Public Appointments: Diversity

Oliver Dowden Excerpts

Thursday 27th June 2019 Written Statements

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

Today I have published the Government’s response to Lord Holmes’ review into opening up public appointments to disabled people, alongside a refreshed public appointments diversity action plan 2019.

In 2017 the Government published their public appointments diversity action plan making the moral and business case for more diverse public appointments and also setting out our goals and a 10 point action plan on diversity. As part of that action plan, we commissioned Lord Holmes to review the barriers preventing disabled people from taking up public appointments and he reported back in December 2018.

The Government have now responded to Lord Holmes’ recommendations and I take this opportunity to thank him again for his invaluable work and efforts in this important area.

We remain committed to bringing more people from diverse backgrounds into public appointments. The Government have set out how they will take forward Lord Holmes’ recommendations and will include these actions in a refreshed public appointments diversity action plan 2019, published today and deposited in the Libraries of both Houses.

The Government accept the principle of all the recommendations that Lord Holmes has made and believes that there is wider applicability to removing barriers for all groups, not just disabled people. The diversity action plan recommits the Government to their ambitions that 50% of all public appointees are female and 14% of public appointments should be from ethnic minorities by 2022. In December 2020, the Government will also consider the case for setting an ambition in relation to disabled people, once they have taken steps to improve the data.

Attachments can be viewed online at http://www. parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-06-27/HCWS1670/.

[HCWS1670]

Oral Answers to Questions

Oliver Dowden Excerpts

Wednesday 5th June 2019 Commons Chamber

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

9. What progress the Government have made towards their target of spending 33% of central Government procurement with small and medium-sized enterprises by 2022.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

We are doing more than ever to encourage SMEs in public procurement. Recently published figures show an increase in spend from the previous year. Examples of measures that we have taken include streamlining procurement processes and improving transparency and, from September, we will be able to exclude suppliers that fail to pay subcontractors on time.

[Mr Dhesi]

Research from the Federation of Small Businesses shows that 25% of businesses that are in supply chains for public infrastructure projects experience late payment more than half the time. Along with the Government lagging dismally behind their target of spending 33% of central Government procurement with SMEs by 2022, is this not yet more evidence that they simply do not represent the interests of small businesses?

[Oliver Dowden]

I would have thought that the hon. Gentleman would welcome figures that show we are spending more with small businesses than ever before. On his point about prompt payment, we set a very challenging target of 90% of undisputed invoices from SMEs being paid within five days and we are meeting that for most Departments.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

T1. If he will make a statement on his departmental responsibilities.

Facility Time Guidance

Oliver Dowden Excerpts

Monday 20th May 2019 Written Statements

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I wish to update the House on the progress being made to monitor trade union facility time usage within the public sector.

The Trade Union (Facility Time Publication Requirements) Regulations 2017 came into force on 1 April 2017, requiring public sector organisations who employ over 49 full-time equivalent employees to publish information relating to trade union usage/spend.

The Government are today publishing updated guidance to support organisations to meet this important legislative requirement. On 3 June we will launch a new online recording system as part of the facility time publication service, enabling all public sector organisations to centrally submit facility time data by the deadline of 31 July. All organisations should report facility time data before this date, and guidance to this effect is included in the tool.

The Government recognise that there are significant benefits to both employers and employees when organisations and unions work together effectively to deliver high- quality public services, but facility time within the public sector must be accountable and represent value for money.

For 2017-18, compliance varied considerably across the wider public sector, with returns in some areas of just over 60%. The civil service saw the highest levels of compliance, with just over 99% of expected returns received.

Returns to the civil service show a 0.06% spend on facility time as a percentage of the pay bill, demonstrating greater accountability and an effective use of taxpayers’ money. Measures taken to encourage these sensible savings include reforms that require trade union representatives to spend at least 50% of their time delivering their civil service job. Average spend across the public sector was higher, especially in local government.

The Government encourage all public sector organisations to reduce facility time spend to the levels seen in the civil service, in order to ensure it achieves value for money. The Government estimate these potential savings amount to £14 million across the public sector.

[HCWS1567]

Death of John Smith: 25th Anniversary

Oliver Dowden Excerpts

Thursday 9th May 2019 Commons Chamber

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I join other hon. Members in congratulating the hon. Members for Edinburgh South (Ian Murray) and for Glasgow South (Stewart Malcolm McDonald), my hon. Friend the Member for Stirling (Stephen Kerr) and the right hon. Member for Derby South (Margaret Beckett) on securing the debate. I am also grateful to the Backbench Business Committee for allocating time to it.

With your permission, Madam Deputy Speaker, I shall keep my remarks relatively short, not from a lack of respect but because, unlike so many other Members who have contributed to the debate, I did not know John Smith personally. None the less, it is an honour to wind up the debate on behalf of the Government. I am not quite as young as the hon. Member for Glasgow North East (Mr Sweeney), who I believe was five at the time of John’s death, or as the hon. Member for Airdrie and Shotts (Neil Gray), who was eight. I was a 15-year-old Tory boy at my local comprehensive, rather lonely position in the mid-1990s, as Members might imagine—[Interruption.] The hon. Member for Walsall South (Valerie Vaz) says from a sedentary position that it toughened me, and it certainly did.

It is a sign of the contribution made by John Smith that, even among teenage Tory boys like me, he was regarded as a towering political figure and there was a genuine and profound sense of shock when we heard of his death. It is a sign of his legacy that 25 years later here we are in this Chamber discussing it. So much of what he did, whether on devolution or the national minimum wage, and the way in which he conducted his politics still seem fresh and relevant to politics today. That is a true tribute to the legacy of John Smith.

My politics and my interest in politics were certainly stimulated by John Smith and I certainly remember those Maastricht debates and the incredible skill that he had—he simultaneously supported the Government on Maastricht and managed to sow division within the Conservative party and inflict defeats on it. Like many others, I also remember his funeral. It was a unique expression of the affection and respect he commanded, not just from the Labour party but from the Prime Minister and other major figures from every party and every area of national life who crowded into that simple parish church in Edinburgh to say goodbye to a man whose basic decency and good sense we could ill afford to lose. As our then Conservative Prime Minister, Sir John Major, said, he

“was one of the outstanding parliamentarians of modern politics. He was skilled in the procedures of this House, skilled in upholding its traditions, a fair-minded but, I can say as well as any Member in the House, tough fighter for what he believed in and, above all, he was outstanding in parliamentary debate.”

He went on to talk about

“the waste of a remarkable political talent”—[Official Report, 12 May 1994; Vol. 243, c. 429.]

and that certainly was raised by many hon. Members, not least the hon. Member for Edinburgh South.

I think that I can say without any risk of contradiction from any of my hon. Friends that if a Conservative Member of Parliament was ever asked to name the greatest Labour Prime Minister we never had, we would all choose John Smith. As many Members have reminded us, many of the causes that John Smith championed are still relevant today. My hon. Friend the Member for Stirling talked about the role John Smith played in devolution. In many ways, he was the godfather of devolution.

Some Members may have heard the Radio 4 programme last weekend, recalling the path to devolution, in which John Smith’s daughter recalled a dinner very shortly after her father’s death to which both Tony Blair and Gordon Brown were invited. Tony Blair apparently earnestly asked John Smith’s daughter how committed her father really was to Scottish devolution, and she apparently left him in absolutely no doubt about the strength of his commitment to that cause.

Other Members, particularly those who worked with John Smith—especially the right hon. Member for Wolverhampton South East (Mr McFadden), who made an excellent contribution—mentioned his basic human decency. It was also brought out very well by the hon. Member for Edinburgh West (Christine Jardine) that it is easy to overlook his role as a family man and that his death deprived his wife of her husband and three girls of their father.

The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) said something that we could all do with remembering on both sides of the House: for a political plane to take off, it needs both its left and right wings fully intact. That speaks to a wider role that John Smith played in promoting a civility in British politics that, as so many hon. Members have rightly observed, is sometimes lacking in these turbulent times. Despite only leading his party for approximately two years, a genuinely huge expectation had built up behind his leadership in 1994, but this never inhibited him from being an open, congenial and good-humoured man, as his colleagues have attested —no matter what their political allegiance.

Perhaps I may be forgiven for concluding my remarks by requoting the oft-uttered words of John Smith the night before he died that many hon. Members have also observed today:

“The opportunity to serve our country—that is all we ask.”

And what a fitting legacy of that great man.

Oral Answers to Questions

Oliver Dowden Excerpts

Wednesday 24th April 2019 Commons Chamber

[Mark Pawsey (Rugby) (Con)]

1. What steps he is taking to ensure that all Government suppliers and subcontractors are paid on time.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

It is important to all suppliers, not least small businesses, that they are paid on time. That is why I have announced that, from this September, we will exclude suppliers from winning contracts if they fail to pay their subcontractors on time. Just this month, I contacted all suppliers to remind them of this intention.

