§ Lords Amendments considered.
§ Clause 1
§ SUPPLY OF GOODS AND SERVICES BY LOCAL AUTHORITIES
§ Lords Amendment No. 1: In page 2, line 3. leave out " or ".
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Reginald Freeson)
I beg to move, That this House doth disagree with the Lords in the said Amendment.
§ Mr. Deputy Speaker (Mr. Harry Gourlay)
I understand that it will be to the convenience of the House with this Amendment to take the other Lords Amendment, in page 2, line 6, at end insert:or(c) to purchase or store building materials for supply to any public body for the construction of any new buildings or works.
§ Mr. Freeson
This is a small but important Bill which will be of much help to local authorities. It has been advocated for a long time by many of us who have served in local government and who have been interested in it for many years. It has relevance to the Government's policy of seeking to rationalise and improve public purchasing generally and it has been widely welcomed in local government circles.
However, during its passage through Parliament there has been mounting pressure from builders' and plumbers' merchants interests to have building materials excluded from its scope. They fear a severe loss of trade. We consider that this fear is groundless and wildly exaggerated, as has been made clear during earlier consideration of the Bill. Moreover, the exclusion of building materials would remove from a Bill a potentially valuable source of co-operation between local authorities, and because of that the Government must oppose the Lords Amendment.
There have been stated in Committee and in another place the details of the basis of the Bill. Our view of this matter is that there are goods which are 1760 used in construction and maintenance work on which large savings may be made by purchasing directly from the manufacturers. The outstanding example is paint where there could be savings of up to 25 per cent. It would be wrong to deny the ratepayers savings of this kind.
Secondly, and perhaps more important, there is considerable scope for standardisation and variety reduction in building materials. The Bill will enable authorities both large and small to get together to pool their purchasing arrangements and to make some progress in this direction, but they can do this without in any way bypassing the builders' merchants.
Finally, it should be remembered that co-operation between local authorities can be of benefit to builders' merchants themselves by enabling the authorities to combine their purchasing and to place large standing contracts. A standing contract enables a merchant to negotiate larger discounts from the manufacturers. It has the advantage that it stabilises his trade and reduces the variety of items which he has to carry in stock. I cannot believe that merchants have anything to fear from the Bill.
An Amendment along these lines was moved in Committee by the hon. Member for Poole (Mr. Murton). However, he withdrew it after discussion, and I must ask the House to reject the Lords Amendment.
§ Mr. Oscar Murton (Poole)
I hope, Mr. Deputy Speaker, that, like Lord Nelson, you will turn a blind eye if I get slightly out of order at the beginning of this short appearance at the Dispatch Box and that you will be indulgent. This is the last time that the right hon. Member for Rossendale (Mr. Greenwood) will appear on the Treasury Bench. I am sure that all hon. Members will join with me in wishing him well in his translation to other spheres.
I have the deepest personal respect for the right hon. Gentleman. I do not pretend that ideologically we agree on all aspects of housing and local government matters. but at no time have I had anything from him but the greatest courtesy and friendliness in our personal relations. It' towards the end of what I am about to say, when I step back into order, I am 1761 less courteous, I know that he will take it in the spirit in which it is meant.
It was my responsibility in Standing Committee to move an Amendment similar to the Lords Amendment, and I am sorry that the Government have decided to disagree with the Lords. This highlights the difficulty experienced at all stages of the Bill. The Opposition have wished to be sure that bulk purchasing and the use of services, plant and building materials would be only for works of maintenance. That is one side of the argument.
