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Public Administration

Volume 886: debated on Thursday 13 February 1975

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7.2 p.m.

I beg to move,

That this House calls for an immediate review by Her Majesty's Government of public administration, particularly in local government and the National Health Service, in the light of its deterioration in quality, increasing cost, and growing remoteness from the people.
The motion deals with the premier growth industry in the country, that is, the public administration industry, and I shall echo the feelings of millions of people that unnecessary public expenditure is getting out of hand. There is a widespread feeling that in the present state of our economy much of the expenditure incurred under the guise of public expenditure is wasteful and that we need to do something about it urgently.

Yesterday we learnt that for the fifth month in succession our industrial production had gone down. Yet at the same time, month by month the cost of public administration in all spheres is rising. When shall we be choked by the cost of public administration? Many people are groaning under the weight of taxation. Far too high a proportion of wage packets, of salaries and of earnings generally is taken away by way of tax or rates, directly or indirectly. Our country is absolutely groaning under a burden of taxation.

There is a feeling in many sections that we are not receiving good value for money, and that the money a man spends himself is better spent than that proportion of his earnings that is spent by the public administration.

The major responsibility for that state of affairs rests fairly and squarely upon the shoulders of the last Conservative administration, which was one of the most prodigal in our history. I shall cite figures to show that that was indeed so. I say that at the outset because, although I shall say some harsh things about public administration, I know that there are many conscientious and honest councillors, people on nominated bodies and officials, who are doing their best to economise and who are well aware of the serious deterioration in our economic position.

They are well aware of the mounting costs with which they are faced, such as increased costs for electricity and transport and for almost everything else. They are conscientiously doing their best to reduce public expenditure as much as they can. The truth is that they are completely caught up in a system that was thrust upon them by the previous administration. However hard they try, they find it impossible to achieve the kind of economies that the economic state of the country calls for, unless they receive substantial help from the Government.

We remember the speed with which the so-called local government reform Bill was pushed through the House. The legislation for England and Wales was combined. Every attempt to have a separate debate on separate Bills dealing with these matters was turned down. The last Conservative administration was determined to push through its Bill.

The same happened with the so-called reform of the National Health Service. Everything was done at a gallop. Both services became overloaded with staff. Local authorities were foisted with agreements that had been entered into centrally but applied locally. I shall attempt to show that the taxpayer was taken for a trot in many ways.

I should like to give a few figures. I shall talk about public administration generally. I shall give figures concerning the National Health Service and local government as samples.

I am sorry that the right hon. Member for Leeds, North-East (Sir K. Joseph) is not present. I wrote to inform him that I should be mentioning him during this debate. In the year 1969–70, the total expenditure on the National Health Service was £1,466 million. The estimated expenditure for 1974–75, after the so-called reforms of the right hon. Member for Leeds, North-East will be £3,241 million.

That figure is an enormous increase. Certain services were removed from local government to the health service which form a small proportion of that expenditure. In Wales, for example, the figure is £2½ million in relation to £207 million total expenditure. We therefore have an idea of the cost of the services transferred. This represents in a period of five years a two and one-third increase in expenditure. That is an impossible situation to contemplate.

Wales is a smaller unit. Therefore, one can more easily contemplate the figures. In Wales there is an increase from a cost of £97·1 million in 1969–70 to £207·7 million in 1974–75. Whatever the rate of inflation, it is nothing like the increase accounted for by these figures.

However, is anybody saying that we have a much better National Health Service today, that the patients are better looked after, or that the doctors are more content? Of course not.

The right hon. Member for Leeds, North-East has made some striking speeches lately about overmanning in industry. There may be a great deal of truth in what he says. Who is responsible for the overmanning in the National Health Service? Who was responsible for the steady growth in the ratio of administrative staff to medical and nursing staff in the Health Service? He was! In 1970, when the right hon. Member took office, the ratio was one administrator to 31·8 people on the medical and nursing side. In 1973 it was one administrator to 27·8. Regrettably, I have been unable to obtain the figures for 1974 when the great re-organisation took place, but we know how Parkinson's Law has worked overtime in many of these areas.

What is more, from Answers to Parliamentary Questions I discovered that the phrase "administrative staff" does not include clerical staff. The phrase is
"… administrative staff other than clerical grades."
But in 1970 the administrative staff, including clerical grades, in the National Health Service numbered 58,262. By 1973, it was 69,417. The rise between 1973 and 1974, about which I have been unable to obtain figures, much to my regret, has been astronomical. This is the work of the party that claims to represent taxpayers and ratepayers, to be the party of good management, the party concerned about people.

In local government we see the handiwork of the right hon. Member for Worcester (Mr. Walker), who, again, I am sorry not to see in his place, because I also wrote to him saying that I intended to refer to his handiwork in this debate. The official Opposition are gluttons when it comes to expenditure. In 1970–71, the annual expenditure on salaries and wages alone in local government in England and Wales was £2,708 million. By the time the right hon. Member for Worcester completed his term of office, that had already risen in 1973–74 to £4,300 million. In that period, the number of staff had increased by nearly 300,000. At the very least, the figure today is 100,000 more than that.

I shall not refer to the expenditure on water services and on other public bodies. It is sufficient for my purposes to cite the two examples that I have given. If there was ever a contribution by any Government to inflation, through excessive expenditure this was it.

We read in our newspapers this evening of the miners being awarded £198 million additional pay, which is the highest in their history. Perhaps it cannot be justified, but it is small fry compared with these figures which I have cited, and at least the miners produce coal, which is a cheaper source of energy than oil from the Arabs, whereas the administrative industry actually produces nothing. It feeds upon itself.

I can imagine the feelings of wage earners when they read that under the proposals of the right hon. Member for Worcester for the reform of local government, Mr. Race, the ex-chief surveyor of Derbyshire, aged 49, who was not appointed in the new authority, has said publicly that his compensation over a period of 14 years will be in excess of £100,000. If the previous Government and the local authorities had all this money to throw away, can they be surprised that they found it impossible to persuaded working people to accept wage restraint, as undoubtedly they should have done?

Between 1970 and 1974, the taxpayers were taken for a ride. NALGO, as the union concerned—and I do not blame it for doing its best for its members—ran rings round whoever was negotiating on behalf of local government. Who could possibly have devised the scheme whereby salaries were paid in relation to population and the salaries of deputies were linked to those of chief executives? The result has been that many chief executives doing exactly the same job as they were doing a year ago are now paid twice the salary, and the same applies to their deputies.

Where was the right hon. Member for Worcester, when this was happening? How unfair this is to people in sparsely populated areas whose officials are paid very much less than in other areas. One has only to see the scales of salaries in some Yorkshire areas, for example.

It is not surprising that this was an enormous contribution to the inflationary pressures. These so-called reformers followed the illusion, so cherished by the former administration between 1970 and 1974, that bigger was better. We had the Conservative administration worshipping at the shrine of Mr. Big. It was said that we should have economies of scale. Where are they? The country looks now for the economies of scale so dear to the hearts of the right hon. Member for Leeds North-East and the right hon. Member for Worcester.

Parkinson's law has been rife. We see the number of high officials who have been appointed, whose status depends on having adequate staffs round them. Large authorities grow under their own momentum. We have the floodgates open, and the country is groaning under the weight. What is more, it is clear that they not only grow under their momentum but do so at public expense. It is to that that we object.

The perpetrators of these reactionary reforms between 1970 and 1974—this centralisation process and this feeding the flames of bureaucracy—also followed the illusion that any problem could be solved automatically by devoting greater expenditure to it. However, many of our problems need a little more sense applied to them in order to bring them nearer to the people. I believe that the two-tier system of local government itself was a nonsense.

I am not alone in holding these views. A gentleman in Yorkshire sent me some newspaper cuttings. I quote from the Skyrack Express of Garforth of 20th December 1974:
"The West Yorkshire County Council—and indeed all county authorities—should be dismantled and given a minor rôle, the Leader of the Conservative group on Leeds Metropolitan Council, Councillor Irwin Bellow, said this week."
It is a pity that he did not realise it before and bring influence to bear on his right hon. Friend who represents that city. We see now the enormity of the cost. The Conservatives set in train a leviathan that can no longer be controlled.

A very interesting study was published in the Financial Times of Wednesday, 29th January by Mr. Joe Rogaly. It is a very interesting study of local government dealing with one of the new areas, the Sandwell authority, in the Midlands. The article has delectable pictures of five town halls that the authority has inherited. The article analyses the expenditure of the authority. Those of us who have read his articles before know that Mr. Rogaly is a perceptive writer. He concludes by saying:
"I said it was a headache; there is surely no cure short of striking out the two-tier system of local government and making natural borough units directly responsible for collecting most of the money they spend. Otherwise councillors all over will continue to believe, as Sandwell's finance chairman does, that there is no relation between increases in rates and voting at subsequent local elections.'"
The truth is that nearly every householder in the country dreads the next rate demand. When they receive the rate demand, it is right that they should ask "Who perpetrated this nonsense?" Where were the people who are now complaining about rates in 1972 when certain notorious measures passed through the House? We have had tremendous duplicity.

For example, there are planning departments at county and district levels. I understand that the hon. Member for Ludlow (Mr. More) has a great deal more sense than many of his right hon. and hon. Friends. I am sorry that he was not more vocal in 1972.

I intervened to say that I thought when the hon. and learned Gentleman said "duplicity" that he meant duplication.

The hon. Member for Ludlow (Mr. More) should have been as wise as I was and should not have been drawn.

Of course, Mr. Deputy Speaker, you have great experience.

With our declining economy I do not believe that the country will be able to accept the present degree of public expenditure. We should embark on certain remedies now. That is why the motion suggests that the Government should carry out an urgent inquiry. For example, it is clear that planning departments could be merged and that the district councils could be responsible for planning. There is no need to have two tiers. We should start to cut our coat according to the cloth.

There should be a five-year moratorium on all prestige projects. From all over the country I have been sent details of a variety of prestige projects. One of the most interesting is reported in an article in the Halifax Courier of 17th August 1974. The article is headed: "Luxury touch for councillors". The article reads:
"A fitted toilet and deep-pile carpet—and even TV and catering facilities are fitted in 'Executive One'—the new £16,000 luxury bus just delivered to the West Yorkshire Passenger Transport Authority for special use by county councillors."
That is only one of the more romantic examples. Throughout the country we know that prestige projects are being put forward. We should seriously think of getting rid of one local government tier. It will be expensive to do so but it will be infinitely more expensive to proceed with the present system.

I say to the Government, as I said in the devolution debate, that if they are to have in Wales and Scotland yet another tier of government, and to super-add it to the two existing tiers, the burden will become intolerable for the ordinary people of Britain. They have to work by the sweat of their brows to earn and to pay taxes. When they find that government and the administration, for example, of the National Health Service are getting remote from them and costing more and more money, and when they realise that they have no control over such expenditure, they tend to despair. I believe that we shall see a massive reaction later this year.

Perhaps I have said enough to introduce this subject. I am sure that there are right hon. and hon. Members on both sides of the House who now realise the great errors that were committed in 1971, 1972 and 1973, whatever view they took in those years. It is a late stage to put matters right, but remedies can be put in hand. The matter brooks no delay.

We are having the worst possible relationship between government and the governed. The governed feel that they are remote from the processes of government. They feel that those who have charge of their affairs in the Government—this applies particularly to the previous Conservative administration, which bears a heavy responsibility—are at fault for having spent money foolishly. They believe that their wishes were disregarded and that the people who believe that bigger was better had their own way.

The ball now lies firmly in the present Government's court. They have a great deal of work and thinking to do to put right many of the wrongs that occurred between 1970 and 1974.

7.28 p.m.

I congratulate the hon. and learned Member for Montgomery (Mr. Hooson) and the Liberal Party on their success in extracting from the official Opposition one Supply Day. I hope that this will be a precedent and that the Liberal Party will have much success in this respect in future.