[Mark Pawsey]

I welcome what the Minister has just said, but a significant proportion of Government procurement is on construction projects, where there are often poor payment practices, such as those exposed during the collapse of Carillion. The Federation of Small Businesses’ “Fair Pay Fair Play” campaign, which carries the message that everyone deserves to be paid on time, is asking for those projects to be made the subject of separate project bank accounts. Is the Minister considering that?

[Oliver Dowden]

Yes. My hon. Friend raises an important point. The Government already use project bank accounts on all construction projects, unless there are compelling reasons not to do so. That is just one way of ensuring our underlying objective of prompt and fair payment. It sits alongside initiatives such as paying our suppliers on time, excluding late payers and appointing prompt payment non-executive directors in all Departments.

[Jim Shannon (Strangford) (DUP)]

Bearing in mind that small businesses are the backbone of our economy, will the Minister outline when we can expect to see the follow-through of the proposed policy whereby suppliers will be unable to win Government contracts unless they are seen to be making prompt payments?

[Oliver Dowden]

The hon. Gentleman is absolutely right to remind the House of that commitment. I announced in November that we will be bringing that policy into practice from September this year. The policy will mean that companies will face being excluded from Government contracts if they fail to pay their suppliers on time in two consecutive quarters.

[Mr Philip Hollobone (Kettering) (Con)]

Which Government Departments have the best record in paying their suppliers on time, and which have the worst?

[Oliver Dowden]

I can tell my hon. Friend that the latest data shows that 10 of the 16 Government Departments were meeting the target of paying 90% of suppliers within five days, and 10 were also meeting the target of at least 96% of invoices within the 30-day target, so there is a good record overall.

[Jon Trickett (Hemsworth) (Lab)]

The Minister’s own Department has seen a threefold increase in late payments over the last couple of years. As we know, the Government are diverted from their day jobs with daydreams of a new Prime Minister, and this distracted Government are raising incompetence to a completely new level. We have seen that they are careless when paying small and medium-sized enterprises that provide services to the public, and those SMEs are the backbone of our economy. Yet the Government are very careful when it comes to outsourcing to wounded giants such as Interserve or failed dinosaurs such as Carillion. Is it not time that the Minister and his Department got their act together?

[Oliver Dowden]

I assure the hon. Gentleman that I am dreaming of nothing but securing my right hon. Friend the Prime Minister in her continued position as Prime Minister.

[Jon Trickett]

“It says here.”

[Oliver Dowden]

Sadly, I do not have a note on that point.

I can also reassure the hon. Gentleman on his point regarding prompt payments in my own Department, the Cabinet Office. According to the latest figures, in March we paid 88% of all our suppliers within five days and 98% within 30 days—a perfectly credible record.

[Mrs Sheryll Murray (South East Cornwall) (Con)]

2. What plans the Government have to use the centenary of Nancy Astor’s election to encourage more women to stand for public office.

--- Later in debate ---

[David Linden (Glasgow East) (SNP)]

5. If he will make it his policy to (a) introduce the real living wage in all Government Departments and (b) seek accreditation from the Living Wage Foundation.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I am pleased to tell the House that from 1 April, the Government increased the national living wage by almost 5% to £8.21 per hour, which gives an annual pay rise of almost £700 to full-time workers on the national living wage. That is our preferred approach to addressing low pay across both the public and private sectors.

[David Linden]

Of course, the national living wage is not a real living wage, and it does not apply to under-25s, so that is a load of mince, frankly. Why would the Government want to perpetuate age inequality in terms of pay? Is the Minister proud of the fact that this Government actively discriminate against young people, including his own civil servants?

[Oliver Dowden]

I find it extraordinary how the hon. Gentleman denigrates the national living wage. The national living wage has handed a pay rise of £3,000 to the lowest-paid workers since it was introduced, and it is rising faster than the real living wage. In respect of under-25s, we need flexibility for younger workers, to help them get into the labour market. That is a sensible compromise.

[Chris Elmore (Ogmore) (Lab)]

The reality is that the Government’s living wage is not the living wage set by the Living Wage Commission, but putting that aside, can the Minister set out what representations he has made to the Independent Parliamentary Standards Authority to ensure that Members of this House can become living wage employers? My understanding is that it will not let us do that.

[Oliver Dowden]

Relations with IPSA are a matter for the Leader of the House, not for a Cabinet Office Minister such as myself, but I have heard the hon. Gentleman’s representations and I am sure the Leader of the House will have heard them as well.

[Mr Speaker]

What I can add, which I hope will be of some reassurance to the hon. Member for Ogmore (Chris Elmore), is that the House of Commons is indeed an accredited living wage employer and has been for some time. I hope that that warms the cockles of the hon. Gentleman’s heart.

--- Later in debate ---

[Royston Smith]

Ministers will know that I never miss an opportunity to talk about jobs and opportunities for my Southampton, Itchen constituents. More people are in work than ever before, but not all jobs are well paid with good opportunities. A Government relocation to Southampton would help to give my constituents more opportunities. Has the Minister considered relocation to Southampton as part of the Places for Growth programme? If not, why not?

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I know what a strong champion my hon. Friend is for the city of Southampton. I have heard his representations and am very happy to extend him an invitation: officials from my Department can meet him and representatives from Southampton to see what we can do in that area.

[Cat Smith (Lancaster and Fleetwood) (Lab)]

There are currently 2 million European citizens registered to vote in the UK, many of whom will be using their votes in the local elections next Thursday. However, in order to be eligible to vote in the European elections on 23 May, they will need to complete some paperwork. So far, fewer than 300 of those citizens have completed the paperwork, which would usually have been distributed by electoral registration officers from January onwards. Due to the short timescale for the administration of the European elections, I have heard that many European citizens are considering taking legal action against the Government. What consideration has the Minister given to that, and what measures could the Government take to help European citizens use their vote in the European elections here in the UK?

[Eddie Hughes (Walsall North) (Con)]

T3. What steps are Ministers taking to encourage the use of innovative technology for the delivery of public services?

[Oliver Dowden]

This is a major priority for the Cabinet Office, which is why earlier this month I announced £1.5 million in funding for 10 projects that will use location-based data to improve public services, and why I will shortly publish a strategy outlining how we will harness the power of innovative technology across the whole of Government.

[Toby Perkins (Chesterfield) (Lab)]

T2. Millions of people are not registered on the electoral roll, and they are much more likely to be from an ethnic minority, young or from a lower demographic class. Does not it say everything about this Government that at a time when we should be trying to get more people on to the register, they are doing everything they can to keep people off the register?

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

T5. Does the Minister agree that, as the Institute for Government has recently pointed out, the Government have outsourced many public services precisely because the public sector was delivering them poorly, and that any plans to end outsourcing are motivated by political ideology, not by what is best for the taxpayer?

[Oliver Dowden]

My hon. Friend is absolutely right to highlight those recent comments, which were clear that Labour’s outsourcing policy risks creating major implementation problems and losing the benefits that outsourcing has brought for taxpayers, without any guarantee that services would improve. This Government will continue to make decisions on outsourcing based on the evidence, not on ideology.

[Several hon. Members rose—]

--- Later in debate ---

[Suella Braverman (Fareham) (Con)]

I have met several innovative small businesses in Fareham recently, for example the IT business Silver Lining. Many such small and medium-size enterprises would like more opportunities to work closely with the Government. What steps are the Government taking to enable greater contracting with SMEs?

[Oliver Dowden]

My hon. Friend is absolutely right to raise this important challenge. We have set a demanding target of 33% of all Government business going to SMEs, and our forthcoming innovation strategy will look at exactly that point—how we can make it easier for SMEs to win innovative Government work.

Public Appointments Order in Council

Oliver Dowden Excerpts

Thursday 11th April 2019 Written Statements

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

Today I wish to inform the House that the Privy Council has made a revised Order in Council that makes provision for an independent commissioner to monitor the procedures adopted by appointing authorities when making appointments to public bodies. This revokes the Order made in November 2017 and provides an amended schedule of bodies and offices to be regulated by the commissioner. Regulation by the commissioner in accordance with the governance code on public appointments is an important part of ensuring that those appointments made by Government Ministers which are subject to regulation are made in an open, fair and transparent manner.

The revised Order in Council has been gazetted in the Edinburgh, London and Belfast gazettes and published on the website of the Privy Council Office. Changes to the schedule reflect where public bodies have been created, renamed, dissolved or subject to machinery of Government changes since November 2017. A copy of the Order in Council has been placed in the Libraries of both houses.

