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Replication Of Property Services Agency Functions

Volume 167: debated on Monday 12 February 1990

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'The Secretary of State shall ensure that the functions hitherto exercised by the Property Services Agency and the Crown Suppliers are not, directly or indirectly, replicated within any department of Government.'.— [Mr. O'Brien.]

Brought up, and read the First time.

7.2 pm

I beg to move, That the clause be read a Second time.

The new clause refers to the replication of Property Service Agency functions—the mini-PSAs. We went into this in some depth in Committee, and the Minister replied to some of our questions. On 16 January he referred to the Ministry of Defence carrying out work that is now done by the PSA, and accepted that the Ministry is now recruiting people to take over the work of the PSA. Between 700 and 800 people will be employed to do the work in the Department. The Minister said that MOD was the largest Department, so it would employ the largest number of people to do PSA work.

In Committee I also asked the Minister about other Departments, in particular about the Home Office and its prisons. I also mentioned the Department of Social Security's new offices to be built in various parts of the country, and the Department of Health's hospitals and clinics. I also referred to other Departments that would assume the responsibilities of the PSA. My question was:
"Is the Minister now saying that all those Departments will have their accountants, consultants, engineers and supervisory staff?"
The Minister replied:
"That is right."
In other words, the Minister said that all other Departments will have their own staff to do the PSA's work. We have agreed on defence, but do I take it that the Cabinet Office, the Department of Education and Science, the Department of Employment, the Department of Energy, the Department of the Environment, the Foreign and Commonwealth Office, the Department of Health, the Home Office, the Northern Ireland Office, the Scottish Office, the Department of Social Security, the Department of Trade and Industry, the Department of Transport, the Treasury and the Welsh Office will all start recruiting personnel to do the work upon which the Property Services Agency is now engaged? Will all those Departments take on accountants, consultants, engineers and supervisory staff, and will they be on the payroll of those Departments? If so, the estimated figure given us in Committee—1,000 people—must be far short of the true number who will be employed in the various Departments. May we have all the details and information?

If what the Minister told us in Committee was factual, it is obvious that value for money is important. So the Minister must explain where the Government stand in relation to value for money in the privatisation of the PSA and the Crown Suppliers.

The Minister has not dealt with the Wardale inquiry, in Committee or in the House. He has commissioned no real inquiry to prove that the privatisation of the PSA is on the right lines and will benefit the Government. There has been no exercise to show that the Government's approach to the privatisation of the PSA is right. The Wardale inquiry, which was never acted or reported on in detail, identified the principal problems in the PSA. It said that the fundamental problem related to management's reluctance to acknowledge that problems existed, and to its lack of vigour in handling them once they had been identified.

People involved in the inquiry believe that this situation shows a degree of complacency by the management. That complacency is reflected in its attitude towards dishonesty and fraud, and we raised those issues in Committee. We wanted an assurance that that situation would not be mirrored in all the Departments that I referred to in my earlier remarks.

The Wardale inquiry said—the Minister has made this point on more than one occasion—that the purpose of untying the various Departments from the PSA was to allow them to have more financial control over their own affairs. One has to ask whether the various Departments understand the concept of financial control sufficiently when it comes to the actions and functions of the Property Services Agency. Unless there has been extensive training and consideration of the problems of financial control, there will be mismanagement when the PSA is privatised, as the Wardale inquiry pointed out.

If management control techniques are not adequate within the various Departments when the PSA is untied from them, it will be difficult to detect irregularities, unless there is to he some sort of in-depth study of problems that may develop in the various Departments which I listed. In Committee we wanted more information, and we mentioned the serious issue that I have referred to tonight. In Committee the Minister said, after he had been questioned:
"I am not sure that we can take the discussion much further, Sir Giles"—
he was the Chairman.
"We have had a good debate on clause 1 and I hope that the Committee will agree to allow the clause to stand part of the Bill."—[Official Report, Standing Committee D. 16 January 1990; c. 121–22.]
We had not had sufficient discussion. We needed to examine and to inquire about a great deal more. The Minister did not come up with the answers to questions that were put to him. Therefore, I shall put further questions to him tonight.

Is it proposed that all Departments, including the Cabinet Office, the Welsh Office and the Scottish Office, will have their own corps of people to do the work that the PSA and the Crown Suppliers carried out?