I felt a great deal of sympathy for some of the things that the hon. and learned Member for Montgomery said about the National Health Service. I believe that the reorganisation of the NHS was the most disastrous thing to happen to it. Sooner or later we must get round to streamlining the service and getting rid of the top heavy administration and the bureaucratic character of the present system. That cannot be done this year or next year.

Until 31st March 1974 I played a part in the National Health Service as chairman of one of the biggest management committees in the country. I know of the upheaval created by the reorganisation. I would not wish to inflict on those with whom I then served the job of going through another reorganisation in the near future. None the less, another reorganisation must come sooner or later. I wish to go on to talk about local government because only last year I put my views on the record about the NHS reorganisation.

I do not blame the Liberal Party for taking the opportunity to exploit the difficulties facing local government and members of local councils. An urgent inquiry is proceeding and it would be unfortunate if, before the committee reports, we were persuaded to start the whole process again. Equally, I do not believe that local government can survive another reorganisation so quickly.

In my local authority there are no prestige schemes. I have spent more than one morning this week examining the estimates before they are presented to my local authority's finance committee. I am the chairman of that committee. It is a heartrending task to cut spending when one knows the aspirations of the local people. Therefore, I shall put on record my own feeling about local government. I do not entirely join with the hon. and learned Gentleman in his criticism of local authorities, and particularly of local councillors. Our system of local government has been admired by people from all over the world. It has attracted the dedicated work of thousands of people who, until this year, gave their time and effort without reward and, even now, give it for little more than out-of-pocket expenses.

I believe that our system of local government is under strain and is threatened by a number of factors. Unlike the hon. and learned Member for Montgomery, I believe that most are largely outside the control of local government, or are imposed on it by central Government.

The first major problem is that it is suffering under the strain of an entirely unsatisfactory reorganisation, which the Tory Government were warned would be expensive, would perpetuate the wholly inefficient and wasteful two-tier system and would in some places have a third tier in parish councils and a fourth tier in neighbourhood councils. The Government's effort would be better directed to assisting local councils and councillors to be more efficient than to inflict a fourth tier on the system. Apart from being less efficient than most purpose authorities, it means the duplicating and overlapping of staff, making communication with the ratepayer more difficult, and the organisation of the services more complicated and expensive.

The present system requires greater numbers of staff. In Kent, under the Royal Commission's arrangements, we might have had, at most, three chief planning officers, but because we have 14 district councils we have 14 chief planners and a county council chief planner. Therefore, instead of three chief planners, we have 15.

The cost of reorganisation has been great. In one of our largest counties the staff provisions encouraged nearly all the chief officers—some of them more than 10 years away from the age of 65—to take advantage of the retirement provisions without applying for a new appointment or being declared redundant. The cost falls on the General Rate Fund, which ought not to bear that burden as well as meaning the premature loss to the service of some of its most experienced officers.

Local government has also suffered, because in a time of inflation it is the labour-intensive industries which suffer, and local government is perhaps the most labour-intensive of all industries in this country. Its services—education, police, fire brigade, refuse collection, parks—genuinely demand increasingly large numbers of staff. When we examine the estimates in any year we see that two-thirds of the total expenditure is on salaries. Local councillors have little control over wage and salary negotiations. Indeed, in the case of the London weighting allowance, the Price Commission—a Government agency, set off a mad, irresistible scramble for increases which left a totally chaotic state. People working within a mile or two of each other, some working for the GLC, are getting the £416 London weighting allowance while others are getting the outer fringe allowance of £120. That makes no sense, and will encourage the demand by unions that there should be a provincial allowance which would stretch not only from the inner four-mile limit of Charing Cross to the outer fringe, but from Charing Cross to Brighton.

Another fact which has created great difficulty for local authorities has been the increasing burden of interest charges because of high interest rates. This has pre-empted large amounts of current expenditure. I believe that higher quotas for borrowing at special rates for local authorities would have been a useful means of stabilising local government expenditure.

A variety of actions from central Government have created difficulties for local councils. On the one hand, new commitments have been pressed on local authorities by successive Governments in which the authorities are little more than agents for the central Government and where, because of the block grant or the rate support grant, the amount provided is either inadequate or not properly identifiable in the total. On the other hand, successive Governments, while talking of greater freedom and powers for local government, have steadily removed functions from it. Last year it was water, sewerage and health functions. The process goes steadily on as the years go by. That makes the proper allocation and utilisation of local resources impossible. Instead, we have a proliferation of local administrations, all of which are involved in services which should be common to all.

Despite these difficulties, our local government record is still remarkable. It can be illustrated in several ways. In 1972–73 rates amounted to £2,617 million—less than half the total of consumer expenditure on alcoholic drink and gambling at £5,481 million. There is no reason to suppose that that balance has been upset in the last 18 months. Even now the rates of a typical council house are no more than about £2 a week.

As to the increasing burden of rates, it was established in 1938 that for every pound that the average citizen spent on goods, he paid 7½d or 3p in rates. By 1972–73 the figure was just 5p. The householder does not bear the whole burden of rates. In 1972–73 rents and other charges were 37·4 per cent., Government grants 36·4 per cent., and rates only 26·2 per cent. As domestic rateable values are less than half the total rateable value and the domestic ratepayer receives domestic relief, the proportion of local expenditure borne by the householder is less than 14 per cent.

There are several urgent problems to be dealt with before the Layfield Committee can recommend a sensible system of finance. Someone must determine whether local authorities should become more and more the agents for central Government or, in the words of the Chartered Institute of Public Finance and Accountancy, relatively independent autonomous units and given freedom and the framework within which to operate. The institute believes, as I do, that only democratically accountable most-purpose authorities can balance priorities in local needs with the resources available. If they are to be the latter, relatively independent autonomous units, they need to have a substantial proportion of their income from local taxation under local control.

While I have always believed that there are real difficulties in local taxation, I am attracted to the proposal put to the Layfield Committee by the Association of District Councils for a tax credit system to those who pay rates to enable us to overcome the regressive and inequitable aspect of rates. Major items like education should go to central Government, with perhaps some limited power to levy a local income tax. If the Minister and others, including the hon. and learned Member for Montgomery, feel that some authorities have behaved extravagantly—I do not wish to defend every authority—the right thing is not to condemn all authorities, because I believe that my authority and many others have acted responsibly.

I gave certain examples of wasteful expenditure, but I agree that it is because of what central Government did that the bill has risen so much.

Perhaps we are on common ground on this issue. As I said, if it is felt that some authorities have behaved extravagantly, we should not condemn them all but accept the offer made by the local authority associations to join in an attempt to ascertain the facts.

We should appreciate the intolerable burdens and difficulties under which local councils have to operate. My council and, I am sure, other councils appreciate the generous support given to them by this Government in awarding £1,000 million for this year and £2,000 million for 1975–76, bringing the total of Government subventions for next year up to about 65 per cent. more than ever before. But local authorities look forward with hope to the findings of the Layfield Committee to give them some relief from the pressures about which we have been talking. Anything that damages or destroys con- fidence in local government does irreparable harm to the whole of our democracy.

7.40 p.m.

What a pleasure it was to see the serried rank of the Liberal Party on its great day in the triumph of the first of its Supply days. It reminded me of a whole row of chickens one of which—indeed two of which—had just laid eggs. My only worry was—where was the right hon. Member for Orkney and Shetland (Mr. Grimond)? He had escaped the Whip, he was not present on parade, and was not here to give us his views on this important topic.

I congratulate the hon. and learned Member for Montgomery (Mr. Hooson) on his speech. It seemed to me that he took the debate away from bureaucracy into the area of local government organisation and rating, which are vital matters, and the right hon. Member for Dartford (Mr. Irving) took the matter even further into reform of local government and the problems it faces.

I believe that both hon. Gentlemen got it wrong. Local government expenditure is rising so fast and appears to be so out of control—just as Government expenditure suffers from the same terrible defect—not because of any reorganisation or slackness or extravagance by councillors, but because there are no mechanisms to control the bureaucracy either within central or local government. We must look to organic solutions to these problems, whether imposed from within or without, solutions that must go much closer to the heart of the problem.

It is always difficult to talk about the Civil Service, because it is alleged that its members cannot answer back. With shameful regularity, this argument has been used to discourage any discussion about the bureaucracy by the bureaucrats themselves. They have the Minister of State, Civil Service Department, who is to reply to the debate, to speak for them. But I would far rather they could write and speak for themselves in newspapers and other media in any way they chose. The time has come when we must have a public debate about how the bureaucracy is run, organised, controlled and, indeed, how efficient it is. We cannot go on hiding behind ministerial responsibility and the Official Secrets Act as if the machine were perfect and its only faults were Ministers, who caused our troubles and problems.

There is a tremendous gap between that system and the private sector where directors, accountants, national enterprise boards, boards of inquiry and management consultants constantly overhaul organisations and produce financial reports, accounts and returns on capital employed to the point where we cannot wade through the available information. As to the other half of the economy there is total silence and a complete absence of information. We must begin by having that information.

Half of our GNP passes through the Treasury and a third of our economic life is produced in the public sector. To have so little in the way of information is to have no information at all about whether it is provided with great efficiency, with average efficiency, or with the greatest inefficiency. Without that information we cannot tell whether there is a job to do in improving the situation, or what methods are required to improve matters.

There is a general feeling among many members of the public that our bureaucracy is too big and is growing too fast. But we are not aware whether that is true. This is because the information given us is totally useless because we do not know in terms of industrial, commercial and semi-industrial activities indulged in by the State the return on capital employed; nor do we know the unit costs of output; nor do we know how those costs compare with those of similar countries that have similar services provided in their public sectors.

The first task, I regret to say, is to break down the public sector into hundreds of sub-units; to find out what those units are trying to do; to measure their output and the amount of capital they employ; to estimate the relative trends in unit costs; and to begin to get some financial information about the performance of the public sector.

I am not talking about Ministers and their advisers. That is a totally different branch of the Civil Service, but it is a difficulty that the Minister of State and my hon. Friend the Member for St. Marylebone (Mr. Baker), as a former Minister, have both experienced, namely, that as they are Ministers, advised by the Civil Service and responsible for it, they are the people who will find it hardest to do much about the problem because they are both charged with responsibility for conditions and pay, and also for organisation. At the same time, they are honour bound to defend what they find. Nor do they, with the greatest respect to both of them, conceivably carry the political guns necessary to do that job when they are not members of the Cabinet. Therefore, a very important task is to obtain the information.

The second task is to identify those who head the units of the Civil Service and to make sure that the public know who they are, and to ensure that they are accountable to the public for their performance.

Is the hon. Gentleman aware that virtually all these recommendations were made by the Fulton Committee in 1968 and that it was a Conservative Government that held up the implementation of the very reforms that the hon. Gentleman says are required?

I am not remotely interested in party points. I am sure the hon. Gentleman agrees that Governments of both complexions have succumbed to the system, however good their intentions when they came into office.

I do not believe that the information that I require is yet available. Fulton may have suggested that it should be available, but that surely is an indication that the machine has smothered Fulton. That is what I am complaining about.

We must next find a way of motivating the Civil Service machine differently. The real difficulty is that if one runs a sizeable part of the public sector, honour and glory come not from making a bigger profit, or by using more effective methods, or making greater use of personnel, or achieving greater output for less effort and expense, but from having a bigger empire. Once a man is responsible for not 100 men but 200 men, the size of his office increases, the horse power of his motor car becomes larger, the office carpet richer and grander. That is the motivation on which we have been content to rely.

Professor Naskinen did an analysis of this after five years in the Defence Department in America. He suggested various ways in which that motivation could be changed. The first, which is obvious but I am afraid unacceptable, is that bureaucrats who succeed in increasing the efficiency and performance of their part of the machine should be paid more and that those who succeed not and whose efficiency is low should be paid less. This, of course, raises appalling problems. It is like denationalising the public sector, and it is very inegalitarian. I do not expect any support from Labour Members, who like to see salaries all the same and regimented.

