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Public Services

rose to call attention to the monitoring by Parliament and Government of the quality, value for money and transparency of public services commissioned from the private sector; and to move for Papers. The noble Baroness said: My Lords, all of us in your Lordships’ House pay our taxes and, like our fellow citizens, we are very keen to ensure that the money is spent by national and local government wisely and carefully. We want to see value for money, services delivered by people who are expert in their field and fairness in any competition to gain contracts for the work. There is one overarching principle underpinning what I want to say today: transparency in the way public money is spent forms the democratic link between those being taxed and those spending the taxes on their behalf. In a free and democratic society, monitoring and transparency in the funding of public services are essential. None of us on these Benches wants to tax the British public overall any more than they are already taxed. We may want to tax things differently, such as the environmental taxes that we have long proposed, but we certainly do not want to tax more. That is why I feel it is vital to scrutinise very carefully how public money—our money—is spent. Historically, public services were mostly delivered by the ranks of employees of government departments and their agents. That was a long time ago. Nowadays, there are actually fewer real public services than there used to be, following the series of privatisations of the past three decades. The supply of water, telephone services, electricity and gas are now private services. The consumer can choose their provider of these domestic services. The provision of train and bus journeys is now a private service, and there are many more examples. There are even plans to privatise social services, a matter about which I am extremely cautious, since people’s lives are at stake. Some public services are still controlled by local and national government, although nowadays they are hardly delivered by them at all. The ranks of civil servants and local authority employees have been drastically reduced. Instead, many workers delivering public services are employees of private companies and charitable organisations which compete with others to deliver public services. That is a very good thing. We have seen major improvements in the delivery of some services because of that competition. People earn a good living from it, and companies make fair profits. That is absolutely fine. We see some excellent examples where two organisations can pool their expertise to deliver a public service. I cite for example the partnership between an arm of Serco, a private company, and the voluntary organisation I CAN. They combine their expertise to promote speaking and listening skills in schools. The children’s services provided by the NSPCC and other charities are excellent and delivered by experts on the basis of evidence of what works. Yet I was most concerned to read recently in the Charity Commission report Stand and Deliver that only 12 per cent of voluntary organisations undertaking public service contracts are paid in full, which undermines the whole concept of contestability. How can the Minister, on behalf of the Government, justify such a thing? The role of government departments, non-departmental government bodies and local authorities has changed. They are now strategic service commissioners rather than having the provider role of the past. In these circumstances, the quality of the commissioning guarantees the taxpayer value for money. The quality of the monitoring ensures that the taxpayer continues to get value over the years of the contract. There are now two giants in the delivery of public services: Serco and Capita. Serco was described by the Guardian as, "““the biggest company you have never heard of””." This is where I come to the transparency part of my question. These two companies run enormous quantities of our public services. Last year, Serco’s net income was £79.5 million and Capita’s profit before tax is quoted on its website as £193.2 million. Yet Capita is known only for the London congestion charge and Serco is hardly known at all to the man in the street. Serco manages transport systems, facilities for the Atomic Energy Authority, air-traffic control systems, both civilian and for the RAF, provides electronic tagging for offenders and runs prisons, young offender institutions and an immigration removal centre. It provides health services and is approved to bid for the operation and turnaround of failing NHS trusts. It runs education support and information services for schools and it operates leisure centres. It is a British-based, international company, but most of its turnover comes from the UK. Capita is another British company; it has beenpart of the FTSE 100 since 2004. It has grown from a £100 million company in 1997, when Labour came to power, to a £4 billion FTSE company by 2006. No wonder its former executive chairman felt able to loan the Labour Party £1 million. The company’s public service contracts range through education—it runs all teachers’ pensions and is the leading provider of IT support and software to schools and local authorities—to health services, the London congestion charge, the criminal records disclosure system, National Rail, BBC information and TV licensing, the operation of benefits such as the education maintenance allowance and an enormous number of business management and IT services to central and local government. There is much more, too. So widespread are the services provided by these companies that we have no idea whether there are any conflicts of interests within the spectrum of what they do. How can any one person outside the company know that? So enormous are they that the whole of life as we know it in this country would collapse if they withdrew their services, fell by the wayside commercially in some way or were taken over by a foreign company. In any other sector the competition commissioner would have something to say about this. If they controlled such a large proportion of the media, some regulator would have something to say. If they controlled such a large percentage of any other industry, there would be concern. Yet nobody seems concerned. Do the Government have any plans to limit the proportion of public services that can be delivered by any one company? It behoves us all to ensure that profitable public service contracts are awarded fairly, after fair competition. Much is at stake. Those who rely most on public services are the most vulnerable members of society. For their sake, we must achieve value for money and ensure that the relevant information