The Minister said that a lot of the work would be let out to contract but, as we mentioned to the Minister in Committee, who will supervise the contracts and tenders? Who will check the work that is carried out? We have had no answers to those questions, and I hope the Minister will answer them tonight.

Having listened to the hon. Gentleman's argument, I am uncertain whether he feels that it would be better if fewer or more people were employed on those tasks. I am equally confused by the use of the word "replicated" in the new clause. Does that mean reproduce or diminish? It is not a word that I know, and I think that the Opposition should state whether they are in favour of more or fewer civil servants to do this work.

7.15 pm

I have to excuse the hon. and learned Member for not being aware of what has happened previously. We are saying that there is little cause for him and for his colleagues to support the Bill, because the present organisation—the PSA—meets all the demands of the various Departments, which will now have to recruit staff. When we say that we do not want those Departments to replicate the PSA, we mean that we do not want mini-PSAs in every Department because we consider that that would be uneconomic. It is not value for money, and would not result in good management practice.

I ask the hon. and learned Member for Perth and Kinross (Sir N. Fairbairn) the same question that I asked the Minister. The PSA has developed various manuals on the work that it does for various Departments. Security is at the top of its list. The PSA has a manual on security in various Departments, which has been built up during years of experience—for the Ministry of Defence, the Home Office, the Foreign Office, the Cabinet Office and the Departments of Social Security and Health. Under the new system, where will the manual go? The Minister did not answer that question in Committee. I asked him again tonight where will the centrally-owned documents which are now in the hands of the PSA be held in future? At one time, the Minister suggested that they could be held by the property holdings department, which would still be part of his Department. If that is so, why are we here? That means that we will have the same situation as we have at present. The manual will go round from Department to Department and there will be no security. That is the situation into which the Minister is leading the House. If our clause is not accepted, there will be a mishmash of security provisions throughout the various Departments.

There is also the question of supervision to ensure that the projects demanded by the various Departments are in accordance with their specifications. Each Department will have to ensure that and will have to recruit the best personnel to carry out the work. There will be a small group of people in a Department to undertake work, whereas, at the moment, the PSA supervises projects in all Departments and can recruit the best staff. The PSA has the knowledge to carry out the work, and the Minister would be wise to leave things as they are. If that is not acceptable, I ask for the assurance that we are seeking in new clause 1—that there will be no duplication of work. Or will Conservative Members join me and my colleagues to ensure that new clause 1 stands part of the Bill? That would be in the best interests of the House and would show that we are concerned about value for money. The report of the Wardale inquiry made it abundantly clear that there must be efficient management and financial control. If there is not, there cannot be protection against dishonesty and fraud. We are trying to protect the House and to make sure that we get value for money.

Will my hon. Friend the Minister tell the House exactly what will happen after privatisation if replication is allowed? I want to be sure that my constituents have the right after privatisation to be allowed to compete properly and fairly without having set against them an in-house programme and all the problems of single action tenders that can arise through Departments giving the jobs to their own boys. I should like to be certain that there will be open and fair competition after privatisation and that nothing will be held back. I hope that the Minister can convince the House about that.

The Parliamentary Under-Secretary of State for the Environment
(Mr. Christopher Chope)

I certainly hope that I can convince my hon. Friend the Member for Hastings and Rye (Mr. Warren) and the House on that important point. It would be pointless for each Department to set up its own in-house works organisation, and that is not the Government's purpose in proceeding towards the untying of Departments. The policy of untying Departments for the PSA predates the Bill and any proposals for privatisation. That is why the hon. Member for Normanton (Mr. O'Brien) is mistaken in his approach. The new clause would prevent the functions currently undertaken by the PSA and the Crown Suppliers being undertaken by other Departments. Indeed, matters would go further because the new clause would prevent the devolution of procurement responsibilities to Departments, and that is well outside the scope of the Bill.

Untying Departments from the PSA will put financial responsibility where it should be—with the user Departments. It will enable Departments to obtain value for money through their own purchasing decisions instead of having to rely on a central Department to make the decisions for them. That is one of the fundamental principles of the financial management initiative that predates the Bill.