But if that is too difficult, Professor Naskinen suggested as a second alternative that it might be possible to add to the empires of civil servants who managed well and detract from the empires of those who managed badly. He suggested that the man who ran a successful weapons procurement agency in the Defence Department and managed to get his unit costs down might be given a couple of hundred schools to add to his empire, whereas the man who ran his schools badly would have not a couple of hundred schools but would be reduced to 100 to show how badly he had done.

If that still shocks hon. Members—it does not shock me, but it is a novel and perhaps slightly over-powerful idea for this country—he fell back on a third suggestion, perhaps less successful in terms of motivation, but the most successful in terms of conditions in Britain. It was simply that those who had the best performance should have a bigger motor car, a bigger carpet, three weeks' holiday instead of two, and that those who did not do so well would find their "perks" diminishing. "Perks" are status; if we cannot use the profit motive, the money incentive, we must go back to the weakest of incentives, which is "perks".

Would the hon. Gentleman agree that Members of Parliament who arrive at nine in the morning should be paid more and those who arrive later should be paid less?

As one who left at nine in the morning today, on the hon. Gentleman's analogy I should probably be the best paid of all hon. Members in the Chamber. I must point out, however, that my ambition was to stop legislation—he surely thinks that the product of this place is legislation—so I have done the most and worked the hardest to reduce the production of this place. The hon. Gentleman must think this out: whether I should be paid the most or the least, or whether the right hon. Member who sits on the opposite side of the House but who is not here and has not been here since November is not perhaps the hon. Member who helps most the productivity of this place because he has wasted no time, impeded no Bill and allowed no check to the legislation passing through.

But the hon. Gentleman diverts me. He cannot and should not be allowed to mix up the profession of politics, the market place of ideas, with the economic function of providing goods and services in the public sector.

So I put forward the views that Professor Naskinen suggested for discussion about how to motivate the bureaucracy in America, and I do not put them forward with much seriousness in the context of the British situation. But if this debate does no more than draw attention to the problem, it will be a great start. Secondly, if we could begin to have the information, it would be possible to evolve.

Thirdly, whichever party governs in the next years ahead, even if it is the Liberal Party, could we have more public discussion about its plans for making the political will supreme over the machine and how to make the machine, in itself, self-regulating organically from within, either by motivating it in the sort of way that Professor Naskinen has suggested, or by some exterior discipline, such as arbitrary limitation of numbers, which in my opinion never works, or a commission to go through each department chopping here and cutting there, which in my opinion never works either.

We must have more thought about what should be done. I, as a Conservative, as a believer in human incentive, think that what we should do is devise incentives for our bureaucrats that will enable them to feel pride if they cut the Civil Service and shame if they allow it to increase and to link status with the sort of efficiency in the public service that we should all like to see but that I suspect few of us believe we actually have at present.

Order. May I remind the House that 12 hon. Members want to speak in the next 65 minutes?

7.56 p.m.

I welcome the debate and the choice of subject by the Liberal Party and I hope that we have many more like them. It is important to discuss the machinery of government at times, instead of simply the policies that Governments have to decide. However, we should not have to be talking about the machinery of government two or three years after the most thorough-going reform of local government and the Health Service that this country has ever had.

The 1972 and 1973 Acts were born with great hopes. May of us thought that they would improve local government, health services and the whole structure of public administration, but the hopes of those Acts have been in no way fulfilled. It is in no partisan spirit that I say that both were disasters. I can see no tangible benefits from them. I took the trouble this morning to look through the White Paper which came before the Local Government Act 1972. That is always a good thing to do—to see the objectives and hopes at the time. In all aspects of life hopes and realisation are separated by a fair-sized gap, and nowhere is that more true than with the White Paper and the Local Government Act.

I wish that some of the architects of those reforms would, even at this late date, try to explain their benefits to the community, to local government officers, councillors and hospital patients. There was a whole list of objectives in the White Paper. It said that the new local government system would have, if not complete financial independence, at least real financial autonomy. Now the party opposite is talking about getting rid of any independent financial base for local authorities at all.

There are other objectives, such as making the system intelligible and understandable to the ordinary man and woman. Even now I find that planners in local government and people working in local authorities are not themselves clear about the division of functions and the precise responsibilities that they have. It is a hopelessly complicated structure, in which many people whose job it is to understand the system are still unable to do so. The disadvantages and mistakes of those two reforms are pretty plain for almost anyone to see.

Having said that, I think that it would be a great pity if we compound what I regard as the disasters of those two reforms by being unwilling to look at the way in which our public administration system in the future could be improved. Other hon. Members have mentioned the problems of saying to people just after these reforms "We may have to do the job again quite soon", but if the pattern that we have now is to remain so for the rest of the century we are just compounding disaster on disaster. Surely we have to think more in terms of what is right and what sort of principles are right for the future. It is right that in this debate we should try to think of some of the principles.

I want to dwell for one moment on what I see to be the origin of the problem of public administration and its structure in this country. The origin is quite a simple one. Simply stated it is this. The scope and activity of Government during this century have extended in a way that no one could possibly have imagined or would have believed conceivable at the beginning of the century. New services have come into being, and government has extended into areas where no one really thought that it would. Completely new responsibilities have come along, and so on. Of course, I should add that, for the most part, these new responsibilities are welcomed by the great majority of the population they are designed to serve.

However, these new responsibilities have been simply grafted on to an existing structure. This even applies with the reformed structure we have at present. They have been added to local government. The Civil Service has got bigger. New ad hoc authorities have been created. There has never been an attempt to say that we want a public administration which will be right for the country, and that we shall not deal with this matter in an ad hoc way, adding a little here, creating a new department here or there, or having a new regional authority there. That is exactly how the process has gone during the last 40 to 50 years.

I should like to commend to the House and to the Government just three or four principles we should bear in mind in trying to discover what is the right system of public administration and the most effective public service in the decades which lie ahead, Some, at least, of the principles I want to recommend are as follows.

First, I suggest that we think of the principle of unity. By "unity" I mean unity of service. That is, that we should accept that the job of a public administrator, whether he is in the Civil Service, local government, a hospital board, a water authority or any regional authority, is essentially similar. The job of public service is similar to some extent, and very frequently the jobs are interchangeable. The country would derive great benefit if we were to see the structure as being essentially similar and that people should transfer from one job to another. Administrators in London should spend time in the regions, and people from the regions should spend time in London. In many respects that is the kind of system which has worked very well in France over the years. In the long run we should work towards a unified public administration service to be applicable to all types, shapes and conditions of public authority.

I spent some time working across the river for what was then the London County Council. That council and its unions seemed to spend most of their time explaining why the London County Council was completely different from any other local authority and why the job of working there was also completely different. I happened to think that the London County Council was similar to other authorities—and faced problems similar to those of central Government. Unity of service, therefore, is one crucial principle.

Another crucial principle is uniformity. I was unable to speak in the debate on devolution, but uniformity is relevant to that matter. We should try to adopt similar patterns of public administration throughout the country. The same applies to services. It is wrong to create new structures for new services. The decision to treat the Health Service differently from other regional or local services was a mistake. It should be treated uniformly with the social services and other vital aspects of our national life.

I commend also the principle of simplicity. We should endeavour to make our administrative structure as simple and as intelligible as possible so that not only we and the administrators can understand it, but the people it is designed to serve can understand it as well. We should attempt to provide for decisions to be made at the lowest level, the level which the people in local communities understand.

Most important, we need to ensure that the principle of democracy applies at the top of our administrative system. All hon. Members should be concerned at the fact that 60 years ago democratic control in Britain, with a much smaller administrative machine and considerably smaller services, was in the hands of about 630 MPs and a few thousand part-time local councillors. Sixty years on, in spite of a vast increase in the bureaucracy and the scale and scope of public administration, democratic control still remains with about 635 MPs and a few thousand part-time councillors.

No action has been taken to strengthen the democratic control of the top of the public administration system. If there is any virtue in a system of haphazard public administration it is at least that it will not be efficient enough to overrule the wishes of the democrats who should be in control. If we are, therefore, to strengthen our public administration we must strengthen the democracy which controls it. We cannot for long tolerate a system which is entirely dependent on MPs being, in a nation of more than 50 million people, the only paid full-time representatives to carry ultimate responsibility for a huge machine in which many of us can see so many mistakes.

If we give effect to these principles the people we want to serve will benefit enormously in the long run.

8.4 p.m.

We are all grateful to the hon. Member for Lichfield and Tamworth (Mr. Grocott) for his comments about the need for a new look at our systems of public control. I wish to concentrate on that aspect of the motion which deals with public administration and to deal with the control of public expenditure. With the current state of our economy the control of spending is one of the most important priorities.

The level of public expenditure in 1969–70 was £32·5 billion. By 1973–74 it was £39·25 billion. Such figures are difficult to comprehend in lay terms. They are perhaps more easily understood if we say that the level of expenditure envisaged every year amounts to between £1,200 and £1,300 for every taxpayer. For 1974–75 the estimated figure has now risen to £43 billion. That is the measure of the problem which we are asking our Civil Service and public authorities to face. Incidentally, those funds have to be not only disbursed but collected, so there is a double task.

In the last few weeks I have had the opportunity of referring to some of the expenditures that have gone through the House. For example, there was the expenditure in connection with the Public Works Loan Board, which was £8,000 million, and the Prices Bill, which was £1,700 million. On Monday evening this week—I do not think that there was a speech from the Labour back benches the whole evening—the House approved expenditure of £21,000 million, some of it through the process of affirmative order.

On a number of occasions I have asked what satisfactory controls we could have when Parliament approved such action. It has been made clear to me that we could rely on the sanctions and activities of the Civil Service Department to ensure that money was not spent without most careful and cautious control. How is it controlled, and what are the resources used for the control?

I ought to declare a personal interest, being a chartered accountant, although I cannot say that my activities as a chartered accountant relate to what I am talking about this evening. There are 61,000 chartered accountants in this country. As they have emerged as a profession they have had a continuing dialogue with the Government and private enterprise and nationalised industry. In their rôle in management they have extensive participation in decision making.

The position in the Civil Service is astonishing. The Fulton Report has been mentioned. I should like to make two brief quotations from it. Paragraph 3 of Appendix D says:
"In Chapter 2 we refer to accounting as an example of a specialist skill where the Civil Service has not recruited sufficient qualified people nor deployed them in positions of proper responsibility. In this appendix we develop this point at rather greater length."
In paragraph 5 we read:
"There can be no doubt that the present position is unsatisfactory and calls for substantial and early improvement."
I would welcome that.

Sir Harry Page has given a Civil Service view of the accounting profession and the rôle it should play, saying:
"I cannot avoid the conclusion that the Civil Service have not yet recognised accountancy as a profession. Accounting is apparently to them something which you learn, if I may exaggerate somewhat and use a phrase from the Lancashire textile industry, by 'sitting next to Nelly', now supported in certain departments by day-release study."
That speaks eloquently for the judgment of the Civil Service on the accounting profession.

I have tried to see what progress the Civil Service has made. The situation is interesting. I have gone through the list of people employed in administration in the non-industrial list. In April 1974 there were 342 accountants—a reduction from 1972, when there were 354. That is astonishing, when we are employing 265,000 civil servants in the general category of the administration group. When we look closer at some of the other categories of employment we see how ridiculous and nonsensical that recruitment level is.

Does the hon. Gentleman realise that the situation is far worse than he says, because the bulk of accountants used in the Civil Service are employed on vetting costs of outside contractors and not on budgetary control or costing inside the Civil Service?

I was coming to that point. I shall refer to the number of accountants employed in the Ministry of Defence, where I believe most of these gentlemen are placed.

