(12 years, 8 months ago)
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Grahame M. Morris (Easington) (Lab)
I am grateful, Mrs Main, for this opportunity, and it is a privilege to serve under your chairmanship for what I believe is the first time. Today, I hope to raise a very important issue, put down a few markers and seek some answers from the Minister to a series of questions that I will pose. I want to place on record my thanks to the Public and Commercial Services Union, the TUC and Unison for various pieces of briefing information that they have provided in support of my efforts today.
When the Minister for the Cabinet Office and Paymaster General was Financial Secretary to the Treasury under John Major, he sought to
“extend competition in the provision of public services further and faster than ever before”.—[Official Report, 18 November 1991; Vol. 199, c. 25.]
He said that he would do so with no bias between public and private sector providers. It must surely have been a setback for him personally that, shortly after setting out that agenda, his then constituents in the North Warwickshire constituency decided to ditch him at the 1992 general election in favour of Labour representation. However, in 1997, he returned to Parliament in the far safer Conservative seat of Horsham and he waited patiently for 13 years in opposition before returning in 2010 to his privatisation agenda of 20 years earlier to make private everything that is public.
I give this preamble only to set out the context of the debate: we can all understand that an individual who has waited 20 years to achieve his ambition may be more keen to implement his policies and to do so somewhat quicker than otherwise would be the case. Indeed, the right hon. Gentleman has made his intentions clear. In June 2011, he spoke to the business community on the subject of public service reform, saying:
“Spending cuts are one-offs. What we need to do, and are doing, is fundamentally change the way we operate.”
However, the problem with the coalition Government’s approach is that it is not evidence-based; it is ideologically driven. Whether they are outsourcing services, opening them up to a range of providers or decentralising them, the Government are gambling with the nation’s hard-won assets.
Jonathan Lord (Woking) (Con)
We seem to be hearing a political diatribe against outsourcing. What would the hon. Gentleman say the previous Government were up to when they successfully outsourced many services? Indeed, many Labour councils, as well as Conservative and Liberal Democrat councils, followed in the footsteps of those pioneering Conservative councils of the early 1980s, by outsourcing services to give people a better service at lower cost.
Grahame M. Morris
The basis of my argument essentially is that there is no evidence base for that approach. If the hon. Gentleman will allow me to develop my argument a little further, I hope to illustrate that point.
If we look at the evidence base, it is in fact a constant lesson from history that reform has often come, as the hon. Gentleman has indicated, in the form of privatisations and outsourcing, but it has not always led to service improvement. Whether the justification for such reform has been a desire to bring perceived good practice from the private sector into the public sector or, indeed, the belief that savings can be made through outsourcing, the question that we parliamentarians must ask the Government and that I wish to put to the Minister is this: where is the evidence for those reforms?
I hope that the Minister will address this issue, which is about the economic and social evidence base rather than an ideological base that is behind what seems to be a rush to sell off services and public assets. It is my contention that the Tory-led policy on public services reform that is being followed by the coalition is ideologically driven and light on any such evidence base. I want to develop that point by presenting some evidence to suggest that the Government are on the wrong side of public opinion and, indeed, wrong about the whole issue of public service reform.
I hope that the Minister is aware of a report by Ipsos MORI entitled, “What do people want, need and expect from public services?” The report presents the most up-to-date and detailed data on current public attitudes to public services and public service reform. I want to put three headline findings on the record. First, people
“want public services to be based on notions of the public good, rather than just what’s good for me”.
Secondly, people
“understand the public good largely in terms of universalism, with equality of access to benefits”.
Thirdly, people
“struggle to see a compelling or urgent case for reforming public services to cope with economic pressures and social changes”.
Gloria De Piero (Ashfield) (Lab)
Does my hon. Friend agree that there are different interpretations of public sector reform? For example, Labour set up academies in areas of high deprivation, but the Tory-led Government turned that on its head. Their interpretation is anti the public good.
Grahame M. Morris
I agree that there are various interpretations of what constitutes public sector reform, and I will speak about academies in a few moments. I am grateful to my hon. Friend for her intervention.
On all three points illustrated in that detailed survey, the Government are out of step with the public on public service reform. Ordinary people want public services in public hands for the public good, but the Government seem to want public services outsourced to business for the good of private profit. Ordinary people want universalism, but the Government want to decentralise, to remove targets and to create local variations and postcode lotteries, so going against standardised and universal access. Ordinary people oppose rapid upheaval and fundamental reform to public services, and a case in point is the opposition to the NHS reforms.