I should like to clarify what the Minister means. Does he think that when the Home Office wants to develop or build a new prison the design work should be left to the PSA and not to the client Department, which is the Home Office? Is the Minister saying that the Home Office will not have an input into the design or building of a new prison but that it will be left to the PSA? Will the same principles apply to the building of a National Health Service hospital? Does the Minister agree that it is for the client Department to instruct the PSA, which then presents designs for which the client can choose? Is not that the way that it works?

That is indeed the way in which the system largely works at the moment. Prior to untying, Departments had no choice but to go to the PSA. They now have the opportunity to go to other organisations. That is why the document issued by the Ministry of Defence, to which the hon. Gentleman referred, praises the essence of the financial management initiative about untying. It says that untying from the PSA will bring greater choice. That is what it is all about.

The financial management initiative aims to obtain value for money through a clearer definition of responsibilities and the benefits of competition. To carry out those responsibilities effectively, each Department will need some expertise to know when or even how to commission consultant advice. Departments will need to be intelligent customers for professional services. That is the essence of what is proposed.

It might be helpful to the House if I refer briefly to an extract from the annual report of the central unit on purchasing. It states:
"Arrangements were made to transfer financial responsibility from PSA to departments (effective from April 1989) for part 1 capital works and to simultaneously untie departments from the requirement to employ PSA. Maintenance and minor works would follow a similar path in April 1990. CUP has been directly involved in three areas:
  • —development of ownership responsibilities in owning departments;
  • —development of a more commercial approach to project management in PSA, together with appropriate organisational and procedural changes both in PSA and the owner departments;
  • —providing specific support and professional input to individual projects.
  • Major departments have adopted the concept of a single point responsibility for each capital project and many have initiated organisational changes…In some departments with large works programme, technical support organisations are being developed to assist the project sponsor. These units will provide the technical expertise necessary to inform the sponsor's decisions. This is a vital role which will significantly improve the project appraisal and management during all stages of the project."
    Fewer people are involved in that than are presently involved in the PSA. It is interesting to note that the central unit on purchasing concludes that, although it is too early to have a full assessment of the effects of untying,
    "it is already clear that project sponsors are benefiting from a more responsive and flexible PSA which, coupled with greater commercialism, should result in a significant overall improvement in project performance."
    That is the Government's aim. I hope that the House will reject the new clause.

    A terrible experience for Scotland was the PSA construction of new court buildings. The PSA was advised by the Scottish courts administration. The buildings are all impracticable, extravagant and extraordinarily badly designed. If they had been subject to commercial competition, it is impossible to believe that buildings that touch upon the lives of so many people could either have been so expensively built or so badly designed.

    I am disappointed to hear what my hon. and learned Friend says. I visited some of the court projects in Scotland and I know that the client, the Scottish Office department responsible for courts in Scotland, is much impressed by the work that the Property Services Agency has carried out. I looked at the new sheriff court in Glasgow. Although the design of the building may not be to everybody's taste and perhaps not to the taste of my hon. and learned Friend the Member for Perth and Kinross (Sir N. Fairbairn), he cannot disagree that the building is mammoth and that it is effective for the function that it has to perform.

    I am amazed that the Minister chose Glasgow sheriff court as the building on which to model the excellence of the PSA. A more impracticable building could not be discovered. It was vastly over budget, 90 per cent. of the space is unused, and to reach the only consultation room the solicitor is required to pass between the cages in which prisoners awaiting trial are kept. It takes half an hour to get from the court to visit a client. There are 15 armchairs in the dock but only two places for counsel who represent the people in the dock. If that is good design, God help us.

    I am sorry that that court's design does not appeal to my hon. and learned Friend, who has experience of using it

    The best court building that the PSA has commissioned in recent years is the court building in Truro, which has won probably half a dozen design awards. It is regarded as one of the best buildings built last year. I was lucky enough to be present when its foundation stone was laid and at its opening. Everybody is much impressed by it. Many other court buildings for which the PSA has been responsible have received similar accolades from the architectural profession.

    Given what I said in Committee, the Minister may be surprised that on Report I rise to agree with him strongly. As a Scottish Member of Parliament, I do not take lightly what was said by someone who is not only a Back-Bench Member of Parliament but chairman of the Historic Buildings Council for Scotland, an appointment that is made by the Government. This is not a jocular matter, because by implication some serious charges have been made against some important people, whose reputation may be affected. At his convenience, will the Minister, or the Secretary of State, write to me commenting on the intervention made by the hon. and learned Member for Perth and Kinross (Sir N. Fairbairn)? This is a grave issue.

