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Lord Moynihan: My Lords, our opposition to this Bill consisted of a tripartite approach which I believe and hope has been both measured and reflective. First, we sought to debate genuine policy differences; secondly, we requested clarification on the implications and effects of various provisions contained within the treaty; thirdly, we attempted to shed light on those areas where the post-Amsterdam treaty text does not match the pre-Amsterdam rhetoric and to seek explanations as to why that is the case. For example, did the Government change their mind at the last minute or was it the result of negligence?
Accordingly, I sought to fulfil those legislative obligations that I outlined at Second Reading; that is, an obligation to scrutinise the details of the treaty title by title, chapter by chapter, article by article, paragraph by paragraph. And in doing so, to judge the treaty and, by implication, the Government and their negotiating skills on a series of key tests. Does it protect and
I believe that the treaty before us gives away so much for apparently so little in return, negotiated by a government whose manifesto promised that they would preserve the role of the nation state in Europe, but whose attitude to the Bill undermined that promise.
That said, I am grateful to the full ministerial team who took responsibility for the many subjects covered by the Bill and who answered so many questions fully while leaving me with sufficient material to table in writing. Late one evening I referred to the manner in which I had worked on the Bill. I hope I shall be permitted to place on record my thanks to Jacqueline Butler, not an employee of that fine body of advisers, the Central Office foreign affairs team, but a political assistant who worked assiduously with me on this legislation. Indeed, my thanks go also to my noble friends Lady Rawlings and Lord Mackay whose contributions have been admirable. To them, and indeed to all my noble friends and all noble Lords who participated in the lengthy proceedings, I express my sincere gratitude.
In conclusion, I thank the attendants without whom I would not have had regular half-hourly briefings on the score and fall of wickets at the Oval today where, had it not been for the pleasure of your Lordships' company, I would have enjoyed an equally memorable all-day sitting.
The noble Lord said: My Lords, this draft order concerns the way in which National Savings, which is an Executive Agency of the Chancellor of the Exchequer, is managed by its chief executive, who is referred to in legislation as the Director of Savings.
The Director of Savings has a range of statutory duties concerning the administration of the agency, and in particular the administration of obligations to customers of National Savings, which are placed upon him by various pieces of legislation. The purpose of this draft order is to confer upon the Director of Savings the power to delegate certain of his duties to an external contractor, as might be necessary in the event of the agency forming a public/private partnership at some time in the future.
The purpose of this order is to delineate exactly those functions which will remain with the Director of Savings if a public/private partnership is entered into. This is a contracting-out, not a privatisation. That means that all the responsibilities in question remain with the Director of Savings, who is answerable to the Chancellor of the Exchequer and to the House. Any contractor who is appointed will be merely his agent. Any legal remedies will continue to be against the Director of Savings. The savings schemes will continue to be backed by the Government.
Approving this draft order does not in itself make any form of public/private partnership involving National Savings necessary or inevitable, now or at any time in the future. Neither this order nor any use of it by the Director of Savings would diminish in any respect or to any degree the protection which exists for customers of National Savings.
The primary purpose of the National Savings Agency, which has been in existence in one form or another for almost 150 years, is to contribute to cost-effective funding of the National Debt by raising money from private investors through the retail savings market. This complements the funding which is carried out by selling gilts in the wholesale markets. This is an important function which brings benefits both to taxpayers, through making funding more efficient and thereby lowering the burden of debt interest; and also to customers of National Savings who have access to an absolutely secure home for their savings, guaranteed directly by the Treasury, and offering attractive rates of interest. Currently over £60 billion of savings are deposited with National Savings, and over half the population of the United Kingdom has some part of its savings invested in National Savings products.
By seeking to involve the private sector in its operations, National Savings is examining a route to harness the skills and experience it requires to implement an ambitious business re-engineering programme, gain expertise in exploiting the latest information technologies and develop a capability for accepting and managing the risks in that process.
National Savings carried out a detailed evaluation of how a public/private partnership could help it to provide its operational services. On 2nd April, the Economic Secretary announced that, following detailed consideration and discussion with those involved, she had given authority to the Board of National Savings to proceed to the invitation to negotiate stage with two shortlisted companies--Siemens and EDS. She made it clear, however, that any decision to conclude a
Bringing this order before the House does not signify that the Government have reached a decision on the matter. It simply sets in place the legislation that will allow the Director of Savings to authorise a private contractor to exercise the operational functions of the agency undertaken in Glasgow, Durham and Blackpool. This is a necessary step if any successful bidder is to carry out these services.
The functions that would be delegated by the order are essentially the routine operational decisions. If a customer wanted to transfer funds from one account to another, to repay funds or to replace a lost bank book the contractor could arrange it. These functions and others being delegated are typical of the types of decisions made every day in savings organisations to allow the smooth running of business and provide customer care.
The director is retaining functions which go beyond simple administrative matters and have a major bearing on the make-up of the savings products and how they can be developed. For example, a number of the functions deal with the way applicants can invest in National Savings, the methods of investing and the forms to be used, or procedures which are clearly crucial in determining how the products develop. Others deal with the methods of making repayments to customers. This enables the director to take advantage of developments in the banking sector generally to steer the business and make sure that it keeps in step with best commercial practice.
