HC Deb 21 February 1990 vol 167 cc1007-22

'No part of a government department where a Government Trading l-und has been established shall be privatised within five years of the establishment of the fund.'.—[Mr. Battle.]

Brought up, and read the First time.

Mr. John Battle (Leeds, West)

I beg to move, That the clause be read a Second time.

Our main concern about the next steps programme is that Government trading funds should not become a simple and quick staging post for privatisation. I hope that the Government will allay our fears by accepting that there should be a period of five years after the establishment of a trading fund within which it cannot be privatised. The eighth report of the Treasury and Civil Service Select Committee in July 1988 says: We confess to being slightly confused by the relationship between the Next Steps and the Government's privatisation policy. I remind the House that privatisation is still a hallmark of the Government's policy. In his speech to the Audit Commission in June 1989, the Chancellor of the Exchequer said: Privatisation will continue as an essential part of our policy. There is a major programme in the pipeline and other parts of the public sector will become candidates as they develop a more commercial approach. The phrase as they develop a more commercial approach is crucial to the setting up of Government trading funds and agencies. We wonder what the Government mean by "a more commercial approach."

In the White Paper published in December 1989—"The Financing and Accountability of Next Steps Agencies"—we read: Next steps is primarily about those operations which are to remain within Government. But it cannot be ruled out that after a period of years, agencies, like other Government activities, may be suitable for privatisation where there is a firm intention of privatisation. When an agency is being set up, this will be made clear. I hope that the Financial Secretary will make that absolutely clear tonight. He ought to specifiy the period that is suggested in new clause 4.

The Treasury and Civil Service Select Committee report also said: The essential thing in any individual case is to avoid uncertainty. If an announcement that part of a department is to become an agency is greeted with the suspicion that it might be privatised, such uncertainty could well damage efforts to improve efficiency and the quality of service. If the organisation is to be privatised, it should be made clear at the outset that this is so. We must ensure that the damaging effects of uncertainty do not devalue the quality of service that is provided. Therefore, the Bill ought to be amended to specify a clear period within which privatisation cannot take place. We owe it to civil servants to give them a clear reassurance.

In the Standing Committee, the Financial Secretary made the interesting remark, "We certainly do not dig up the roots the day after planting." That is a wholesome image which is in tune with current green thinking, but there is evidence in other policy areas that the day after planting, the Secretary of State for the Environment, for example, as a result of pressure from certain parts of the country, came to believe that the poll tax ought to be uprooted, or looked at, root and branch, for next year. I know that you would rule me out of order, Madam Deputy Speaker, if I were to pursue the Financial Secretary's analogy any further. However, it appears that what is set down one day as a policy is uprooted the next. We want the Financial Secretary to assure us that in this case that will not happen.

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More pertinent to the debate is the comment of Sir Peter Middleton, the permanent secretary to the Treasury, in the evidence that he gave to the Treasury and Civil Service Select Committee: As part of the process of seeing whether these organisations should be agencies, it is perfectly natural to look at the three things I suggested: privatisation, contracting out and simply dropping the activity. Secondly, becoming an agency may be a step to privatisation later; it is all part of getting a more commercial attitude. I think this is particularly true of the various trading funds. It is very difficult to privatise things that do not charge for their output. That is the basic problem. I suggest that that is exactly at the heart of the debate. We must examine that statement about developing a more commercial attitude, particularly as we are dealing with publicly divided services.

In the 1980s, the Government embarked on a great economic experiment. The policy watchword for nearly a decade has been "Privatise". There has been total addiction to what some people would describe as the myth of the arithmetic of the workings of the perfect free market model. During our consideration of the Bill, the Government have moved the emphasis slightly, but it still does not contain the limited guarantees that would make clear to civil servants where they stand, or would make clear to the public that we are talking about preserving, extending and improving the efficiency and quality of services.

My hon. Friend the Member for Wrexham (Dr. Marek) referred in the debate on new clause 2 to the Government having isolated people into units. The word "units" is interesting. It is not a question of looking at people as individuals. The word "units" leads us directly into the accountancy language of economic management. Great claims are made for the "next steps" initiative. We are told that it will lead to improved services. However, all the emphasis is placed on financial performance. That emphasis masks the shift in Government thinking from quality to quantity. How can efficiency and improved quality of service be accurately measured? It is difficult to devise objectives and empirical tests for service industries that prove that the service has been delivered.

I recollect that the Treasury instructed local government to implement a programme called urban programme monitoring initiatives. Although spending on the urban programme for the inner cities was less than 1 per cent. of the total budget, the Government instructed local authorities to monitor those programmes in such detail that, when the planting of trees took place, council officers or voluntary groups were instructed to count the number of trees that had been planted and to return to the site six months later and count them again to find out whether they were still there. They were also instructed to measure the distance travelled when vans or minibuses took elderly people to their luncheon clubs. The accuracy of the figures was all that mattered, regardless of the fact that that might damage the services provided.

