HC Deb 10 July 1991 vol 194 cc951-5 3.32 pm
Mr. Clive Soley (Hammersmith)

(by private notice): To ask the Secretary of State for the Environment if he will make a statement on the future of the Property Services Agency.

The Secretary of State for the Environment (Mr. Michael Heseltine)

In October 1989, the Government made clear their intention to privatise the activities of the Property Services Agency. We are actively considering a range of possible ways to do that. I shall make a statement when we have chosen from among the many options that we are considering.

Mr. Soley

This is a serious matter. The Government now say that at least three Departments are considering proposals. One option is closure, resulting in about 19,000 redundancies—some 5 per cent. of the total civil service. We are also deeply disturbed at an alternative option—the reference to "large dowries" so that the purchase is made attractive to a private buyer.

We want to know today how large those dowries will be and why nothing was put in the Property Services Agency privatisation Act. We debated that legislation at great length in Committee and on the Floor of the House, but no mention was made of large dowries. What form will those dowries take, and how can the Government be sure that the European Commission will allow them? Are the Government satisfied that the debacle referred to in a letter from the Minister's office concerning Crown Suppliers—the other half of the Property Services Agency—will not be repeated in this case?

If the Property Services Agency is to be made attractive to a bidder by requesting the Secretary of State for Defence to co-operate—the letter constantly refers to him as being "hopefully willing to co-operate"—will that be done by giving the agency large contracts via the Secretary of State for Defence? If the organisation that buys the PSA chooses to run those contracts out and then close the organisation down, what will happen to future work in defence and security establishments? What will happen on the security issue generally, bearing in mind that it involves security work in bases not only in Britain but at British bases in Germany, Cyprus, Belize, Gibraltar, Hong Kong and other places?

What guarantees can the Secretary of State give that issues involving security, employment and redundancy, and the European Commission are protected? Above all, will he guarantee that the public purse will be protected from yet another raid from a Minister who seems more interested in putting his hands into the public pocket and using the money to pay someone to take over a public organisation than in ensuring the good management of property development within Government Departments?

Mr. Heseltine

The whole House will welcome the interest that the hon. Gentleman is now taking in the consequences of running down the defence budget. The Opposition spent the whole of the 1980s trying to run down the defence budget. Now the Labour party seems to realise that there are consequences in doing that, in terms of the number of people who might lose their jobs. There is a certain innumerate tragedy in the fact that Labour Members cannot even read leaked letters and understand them when they come into their hands. The great dowry that Labour Members are talking about is nothing other than the redundancy pay that we wish to protect so as to ensure that people employed in the PSA do not suffer by the changes.

Mr. Kenneth Warren (Hastings and Rye)

Is my right hon. Friend aware that at the substantial PSA establishment in my constituency staff are worried that, during the 18 months, no real decision has been taken about their future? Will he do all that he can to get ahead with privatisation and not waste time having to talk about it in the House?

Mr. Heseltine

I very much sympathise with the employees in my hon. Friend's constituency. It is precisely because I have been trying to make such progress, in negotiation with my right hon. and hon. Friends in the Treasury, the Minister of Defence and other Government Departments, that all the options are now being considered.

Mr. David Bellotti (Eastbourne)

The Minister will be aware that this debate started because the Select Committee on the Environment said that the PSA was inefficient and its lines of communication were too long. If that were so, why did the Government not look at options other than privatisation? Why should some 20,000 people now be threatened with redundancy, with catastrophic effects on communities as far afield as Hastings in East Sussex, where some of my constituents are employed, and overseas in Cyprus? Given the possibility of further waste of taxpayers' money, is it not now time to have a rethink about privatisation and consider other options?

Mr. Heseltine

I deplore the practice of leaking letters, but if people do it, I wish that they would do it not just to the Labour party but to the Liberal party. The hon. Gentleman would then have seen, from the constructive nature of the leaked letter, that it is precisely the Government's intention to look at a range of ways of transferring the PSA to the private sector. That is what the letter was all about.