The Civil Service has 261 economists, 401 statisticians and 1,307 information officers, compared with 400 accountants to control our expenditure of £43 billion. The legal department has 797 people, excluding departmental legal employees. An ominous statistic is that there are 3,302 paper keepers. That in itself reflects a level of expenditure which might be better applied to economy rather than to paper keeping. In the circumstances, the figure of 400 accountants is a ridiculous and irrelevant number against the total Civil Service of 700,000 people.

The Melville Burney Report in 1972 sought to identify some of the areas in which accountants could be actively engaged. Certain activities peculiar to government are also peculiar to accountants—for example, control of the Consolidated Fund, the National Loans Fund, the National Insurance Fund and the preparation of estimates. In the public sector, there are allocations of resources between competing demands—very much a function for accountants—and also such activities as the payment of welfare benefits, health and social security benefits, unemployment benefit, and financial reimbursements, revenue disbursements and the planning of Government funds. These are all special to Government activities.

Then there are affairs in ordinary business life which have something in common with Government activity—for example, project planning, capital expenditure programmes, financial objectives, profitability and cash flow. Indeed, the creation of cash flow must be at the nub of the Government's affairs at the moment. There are also such activities as costing and cost benefit analysis, management accounting and internal auditing. The difference between accounting and auditing seems to escape the Government machine.

The presentation of the Government's expenditure proposals is traditionally in a ritualistic printed form. It is astonishing that presentation of figures in a printed form makes them seem beyond suspicion and question. The same applies to local government. Its figures when printed seem inviolate. Yet it is all based on a system of accounting about 300 years—possibly even 1,300 years—out of date.

No self-respecting golf club would allow its accounts to be prepared in the way in which the Government present their figures. It is single-entry bookkeeping, the receipts and payment account in the lowest possible form, taking no account of expenditure incurred, of the value of the assets created, or of the future capital costs incurred by the Government. That must be nonsense. It adds strength to the case that we should have professional competent accountants in the team.

I have referred to the number of professional accountants employed in the Civil Service, and to the areas in which they are employed. Out of the 342 so employed, 193 are employed in the Ministry of Defence on procurement exercises. In the Inland Revenue there are 27 accountants. When we reflect on the whole consultation process, with the 60,000 accountants who are privately employed in industry and in practice, the number of 27 seems to strike a nonsensical chord. In the Department of Industry there are 81 accountants.

There is a total of 44,000 in the administrative group in the Ministry of Defence. There are 17,000 people in the Inland Revenue, of whom 27 are professional accountants. In the Department of Industry there are 4,746 people, of whom 81 are professional accountants. The best is yet to come. The most perfect and pure place of all is Her Majesty's Treasury, where there are 1,189 people in the administrative group and one qualified accountant. He is the king of them all, the king of the Treasury. The Export Credits Guarantee Department was given an allocation of £21 million last Monday. This department runs a parallel course with the Treasury because it, too, has one qualified professional accountant. It is enough to say that very little progress has been made since the Fulton Report or the Melville Burney Report. This is a matter to which the Government must direct their attention as soon as possible.

There are things which can and should be done. There was a recommendation that a head of the profession should be appointed. I understand that there has been a long and earnest search among those in the accounting profession. Yet that search has been doomed to failure. We have had to have recourse to the desperate remedy of competitive advertising to find someone. I welcome the fact that we are to go into the open market to seek the right person for the job. It is a matter of urgency that the head of the accounting profession in the Civil Service should be appointed as rapidly as possible, taking full responsibility for it.

There needs to be active participation and integration of accountants in the Civil Service, recognising the modern rôle they can play. It is not enough to say that economists can do the job as well. That is not to recognise that we have moved on. Galileo invented the system of double-entry book-keeping, which has been very successful and effective and which has, perhaps, even improved a little, as the Chancellor noted when recognising inflation accounting needs and inflation costs relief.

We need to have these professionally qualified people. We need to recognise the differentials between auditing and accounting. It is not enough to say that because we have well qualified and competent district auditors they can carry out modern accounting functions. We are living in times of change in the Civil Service. The accounting profession has sought to recognise that. I hope that the Government will recognise this urgent need.

8.24 p.m.

Although there was an element of special pleading for a well-known profession in the remarks of the hon. Member for Hertfordshire, South-West (Mr. Dodsworth), most of us share his concern about cost control in government and the ability of those who pursue the effectiveness of Government to do so by the study of published accounts and records. We share the hon. Member's concern about the way in which those records are presented and the difficulty that even those with considerable professional knowledge of the subject have in making sense of Government accounts as they are traditionally presented.

I should like to refer to some of the themes that the hon. and learned Member for Montgomery (Mr. Hooson) developed. I, too, recall that we were told that size and economy were linked and that we had to have an increase in the size of public bodies, particularly in areas such as local government, largely because of cost. We were told that cost benefits would flow. We have since discovered that greater size, greater remoteness and greater cost go together and that there is a frighteningly close relationship between them.

The reasons why larger units tend to bring higher costs are numerous. My hon. and learned Friend the Member for Montgomery referred to the way in which population scales were used to arrive at salaries. There are other factors. Larger units attract more administration, and a higher and higher pyramid is constructed. A structure is developed that contains more and more administrators and deputies and eventually a "more chiefs than Indians" situation develops.

Until recently, transport costs were not considered in relation to reorganisation. It was assumed that, however large the area, the cost of transport to officials within the area would be insignificant. Petrol costs have increased, and if administrators have to be sent scurrying over a large new county area to inspect large numbers of outstations that do not have a sufficient degree of responsibility, transport costs become very large. Leaving out of account increased fuel costs, petrol costs for official journeys have substantially increased over the past few years.

More expensive ways of doing things develop in large units. No longer is the local contractor brought in to do a simple job. Elaborate regional or area procedures are used, and the advantages of central purchasing are offset by the failure to operate economically at local level.

We are all familiar with the characteristic public service estimates system, which I hope the Government will examine. Most public bodies still seem to operate within a framework that generates a mad March hare mentality at the time of the year when money left over from last year's estimates must be spent lest the following year's estimates are reduced. There should be a sensible way of proceeding with estimates from one year to the next without the necessity of spending money to establish a claim for money in future.

We have seen the consequences of increased size in local government reorganisation. My own county of Northumberland is the exception. It has been reduced in size and, as a result of local government reorganisation, has been left with acute problems in paying for services for a large and scattered area from which has been removed its urban industrial source of revenue.

I have a great deal of sympathy with the Northumberland County Council in the problems of running such a large scattered area with such limited resources. But the council's intention to spend £7½ million on a new county hall in the present stringent economic situation does not suggest that it is taking the Government's warning to heart. I hope that the Government will not smile favourably on that project, justified as it is by the existing county hall not being situated in the new county. That is a minor inconvenience that the residents of Northumberland will survive for a few more years if they can be spared having to spend £7½ million to put the matter right.

These trends are more evident in the health and water services. In both they are accompanied by two other failings. One failing that the new structure of the health and water services shows is the removal of any element of democratic control, particularly local democratic control, from services that touch the individual at crucial points in his life.

That is most true of the health services. We are creating the cumbersome, ineffective machinery of community health councils as a substitute for democracy, and that illustrates the failure of what we are doing. Many members of the party responsible for this change believe that this is a satisfactory alternative. I hope that the community health councils will do a useful job, but there is a world of difference between a body that can register complaints and advise people on how best to remedy them, and a body that, as a result of the ballot box, exercises community choice about the policies and decisions of major services. That is what should have been provided for the health services and it has not been provided. [Interruption.] The hon. Member, from a sedentary position, defends his Government's attitude, but his feelings are not shared by members of other parties.

The other great failure of the reorganisation of health and water services is that the services are separated from each other. They are separated from the great body of local government services, such as social services, which are closely related to the health services. The more we put public services into separately administered boxes, the less we can operate them with any kind of co-ordination, and the less we can decide priorities between them, because each individual service sets its own priorities and there is no local or regional judgment about them. We prefer this range of services to be brought under a single regional administrative body, together with services administered by the county council, to having them separated in this way and run undemocratically.

I now propose to refer to some of the practical aspects of the situation with regard to health and water services. When I look at my area, I cannot help but dissent from the opinion of the hon. Member for Lichfield and Tamworth (Mr. Grocott), who spoke about uniformity in the pattern of administration. The failure of uniformity is only too well illustrated in the reorganisation of the health services. A pattern that might suit some areas does not necessarily suit those to which it has been applied. A pattern revolving round a district general hospital cannot be applied effectively in an area where there are no district general hospitals, and here I am speaking of Northumberland. A pattern designed for one area produces bad administration if it is applied rigidly to another area in which it is unsuitable.

We have developed in the health services a pattern of administration with more tiers than a royal wedding cake. We have level after level of administration, when we could achieve the object more satisfactorily by having perhaps only two levels. We have regions, areas and districts, and within districts there are sectors.

At area level we have created an administrative structure that covers too large an area and removes effective decision making from individual hospitals and clinics, from the locality where the job is being done. We have developed the habit of putting behind desks people whom we have trained at considerable expense to do professional jobs. That is one of the worst features of the health service. Not only have we seen a proliferation of administrators, but we have taken trained professional people and said "The best thing to do is to make you an area medical officer. That is the pinnacle of your promotion ladder. You can put down your medical training and equipment, sit behind a desk and be an area medical officer".

We have said to nurses that we want them not to run the nursing service in one hospital but to be area nursing officers, or the area officer for three hospitals. We tell them that their job will be to travel and see that everything is all right. We tell them that they are not required to do any nursing. We take our most valuable resources of trained and competent people and make them administrators. We create levels of administration that we do not need.

Much of this cannot be right, and since February I have pleaded with the Government to try to halt some of this rolling bandwagon of unnecessary administration. I get the impression that the hon. Member for Plymouth, Devonport (Dr. Owen), who has borne so much of the responsibility for health service reorganisation, is not very interested in trying to stop the movement of the bandwagon that has developed. He seems content to let the machinery set up by the previous Government roll on. It would have been impossible immediately to unscramble what had gone before, but the hon. Gentleman could have done more to stop some of the developments that have taken place.

Perhaps the greatest nonsense is the new water authority. In my area we have created a water authority, which is explicitly responsible for the water cycle. That is the justification for setting it up. All the stages of the water cycle must be considered by one body—water supply, sewerage, and so on. But in most of my constituency the water authority does not provide the water supply. Water is provided by private enterprise water companies, which have bigger headquarters than the water authority. They send out their own charges separate from the water authority. The water authority does not even provide the sewerage services. Most of these are provided on an agency basis by local authorities. Many people have the same job as before, but now they are acting as agents of the water authority.

We have created an organisation which, although it has some functions, is not carrying out the major functions because there are efficient ways of doing that through local authorities and the water companies. We create an organisation to be the overlord, and we find it necessary to pay a man more than £5,000 a year to be the part-time chairman. We provide him with a motor car, and we consider that to be an improvement in administration.

It would be a mistake to suppose that if our administration were better designed and more economical and without waste, we should do away entirely with the problems and burden of rising costs on taxes and rates. Such aspects as the cost of providing teachers and nurses put strains on the system. We cannot wipe out those costs. But whereas at one time it may have been reasonable for us to carry a surplus on the administrative side, and although we may have felt able to absorb such costs without worrying unduly, we can no longer afford this luxury. We cannot create more expensive and visibly extravagant administrative structures without undermining any attempt we may make to seek sacrifices from the community.

Mention has been made of the various groups, such as the miners, to which we have appealed. What weight can we attach to such appeals if they are made against the background of administrative waste? It is a waste produced by the system more than by the individuals who operate it. Many of the people concerned in simply doing their jobs are bound up with the morality and assumptions of the system to which the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) referred in an interesting speech. I do not agree entirely with the hon. Gentleman, but I hope that hon. Members opposite will share with us a genuine desire to get away from the assumption that the object of life of an administrator is to get more "perks", a better carpet, or a grander status, or to create a bigger empire or gain greater financial rewards. The object must be to provide the best service, and we must try to get rid of the idea that the "perks" and financial rewards are the object of the exercise. We should be striving towards a society in which people obtain the most job satisfaction if they provide the best service to their fellow men.