The Government have run amok with the reorganisation of the health service and forged ahead with public service reform and outsourcing at breakneck speed. It is no surprise that when Ministers make speeches on public service reform, they do so to business leaders, never to public sector workers, service users or trade union groups who work in the public sector. I want to place on the record my support, sympathy and admiration for the front-line workers who are so often treated like pawns in a game of chess, facing constant change, reorganisation and regrading, often at the whim of political elites.
Workers across the public sector know that the latest policy move to the mass outsourcing of services and a free-for-all for business will be a last hurrah, because many of the changes will be irreversible. For people who work in the public service, it means an end to job security and to nationally determined pay, conditions and terms of service. Instead, national public services will become ever more fragmented, unstable and variable, offering short-term and risky employment not by the state, but by any fly-by-night private sector operator.
Jackie Doyle-Price (Thurrock) (Con)
The hon. Gentleman is making a passionate case, but it is framed as public versus private. The reality is that we are looking at any number of models to deliver our public services. We have social enterprises and co-operatives. Surely, we should look at the outcome and not the structure of delivery.
Grahame M. Morris
I thank the hon. Lady for her intervention, but there is a danger of fragmentation, even with some of the models that she mentions—for example, in the national health service and social care. If we are trying to promote integrated services, a plethora of private sector and even voluntary sector providers works against that ethos. That is a risk.
My argument is that public sector workers and service users know the difference between private profiteering and public services. Let us not forget that the key difference is that the first duty of a business is to its shareholders and the pursuit of profit.
The coalition Government are trying to do two things in developing their own brand of public service reform, which is quite distinct from what the Labour party did when in office. First, they are trying to tie down companies with more stringent contracts in the belief that setting targets will guarantee performance—ironically, the Government argued against targets in the national health service and wanted them to be ditched by public sector providers. Secondly, they believe that with stricter conditions for private sector providers, there should be no limits on where those providers should be allowed to tread within the public sector.
Ian Mearns (Gateshead) (Lab)
My hon. Friend is developing a pertinent point. If we outsource public services—a public commodity—to the private sector, in some way, shape or form the private sector has to make a profit to give to its shareholders. That seems to be the logic from the Government’s perspective, but it will be impossible for public services to become more efficient or reinvest savings back into the development of the service.
Grahame M. Morris
That is an excellent point, and we should be guided by the evidence. If the Minister can demonstrate that that is not the case, I will be interested to hear his response. Certainly, in relation to the national health service, the detailed impact assessment published with the Health and Social Care Bill proved that in-house services were considerably cheaper than those offered by the private sector, as well as being more responsive, accountable and fitting in with the wish for better integration.
A little earlier, different models of provision were mentioned. The coalition Government are promoting different models for outsourcing different services within different Departments—for example, academies and education, the utilities model and the NHS, or payment by result for welfare and benefits. However, although those are different models, the driver is the same. Emergency 999 call centres have been privatised and outsourced together with the administration of the benefit system. The roads on which we drive are the latest to go, as the pace of outsourcing to the private sector speeds up.
John Cryer (Leyton and Wanstead) (Lab)
Another example is the translation service. Since it was moved into the private sector, a plethora of problems have included translators failing to turn up at court and criminals walking away without being tried because no translator was present.
Grahame M. Morris
There are many examples where the proposals for privatisation, outsourcing or whatever models are being piloted have not produced positive results. I do not have the opportunity to list them all owing to a shortage of time, but I am grateful to my hon. Friend for that example.
The Welfare Bill passed through Parliament in March and lays the foundations for billion-pound contracts of five years or more for private companies to run welfare-to-work programmes and the administration of the new benefits system. I believe that the rush to outsource the biggest spending Department—the Department for Work and Pensions—rather than develop a coherent strategy to create jobs and growth in the economy, is a dereliction of duty by the Government.
Jackie Doyle-Price
The hon. Gentleman draws attention to a good example of a contract that is working. In that contract, the burden of risk is pushed on to the private provider. If it does not deliver jobs, it does not get money. Surely, that is a good thing.
Grahame M. Morris
I am afraid that I do not agree with the hon. Lady. The issue was raised during questions to the DWP on Monday—by myself, I think—and the papers this weekend illustrated a number of examples of service failure. Service users feel huge dissatisfaction with Atos and A4e, and there has been a huge uproar about the quality of service provision in training or retraining ex-offenders.
The evidence base is littered with failures from the private sector, so it is difficult to hold up an example. If there is a good example, I suspect that it might be the exception rather than the rule. Most often, there is a negative impact for employees, with the prevalence of short-term contracts and the use of part-time and temporary staff who are often recruited through employment agencies. Indeed, Unison commissioned a report on the rise of the multi-billion-pound private public services industry and raised significant concerns about the increased dependency on private firms.
