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Cabinet Office

Volume 524: debated on Wednesday 2 March 2011

The Minister for the Cabinet Office was asked—

National Citizen Service

The pilots will be based in 190 different locations this summer and have a good geographical spread in regions across England. I am delighted to say that more than 11,000 16-year-olds will have the opportunity to take part.

My constituents and I are very much looking forward to the service arriving in Hastings and its environment. What are the arrangements for rolling the service out further; who will be in charge of fulfilment; and how can MPs get involved with it?

This year’s pilots involve areas represented by 400 MPs, so there are plenty of opportunities to get involved. I am delighted to say that Catch 22 and the Prince’s Trust are leading the pilots in East Sussex this year, and I very much hope that my hon. Friend will get involved because this provides a fantastic opportunity for young people in her area to participate in a very positive experience.

Anything that taps the idealism of young people in the wider society is clearly to be welcomed; it is a good thing. These pilots, however, seem to be an inadequate response to the needs of 965,000 young people who are now out of work. The scheme itself was criticised, as the Minister will know, by the university of Strathclyde, so will he at least indicate the date by which the scheme will be made universal for all young people, as the Prime Minister promised before the election?

I am sorry that the hon. Gentleman appears to have such a downer on the scheme, which provides a hugely positive opportunity for young people in this country. We are testing it thoroughly on behalf of the taxpayer—there are 11,000 places this year and 30,000 next year—with a view to rolling it out, as he suggested, to make it more widely available and so compelling for all 16-year-olds that they will want to get involved in the future.

Big Society Bank

2. What steps he plans to take to ensure that the big society bank has a social mission as part of its statutory remit. (42473)

In our social investment strategy, announced on 14 February, we set out that the big society bank will be an independent institution with a locked-in social mission and initial capital provided by the banks. Sir Ronald Cohen and Nick O’Donohoe are working with us and the banks to put forward a proposal on how best and most speedily to achieve that.

As how the big society bank will be set up and the terms on which it will receive capital from UK banks are still unclear, will the Minister explain how he will guarantee the bank’s social mission and ensure that it does not become like other mainstream lenders?

As I said, the social remit will be absolutely built into its mission; it is a crucial part of it, so it will be locked in. I have to say that criticism comes poorly from Labour Members who have talked about creating a social investment bank for many years. Frankly, on taking office last May, I expected to find well-prepared plans, but when I opened the file, I found it pretty much empty.

The Minister will know that I welcome the bank. What priorities will it have to fund projects associated with, and supporting, young people?

That will be one of the bank’s priorities. The legislation allowing the money from dormant bank and building society accounts to be put into a social investment bank provides a priority for youth projects. As I say, this will be a serious priority. The bank will be able to provide wholesale funds into the already growing social investment market, for which there is a huge demand. We want to see much more money—including, over time, mainstream finance from the mainstream banks—being made available for this market.

We welcome the progress the Government have made in setting up the big society bank, and we note that it will be launched with £300 million-worth of capital at the end of this year. However, community projects also rely on revenue funding to support capital investment and according to estimates from the Association of Chief Executives of Voluntary Organisations, the total loss of revenue faced by civil society organisations will be at least £1.14 billion in the next financial year, rising to £3.1 billion a year by 2014-15. Does the Minister accept these figures and, if not, will he undertake to provide the Government’s own estimates of the revenue losses faced by community organisations over that period?

The social investment bank planned by the last Government would have received a meagre £75 million of investment at best, and probably a great deal less than that.

I do not know whether the right hon. Lady noted what my right hon. Friend the Secretary of State for Communities and Local Government told the conference of the National Council for Voluntary Organisations yesterday. He said that the Government had “reasonable expectations” that local authorities would not impose greater cuts in their funding for community, social and voluntary organisations than they imposed on their in-house services, and that if authorities did not follow those “reasonable expectations”, he would contemplate making them statutory.

The fact is that we face the biggest budget deficit in the developed world. As a result of the legacy of the Government of whom the right hon. Lady was a prominent member, we are spending £4 for every £3 in revenue, and we cannot carry on like that. The necessity—and it is a necessity—to eradicate the structural deficit is something for which the right hon. Lady should bear her full share of responsibility.


3. What assessment his Department has made of the potential efficiency savings from the use of teleconferencing. (42475)

Teleconferencing and video conferencing are a key part of our strategy to minimise travel in the civil service. Officials have been encouraged, indeed instructed, to use alternatives. Telephone calls can be quite helpful in that regard, when possible. So far, Departments have saved £50 million in the current financial year by avoiding travel, but by the better buying of travel services we have saved an additional £50 million. We are also reducing the cost of teleconferencing itself. We have opened up fresh discussions with major suppliers, and as a result of the Crown renegotiations that I have been overseeing, one of our suppliers has already offered a significant reduction in its audio conferencing tariffs.