8.37 p.m.

I greatly welcome this debate and congratulate the Liberal Party on initiating it. The Liberal Party seems to be getting the reputation of being a thinking man's Opposition. That is borne out by the two subjects chosen for debate today. I welcome the debate because it treats a subject which the House tends to neglect except at the time of the annual battle on the rate support grant. Too much public administration escapes detailed public scrutiny of its effectiveness, resulting in debilitation of public accountability.

The first element of any analysis of the cost and quality of public administration should be the definition of the boundaries of public administration. I regret that those boundaries are not clearly marked. I have recently been trying to chart them by tabling a series of Written Questions to Ministers, and I have learned of 350 bodies external to the Government to which Ministers either make appointments or give public funds.

My right hon. Friend the Secretary of State for the Environment appears to be responsible for 170 of them. My right hon. Friend the Secretary of State for Defence says that he is responsible for so many that it would involve disproportionate cost to public funds to discover the number. Trudging through the bureaucratic undergrowth which grows in the shade of the great Departments of State one comes across the Submarine Museum, the Mobile Radio Committee, the Freight Integration Council and the Committee on Bird Sanctuaries in Royal Parks. My guess is that there are more than 500 quasi-governmental bodies, all representing a charge to public funds, and whose public accountability is negligible. The examination of the scope, function, cost and value of them should be made the responsibility of a permanent review body.

I turn briefly to a major issue of the management of central Government. Seven years ago an exhaustive inquiry into the management, organisation and staffing of the Home Civil Service was carried out by the Fulton Committee. I must disclose an interest in its work because I was employed by the committee as its management consultant. The committee's recommendations have led to an improvement in the management of the Civil Service in general. Personnel management has become recognised as a leading function and not a junior branch of cost control. There have been developments in managerial accountability, improved training, enhanced promotion, and opportunities for technical staff.

However, the most important Fulton recommendation, that there should be a unified career class system to enable the best professionally qualified people to reach the top jobs, has never been implemented. The top few grades of the Civil Service have been amalgamated, but we still have the situation in which very few young, professionally qualified officials can ever obtain sufficient general management experience earlier enough in their carrers to fit them for the top administrative jobs.

Fulton put a lot of noses out of joint when it called the Oxbridge mandarins who run our Civil Service amateurs. A lot of that criticism was overdone and unjustified. However, the top and dominant jobs in the Civil Service for the control of spending still go to the generalist, the all-rounder who—surprise, surprise—more often than not is an Oxbridge classicist or historian rather than the professionally qualified accountant, economist or engineer. Without such specialists in its higher cadres the Civil Service is ill-equipped for policy research, quantitive analysis or the management of intervention. It is imperative that the Government carry on with the implementation of the Fulton recommendations, which are as essential now as they were in 1968.

When we consider the quality of service, or the service cost and the remoteness of local government health and water authorities, the question once again hinges on public accountability. The last Conservative Government carried out a series of major changes in those areas without understanding the nature of public administration or the managerial or organisational imperatives at work in public administration. Enamoured of the managerial ideas of a decade or two ago they concluded that efficiency and effectiveness depended on the creation of large, integrated management structures. They failed to notice more recent research which showed that, in industry in general, the bigger the organisation the lower the return on capital. We can parallel that experience throughout any kind of organisation.

The results of this folly can be seen in the reorganisation of the National Health Service, which is a classic example of how not to do it. It sought to combine the three main strands of health care—general practitioners, hospitals, and the local authority health services—into one multi-layer bureaucracy, employing one-twentieth of the country's workforce. The emphasis on the reorganisation of the National Health Service was on professional management and the integration of services.

In some ways the effect was just the opposite. The organisation failed to provide a chief executive at any organisational level—at no regional or district level is there a chief executive—relying instead on what is charmingly called consensus management, or the ability of medical, paramedical and administrative specialists to agree on a course of action, to implement it, and to monitor themselves as to how well they were implementing their course of action. An important element of professional management, the accountability of an individual executive, was totally lost. Moreover, the top level posts in the system were occupied by civil servants in the Department of Health and Social Security whose career pattern is in the Civil Service at large and not in the Health Service.

Therefore, the professionalism they were so keen to implement stopped at the regional level. There is no indication, on the matter of integration for services, that general practitioners are any more integrated in the system than they were before, since the health authority has no direct control over them. The reorganisation may have tried to integrate the personal health services of local authorities with hospital services, but it is possible to argue that it was more important that the local authority health services should continue to be integrated with local authority social and housing services.

As a result of the reorganisation, the local authorities lost their medical officer of health, who had great influence on the range of decisions made in local authorities. He was an officer who had great weight in council deliberations. So the local authorities lost a medical input into housing policies, into social policies, into amenity policies and into education policies. Perhaps most important of all, the medical officer of health was publicly accountable to an elected local authority, whereas the new structure has minimal public accountability, is remote, and is inadequately rooted in the community.

All this has happened at a time when more public involvement in health issues such as smoking, diet, accidents and occupational hazards is probably of far greater significance than a neat administrative structure based on hospitals—that is to say, community care. Preventive care should now be the emphasis of general health care for the public, and that was the view of the medical officer of health who is now abolished and made a bureaucrat in a hospital-dominated health organisation.

Finally, the organisational structure of health has too many layers. There is no clear reason for a regional health authority. The Finance Division of the Department of Health and Social Security oversees a regional treasurer, who oversees an area treasurer, who oversees a district finance officer, each one existing to collect data from or to distribute them to the others. Meanwhile, there is no adequate budgetary control system, nor any way of publicly demonstrating the costs and benefits of different courses of action. Individual area health authorities, such as that in Norfolk, make exceptional efforts to make the system work and to try to overcome years of neglect in terms of investment in health facilities. In the end, it may work. Nevertheless, the reorganisation of the National Health Service is illustrative of the general tendency of the last Conservative Government to fail to grasp the need to organise public administration on a human scale.

On the general question of cost, in my experience, which is fairly extensive and covers both the activities of private industry and of public authorities, organisations in public administration have never struck me as being as inefficiently run as private industry, and, on the whole, service to the public is rather better and more understanding.

The failure of this motion, which has good intent, is that it is too highly generalised. A review of public administration will serve no purpose. We have to examine the situation sector by sector. We need a review body for the quasi-governmental bodies, to which I referred earlier, which are accountable to no one. We need executive action by the Civil Service Department on the continued reform of the Civil Service. We need a different approach to each of the health authorities, the water authorities, the police authorities and the local authorities by a combination of actions—sometimes by specific inquiries, possibly by statutory review bodies, into the results of recent reorganisations, by Government action to democratise their governing authorities and by their own efforts to involve the community. Of all these, the last—the conscious effort to publicise and consult the community—seems to me to be the most important.

8.48 p.m.

This has been an interesting debate, and perhaps at the outset I might take up one or two of the very constructive points made by the hon. Member for Norwich, South (Mr. Garrett). He spoke about looking at these problems sector by sector. In that, I believe that he is on to a very important approach to the subject.

Then the hon. Gentleman made a very strong point about the rate of return on large units being typically low. I hope that he will repeat that argument when we discuss the nationalisation of manufacturing industry, where the same principle applies.

We shall all have our opportunities.

I wish to concentrate my remarks on one sector and to deal with the problems arising within water authorities. This is a matter of great concern to many right hon. and hon. Members, and I know that the hon. Member for Isle of Wight (Mr. Ross) takes a very keen interest in it. I shall try as far as possible to strike a co- operative attitude in trying to resolve some of the problems.

The hon. and learned Member for Montgomery (Mr. Hooson) touched on a constructive note only in virtually the last sentence of his speech. He gave us his usual knockabout comedy stuff, but that does not help us. It does not help to backtrack, to suggest conceptual arguments or to score party points. It is to no one's shame to say frankly that the water authorities have been shown to produce enormous administrative difficulties and a true lack of accountability. I hope we shall soon have an opportunity to debate such matters. They have been raised over many months, and we have not had a chance to hear the Government's thinking and to explore the views of right hon. and hon. Members.

I shall make what I hope are one or two constructive suggestions. In moving ahead I believe that we need to regard the authorities as nationalised industries in all but name. It follows that we need to consider the problems of accountability in the same light as they have been considered over many sectors of our nationalised industries. In particular, I must point to the difficulty that we face in obtaining information. I am sure that over recent months many hon. Members have experienced grave difficulties in trying to investigate the capital and revenue accounts of the water authorities.

It is true to say that on captial account the representations of many hon. Members have been reflected in the Secretary of State's decision to cut back capital expenditure this year. If we look to revenue account we immediately find grave difficulty in disentangling meaningful figures and getting any real idea, on a year-to-year basis, of a definition of the new life of the authorities. There must be ways in which that form of accounting can be made more open and freely available to all hon. Members.

We must also consider some of the other problems that have come about as a result of the composition of the authorities. I am sure that many hon. Members will have shared the experience of hearing senior officials—this has happened in my authority, the Southern Water Authority—say that the difficulties which they have experienced stem from the basis on which so-called elected representation brings people to the boards who are not in any sense answerable to their electorate. Without in any way making invidious comparisons between individuals we must consider ways in which more accountability will be available at that end of the scale.

Similarly, if we consider the balance between the number of so-called elected representatives and permanent officials and outside persons it is clear that the way in which the balance of the board is constituted needs careful consideration. There should be a more clear-cut majority of elected representatives.

Next, I turn to the debt burden of the authorities. We have a unique opportunity to regard the authorities as nationalised industries. The precedent for writing off capital debt is well established in the nationalised industries. It might be said that it is almost too well established. I would favour, for the new authorities, the writing off of their capital debt and the implementation of a "pay-as-you-go" system. That would enable us to have a more meaningful system of accounting and a far more justifiable set of charges made to the public.

In terms of the relationship between the authorities and the National Water Council it seems that we are still breaking fresh ground. Already there are signs of total wastage within each authority. Matters which could more properly be dealt with by the council are being dealt with at the lower level. There is, for instance, the question of advertising. I am pleased to find that my local water authority has now begun to issue advertisements in which it puts forward the positive arguments that water at 10p a ton is still one of the cheapest purchases and that it does not receive rate support grant as do local authorities. Those are positive arguments, and I can think of no reason for their not being put forward by the National Water Council in acting on behalf of the industry as a whole.

The National Water Council should be part of any thinking that the Government may have about their wider, revised approach to the relationship between, on the one hand, those who pay their charges and, on the other, the Government, with the various individual authorities in the middle.

I turn now to the feeling of consumers about their complete lack of contact with the authorities. I should have thought that this problem was capable of remedy if we could encourage the idea of consumer councils or some local body which could deal with many of the difficulties which come up at this time of year, with flooding, and so on. At present there is no way in which these matters can be resolved. Indeed, the hon. Member for Berwick-upon-Tweed (Mr. Beith) said that local councils are now acting as agents for the water authorities over sewerage, and so on. This is a recipe for difficulty in satisfying the consuming public.

I favour direct billing, because it not only enables the authority to have direct contact with the public; it helps to produce a better relationship and a more efficient basis on which to adjudge charges.

I join those who have complimented the Liberal Party on choosing a subject which has been valuable in allowing some of us to explore matters which we seem all too infrequently to have the chance of exploring. It is not fair to say that this Supply Day has been wrested from us. It is a matter on which the official Opposition have been glad to facilitate the Liberal Party. I believe that the Government might, in turn, show equal willingness in approaching the subject which some of us have mentioned tonight.

8.57 p.m.

I apologise to hon. Members who have not had the good fortune to catch your eye, Mr. Deputy Speaker, but I felt that I ought to intervene now as the record of the previous Government, for which I had part responsibility in this area, has received rather less than wholehearted praise.