We have only added bodies to the schedule where they legally exist as of the date of the Order being made. This means that two bodies previously announced by the Government have not been included in this revised order: the Holocaust Memorial Centre Ltd and the Trade Remedies Authority (TRA). The former is soon to be established as an arm’s length body of Government. At that point, it can be treated as a regulated body by notification to the commissioner under section 2 (3) of the Order in Council. The TRA has already been notified to the commissioner under this section who has confirmed that it will be treated as a regulated body as soon as it exists. In the meantime, interim appointments to the TRA have been made in line with the governance code and principles on public appointments. The TRA will be the only arm’s length body of the Department for International Trade and will appear as such on the schedule of the Order in Council when it is next updated.

We will conduct a comprehensive review of the Order in Council later this year to ensure consistency in the schedule and the types of bodies included. This will provide a further opportunity to add the two bodies above and any other newly created bodies to the schedule as appropriate, and the subsequent Order in Council will be published. Thereafter, we intend to undertake an annual refresh of the Order.

The attachment can be viewed online at: http://www. parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-04-11/HCWS1510/.

[HCWS1510]

Civil Service Compensation Scheme

Oliver Dowden Excerpts

Tuesday 19th March 2019 Westminster Hall

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

It is a pleasure to serve under your chairmanship, Ms Buck. I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing this debate, and welcome the opportunity to respond to the points he has made.

Further to the point raised by the hon. Member for City of Chester (Christian Matheson), I want to put on the record right from the beginning that of course the trade unions have a valuable and important part to play in debates around civil service terms and conditions. Indeed, I have met them frequently—both PCS and the other principal unions, Prospect and FDA, as well as GMB and others.

I know that in his role as chair of the PCS parliamentary group, the hon. Member for Glasgow South West takes a close interest in these matters, and I pay tribute to him. Whatever our political differences, I know he is a strong and effective advocate for the trade unions and for PCS, and he has demonstrated that again today. In my experience both as a Minister in the Cabinet Office and in my previous time working at 10 Downing Street, I have worked with some of the most committed, talented and hardworking public servants in our country.

At a time when the nation faces significant challenges, those public servants’ work is more important than ever, so I am happy to join hon. Members, in particular the hon. Members for Coatbridge, Chryston and Bellshill (Hugh Gaffney) and for Edinburgh East (Tommy Sheppard) in paying tribute to them. As the hon. Member for Edinburgh East said, we need their skills more than ever at this time, as we face Brexit.

I certainly share hon. Members’ belief that all civil servants should be rewarded for the work they do, so that we can attract the best and brightest into the heart of Government. This debate relates principally to the compensation package available to civil servants when they are made redundant, but since hon. Members, particularly the hon. Member for City of Chester, have raised the question of pay I want to address that briefly before addressing the rest of my remarks to the substance of the debate. The hon. Gentleman raised the point about the Government’s fiscal position and the spending backdrop against which we are making these decisions. I am glad he has recognised that the Government have made considerable progress in reducing the deficit. He is right that we have made a lot of progress: the deficit is down by four fifths since 2010, from about 10% of GDP to about 2%. None the less, the Government are still borrowing more than £40 billion every single year, so the pressure has not gone away and we must still take some difficult decisions.

The reason we must take those difficult decisions is that we spent over £50 billion on debt interest last year. That is more than we spend on schools, and more than we spend on our police and armed forces combined. There is still a strong countervailing pressure from the need to continue to bear down on expenditure. Pay forms a large part of Government expenditure, so pay has to be part of that mix.

The overall approach taken to pay is that the Chief Secretary to the Treasury has made it clear that the overall cap has been lifted, but given the financial constraints within which we are operating, which is what the chief executive of the civil service was alluding to, it remains the case that central Government Departments have pencilled in—in fact, penned in—their funding. It is very clear from the Treasury how much budget has been allocated for pay rises, and in the coming financial year that is 1%.

That does not mean that Departments cannot go beyond that, but if they do, they must find efficiency savings to do so. In respect of all delegated levels of pay—that is to say, below the senior civil service—the process for determining pay awards is that it is up to each different Department to determine its pay award.

[Chris Stephens]

I am hoping to secure a separate debate on civil service pay, but since we have touched on it, I am sure the Minister remembers, as he was on the Front Bench, that we debated this last year and he agreed to look at the situation of having 200 separate pay negotiations across UK Government Departments. I think he is sympathetic to my view that that is a bit foolish. Given that permanent secretaries have agreed a joint position, as I understand it, of 1% to 1.5% across Departments, is it not better to have one pay negotiation for the whole civil service?

[Oliver Dowden]

I should say from the outset that no decision has been taken or agreed by permanent secretaries. There is a very clear process for this, which is that for delegated pay, which is that for civil servants below senior civil service level, the framework is set by the Cabinet Office in conjunction with the Treasury and then it is up to each individual Department to make individual decisions.

On the point about co-ordination, the Chancellor of the Duchy of Lancaster and I want to ensure that we have a proper process of engagement with the principal trade unions as we set the delegated framework, but it is important to say that that is not a pay negotiation. We need to understand their position, but the individual pay negotiation must be done by each individual Department. I think having each Department make its individual determination is the right approach, but I am keen to ensure that we engage with the trade unions and others as we consider the overall approach to delegated pay. As I understand it, correspondence is ongoing with the trade unions on the best way of doing that.

Beyond the delegated framework, there is also potential for further efficiency savings to allow for higher pay rises. I have signed them off as a responsible Minister; for example, the Foreign Office recently agreed a two-year pay deal funded by efficiencies, allowing for a 6.4% average uplift for non-SCS staff. It is possible, through smarter ways of working, to fund higher pay awards. I hope that gives hon. Members an overall sense of the approach the Government take to pay.

[Christian Matheson]

Can the Minister describe some of the smarter ways of working that helped to encourage the signing off of that particular pay rise?

[Ms Karen Buck (in the Chair)]

Order. May I encourage the Minister not to stray too far from the subject matter of the debate in responding to that intervention?

[Oliver Dowden]

Thank you, Ms Buck; I will take that injunction seriously and, if I may, I will write to the hon. Gentleman to set out the policy in more detail, so that I do not detain Members any longer on this point. Following your lead, Ms Buck, I turn to the substance of the debate.

The Government have a responsibility to ensure that the civil service is both efficient and cost-effective, and that includes the compensation scheme to support civil servants when exits are necessary—the hon. Member for Glasgow South West outlined the overall history. Important steps towards this goal were taken in 2010 when Lord Maude, then Minister for the Cabinet Office, introduced important reforms to modernise redundancy arrangements in the civil service. A revised civil service compensation scheme was launched in December 2010; at that time, Lord Maude set out his hope and intention that it would be a fair settlement for the long term. I fully acknowledge that point.

However—this is the key point—over the years since 2010, it has become apparent to the Government that those reforms did not fully deliver on their aims. If hon. Members will allow me, I will set out the reasons for that. Part of the rationale for the 2010 reforms was cost savings, and it has become clear that the expected cost savings did not fully materialise. The average compensation entitlement under the 2010 scheme is considerably higher than was intended when the scheme was first introduced. In 2010, the average compensation entitlement for voluntary exits and voluntary redundancies was expected to be £33,754, but by 2017 it was estimated to be £40,513.

More widely, it has become clear that other aspects of the scheme were not appropriate. To give an example, the compensation scheme provisions for early access to pensions for staff aged as young as 50 enable them to retire and draw all of their civil service pension without a reduction for early payment. That is often very expensive for the employer and is increasingly out of line with the Government’s wider aim of encouraging longer working lives.

In recognition of those concerns, the Government introduced new civil service compensation scheme terms in 2016, which, as the hon. Member for Glasgow South West highlighted, were challenged by way of judicial review in 2017. It is important to point out that the court accepted the Government’s reasons for making the reforms, but it found that the Government had not fully met their obligations with regard to how the consultation process was carried out. The 2016 terms were accordingly struck down and the 2010 terms reinstated.

Although the Government of course accepted the court’s judgment—as we must—we still believe that the 2010 compensation scheme reforms have not fully met their objectives, and that there remain good reasons for reforming the scheme. Accordingly, we launched a new consultation on reforming the civil service compensation scheme in September 2017, which set out the Government’s objectives. Principally, the objectives are to align with the principles of the compensation scheme reform expected across the wider public sector; to support employers in reshaping and restructuring their workforces to ensure that they have the skills required for the future; to create significant savings on the cost of exits and ensure the appropriate use of taxpayers’ money; to ensure that any early access to pensions remains appropriate; to ensure that efficiency compensation payments are appropriate for the modern workplace; to support the flexible use of voluntary exits; and, where possible, to implement a set of reforms that are agreed by the trade unions.

