Public Sector Pay Policy
Oliver Dowden Excerpts(5 years, 11 months ago)
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The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing the debate. I know that, in his role as chair of the PCS union parliamentary group, he takes a keen interest in matters relating to the civil service—as do I, as a responsible Minister.
This has been a valuable debate, with intelligent contributions from most—not all—hon. Members. I think I will be able to address most of those points in my speech, so if hon. Members will forgive me, I will not go into detail at the beginning. However, I shall try to cover any remaining points at the end of my remarks, because I am conscious of how much time we have left.
The starting point has to be the role of civil servants. I know from my experience—both recently as a Cabinet Office Minister and in the five years I spent in Downing Street as an adviser—the standard of our civil service. I have worked with some of the most genuinely committed, talented and hard-working public servants in our country, and I pay tribute to every one of them. At a time when our country faces many challenges, not least how we deliver Brexit, we can rely on our civil servants to help us. I see that every day in my role as a Minister, whether in the groundbreaking work of the Government Digital Service or the critical work of our civil contingencies team. Day in, day out, I see the tremendous quality of the work that they deliver.
The starting point for me and the Government is that all civil servants deserve to be rewarded for the work that they do, so that we can attract the brightest and the best. At the same time, that has to be balanced against the wider constraints faced by our public finances. I will set out some context. The shadow Minister spoke about who caused this situation, so let us remember. When we came into government in 2010, the UK had the largest deficit in its peacetime history. We were borrowing £1 for every £4 or £5 that we spent. Who caused that? It is quite clear: the last Labour Government. We had to deal with that legacy.
In that context, I make no bones about the fact that we had to take some very difficult decisions. As has been said by many hon. Members, including my hon. Friend the Member for Solihull (Julian Knight), one of those difficult decisions, given the proportion of public expenditure accounted for by public sector pay—about a quarter—was that public sector pay had to be restrained, which is why we introduced a pay freeze for the first two years of the Parliament, followed by the 1% pay cap.
Christian Matheson
I am most grateful to the Minister for giving way; I will only intervene once. If what he says is the case, can he explain how the last Labour Government were responsible for the crash of the sub-prime mortgage market in the United States, which caused the crash here?
Oliver Dowden
The problem was that the last Labour Government did not fix the roof while the sun was shining. We entered this situation as the least well prepared of any G7 country, so that when we faced those challenges, instead of having a robust fiscal situation, we were already borrowing.
Chris Stephens
I want to deter the Minister away from this Tory buzzword bingo, so will he explain to us what that has to do with public sector pay?
Oliver Dowden
Forgive me; I thought I made that very clear at the beginning. When we inherited such an enormous deficit, we had to constrain public expenditure. Given that public sector pay accounts for a quarter of public expenditure, public sector pay had to play its part. That is why we initially introduced a freeze, followed by a 1% cap from 2013 to 2017.
Those were difficult decisions, and I genuinely pay tribute to all our civil servants who had to live within that constrained pay deal. However, it is worth making a few points in relation to that. The first is that the median civil service salary has increased by 15% since 2010, which is actually the same as in the private sector. Indeed, it is greater than other parts of the public sector.
Many hon. Members also raised the gender pay gap, which is important. Clearly, more progress needs to be made, but again it is worth looking at the figures. The pay gap for full-time employee civil servant salaries is 7.2% for the mean salary and 11% for the median. That compares with 13% and 15.4% in 2008, so we are making progress, but I do not deny that we need to progress further.
Dr Poulter
Adjusted for age, sex and other determinants, the pay gap is actually about 3%. I am sure my hon. Friend will want to clarify that point.
Oliver Dowden
I thank my hon. Friend for that helpful intervention; I am absolutely sure that he is correct.
Inequality was also raised, but again let us look at the actual figures. Income inequality is down since 2010, and is lower than at any point under the last Labour Government, so let us start with the facts of the situation. Not only that, but we have helped the lowest paid. For example, when the freeze was introduced, we ensured that anyone earning under £21,000 received at least a £250 increase in their pay.
In addition, as many of my hon. Friends have mentioned, we introduced the national living wage, the effect of which has been to benefit more than 2 million people, leaving them more than £2,000 better off since its introduction. As a result, figures from the last two years show that the lowest paid in our labour market received pay rises almost 7% above inflation, and many of those who benefited were our lowest-paid civil servants. Indeed, the overall picture shows the salaries for junior grades of civil servants remaining comparable to private or public sector equivalents, and in total remuneration both administrative assistants and administrative officers—the lowest paid in the civil service—are paid more than their private and public sector equivalents in London.
Julia Lopez
My hon. Friend is making a strong case for the reasoning behind the Government’s decisions. However, many of us are concerned that we are now seeing false economies. For instance, restraining public sector pay is leading to increases in agency costs and a loss of talent, which has reduced productivity in some sectors. We now need to look at what those costs are. What analysis has he done of those costs versus the costs of increasing pay?
Oliver Dowden
My hon. Friend is absolutely right, and in a moment I will come to the fact that we have actually lifted the 1% pay cap across the board.
However, I will make one further point on the measures the Government have taken to help the lowest paid—and, indeed, all workers. I am referring to the increase in the personal allowance. When we came to power in 2010, the personal allowance—the tax-free allowance—stood at £6,475. It now stands at £11,850. That is near enough a doubling, and it means that any basic rate taxpayer will be more than £1,000 better off compared with 2010. Through a combination of ensuring that we have a national living wage and tax cuts, we have ameliorated many of the impacts of the necessary public pay constraint, which we had to introduce. In addition, we have frozen fuel duty, saving the average driver £850 compared with pre-2010 plans.
Neil Gray
The Minister has stated that the Government have ended the 1% pay cap, but he has not yet argued for the Treasury fully to fund that for Departments, so perhaps he can explain this point to the House. If he advocates an end to the 1% cap, what percentage pay rise does he think would be acceptable to our public sector workers, and will he argue with his Treasury colleagues to see that properly funded for all Departments?
Oliver Dowden
The hon. Gentleman talks about the Treasury paying for it. The Treasury does not have any money of its own. It gets money only in three ways: it taxes people, borrows or cuts spending elsewhere. We need to be honest about where the money will come from to pay for any rise.
I will come on to it in a moment, but briefly, we set this out in the spending review; we budgeted for a 1% pay rise across the board. We have now removed the requirement for a 1% rise. That creates two further opportunities. The first is that there will be flexibility, if further efficiencies can be found, to further increase pay, above 1%. In addition, if there is a significant change in working practices that can justify a significant pay rise, a full business case can be made, and that will allow the funding of a larger pay rise.
Chris Stephens
The Minister now appears to be suggesting to the House—I just want to double-check that what I heard him say was what he said—that each Department has budgeted for 1%. If that is the case, surely those of us who are arguing that the public sector pay cap has not ended or been lifted are correct. Is that the case, Minister?
Oliver Dowden
The cap has been removed; it is no longer the requirement that public sector pay rises be limited to 1%. The situation in the spending review was clear: there was a budget for a 1% rise. If Departments wish to go further than that, they need to find efficiency savings. My right hon. Friend the Chancellor of the Exchequer was perfectly clear about that in the autumn Budget.
