Previous Section Back to Table of Contents Lords Hansard Home Page

Baroness Hollis of Heigham: Did I hear the noble Lord correctly? Is he suggesting that collecting rubbish

18 Jun 1996 : Column 240

in dustbins is the same as administering housing benefit claims? Does he believe that there is any comparison between the two?

Lord Mackay of Ardbrecknish: I did not make that suggestion at all. I simply pointed out that it was an objection to the whole contracting-out policy and that encompassed services such as the collection of dustbins, which is done very efficiently indeed in many local authority areas by the private sector. We are discussing now what I might call a sub-set of that policy, which affects the financial services of local authorities.

The noble Baroness advanced arguments of which my ministerial colleagues in the Department of the Environment are very well aware. They understand and have examined them. They have concluded that there is no special case for benefit work not to be taken into account when local authorities calculate whether they have fulfilled their competition requirements.

We believe that there are substantial savings to be made in the administration of benefit work. With that in mind, as the noble Baroness knows, we have recently proposed increasing the competitive requirements for financial services work (into which this activity falls) from 35 per cent. to 65 per cent. We believe, however, that there are some elements of benefit work--mainly determinations--where the functions cannot be transferred to another party and we have no intention of forcing local authorities to do so.

It is very unlikely that an authority could not meet its competition requirements without exposing work to competition where it has no power to do so. In other words, there is enough headroom, so to speak, in the 35 per cent. which remains to accommodate work such as the determination work. But if that were to occur, we should certainly be prepared to examine the case and provide an exemption if the case were shown to be justified.

I suspect that the noble Baroness was referring to a little more than determination in the adjudication officer definition and that she was thinking about the day-to-day administrative processes used to assess and pay claims on housing benefit or council tax benefit--the collection of information and subsequent payment of the benefit. Her amendment, if accepted, would simply mean that all aspects of benefit administration carried out by local authorities would be outside the scope for the exposure to competitive tendering. That is certainly not the Government's intention.

The point about competitive tendering in this and every other field is to deliver a more efficient service in the most cost-effective manner. There are clear specifications laid down in all those contracts for the delivery of the service--for the outcomes achieved--so that whoever does the work, whether it is in-house or a private contractor, he is paid not just for processing the claims but paid on the basis of the outcomes. The outcomes are well described as "paying the right money to the right person at the right time". I should have thought that those were specifications that we should demand from everybody, whether it is an in-house person or a private contractor.

18 Jun 1996 : Column 241

There are local authorities which already use private companies for part of the housing benefit work. The experience of those who have already contracted out is not one which I recognise from the noble Baroness's description. CCT is about getting the best services for the local charge payer at the best price. The policy is about ensuring that the service is delivered well to the customers who need it and costs as little as possible to the taxpayers and the council tax payers who have to pay for it. I am afraid that the noble Baroness's amendment is designed to remove the need for local authorities to expose large amounts of their financial services to competition, thereby ensuring that we do not gain the competitive and financial advantages that we believe come from competitive tendering.

I hope that, with those remarks, the noble Baroness, having aired her point of view very clearly, will feel able to withdraw her amendment.

Baroness Hollis of Heigham: Before I comment more fully and decide what to do about the amendment, perhaps the Minister will tell me how I should understand the quotation that I gave. Why, six months ago, in November 1995, did the DoE say in a circular:

    "Given the sensitivity [of all this area] Ministers have undertaken that authorities will not be compelled to market test any of this work"?
Would the Minister like to explain to me what that sentence means?

Lord Mackay of Ardbrecknish: I do not have the circular to hand and so I am not sure of the context from which the noble Baroness took the quotation. But I have made it clear, and my ministerial colleagues at the Department of the Environment as well as my right honourable friend at the Department of Social Security have made clear, that the determination--the adjudication work--is work that cannot be transferred to another party. As I made perfectly clear, we have no intention of forcing local authorities to contract out that part of the housing benefit work. The other parts of the housing benefit work are perfectly capable of being contracted out, as has already happened in certain local authorities.