    7.30 pm

    Because architecture is a subjective assessment of buildings. Architects disagree about the merits of a particular building. My hon. and learned Friend the Member for Perth and Kinross holds a different view about the sheriff court in Glasgow from the hon. Member for Linlithgow (Mr. Dalyell).

    I congratulate the Minister on defending the architecture and the amount and quality of work done on those court buildings. If the PSA is so good, and I agree that it is, why are the Government privatising it?

    The answer is quite straightforward: because the PSA is so good, it is important that its expertise is available in a wider market.

    Is not the danger that the PSA will be lost? We know that it did extremely well before the Government began to run it down and turn it into a second-class service. Therefore, its value is not as high as it would have been a few years ago. Its past considerable achievements could be maintained if the Government were prepared to back it.

    The facts show that the quality of work that the PSA is commissioning and doing is improving year after year. The work that has been done at Kew gardens is an example of the high esteem in which the PSA is held. The restoration of Fort George is a magnificent example of the PSA at its best. I am sure that it will have an enormous amount to offer the private sector, and I hope that it will do so not only domestically but internationally.

    Before we are carried away on a tide of euphoria, I hope that hon. Members will recall the report that the Select Committee on the Environment made after it had interviewed and examined the PSA. In support of my hon. and learned Friend the Member for Perth and Kinross (Sir N. Fairbairn), may I say that the Glasgow sheriff court was completed by the PSA, but the new senior judge wanted to enter court not from the left but from the right, so it had to start all over again. Hon. Members should consider the PSA's record on finishing jobs on time, but they should not consider its record on finishing work within the cost yardstick, otherwise they will have a heart attack.

    My hon. Friend makes a valid point. Sometimes delays are incurred because, for example, a member of the judiciary disagrees about the design of a building. Sometimes those delays are blamed unfairly on the PSA, when truly the responsibility lies with the client. That is why the essence of the financial management initiative is to ensure that responsibility for such delay lies where it truly should—with the client.

    We have explored the new clause conscientiously and thoroughly, and I hope that the House will reject it.

    The point of the new clause is to avoid empire building within Departments. I am sure that Departments will find reasons for employing experts in security, building design or other matters.

    The new clause aims to avoid duplication of functions that are covered by the PSA at present. I agree with the Minister about effective and efficient administration, but the danger is that duplication will affect the purpose of the Bill. The new clause has much to commend it in that respect.

    I feel that I should intervene, given the remarks made by the hon. Member for Linlithgow (Mr. Dalyell), to which I do not object. I am chairman of the Historic Buildings Council for Scotland, and I hope that I was chosen for that position because I am sensitive to the appearance of buildings and their practicality and cost.

    My hon. Friend the Minister said that Glasgow sheriff court is an example of the excellence of the Property Services Agency. In my opinion, it is a singular example of the fallacy of the monopoly of the PSA and of the excellence of the purpose of the Bill.

    Glasgow sheriff court rivals in its appearance Goebbels' propaganda ministry in East Berlin, which still stands. It is brutal and hideous. Originally, it was planned to be one third higher than it is, but because the extravagance of its absurdity prevented it from being practical it was required to be one third lower. It is a building of great impracticality, and 90 per cent. of its usable space is unused. It is ill-designed, greatly extravagant and preposterous. Without challenge—the PSA cannot be subject to challenge—the agency decided that the bench in the court should be 40 to 50 ft long. The sheriff therefore cannot speak to the shorthand writer, who is too far away. The witness box is such that the jury cannot observe the witness, and the presiding judge is lower, and therefore appears lower in status, than those appearing in court. There are 15 swivelling armchairs in the docks of the jury courts. I presume that the courts are expected to house 15 accused people, but the table at which their representatives sit has room for only two people on each side. Presumably, on the prosecution side will be the procurator fiscal and his assistant, and on the defence side one advocate and one solicitor.