is in the public domain. Sadly, there is evidence that that is not always the case. I quote one example given to me this week by my noble friend Lady Hamwee, the deputy chairman of the London Assembly, whose role is to scrutinise the office of the Mayor of London on behalf of the citizens of the capital. She is unable to be in her place today, but she told me that when the London congestion charge scheme was introduced, the contract between Transport for London, chaired by the mayor, and Capita, which runs the congestion charge scheme, was not put into the public domain. She and a Labour Member of the Assembly requested it on a number of occasions. They were told that it contained a confidentiality clause that precluded both parties from publishing it, so the mayor and Transport for London could not provide it for her. Capita came up with the converse reason. Eventually, the mayor agreed to ask Capita to agree to its release. It consisted of 600 pages, and it crashed the GLA computer. On a general point, it is inevitable that private companies will want to keep the detail of their relationship with their customers to themselves. Theirs is a very different culture from that of the public services. It is therefore all the more necessary for the public sector to be alert to that and to so arrange things from the start that there is maximum openness about contracts for public services. That becomes all the more important because of the scale of the matter. Recent estimates by Kable, an organisation that provides technology research and analysis on UK government and public services, suggest that almost one fifth of public sector services—£60 billion—could be delivered through outsourcing to private and voluntary bodies. The principal sectors targeted are health and education, much of it IT services and management tools, but a lot of it is local government services too. It estimates that the market for public sector outsourcing for 2005-06 reached£49.4 billion and will grow by 30 per cent over the next three years, to reach an annual spend of £64.3 billion, a growth rate of over 9 per cent. With public spending reaching £550 billion in 2005-06, the pressure to contain costs and improve service delivery is stronger than ever. It is a great challenge to the private companies and voluntary organisations in the field. It is also a great challenge to the commissioners of services to ensure that they are wise commissioners, that the contracts are right, that they deliver value, that monitoring will expose failure that can be rooted out wherever it is found and that the public are not bound to contracts for 30 years from which they cannot be extricated. I fear that many PFI contracts will turn out to be of that nature. They are short-term solutions to long-term problems, and they put the country in hock for decades. In my field, education, schools now have control over the vast majority of their own budget. That is a good thing in the main, although there is enormous pressure on local authorities to find the money for the support services for which they are still responsible. They have to pick up the pieces when individual schools fail children, and that can be very hard. It makes schools vulnerable to the clever sales pitches of companies that sell them the latest whizz-bang techie idea or snake oil that will solve all their problems. I think that rather ironic description applies to the military equipment companies that have persuaded about 3,500 schools to buy equipment to fingerprint their pupils for purposes as trivial as borrowing library books or paying for their lunch. I will not go into the detail of the practice here, since the Minister replying today will not be in a position to answer me. Suffice it to say that the DfES has really no idea what is going on out there. It does not know how many schools are doing this or how many children are affected. The noble Lord, Lord Adonis, in answer to a question from me earlier this week, revealed that his department is unaware that most of those schools are flouting good practice by not getting the parents’ permission for this infringement of their children’s rights. That is the sort of thing that can happen when services to the public sector are not properly monitored. The Government are walking blindfolded into a future identity fraud crisis, and the parents and children do not even know about it or realise the implications of the practice. Proper monitoring of outsourced public services is essential. Having opened up the market and allowed schools to spend their own money, the Government must introduce statutory guidance to regulate schools that use those systems. It is simply bad practice for schools to keep a record of children's precious and unique biometric information, sometimes on insecure computers that can be hacked into, without parents’ informed consent. The Government should do something about it before it is too late. The other most contentious involvement of private sector companies and voluntary organisations in education is in the takeover of city academies, in exchange for a fairly paltry sum of money, some of which is never even paid. We on these Benches have always welcomed the injection of money and ideas from successful business people into our schools but not at the cost of relinquishing public accountability and democratic control. When we talk about state provision of compulsory school-age education, we must have local democratic accountability, and that is missing from these schools. Some academies have awarded valuable contracts for services to companies owned by their sponsors without the proper competitive tendering process that they are supposed to operate. According to an article in the Guardian last week, that has happened in the Grace Academy in Solihull, the King’s Academy in Middlesbrough and the West London Academy. In some cases, the DfES was persuaded to waive the usually strict rules about tendering to allow that to happen. The DfES has refused to answer questions about whether these are one-off situations or whether the practice is widespread. In these matters, as in all the other situations I have mentioned, the confidence of the public will be gained only if transparency and fairness are the watchwords. Examples such as these undermine the confidence of the public in these public/private arrangements and make them suspicious that someone is lining his pocket at the expense of taxpayers. I accept that, in most cases, that is not so. Most companies and voluntary organisations give good value and a fair deal, but we need to be convinced that the monitoring of this brave new world of private delivery of services is rigorous and that the levers available to correct poor delivery are powerful. I beg to move for Papers.