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Local Government (Supply Of Goods And Services)

Volume 114: debated on Tuesday 7 April 1987

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4.8 pm

I beg to move,

That leave be given to bring in a Bill to prevent local councils discriminating against private companies who supply goods and contracting services, and for related matters.
I shall detain the House for only a short time. My Bill is designed to require local councils to allow private contractors the unfettered right to tender for the supply of goods and services, to stop them creating companies of convenience as a way round the Government's economic policy, and to amend an anomaly in the General Rate Act 1967.

The Bill will prevent a serious and growing abuse of purchasing power by some local councils. It is the practice of those councils to try to impose political conditions on private businesses that have nothing to do with their ability to provide goods and services. These councils seek to influence policy and gain publicity in areas such as defence, foreign affairs and employment, subjects that should properly be decided by the House and not by the lethal Left in control of councils such as Brent, Haringey, Lambeth and Newham, whose primary duty it is to provide their ratepayers with the highest standard of services at the lowest possible cost. It is not for them to impose their own interpretation of the law, but simply to administer it.

Over recent years the number of local authorities imposing onerous or irrelevant conditions on private businesses has been growing at an alarming rate. Such impositions range from the requirement to fill in long and detailed questionnaires which are wholly irrelevant to the firms' commercial and technical abilities to outright bans on firms for purely party political dogmatic reasons.

There are now over 40 councils which introduce overtly political considerations at some stage of their contractual process. Labour-controlled Tameside asks potential suppliers whether they make donations to political parties, the tacit threat being that if they subscribe to any party other than its own they will not be included on, or will be removed from, the tender lists. The London borough of Newham asks for information as to whether any of the firms or directors of the firms are freemasons. That is wholly irrelevant to the goods and services the firm is asked to provide. Links with South Africa, work at defence establishments such as Molesworth and Greenham common and the use of self-employed labour are other common areas of lethal Left local interference.

Self-employment is a dynamic sector of our economy. It has been responsible for a major part of the growth of the labour force in recent years and is the specific reason for the welcome and continuing reduction of unemployment. Those local councils which seek to ban this practice attack the freedom of the individual to sell his or her labour wherever they choose within the law. They would hamper economic flexibility and force more people into the black economy or, more sadly, out of work altogether.

My Bill in no way affects a local council's right not to use a contractor on the grounds of incompetence nor would it impair its statutory duties under existing legislation such as health and safety legislation arid the Race Relations Act 1968. I recognise that in some areas of high unemployment a percentage of workers living locally should be employed locally and my Bill will make provision for that. However, it will also prevent the abuse of power by local councils which seek to interfere on issues that are, quite simply, none of their business. It will eliminate unnecessary bureaucracy and red tape, it will enhance freedom, encourage business enterprise and stimulate employment.

The second purpose of my Bill is to stop councils from creating companies of convenience, controlled by the same council buying its assets and leasing them back to it simply to evade the Government's financial guidelines. By way of illustration, I shall explain what is happening in Manchester city council. A total of 32 buildings owned by the council are to be sold to an investment company, also owned by the council. That company will lease the buildings back to the council. The money to buy the properties will be borrowed from a number of banks by a company controlled by the council called the Manchester Mortgage Corporation. Among the buildings affected are the central library, the central art gallery and a shopping centre in a suburb of the constituency of the right hon. Member for Manchester, Wythenshawe (Mr. Morris).

The buildings are valued altogether at £200 million. The Manchester Mortgage Corporation will hand the £200 million to the council in exchange for a 75-year lease on the 32 properties. The council will put the money into its bank account to earn £15 million a year interest. As soon as the Manchester Mortgage Corporation gains the leases for the properties it will lease them back to the council for 20 years, less one day. Interest will not be paid for the first two years. The poor ratepayers will have to pick up the tab.

Manchester city council is seeking to borrow against its capital assets to finance its day-to-day expenditure. That is illegal. However, that cunning piece of creative accounting is an attempt to achieve a way round the law be redefining the word "capital". My Bill would put an end to that.

The third purpose of the Bill is to amend section 34 of the General Rate Act 1967, which denies local town councils the right to receive direct rateable benefit from energy installations such as power stations. I have a power station in Rugeley in my constituency of Mid-Staffordshire and my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), who sits on the Government Front Bench, has Sizewell A within his constituency and will soon have Sizewell B. Perhaps I can illustrate the point by referring the House to the Suffolk context. The recently published Layfield report said that one of the matters raised by local interests was the question of the financial benefit the locality could expect to derive from the CEGB in the event of Sizewell B being constructed. Suggestions had been made that the board should finance directly the provision of local amenities such as a swimming pool, sports centre and so on. Concern had been expressed that, although the rates that would be paid to Suffolk coastal district by the board would hugely increase in the event of Sizewell B being built, none or virtually none of this increased revenue would accrue to the benefit of local council finances because there would be a commensurate reduction in the rate support grant to the district council.

