NHS Support Services (Contracts) (Hansard, 24 May 1985)

§ Mr. Kenneth Clarke

The text of my letter wasSome Districts are seeking to require contractors who tender for the provision of NHS support services to employ staff on Whitley terms and conditions of service. This is contrary to the advice given by the Department last year in DA(83)40; and it is, as John Patten made clear again in his letter this summer, unacceptable to Ministers. You may find it helpful if I explain our policy and the reasons for it. All authorities have been asked to seek tenders, including in-house tenders, for their domestic, catering and laundry services to ensure that they get the best value for money in these services. When going to tender, authorities need to prepare tender documents which clearly specify the work to be done, including the standards to be achieved. They need to see that only competent contractors are invited to tender. When assessing a contractors competence, an Authority can certainly consider, amongst other things, whether the wage rates and conditions likely to be offered by that contractor will be adequate to attract the right sort of staff, given the available supply of full-time or part-time workers in the area. All these are necessary steps to take to ensure that the authority meets its obligation to secure services of the standard required at the lowest cost. However we consider that it is quite wrong for authorities to go beyond these steps and specify the terms and conditions of service which private contractors should provide for staff working on NHS contracts. There is no sensible basis upon which a Health authority can interfere in this way in the relationship between the contractor and its employees. It cannot be right for Health Authorities to stipulate holiday entitlement, sickness benefits or inflation-proofed pensions as well as wage rates for cleaning and catering companies in their area. Moreover attempts to set wage rates and conditions are likely to be against the interests of the health authority and its patients because the effect will probably be to restrict competition for contracts and to acid to any contractors' costs. This in turn is likely to lead to extra costs for authorities. Those extra costs will be to the detriment of patients in that district, because they will have to be found from resources which would otherwise be available for patient care. It may be that some members of health authorities who have favoured the idea of including a requirement for Whitley terms and conditions in their contracts have done so because they have been persuaded that this was the only way to ensure that standards are maintained if work goes to a contractor. I am quite sure that this view is mistaken, and that, far from being in the interests of the service, imposing these requirements on contractors will simply divert resources from patient care. Some Authorities may also have been influenced by the argument that the circular itself is not a binding direction in law. This is quite irrelevant and is not any sudden or unexpected discovery. Circulars have always been worded in this way and 593W we do not draft them to ensure that each circular is a legally binding document. We do not ordinarily expect to have to use the Secretary of State's legal powers of direction as we look upon our Health Authorities as partners in our aim of improving the National Health Service. However we have always expected Authorities to follow Government policies and we are entitled to continue to do so. I would like you to ensure that Ministers' views are clearly and firmly brought to the attention of any Authorities in your Region which have adopted Whitley wages and conditions requirements for contractors, or are considering doing so. It is most important that they understand that these requirements cannot be in the best interests of patients, and should not be included in tender documents. We look to you in the first place to continue to provide the leadership to the Region which is required to ensure that all Districts, and their hospitals and patients, take full advantage of the tendering policy.

KENNETH CLARKE