Documents have been submitted while the National Health Service and Community Care Bill is being considered in Committee, and emphasis is placed in the medical audit documents on input, output, throughput and episodes of patient care. The emphasis is on quantity measures that have been lifted from accountancy models, using target indicators. However, such models have a habit of cutting out those parts of the service that cannot be measured in detail by mathematical models, although they provide a crucial service to people.

Paragraph 3.19 of "The Financing and Accountability of Next Steps Agencies" under the heading "Impact on Agency financial management" states: The general framework for providing and managing Civil Service resources described above will give a range of choices. These include—whether an Agency's running costs current expenditure is allocated and monitored gross or net and thus whether its receipts influence or determine the amount it can spend". That reminded me that the rationale behind the critique of state-planned economies was precisely that gross output measures did not exactly work. It reminded me of the story of electric lamp factories where the plans were to measure only in aggregate watt power, so they could not produce any low-power lamps. It also reminds me of the story of women unloading bricks from a truck and smashing many of them because if the unloading were done more carefully they would produce less and be paid less, the driver of the truck would make fewer runs in the day and finally, his enterprise would clock up fewer tonne-kilometres. Those are recorded episodes of what happened under state-planned economies.

In an article on industrial management in "The Soviet Economic System" Alec Nove writes: In every case the essence of the problem is that the centre is trying to set up an incentive system designed to achieve more efficiency, but, because it does not and cannot know the specific circumstances, its instructions frequently contradict what those on the spot know to be the sensible thing to do." Yet that is precisely what the Government are doing. The great irony of our time is that, precisely when the Soviet and other planned economies are moving away from that model, our Government are insisting that it should be the model for the public sector. I hope that there is still time to say that it might not be the best one. It seems strange that the Government are turning to such evaluations precisely when the Soviet Union is desperately struggling to move away from the straitjacket approach. It is not sufficient simply to mimic the organisation and methods of private business, because they may not be appropriate to the circumstances.

It would be unfair to put to the Financial Secretary all the recorded cases of the Government urging Labour and Conservative local authorities to contract out street cleaning to the private sector only to find that the job was not done properly and the on-cost had to be taken on board again. In Leeds, the local authority contracted out the laundry services only to discover that they ran at a loss when previously they had been fine.

More recently, the Government have been obsessed with pushing various services into the private sector. That is mirrored by the community care proposals put before the House which demonstrate precisely the problem. The London borough of Barnet contracted out its services for the mentally handicapped to an agency and then had to rescue the agency because it was running into insurmountable financial problems as it could not cope with the capital costs of running the services. In other words, some of the costs have to be absorbed by larger organisations and shared around.

The Government know precisely that the proposals a re an attempt to control costs from the centre while disowning responsibility for the quality of the service provided once the fund is set up and we move towards the agencies. What will be the Minister's overriding concern when he sets the performance targets? We suspect that it will be to control the costs from the centre with a view to reducing them. The measures that will be used are those that can be most easily measured but which will drive out vital unmeasurable considerations.

We are entitled to ask to whom the public will complain when they feel that the services are not adequately delivered. An interesting phrase is used in the White Paper when it refers to the Minister and his Department as the owner of the service". It is ironic that the service is being handed to the agency chief executive who is being made responsible and the Government will disown the service and take no responsibility for its functions.

Paragraph 4.3 of "The Financing and Accountability of Next Steps Agencies" stated: Parliamentary control is maintained through—the affirmative Order establishing each fund—the scrutiny of statutory annual accounts, and the power to examine the fund Accounting Officer. Paragraph 4.5 continues: Because a fund's detailed cashflow is removed from normal Parliamentary Supply controls, Parliamentary approval is required, by affirmative resolution Order, to the setting up of each fund and the overall limit on its borrowing. Once they are set up, they are then disowned and passed to the responsibility of those agency chief executives.

In some areas of public policy, we have been there before. We have only to look at the organisation of the health authorities, the development companies and the authorities that deal with water. It will not be sufficient for the Financial Secretary to reply to the debate by saying that in three years' time there will be monitoring to see how it is working out.

We cannot leave the Bill and the proposals for the trading funds as if there were a bonded warehouse or a holding operation—holding the functions for privatisation in the near future. The threat of privatisation continues to hang over those functions that have been assigned for agency status. One way in which the Government could allay those fears would be to accept the new clause and remove that threat once and for all by removing the ambiguity and by making it absolutely plain to the Civil Service staff and to the public who need the services where the Government stand.

Mr. Beith

I do not want to go into detail on performance indicators, on which the hon. Member for Leeds, West (Mr. Battle) made some comments, because I have tabled a new clause on that subject.

New clause 4 bears directly on whether the trading funds are a bonded warehouse on the trade route to privatisation. That is a perfectly legitimate concern. The Government have the reputation of being the privatising Government. When a similar allegation was made on another occasion, the Chief Secretary to the Treasury said that there was a grain of truth in that. Obviously there are probably candidates for trading fund status which might also be on the list as candidates for privatisation.