My final point in relation to the overall terms and conditions for civil servants is about the amount of pension contribution that is made. This point was made by my hon. Friend the Member for Ochil and South Perthshire (Luke Graham). If we look at the figures, we see that for a civil servant on the median salary of £25,900, the Government provide £5,400 in pension contributions. That is the equivalent of an extra 23% on their basic pay and it is something that is not available to most people working in the private sector.
Difficult sacrifices have been made, but as a result we are finally starting to live within our means. Rather than borrowing £1 for every £4 we spend, we are borrowing £1 for every £10. That means that we are still living beyond our means, but it gives us some scope to remove the blanket ban, although that does not mean that we can suddenly fund huge increases in public sector pay. My right hon. Friend the Chief Secretary to the Treasury made it clear in September that the across-the-board 1% cap would be lifted. That means that the Government are no longer pursuing a one-size-fits-all policy for public servants.
In 2016, the Government set out five priority areas in the “Civil Service Workforce Plan”. Those areas are expected to have the greatest impact on readying the civil service workforce to respond to the challenges that the United Kingdom will face now and in the years to come. One priority is a commitment to develop cost-effective and flexible reward structures that enable the civil service to attract, retain and develop the very best talent within the pay systems in place.
In practice, there are two elements to civil service pay. I am sure that many hon. Members will be familiar with this, but I will set it out briefly. The pay of senior civil servants, who make up 1% of the civil service, is subject to an independent pay review body process, which is conducted by the Senior Salaries Review Body. Its 2018 recommendations are expected later this month, and we will respond to them in due course.
The second and by far the larger group, and the group to which most hon. Members were referring, is the rest of the civil service. Its pay and grading arrangements have been delegated to Departments and agencies since 1996. The effect of that, which hon. Members touched on, is that each Department makes decisions. As has been alluded to by the hon. Member for Glasgow South West, I continue to discuss this with the PCS, but the flexibility that it gives us is that it enables each Department to determine its own pay levels so that it can meet the needs of its own Department.
The 2018-19 pay remit guidance, which will set out the overall parameters for any future pay deal, will be published shortly. It will provide the range of average awards available to Departments, but it is for each Department to decide how to structure its pay award, and those decisions will be made in the light of their own priorities and affordability and must be discussed and negotiated with their trade unions.
Oliver Dowden
I am conscious of time, but I will give way briefly to the hon. Gentleman.
Chris Stephens
The Minister has been generous. Could he just answer this one question? He and the PCS have had some discussion about addressing the 200 sets of pay negotiations. Is it his intention to continue that discussion to look at whether that is actually an adequate way of funding civil service pay?
Oliver Dowden
The hon. Gentleman makes an important point. As he says, I have both discussed and corresponded with the representatives of the PCS on this. I will continue that discussion; I remain open-minded on it, but the point I am making is that one has to balance against that the flexibility that allows each Department to tailor to its own needs. I agree that there is an issue about 200-plus sets of negotiations, but hon. Members will understand that there was a reason for that in the first place.
I should move towards a conclusion in order to give the hon. Member for Glasgow South West an opportunity to respond. I genuinely am confident that as we approach the 2018-19 pay remit guidance, we will continue to strike the clear balance between an appropriate reward for hard-working civil servants and the need to live within our means as a nation, so that we do not continue to borrow more and load up more debt that will burden our children and grandchildren.
Oral Answers to Questions
Oliver Dowden Excerpts(6 years ago)
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Craig Mackinlay (South Thanet) (Con)
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
Small businesses are the engine of our economy, and we are determined to level the playing field so that they can win their fair share of Government contracts. That is why, last month, I announced a range of new measures, including consulting on excluding bids for major contracts from suppliers who fail to pay their subcontractors on time and giving subcontractors greater access to buying authorities to report poor payment performance.
Mark Pawsey
I thank the Minister for his answer, but I recently met small businesses at the Rugby branch of Coventry and Warwickshire chamber of commerce, many of whom told me that they were put off from tendering for public sector contracts by the complexity of the process. I know that Ministers have worked hard to break down barriers, so what steps is he taking to get the message across that there are real opportunities for business among small companies?
Oliver Dowden
My hon. Friend raises a very important point. As he says, we have already removed complex pre-qualification questionnaires from low-value contracts, but this afternoon I will again be meeting the small business panel, which represents small businesses up and down the country, and we will be discussing exactly how we can further simplify pre-qualification questionnaires and associated bureaucracy.
Priti Patel
The UK’s fantastic small and medium-sized enterprises drive innovation and help to deliver our public services. What barriers has the Minister identified that he will tackle to ensure that we can see more small businesses from around the country tender for Government contracts?
Oliver Dowden
I thank my right hon. Friend for her question. She is absolutely right: I am committed to breaking down barriers for SMEs supplying the public sector. That is why, over Easter, I announced that we required significant contractors to advertise their contracting opportunities for SMEs on Contracts Finder. In addition, my right hon. Friend the Prime Minister has appointed an SME champion in each Department, and I have personally written to strategic suppliers to remind them of their obligation to pay subcontractors on time.
Craig Mackinlay
A report that I published in conjunction with the TaxPayers Alliance earlier this year found that some public sector organisations are spending up to seven times more for a ream of photocopier paper than others. What steps is my hon. Friend taking to ensure that the public sector spends taxpayers’ money more wisely in everything that they incur and spend, and will he undertake to read my report?
Oliver Dowden
I will, of course, undertake to read my hon. Friend’s report and will respond directly. It is precisely for this reason of getting good value for the taxpayer that we established the Crown Commercial Service to increase savings for the taxpayer by centralising buying requirements for common goods and services such as photocopier paper.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
FCC Environment has public sector contracts across 160 constituencies, yet it refuses to pay its workers sick pay. The workers in Hull have been out on strike for more than 30 days after one of their colleagues developed cancer and had to return to work after a month because he could not afford to be off work. Will the Minister please look at reforming the rules for procurement so that no companies can exploit workers in this way and not pay them the basic right of sick pay?
Oliver Dowden
Clearly, all suppliers are subject to the general law of the land, which covers many of those points. In addition, we have introduced a supplier code of conduct, which looks exactly at those corporate responsibility points, and we review it continuously, and we will review it with such cases in mind.
John Spellar (Warley) (Lab)
Today’s Carillion report clearly demonstrates the urgent need to deal with the late payment culture in the construction industry, which is hitting many subcontractors. Most important and pressing for me today, four months after the Carillion collapse, is the ongoing shutdown of the Midland Metropolitan Hospital. I have raised the matter with the Cabinet Office several times, with Health Ministers, and even twice here in the Chamber with the Prime Minister, so when will the Government stop dithering and start work again on this much-needed hospital?
Oliver Dowden
I know that the right hon. Gentleman is very passionate about this issue. I can reassure him, rightly again, that we remain absolutely committed to getting the new hospital built as quickly as possible, and we are supporting the trust to achieve that while ensuring that taxpayers’ money is spent appropriately.
