Cleveland Fire Authority

Ian Lavery Excerpts

Monday 13th May 2013 Commons Chamber

[Tom Blenkinsop]

At the meeting mentioned by the hon. Member for Stockton South (James Wharton), the main thrust of the chief fire officer’s argument for seeking a mutual model was to avoid corporation tax. If that is the sole purpose of pursuing the mutual model, one has to assume that the mutual is making a profit, but I want to go into that in more detail. Spending £198,000 from the Department of Health’s social enterprise investment fund, the brigade created an arm’s length company, the Cleveland Fire Brigade Risk Management Services community interest company, to bid for contracts from the private and public sector, with any profits to be given to the brigade. However, it operated at a loss of £38,000 in its first year and has already lost a major telecare contract that it had secured six months previously. I am no mathematician, and I do not know what the corporation tax yield would be for the Treasury on a community interest company running at minus £38,000, but with the CIC struggling to make a profit as it is, I fail to see how spinning out the brigade would generate any more contracts or revenue than the current arrangement.

The most important reason I, along with my hon. Friends the Members for Stockton South, for Hartlepool (Mr Wright) and for Middlesbrough (Andy McDonald), object to the proposals is the scope for privatisation that they permit. I cannot confess to being an expert on the technicalities of European public procurement law, but if the brigade were to be spun out, it would seem almost inevitable that once the initial contract has expired, the authority, as a commissioner, would be obliged to open the process up to competitive tendering, with social value legislation offering little protection. The authority’s senior officers have refused to provide my office with information about the procurement routes it is considering, but none of the “no market”, “joint venture”, “in-house incubation” or “competitive tender” options discussed on the Cabinet Office’s mutuals taskforce website offer protection from competitive tendering in the medium or long term.

There does not appear to be an appetite from senior officers in anywhere but Cleveland for spinning out the brigade, but the necessary changes to the Fire and Rescue Services Act 2004, which the Minister attempted to push through the Regulatory Reform Committee in a legislative reform order, would, in his own words,

“enable fire and rescue authorities in England to contract out their full range of services to a suitable provider”.

[Ian Lavery (Wansbeck) (Lab)]

My hon. Friend correctly highlights the fact that the issue was placed in letter form before the Regulatory Reform Committee, of which I am a member. Can he give any explanation for why that was the case?

[Tom Blenkinsop]

That is precisely why we are here tonight. My hon. Friend makes the valid point about letters on separate issues appearing before the Regulatory Reform Committee with no prior warning. That suggests something going on behind closed doors that we have still not been able to get the documents on in any proper manner.

I presume these providers could be in the private sector as well as the third sector, which could obviously have effects throughout England. The Minister confirmed that view to the FBU’s parliamentary group only recently. The Labour party supports mutuals, as do I, but the Co-operative party and I feel that this is a wholly inappropriate application of the model. The application does not appear to be the end in itself, but merely a stepping stone to further change. I am sure the Minister can see the difference between mutualising a bailed-out, formerly privately owned bank and mutualising a life-or-death public good such as a fire service.

I am sure the Minister has a series of quotes ready to fire at me accusing me of scaremongering, but before he does that, I would be grateful if he can clarify one simple point in his response. Specifically, will he absolutely guarantee that if the brigade were to be spun out, a few years down the line, it would not be subject to competitive tender? That would be despite the fact that Cleveland’s own chief fire officer stated that any contract would be subject to competition after the initial contract awarded to any mutual expired. If the Minister can confirm this, will he please inform the House which procurement route would permit this?