The Government must have realised by now that privatisation is rather unpopular, and the experience with water and electricity should convince them of that. Some of the merits of the more commercial approaches to some aspects of the work of the organisations involved are lost in the general sense on the part of the public that they are being done—that their assets are being taken away from them and that they are losing any control that they had over services that are important to them.

They would certainly have that feeling if that threat were to hang over some of the key services that are possible candidates for trading funds. I am thinking of services such as passports, the licensing of patents, and other matters where people's basic right to do something is at stake. It is important for the Government to dispel the impression, if it be false—of course, it may not be false—that trading funds are a halfway house to privatisation.

It will not do the business of setting up trading funds any good if they are seen in that light, because it will not be a route to ensuring that we can have an effective operation going on within the public service. What is the motivation that we need to give the staff involved? We want them to know that it is possible to be a public servant providing a public service. but doing so in a way that is more cost-effective and more conscious of the member of the public as a customer of the service than some of the traditional methods may have been. If those two factors are to be married, the last action to achieve it will be for the staff involved, and some of the public, to feel that the Government are preparing the way for privatisation.

It seems that the purpose of the amendment is almost met by the reality that it is almost inconceivable that the Government could get a privatisation off the ground within five years of setting up a trading fund. So it would not hurt the Government to make it clear that they have no intention of seeking to do so, and thus avoid the necessity for the amendment.

It would help even more if the Government would say that in most areas of the public service—particularly in those areas in which the Government are a monopoly provider of some right, opportunity or privilege which, if withheld, would be a great disadvantage to a member of the public—they do not contemplate privatisation. If they did that, they would give a fairer wind to the trading fund proposals and the next steps initiative, which are all about providing a service to the general public or, in some cases, to Government Departments in a more efficient way.

9 pm

Mr. Dalyell

I preface my remarks—I am sure that I shall be in order in doing so—by saying that in my Scottish constituency experience, the civil servants with whom I deal, including those in the Inland Revenue at East Kilbride, are people of high quality who are obliging. I wish, as the constituency Member, to register my view that overwhelmingly they do an excellent job in my constituency. I believe that civil servants are caring people who, when asked properly, go to infinite trouble, especially where there is a good case to be answered.

But there is a problem to which I draw the attention of the Minister. In Scotland—and, I suspect, elsewhere outside London—to get promotion, often civil servants are expected to move to London. The Civil Service unions which have been considering the measure say that too many promotions have involved moves to London and that such moves are increasingly unpopular, for obvious reasons, with civil servants from Wales, Scotland and the English regions. The unions say: To management's credit, after many years of union pressure"—

Madam Deputy Speaker

Order. I regret having to interrupt the hon. Member again, but I wonder whether he is dealing with the clause that is before the House, which is entitled "Prohibition of privatisation".

Mr. Dalyell

My hon. Friend the Member for Leeds, West (Mr. Battle) made an interesting speech in which he concentrated on the subject of centralisation. I am on precisely the same point, Madam Deputy Speaker. Bluntly, if he was in order, I believe that I am in order——

Madam Deputy Speaker

Order. I am sure that the hon. Member is not challenging the Chair. I listened carefully to the remarks of the hon. Member for Leeds, West (Mr. Battle), who spoke pertinently to the new clause. I am wondering where the hon. Member's argument is leading us in relation to privatisation. Perhaps it will become clear if I give him another minute in which to develop his theme.

Mr. Dalyell

It certainly will, Madam Deputy Speaker. The unions say: To management's credit, after many years of union pressure, cautious moves are now being made to develop a coherent regional career development policy (the `Eight Cities Initiative'). Yet this promising beginning will be completely undermined if the agencies are allowed to build miniature Berlin walls around their own mutually exclusive personnel and pay systems. It all comes back to what will happen to centralisation if agencies are allowed to go their own way.

The unions say: One of the 'advantages' of an agency system identified by the Ibbs report was the gradual erosion of national bargaining. Clearly, this threat is of major concern to the union, given the likelihood that decentralised bargaining will be used to drive down pay and worsen conditions of service in certain areas (particularly outside the South East of England). I think that I am absolutely on target and in order in asking about the Government's thinking on promotion and centralisation. Under the developments which we are considering, will there be any easing of the pressure to move to this city, whether from Edinburgh, Leeds, Wrexham or elsewhere? Will structures be developed to provide a regional promotion ladder so that people do not feel bound to turn down jobs necessary to their career because housing in London is beyond their pocket? It is a matter of mortgages, housing and schooling for young families. Those factors should not rule out upward mobility in a career. Under the agency set-up, how do the Government envisage that this problem will be alleviated, if not solved?