Christian Matheson (City of Chester) (Lab)
Although we warmly welcome moves to open up Government contracts to SMEs, the fact is that they are still being crowded out by big suppliers that regularly fail to deliver, including G4S with its youth custody provision; Capita with its failing Army recruitment contract, among many others; and, of course, Carillion. Will the Government introduce a new requirement that firms cannot bid for new Government contracts while they are still failing to meet quality standards on their existing public sector jobs?
Oliver Dowden
Individual contracting Departments clearly keep the performance of all contractors under review. The hon. Gentleman says that we should ensure that small businesses can bid for Government contracts. I announced a range of measures over Easter precisely to deal with that issue. Indeed, we have introduced a requirement for all subcontracting opportunities by principal contractors to be advertised on the Contracts Finder website, which gives SMEs a great chance to bid for work.
Neil Gray (Airdrie and Shotts) (SNP)
Richard Benyon (Newbury) (Con)
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
Our world-leading national cyber-security strategy is supported by £1.9 billion-worth of investment. It sets out measures to defend our people, businesses and assets, to deter our adversaries and to develop the skills and capabilities we need.
Richard Benyon
With cyber-attacks on public services in other countries and a highly publicised attack on our own NHS, does my hon. Friend agree that cyber-security is not just the responsibility of people at the top of our businesses, public services and agencies, but is actually the responsibility of every single employee, and that we have to get that culture across our public service estate?
Oliver Dowden
My right hon. Friend is absolutely correct. Cyber-security is a responsibility of all businesses and individuals. It is precisely the objective of the Government’s national cyber-security strategy to get that point across.
Laura Smith (Crewe and Nantwich) (Lab)
It is undeniable that the UK is in the grip of a digital skills gap, yet despite the Government’s national cyber-security programme, the problem is getting worse. Fewer students are taking up technology-based A-levels, and those who do are underperforming compared with their counterparts in other subjects. What conversations has the Minister had with his Front-Bench colleagues to ensure that digital technology is integrated across the curriculum and that teachers of all subjects are given the training to help them inspire the next generation into closing the digital skills gap?
Oliver Dowden
I do not recognise the picture that the hon. Lady paints. We are a world leader in digital technology, as I repeatedly see when I visit the Government Digital Service, which has an extensive training programme. In addition, one of the first three of the Government’s new T-levels will focus on digital.
Several hon. Members rose—
Mr Speaker
The hon. Gentleman has got his point on the record with considerable alacrity.
Oliver Dowden
The hon. Gentleman’s profession should have been orator and statesmen; that would have been a better description. He is absolutely right that we should be working with the police, and that is why one of the measures in our strategy is to deter and disrupt our adversaries, which includes states, criminals and hacktivists.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
Andrew Jones (Harrogate and Knaresborough) (Con)
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
My hon. Friend raises a very important point. We are determined that the public sector uses technology to improve services. Indeed, just last week I announced the first GovTech challenges to help tech firms to create innovative, cutting-edge solutions to public service challenges. The first seeks to use artificial intelligence solutions to identify recruitment images that are created by Daesh and spread online.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
We are now in an unsustainable and inconsistent position whereby 16 and 17-year-olds in Scotland and Wales can be trusted to vote in local government elections, yet their counterparts in England and Northern Ireland are denied that right. Does the Minister agree that if we are to maintain the integrity of our electoral process, we must have equal voting rights across the UK?
Capita
Oliver Dowden Excerpts(6 years ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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Sir Vince Cable (Twickenham) (LD)
(Urgent Question): To ask the Minister for the Cabinet Office if he will make a statement on the financial position of Capita.
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
I genuinely welcome this opportunity to update the House on Capita’s announcement yesterday, which covered its 2017 full-year results, the launch of a £701 million rights issue and an update on its transformation programme. As I have told the House repeatedly, private companies can answer for themselves, but the Government’s priority is the continued delivery of public services. As we demonstrated with regard to Carillion, we have continued to deliver public services without interruption.
The House will recall that I came here in February when Capita initially announced the rights issue. Capita confirmed yesterday that it is proceeding in line with that previous announcement. The House might be interested to know that Capita’s statement yesterday announced that underlying profit before tax is £383 million for 2017, which is in line with market expectations; that, as a result of the rights issue, it has made a £21 million contribution to reducing its pensions deficit; and that, as a result of the announcement, the market reaction was a share price rise of over 10% on the day.
Capita’s board and auditors have confirmed that the company will continue to have adequate resources to deliver on its obligations, supported by its rights issue and other steps designed to strengthen its business. The rights issue is underwritten and the required shareholder vote will take place in early May. Management have confirmed that the key shareholders fully support their plan. In addition, the company has suspended dividends until it begins to generate positive cash flow; it expects to generate at least £200 million in 2020. The impact of all this has been to reduce dividends and shareholder returns in favour of other stakeholders. This, once again, is evidence of shareholders taking the burden, not taxpayers.
I understand that Members remain concerned about outsourcing companies, following Carillion’s liquidation. However, we must be clear that Capita has a very different business model and financial situation; it is not a construction business and it has minimal involvement in private finance initiatives. The measures that it has announced are designed to strengthen its balance sheet, reduce its pensions deficit and invest in core elements of its business. As I said in February, arguably these are the measures that might have prevented Carillion from getting into the difficulties that it did.
It remains the position, as I said in February, that neither Capita nor any other strategic supplier is in the same position as Carillion, but I would like to reassure the House that officials in my Department and I continue to engage regularly with all strategic suppliers. It is in taxpayers’ interests to have a well-financed and stable group of key suppliers, so we welcome the moves that the company announced yesterday.
Sir Vince Cable
The public will clearly be deeply concerned that yet another major Government contractor has been in financial distress, following Carillion and earlier service problems with Serco and G4S. Capita is not a construction company, but given that we are dealing with IT services that affect literally millions of people—for example, in relation to tax credits, disability testing and benefits, the congestion charge, the BBC licence fee and Army recruitment—what contingency plans has the Minister put in place since he was informed that the company’s losses are not sustainable? Is there a Crown representative in place? Have new contracts been stopped? Since the new chief executive announced cuts of £175 million a year, to make savings for the new company, how far have these been discussed with the Government, and how far have they a bearing on the provisions of those highly sensitive services? In the light of this development and earlier developments with Carillion, what steps have the Government taken to reform the system of Government procurement, so that we do not have companies low-balling to win contracts that then make losses, and to break up some of the contracts, so that we are not over-dependent on a handful of financially fragile companies?
Oliver Dowden
I thank the right hon. Gentleman for his questions. I will seek to address them all, but please forgive me if I miss any. I will come back to him in writing if I do.
On the company’s overall position, it is important to understand that what has happened is exactly in line with what was announced back in February, so there is not really a new development. The company’s underlying position, as it has said publicly, is that it has about £1 billion of cash that it can call upon.
The right hon. Gentleman asks about the Crown rep. I confirm that the Crown rep is Meryl Bushell. I met her this morning and continue to engage with her, as I do with all the other Crown reps.