Mr. Tim Smith (Beaconsfield)

Is this not an absurd fuss about nothing? The letter contains nothing more than that which any intelligent person would expect to see in communications between one Minister and another about the future options for the PSA, a body which we all know to have been thoroughly inefficient and badly managed. Whether the Government decide to privatise or close the PSA, is there not only one consideration that matters—that the taxpayer should get the best possible value for money?

Mr. Heseltine

My hon. Friend is absolutely right. The taxpayer is entitled to be sure that good government delivers the best possible value for money. In seeking such ends, the country at large, the House and Government employees are entitled to be sure that Ministers take proper consideration of the future and the protection of everyone's interests. It is precisely because we have been considering the consequences in terms of redundancy money that we have looked at what it would be necessary to do to ensure that the entitlement of those people would be protected if the PSA were transferred to the private sector.

Mr. John McAllion (Dundee, East)

Ministers have consistently argued that an important strand of the civil service reforms has been to improve the morale and commitment of public servants. What will be the impact on the 19,000 workers at PSA of reports in the newspapers today that Ministers cannot make up their minds whether to sack them all or to sell them off to whichever private sector buyer is most susceptible to sweeteners? Any local council which showed the same woeful level of mismanagement as Minsters have shown in this sorry affair would be booted out of office and financially surcharged. Why is that not also the fate of Ministers at the Treasury and at the Department of the Environment?

Mr. Heseltine

We all know that the Labour party's one obsession in life is to elevate the interests of the producers, and of the trade unions representing them, over and above the interests of the consumer we seek to serve. It is no use Labour Members coming to the House time and again, pretending to serve some wider public purpose when they are actually trying to enhance the scale of public sector activity. If they really understood what the issues of morale were all about, they would realise that many hundreds of thousands of people employed in privatised industries have come to relish the excitement and stimulation of their new freedoms.

Mr. Richard Alexander (Newark)

Is it not the case that there is no absolute need for defence work to be done by the Property Services Agency, and that, when station commanders and commanding officers have gone out locally for work, there has been greater satisfaction and much greater promptness in getting the work done, and everyone has benefited all round?

Mr. Heseltine

My hon. Friend is perfectly right. All through the 1980s we switched work from the PSA, as a proportion of its total spend, into the hands of private contractors, consultants and architects. The Labour party never seems to understand that that gives greater opportunity to the people employed there and gives the private sector companies concerned the opportunity to sell on the international market, exploiting the procurement underwriting which they get from the British Government.

Mrs. Margaret Ewing (Moray)

The Secretary of State will understand the interest in this matter in my area, where a large number of people work at RAF Kinloss. Given that, on 2 May, it was made clear at a meeting with the Whitley council that the Government view was that the PSA faced early privatisation, late privatisation or closure, what time scale does the right hon. Gentleman have in mind, and will he ensure that adequate time is given for negotiations? Wrong handling of the privatisation moves could lead to the closure of many of the PSA establishments.

Mr. Heseltine

I am deeply concerned to ensure that when the transition takes place it is conducted in a way that is as helpful as possible to people employed in the PSA. It is precisely because I have been conducting wide-ranging negotiations to bring about such an end that it has taken a little longer than it would have done if we had reached crude decisions without taking the employees into account. That we would not be prepared to do.

Mr. Bill Walker (Tayside, North)

Does my right hon. Friend agree that the great changes taking place in the Ministry of Defence and the rundown of bases in the United Kingdom, coupled with the fact that, for some time, the Royal Air Force has given station commanders budgets which they never had before, have meant that the role of the PSA has changed substantially? It is therefore correct that my right hon. Friend and his colleagues should look at it carefully, because if they did not do so the stations, the military and those employed by the PSA might not benefit.

Mr. Heseltine

My hon. Friend fully understands why the Government must take proper care in this matter. That is what we are doing.