The consultation also set out a proposed new set of civil service compensation scheme terms that the Government believe would deliver on those objectives. In summary, those are a standard tariff of three weeks’ salary for a year of service, voluntary exit and redundancy payments of up to 15 months’ salary, compulsory redundancy payments of up to nine months’ salary, employer-funded pension top-up payments allowed only from the age of 55, increasing in line with the state pension age, and that the efficiency compensation tariff should align with the compulsory redundancy tariff.

The Government took the view that those terms would meet the objectives set out in the consultation document, and considered that the scheme would offer a good level of support to civil servants to bridge the gap until they found new employment or entered retirement, and would provide the flexibility needed to support employers in reshaping and restructuring their workforces to meet the challenges that they will face. It will also be fair to taxpayers, who ultimately fund the cost of civil service exit payments, as Members know.

I recognise that this is an area in which trade unions rightly have strong views. The Government are therefore carefully consulting with unions with the aim of reaching an agreement if at all possible. The consultation has already stretched for more than 18 months—a very long period—and has included numerous meetings between my officials and union representatives and between my predecessor and union representatives, and I myself have now held two rounds of meetings with union representatives, which have been extremely useful in helping me to understand the unions’ positions on the proposed reforms.

I am pleased to say that throughout the process PCS and all the other unions engaged openly and constructively with the consultation, notwithstanding their overarching position, which I acknowledge, that the Government should not be reforming the compensation scheme. I place on the record my thanks to all the unions—Prospect, FDA and PCS—for their work in engaging constructively with the process.

As well as engagement through meetings, unions have also put forward detailed counter-proposals setting out their alternative vision of what a reformed scheme should look like. As has been highlighted by hon. Members—particularly the hon. Member for Glasgow South West—those proposals are detailed and well thought through and reflect the considerable effort that has clearly gone into their preparation. Again, I thank the unions for that constructive engagement.

As a result of the meetings and counter-proposals, I am left in no doubt as to the unions’ positions. I understand the areas that they consider priorities for reform, their concerns about the Government’s proposals and their preferred alternative reforms. Contributions to the debate have further increased my understanding of the position of PCS and the other unions it is working with on this consultation. I am very grateful to hon. Members for their contributions.

[Chris Stephens]

The Minister has been most generous in giving way. If the trade unions put forward a counter-proposal that met the Government’s expected savings target, would the Government be more sympathetic? Does he understand the principles behind what the trade unions have put forward, including looking after those who are lower paid rather than those at the top?

[Oliver Dowden]

I certainly understand what the trade unions are trying to put forward and I completely understand their concerns about lower-paid workers. However, it should be noted that there is already provision for a minimum payment that covers lower-paid workers, although a discussion about the level at which to set that forms part of the consultation.

I do not want to pre-empt my final determination, but I am concerned about the scale of the cost savings. At the moment, I still have significant questions about whether what has been proposed by the trade unions meets the cost-saving requirements of the reform that we have set out. That is one principal consideration that will affect my final determination. However, I am very much conscious of the arguments that have been clearly put forward by the trade unions on these points, particularly on help for the lower-paid.

As I have said in recent meetings with union representatives, I am now genuinely carefully considering the counter-proposals that all unions have made. I remain keen to reach agreement with the unions if at all possible, and I am considering whether the Government’s proposals can be adjusted to help to facilitate that, while remaining consistent with our overall objectives for reform. As Members have noted, I intend to make a decision on any amendments to the Government’s proposals shortly. Following that, my intention is then for a period of further consultation with the unions, in advance of the Government’s making a formal offer of revised terms to the unions in the hope that they are accepted.

I conclude by repeating that the Government greatly value the work of civil servants. We are keen to reach agreement on a set of compensation scheme terms. I believe that the consultation proposals are fair and provide a good level of support to civil servants, while recognising the need for continued reforms and savings. I once again thank hon. Members for their contributions and I hope I have set out the Government’s approach clearly.

Interserve

Oliver Dowden Excerpts

Monday 18th March 2019 Commons Chamber

[Christian Matheson (City of Chester) (Lab)]

(Urgent Question): To ask the Minister for the Cabinet Office if he will make a statement on the major Government supplier Interserve entering administration.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I have been asked to respond on behalf of my colleague, the Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster.

As I have said repeatedly to the House, the Government are not responsible for decisions taken by companies in the private sector. What the Government are responsible for is the continued delivery of public services, and I assure the House that has happened in this case. Schools continue to be cleaned, roads continue to be repaired and improved, and services in Government buildings continue to run as normal.

I reassure hon. Members that nothing in Interserve’s refinancing will affect the delivery of public services. No staff have lost jobs and no pensions have been affected. The company has executed a contingency plan that it had prudently developed in case shareholders rejected the proposed refinancing deal. This was a pre-agreed transaction, known as a “pre-pack” administration. Hundreds of pre-pack administrations are performed every year, including by well-known companies. It is a well-established and normal process, typically used when a shareholder is blocking a business’s restructuring.

To be clear, the operating companies responsible for the delivery of all Interserve’s services, public and private, have remained wholly unaffected. As a result of shareholders failing to reach agreement on the proposed refinancing, the parent company—Interserve plc—was put into administration. The operating companies, the companies that actually deliver the services, were then almost immediately purchased by a new company, Interserve Group Ltd.

This new company has been considerably strengthened. It now has a much stronger balance sheet, £110 million of additional cash and a greatly reduced debt burden. It is in taxpayers’ interest to have a well-financed and stable group of suppliers, so this has been a positive outcome for the company’s customers, supply chain and employees.

I am clear on the benefits of outsourcing. Working with the private sector allows us to access expertise and economies of scale that can help us to deliver more innovative public services at better value for the taxpayer. As I have said before, this Government are driven by what works, not by political dogma, and the evidence is clear. Research shows that outsourcing delivers savings of between 20% and 30% compared with bringing services in-house.

However, we recognise there is more we can do to improve how we outsource. We have learned from the collapse of Carillion, and we are implementing changes to our procurement and commercial processes, as the Chancellor of the Duchy of Lancaster and I have set out in several speeches. For example, we have published “The Outsourcing Playbook”, which was developed with industry and outlines a range of measures designed to ensure that outsourcing projects succeed.

We are now asking suppliers of critical contracts to provide detailed information to help to mitigate any risk to service delivery in the rare event of corporate failure. These “living wills” are now being piloted by five strategic suppliers, including Interserve. We are taking action on prompt payment, including excluding suppliers from Government procurement if they cannot demonstrate prompt payment to their supply chain. We are also taking steps on embedding social value in Government procurement, and I launched the consultation last week.

These sensible and prudent steps will help us to ensure that we get procurement right first time, that we identify and remedy financial risks to Government services and that we manage taxpayers’ money in a way that achieves the best value for money. Indeed, the fact we had ongoing engagement with Interserve throughout this process, through our Crown representatives and the Government commercial function, demonstrates the strength of the Government’s approach to managing our strategic suppliers.

Once again, although the corporate structure of Interserve changed on Friday, I reassure all hon. Members that public service delivery remains wholly unchanged. No jobs have been lost, no pensions have been affected and no services have been disrupted.

[Christian Matheson]

Mr Deputy Speaker, would you pass on my thanks to Mr Speaker for granting this urgent question?

The slow-motion car crash that is the Interserve crisis seems finally to have come to a dreadful conclusion. Let us first remember the company’s 45,000 employees and hundreds of small subcontractors living with uncertainty today. In June 2018 the Cabinet Office gave Interserve a red rating, which indicates:

“Significant material concerns for Cabinet Office Commercial Relationships Board to consider High Risk designation.”

That followed profit warnings issued over the previous year. Despite this, Interserve continued to receive public sector contracts worth hundreds of millions of pounds, including from central Government—a situation remarkably similar to the problems with Carillion just over a year ago. According to the GMB union, the largest of those contracts is worth £66.7 million and was awarded by the Foreign and Commonwealth Office in August.

What checks did the Government make to ensure the contracts they were signing were being given to a company capable of delivering them? Can the Minister also confirm reports that his Department drew up secret plans to nationalise some of these contracts—in other words, to take them back in-house—should Interserve fail? Incidentally, we would support such plans in principle. If such plans were drawn up, why did contracts continue to be awarded to a company that Ministers knew was struggling and was possibly unable to fulfil them?

Will Ministers now activate those plans? If not, what steps will the Government take to ensure continuity of services, especially if parts of Interserve’s business are sold off? Among many other things, Interserve builds motorway junctions, provides maintenance on military bases and runs probation services—badly in the last case, even by the Government’s own admission.