Mr. Bill Michie

This is a major part of the debate. There are genuine fears that the Bill has nothing to do with efficiency or with whether the service will be better for the Government and the nation but is the first step towards privatisation. In Committee, we spent a considerable time discussing what was meant by a three-year review. I got hold of the wrong end of the stick. I thought that the three-year review started after three years, but the Minister confirmed that the review will take place within the first three years, and then we will know what is what. I understand that every Government Department, like every department in the private sector, must be watched, reviewed and changed, but we are suspicious about why this is being done.

We spent a considerable time talking about what the review was all about, and I found some of the Minister's comments ominous, to say the least. Even now, I am not sure whether it is a review or an evaluation. I suspect that the intention is to fatten up one of these units, as has happened in the past, or to slim down some of the operations to make them more attractive for privatisation. Either way, as we know from what is happening in other sectors of industry, the financial restraints or management edicts can be such that the business or unit is no longer attractive to anyone.

That is a good excuse for the Government to say that it does not work at present but would work much better in the private sector. All these tactics have been used, and I see no reason why the Government will change their spots and not use those techniques as they see fit. By the time that happens, most of the damage will have been done to the professions and agencies, so it will be difficult for the Opposition to argue against some change taking place.

There is just cause for concern. The Minister stated, as my hon. Friend the Member for Leeds, West (Mr. Battle) said, that he is not likely to dig up the trees or the roots the day after planting. Everyone accepts that. I make the point that he would probably start scratching at the roots the day after planting to see how the tree was getting on. I presume that that is what the evaluation and review are all about. Having said that he would not dig up the trees, the Minister said in Committee: The hon. Gentleman seeks to put an unduly gloomy interpretation on the period of review. It is normal to provide for a review period. At the beginning I accepted that. He went on to say: The purpose of the review is to consider the progress made during the review period. I am not sure what he meant by that. What worries me is what the Minister went on to say: As I have said, the vast bulk of the agencies are by their nature unsuitable for privatisation. However, one cannot rule it out absolutely across the board because in certain cases it will be appropriate, It is clear that in certain cases there is more than a possibility of privatisation. We may breathe a sigh of relief and say that most of the agencies will remain as they are. But let us read on. The Minister said: circumstances may change so that some agencies fall into that category"— those agencies which in the previous sentence he said were not the right sort of agencies for privatization— which were not there initially."—[Official Report, Standing Committee A, 23 January 1990; c. 30.] We have every just cause to move the new clause and press it to a vote. The Minister gave assurances that there would be stability for at least three years and that the Government were not thinking about privatisation. However, in his summing up it was obvious that privatisation was very much in the minds of the Government. We need a categorical assurance that, at least for the first five years, none of the agencies, as spelt out in new clause 4, will be privatised. That is not simply because of our political arguments against privatisation. It is because of the argument that we advanced at the beginning of the debate—that we have a good, professional Civil Service and that the changes in the Bill are already causing anxiety among Civil Service staff and Opposition Members.

All that we need is a period of stability. It is not unreasonable to ask for a guarantee from the Government that, for at least five years after the installation of the agencies, there will be no privatisation. I hope that the Minister will come up with a positive answer to that point.

Mr. Harry Barnes

This is an important new clause and I am pleased to hear that we shall vote on it. Our views should be registered in the Lobbies.

We need the new clause to protect us from the Government's general ideology. They have learnt that they can privatise anything. The new contribution that they have made to political thought in capitalist terms is that privatisation knows no bounds. They have learnt to develop tactics to achieve privatisation. The measure can be applied within the Civil Service as well as many other public services, such as the National Health Service. We should protect ourselves against that.

In many ways, the new clause is modest. It says: No part of a Government department where a Government Trading Fund has been established shall be privatised", and it might have stopped there but it goes on within five years of the establishment of the fund. If it had stopped at "privatised", it would have meant that if the Government wished to privatise one of the agencies they would have needed primary legislation. Possibly that is the type of amendment that should have been tabled. I realise that in politics there is a need to be practical and to press the Government as much as possible within reasonable bounds to make them accept at least the amendments and new clauses that they may have half conceded against some of their instincts and interests. However, as my hon. Friend the Member for Sheffield, Heely (Mr. Michie) has said, at least that would provide some time for reflection before making any move.

In the past, Socialists have been used to ideological disputes. There has always been an argument about public ownership and about whether we should have nationalised industries or other forms of ownership in which there is greater worker participation, for instance. There has also been a continual debate about the bounds to which Socialism should go in relation to ownership. Should it be to the "commanding heights" of the economy, as Nye Bevan described it in terms of public provision, or should it extend to the lot, as some people, on some occasions, have engaged in advocating when on an ideological bent that they could not stop?

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In fact, we have the mirror image of what has happened in the Conservative party. Conservatives have now become the people who want the lot. In the end, there are no bounds to the areas to which their ideology can take them, irrespective of questions such as the nature and running of society, the power forces that exist in society, and problems of exploitation. Conservatives have come to the view that the Government can privatise everything. That has always been obvious in relation to industry. We have had big battles in the House about the steel industry and about whether it should be part of public or private provision.