Several Hon. Members


Mr. Speaker

Order. This is a private notice question. I have to have regard to the fact that there is a statement to come and then an important Northern Ireland debate. I will take two more questions from each side and then move on.

Mr. D. N. Campbell-Savours (Workington)

Does the Secretary of State recall that it was I who exposed breaches of EC and GATT rules while the Government were privatising the Crown Suppliers and the furnishing division, Crown Furnishings? What is meant precisely by the part of the letter which refers to: The handling of redundancies, EC state aids and other considerations"? How is that connected with the dowry? May we have an assurance that there will be no breach of EC regulations or directives or of GATT rulings in this case—so that what we had to expose on a previous occasion does not happen again?

Mr. Heseltine

The hon. Gentleman draws attention to the part that he claims to have played in an earlier case. While I do my best to keep my eye on what is proceeding—

Mr. Campbell-Savours

Answer the question.

Mr. Heseltine

I am about to answer it. I do my best to keep in touch with what is happening within the broad areas of my responsibility, but the role played by the hon. Gentleman had escaped me. I have therefore learnt something this afternoon—a rare event when standing at the Dispatch Box listening to the Labour party.

The hon. Gentleman has read from a letter by a Treasury Minister. One thing about Treasury Ministers is that they are extremely literate, so he ought to be able to understand what they are saying.

Mr. Richard Page (Hertfordshire, South-West)

Has my right hon. Gentleman had an opportunity to read some of the Public Accounts Committee reports and some of the National Audit Office reports on the PSA? I refer, for instance, to a report on the management of the civil estate, published in 1988, to a National Audit Office report on the new headquarters for the Department of Energy published in 1990, and to the new building for the British Library report published in 1990. Does he agree that all those reports present a sorry tale of time slippage and cost overruns which warrant winding up this agency, and that the sooner that is done, the better for the taxpayer? Is not the letter about which there has been such a furore the normal, common-sense commercial practice that any company would follow when considering the sale of such an organisation?

Mr. Heseltine

My hon. Friend will understand that when I was responsible for the PSA as Secretary of State for the Environment from 1979 to 1983, and one of its principal customers as Secretary of State for Defence from 1983 to 1986, the reports to which he refers were almost bedside reading. Anyone in the offices that I held did not need such reports to draw his attention to the problems associated with the employment of more than 20,000 people in the construction industry. There is no effective way in which we are likely to be able to secure value for money for the taxpayer or the delivery of adequate service to customers within such an arrangement. That is why we have taken these decisions and are moving in the direction that we have outlined.

Mr. Gerald Bermingham (St. Helens, South)

Does the Secretary of State agree that, if a private contractor sought to sell a subsidiary which was known to be a loss maker in such a way as to deceive the purchaser, that contractor would be prosecuted? What difference does it make if the Department of the Environment seeks to do the same?

Mr. Heseltine

The hon. Gentleman is making mischief. My Department has not the slightest intention to deceive anybody. We are trying to find the best possible deal for the taxpayer and for employees of the PSA.

Mr. Geoffrey Dickens (Littleborough and Saddleworth)

Does my right hon. Friend agree that there is no better way to motivate a work force than to give them a stake in the company in which they work? That being so, does he further agree that, for years, the PSA has been a shambles and badly needs the sorting out that private industry would achieve? I know that privatisation is only one of the options, but will my right hon. Friend consider it favourably because it would be in the interests of the work force and the taxpayer?

Mr. Heseltine

My hon. Friend is perfectly correct. The only issue is how we move from where we are to where we want to arrive. The serious responsibilities which flow from this process involve the protection of taxpayers' money, the secure delivery of service to customers of the PSA and a proper regard for the interests of the employees.

Several Hon. Members


Mr. Tam Dalyell (Linlithgow)

On a point of order, Mr. Speaker. Some of us were on the Committee tape.

Mr. Speaker

Order. Well, I know. I heard the hon. Gentleman.

Several Hon. Members

On a point of order. Mr. Speaker.

Mr. Speaker

Order. No, I will take points of order after the statement.