I thank the Minister for that full answer, but will he make it a little fuller by telling me which Departments make good use of teleconferences and which do not, and why?

That is a very good question, to which I do not have an immediate answer. I am prompted by the hon. Gentleman’s interest to look into the matter, and I will get back to him with some answers.

Teleconferencing provides a key opportunity for digital policy. The head of that policy in the Minister’s Department was appointed without a fair and open competition, as a former party staffer. That was one of 30 appointments revealed by freedom of information releases this week. Can the Minister tell me who those 30 people are and what they do?

Of course I understand why the hon. Gentleman is so outraged by the idea of people with party affiliations fulfilling a public service vocation, because of course none of that ever happened under his party’s Government—a Government who, with the hon. Gentleman as one of the principal operators, distinguished themselves by their approach to cronyism.

I can tell the hon. Gentleman that anyone who has been appointed to a civil service role has passed all the appropriate tests, which, as he will know from his experience as a Minister in my Department, are extremely rigorous.

Big Society Bank

Sir Ronald Cohen and Nick O’Donohoe are working with us and with the banks to develop a proposal for the big society bank. As I have said, it will initially be capitalised by an investment from the mainstream banks. We are currently seeking to secure state aid approvals from the European Commission so that money from dormant bank and building society accounts can be directed towards the big society bank. Nothing along those lines had been done when the Government took office. In the meantime, we are working with the Big Lottery Fund to ensure that interim arrangements are in place by April, so that we can make early investments as soon as the first round of dormant bank account money becomes available in the summer.

Youth clubs such as the Metro, Boston Lodge and Colville House play an important role in my constituency. What guidance and financial assistance will be given to them, and to those operating new voluntary sector schemes whose aim is to take over the running of other local services such as crossing patrols and libraries, and when will that guidance and assistance be available?

As my hon. Friend will know, a key part of our approach to public service reform will be encouraging voluntary and social enterprises to bid for the delivery of public services. They are being given a massive opportunity to develop different revenue streams and deliver public services in a responsive and agile way. The big society bank will deliver extra wholesale funding to the social investment market for start-up and development capital for such organisations. In the meantime, for some organisations the transition fund will provide bridging finance until those revenue streams become available.

My question was about representations received, because there is a lot of interest in the big society bank in Thirsk, Malton and Filey, but there is also concern that if match funding is required, it will trigger the 2.5% referendum call on local government spending under the Localism Bill. Will this issue be addressed?

I will look into that. The big society bank will provide private investment to bulk up the important social investment market. We have had numerous representations on this matter, most of them saying, “Please get on with it because we were very disappointed about waiting for so long for the last Government to do anything at all.”

Will the big society bank give grants as well as loans, and will the loans be set at commercial or preferential rates?

The big society bank will not make grants. It is a bank, so it will make loans and provide investment capital for this important and growing sector. One of the problems in the social investment market has been that Futurebuilders was able to give both grants and loans, which was very distorting for the large and growing number of intermediaries in that market. The bank should be an investment organisation, not a giver of grants.

What steps have been taken to ensure that the big society bank will be relevant and accessible in all regions? Also, is it being impressed upon the banks that the coming arrival of the big society bank will not obviate their duty to show consideration and support for the third sector in the current challenging funding environment?

I am grateful to the hon. Gentleman for that relevant question. The introduction of the big society bank certainly does not obviate the broader need to support voluntary and social enterprises, in the interests of local residents. The bank’s remit will be UK-wide. The money put in by the banks will be for UK purposes, but the money coming into the big society bank in due course from dormant bank accounts will be for England only, unless the devolved Administrations decide to put their share of that money into the big society bank, which I hope they will be encouraged to do.

Voluntary Sector (Jobs)

6. What estimate he has made of the likely change in the number of jobs in the voluntary sector in the next three years. (42478)

Unfortunately, the sector cannot be immune from the cuts that are forced upon us, so of course there is concern about short-term job losses, but we firmly believe that there will be opportunities for the sector in the future, not least in delivering public services, and we are working very hard to make those opportunities real.

I thank the Minister for that answer, but the National Association for Voluntary and Community Action estimates that 26,000 charity workers will lose their jobs in the face of the Government’s accelerated cuts to services. Does he agree with that estimate, and if not, will publish his own estimate of the job losses in the sector?