    The building is remarkably impractical. It has certain modern, tasteless features. The great arms of Glasgow has been smashed into bits so that it is incomprehensible and cast in granite over the door. I imagine that the hall is twice the length of the Chamber—for what purpose, I cannot imagine. The building is impractical. To go to the cells, one must go on a long trail, and there is no system of communication between the courts and the cells. At the cells, there is a huge area where the police can undertake their activities and it is unlike any other court that I have seen. However, there is almost no provision in the cell area for solicitors or lawyers to interview their clients. I question whether the Property Services Agency can design courts.

    Is the hon. and learned Gentleman saying that the court's design and layout were totally the PSA's responsibility and the client department was not involved? Does he believe that the client department does not become involved in that work?

    No, but unfortunately that makes it worse. The Scottish courts administration is the adult child of the PSA. There are extraordinarily badly designed courts in Airdrie, Greenock and Glasgow. Look at what the PSA and the Scottish courts administration propose for the High Court in Glasgow, one of the great buildings of the city. They propose a ruinous and impractical scheme, which was opposed by everyone else, as was the Glasgow sheriff court which practises therein. Therefore, nothing could be better than challenging the PSA's dominance.

    I have had the benefit, or otherwise, of being a Minister. On the first day I moved into my small office, I was visited by six people from the PSA—Mr. Curtain, Mr. Carpet, Mr. Desk, Mr. Chair, Mr. Picture and Mr. Someone Else—who told me that they would transform my office at a cost of £6,600. When the PSA offered to move the Crown Office into the royal high school building in Edinburgh, it did the same, except this time at a cost of £160,000. Monopolies of this kind that fall to Ministers and Government agencies should be challenged by those who have more common sense and more idea of economy and practicalities. If the Minister wants to come with us to Glasgow sheriff court, either as a client or as a colleague, I shall show him the absurdity of the work carried out by the PSA.

    I have not yet been to Glasgow sheriff court, but I am not sure that I want to go as either the client or the colleague of the hon. and learned Member for Perth and Kinross (Sir N. Fairbairn). I have, however, been to Fort George, where the work was done brilliantly. Last week, I was at Kew gardens for the speech by the Prince of Wales on rain forests-a matter close to the heart of the Secretary of State. The experts, whom we both know, were full of praise for the PSA's careful work to take account of special needs. The PSA did a brilliant job there.

    I cannot agree with the hon. Member for Langbaurgh (Mr. Holt) if he believes that, a private

    consultant or architect designed a court house, there would not be changes to the design. Changes are made whether a building is designed by the PSA or by a private company or architect. If a judge says that he wants to enter the court room from the right, that will affect the PSA and the private consultant. If that is the Bill's basis, there are no grounds for pursuing it, because nothing will change.

    7.45 pm

    Paragraph 72 of the Environment Select Committee's report states:

    "The original concept of an all-embracing agency has failed the test of experience. The PSA was established to provide a total service to Departments, but its functions have gradually been chipped away by its client Departments. It has been found to be too impotent and too cumbersome, with lines of communications that are far too long."
    That damning paragraph explains why we need to privatise the PSA.

    The Minister referred to project performance as one reason for giving the various functions to the client Departments. How does one measure project performance unless there is someone in each Department measuring it? The Select Committee's report did not refer to project performance. Research is needed to determine what the Minister means by measuring project performance. He paid credit to the Truro court house. If such expertise is available, why do the Government want to lose it? The Minister said that he would like the PSA to move into a wider market. Why are we not discussing a provision to allow that to happen, instead of destroying it?

    The hon. Gentleman referred to the Government. I should like to make it absolutely clear that the Select Committee's report was a unanimous report by all parties.

    There is no reference in the report to the Minister's point about project performance. I should be interested to learn how the Minister will ensure that project performance is measured in every Department that will benefit from the Bill, as they will all have their own mini-PSAs.

    We should discuss how to give those people with expertise in the PSA and the Crown Suppliers more opportunities to work in the private sector. Because they are dictated to by the Department of the Environment, they are prevented from undertaking other work, just as happens with local authority public works departments. If the aim is to provide a wider market for the expertise of the PSA and the Crown Suppliers, that could be provided without this legislation.

    The Minister has not given us a good reason why we should not pursue the new clause. I know that we have only limited time in which to debate the new clause and amendments, and the Third Reading, and I do not intend to divide the House now; we intend, however, to divide it on Third Reading.

    Question put and negatived.