Does the Minister agree this company has simply been hoovering up contracts willy-nilly, regardless of expertise and clearly without regard to the financial implications of such a strategy? Does he agree that Ministers have allowed this to happen based on a false economy of impossible contract prices that, as in the case of Carillion, brought down the whole company and much more around it? Does the Minister accept that the Government’s policy of focusing on just a few major contractors owned by big financial institutions has not only squeezed smaller UK businesses from the scene, but driven the risk to an unacceptable level, at great cost to the taxpayer? The Conservatives’ claim that outsourcing provides value for money has again been shown up for the ideological baloney that it really is. Finally, will the Minister confirm that the Government are looking at all major suppliers to ensure that their finances and ability to deliver contracts are watertight? After Carillion, and now Interserve, the public are entitled to ask who is next.

[Oliver Dowden]

I thank the hon. Gentleman for his questions. As he knows, I have great respect for him, but he rather overstates the case in respect of Interserve. Let me go through some of the points he raised. First, he asked whether checks were performed on the company before contracts were awarded. Yes, of course those checks were performed.

Rather than trading rhetoric around, let us look at the facts. Interserve issued a profit warning in September 2017, after which no major central Government contracts were awarded to Interserve until it completed its refinancing in April 2018. Since that refinancing, two such contracts have been awarded: one in August 2018 for facilities management for the Foreign and Commonwealth Office in Europe, where Interserve was the incumbent supplier, so it was essentially a continuation of that service; and secondly, a contract with Highways England was awarded in September 2018 for a £12 million bridge over the A63. Of course, contracts are being awarded across the wider public sector but, in respect of the contracts awarded by central Government and for which Ministers are responsible, those are the major contracts that were awarded in the relevant period.

The hon. Gentleman asked whether we will nationalise the company. The point here—indeed, the point about all the contingency—is that there is no need to invoke the contingency. Contingency is used if a company collapses —if it goes into liquidation—whereas in this case the companies that deliver services for the Government are entirely unaffected. All that has changed is the ownership by the parent company. Indeed, what has changed is that the company has got stronger—it has £100 million more on its balance sheets and fewer debts because of the restructuring—so there is absolutely no need to invoke the contingency preparation.

The hon. Gentleman talked about a few major companies winning Government contracts; let me tell him the figures: more than 5,000 companies bid for and win Government contracts. We have set a demanding target of a third of all business going to small and medium-sized enterprises.

If the hon. Gentleman is worried about contracts going to Interserve, perhaps he should speak to a few of his colleagues. For example, a £10 million contract was awarded to Interserve in June 2018—by Labour-run Southwark Council. Perhaps the hon. Gentleman could have a word with Labour-run Wales, which awarded a contract to Interserve just in December.

I really have to say to the hon. Gentleman that at this time when employers, suppliers and public service workers are seeking calm heads and reassurance, we are absolutely clear that they are completely reassured. I would have thought the hon. Gentleman would have done better.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

Does my hon. Friend recall the inquiry and report by the Public Administration and Constitutional Affairs Committee, which I chair, on the collapse of Carillion? We found that in this sector there was a habit of companies taking on far too much risk without sufficient compensation from contractors, and we found over-optimism on the behalf of Government that they could transfer risk at unrealistic prices. Is this not another example of a company that is paying that price? Should we not be more optimistic that the company has been put into a pre-pack administration in a much more responsible fashion, with lenders taking a much more responsible view? Is there not also a lesson that shareholders must accept that this is not a sector that lends itself to high risk and high return? We do not want to trust our public services to such a risky model.

[Oliver Dowden]

I thank my hon. Friend for his question; as a former member of his Committee I know about his considerable expertise in this field. Indeed, the expertise provided by his Committee helped to frame the Government’s response post-Carillion. For example, that is why I launched the outsourcing playbook a couple of weeks ago. It deals with exactly this point, and is a guide to how Departments should allocate risk as between the Government and the private sector.

My hon. Friend is absolutely right about the overall approach that should be taken. I have been clear, as has my right hon. Friend the Chancellor of the Duchy of Lancaster, that outsourcing companies that provide services to the Government should expect reasonable but not excessive rates of return. Through the programme of reforms we have introduced, we are moving towards a new model for outsourcing.

[Tommy Sheppard (Edinburgh East) (SNP)]

The Minister puts a brave face on things and tries to spin well but the truth is that, first with Carillion and now with Interserve, the collapse of these major multinational multi-service companies seriously damages the entire credibility of the Government’s outsourcing procedures and policies. If I understood correctly, he confirmed that contracts were awarded to Interserve last year, after it was known that the company was crippled with debt and facing imminent collapse and restructuring. If that is the case, I seriously suggest that the procedures for the protection of public money in this context are not adequate, and his Department ought to look into revising them.

Will the Minister give an assurance that no further contracts or spending will be lodged with the group that has taken over the Interserve contracts from this day forward? Will he put in place procedures such that any other companies facing imminent collapse are taken off the tender shortlist and contracts are not awarded to them?

We are all mindful of the fact that a no-deal Brexit has not yet been taken off the table. It may still be the case that, in the weeks and months ahead, the Government are scurrying around trying to find private contractors to undertake large amounts of work at short notice. What assurance can the Minister give the House that, if that is the case, the procedures will be more robust than they were in this case, to make sure that public money is protected?

[Oliver Dowden]

I will take as a compliment the hon. Gentleman’s opening remarks saying that I have spun this well. I have not spun it well; I have set out the facts, which are that the situation for the companies delivering the services in question remains wholly unchanged as a result of the change in the parental ownership structure.

The hon. Gentleman asked about the contracts that the Government have awarded, and I have already set out that position. Again, if he thinks it is irresponsible to be awarding contracts to Interserve, I suggest he has a word with his colleagues in Scotland, where Interserve has been winning contracts left, right and centre. In fact, it is even protecting the pandas at Edinburgh zoo through an outsourcing contract. Back in November, the Scottish Government awarded a contract, saying it would

“deliver benefits for the North Ayrshire communities as well as long-distance road users upon completion”.

Who was that contract awarded to? Interserve.

[Mark Pritchard (The Wrekin) (Con)]

Although I do not believe in nationalisation—save for, perhaps, the Brexit process—and although this is not the same as Carillion, I say gently to the Minister that this is a near miss for jobs, investment and the whole credibility of outsourcing. Is this not potentially another case of greedy capitalism—I speak as a Conservative MP—giving capitalism a bad name, rather than considerate capitalism? Will the Minister enlighten the House as to what has happened since Carillion’s collapse and the so-called stress testing, with the unit in the Treasury and the unit in the Cabinet Office, to ensure that this does not happen again? Following on from what the hon. Member for Edinburgh East (Tommy Sheppard) quite rightly said, what else are the Government doing to try to prevent this from happening again?

[Oliver Dowden]

Let me restate this point. My hon. Friend raised the issue of whether this situation was a near miss, as compared with Carillion. The situation with Carillion was very different: it had problems across all its contract base and issues with its management, which are currently being explored. In this case, there is a specific issue in relation to some of the energy for waste contracts, which are being dealt with. The company sought to refinance to strengthen its balance sheet. It failed to do that because of the position taken, some might say, by some greedy capitalists, in respect of some of the hedge funds that owned shares in the company and refused to consent to its restructuring. None the less, it has gone through a pre-pack, and as a result its position has strengthened considerably. It has £100 million more on the balance sheet and it has reduced its debts considerably.

My hon. Friend is right to challenge the Government on what wider lessons we have learned. It is precisely why we engaged in a tremendous exercise of consultation, engagement and reform. For example, we spent more than 1,400 hours gathering evidence and, as a result of that, we have announced extensive changes through the new playbook.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

We can get into the weeds, but the big picture is that only a handful of civil servants in the Minister’s Department actually know in detail at any point what might or might not be happening with a company’s balance sheet. Earlier, the Minister talked about local government, but it is not privy to that information. Indeed, the Minister is not privy to that information. Is not the big risk that things can be happening with very little or no real scrutiny? The public is in the dark, the Minister is in the dark, and certainly other public service purchasers are in the dark, and is that not one of the big problems?

[Oliver Dowden]

I take this opportunity to reassure the hon. Lady and the House that I am most certainly not in the dark about the position of our strategic suppliers. Almost every week I meet the senior officials she referred to in order to understand the situations of our strategic suppliers. Moreover, I regularly meet the Crown Representatives who, as she knows, are responsible for managing the strategic suppliers on behalf of the Government.

[Bob Blackman (Harrow East) (Con)]

I thank my hon. Friend for the answers that he is giving. Clearly, there are big advantages both on costs and quality of service provided by outsourcing, but does he not agree that some of these conglomerates that provide a whole spread of different outsourced services are disadvantaging the small and medium-sized enterprises that could otherwise gain these contracts directly? Clearly, with this restructuring, they could miss out. When restructuring happens, someone loses out. Should the Government not now be considering a wider spread of smaller contracts so that SMEs can properly compete against the conglomerates?