I should like to add my congratulations to the hon. and learned Member for Montgomery (Mr. Hooson) and the Liberal Party for choosing this interesting subject for their Supply Day. What we have been discussing since four o'clock is the nature of the society that has developed around us and that will affect our lives for many years.

There have been some interesting and well-informed speeches. I liked the con- tribution by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) who seems to have made the subject of the Civil Service his own in his pamphlet of about six months ago. The contribution by the hon. Member for Lichfield and Tamworth (Mr. Grocott) on the principles of public administration was interesting and thoughtful.

I start with the proposition that we are over-governed. I believe that it was a senator in Texas who, after he had seen and taken in the full scope of the Federal budget of the United States of America, said "Thank God the American people do not get all the government that they pay for." Unfortunately, because our Civil Service is better, more thorough and more scrupulous than that of the United States, we get all the government that we pay for, and a bit more thrown in.

Figures have been bandied about in the debate. There are slightly fewer than 700,000 civil servants and 2,700,000 local authority employees. In the last 10 years the number of local government employees has increased by nearly 800,000—1,900,000 to 2,700,000. There has been an enormous increase in that area of responsibility. This is the evidence of the growth in bureaucracy.

We must ask ourselves why there has been such a growth and why there has been such an enormous increase in the number of local and central government employees. The answer lies in this Chamber. It is our responsibility as Members of Parliament or as members of the Government. There is no problem on which we are approached by our constituents, whether that problem relates to education or help for the disabled, that we feel cannot be solved by some extension of governmental activity. We all as Members of Parliament regularly say that the Government should be doing something about the matter. The fact that we take that attitude means that somewhere in Britain there will be more local government employees or more civil servants.

Each Conservative administration on assuming office has been determined to do less and has ended up by doing more. Each Socialist Government on assuming office has been determined to do a vast amount efficiently and has ended up by doing an even vaster amount inefficiently. One does not know what a Liberal Government would do if it had the opportunity, since the Liberals have not had a chance to do anything since 1915.

The hon. and learned Member for Montgomery, in a waspish speech, made great play with the enormous increase in bureaucracy resulting from local government reform and the reform of the National Health Service. But what would the Liberals do about the problem? They have in their manifesto a proposal to deal with the problem of prices and incomes by the imposition of a tax on inflation. Will the House contemplate the number of civil servants who will be required to implement that proposal? Each wage-earner and salary-earner would have to have his income assessed this year compared with last year, and every increase would have to be examined individually to see whether it was due to promotion, extended responsibility, higher productivity, and so on. Therefore, we should need a new army of evil servants to implement the Liberal proposals.

Does the hon. Gentleman realise that the Liberal proposals suggest an average of company salaries, in other words, that it is the average pay in which we are interested?

Even so, the proposals would mean an enormous increase in the Civil Service to undertake the work on that basis, quite apart from any unfairness that it would cause. If the rôle of government is to be reduced and the size of bureaucracy either at local or central level is to fall, it can be done only by reducing the tasks or functions of government. There is an inbuilt momentum in any bureaucratic system for it to grow.

Some play has been made about the size of the Civil Service. In the period of the last Socialist Government the central Civil Service saw a substantial increase of 50,000 people. That led us to make a rather bold pledge in our 1970 manifesto to cut the size of the Civil Service. It fell to me in 1972 and 1973 to try to implement the pledge. As a result of considerable effort by my Governmental colleagues, we managed to achieve a modest reduction in the size of the Civil Service from the 702,000 civil servants whom we inherited in June 1970 to a figure of 694,000 in January 1974.

I would agree with the important point made by the hon. Member for Cirencester and Tewkesbury that simple head-counting is not appropriate when considering methods of control. That method equates a Permanent Secretary who earns £17,000 with a paper keeper earning £1,500 a year. I believe that we must develop much more sophisticated controls—as suggested by a number of hon. Members—and that there should be control of total resources, in other words, of cash spent in the administration of Government Departments.

The actual cash spent is vast. If one looks at the Estimates before the House at the moment and extracts just those items relating to the pay and pensions of the Civil Service in all the great Departments of State, one finds that it is £2,000 million. The central Departments of State are responsible for about £22,000 million of expenditure, so the cost of administration is nearly 10 per cent. of what is spent. That is an enormous figure and what is surprising is that there is very little effective control of it.

No Select Committee, not even the Public Accounts Committee, nor the Expenditure Committee, deals with that sort of expenditure. They deal with the expenditure of Departments in fulfilling their responsibilities, but they do not examine the entrails of the Departments to see whether that £2,000 million is being spent efficiently. This is a major gap in our systems of control over the administration of our country.

In view of the admirably enlightened concept that the hon. Gentleman has just been expressing of the proper way to consider the extent of Government administration expenditure, can he assure us now on behalf of his party and its Central Office that they will abandon the primitive head-counting propaganda that has always been part of their stock-in-trade?

Policies evolve and I am thinking aloud tonight. I should not wish to commit my right hon. Friend the new leader of my party to being either for or against a head count. My experience is that there has to be proper control of total cash resources. We burke the issue if we believe that that is not the case.

Is the hon. Gentleman aware that the cost of administration as a topic falls into the area of the General Sub-Committee of the Committee on Expenditure and that it is Members of his party who have turned that sub-committee into a discussion of rival schools of economic management?

I am not privileged to be a member of that sub-committee, but if the hon. Gentleman is, I hope that he will draw my wise remarks to its attention.

What else can one do about the efficiency of the Government machine? First, there must be a greater readiness in the Civil Service to adopt new techniques, particularly based on computers. The whole social security system in America is computerised. If a claimant goes into a local office in one of the Southern States, the clerk will type his details on to a computer, and the record, with suitable security checks, will come up immediately. That is infinitely more efficient than the system used by our own hard-pressed social security officers.

I agree entirely with my hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth) about the need for more accountants in the Civil Service. I am not making an apology for my past, but the situation is not quite as bad as he made out. When we were in office we extended considerably the principle of management accounts in Government service. In the Civil Service Department, the Minister is responsible for the Stationery Office, a great sprawling industrial empire. When I was responsible for it, I appointed a financial director, an accountant from outside, to introduce management accounts so that we could know where we were making or losing money—it was mainly the latter that we measured. I also appointed a marketing director to try to sharpen the cutting edge on the selling side.

There is a great rôle for businessmen in government. We introduced six in 1970 and in some areas they have had considerable success. Sir Derek Rayner reorganised the procurement side of the Ministry of Defence. He has now returned to Marks and Spencer. He introduced a system which, in this year and next, will make substantial savings in public administration—several tens of millions of pounds. So I agree entirely with what my hon. Friend said about the need for this expertise. I hope very much that the head of the accounting organisation that we set in train will shortly be appointed.

I want to return to something I said earlier about my belief that if bureaucracy—or "bureau-cracy", as Sir Gerald Nabarro used to call it—is to be reduced in Britain, we have to look at the functions of government. One of the extraordinary things about the last 100 years is that our Victorian forebears prided themselves on finding cheaper, quicker and more effective ways of doing things. We in this century have spent a great deal of time in finding more expensive, more elaborate, slower and less effective ways of doing things. We want throughout the whole Government machine a much greater spirit of innovation and much more enthusiasm of the sort that our forebears had.

Indeed, if one is thinking of cutting out functions, one of the areas in which one can make the greatest savings is our tax system. I find it extraordinary that we have as many people employed by the British Inland Revenue as are employed by the American inland revenue department, and the Americans have three times the number of taxpayers. How can they do it? They have a system of self-assessment with random checking. But the Inland Revenue in this country believes that we are all potential tax fiddlers and that every little tax return must be checked. That is not an efficient way of doing things.

When we were in office, we intended to introduce a form of negative income tax, the tax credit scheme. I was very much in favour of that for broad political and social reasons and because it would have brought together the social services and the taxation system. But a spin off would have been that it would have saved 15,000 civil servants. We should resist the imposition of new taxes and new systems of government.

On Monday and Tuesday of next week we shall be discussing the Industry Bill, which will set up, among other things, the National Enterprise Board. We shall be creating another great army of civil servants who will be receiving reports from industry, filing them away, very occasionally reading them and, as it were, performing merely a rather useless administrative function.

The right hon. Member for Dartford (Mr. Irving) talked of his enthusiasm for local income taxes, but they are bound to increase the amount of government and the amount of interference in the life of the citizen. Therefore, I am very much of the view that if we are to reduce the rôle of government, we in this House have not always to be finding ways of extending government. We are to blame if the country is over-governed, and no one else.

Two hon. Members touched upon a very much broader and, to my mind, a fascinating issue—the whole question of how one controls the Civil Service. My hon. Friend the Member for Cirencester and Tewkesbury has written on this subject and he mentioned it today. The hon. Member for Lichfield and Tamworth also mentioned it. It is very pertinent now that the Crossman diaries are coming out. Who controls the civil servants and who governs the country? When reading the Crossman diaries I was reminded of something Crossman wrote three years ago, in his Godkin lectures in America, about the relationship between the Civil Services and the Government. He said:
"If we think of the civil servants as marine animals and the politicians as fishermen operating on the surface,"—
that is about the relationship—
"The civil servants know that the boatloads of politicians now anchored above them are certain to be changed within five years. They also know that any idealogical crusade to carry out the mandate will be blunted by failure, electoral unpopularity and sheer exhaustion. So they are prepared to concede quite a lot under the first impact of an election victory, but when that is over the civil servants resume their quiet defence of entrenched departmental positions and policies against political change."
That was Dick Crossman three years ago and when I read it I could not help recalling the little rhyme of Humpty Dumpty in "Through the Looking Glass" when he said:
"I sent a message to the fish,
I told them 'This is what I wish',
The little fishes of the sea,
They sent an answer back to me.
The little fishes' answer was,
'We cannot do it, sir, because."
As I know from my experience as a Minister, that is so often the attitude of the Civil Service, but I do not believe that the Civil Service runs the country. Ministers run the country and if they fail to impose their political will upon their Departments, it is the Ministers who fail, not the Departments.

I turn to the last phrase in the motion which refers to the "growing remoteness from the people". This is in many ways the central theme of tonight's debate. Many people feel that they can have little influence even on the matters closest to their lives and nearest to their homes. The Government not only appear remote, they are remote, and there is a growing divide between the governing and the governed.

This alienation of the citizen has many manifestations. The private householder wakes up one day to find that a motorway is planned to go through his back garden. The person seeking social security benefits meets a very young clerk at the local office. The clerk is probably inadequately trained and the applicant thinks that he is rude and unsympathetic. Anyway, the claimant cannot understand the system because it is all so complicated—I doubt whether any hon. or right hon. Member fully understands the complexity of the social security system.

The belief of ordinary people in Britain that the House is remote and unresponsive to their needs, secretive about its procedures and out of touch with the common man is yet another manifestation. So are the anti-Europeans who fear that the institutions of Europe will promote even greater remoteness. The alienation shows itself in the young married couple who find that the society in which they live makes it almost impossible for them to own their own home. All this leads to the widespread belief that in some way politicians—of any party—and our political institutions are not representing the people.

I do not believe that we should despair with this analysis. Our problem is the problem of a mass electorate that is infinitely better informed and infinitely more politically aware than it has ever been, but it is frustrated by its inability to get its word in edgeways. What should we do?

The first modest step would be to ensure that all those points where ordinary people come into contact with officialdom—the social security office, the employment exchange, the tax office and the housing department of the council—the officials make great efforts to be responsive, understanding and sympathetic. Many people feel that civil servants actually enjoy operating complicated and meaningless controls. The social security offices particularly need humanising along the lines of the housing advice centres. There is a good centre in Lambeth where people are treated as clients, not as one damned awkward case after another.

Secondly, in local government, now that we have large councils, there is in some areas a need for some other representative body. I am reluctant to suggest yet another tier, but there is a need in some areas for neighbourhood councils. If there is a local natural demand for them, the Government should be prepared to meet it. But at a local level I only wish that local councillors could make themselves more available and better known in their areas. I only wish that the deliberations of local councillors were more open and that the councils publicised their plans more prominently. I should like ratepayers each year to get a simple statement of the short-term and long-term projects that their councils will be undertaking.

