---

Public Services

My Lords, I have two immediate expressions of gratitude. The first is to the noble Baroness, Lady Walmsley, for introducing what has been a most interesting and stimulating debate. There was a contrast between real statistics, immediate problems. theoretical interest in the nature of the mix between public and private, how we measure those boundaries and how we create the correct balance between their contributions to the public good. My second debt of gratitude is to the noble Baroness, Lady Noakes, who said that I had an impossible job and that she had some sympathy for me. Wherever I can get sympathy, I accept it with the greatest enthusiasm. I certainly need it now as I have only 20 minutes in which to cover this extremely extensive debate. In terms of describing the principles on which the Government act and giving illustrations from decisions and policies at national and local level, my noble friend Lord Warner did the House a great service. He gave clear illustrations of the way in which these arrangements can be established effectively and to good purpose nationally and locally, and outlined the main principles on which we ought to work. I was grateful for that speech, in which he illustrated the Government’s achievements in crucial areas. That is also my task but I emphasise that I recognise the nature of the theoretical debate. The noble Lord, Lord Wallace, is right that many Bills that come before us on aspects of public expenditure will raise issues about the nature of the mix of ensuring value for money and guaranteeing effective accountability. A theme which ran through all speeches was the extent to which relying upon certain areas of private delivery spread a danger of limited accountability. The fact that private organisations could establish that certain aspects of their operations were commercially confidential puts limitations on accountability to which local authorities and national government could present a challenge. As my noble friend Lord Warner pointed out, these issues are determined by the nature of the contract. Of course the contract can be drawn up in terms of counting the beans. As the noble Lord, Lord Wallace, suggested, it could be a question of the relationship between costs and returns in the contract. But the plea was strongly made by the noble Baroness, Lady Scott, when she was referring to local government, and by the noble Baroness, Lady Walmsley, in her opening remarks, that the contract ought to have demands of accountability and that there should be a structure in which the organisation delivering the service was open to such accountability. That depends on the nature of the contract. As this process develops, we learn and improve. There are very many actors involved in the contracts. The noble Baroness, Lady Noakes, expressed sympathy for the job I had to do and then asked me the nuclear question which she knew I could not answer—namely, what is the global cost of all these contracts? She knows very well that I am not in a position to quantify that. It is an impossible question to answer. However, because there are so many actors upon the scene, we need to develop a clear philosophy of how we balance costs and returns effectively and make sure that contracts insist upon accountability. Above all, what is the purpose—the philosophy—behind public service? Surely it is not to balance the interests between producers but to guarantee that the consumer gets the best possible public service. That is what is at stake. Of course due regard must be given to costs, but over the past decade or so there has been a clear realisation of what the public are demanding. The noble Baronesses on the Liberal Democrat Benches emphasised that there may be greater interest than might be contended in who delivers the service, but I do not think that anyone can contradict the view that the most important thing is the quality of the service that is delivered. That is inevitably the view of the public. We should recognise how much progress has been made against this background, in which the Government have been able to use a great deal of the public/private mix. There was a huge backlog in public investment when we came to power 10 years ago. The usual areas of obvious neglect, which I shall not bore the House with, included huge school repair backlogs and enormous problems in the National Health Service, while investment in transport was clearly very necessary. Expenditure on schools had been more limited than was good for the education programme. The Government pride themselves on having made immense progress in delivering public service. In getting the necessary resources for investment, there have been huge advantages in levering in private investment. As my noble friend Lord Warner indicated, that can be done at local level and in much bigger national programmes. We are concerned not to engage in the debate between public ownership or the market in theoretical terms; we are concerned with what delivers best for the public interest. That is why inevitably there are different solutions to different services. The noble Baroness, Lady Walmsley, identified things that were wrong with aspects of the academies. The DfESvets sponsors of academies with regard to their responsibilities. There is a safeguard against conflict of interest. She said that those who provided the service to the school might sometimes have close relationships with the sponsors. That is a conflict of interest which we would regard as reprehensible; it needs to be identified. Given the position of the relationship between the department and Ofsted to the operation of the academies, they have to be as open about their activities as other schools and educational institutions. Should a conflict of interest such as the one the noble Baroness identified cometo light, the department has the opportunity and responsibility of ensuring that something is done about it. The first responsibility belongs to the governing body, which has a public duty to act in the interests of the school, not of the sponsor. Sponsors who back and help establish academies are well aware of that basic constraint on their expectations of what happens in the academy’s transactions. The noble