My Bill would seek to amend that anomaly. That anomaly does not apply to other public sector buildings such as those owned by British Telecom but simply to energy installations. The CEGB has already drawn that point to the attention of my right hon. Friends the Secretary of State for the Environment and the Secretary of State for Energy and I sincerely hope that, if the House approves my Bill, my right hon. Friends in those Departments will seek to amend the Act.

The most important aspect of the Bill is to assist the ratepayers in Manchester and in those 40 and growing other local authorities where lethal Left-wing councillors are seeking to discriminate against their day-to-day interests in pursuit of party political dogmatic objectives that have absolutely nothing to do with their functions and their duties to the ratepayer.

Yes, Sir.

Trying to secure a rational debate on a subject such as contract compliance is rather like going downstairs to advocate temperance in the Strangers' Bar. We have just heard a speech from the hon. Member for Mid-Staffordshire (Mr. Heddle) which is typical of the graceless and mean-spirited approach that one is now getting from the Conservative party. In fact, it is typical of the hon. Gentleman himself.

This Bill is about contract compliance. The hon. Gentleman would like to ban all forms of contract compliance and in that he will find several supporters on his own Front Bench, including the present Secretary of State for the Environment.

I know because the right hon. Gentleman said so and I must assume that on that occasion he was telling the truth.

Contract compliance is not some alien doctrine. Indeed, the House of Commons passed a fair wages resolution, which is contract compliance, as did the London county council, the forerunner of the Greater London council, in 1891. Even the Government, who are attempting to reduce Britain to a state of economic anarchy, are still prepared to retain certain residual elements of contract compliance in the contracts they issue.

The GLC's work on contract compliance was based on the American model. It was not something imported from Moscow, as the newspapers were suggesting, but was based on the experiences that started in the United States under President Roosevelt when he signed Executive Order 8802 in June 1941. It took the race riots in the United States in the 1950s and 1960s for teeth to be put into that policy and it was President Kennedy who did that with Executive Order 10925 when the phrase "affirmative action" first appeared in the United States. It is now used to describe the generality of all programmes, policies or activities aimed at eliminating discrimination and promoting equal opportunities. It is working in the United States and it could work here.

President Reagan, rather like the Prime Minister, was trying to deregulate across the board. He did not like, and no doubt still does not like, affirmative action and contract compliance, so an onslaught was launched on the concept. However, in the end Reagan was defeated, not just by the civil rights groups but by the American equivalent of the CBI, the National Association of Manufacturers, which said that it did not want to see affirmative action removed. The White House has now admitted defeated, and affirmative action remains. However, at a time when President Reagan has admitted defeat, the Government are prepared to fight the battle again. I can only hope that they meet with the same fate.

In this country, there is a need for contract compliance. The rate of unemployment among young blacks is twice as high as that among young whites, and the Policy Studies Institute estimates that at least one third of all employers discriminate against black applicants at the point of recruitment. Women's earnings as a proportion of men's earnings remain at about 73 to 74 per cent., slightly lower than their high in 1975 at 75·5 per cent. Sexual segregation remains a dominant characteristic of the United Kingdom labour force.

In respect of disabled people, a recent study estimated that an able-bodied applicant was 1·6 per cent. more likely to receive a positive response from an employer than a disabled applicant with equal qualifications. Bringing a court case for failing to meet the 3 per cent. quota established under the Disabled Persons (Employment) Act 1944 is unheard of. This quota is honoured more in the breach than in the observance by the Government, but when a borough such as Lambeth decides to try to meet the provisions of the 1944 Act it is attacked by the vermin in Fleet street and derided. A number of local authorities are attempting to ensure good employment practices with the employers and contractors with whom they have business. Whatever else one says, given the fact that about 80 per cent. of employment is now in the private sector, it is only by attempting to influence policies within the private sector that one can see these good employment practices pursued. Contract compliance offers just such a way.

We do not need a Bill like this. I know, whatever the hon. Member for Mid-Staffordshire might have said, what his real intentions are, because he has stated them here on more than one occasion during local government debates. We want a Government-backed scheme of contract compliance along the United States model. Without it, all the protestations by Ministers about deploring discrimination in employment will remain a massive exercise in calculated hypocrisy. Many local authorities are trying to do something positive and deserve to be defended in their actions by the House and not subjected to this cheapjack little Bill at the fag-end of this Government. I ask the House to reject it.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Heddle, Mr. Ian Gow, Sir John Page, Sir Geoffrey Finsberg, Mr. Robin Squire, Mr. John Watts, Mr. Malcolm Thornton, Mr. Robert Key, Mr. Eric Cockeram and Mr. John Powley.