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Carter Review (Legal Aid)

My hon. Friend illustrates that there are complications in the application of the tendering process to legal aid services—not just in the bidding process but in connection with a range of other factors such as mediation, advice from citizens advice bureaux, and similar areas. He underlines the point that I was about to make, which was that it is difficult to apply a relatively simple tendering idea to the complex issues before us. The Committee heard evidence of the so-called ““curse of the winner””, whereby tendering firms might, because of anxiety to remain in the frame, make a low bid at an early stage. Another way of putting it is contained in a book by the late Kieron Walsh entitled, ““Public Services and Market Mechanisms: Competition, Contracting and the New Public Management””. In that book, he said:"““The fixed price contract is likely to have an effect on the way that the service is provided. If contractors cannot control the income they receive then they are likely to try to cut the costs of the work by reducing the quality or quantity of work done.””" That is just one example of why we do not need to look into a crystal ball to see the outcome of what is happening to tendering processes. The information is not new; we have it in a book—in that case, a book written in 1995. The known outcomes of the tendering process mean that, as was the case historically, we must consider not just the question of the first tendering process but those that follow—the second, third and fourth rounds. The suggestion appears to be that, if prices increase as a result of the process, as they might well do in areas such as those that I have described that have only one or two suppliers, that might be seen as evidence of a cartel. That is not necessarily the case at all; it might simply be that there is not sufficient supply to accommodate a tendering process. During the Committee’s deliberations, I asked one or two questions that were couched in terms of comparison with waste collection tendering processes. I subsequently received letters from several lawyers asking how I dared to compare them to bin men. It was not my intention to do so, but I did intend to draw some lessons from waste service tendering processes, among other things. One of the lessons is that, once second, third or fourth tendering process are reached, the tenderers that were previously knocked out cannot get back in. After a period, that results in the only remaining tenderers being those that have tendered already, because they are the only ones left in business. In those circumstances, the idea that the process will continually improve competition, drive down prices and lift the standard of services does not necessarily stand up. That idea is based on classic tendering theory. As Kieron Walsh said, it is relatively simple to organise a tendering process for rubbish collection, but it is much more complex to organise one for legal services. Among other things, and as has been mentioned, the tendering parties in a rubbish collection tender have to submit a tender in order to stay in the market. If local authorities or private companies do not tender for municipal waste collection, they are not in the waste collection business. That is not true of legal services; the firms will simply switch to some other legal service. The point about the planned tendering process is that it is leaky; firms leak out of the process and switch out of the area.