I do not recognise the basis of that estimate, but of course there is a challenge in the short term, and this Government are working very hard to try to help the sector manage through this period of transition. There is a very significant long-term opportunity for the sector to deliver more public services, to help people find more of a voice at the local level, and to benefit from the additional time and money we hope to encourage people to give as well as the social investment we are trying to encourage through the big society bank.

I welcome the progress my hon. Friend is making in promoting and advancing the voluntary sector. [Interruption.] Will he compare that with the lacklustre performance of the last Labour Government?

I thank my hon. Friend for that question, and it was interesting to hear the chortles from those on the Opposition Benches. Of course there is absolutely no recognition among Labour Members of the necessity for these cuts after their Government’s absolutely shambolic stewardship of the economy over the past 13 years.

Many in the voluntary and community sector are describing the transition fund, which was heavily over-subscribed and I believe is now closed, as a drop in the ocean compared with the tsunami of cuts facing the sector. Does the Minister not agree that he needs to do more to protect the voluntary sector from job cuts, especially at a time when he is asking it to do more?

I do not think any of my constituents would consider £100 million of taxpayers’ money to be a drop in the ocean. As the outgoing Labour Chief Secretary to the Treasury said, “There is no money,” yet we have found £100 million to try to help the most vulnerable organisations through a very difficult transition period. We wanted to get that assistance up and running as quickly as possible so the money could get out in as unbureaucratic way as possible, and I am very proud of what we have managed to achieve.

Government Procurement (SMEs)

7. What steps he is taking to make Government procurement simpler for small and medium-sized enterprises. (42479)

9. What steps he is taking to make Government procurement simpler for small and medium-sized enterprises. (42480)

12. What steps he is taking to make Government procurement simpler for small and medium-sized enterprises. (42483)

Order. I apologise for interrupting the right hon. Gentleman, but I think he seeks to group the question with a number of others: Nos. 9, 11 and 12.

I do indeed, Mr Speaker; I am very grateful to you.

My hon. Friend is absolutely right to ask this question because we attach a huge amount of importance to trying to open up contracts to small and medium-sized enterprises. We have launched the Contracts Finder website, which is of enormous advantage to them, and we are getting rid of vastly burdensome pre-qualification materials. Opposition Members may be interested to know that a document such as the one I am holding is what small and medium-sized enterprises had to fill out over and over again in pre-qualification. We are now reducing that and eliminating it in many cases.

I thank my right hon. Friend for his reply. A business in my constituency offers a proven low-cost solution to helping individuals back to work, but it is finding it impossible to get access to Government. Can my right hon. Friend advise Gary Roberts of Cavendish Films how he can open a dialogue and ensure that these potential huge savings are given a fair hearing?

I would be delighted to welcome my hon. Friend and his constituents from Cavendish Films to discuss that very issue. The Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), has constructed the Work programme in a way that enables the main contractors to deal with the vast range of subcontractors on a payment-by-results basis, and I am sure there is plenty of opportunity for my hon. Friend’s constituents to be introduced to the participants in that programme.

My constituency of Elmet and Rothwell has one of the lowest unemployment rates in the country, which is due mainly to a very successful SME base. Is the drive to procure from SMEs intended as a way of subsidising them, or is it the most efficient way for the Government to procure?

My hon. Friend raises another extremely important question. It is emphatically not the Government’s intention to subsidise small and medium-sized enterprises through the contracting process, but rather to enable Government to be more efficient by promoting the kind of innovation that SMEs so frequently bring to the work they do. Our feeling is that if we get locked into contracts merely with very large suppliers, we often lose that innovation, and we are determined to avoid that result.

SMEs are vital to the black country economy. What is the Minister doing to ensure that small and medium-sized companies in places such as the black country can compete for Government contracts on a level playing field?

Again, that is an enormously important question. One of the purposes behind our move to spread contracting to SMEs is precisely to ensure that we do not get such an unbalanced economy. We want to reach out to firms that have the best propositions—often, small and medium-sized firms—in parts of the country where there are not major contractors who do much business with Government. We believe that that is a good way of helping to build the economies, and enterprise and innovation, in those areas of our country.

Government procurement officers have been very risk-averse in the past and associate large companies with security. Does my right hon. Friend agree that a change in culture is required, as well as these excellent new policies?

In a word, yes. We are determined to achieve a change in culture, and the dictum that nobody ever got sacked for hiring IBM is one that my right hon. Friend the Minister for the Cabinet Office is putting to the test. We are determined to go for innovation and excellence, and we will do that on a wide scale. Looking at the figures for contracting, I see that we have already achieved an enormously wide spread in the past few months.

Order. There are really far too many noisy private conversations taking place in the Chamber. I want to hear the questions and, indeed, the good doctor’s answers.