The right hon. Gentleman asks whether new contracts had been awarded. Since the statement in February, no new contracts have been announced by central Government. However, I understand that the BBC and authorities in Northern Ireland have announced contracts.
The right hon. Gentleman asks what we are doing to break up the system of Government procurement. I always ask, with every contract that crosses my desk to be authorised, whether we have broken it up into as many small pieces as possible to make it accessible for small businesses. Over the Easter period, I made an announcement to help us meet the very challenging target we have set of 33% of all business going to small or medium-sized enterprises. We set a target of 25% in the last Parliament and met it. I announced a range of measures to help us towards the 33% target. I wrote to all the Government’s key suppliers saying that I wanted them to appoint an SME representative to try to drive business to SMEs. I have required all their subcontracting over the value of £25,000 to be published on the Government’s Contracts Finder. I am consulting on ways to improve prompt payment to make it a condition of business being awarded to strategic suppliers. That is very important to SMEs, and I am looking at ways to give them a right to go over the top of key suppliers to the Government to give them a right of recourse.
I say gently to the right hon. Gentleman that both he and I have a proud record from our time working for the coalition Government—he at a much more senior level, running the Department for Business, Innovation and Skills. In line with other Governments, we continue to award contracts to Capita. The House may be interested to know that of the major central Government contracts that have been awarded to Capita, about 20% were awarded under Labour, over half under the coalition Government and 27% under this Government. This issue does not to relate to one party over another.
The reason we do it is that we know outsourcing delivers efficiencies. According to one survey, we receive efficiencies of at least 11%. If we get efficiencies of 11%, that means more money to spend on health, more money to spend on education and more money to spend on core services. That is why the Labour Government did it, why the coalition Government in which the right hon. Gentleman served did it and why this Government continue to use outsourcing.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Does my hon. Friend agree that there is something of a correction going on throughout the sector, as it adjusts to the effects of the Carillion collapse and to the perhaps over-tight margins that some contracts have imposed on providers? I draw his attention to the fact that the Public Administration and Constitutional Affairs Committee is doing an inquiry into the lessons to be learned from the collapse of Carillion. Personally, I take confidence from the fact that the investors have decided to trust Capita with £700 million more of their capital to secure the long-term future of the company.
Oliver Dowden
I thank my hon. Friend for his question. He is absolutely right that what we discovered yesterday was that the rights issue is proceeding exactly as planned. In terms of the overall market, I have tried to be clear all along that suppliers should expect a decent rate of return—not an excessive rate of return, but one that allows them to run a profitable business, while ensuring that there are savings for the taxpayer. That is why we use private companies. It is not because of ideology; it is because they deliver savings to the taxpayer, which means more money to be spent on health, education and other public services.
Christian Matheson (City of Chester) (Lab)
May I thank you, Mr Speaker, for granting the urgent question and congratulate the right hon. Member for Twickenham (Sir Vince Cable) on securing it?
Capita is one of the strategic suppliers to the Government, providing services of particular strategic importance, yet, as we heard from its boss today, it had no strategy aside from mucking up the management of the dental register, leaving hundreds of dentists to stand idle; failing to maintain the primary care support service in England, which supervises GP and patient records; and failing on the Army recruitment contract, among many other failings. Members have been highlighting those and other failures to the Government over a period of years and will not be surprised at the latest news. I echo the call from the right hon. Member for Twickenham for the Minister to outline what contingency plans he has put in place to deal with a possible default on any one of those contracts.
The Government claim to be monitoring the situation and have a Crown representative in place, but do they even know what they are monitoring if they are not sure about the number of contracts Capita runs? I and other Members have asked for a list of Government contracts undertaken by Capita and have not been provided with one. Do the Government know how many contracts Capita undertakes across central Government and, indeed, across local government? Will they publish a list of all those contracts?
Will the Minister confirm what improvement plans have been agreed with Capita since its string of profit warnings or yesterday’s refinancing? What quality thresholds will be built into Government contracts to ensure that Capita and other privateers reach an acceptable standard of service delivery, particularly in view of their precarious financial situation?
This latest episode in the saga of outsourcing scandals again shows the public that the Government’s commitment to this practice is nothing more than ideological. Despite the danger to public services, along with the treats to Capita’s staff and subcontractors, the Government will not shift from their view that these giant multinational firms should make huge profits from the public purse, until the point when they fold, taking our public services with them. The Government act as though these firms should be allowed to privatise the profit of the public sector, while nationalising the risk to the British public. We need a change in direction now. Will the Minister use this latest episode involving Capita to finally introduce a presumption in favour of in-house provision of public services?
Oliver Dowden
I have a great deal of respect for the hon. Gentleman, and he could have done a little better than some of the overblown rhetoric in his contribution. Yesterday’s announcement was entirely in line with market expectations.
The hon. Gentleman asks what is being done in relation to strategy. The strategy has been set out clearly by the new chief executive. It includes a revised divisional structure and executive team to better manage and enhance services and client value, as well as a rights issue, which, as I said, has proceeded as planned and will materially improve the company’s financial stability, thereby reducing its debt, enabling it to invest in core services, allowing it to reduce the pensions deficit, which it has done by £21 million—I hope all Members will welcome that fact—and allowing it to reduce its cost base.
The hon. Gentleman asks what contingency planning the Government are doing. As I have said, we undertake appropriate contingency planning in respect of all our strategic suppliers. I take a close personal interest in that as a Minister, and I know that the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office takes a similarly close interest in it.
The hon. Gentleman asks about contracts that have been awarded to Capita, so let me give him the numbers. Of the current major central Government contracts that have been awarded to Capita, nine were awarded under Labour, which is 20%, 24 were awarded under the coalition, which is about 53%, and 12 were awarded under the current Conservative Government, which is about 27%. This is not a party issue; all three formations of government have decided to use outsourcing companies.
To conclude, I had thought that the hon. Gentleman would agree with the words of a previous Labour leader and somebody who many regarded as being, at least in some senses, a successful leader. Gordon Brown, hardly a rabid right-winger, said:
“It simply would not have been possible to build or refurbish such a number of schools and hospitals without using the PFI model.”—[Official Report, 14 November 2007; Vol. 467, c. 665.]
That was a sensible Labour Government who were committed to delivering public services. We do not see such sense from the current Labour party, I am afraid.
Mr Mark Francois (Rayleigh and Wickford) (Con)
While I agree with the thrust of the Minister’s response, I am afraid I have to tell him that a serious blot on Capita’s record is the Army recruiting contract. Capita does not have much experience in that area and has been underperforming very seriously on the contract for some five years. I told the House in Defence questions yesterday that it is now known universally in the Army as “Crapita”, because of its poor performance on the contract. Will the Minister accept it from me that, although nobody wants to see Capita go bust because of all the jobs that would be lost, equally we cannot have an Army without recruits? Therefore, this is one contract that Capita, honourably, should hand back.
Mr Speaker
I must tell the right hon. Gentleman that his second reference to the rather unfortunate nickname of the company concerned has just caused some merriment among school students in the Public Gallery. They clearly found it very funny, as did I, so the right hon. Gentleman may be a celebrity among those students—not to mention, of course, in his constituency and in many other parts of the country.