The Parliamentary Secretary mentioned the other side. One understands the principle of local authorities assisting one another as, for example, when a county council assists a district council within its administrative area. But the difficulty arises, and it is highlighted by the Amendment, with the definition of a public body. This may not be another local authority. The Bill defines a public body as:being a person or description of persons appearing to those Ministers or the Secretary of State to be exercising functions of a public nature ".At no stage of the discussion of the Bill in this House or in another place has it been possible to persuade Ministers to give an example of what those public bodies might be. The nearest we got was when the hon. Member for Hayes and Harlington (Mr. Skeffington) said:It has to go through the test that the Minister will have to be satisfied that this is an appropriate body to enter into arrangements of this sort "—[OFFICIAL REPORT, Standing Committee D,4th December, 1969; c. 37.]We want to underline that materials supply must always be used by public bodies only for works of maintenance. If that view is not acceptable to the Government —and this brings us to the germane point which the hon. Member raised—the door is wide open to the purchasing departments of large local authorities in certain circumstances virtually to cut out builders' and plumbers' merchants and to place large contracts for direct supply with the prime manufacturers.
There is severe competition in some sections of the trade. The Parliamentary Secretary mentioned the example of paint. There is intense competition in paint manufacturing, and with bulk purchases up to 25 per cent. discount may 1762 be given. There is no reason why ratepayers should not reap the benefit of such discounts, but one has to remember the problems of the individual builders' and plumbers' merchants and all those others who would be unduly affected if this development were carried beyond normal caution.
We understand the reason for the rationalisation of public purchases and we think that it is a good idea, but the legitimate interests of builders' and plumbers' merchants should not be damaged. Without the Lords Amendment, if this process were carried beyond a certain point certain dangers could arise. First, there is the erosion of private enterprise; secondly, there is the damage to the legitimate interests of small and medium-sized traders; thirdly, there is unfair competition in a trade in which there is already a considerable recess. I am sorry to have to say this in the Minister's presence, but I sincerely believe that the recession is due to the Government's hopeless mismanagement of the housing programme which is now in total disarray.
With that unkind but nevertheless true comment, we greatly deplore the Government's decision to disagree with the Lords.
§ 5.0 p.m.
§ Sir Douglas Glover (Ormskirk)
I hope that the House will allow me also to go a little outside the rules of order and to pay a compliment to the Minister of Housing and Local Government. He and I have been friends all the time that I have been a Member of the House, and it has been a pleasure to be in the House with him. He is in a slightly different position from me. He is giving up his great office of State and ceasing to be a Member of the House, but is taking over another very important job from which I think he will get a great deal of satisfaction. His great human interests lie very much in the field covered by the job he is taking over. I think that he has many years of happy work and endeavour before him, and I wish him every success.
I am not against bulk purchasing. I am involved in the non-profit-making housing activities of the nation, and at present, together with others, I am trying to organise a system of bigger bulk 1763 purchase. Therefore, I do not speak in a hostile manner to the Government in rejecting the Amendment. Bulk purchase by local authorities may have certain advantages in the short run, but we must be concerned about the change and growth in technology. Suppose that half a dozen or a dozen local authorities work together with one central buying authority. Suppose that they buy a " loo " as a standard model and go on buying it for years. When they want more, they order the same model, and the manufacturer producing new models cannot find anybody to take up the more advanced piece of technology and he has great difficulty in marketing it. The object of bulk purchase is not entirely to do with price, although price is very important. Gradually, we are putting into houses better quality and more up-to-date pieces of equipment to make them better places in which to live.
With over-centralisation of buying there is a danger of slowing down the development of technology and the rate of change and innovation. Nearly all innovations start in smaller units which are prepared to innovate. With bulk purchasing, this does not take place. Bulk buying puts out of commission the local plumbers and merchants, and there is no longer a wide variety of choice, or a wide variety of people selling their wares to local authorities and builders. Therefore, the products of scientific and modern technological development do not get into the market and are not used by the people.
I regret that the Government have not accepted the Lords Amendment. I hope that local authorities will bear in mind that the danger in bulk buying is that it is all too easy to do what we in business call the repeat trade rather than going to the trouble of making a fresh assessment. This is a real danger, particularly in organisations run by local or public bodies, because there is not the same demand in those bodies for innovation and change as there is in the private sector. It would probably have been wiser if the Government had accepted the Amendment and had left scope for innovation and change which should be in our minds as much as the question of cost.
With those few erudite words, I wish the Bill every success.