Under a Right-wing Conservative Government, we could have expected that the public utilities, such as water and gas, would be added to the list and that there would be major debates about them. We feel that privatisation is inappropriate because those areas should be within the public responsibility and be surrounded by democratic organisation. However, the extra consideration that the Government now have in mind is that all public services, including local government, the Health Service, the Civil Service, and the prisons—as can be adduced from their ideological tracts—are open for privatisation. All that is needed is a command Government, holding the reins, dishing out the contracts and the public money that can be used in those areas. But that is not what we should have.

Hon. Members have said how grand the Civil Service is and have referred to the good tradition of the Civil Service in this country. Part of what is good about the Civil Service is its tradition of public service and the fact that it does not have to believe that it must make ends meet or do things as cheaply as possible and run according to the market guide. The people involved in it are not there just for themselves; they are associated with the work that they are doing and are concerned about the services that they provide.

The House itself seems to have become a body in which there is too much interest in oneself. This applies especially to Conservative Members. They have too much interest in their own commercial values, and are less concerned about the fact that they are here to provide a public service. They should be willing to act to provide a public service and, to some extent, to sacrifice their own individual interests, promotion, concerns and advancement to achieve that end. Although there are obviously counter-forces in the Civil Service, in that people are interested in their own promotion, we should nevertheless nurture that spirit in the Civil Service.

The new clause at least tries to protect something that has existed in the past and would allow us to try to hold on to the spirit of the Civil Service even though we are talking about Government trading funds and agencies and all the problems that they will create before we can absorb the people concerned back into a proper public service. That spirit should then be reflected in all the other public services to which I have referred. Perhaps we can then enter into discussions about how far that spirit of public service and social provision should be extended into areas such as the public utilities and our industries, at least as far as the "commanding heights" are concerned.

Mr. Lilley

The hon. Member for Leeds, West (Mr. Battle) made a vigorous and intellectually stimulating speech. I shall try to resist the temptation to follow all the intellectual hares that he started, much as I should like to do so.

The hon. Gentleman quoted my right hon. Friend the Prime Minister, who said that "next steps" was primarily about those operations that are to remain within Government control. Where there is a firm intention to privatise, this will be made clear when the agency is being set up.

Before agencies are set up, all other options, including abolition and privatisation, are examined. In most cases, this examination leads to the conclusion that the nature of services provided by the agencies does not make privatisation a feasible or realistic option. That is particularly true of bodies such as the planning inspectorate. That is not to say that some activities might not be contracted out, but generally our expectation is that most mainstream activities of next steps agencies will continue to remain within central Government for the foreseeable future.

We cannot rule out the possibility that in a few cases circumstances might change. But even if they did, privatisation is not likely in practice to take place until five years have elapsed. A major review of options is not likely to take place until the framework document is reviewed, usually about three years after agency status has been conferred. Experience suggests that primary legislation would almost certainly be required, so five years is likely to be a minimum time-scale. I think that I said in Committee that the chances of any privatisation occurring before five years had elapsed was "vanishingly small".

It is one thing to give assurances; it is another to set up an absolute legislative barrier. I cannot foresee all possible circumstances, and I therefore cannot absolutely rule out privatisation in less than five years. Moreover, as Conservative Members see major benefits arising from privatization—for staff as well as for taxpayer and customer—I should not wish to do so either.

Opposition Members seem to suggest that we might be concealing an intention to privatise. I assure them that there is a clear difference between us on the question of privatisation. We on the Conservative Benches are proud of our belief in privatisation. We believe that it is a valuable and essentially popular policy. If we intend to privatise, we make it clear; we boast about it and do not hide our light under a bushel.

Mr. Bill Michie

We are getting more worried. The Minister seems to be saying, "We are not likely to privatise for five years, but we may." All this dithering is not helping the profession or the Departments that we wish to protect. It would be much easier, fairer and more honest to allow a five-year cooling-off period. That would be no skin off the Government's nose—unless they intend to do something but are not prepared to say so.

Mr. Lilley

I think that I have made it clear that it is extremely unlikely that there would be privatisation in under five years after the agency was set up. That is why the sort of ban that Opposition Members seek is unnecessary. But it is conceivable that, in some remote circumstances, it would be desirable to privatise an agency in a shorter timescale, so it would be foolish to rule it out. It is foolish to close off options—even remote options— ahead of the game.

The hon. Member for Leeds, West said that our privatisation programme was the consequence of an obsession with the theory of the perfect market. That was a hare that I was tempted to follow because, in a book that I wrote with Samuel Brittan, one chapter demolished the myth of the perfect market. It is a silly idea. We work on the basis of an acknowledgment of the imperfections of life and one of the responses to those imperfections is to acknowledge that private ownership works much better than public ownership. The hon. Gentleman went on to describe some of the absurdities that follow from state planning, centralised control and public ownership. The lesson to be learnt from that is: "Privatise where you can, and where you cannot, decentralise or commercialise."