What proportion of Government contracts were won by small and medium-sized enterprises in Yorkshire, and what are the Government doing to ensure that small companies in the north of England get a proportionate share of Government contracts?

I will write to the hon. Gentleman with the figures for Yorkshire. I can tell him that we have set a presumption that all Government Departments will be moving towards 25% of contracts being in the hands of small and medium-sized enterprises, giving a vast range of opportunity not just in one part of the country but all parts of the country. Indeed, we intend to ensure that people throughout the country have ample opportunity to get into this market, which is why we are making it so much easier to participate.

Big Society Ministerial Group

The informal ministerial group on the big society and decentralisation supports progress across government on cross-cutting issues, such as the role of the voluntary community and social enterprise sector in public service delivery, the progress made in vanguard areas and the compact between the voluntary sector and the state.

Order. The House must come to order. This is very unfair on the Minister. He is offering the House an informative answer and it must be heard.

Thank you, Mr Speaker. I also thank the Minister for his answer. Given that opinion polls show that the majority of the British people have not even heard of the big society and that the majority of those who have think it is just a cover-up for the cuts, does the Minister believe that the work of the ministerial group has been a resounding success? Does he not believe that Ministers’ time would be better spent doing credible work in their own Departments?

I am sorry that the hon. Gentleman does not think that building a bigger, stronger and more cohesive society is worth while, particularly given that the role of the state is having to retrench severely as a result of the financial incontinence of the previous Government of the party that he supports. I am sorry to have to remind him that when the coalition Government took office his Government were spending £4 for every £3 in revenue and had the biggest budget deficit in the developed world. So less money is available and building a bigger, stronger society, which I would have thought he would support, is a very worthwhile exercise for not only the whole Government, but the whole of Parliament.

Will the ministerial group examine the role of the big society bank to see whether it can be run on national credit union lines, so that it can link up with local credit unions and ensure that the money cascades down to community groups at the grass-roots level?

The social investment market has been growing in recent years but it needs additional wholesale funds, both from the big society bank and from freeing up the guidelines on investment by trustees of big philanthropic foundations. That will grow the social investment market significantly, and the credit union movement, which is extraordinarily important and has a very important social mission, can be an important partner in that progress.

Will the Minister or the “Secretary of State for the big society” have a quiet word with Wirral borough council, which has closed important care and respite homes too quickly in order to let the non-government sector fill the gap? That is giving the big society a bad name.

I refer the hon. Lady to the remarks made by the Communities Secretary yesterday. We do believe in localism; we believe in local authorities being accountable, not to Whitehall, but to their own local residents. Each local authority has to justify its decisions but, as my right hon. Friend said yesterday, we have expectations that local authorities will not impose greater cuts on their funding for voluntary organisations than they do on their own costs. We would expect them to have regard to that.

Public Sector Procurement (Fraud)

The National Fraud Authority estimates that £21 billion is lost to fraud in the public sector each year, on top of which there is a so far unquantified loss from error and from uncollected debt. It is estimated that £2.4 billion of that £21 billion is lost to procurement fraud, and that is unacceptable. The Prime Minister has asked me to chair a counter-fraud taskforce comprising members from government and private sector experts to tackle the issue. We are overseeing a series of pilots, including one on procurement, to drive forward ways to tackle public sector fraud, and we will report our findings in due course.

I thank the Minister for that answer. That figure of £21 billion is truly shocking. Will the Minister update the House on progress towards developing a more robust methodology for quantifying how much taxpayers’ money is being wasted in this way?

It is actually difficult to know exactly how much is being lost. The numbers are increasing each year, but that is largely because there is a better handle on the data. The quality of much Government data is lamentably poor and it is particularly difficult to obtain accurate figures on some procurement fraud, such as collusion or bid rigging. However, in one of the taskforce pilots, the Department for Transport is using data analytics to detect overpayments from the Department’s accounts payable systems. A similar exercise undertaken by the Home Office detected and recovered no less than £4 million in overpayments as a result of fraud or error.

Transition Fund

There were just over 1,700 applications to the transition fund, which are currently being assessed by our delivery partner the BIG Fund. The first transition fund awards, totalling £1.7 million, were made on 15 February to 18 organisations and there will be hundreds more awards over the coming months.

Given the appetite for the transition fund, will the Prime Minister consider a new fund to enable even more civic societies that undertake such valuable work, such as Home-Start in Teignbridge, to continue to operate? Will he consider including smaller organisations in such a new fund?

I understand the question, but unfortunately we have no money to consider such an initiative. We had to take some very tough decisions on eligibility criteria for the first round and we are actively looking at ways to top that up, but we have no current plans for a second round.