Oliver Dowden
My children are aged six and eight, and on the off chance that they happen to tune into this later, I will make sure that I do not repeat that word, because I would not want to hear it around our breakfast table.
I know about the commitment of my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) to this issue; he is absolutely right to raise it. We all know that there have been problems with Capita, but I can update him and the House by saying that the MOD and Capita have agreed an improvement plan under their contract. I understand that Capita is looking to deliver on that plan, so I am confident that it is making steps in the right direction, although I do not deny that there have been problems in the past.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
A £701 million rights issue after a £530 million loss, with a scramble to recover reputation after damaging contract bungles, is indeed indicative of a business with no strategy. Given the wide range of public services involved, is the Minister at all worried by the situation? If so, what precautions has he put in place to protect people’s jobs? Does he agree that this highlights a role for the public sector in providing vital public services? Given that he is wedded to the PFI model, will he take the time to look closely at the Scottish Government’s Scottish Futures Trust model, which has saved the Scottish Government £1 billion?
Oliver Dowden
I thank the hon. Gentleman for his questions. As I have said, Opposition Members keep trying to characterise this as ideological, but the fact is that Governments of all colours have used outsourcing. Why? Because they know that that can deliver savings. It is just the same as when private companies use outsourcing so that they can focus on their core businesses.
The hon. Gentleman asks whether I take a close interest in this—yes, I take a close interest in all our strategic suppliers. On a weekly basis, I receive updates on the position and on the plans that we have, if necessary, in relation to all our strategic suppliers. However, I restate to the House that Capita’s position is not the same as Carillion’s—nor, indeed, are any of the other strategic suppliers in that position.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
Does my hon. Friend agree that the Labour party is interested only in the ideological pursuit of renationalisation at any cost? What matters to the public is that they get the best services at the best value to the taxpayer.
Oliver Dowden
My hon. Friend’s raises a very important point that is another rebuttal to this idea of ideology. If we want to look at ideology, perhaps the number of PFI contracts signed by a Government would give an indication of that, so let us look at the numbers. How many contracts did Labour sign on average each year? Fifty-five at the peak. How many have this Government signed in the past year? One. If this is about an ideological commitment to the use of the private sector, Labour Members should search their souls in relation to their last Government.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Minister makes great play of the 11% savings from contracting out, but it is no good making savings if core services are not being delivered well. Will he outline how many of the contracts he is concerned about—he has listed them a couple of times—and will he tell us how many contracts he is discussing with Capita with regard to whether their delivery should be reviewed? It is no good spending taxpayers’ money on a private company if it is not delivering the services that it is paid to deliver.
Oliver Dowden
The contracts that each Department agrees with the private sector for the delivery of services are very stringent. Each Department is responsible for ensuring their proper delivery, and if the company is not delivering properly, it will be in breach of the contract and remedies will be available. At the point of re-letting a contract, we look at the overall performance of the company concerned to ensure that it is in a fit state to be able to deliver on its promises. There is a dual responsibility between the individual Departments, which set out the terms, and the Cabinet Office, in which I sit, which has overall responsibility for the supplier market.
Dr Matthew Offord (Hendon) (Con)
Barnet Council has a significant contract with Capita. It also has a business continuity planning framework that monitors liquidity and indebtedness. It reviewed the situation twice last year, and again after the recent profit warning, and the company was shown to be far from reaching the relevant threshold for triggering any action, but in the local elections, the Liberal Democrats are using the issue to scaremonger. I urge the Minister not to take advice or direction from someone who undersold Royal Mail by £1 billion and then called the loss “froth”.
Oliver Dowden
I thank my hon. Friend for his question. Tempting though it is, I shall resist the urge to comment on the Royal Mail deal, but I refer him again to the— [Interruption.] When the Department was controlled by the Liberal Democrats, I do not think the right hon. Member for Twickenham (Sir Vince Cable) would have taken kindly to a Conservative special adviser getting too heavily involved.
I refer my hon. Friend the Member for Hendon (Dr Offord) to statistics that demonstrate that over half of the contracts that were given to Capita were awarded under the coalition Government, in which the Liberal Democrats played a sterling part. If they want to play politics, I refer them to those statistics.
Rachel Reeves (Leeds West) (Lab)
May I push the Minister on contingency planning because I fear that the Government are being a bit complacent about that issue? Since Carillion went bankrupt, hospitals in Sandwell and Liverpool have been mothballed. What confidence does he honestly have that if Capita were to go the same way as Carillion, its contracts would continue to run and these crucial public services would continue to be delivered? The experience of Carillion is that that is not happening.
Oliver Dowden
I gently disagree with the hon. Lady, who has a great deal of expertise in this area. Public services have continued to be delivered without interruption. There is a specific question about the PFI contracts in respect of those two hospitals, but I reassure her and other hon. Members, who I know take an interest in this, that we are taking a very close interest in the matter. We are engaging with NHS Improvement and the Department of Health and Social Care to try to resolve this as quickly as possible and ensure that we have a clear plan for the delivery of the hospitals.
Bob Stewart (Beckenham) (Con)
Obviously I support outsourcing in principle, but I am really concerned. If Capita is reviewing the way it operates—it has operated abysmally in various spheres, particularly Army recruiting, as my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) said—are the Government reviewing how they have oversight of these contracts so that we can get more effective feedback and problems can be corrected quicker?
Oliver Dowden
I thank my hon. Friend for his question. He is absolutely right to raise the issues that we have had with the Army recruitment contract, but what is happening demonstrates that the Government are engaging with these problems. The MOD and Capita have agreed an improvement plan, which seeks to address some of the significant problems that we have. When these problems arise, we are engaging with the companies concerned to try to deliver improvements.
Catherine West (Hornsey and Wood Green) (Lab)
What assessment have the Government made of the impact on apprentices who are employed in Capita’s many workplaces? How many individual apprentices may be affected? Which regions of the UK are particularly exposed? What contingency plans are in place to protect potential losses to the apprenticeship programme, and what will be done to stop these failing business practices? I am fed up with having to listen to poor apprentices in other companies who have lost their roles as a result of failing business practices.
Oliver Dowden
I reassure the hon. Lady that the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office is taking a very close interest in this and working in respect of all those apprenticeships. At the moment, those apprenticeships are ongoing, but clearly we need to look at how we can manage their future so that young people do not find themselves disadvantaged. I can assure the hon. Lady that this is a top priority for my right hon. Friend.
Stephen Kerr (Stirling) (Con)
The Minister says there have been problems with Capita, and while Capita and Carillion are different businesses in different situations, they have something in common: the businesses are both big and complex. What steps are the Government taking to involve more small and medium-sized businesses in the delivery of public services?