It is bizarre to suggest that the creation of agencies is a centralising measure, still less the creation of trading funds. They are both decentralising measures that give greater managerial flexibility to those bodies remaining firmly within the public sector. That is a desirable thing to do.

Mr. Battle

Is it not the case that, although managerial responsibilities will be given to the chief executive of the agency, the financial purse strings will still be held by the Minister?

Mr. Lilley

They will be given greater commercial freedom within the discipline and accountability of the trading fund, which is desirable. That is why Governments of both parties have successfully operated trading funds. Neither party is ideologically opposed to trading funds in principle.

The hon. Member for Leeds, West suggested that we were in some way disowning quality of service when we set up agencies or trading funds. That is not so. The Minister will remain responsible to the House for the quality of service of agencies which remain part of his Department. The report on the next steps programme said that agencies would be required to report not just on efficiency but on "quality of service targets" over the previous year, "set against previous trends". They will be responsible for quality and they will be given targets for quality and be expected to report on whether they met them.

Mr. Dalyell

The interesting book that the Minister wrote with Sam Brittan is well worth reading.

I want to ask the Minister about the mechanics of parliamentary questioning. As I understand it, it will be much more difficult, via the Table Office, to table questions under the new policy, although I concede that there is a general report back. Have the Government asked the Clerks what will happen in relation to parliamentary questions?

Mr. Lilley

I am grateful to the hon. Gentleman for his comments on my book. He is one of a rare and select breed, but I did not realise he was of such a rare and select breed to have read my book. That puts him in a very narrow and refined coterie.

The accountability of agencies to the House, and their responsiveness to questions, will be unaltered by the establishment of an agency. I am happy to confirm that. It is only nationalised industries that are not properly accountable to the House which is a good reason for privatising them.

The hon. Member for Berwick-upon-Tweed (Mr. Beith) said that he thought that privatisation was unpopular. I hope that he and his party will come out firmly against it at the next election, because that will considerably undermine his party's standing and improve the Government's. I am glad for his hints about that. He thought that we should go along with the amendment and give a five-year guarantee. I do not agree with him.

The hon. Member for Linlithgow (Mr. Dalyell ) spoke of promotion and centralisation, and their inter-relationship. I could respond that he was asking the wrong question under the wrong clause to the wrong Minister, because that is a matter for the Minister with responsibility for the Civil Service. However, I shall endeavour to be helpful: the establishment of agencies is not a centralising measure, but a decentralising one.

We believe that there should be interchanges of staff at all levels between Departments and agencies. In particular, we think that it is important that all who aspire to rise in the Civil Service should have experience of management and, where practicable, that should include a successful period in an agency. I hope that my explanation meets some of the hon. Gentleman's concerns.

The hon. Member for Sheffield, Heeley (Mr. Michie) said that he found my statements in the Standing Committee ominous when I referred to reviews. However, he did not complete the quotation that he read out, the last few words of which were: But that will be … rare."—[Official Report, Standing Committee A, 23 January 1990; c. 30.] I reiterate that and say that it will be very rare.

Mr. Michie

"Comparatively rare."

Mr. Lilley

Right—"comparatively rare." I reiterate the word "rare": I am even prepared to drop the word "comparatively". However, the interesting logic of the hon Gentleman's remarks and of those of the hon. Member for Derbyshire, North-East (Mr. Barnes) rests in the presumption that many of these bodies are, in principle, privatisable. There is an interesting reversal of roles in this. We do not think that there is scope in most of these cases for privatisation; we do not even think that it would be meaningful to envisage it. So to fear it, or to suggest that agencies are all prime candidates for privatisation and that it requires only restraint or legislative prohibition to stop the Government privatising them, seems a little bizarre.

9.30 pm
Mr. Barnes

Unfortunately, the Minister is not the only Conservative writing books on this subject. The general thrust of Government policy in recent years, especially since the third electoral victory, has been in the direction of privatisation. One does not need to be a crystal ball gazer to see the trend.

Mr. Lilley

Apart from being a distinguished author with at least one reader, I am also the Minister responsible for privatisation. I do not have the grand title of my counterpart in Poland—the Plenipotentiary for Privatisation—but I am supposed to be looking for opportunities to privatise. Be that as it may, in most of the areas that we are discussing today it is not a runner. Opposition Members are unduly concerned.

I do not want to prolong the debate; I believe that I have answered the main points. I have confirmed that those who are worried about privatisation have nothing to fear in the context of most of the agencies. The chances of any of them being privatised within five years are vanishingly small, and in my view the new clause is unnecessary.

Mr. Dalyell

I have had a quick word with my right hon. Friend the Member for Wrexham (Dr. Marek) and have discovered that we both thought that it has not been made clear that those who have a spell in an agency will somehow improve their promotion prospects or earn brownie points. I am not saying that that is wrong; I am saying that it is an interesting statement.

Have guidelines been issued to this effect? Do civil servants know that this is now policy?