I started with the proposition that we were over-governed, and the consequence of that could be an almost unstoppable move to bigger and bigger units. Bigness means remoteness; remoteness means unresponsive government; and unresponsive government leads to discontented people. Size, therefore, is crucial.

Some hon. Members will be familiar with Schumacher's book "Small is Beautiful", in which he says something along the following lines. The battle of the future will be between two groups of people. The first consists of those who believe in keeping a crisis away by speaking of breakthroughs: "A breakthrough a day keeps the crisis away". We are all familiar with the politicians on both sides of the House who find this idea an easy refuge. But these breakthroughs almost invariably mean a greater, more instant subjugation of man under the requirements of the system.

The second group, which Schumacher calls the homecomers, brings things back to the human scale, to real human requirements. The homecomers will require more creativity. Any intelligent fool can make things bigger, more complex and more violent. It takes a touch of genius and a lot of courage to move in the opposite direction. I suspect that most of my colleagues are with me in belonging to the second group.

I hope that if the debate is read widely outside the House, people throughout the country will see that we are aware of this remoteness, that as Members of Parliament we are aware of this growing divide. We must try to do something about it.

9.22 p.m.

I thank the hon. Member for St. Marylebone (Mr. Baker) for a very good contribution to the debate. It was good-natured, and the hon. Gentleman took some of the bantering earlier in the right spirit. The hon. Gentleman went a little wide of the mark when speaking of our inflation tax, but I ask him not to come back to me on that, because I do not pretend to understand it either.

I agreed with what the hon. Gentleman said about local councillors. I am winding up the debate for the Liberals because I happen to have been a county councillor for about seven years. For my last year I was chairman of our policy and resources committee. I admit that the county is the smallest in England and Wales, but we had quite a task in dealing with the problem of the changeover in local government. I agree that councillors could give a great deal more assistance to the electors. I am sure that many in some areas give that service, but when I was a county councillor I cannot remember more than about five or six calls a year to me to inquire about this, that and the other. Yet hon. Members are expected to handle everything. When one says "You should see your councillor", people reply "You are an MP. You deal with it. It is your job."

I had the notion of taking the policy and resources committee with me to meet the public and explain the priorities we had decided, to explain how we were spending money to try to bring them much more into the picture. I hope that if this debate is read some of those in power may follow up that useful suggestion.

The debate has been of a high standard. I cannot speak as well as many of those who have taken part, for whose contributions I am grateful. The Government should take careful note of what has been said.

Our words here have not been intended as an attack on local councillors, local government officers or civil servants, but rather as an attack on the system under which they are obliged to operate. I entirely agree with the hon. Member for St. Marylebone that the responsibility for that lies in the House. Since I have been here, in the past year, we have passed legislation, particularly the Control of Pollution Act, which, I am sorry to say, is not being brought into operation for financial reasons. When that Act comes into force it will mean more work for local authorities and more employees.

The cost and quality of public administration are burning issues with ratepayers and taxpayers. If Layfield decides to put the whole cost on to taxpayers I bet that there will be an outcry from them, as there is now from ratepayers, who feel that they are being overcharged for less efficient and more remote services.

I have sympathy for the Government over the present structure of local government in England and Wales. It was not of their seeking. They were landed with the baby. Unless they take immediate steps, however faltering in the first instance, to tackle the problem, they will face this summer a grassroots revolt frightening in its dimensions, the consequences of which hardly bear thinking about.

In its leader on Monday last week, commenting on the devolution debate, The Times got it right when it said:
The order of events in the reform of local government was exactly wrong. First they carved up local areas and distributed functions; now they are looking simultaneously at local finance and parliamentary devolution. They should have looked first at devolution (if any), then at local organisation and finance together. The result of putting the cart before the horse is that in England and Wales new local authorities have started life in a financial mess, lacking power and sufficient responsibility in that department of their affairs; and in Scotland, which is in line for the strongest dose of devolution, a pattern of local government is being laid down that fits ill with a Scottish national assembly.
All of us, certainly those of us on the Liberal bench, say "Amen" to that. Of course Kilbrandon should have come before Redcliffe-Maud.

My hon. and learned Friend the Member for Montgomery (Mr. Hooson) quoted some frightening statistics. I had intended to add some of my own, but I have little time left, so I will confine them to very few. In Nottinghamshire, the Nottingham Evening Post has been drawing attention to some of the goings on in the county since local government reorganisation. Some 1,331 jobs have been added to the authorities in the county at a cost of about £2,700,000 The Local Authorities' Conditions of Service Advisory Board conducted a survey of salaries. It was published last May, and I believe that it has since been updated to August, but I have not the figures for the latter month. The survey showed that the merging of 1,390 separate authorities into 422 larger ones had led to a 4·7 per cent. increase in the number of posts and a 4·5 per cent. increase in salaries. Much has happened since then.

Staffing in local authorities has considerably increased. It is a growth industry. This can be seen if one looks at the advertisements in the national Press. A typical example was in The Times on 31st January. There was an advertisement for a deputy county prosecuting solicitor for Lincolnshire. It is a newly-established post and the salary was given as £5,641, rising to £6,196. An assistant prosecuting solicitor was also wanted. That, too, is a new post. Another advertisement is by the Tyne and Wear County Council for an archaeologist and an assistant archaeologist. The Manpower Services Commission advertised for a Director of Manpower Intelligence and Planning, at a salary of £12,000. The advertisement said:
The Director, now to be appointed, will be responsible for assessing the manpower intelligence, forecasting and planning needs of the Commission; making recommendations as to how these needs may be met and setting up the capability for achieving the agreed objec tives. The latter function will include assisting in the recruitment of necessary staff.
It is true that the total figure for the Civil Service—and here I give credit to the hon. Member for St. Marylebone—has shown a slight drop. The total of 690,000 had risen to 695,000, but during his period of office it fell to 687,000, but I fear the worst when next year's figures are published.

On October 10th the Sunday Times surveyed the percentage increases in non-industrial jobs in various countries between 1962 and 1973. The total number in non-industrial jobs in Japan was 7 per cent. of the population, in Italy 7½ per cent., in West Germany 8 per cent., in France 15 per cent., in the United States 19 per cent. and in the United Kingdom 29 per cent. In 1962 in the United Kingdom there were 11,749,000 industrial jobs and 11,537,000 non-industrial jobs. In 1973 there were 9,991,000 industrial jobs and 12,747,000 non-industrial jobs.

In his Financial Times "Case Study of the Exploding Costs of Local Government" Joe Rogaly said:
"Local government in England and Wales is a mechanism that re-distributes income in the most glaring display of public inefficiency since the Americans started to pay their farmers not to grow corn."
The Chancellor rightly tell us that unless we modify present wage increases we shall go bankrupt. Some of us have been saying that for a long time. At long last the right hon. Gentleman is saying it.

The first thing to do is to put a check on further recruitment in national and local government. There should be the immediate review for which we call. Today the loan debt of local authorities stands at nearly £21,000 million. It is costing £1,880 million per annum to service this debt. I agree with the hon. Member for Arundel (Mr. Marshall) that some of this will have to be written off. This has happened so often with nationalised industries. It is a crippling burden which it is impossible for them to carry.

We know that it is the Government's view that further reorganisation, following upon the traumatic upheavals in local government, which I went through along with other hon. Members who have had local government experience, would only worsen matters. We must have due regard for that view, but I suggest that it cannot be avoided if the voice of the people is to be heard on such bodies as regional water and hospital authorities.

Many hon. Members have spoken about this with greater knowledge than I possess. Like the hon. Member for Arundel I constantly receive complaints about the way in which representatives of local authorities, particularly those serving on water boards, are being outvoted by those who have been directly appointed to these bodies. In my area the Southern Water Authority has made a sudden decision to equalise charges. This is a burning issue because it was understood that this was to be phased over six or seven years.

We on the Liberal benches believe in the necessity of directly-elected regional assemblies in England, with independent revenue raising powers, under whose umbrella these sorts of bodies would operate. Having read the whole of the debate on devolution which took place on Monday and Tuesday I recommend to the Minister the advice given him by his hon. Friend the Member for South Shields (Mr. Blenkinsop). The hon. Member is not present but I told him that I would be referring to his speech. His was a sensible solution, which dealt with how we might make a start in the North-East.

As we see it, the county will ultimately have to go. The districts will become all-purpose authorities, and a new structure will be brought in at grassroots level by expanding the rôle of the parishes. Many small towns could have opted to have town council status but did not do so. The rôle of the parish must be extended into urban areas and they must be given increased powers. I endorse the evidence which the Minister will recently have received from the National Association of Local Councils which, I understand, also sent a preliminary draft for a clause to amend the Local Government Act 1972. Till these measures can be introduced it is desperately important that counties and districts should establish the closest contact. Liaison committees should be compulsory in an effort to avoid duplication.

Planning is a typical example of this. I draw to the attention of the Minister the views of Professor James, former Chief Planner at the Old Ministry of Housing and now Professor of Planning at Sheffield University. In a paper delivered to the Town and County Planning Association in December he concluded that the present division of planning powers was hopelessly wrong. He said that till it was rectified there would be a waste of money and of skilled manpower, and increasing frustration. He called for the withdrawal of planning functions from the counties at the earliest moment. It is his view that planning should be administered at regional and district level. In my constituency we have set up an area planning organisation serving the county and two districts. We did not break up our original planning team. This is a practice which could be applied in other parts of the country.

There should be greater freedom in transferability of jobs between authorities. Let us have another look at our attitude to work study. I know that this is a problem tied in with wage structures. It seems to have finished up with about two or three blokes on the job and extra staff in county hall who are getting far more money than the men whom they replace. There is room for looking at that again.

In the debate we have expressed the view, now widely held throughout the country, that the present structure of local government is a disaster. We have had the structure for a year, so we have had sufficient experience of it. People of all political persuasions are becoming increasingly restless.

Any review that is undertaken must ask these questions. Are the services provided efficient in relation to costs? Is it possible for greater productivity to be achieved? Should the standards in some services be cut? Should some services be discontinued? Are the management structures established by Bains and so faithfully followed by almost all authorities working out as well as was originally envisaged?

I have tried to outline some preliminary steps which the Government should take now. In our present economic situation, and in view of the rightful indignation of ratepayers and taxpayers, far more drastic action is needed. I do not pretend that it will be easy, but it will be catastropic if we sit back and do nothing.

9.35 p.m.

The quality and cost of administration, whether at national and local government or at National Health Service level, is a matter of crucial concern, particularly to a Labour administration committed to policies designed to enlarge the area of State provision. Therefore, I welcome this opportunity to speak in this debate, concerned as it is with the contribution made by civil servants, local government officers and public servants in their endeavours to administer and implement legislation enacted by the House.

The motion refers to the deteriorating quality of public administration and comes to the hardly original conclusion that national and local government and the National Health Service should be subject to yet another immediate review. What a splendid phrase it is—"an immediate review". It is almost as if those whose names are appended to the motion were completely unaware that what national and local administration is suffering from is a surfeit of reviews and reorganisations.

Impressive contributions to the debate have been made by hon. Members on both sides of the House. I was particularly taken with the contribution of my hon. Friend the Member for Norwich, South (Mr. Garrett) who referred to the work of the Fulton Committee, to which he made a significant contribution. I have carefully noted what he said about unified grading and the Oxbridge recruiting policy which obtained at one time in the Civil Service. I was equally impressed by the speeches made by the hon. Member for Hertfordshire, South-West (Mr. Dodsworth) who made a thoughtful contribution, and the hon. Member for Isle of Wight (Mr. Ross) which was characteristically modest.