Oliver Dowden
My hon. Friend raises a very important point. It is right on two levels that we have a diverse supply market: first, because the more suppliers we have, the less we are at risk from the loss of any one supplier; and, secondly, because small and medium-sized enterprises are the backbone of our economy locally and nationally, creating 16 million jobs, and I am determined to ensure they get their fair share of such contracts. That was why I announced a range of measures over Easter, including providing subcontractors with a right of access to buying authorities in order to report poor practices. It was also why the Prime Minister wrote to every Secretary of State requesting that they appoint an SME champion. I want the message to go out to all SMEs—I spent a lot of time over Easter meeting small businesses and communicating this—that they can bid for and win Government contracts. Go on to Contracts Finder, find them, and bid for them!
Kelvin Hopkins (Luton North) (Ind)
In my two decades in the House, I have opposed PFI schemes root and branch from the beginning. It seems that the number of PFI agreements has dwindled to virtually zero, so it looks like the Government agree with me now. A number of public authorities are now insourcing and making financial gains as a result. Will the Government encourage that process, which would save public money? Will they also not hand out lucrative public contracts to Capita to help it out of its present circumstances?
Oliver Dowden
I shall resist the suggestions of Front-Bench colleagues; I do not think I will ever convince the hon. Gentleman to cross the Floor, despite his warm words.
We reviewed PFIs and introduced the new private finance 2 contracts, which removed many of the excesses we saw under the last Government. The hon. Gentleman asks about the rewarding of new contracts. Since the statement in January, as I said, no contracts have been awarded to Capita by central Government. Two have been awarded by the wider public sector—by the BBC and Northern Ireland authorities.
Bob Blackman (Harrow East) (Con)
My hon. Friend will recall that Capita developed from the public sector in the first place. Does he agree that the use of outsourcing not only controls costs and gives gains to the public, but provides certainty over the standards of service provided to the public? If an outsourced company fails to deliver to those standards, the contract can be recalled and given to an alternative provider.
Oliver Dowden
As ever, my hon. Friend and neighbour is absolutely correct. That happens regularly, and it is exactly why private companies all use outsourcing to provide services such as cleaning and site security—because they can use specialist providers and because that delivers savings. He talks about how the Capita model arose. I remind Labour Members who are getting overexcited that Capita was founded by Sir Rod Aldridge, who was a major donor to not the Conservative party, but the Labour party.
John Spellar (Warley) (Lab)
May I associate myself with the comments about Army recruitment made by the right hon. Member for Rayleigh and Wickford (Mr Francois) and the hon. Member for Beckenham (Bob Stewart)? Does not the Minister accept that Capita is only the latest outsourcing company to be in trouble? With some, including probation, hospital and rail companies, having to hand back contracts and the growing crisis in the over-leveraged, offshored care industry, does he not question whether there are not actually deep systemic problems with the Government’s dogma-driven privatisation model?
Oliver Dowden
I simply fail to understand how Labour Members can say that this is dogma-driven when the last Labour Government awarded 55 PFI contracts a year and one was awarded in the last year. Some 20% of the contracts awarded to Capita were awarded by the Labour party. This is not about ideology; it is about what works. Outsourcing delivers savings, which means that we have more to invest in the public sector—more in our schools; more in our hospitals.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
May I give the Minister an opportunity to repeat and reinforce his message about small businesses and the importance of their getting more involved in the delivery of public services? Will he encourage businesses in my constituency and the wider Dorset region to bid for contracts?
Oliver Dowden
My hon. Friend is absolutely right. Small businesses should be going out there and bidding for Government contracts. I know that his constituency has much expertise in the aerospace sector, and I announced further measures over Easter to help such small businesses. I wrote to all our strategic suppliers asking that they adhere to the prompt payment code, and I am requiring suppliers on large contracts to provide their subcontracting data. They can be under no illusion that the Government are watching closely to ensure that in terms of contracts from government itself and subcontracting, SMEs get their fair share.
Wayne David (Caerphilly) (Lab)
I welcome the Government’s recognition that Capita is not delivering on its contract for Army recruitment, but rather than Capita simply introducing an improvement plan, would it not be better for the Government to consider bringing contracts back in-house so that Army recruitment is conducted by the Army? That is what the Army wants.
Oliver Dowden
As the hon. Gentleman has acknowledged, I have answered the question about the Army recruitment contract, and I shall not repeat my answer, but I would say that we are not driven by an ideological approach. If services can be delivered better in-house, of course they can be delivered in-house, but in the majority of cases, for contracts such as cleaning and security, both the private and public sectors have found that they get cheaper services that are just as good quality when they outsource. That is the right decision to make.
Mike Amesbury (Weaver Vale) (Lab)
Capita employs hundreds of people in my constituency at a place called Preston Brook. What discussions have the Government had with recognised unions, such as the Communication Workers Union, about the job and pension security of those workers?
Oliver Dowden
The hon. Gentleman raises a very important point. I can reassure his constituents, as I have done repeatedly at the Dispatch Box today, that yesterday’s announcement was in line with expectations. Capita is not in a similar position to Carillion. I can also reassure them that, as a result of the rights issue yesterday, a further £21 million has been paid down into the pension fund, meaning that their pensions are more secure as a result of the announcement on Monday.
Stephen Lloyd (Eastbourne) (LD)
The Minister has spoken several times in glowing terms about the importance of the SME sector. One of the issues that came out of Carillion’s collapse was the deplorable reality that it often did not pay its SMEs their subs for 120 days, and sometimes more. That is the way to destroy the SME sector. Given that this is taxpayers’ money, will he give me a guarantee that that is not happening at Capita and that people are getting paid within a fair and reasonable time?
Oliver Dowden
The hon. Gentleman is right to raise the issue of prompt payment, and I know that various Select Committees are looking into the Carillion case. My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy is sitting next to me, and the Chancellor announced in the spring statement a call for evidence on the prompt payment code, which governs such payments. The Government pay about 96% of our contractors within 30 days. As I said, I have written, post Carillion, to all our strategic suppliers to re-emphasise the importance of adhering to the code. We are consulting on how to exclude suppliers if they do not do so.
Government Property Agency
Oliver Dowden Excerpts(6 years, 1 month ago)
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The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
I wish to update the House on the establishment of the Government Property Agency as an Executive Agency of the Cabinet Office.
Government are delivering a modern, innovative public estate strategy that drives a step-change in our property ambitions—broadening from a primary focus on efficiencies and savings to one that uses assets as an enabler to deliver our priorities for excellent public services; economic growth; and more land for housing across the UK.
The previous Chancellor set out some of that ambition at the March 2015 Budget where he announced that Government would implement a new commercially driven approach to land and property asset management across the central Government estate and that it would create a new central body which would own and manage relevant property assets.
I announce today a significant step forward in creating a modern, effective and efficient civil service fit for the 21st Century, positioning property as a strategic enabler of wider civil service transformation, through the creation of a Government Property Agency.
The agency will be a new executive agency of the Cabinet Office from 1 April 2018 and will provide the centralised ownership, control and delivery infrastructure needed to unlock benefits across organisational boundaries. It further positions Government to deliver workforce change and wider business transformation, delivering efficiencies and releasing land and property for productive use, including building new homes.