Mr. Lilley

I have made this point in a letter to the hon. Member for Makerfield (Mr. McCartney). It will apply increasingly as more agencies exist in which civil servants can become successful. I can, however, confirm that the idea is more widely known than the hon. Gentleman seems to suggest. The document "Developments in the Next steps Programme" states: The Government agrees there must be genuine interchangeability between policy and executive functions. Therefore, while there is no question of a mechanistic approach to career planning, the Government will aim to ensure that as part of their career development key staff can gain experience of both management and policy work. So the basic notion has been spelt out in public, even though some hon. Members found it novel.

Dr. Marek

The quotation in the Minister's document is rather different from what he said before. I am sure that it would surprise most civil servants to learn that their promotion prospects will not be as good if they have not worked in an agency. Of course I know that it is the Government's intention that up to three quarters of the Civil Service will eventually be part of agencies.

For the life of me I cannot understand why the Financial Secretary is not prepared to accept our new clause. It is sensible and talks about no privatisation within five years. The Financial Secretary has said that there is only a remote possibility of any agency being privatised before five years. If it is remote that is a good reason to accept the new clause. He did not say that accepting the new clause would be good management policy because it would be good for the morale of civil servants working in the agencies. We have had a good debate apart from that point which did not come across from the Government.

Any civil servant who works in an agency or who suddenly finds himself in an agency will be unsure of his future even though it is not the immediate intention to privatise that agency. If our new clause and the guarantee that it contains were accepted, at least civil servants would have five years during which they would continue to be part of the Civil Service and there would be no question of people being compulsorily hived off, made redundant or moved from one area to another. That would be good for the morale of civil servants and that would be reflected in their work. Of course that would also be good for the public. It is a pity that that matter was not mentioned by the Government.

The other fears have been well illustrated by my hon. Friends the Members for Sheffield, Heeley (Mr. Michie), for Derbyshire, North-East (Mr. Barnes) and for Linlithgow (Mr. Dalyell). I am glad that the hon. Member for Berwick-upon-Tweed (Mr. Beith) seems to share our worries about this matter and I am happy to have his support.

The new clause is important and simple. It was not difficult to draft and did not require the expertise of a parliamentary draftsman. The Government could have accepted it, but they have not. Could one of the reasons be what the Chancellor of the Exchequer said in his speech to the Audit Commission on 21 June 1989? At that time, he was the Chief Secretary to the Treasury and he said: Privatisation will continue as an essential part of our policy. There is a major programme in the pipeline and other parts of the public sector will become candidates as they develop a more commercial approach. It worries the Opposition that, as parts of the public sector develop a commercial approach, they will be candidates for privatisation.

Five or ten minutes ago, the Financial Secretary said that the Government will privatise where they can and commercialise where they cannot. If we add to that what the present Chancellor said on 21 June last year, it is clear to me and to my hon. Friends that eventually there will be plans for privatisation of substantial parts of the Civil Service. The Government say that that is not true, but they will have to do more than they have been doing up to now to convince us of that.

This has been a good debate and the arguments have been well advanced. There is a clear division of opinion between the Opposition and the Government and I ask my hon. Friends to vote for the new clause.

Question put, That the clause be read a Second time:—

The House divided: Ayes 77, Noes 148.