[Oliver Dowden]

As ever, my hon. Friend raises a very important point. He is absolutely right that, post-Carillion, we must ensure that we strengthen the supply chain. One of the ways in which we do that is through increased diversity, particularly by enabling small and medium-sized enterprises to bid and win Government contracts. That is why we have reduced complex pre-qualification questionnaires, why we have set a very demanding target of 33% of all contracts going to SMEs and why, in November, I announced proposals to ensure that strategic suppliers who did not pay their subcontractors on time would face exclusion from winning Government contracts.

[Rachel Reeves (Leeds West) (Lab)]

The Minister spoke as though just a couple of bad mistakes were made at Interserve, but the truth is that this company had gross borrowings of £850 million and an operating profit last year of just £93 million, owing to a whole series of bad mistakes. When my Select Committee did our inquiry into the collapse of Carillion, we warned that it was unlikely to be a one-off and that the whole model, the whole system, was broken. As with Carillion before, the vultures are circling this firm, earning tens of millions of pounds. A total of £90 million was paid out in the past 12 months to advisers—EY, now acting as the administrator; Rothschild, which is advising Interserve; and Grant Thornton, which is bringing in money as well. Why not let the hospitals, the schools, the local authorities and others take these contracts back in-house and manage them in-house in future rather than have this failed contracting-out model? Rather than paying out millions of pounds to advisers, this money should be invested instead in the crucial public services on which we all rely.

[Oliver Dowden]

I have a great deal of respect for the hon. Lady and I know that she has considerable expertise in this field. It is precisely for that reason that in reforming the process of outsourcing—the so-called playbook, the decisions that the Government go through in deciding how and whether to outsource—we now consider whether it is better to bring services in-house or to outsource them. There is a lot of evidence to show that outsourcing brings genuine efficiency savings and genuine innovation—the evidence shows that it can be between 20% and 30%. She castigates me for my description of the situation in respect of Interserve. It is very different from Carillion. There is one major problem for Interserve and that is in respect of the energy for waste contracts. I would much rather that Interserve had dealt with that itself and not been forced into a pre-pack administration. Unfortunately, the shareholders did not consent to that, but the net effect of all of this is that the company is strengthened. It has £100 million more in cash and has considerably reduced debt.

[Alex Chalk (Cheltenham) (Con)]

One of the key lessons that emerged from the collapse of Carillion was that small companies that were acting as subcontractors were left dangerously exposed by unethical and over-lengthy payment terms. Can the Minister confirm that no subcontractors, whether in my constituency or elsewhere, have been adversely affected in this case? Will he update the House on what he is doing to ensure that these big companies cannot continue to act unethically in this way, but should play by the rules?

[Oliver Dowden]

As ever, my hon. Friend is absolutely right. First, straight off the bat, I can give suppliers in his constituency that assurance. There is absolutely no change in the status of the credit rights of those suppliers who are providing services, as the operating companies remain unaffected; it is the ownership that has changed. He rightly raises the point about supply chain finance. That is a major issue. I have twice already brought in strategic suppliers and reminded them of the importance of paying their subcontractors on time, and we are backing that up with action. In November, we announced a prompt payment initiative to ensure that, in future, if they fail to pay their suppliers on time, they will be excluded from Government contracts.

[Chris Stephens (Glasgow South West) (SNP)]

I refer to my entry in the Register of Members’ Financial Interests and to my position as chair of the Public and Commercial Services Union parliamentary group. May I correct the Minister on two things? First, the Foreign and Commonwealth Office contract was not renewed in August 2018—that was when the bid was accepted. Can he confirm that the actual renewal date of that contract was December 2018 and can he perhaps explain the four-month delay? Was it because of Interserve’s financial position? Secondly, he said that jobs are protected. Will he therefore explain why the Interserve FCO contract plans to make five employees redundant on Friday and issue them with redundancy notices? I really seek an assurance from the Minister that pay, jobs, pensions and employment terms and conditions are protected for Interserve employees delivering public services?

--- Later in debate ---

[Oliver Dowden]

I thank the hon. Gentleman for both of those questions. Let me deal with each in turn. Interserve will make decisions as to employment and other things on an ongoing basis. Nothing has changed between Friday and now; none of those job changes will be as a result of this change in the corporate structure, as the operating companies are wholly unaffected. Clearly, I cannot, from this Dispatch Box, give commitments on the future employment decisions of a private company going forward, but I can assure him that none of those will arise from this change in the corporate structure. He made a point—a pedantic but an important one—in relation to a contract being accepted. Essentially, that happens when the relevant Department, the Foreign Office, has signed the contract, because, at that point, it is legally obliged to enter into it and deliver on it. There may be a gap between the contract being agreed and it actually being entered into. That is the point at which the assessment is undertaken, which was in August.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

When Carillion collapsed, 30,000 small businesses lost, on average, £141,000. For one business in my constituency, the figure was over £176,000. I appreciate that it is not exactly the same, but may I urge the Minister to look at my Bill for project bank accounts, which would have protected the small businesses that lost that money in Carillion? Project bank accounts would also protect businesses that must be worried about their future in Interserve, and other companies, and would ensure that late payments are prevented.

[Oliver Dowden]

I welcome the hon. Lady’s acknowledgement that this situation is different to Carillion. She rightly raises the point about project bank accounts, and I know that she has been a strong campaigner on that issue. I agree that there is an important role for project bank accounts to play, particularly in the construction supply chain. That is why last year I hosted a roundtable at the Department for Business, Energy and Industrial Strategy with suppliers to understand their experience of project bank accounts and to consider how we can use them more widely across the public sector.

[Laura Smith (Crewe and Nantwich) (Lab)]

Interserve is the second giant probation privateer to collapse in less than a month, despite hundreds of millions of pounds in bail-outs. Will the Minister explain why the Government are planning to repeat the mistakes of the past and re-let probation contracts on an even larger scale? Is it not time to call a halt to the process and bring these services back in-house?

[Oliver Dowden]

The Ministry of Justice, in consultation with the Cabinet Office, the Treasury and others, is looking at the approach to probation contracts. It has already made announcements and will be making further ones. The new playbook sets out the approach that we should take to outsourcing Government contracts, and looks at questions such as the balance of risk, whether a contract would best be provided by the Government or an outsourcer, and the balance between the amount done by the Government and the amount done by the outsourcer. Those exact tests will be applied in the next stage of probation contracts.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

Thinking about the defence of our country, Interserve is doing great work for our armed forces in bases such as the Falklands, Ascension Island and elsewhere. As the Minister said, the trouble has largely been caused by the activities of two hedge funds—sheer speculation. What measures or reforms might the Government consider to prevent these activities from getting in the way of our vital national security?

[Oliver Dowden]

I understand the hon. Gentleman’s frustration with the behaviour of some of the hedge funds concerned, and their failure to agree to this refinancing. However, I reassure him that there will be no change to the delivery of any contracts that Interserve carries out, including the ones that he listed. Those services are being delivered in exactly the same way today as they were on Friday; there has been no change in jobs, no changes in pensions and no change in the delivery of those services.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

Interserve has the contract for the long-awaited bridge across the A63 in my constituency, and Highways England is doing everything it can to ensure that work continues as normal. I am giving the Minister the opportunity to offer me and the people of Hull the reassurances and guarantees that we need, because we will not be very happy if there are any delays to the bridge, after waiting 20 years to have one. Will the Minister offer guarantees that as Interserve goes through administration, there will be no delays to the building of the bridge, no delays to the payment of the people working on the bridge, and no delays to payment of local subcontractors?

[Oliver Dowden]

Once again, I remind the House that that contract was awarded in September 2018 by Highways England. I absolutely assure the hon. Lady that there will be no change in the delivery of these services by Interserve as a result of the change in the corporate structure. Clearly, I cannot guarantee the whole schedule of the building works and so on, but I can 100% assure her that no change will arise as a result of this change in the corporate structure, because the operating company remains completely unaffected; it is just the ownership that has changed.

[Mike Amesbury (Weaver Vale) (Lab)]

I am afraid that some of the Minister’s answers will come back to haunt the Government in the not-too-distant future. Some 45,000 jobs are at stake—£2 billion-worth of public sector contracts. Is it not about time to get the referee on the pitch and bring the contracts in-house?

[Oliver Dowden]

I am acutely conscious of the jobs that are at stake, which is why I welcome this refinancing. It means that there is £100 million extra cash in the company and there are lower debts. I can reassure every one of the employees that their jobs and pensions are not at risk as a result of the restructuring, and neither is the service delivery.

[David Hanson (Delyn) (Lab)]

The community rehabilitation company Working Links collapsed a few weeks ago, and the assessment by the Government through the National Audit Office was that £467 million-worth of additional costs had to be met. Now that eight of the 21 community rehabilitation companies are changing their ownership and management, what assessment has the Minister made of additional costs to the Ministry of Justice for probation CRCs?