The debate, however, has not been without its quixotic features. A challenge has been mounted by the Liberal Party—a party which, on the evidence of recent General Elections, is not likely to be entrusted by the British people with responsibility for public administration, and interventions have been made by Tory ex-Ministers and hon. Members who bear a heavy and direct responsibility for those features of public administration which seem to be the main basis of concern.

The motion lumps together the whole vast field of public administration as though all the problems were the same and needed the same kind of attention. It goes on to suggest as particularly pressing candidates for review local government and the health service. These services are still reeling from the effects of the reorganisation initiated by the previous Conservative Government. The motion commits the ultimate in double-think by complaining about both increasing costs and growing remoteness from the people. I am the last to be complacent about either of those problems, to which several hon. Members referred.

To assume that one can solve remoteness from the people on the cheap without incurring increased costs is to live in a world of make-believe. Those who have been involved in tackling this problem know that increasing participation and involvement is costly in time and money. It is an essential area for us to concentrate on, but it is not an area where we can hope for cost reduction.

Anyone can find, in the broad fields of public administration, cases of inefficiency and shortcomings. It would be ridiculous to assert that they do not exist. Indeed, they have always existed. Accusations are particularly easy to level at local services at this time because, for two separate reasons, they are going through a period of exceptional strain. I refer to reorganisation and inflation.

Less than 12 months ago there occurred in England and Wales the biggest single upheaval in local administration that has ever been adopted in a single operation. Local government, the National Health Service and the water industry were all reorganised. The form of the changes was decided by our predecessors. The present Government were opposed to many of the features of the new systems, and we take no responsibility for the result.

But we accept that, these reorganisations having taken place, it would be naïve to expect the new authorities to be other than still in a state of relative change at this stage in their existence. Indeed, no matter what shape the reorganisation had taken, a period of some years would have been necessary before the new systems settled down.

The motion says that the cost of local government services is increasing. That is true. People are paying more pound notes from their pockets in rates, but it is absurd to blame local authorities for all of this increase. By far and away the major element is inflation.

Where there are increases in real expenditure, these arise in endeavouring to meet the demand for better services which we all want. We are getting more teachers per child in the schools, and better social services, and those who talk about the increased cost of local government should go out and meet their constituents in their own homes. They should meet the elderly people who are being catered for by meals on wheels, extra-domiciliary services, and so on, which are provided on a far larger scale than ever before.

Will the hon. Gentleman explain how an assistant archaeologist, or an assistant prosecuting solicitor, delivers meals on wheels?

One can make amusing interventions. I was referring to the social services. If the hon. Gentleman cannot tell the difference between social services and archaeology, perhaps I can help him when the debate is over.

Does the hon. Gentleman agree that if the same number of meals on wheels, and the same number of domiciliary visits are being made and organised by a staff that is twice as large as before reorganisation there appears to be some cause for concern, even to him?

I pay serious attention to the point made by the right hon. Gentleman. Let him identify the authorities where he alleges that situation exists. It is all very well making generalised comments. If the right hon. Gentleman will provide me with detailed information, I shall be happy to examine it.

If I may continue, I accept that it is, unfortunately, essential in the present economic conditions to reduce the rate of growth of public expenditure. Following the recent rate support grant settlement, we have sent a circular to local authorities explaining in considerable detail how they should go about this and I am sure they will respond, however unwilling they may be to see some of their hopes frustrated.

A number of hon. Members referred to the Layfield Committee. As is well known, this committee was established by my right hon. Friend the Secretary of State for the Environment, and it will deal with local authority finance in its broadest context including, of course, the way in which local authorities spend money and the controls that there should be upon them.

Much play has been made with allegations of overstaffing and duplication and of the creation of top posts with high salaries in local government. I listened particularly to the hon. and learned Member for Montgomery (Mr. Hooson), who suggested that public administration in certain localities was overloaded with staff. Give us the details and we shall examine them. I share the concern expressed and I assure the House that such allegations are a matter of concern to the Government. I should perhaps explain that staff numbers have increased to meet the demand for a wider range of local government services. But central Government and local government have now agreed that there should be no increases next year in their present staff numbers beyond the small amount needed for inescapable commitments.

On salaries, the Government have put a proposal to the local authority associations and to other relevant bodies that certain top salaries in local government, in the water industry and the National Health Service, should be reviewed by an ad hoc independent committee under the chairmanship of Lord Boyle. Reorganisation inevitably means fewer and larger executive local authorities. All schemes of reorganisation have pointed in this direction, including the proposals put to the Redcliffe-Maud Royal Commission by the Liberal Party. To that extent, local government has become more remote and those who, like the Liberal Party, favour regional or provincial authorities are advocating authorities more remote than any we have today.

What we need to concentrate on is action to strengthen the links between the citizen and the local government system—for example, through the Government's proposals for neighbourhood councils, greater public participation in the planning process and other practical steps of this kind.

I turn to the question of the National Health Service. I was impressed by the perceptive comments of my right hon. Friend the Member for Dartford (Mr. Irving). I carefully noted what he said. It should be remembered however that all the major parties were agreed that reorganisation of the National Health Service was right and timely and that unification of the former tripartite structure of the health service was the right solution. The reorganisation was primarily concerned with administration, though the underlying aim was to provide a better service more responsive to the needs of individuals.

The reorganisation has meant fewer health authorities in England—a reduction from over 600 separate authorities to just over 100. I would have thought that that was a welcome simplification for the public and it has provided better co-ordination with the personal social services. The Government are determined that the area health authorities should be given real responsibility and freedom to get on with the job with the minimum of interference from above. That means being free within the resources available and the broad framework of established policies to respond to what people locally want.

When in opposition, however, we criticised the provisions in the reorganisation Bill governing the constitution and membership of the health authorities as being too bureaucratic and insensitive to local opinion.

I suggest that the hon. Gentleman waits until I deal with his speech when it will be demonstrably clear that no bureaucracy has written my speech.

The Parliamentary Labour Party, when in Opposition, criticised the provisions in the National Health Service reorganisaton Bill governing the constitution and membership of the health authorities as too bureaucratic and insensitive to local opinion. It was too late to change these arrangements when we came into office but we published last year a discussion paper setting out ways of making the present health authorities more democratic in their membership, and of strengthening the voice of the local community in the management of the services. Specific provision has, of course, been made within the reorganised service for local people to make known their views on the provision of health services in each health district through the community health councils. When in opposition we criticised the Tory proposals in the reorganisation Bill and were able to get them considerably strengthened. Since coming to office we have taken a series of decisions, all aimed at making the councils into more effective voices for the local users of health services. These councils will, we believe, form a real and effective bridge between management and consumers and further strengthen the local voice in the planning and management of health services.

I have already referred to our proposal that salary levels for the new management posts should be—and will be, I hope—referred to an ad hoc independent committee under Lord Boyle. We shall—as we said on taking office last year—keep the working of the reorganised service under continuing review. But a decision now for any root and branch review of NHS administration within 12 months of a major reorganisation cannot be justified.

I believe that reasonable opinion in the country recognises the exceptional problems facing local authorities and health authorities today caused by the aftermath of reorganisation and by the pressures of inflation. We may not agree with the shape of the reorganisation—certainly the Government do not support all the changes made by their predecessors. But we accept that reorganisation has taken place. The staff of local government and the Health Service deserve credit for their unremitting work in carrying through the reoganisation, while ensuing that services are maintained. What is now needed is a period during which members and officers can get the new systems working without the uncertainty of further imminent upheaval.

Perhaps I may now turn to central Government administration. Parliament has always paid critical attention to the size of the Civil Service and I do not complain about this. But it is also right that due regard should be paid to the magnitude of the tasks civil servants are asked to perform.

The Civil Service is an easy target for ill-informed and carping criticism, by those who do not bother too much about the facts. But let us look at some of the facts. The motion refers to the rising cost of administration. In fact only one-fifth of public sector manpower is in the Civil Service, and I am not counting the nationalised industries—hardly, I suggest, evidence of a bloated bureaucracy. Nor is the Civil Service populated by the mandarins that the journalists would have us believe. I am sorry to obscure the judgment of some of the pundits with more facts, but the facts speak for themselves.

I have noted the plea that the hon. Member for Hertfordshire, South West made for more professionally qualified accountants within the public administration. I thought that he advanced an informed and amusing plea. I have carefully noted it.

It should be recalled that in the civil departments of the public administration only 12 per cent. of the staff are engaged on central administration such as advising on policy and providing personnel and finance services.

The motion calls for an immediate review of public administration. The Civil Service underwent a major review not many years ago, under the chairmanship of Lord Fulton. The Fulton Committee made a number of recommendations designed to improve the quality of management and administration in the Civil Service. What we need now is not a further review and further reorganisation but the careful and continuing monitoring of performance, a readiness to adapt to changing circumstances and needs, the constant seeking after greater efficiency and greater responsiveness.

Within the Civil Service there is a constant search for new methods of organising work and applying new techniques. Apart from the staff inspection machinery procedures I have mentioned, both the CSD and other departments have powerful management services units. Indeed the Civil Service can justly claim to be in the forefront of thinking about improved methods of working, especially in such areas as computers and opera tional research. The Civil Service is also ready to seek outside skills and expertise where this is necessary. In the last seven years there have been some 300 consultancy assignments over a wide range of Civil Service work. The stereotype of the pin-striped tea drinker who has only recently exchanged his quill for a fountain pen could not be further from the truth.

Hon. Members on both sides of the House are rightly concerned with the quality of administration and its responsiveness to those whom it serves. These are matters about which no Government can be complacent. Nor can they be dealt with by some all-embracing review. We need to look at each of the services that the Government provide to consider how best they can respond.

As a Government, we are anxious to humanise public administration and to ensure that it responds more effectively and sympathetically to the needs of modern day society. Of course, we need to do more, and several honourable Members who have spoken in this debate have mentioned their particular concerns. But the debate has demonstrated clearly that there is no panacea to be sought in a grandiose and fanciful all-purpose review of public administration as a whole.

Dustbin politics are no substitute for genuine concern—concern that the individual should find public agencies helpful and accessible as in the new job centres of the Employment Services Agency, and concern that people should understand their rights and be able to obtain them, as in the Government's emphasis on helping the consumer. None of us can be complacent about the overall standard of administration or relax in our efforts to look for improvements in quality and efficiency.

Naturally, I want to deal with the criticisms made in the speech of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). I hope that I shall be forgiven if I single out the hon. Gentleman's contribution. I do so because the hon. Member for St. Marylebone (Mr. Baker) seemed to approve of his hon. Friend's speech in this regard.

The hon. Member for Cirencester and Tewkesbury has not only spoken in this debate. He wrote a very illuminating piece in the Daily Telegraph Supplement only a matter of days ago on the same subject. The hon. Member for St. Marylebone suggested that the hon. Gentleman was a authority on the Civil Service, having written a pamphlet about it some six weeks ago. However, in his article, the hon. Member for Cirencester and Tewkesbury trotted out his old hobby horses about the Civil Service being too big, too little accountable and too irresponsible. But how can he expect his allegations to be taken seriously when he refers to "our 800,000 bureaucrats" in the Civil Service? Surely an hon. Member who is interested in official statistics knows that there have not been as many as 800,000 civil servants since the day his mother tore up his ration book to light the fire in the parlour.

The hon. Gentleman went on to say that what was needed was a huge cut in the number of public servants. Later, he moved into the world of fantasy by suggesting that there must be an outside axeman charged with going into each of the corridors of Whitehall and cutting the numbers down to size. It was all blood curdling stuff. He might at some time consider including it in a future Tory policy statement under the heading, "Bring Back the Mad Axeman of Tewkesbury" but such ideas have little relevance for the real world of public administration. It is a fact that our civil and public servants make a real and positive contribution to community life and to our national welfare and well-being. I hope that on occasions more hon. Members on both sides of the House will recognise the real contribution that is made by such people in endeavouring to do a worthwhile job—

It being Ten o'clock, the debate stood adjourned.