§ Mr. Freeson
By leave of the House, may I express on behalf of my right hon. Friend the Minister his appreciation of the complimentary and kind remarks made by the hon. Members for Poole (Mr. Murton) and Ormskirk (Sir D. Glover). As a younger Member, may I express my good wishes to the hon. Member for Ormskirk. I have heard him speak often, and sometimes at length, at all sorts of hours in the House. One thing which has always impressed me about him is his constant courtesy and kindness. He is almost too unaggressive for a person in politics. That characteristic has impressed me particularly at certain late hours in debate.
I wish to deal with the one somewhat abrasive observation of the hon. Member for Poole, which, I suppose, was inevitable in this week leading to the Dissolution. He suggested that if we did not exclude building materials we should do damage to local authority housing programmes. The person who has done more damage to the local authority programmes than anyone else is the Opposition spokesman on housing, the hon. Member for Worcester (Mr. Peter Walker), at whose behest local Conservative councils have been cutting down very severely on their housing programmes. During the last six months I have had the unfortunate task of trying to persuade many authorities which have been acting on his recommendation to reverse the policies which have resulted in a major setback in local authority housing since the Tories took over in 1968 in many areas.
I now deal with the definition of " public bodies " as covered by the Bill. I was not in the Committee, so I have not followed the detailed discussions on this point, but I understand that a public body other than a local authority must be designated by the Minister by Statutory Instrument which has to be laid before this House. Examples are old persons' welfare committee and a variety of other types of organisation doing public work, often in association or cooperation with local authorities and others. These are the kinds of bodies which might be designated if the Minister thinks fit and places the matter before the House. These are quite marginal. The co-operation with which we are 1765 really concerned is that between local authorities.
I turn to the general fears which have been repeated today by the hon. Member for Poole. It has been made clear many times by my colleagues that the Bill does not empower local authorities to sell goods to the general public. It empowers them only to supply goods and materials by agreement to one another and certain other public bodies. The vast bulk of all building work, whether for public or private purposes, done by private contractors would in practice not be affected by the Bill because this is where most contract work is done on behalf of local authorities. Direct labour covers a little less than 4 per cent. of the contract work. So, at most, we are dealing with that percentage of the builders merchants trade.
That is probably an exaggeration because even within this limited field, if all authorities chose to combine their purchasing arrangements for building materials, our experience on the basis of those authorities which already have such powers by local Acts shows that most materials will still be bought through builders merchants. This is certainly so in the case of authorities with local Act powers granted to them to supply building materials to one another. They find that discounts obtainable by direct purchase from the manufacturers are usually insufficient to offset the cost of storage, including administrative costs—breakages, thefts and losses—on the disposal of obsolete items. Moreover, they find that merchants can offer advantages in the way of quick delivery and service.
In practice, therefore, even when local authorities are already empowered to cooperate in the way in which the Bill provides, they still find that it pays them best to secure their supplies through builders' merchants.
That brings me to my last point, in answer to the question of innovation, because this is the appropriate stage at which to deal with it. Nobody disagrees with the point which was being made, but no one is compelling anybody to co-operate where this is not suited to people's interests in the local authority field. What is more, the Bill, when enacted, will enable local authorities by 1766 co-operation to staff the purchasing departments more effectively, in many instances with better professionally qualified persons, including the kind of person who recognises the benefits of technological change in the kinds of equipment covered by the Bill.
In any event, the general philosophical point which was being made about innovation in technology by the hon. Member for Ormskirk is not peculiar to paint, bricks and other related building materials, and, therefore, it does not arise on the Amendment which we are resisting.
§ Question put and agreed to.
§ Subsequent Lords Amendment disagreed to.
§ Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to certain of their Amendments to the Bill: Sir D. Glover, Mr. Denis Howell, Mr. Murton, Mr. Greenwood, and Mr. Ashton; Three to be the quorum.—[Mr. Freeson.]
§ To withdraw immediately
§ Reasons for disagreeing to certain of the Lords Amendments reported, and agreed to; to be communicated to the Lords.