That is the purpose of the draft order. It is a technical piece of secondary legislation which makes it possible for such a contract for private sector involvement to be concluded. I commend it to the House.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the noble Lord for his explanation of this contracting out order. If I had read the order rather earlier in the week, or perhaps even last week, I do not think I would have allowed it to come on at the tail end of today, which seems to be entirely for the convenience of the Government so that their Bank Benchers do not hear what is happening.
When I started looking at the order earlier in the day I realised that it was being brought forward under the Deregulation and Contracting Out Act 1994, a measure taken through the House by my noble friend Lord Strathclyde in one of his last ministerial acts before he was elevated to the position of Chief Whip. It is nice to see that the Labour Party is now so keen on the Act. I remember taking part myself in debating the legislation. Indeed, I summed up at Second Reading. I was defeated one evening by the late and much lamented Lord Howell. It gave him and the Labour Party a great deal of pleasure to see me defeated. I then had
However, I decided to re-read some of my words and their words on the Deregulation and Contracting Out Act, or Bill as it then was. I came across a quotation from the noble Lord, Lord Peston, at Third Reading. At col. 621 of the Official Report on 26th October 1994, the noble Lord, Lord Peston, said:
When I went to the report of the Second Reading in which I played a part, I discovered that the noble Lord, Lord Clinton-Davis, had summed up for the Opposition that day--they are now the Government of course-- on 6th June 1994 at col. 1039. The noble Lord, Lord Clinton-Davis, was preceded by the noble Lord, Lord Tordoff, who said that the Bill was a "sinister Bill". He was then speaking for the Liberal Democrats whose interest in the Bill and the order I note. The noble Lord, Lord Tordoff, said,
a Bill which he said was "sinister and offensive". So rather than repeal this sinister and offensive Bill we have today the noble Lord, Lord McIntosh of Haringey, using the power in the Bill to proceed with contract-out measures which, when they were on these Benches here, the Labour Party seemed to find fault with.
I am glad to have such a conversion as we are seeing today, the Government changing their position in Opposition from repealing the Bill to actually making use of it. They are not making use of it in any small way, but in a very big way. That is because what we have before us is an order under the Act which will mean the largest ever transfer of central government IT and non-IT staff to the private sector in a 10-year deal which is expected to be worth over its lifetime something like £1.6 billion. It is twice as many staff as transferred to EDS in 1994 under the then record-breaking £1 billion deal when the Inland Revenue out-sourced. I am envious of the noble Lord, Lord McIntosh of Haringey, because although I managed a few contracting outs I never managed one on quite this scale.
So here we have the Government proceeding with a move, using a piece of legislation which, when they were in Opposition, they entirely and utterly deplored. But it is a very major piece of contracting out and nobody should underestimate it. There are something like 4,200 staff employed by the National Savings.
I gather that such is the contracting out that some 4,000 of the staff will go, so that only 200 at the most will remain. That suggests to me that the director of National Savings is not going to be doing very much after this contracting out has been achieved. This is a big contracting out with something like 4,000 people being involved. Roughly 1,000 of them work in Durham; 2,000 work in Cowglen near Glasgow and 1,200 in Blackpool.
The order does not meet with the approval of the unions. The Public and Commercial Services Union is very much opposed to it. Indeed, it has reminded the Labour Party of what it said in opposition. I am grateful to campaign update for reminding me that Mr. Derek Foster said in a Labour Party press release of 23rd January 1997 that the PSI (private sector involvement) proposals were an "ill founded project" which would be,
The Scottish Trades Union Congress carried a unanimous motion recently when the PCS asked for support for its campaign to keep all of National Savings in the public sector. The motion called on the Scottish Trades Union Congress to add its voice to those already lobbying the Economic Secretary. It said:
I suppose that New Labour is not in the least bothered by the fact that Old Labour, represented by the Scottish Trades Union Congress and the PCS, is so upset by what it is doing in carrying out Conservative policy. That is why I so much welcome this order.
However, it is clear that if EDS is right--it is one of the two finalists--something like 2,500 jobs could go. When I look at the three main places where National Savings has its operations, I can see that that means that jobs may be lost at two of those places. National Savings' operations may cease at Durham, at Blackpool or at Cowglen. I cannot see it being efficient to reduce the staff to the extent that EDS thinks is possible and to keep operations at all three locations. The Minister may be able to help me on this, but I believe that the premium bonds computer (ERNIE) is located in the Blackpool area. I imagine, therefore, that some of those jobs may well stay in the Blackpool area. However, that seems to pose considerable dangers to operations at Durham and Cowglen. I know Cowglen in Glasgow and it is not an area where alternative employment is thick on the ground. I suspect that the same is true of Durham.
I hope that the Government will be open and honest with the unions and employees and make clear that many of the jobs are at risk and one or more of the offices may close. As we discovered when in government, sometimes this is the unfortunate and difficult price to be paid for the improved efficiency that contracting-out brings. But it must be done with care and a good deal of help to the staff who as a result become unemployed. I hope that the noble Lord, Lord McIntosh will give me an assurance that that will be done.
I also hope that he will not try to pretend that there will be no job losses. There will be. Even if the EDS internal memorandum is a little wide of the mark I cannot believe that it will still employ 4,000 people at the end of the period of contracting out. I hope that the Minister will be able to assure me that major efforts will be made in whichever place it is to help those who lose their employment to find other jobs. At the risk of being parochial, I hope that that is particularly true of Glasgow which has considerable unemployment problems.
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