The privatisation of public services has already become a huge industry, through which the private sector receives more than £80 billion of taxpayers’ money every year, yet it has become characterised by increased cost, deteriorating quality, the loss of accountability and the greater risk of service failure. The reason why we had the birth of municipal provision in the great northern cities—Manchester, Bradford, Leeds and Wigan—was that the city fathers saw that public provision was more efficient and accountable than the existing private sector provision that was available at the time. Those arguments are not new in that respect.
I want to give another couple of examples. I mentioned A4e, and it would be remiss not to mention the Southern Cross care homes debacle. Other scandals in relation to welfare have also raised such issues and brought this agenda to the fore. That will happen more often as more services are passed over to the private sector. There is also a risk that we will lose control over our public services altogether. Indeed, in 2007, the Local Government Association warned that the amount of local authority spending on external private sector contracts and the ability of local government to make efficiency savings when it has already signed contracts without further damaging services was not realistic.
The Government’s central argument in favour of the increased commercialisation and privatisation of public services rests on the importance of consumer choice as a driver for increased efficiency, accountability and value for money. However, again, that is not supported by the evidence contained in the public surveys that have been carried out. One area that features genuine consumer choice is the provision of utilities. In most parts of the United Kingdom, people can choose a provider of gas or electricity from a handful of companies. However, is that a good example? There is massive public concern that prices have increased way above inflation and that the profits of the energy companies have soared. So the panacea of private-led competition is not everything that the coalition would have us believe it is.
Jonathan Lord
The hon. Gentleman is making a delightful speech in favour of socialism, the big state and the state always providing, whether nationally or locally. He talks about the utilities and so on. British Telecom is not perfect, but I remember as a young man when one had to wait weeks and weeks, if not months, to have a phone installed, and I think there was a choice of about three phones. As soon as BT was privatised, it saved taxpayers’ money and gave a much better service to its customers.
Mrs Anne Main (in the Chair)
I remind the hon. Gentleman that I am sure that he would like to give the Minister enough time to respond to the questions that he has asked.
Grahame M. Morris
I would, indeed—thank you, Mrs Main.
There is an awful lot to explore in relation to the subject, but I want to pose a number of questions to the Minister. I want to ask about the evidence. Given that the survey evidence shows that the public seem to reject the individualist consumer approach to public service, why are the Government pursuing that? Can he point to specific pilots or evidence of its success? What protections are in place to stop the spiralling costs of redundancies during this transition period, for example, in the national health service?
In respect of the decentralisation agenda, what specific standards are being developed to ensure accountability, equality of access and provision nationally? With this new landscape of competing service providers from different agencies, with different forms of accountability, how will the needs and interests of service users with complex and multiple needs be protected? I am thinking about the social care sector, where needs dealt with by different providers often require integrated services.
Will the new accountability measures apply to private and voluntary sector providers? As we know, they remain outside of the scope of the Freedom of Information Act. What direct accountability will there be to elected representatives and democratic institutions, nationally and in respect of local government, when such public services are outsourced?
The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)
It is a great pleasure to serve under your chairmanship for the first time, Mrs Main. I congratulate the hon. Member for Easington (Grahame M. Morris) on securing the debate and on how he presented his case. I believe that he worked in the NHS before going into politics. I read his profile, which says that his political mission is to push Labour leftwards, so he must be delighted with the direction of travel. It is clear where he is coming from and I have a certain respect for that, even though I come from a different place politically.
Our constituencies may be different, but I suspect that all our constituents share a desire to see the Government deliver better value for the tax that they pay. This Government take that seriously.
Mr Hurd
Perhaps I can just advance my argument a little.
This is not the place to have a great debate about the economic situation or the level of debt that the Government have inherited, but we are serious about trying to deliver better value for taxpayers’ money. I am a Minister in the Cabinet Office. The controls that we have put in place—that my boss, the Minister for the Cabinet Office and Paymaster General has put in place—delivered some £3.75 billion in the first year of our Government and are on track to deliver £5 billion of savings this year. We are quite proud of that. Frankly, it was an exercise in delivering common sense. It is an appalling indictment of the attitude of the previous Administration to public money that such big savings could be found in such short order by doing some basic commonsensical things.
Ian Lavery
Does the Minister agree, in respect of looking for better value, that paying doctors, nurses and porters in his constituency more than those in my constituency is a good way of saving money?
Mr Hurd
I want doctors and nurses to be paid at fair value. I am also interested in the value that they offer to the taxpayer for the work that they do, which brings me on to my next point about public services and how they are commissioned.