The assets in scope to transfer to the agency at this stage are general purpose assets (offices, warehouse and depots), plus non-specialist science assets. Specialist assets such as courts, prisons and specialist science assets will remain on Departments’ balance sheets and the model also excludes devolved administrations, local governments, schools, NHS clinical estates, HCA regeneration assets, MOD estate and overseas estate.
The Government Property Agency has been running in shadow form since January 2017, working with a small number of Departments to test structures and processes before launch in April 2018. The agency will initially deliver the Government Hubs programme with HM Revenue and Customs and manage non-specialist properties for Cabinet Office and Department of Business, Energy and Industrial Strategy—before expanding its scope to the non-specialist properties of other Government Departments in subsequent years.
Creating the agency will bring benefits to Departments and their arms’ length bodies through more effective management of the assets they occupy and own. It will establish a single agency providing the basis for a joined-up approach to the management of Government property assets. And the taxpayer will also benefit from reduced cost and improved efficiency of the estate.
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Oral Answers to Questions
Oliver Dowden Excerpts(6 years, 1 month ago)
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Mike Wood (Dudley South) (Con)
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
Small businesses are the engine of our economy and we are determined that they should get their fair share of Government contracts, which is why we have set an ambitious aspiration for a third of procurement spend to be with small and medium-sized enterprises by 2022. We will shortly announce further measures to help us to achieve that target.
Rachel Maclean
We understand that High Speed 2 will bring vast benefits to our economy in the west midlands, including £4 billion-worth of economic growth and 50,000 extra jobs, but small businesses in Redditch say to me that they are not sure how to bid for the contracts. What advice can the Minister give them?
Oliver Dowden
My hon. Friend raises an important point. Small businesses throughout the country create millions of jobs and it is important that they are able to access large contracts such as HS2. Public sector contracts are advertised on the Contracts Finder website, which is free and easy to use, and bidders can request information as they need it. I encourage businesses in my hon. Friend’s constituency and elsewhere to take advantage.
Stephen Metcalfe
As my hon. Friend will know, small businesses are the backbone of the UK economy. It is the Government’s responsibility to make sure that they can compete equally for public sector contracts. Will my hon. Friend tell the House what he is doing to level the playing field?
Oliver Dowden
We are constantly looking into new ways to reduce the barriers to small businesses working with the public sector, which is why we have already scrapped complex pre-qualification questionnaires for low-value contracts. We require public sector buyers to split contracts into accessible chunks for small businesses, and I am pleased to confirm that we will reopen the G-Cloud to new suppliers, which will further help small businesses.
Mr Speaker
We are very short of time. I sometimes think we have time for the questions but not always for the answers. We need to be pretty dextrous about this.
Oliver Dowden
My hon. Friend is absolutely right, and all contracts worth more than £10,000 are published on the Contracts Finder website. Indeed, more than 25,000 organisations are currently registered with Contracts Finder, of which 64% are small and medium-sized enterprises.
Helen Goodman (Bishop Auckland) (Lab)
Public procurement was meant to be one of the Brexit dividends, but it is not going very well with the Passport Office. Will the Minister tell us specifically what will change?
Oliver Dowden
I have to say to the hon. Lady that, as we leave Europe, it is important that we remain an open economy, and I have every confidence in the way in which that procurement was conducted. We should be sending a signal that, just as we expect foreign businesses to be able to bid for contracts here, we have an open system in this country.
Derek Twigg (Halton) (Lab)
I hear that the problem for small businesses is that they are often denied the chance to bid for work, because they are told by various people that it is down to Government procurement rules, so local businesses, in particular, are kept out. What more is the Minister doing to ensure that local businesses get local contracts?
Oliver Dowden
It is very important that local businesses can get local contracts. The first thing that the Cabinet Office is doing is ensuring that as we re-let contracts, we split them into small amounts so that they are easier for small businesses to bid for, and we have extensive engagement before we let the contract to ensure that as wide a range of businesses as possible can access it.
Kerry McCarthy (Bristol East) (Lab)
In Brazil, 30% of food for school meals has to be sourced from local or family farms. France has just introduced a similar law on local, organic provision in public procurement. Why can we not do it here?
Oliver Dowden
I know the hon. Lady’s commitment to this cause. As a result of the changes made under this Government, we allow contracts to take into account factors such as the local sourcing of food, as long as it is provided to all businesses.
Mr Gary Streeter (South West Devon) (Con)
Mr Streeter
We live in a London-centric country. Can my right hon. Friend update the House on what he is doing to ensure that Government Departments are relocated to other parts of the United Kingdom, including, of course, the great south-west?
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
This Government are committed to locating economic activity outside London and the south-east. Since 2016, 12 new public bodies have been located outside London, and indeed in the south-west to which my hon. Friend refers. Her Majesty’s Revenue and Customs has set up a regional centre in Bristol, which employs 1,600 people.
Marsha De Cordova (Battersea) (Lab)
Simon Hoare (North Dorset) (Con)
Oliver Dowden
My hon. Friend raises a very important point. Cyber-security is a major priority for the whole of this Government, and our world-leading national cyber security strategy is supported by almost £2 billion of investment. It sets out measures to ensure that the public sector, and the wider economy, is cyber-secure.
Layla Moran (Oxford West and Abingdon) (LD)
Kerry McCarthy (Bristol East) (Lab)
Oliver Dowden
As the hon. Lady will be aware, we have invested in the balanced scorecard approach. Of course, we will look at extending it to whatever procurements are possible.
Alex Norris (Nottingham North) (Lab/Co-op)
Ministers talk a lot about voter fraud, even though there were only two convictions in 2016. Ministers do not talk about the 6 million people who are not on the electoral register. May I have a commitment from Ministers that, when it comes to strengthening our democracy, they will prioritise the many, not the few?
State of the Estate
Oliver Dowden Excerpts(6 years, 1 month ago)
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The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
I have today laid before Parliament, pursuant to Section 86 of the Climate Change Act 2008, the “State of the Estate in 2016-17”. This annual report describes the efficiency and sustainability of the Government’s Civil Estate and records the progress that Government have made during the financial year 2016-17. Since 2010 we have delivered savings of over one billion pounds in annual operating costs and a 25% reduction in the size of the estate (2.8 million square metres). We have also made significant progress on other key areas including achieving a 33% reduction in emissions by the end of 2016-17, which exceeds the 2020 target of 32%.
Looking ahead, our aim is to ensure that our estate not only delivers value for the taxpayer but also acts as an enabler to the delivery of the Government’s wider commitments—from releasing surplus Government land to building new homes, to delivering public services that are more accessible and responsive to citizens’ needs and to ensure our estate showcases best practice in mobile technology and workplace design.
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Oral Answers to Questions
Oliver Dowden Excerpts(6 years, 2 months ago)
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Kerry McCarthy (Bristol East) (Lab)
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
The Government are committed to ethical procurement. The Public Services (Social Value) Act 2012 requires commissioners to consider the social benefits of their approaches to procurement, and the industrial strategy requires Departments to consider wider social and economic factors in the design of major Government contracts.