Baroness Hollis of Heigham: The quotation was in reference to the administration of revenue benefits and services, not to determination. Clearly, the Government's word lasts for six months. Six months ago local authorities were assured that the 35 per cent. rule would remain in place and that housing benefit administration would be protected from CCT. Six months later, we have a volte face. I give way to the Minister.

Lord Mackay of Ardbrecknish: It is not a volte face at all. It is simply ensuring that the policy is succeeding in those areas in which it has been started and therefore it is sensible to expand the area over which the benefits can be sought. I should have thought that it was

18 Jun 1996 : Column 242

perfectly sensible to start slowly and simply expand further in order to gain maximum benefit for the council tax payer and best service for the customer.

Baroness Hollis of Heigham: If the ties on parliamentary language did not preclude me, I would use the word "rubbish" to that, but it does, so I will not, except when talking about the dustbins that the Minister is so fond of quoting. The point is that throughout all CCT work, ever since Government first initiated this, going back now some 10 years--and many of us on these Benches have been involved in those debates over those 10 years--Government have always allowed local authorities, given that commitment, to ring fence that work which is particularly sensitive in handling confidential information. That position which applies to housing benefit was reconfirmed by the Government in November.

The Minister talks airily about increments and learning from experience; it is simply not true. It has never applied to this area of work. He is pulling arguments out of the air in the hope that because it has been done in dustbins we are now ready to apply it to housing benefit and confidential material. That is not the case. This work has always been regarded and recognised as sensitive and therefore not appropriate to go out to CCT, where it would perhaps go to a company who has gained the work simply because they have put in the lowest bid. The lowest bid to the specification has to be the one that is accepted. We had debates on that subject when we introduced that Bill many years ago. The cheapest bid is the one which pays its staff the least; it pays its staff least because it trains them least and, as a result, there is the fastest staff turnover and the lowest level of staff reliability. If the Minister knew, as would the Department of Environment Minister, about the workings of CCT he would recognise that what I am saying is a faithful and accurate description of what has happened to wide swathes of white collar CCT work.

The Minister made a couple of other points. He said that the Government were protecting the determination of housing benefit claims. It was only the administration that was going out, as though somehow in local government work one can make a clean distinction between the two. One cannot do so. The collecting of information is a crucial part of the determination of the final result. Only then will one know what additional information one will want in order to make a determination. The determination will be done by one set of officers, apparently, in-house to the local authority; the collection of information, which is essential to that determination, will presumably be done by a private company outside. How service standards can be specified under this, I really do not understand. It is an absurd distinction which cannot, in practice, be held or delivered. I promise the Minister that; it will not work.

Secondly, the Government emphasise efficiency and say that the whole benefit of CCT has been in relation to efficiency, but the whole problem of housing benefit is the risk of fraud and error that occurs. The very management problems that will occur in the switch from

18 Jun 1996 : Column 243

the existing system to one going out to CCT will encourage inefficiency rather than reduce it. There will be very high lead-in costs indeed.

Where such CCT work is voluntary, I was very careful to say in my opening remarks that that is fine. It is for the local authority to decide and develop partnership schemes. However, I repeat that housing benefit, as we know, is a stressed system. Fraud is increasing. Errors are high. Take-up is inadequate. This is a system where, at the same time that the Government are continually changing the structure within which it works, the Government are throwing it out to CCT, having reversed something like a decade's commitment to protect sensitive work away from commercial considerations. The Government have sought to reverse 10 years' policy in the last six months and, as the IRRV, an independent professional body of rating officers said, the only explanation they can come up with, and I quote, is that:

    "the [Government] is responding 'to private briefs from a group of disappointed contractors'".
I just wonder whether the approach of a general election and the necessary finance for that has anything at all to do with this decision. None the less, with the permission of the Committee, I withdraw this amendment.

Amendment, by leave, withdrawn.

Clause 109 agreed to.

Schedule 11 agreed to.

Clauses 110 to 112 agreed to.

Next Section Back to Table of Contents Lords Hansard Home Page