[Oliver Dowden]

Once again, I reassure the right hon. Gentleman that there will be no additional costs in respect of those contracts as a result of the corporate restructuring, as the company delivering the contracts remains wholly unchanged.

[Dr David Drew (Stroud) (Lab/Co-op)]

On the back of the collapse of Carillion, I was told by someone who works in the business of two other companies that they would go the same way in due course. They said that the second company to go that way would be Interserve; I will not mention the third. What due diligence did the Government carry out on the implications for other service companies? If it was known in the industry, why was it not known by the Government?

[Oliver Dowden]

As I have said repeatedly from this Dispatch Box, the Government undertake appropriate contingency planning in respect of all our strategic suppliers. We have not had to invoke that contingency with Interserve because the companies delivering those services remain wholly unchanged; no jobs are lost, no pensions are affected and no services are disrupted.

[Jim Shannon (Strangford) (DUP)]

When Carillion went down, lots of jobs were lost and projects were put on hold, and confidence was badly dented. At that time, we were informed that steps were being taken to ensure that the situation would not happen again. Only a matter of months later, Interserve has experienced difficulties, and yet again the general public are losing confidence. It seems that outsourcing has become a gamble. Could the Minister outline steps to restore confidence? Is he satisfied that Interserve’s financial position has been secured, and what discussions have taken place with other companies to check and monitor that no other big companies are facing major financial problems?

--- Later in debate ---

[Oliver Dowden]

As I have said, I would rather that this corporate restructuring had happened in a smoother way. It has happened through a pre-pack process, but as a result, the companies actually delivering the public services are unchanged; it is their ownership that has changed. I reassure the hon. Gentleman that all the contracts currently being delivered by Interserve will continue to be delivered and will be unaffected, because their specific corporate ownership has not changed. Jobs will not be lost as a result and pensions will not be affected. Indeed, the company’s balance sheet is strengthened.

[Chris Stephens]

On a point of order, Mr Deputy Speaker. The Minister has said on two occasions that no Interserve employees would lose their jobs, but there has been an acknowledgement that five redundancy notices will be issued on Friday. I would suggest that those statements are incompatible. Can you advise me on how the Minister can correct the record about jobs being lost, and is there any other way in which Members can lobby the Foreign and Commonwealth Office to ensure that those five employees are not served with a redundancy notice on Friday?

General Election (Leaders’ Debate) Bill

Oliver Dowden Excerpts

Friday 15th March 2019 Commons Chamber

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

May I begin by associating myself with the comments of the hon. Member for Leigh (Jo Platt) about the appalling attack in New Zealand? As my right hon. Friend the Security Minister made clear this morning, the Government show solidarity with the people of New Zealand.

I am grateful to my hon. Friend the most capable Member for Wellingborough (Mr Bone), who spoke most entertainingly in this important debate. I hope that I have repaid the compliment that he paid me in his opening remarks. As he rightly said, this topic has received some attention recently. There was a debate on exactly this topic in Westminster Hall in January. I take a personal interest in the matter: when the first leaders’ debates were being discussed and prepared for, I was working for David Cameron when he was Leader of the Opposition, so I have seen this process all the way through.

As the hon. Member for Ipswich (Sandy Martin) said, televised leaders’ debates are an important campaigning tool, allowing members of the public to access and reflect on the key message of political parties in the comfort of their own home, through their television sets and other devices. They also have broad appeal, reaching members of the public who have traditionally been disengaged from politics, and there is plenty of evidence that members of the public find televised debates informative and engaging.

I am clear that TV debates can be a useful part of the democratic process. The question for this House today, though, is whether they require primary legislation to regulate and mandate them. The Government do not believe, on practical and principled grounds, that there is such a case. Over the coming minutes, I will try to develop that argument a little further, starting with clause 1, which sets out duties for the establishment of a proposed commission.

The Bill provides that the commission would have a statutory duty

“to maximise…the number of viewers of the debates it oversees, and…the wider media coverage of those debates.”

It is an admirable aim to maximise such engagement. However, both these duties are better served in the hands of broadcasters, rather than in the hands of an independent commission. Broadcasters have the incentive, infrastructure and expertise to design and deliver media content that the public wish to consume. As has been acknowledged by many hon. Members, broadcasters have in the past successfully delivered televised debates without the need for legislation, mandation or an independent commission.

My gut instinct—as a Member of this House, a Minister and, indeed, a Conservative—is that one should not seek to regulate unless it is absolutely necessary. In this case, I am not convinced of such a necessity. Particularly when we are dealing with a scenario of potentially infringing the rights and freedom of the press and broadcasters, we must have a very high bar for such regulation in the first place.

Clause 2 sets out a highly prescriptive framework, with various rules for how the debates must be conducted. As my hon. Friend the Member for Wellingborough highlighted, it requires a precise number of debates, mandates leaders’ attendance and requires all political parties to be represented. I fear that this creates a very inflexible framework. The clause is even more prescriptive when it comes to timing, mandating that certain debates have to be held within 19 days of polling day, but it is not quite clear why.

[Mr Bone]

I omitted to point that out in my speech. The reason is that there are effectively two polling days—the day when the postal votes go out, and the day of the general election—so one of the debates would be close to the general election and one would be when the postal votes go out. I am sorry if I did not make that clear.

--- Later in debate ---

[Oliver Dowden]

I thank my hon. Friend for that clarification. None the less, there is a lack of flexibility. For example, if there was a major incident, which we have seen in the past, and it was deemed that it would not be appropriate to hold the debate on such a day and broadcasters wished to move the date, the legislation does not currently provide any such flexibility. Such prescription would also make it harder for broadcasters to determine the precise date on which they would maximise coverage. For example, they may decide that a Sunday would provide more coverage than a Monday evening.

Similarly—this important point was raised by my hon. Friend the Member for Boston and Skegness (Matt Warman)—clause 2 is very prescriptive about the participation of political leaders, and it does not permit them to send someone in their place. My hon. Friend the Member for Wellingborough made a reasonable and good argument for why one might wish to compel the leaders of political parties to attend such a debate, but there are many reasons why it may, for legitimate reasons, not be appropriate. For example, if the leader of the party in question is not represented in this House, we may well wish the leader of the grouping in this House to participate in the debate, since they would be the person who would ultimately become Prime Minister, should they be successful.

Moreover, there is still a considerable problem about the exact sanctions if the legislation is not adhered to. There have been jokes about whether a party leader should be sent to the tower if they fail to turn up, but this is an important question. If the legislation is to have any meaning, it must have a meaningful sanction behind it, and there is no clarity on that.

[Mr Bone]

I am grateful to the Minister for giving way again. The point was that we do not really need to have a sanction, because if the leader of a political party wants to break the law, that usually damages the political party. That is the effective sanction.

[Oliver Dowden]

My hon. Friend makes a good point. None the less, when we are drafting primary legislation, we should have clarity about the sanctions that flow from a breach of laws passed by this House.

There is also the question of the membership and operation of the independent commission. The Bill states that the commission’s operating expenses

“are to be funded by television broadcasters by agreement.”

Failing that, the Secretary of State may impose a levy. My hon. Friend usefully clarified that broadcasters have indicated that they would be willing to pay such a levy, but I remind Members that the exact way in which such a levy is determined and who should pay it is often terribly complicated. For example, the establishment of post-Leveson press regulation was certainly not easily determined. Licensed broadcasters already pay a licence fee to Ofcom, so this would be a further burden on them.

Moreover, televised leaders’ debates are already subject to agreement between broadcasters and political parties. Broadcasters have been known to collaborate between themselves on the format and delivery of televised leaders’ debates. They are well-placed to lead on such decisions, as they have both experience and expertise in broadcasting televised leaders’ debates. Each broadcaster also brings their individual, distinctive approach to such debates, as we have seen in previous leaders’ debates.

In addition, there is a considerable body of evidence on this point. For example, on 13 May 2014, the House of Lords Select Committee on Communications published its findings on broadcasting general election debates, and having looked at whether an independent debates commission should be set up to oversee televised election debates, it found no substantial evidence to support such a proposal. There is similar evidence from Professor Charlie Beckett, of the department of media and communications at the London School of Economics.

I would like to address the point raised in particular by the hon. Member for Lincoln (Karen Lee) about the attitude of the next generation. I think there is a lot of evidence that the next generation is increasingly moving away from conventional broadcast media to consuming news and current affairs in many different forums, such as Facebook and Twitter. For example, a report by Ofcom entitled “News Consumption in the UK: 2018” found that eight in 10, or 82%, of those aged 16 to 24 used the internet for news, compared with just six in 10 who used television. [Interruption.] It seems a little strange to seek to regulate conventional televised leaders’ debates, even if, as the hon. Lady says from a sedentary position, there is an opportunity to stream such things, because there are increasingly other forms of leaders’ debates that do not take place in a television studio—for example, there are mechanisms for having Facebook debates. This Bill seems to be looking backwards, rather than forwards to the future of broadcasting.