The Government’s view is that, when expectations about public service standards are rising, we need to find more creative solutions. There is dissatisfaction and a challenge, because there is less money about and therefore greater pressure to get better outcomes with less money.
My hon. Friend the Member for Thurrock (Jackie Doyle-Price) made an important point: the direction of travel here is not driven by ideology, although there is more ideology communicated from the Opposition than the Government. This is driven by a desire to deliver better outcomes on behalf of the taxpayer and the people we are trying to help in a way that is much more transparent than before.
Ian Mearns
The Minister belabours the point about making additional efficiencies within government since the coalition came to power. Of course, one of the biggest elements of public expenditure is local government. Conservative control in local government has been at a high watermark for eight or nine years now. Would he criticise Conservative councils in that respect?
Gloria De Piero
The Minister might not want to speak about Conservative councils, but I live in Nottinghamshire where the Conservative council has just used taxpayers’ money to develop a new logo on all the buildings. Is that good value for taxpayers?
Mr Hurd
I do not know because I do not know the situation in Nottingham. That is an issue on which the people of Nottingham can take a view and they will be able to express that view more clearly and more loudly because we are moving towards a world in which there is more transparency about local authorities’ spending. We are moving away from the opaque world in which we had very little information about what was being done in our name.
Lisa Nandy (Wigan) (Lab)
I share the Minister’s concern about value for money, although I am also concerned about protecting the most vulnerable and about the standard of public services and the intelligence of targets that are used in outsourcing. Will he respond to the point that was powerfully put by my hon. Friend the Member for Easington, about the evidence base behind this? Where is the evidence that outsourcing provides better value for money?
Mr Hurd
I am delighted to move on to the substance of the debate. I have tried my best to respond to various interventions from Opposition Members. The hon. Member for Easington referred to open public services. [Interruption.] With respect to the hon. Gentleman, I am trying to answer the meat of his argument, which is whether it is good to create a situation in which those buying on behalf of the taxpayer have choice about where they buy services on our behalf. He is actually arguing for no choice and for protection of the status quo. The Government’s open public services White Paper makes it clear—we expect a political argument about this—that we want to switch the default setting away from in-house delivery to commissioning services from a diverse range of providers where that would improve services or reduce costs.
The hon. Gentleman made it clear that he was hostile to the for-profits sector. My hon. Friend the Member for Thurrock made a valuable point that the Government are agnostic about who delivers the service. We are particularly keen—it is a coalition Government commitment —to make it easier for charities and social enterprises to participate in public services. They are not driven by a profit motive. By definition, they are driven by a desire to deliver a better outcome for the people whom they support and care about.
Jackie Doyle-Price
The hon. Member for Easington (Grahame M. Morris) referred to academies in his speech. Perhaps I should remind my hon. Friend about the Public Accounts Committee’s inquiry into academies, which showed that they delivered not only better outcomes for the taxpayer but better value for money. Is that not a perfect example of how changing provision and getting away from uniform provision delivers better outcomes?
Mr Hurd
Yes, I absolutely agree. I also agree with what my hon. Friend said when the hon. Member for Easington kept saying, “Where’s the evidence?” There is plenty of evidence for the value of competition—if we need it, because we know it in our daily lives. Academic research suggests that competitively tendering public services typically produces savings of between 10% and 30% while maintaining or improving standards. I refer the hon. Member for Easington to the “Public Services Industry Review” of July 2008 by Dr DeAnne Julius, but there is no shortage of evidence for the value of tendering and introducing competition into the system.
Dr Julius also talked about the payment-by-results regime, which the Opposition do not like at all, although the situation we inherited was that those buying on our behalf were extraordinarily complacent about whether we got anything for the money. Such a regime is not appropriate in every case, but we are moving towards a requirement for commissioners—those buying on our behalf—to think much harder about what they are buying and the outcomes against which they will be measured in a new transparent world where there will be nowhere to hide. Yes, we will introduce payment by results where that is appropriate, because it introduces some basic, common-sense discipline into how we spend taxpayers’ money. For most of my constituents, that makes plain common sense—after all, it is their money.
Finally, we are also keen to encourage the development of mutuals, employee ownership and organisations in which employees are in charge. One such model in which ownership is shared between employees, Government and private sector partners is the innovative pathfinder mutual joint venture, My Civil Service Pension, which provides pension administration for civil servants. Likewise, I go around the country and meet some of the mutual spin-outs from the NHS, where the hon. Gentleman used to work, and the difference when one walks through the door into those organisations is tangible.
Our programme of reform is focused on the citizen and is already cutting out unnecessary cost to help protect front-line priorities. Outsourcing remains an interesting option and one that will offer the best deal in many situations, but it is not the only one, and we are judging every case on its merits.