Division No. 94] [9.38 pm
Allen, Graham Eastham, Ken
Barnes, Harry (Derbyshire NE) Evans, John (St Helens N)
Battle, John Ewing, Harry (Falkirk E)
Beckett, Margaret Fields, Terry (L'pool B G'n)
Beith, A. J. Flynn, Paul
Bermingham, Gerald Forsythe, Clifford (Antrim S)
Boateng, Paul Foster, Derek
Bradley, Keith Fyfe, Maria
Bruce, Malcolm (Gordon) Galloway, George
Buckley, George J. George, Bruce
Callaghan, Jim Golding, Mrs Llin
Campbell, Menzies (Fife NE) Gordon, Mildred
Campbell-Savours, D. N. Heffer, Eric S.
Clay, Bob Hood, Jimmy
Clelland, David Howarth, George (Knowsley N)
Clwyd, Mrs Ann Howells, Geraint
Cox, Tom Hughes, John (Coventry NE)
Cryer, Bob Hughes, Robert (Aberdeen N)
Cummings, John Jones, Martyn (Clwyd S W)
Dalyell, Tam Lamond, James
Darling, Alistair Leadbitter, Ted
Davis, Terry (B'ham Hodge H'l) Lofthouse, Geoffrey
Dewar, Donald McAvoy, Thomas
Dixon, Don McWilliam, John
Duffy, A. E. P. Mahon, Mrs Alice
Eadie, Alexander Marek, Dr John
Maxton, John Ross, William (Londonderry E)
Meale, Alan Sheldon, Rt Hon Robert
Michie, Bill (Sheffield Heeley) Skinner, Dennis
Michie, Mrs Ray (Arg'l & Bute) Taylor, Matthew (Truro)
Mullin, Chris Wareing, Robert N.
Nellist, Dave Welsh, Michael (Doncaster N)
Orme, Rt Hon Stanley Williams, Alan W. (Carm'then)
Patchett, Terry Wise, Mrs Audrey
Pike, Peter L. Worthington, Tony
Powell, Ray (Ogmore) Young, David (Bolton SE)
Primarolo, Dawn
Robertson, George Tellers for the Ayes:
Rogers, Allan Mr. Jimmy Dunnachie and Mr. Allen McKay.
Ross, Ernie (Dundee W)
Alexander, Richard Jessel, Toby
Alison, Rt Hon Michael Johnson Smith, Sir Geoffrey
Amess, David Jones, Robert B (Herts W)
Arbuthnot, James Jopling, Rt Hon Michael
Ashby, David Kilfedder, James
Aspinwall, Jack King, Roger (B'ham N'thfield)
Atkins, Robert Knapman, Roger
Baker, Nicholas (Dorset N) Knight, Greg (Derby North)
Batiste, Spencer Knowles, Michael
Bendall, Vivian Lang, Ian
Bennett, Nicholas (Pembroke) Lawrence, Ivan
Benyon, W. Lester, Jim (Broxtowe)
Bevan, David Gilroy Lilley, Peter
Blaker, Rt Hon Sir Peter Lloyd, Peter (Fareham)
Boswell, Tim Lord, Michael
Bottomley, Mrs Virginia Luce, Rt Hon Richard
Brazier, Julian Macfarlane, Sir Neil
Bright, Graham MacGregor, Rt Hon John
Brooke, Rt Hon Peter MacKay, Andrew (E Berkshire)
Browne, John (Winchester) Maclean, David
Bruce, Ian (Dorset South) Malins, Humfrey
Buck, Sir Antony Mans, Keith
Burns, Simon Marshall, John (Hendon S)
Burt, Alistair Mawhinney, Dr Brian
Butler, Chris May hew, Rt Hon Sir Patrick
Butterfill, John Miller, Sir Hal
Carlisle, John, (Luton N) Mills, Iain
Carlisle, Kenneth (Lincoln) Mitchell, Sir David
Carrington, Matthew Moate, Roger
Carttiss, Michael Monro, Sir Hector
Channon, Rt Hon Paul Morris, M (N'hampton S)
Chapman, Sydney Morrison, Sir Charles
Churchill, Mr Moynihan, Hon Colin
Couchman, James Needham, Richard
Davies, Q. (Stamf'd & Spald'g) Nelson, Anthony
Day, Stephen Neubert, Michael
Devlin, Tim Newton, Rt Hon Tony
Douglas-Hamilton, Lord James Nicholls, Patrick
Dover, Den Nicholson, David (Taunton)
Dunn, Bob Onslow, Rt Hon Cranley
Emery, Sir Peter Oppenheim, Phillip
Fairbairn, Sir Nicholas Paice, James
Favell, Tony Parkinson, Rt Hon Cecil
Forman, Nigel Patnick, Irvine
Forth, Eric Pawsey, James
Franks, Cecil Peacock, Mrs Elizabeth
Fry, Peter Porter, David (Waveney)
Garel-Jones, Tristan Raison, Rt Hon Timothy
Goodhart, Sir Philip Rathbone, Tim
Goodlad, Alastair Renton, Rt Hon Tim
Gorman, Mrs Teresa Ryder, Richard
Hanley, Jeremy Sackville, Hon Tom
Hargreaves, Ken (Hyndburn) Shaw, David (Dover)
Harris, David Shaw, Sir Giles (Pudsey)
Hawkins, Christopher Shaw, Sir Michael (Scarb')
Heathcoat-Amory, David Skeet, Sir Trevor
Hicks, Robert (Cornwall SE) Smith, Tim (Beaconsfield)
Howard, Rt Hon Michael Speller, Tony
Howarth, G. (Cannock & B'wd) Spicer, Michael (S Worcs)
Howell, Ralph (North Norfolk) Stanbrook, Ivor
Hunt, Sir John (Ravensbourne) Stern, Michael
Hunter, Andrew Stevens, Lewis
Irvine, Michael Stewart, Andy (Sherwood)
Jack, Michael Stradling Thomas, Sir John
Summerson, Hugo Wells, Bowen
Taylor, Ian (Esher) Wheeler, Sir John
Taylor, John M (Solihull) Widdecombe, Ann
Temple-Morris, Peter Winterton, Mrs Ann
Thompson, D. (Calder Valley) Wood, Timothy
Thompson, Patrick (Norwich N) Yeo, Tim
Thorne, Neil Young, Sir George (Acton)
Thurnham, Peter Younger, Rt Hon George
Waller, Gary
Ward, John Tellers for the Noes:
Wardle, Charles (Bexhill) Mr. Stephen Dorrell and Mr. David Lightbown.
Watts, John

Question accordingly negatived.

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