In conclusion, while we have heard a number of strong points on this topic, particularly from my hon. Friend the Member for Wellingborough, there are very obvious deficiencies in this Bill. For that reason, the Government do not support it. We continue to believe that this is best determined by broadcasters and political parties, so we will not support this piece of legislation.

[Madam Deputy Speaker (Dame Eleanor Laing)]

The debate has concluded, but I hesitate to put the Question, as the hon. Member for Wellingborough (Mr Bone) has indicated that he wishes to withdraw his Bill. Does he seek leave to withdraw the motion?

Draft Public Procurement (Amendment etc.) (EU Exit) (No. 2) Regulations 2019

Oliver Dowden Excerpts

Thursday 14th March 2019 General Committees

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I beg to move,

That this Committee has considered the draft Public Procurement (Amendment etc.) (EU Exit) (No. 2) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Evans. As hon. Members know, the Government remain committed to securing an agreement on the United Kingdom’s exit from the European Union, but we must be prepared for all outcomes. Notwithstanding the motions passed in the House over the past couple of days, it remains the default position that if nothing is agreed we will be in a no-deal situation. The draft regulations deal with procurement in that context.

The amendments made by this instrument do not amount to a material change in procurement policy. To all intents and purposes, they maintain the status quo for UK contracting authorities with regard to their obligations towards certain non-UK suppliers. They will ensure that the UK’s procurement system continues to function as intended post EU exit in the event of no deal, and grant certainty to UK contracting entities that they can continue after exit day to procure goods and services in the way they do now. In that way, the Government are ensuring that those entities can continue to be able to obtain value for money for UK taxpayers.

As hon. Members may be aware, the UK Government are working to agree continuity agreements with a number of our international trading partners, which will replicate as closely as possible trade arrangements to which the UK is currently a party via its EU membership. We have already laid before Parliament agreements with Switzerland, Israel and Chile, which contain substantial provisions on procurement. Where the UK has entered into an agreement that contains provisions relating to public procurement, we must ensure that our domestic procurement legislation takes account of the obligations in those agreements.

In their current form, the Public Procurement (Amendment etc.) (EU Exit) Regulations 2019, which were approved by this House a couple of weeks ago, on 20 February, would amend the existing procurement regulations to disapply from exit day the duties that UK contracting authorities currently owe towards economic operators from countries with which the EU has a trade agreement containing procurement provisions. The regulation-making powers in clause 2 of the Trade Bill, which is currently before Parliament, would enable the UK to reinstate those duties in such a way as to reflect the UK’s transition continuity agreements, rather than the EU agreements that they replicate to which the UK will no longer be party after exit day. As Committee members are aware, the Trade Bill is yet to complete its parliamentary passage. In consequence of the absence of bespoke implementing powers, we have had to look at other measures that would enable the UK to demonstrate compliance with agreements that we have worked hard to negotiate.

It is the duty of a responsible Government to ensure that, once we have left the EU, we continue to reap the economic benefits that these agreements bring. It is also our duty to uphold our reputation as a valued and respected trading partner by ensuring that the obligations we have committed to maintain after our withdrawal from the EU are adhered to. I am therefore bringing forward this second EU exit instrument, which will amend the first instrument before it comes into force. Instead of removing the procurement regulations—the obligations owed by UK contracting authorities and other entities towards non-UK suppliers—immediately on exit day, the first SI would preserve them for 18 months after exit day. The need for a second amending instrument was, as hon. Members may recall, referred to during the debate on the first EU instrument in a Delegated Legislation Committee on 13 February, which I also led on behalf of the Government.

In practical terms, the preservation of obligations will have the effect of ensuring that for a time-limited period, suppliers from certain non-EU trading partners will be afforded the same guaranteed rights of access to UK procurement markets that they now enjoy. This mirrors a similar provision already contained in the first SI in respect of suppliers from states that are party to the World Trade Organisation government procurement agreement. That provision has already been approved by the House; it is simply being extended to 18 months, to align it with the provisions that we are introducing in respect of bilateral treaties between the EU and third countries.

By keeping alive duties owed by contracting authorities as they exist already, the Government are ensuring that the UK continues to meet its international procurement obligations. In turn, that will help to ensure that UK businesses continue to enjoy access to overseas procurement opportunities, and that UK contracting authorities can continue to obtain the best possible value for money when procuring through robust supplier competition.

Some hon. Members may at this point question whether, when the UK leaves the EU, it is appropriate to maintain existing obligations arising from EU agreements to which we will be no longer a party, and whether doing so will produce an adverse effect on British businesses and authorities. It should be emphasised that the procurement obligations that arise from the UK’s continuity agreements are in essence the same as those that until now have arisen from the EU’s trade agreements, meaning that the amendments in this instrument represent a temporary, technical solution to complying with the UK’s international procurement obligations until such time as the Trade Bill is enacted.

I assure the Committee again that, in practical terms, the provisions in this instrument amount to a time-limited continuation of the status quo that will create no additional burdens or costs for UK businesses or contracting authorities. Contracting authorities across the UK will continue to be able to procure competitive goods and services from overseas, as they do now, and UK businesses will see no change as a result of this instrument in the way they go about bidding for and winning lucrative public contract opportunities, both in the UK and in countries with which the UK has a trade agreement. For that reason, it has not been necessary to publish an official impact assessment.

The instrument will ensure that in the event of no deal, the UK’s procurement system continues to function as intended post Brexit; that the UK can successfully ratify and comply with its international continuity agreements; and that UK suppliers and contracting authorities can continue to operate, as they do now, for the foreseeable future. I therefore commend the regulations to the Committee.

--- Later in debate ---

[Oliver Dowden]

I have great respect for the hon. Member for Leigh, but she somewhat overstates her case in respect of the regulations. They are just about continuity; there is no change for businesses affected and we are not seeking to rewrite the regulations. All we are doing is accepting the reality of the situation, which is that the Trade Bill has not completed its passage through Parliament, so we have to find a way to give effect to our international obligations.

The principal international obligation that we have to give effect to is the GPA, which the hon. Lady characterised as a failure. Most people did not expect us to conclude the GPA before exit day, but we managed to deliver that. It covers almost all the access rights for United Kingdom businesses, so they will be able to access third-country markets through our membership of it. The way in which the Constitutional Reform and Governance Act 2010 works means that the measure has to be laid 30 days before it takes effect, which is why it will take effect shortly after exit day. There will be a very small window in which, in theory, UK companies will not be able to access those third-country markets.

As I said last time we discussed this, access remains the default for most third-country markets, so the Governments and legislatures in those countries would have to actively decide and go to the effort of saying that we could not have guaranteed access in that small window—notwithstanding the fact that they know we will have it by the end of the month. In respect of the small number of countries where the default is that we drop out, the situation would have to be that procurements were commenced and completed in that period, so a vanishingly small number of companies will be affected.

On the hon. Lady’s point about the wider access to markets, of course there are further mutual obligations in respect of the bilateral agreements between the EU and third countries to which we are a party through our membership of the EU. On procurement, however, most do not go much further than the GPA that we have already agreed. We are making good progress in concluding bilateral trade agreements; I have outlined the ones that we have already reached.

The other point to remember is that the default policy in the United Kingdom is completely open access, so we already allow access regardless of whether countries are signatories to the GPA or other bilateral agreements. We will simply be maintaining that. The only thing that will be different is the right to remedies for third countries as they enter the UK market. A company in a third country that accesses the UK market would not have remedies unless they were granted by the UK Government. The draft instrument gives continuity, in that they will continue to be able to get remedies. In all other respects, the situation will remain exactly the same.

The hon. Member for Dunfermline and West Fife raised several points on Scottish procurement. We very much want to increase the proportion of SMEs able to access Government procurements, and we are making good progress. There is a slight difference between Scotland and the UK, in that UK contracts tend to be much larger. For example, in reprocuring Trident, it is highly unlikely—in fact, impossible—that an SME would win the contract.

On whether the draft instrument will take powers away from Scotland, I say to the hon. Gentleman that everything will continue as it was before. As he knows, we have proceeded with consent. Scotland is replicating these provisions. It is a long-standing practice that the Scottish Government regulate procurements in respect of Scotland, and the draft instrument does not change that. I hope that reassures him.

In summary, this is a prudent step to ensure continuity, reflecting the fact that it remains the case that no deal remains the default position unless and until Parliament legislates to change that. A responsible Government have to take steps that take that into account. Again, I commend the draft regulations to the Committee.

Question put and agreed to.