Baroness asked a rather more general question about whether certain parts of the private sector could dominate public services and whether we would come to depend on them too much. I disagree. I recognise that in certain areas, as she listed in her speech, private companies have a very significant role to play. But the total managed expenditure will be well over £600 billion by the end of the next spending review period. Capita is responsible for £4 billion of that. Capita is a most successful company, whose name crops up in a public connection more often than many other companies, as she indicated. It has enjoyed conspicuous success in some areas but has shown weaknesses in one or two others. However,£4 billion out of £600 billion scarcely suggests market dominance. The noble Baroness, Lady Noakes, emphasised IT failure in government. The vast majority of government IT projects perform excellently. They deliver key public services day in, day out, and on budget. As a Government we are managing some of the largest and most complex IT-enabled projects in the world. I am well aware of the areas that she identified where there have been weaknesses, but the vast majority work to budget and work successfully. No sharper criticism could be advanced of the Government than if they had attempted to deliver huge public service programmes without coming to terms with the opportunities vouchsafed by the development of IT while recognising the risks involved. The noble Baroness, Lady Stern, said that she did not expect me to be able to answer one or two of her questions. Indeed, I am not able to answer them at this stage. However, I reassure her that although we are not sure that we can go much beyond January in this regard, the information on the website of the Chief Inspector of Prisons relates to both public and private services. Although there may be an issue of immediate updating, the matters which she raised on private prisons are available on that website for public analysis and scrutiny. She identified problems with certain prisons. I do not think that she would expect me to respond to those points now. However, many aspects of the prison private finance initiatives have performed well and have delivered cost savings. Prisons have been built on time and on budget. The first PFI prison comprised a 17 per cent saving as against a traditionally procured prison. That is not a negligible saving. Further, valuable external resources are levered into such projects. The noble Baroness asked whether the relevant reports were available. I am not sure about the date of the latest report but, as she will know only too well, one could not expect fuller reports than those provided by the Chief Inspector of Prisons. We hold her and that office in high regard in providing that information. The noble Lord, Lord Wallace, made the main theme of his speech that, whenever public provision is in issue, there is bound to be an ongoing debate about the relationship between public and private resources. We all recognise that such a debate must be based on clear principles. The Government believe that the principles are very clear. We know that we need to identify the public interest in the choice of delivery system. That is open to debate. When we bring legislation that initiates change before Parliament, we reflect the nature of that debate. A reforming Administration will bring forward a whole series of proposals about how our public services need to change to meet a reforming agenda. In this rapidly changing world a Government would not meet their obligations if they did not respond to the rapidly changing circumstances in which public provision has to be established. However, there is bound to be a debate within that framework. It is clear that there is a legitimate role for the private and third sectors in delivering and reforming public services based on a clear assessment of value for money, not dogma. It is certainly based on the fact that there must be proper accountability. That was a constant theme in speeches from all sides of the House, certainly from the Liberal Democrat Benches. We are open to hearing all suggestions that public services are not as open as they ought to be. There is no agenda here for imposing on the previous open accountability of local government a new secretive provision because private resources and private agents are used. The concept of openness must pervade local democracy. It is up to local authorities to recognise that the contracts which they strike with these providers will, and ought to, guarantee that openness. Where we do not think that value for money can be guaranteed through the market and private providers, we shall continue to be entirely pragmatic about public service delivery. The noble Lord, Lord Wallace, my noble friend Lord Warner and other speakers were emphatic about that. We should value the ethos of public service. Not everyone is motivated purely by economic grounds. Nor is the public good delivered by the sole consideration of cost-benefit analysis. It is clear that we do and will depend on the ethos of public service which pervades the Civil Service and the legions who work in local authorities. As we all recognise, one of the great strengths of British life is the extensive work that is done through the voluntary sector, which has very high ethical standards. It plays an increasingly important part in the delivery of certain aspects of public services. The Government will remain pragmatic about these issues. We recognise that in whole areas the public interest can be served only through the delivery of public services that are democratically and straightforwardly answerable to public authorities or Parliament. However, during the decade in which we have been in power, we have proved that, increasingly, enormous advantages can be derived from carefully drawn up contracts which ensure that private investment is levered in to increase the resources available to develop the public goods which we need, and that considerable efficiencies and gains can be achieved in those areas through the operation of the market. I thank everybody who participated in this informative and, from the Government’s perspective, enormously challenging debate.