultants in drawing up proposals for restructuring the operation of vehicle testing and setting up computerised data handling and management information systems. I shall be able to make full use of these in pursuing the new approach I have outlined.