Kerry McCarthy
Another recent report has commented on the link between ultra-processed food and cancer, rising levels of obesity, and the fact that only one in four adults is eating five a day. What more can the Government do through their public procurement processes to encourage healthy, sustainable eating, and to source it from British producers?
Oliver Dowden
The hon. Lady has raised an important point. As I have said, the Public Services (Social Value) Act 2012 enables procurers to take those wider factors into account. We are also encouraging the adoption of a so-called balanced scorecard approach whereby, in the process of procurement, we consider those wider factors. We have rolled that out for all contracts worth more than £10 million, and have extended it to the Crown Commercial Service framework for facilities management.
Michael Fabricant (Lichfield) (Con)
What additional flexibility in public procurement will be yielded by Brexit?
Oliver Dowden
One of the advantages of Brexit is that it will provide a wide range of opportunities to tailor our procurement rules to the needs of this country. Once we have left Europe, we will be considering exactly those measures.
Thangam Debbonaire (Bristol West) (Lab)
What certainty does the Minister have that there is no direct or indirect gender discrimination anywhere in the Government’s supply chain?
Oliver Dowden
In October last year, the Government produced a code of conduct relating to Government procurement which covered precisely those points.
Chris Davies (Brecon and Radnorshire) (Con)
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
The Government are committed to moving activities away from London and the south-east. There is a presumption that all new non-departmental public bodies should be outside London, so we have created Government hubs across the UK, including in Edinburgh and Glasgow. My hon. Friend makes a marvellous case for having more such opportunities in Scotland.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Mark Pawsey (Rugby) (Con)
Oliver Dowden
My hon. Friend makes an important point. Small businesses are the engine of our economy, and we are committed to supporting them in public procurement. That is why we have already streamlined our procurement processes to assist small businesses by, for example, abolishing complex questionnaires. Specifically in relation to too much bureaucracy, businesses can report such practices to the mystery shopper service.
Patrick Grady (Glasgow North) (SNP)
Alison Thewliss (Glasgow Central) (SNP)
My colleagues in Edinburgh will be voting today to scrap the public sector pay cap and give a 3% pay rise to those earning under £36,000. When will public sector workers in England see a similar rise?
Oliver Dowden
Public sector workers are among the most talented and hard-working people in our society, and they should be fairly rewarded. In respect of the Cabinet Office, the Chancellor’s Budget statement confirmed that we are moving away from the 1% average public sector pay award, and proposals will be issued later this year.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
I wish my right hon. Friend every success in his forthcoming meeting with the Scottish and Welsh Governments this week. Will he bear in mind that he is being compromising and open, and will he invite them to be the same?
Strengthening Families
Oliver Dowden Excerpts(6 years, 3 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
It is a pleasure to serve under your chairmanship, Ms Buck, and it was a pleasure to have Mr Bone as our Chair prior to your arrival.
When we go to someone’s funeral, it is rare that people talk about that person’s educational or career successes. They certainly, as my hon. Friend the Member for Gainsborough (Sir Edward Leigh) said, do not talk about the money that person made during their lifetime. Almost always, the eulogy centres on the family. People want to be remembered for the family—for their contribution to family life and the stable family life that they built. Families are at the centre of all our individual lives. They provide us with a sense of stability, security and purpose, sustaining us through times of emotional, health and financial difficulty, and providing us with a sense of place and fulfilment. We all experience families in different ways throughout our lives, as children to our parents, as parents or indeed grandparents as we grow older, as partners or through our extended relationships. To answer a point made by my right hon. Friend the Member for New Forest West (Sir Desmond Swayne), of course we all know that modern families are not all two parents with two children. It has been established during the debate that it is not helpful to stigmatise people who do not conform to that measure, and I do not think anyone suggests we should do so.
As a dad with two young children, I know the importance of strong families and the role that families play in children’s development—not only physical development but cognitive, emotional and social development. I completely agree with the attitude of my hon. Friend the Member for Stafford (Jeremy Lefroy) towards television and social media for children. The decline in the practice of children sitting at the table to eat with the family has profound consequences. When children eat with the family they learn many soft skills such as conversational ability and table manners that put them at an advantage and help them succeed throughout life. I certainly agree about playing games: my family like Articulate! My six-year-old already beats me at Cluedo so I am giving up on that one. I shall resist the temptation to speculate on games that members of the Cabinet might choose to play.
For all the reasons I have given, it is, for me and certainly for my party and the Government, families and not the state that form the cornerstone of our society. That is why families are at the heart of Government policy and why I am so pleased to have the opportunity to respond to the debate on behalf of the Government. It is an important issue, and, as my hon. Friend the Member for Congleton (Fiona Bruce) said, it is also a cross-cutting issue where responsibilities lie with a number of different Departments. As a Minister in the Cabinet Office, which has responsibility for co-ordinating cross-Government work and policy, I am responding to this wide-ranging debate on behalf of the Government. Within the Cabinet Office, we are continually looking at ways to measure the impact of policies in relation to the family. We currently analyse that impact through mechanisms such as the implementation unit, which falls within my brief. That is a central part of the initiative.
I pay tribute to my hon. Friend for securing the debate. I know what a strong campaigner she is on the importance of families, and how much of her parliamentary career she has devoted to championing the cause. That was demonstrated once again by her passionate speech today. I also pay tribute to all hon. Members who were involved in drawing up the “Manifesto to Strengthen Families”. I know that she chaired a roundtable on Tuesday with our hon. Friend the Member for South West Bedfordshire (Andrew Selous) and David Burrowes. I join my hon. Friends in paying tribute to Mr Burrowes. He was a neighbour when he served as Member of Parliament for Enfield, Southgate and he is completely and passionately committed to this cause.
I am very familiar with this cause from my time working for the former Prime Minister. My hon. Friend the Member for Congleton mentioned “Breakthrough Britain”. I well remember that report and its impact and the significant contributions, not just from David Burrowes, but people such as Dr Samantha Callan, who are very committed to this project. For me, the statistic that brought it home during the debate is that children are more likely to have a smartphone than a father at home. What does that say about our values as a society if that is the case?
Margaret Greenwood
When the Minister is talking about values as a society, will he set out for us what his Government are going to do to tackle child poverty, which is set to rise to 5 million?
Oliver Dowden
As the hon. Lady has raised the point now, I am happy to talk about it. It was certainly my experience growing up that my dad losing his job at a wire factory had the single biggest impact on our family finances and our family life. It put the greatest strain on our family. I am very proud to serve in a Government under which more than 2 million new jobs have been created—that is hundreds of thousands of households where children grow up seeing their parents going out to work and having the stability and security of a wage packet.
That achievement stands alongside a range of measures that we have taken—for example, we are the first Government to introduce a national living wage. We are also cutting people’s taxes so they keep more of what they earn. We have essentially doubled the tax-free allowance, meaning that anybody working 30 hours a week on the minimum wage pays no tax at all. In addition to that, universal credit reforms pioneered by my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), the former Work and Pensions Secretary, have had a tremendous impact. When I visit jobcentres in my own constituency, I see the enthusiasm that people working there have because they know that we finally have a policy that genuinely incentivises people from welfare into work. We have a record of which we can be proud.
I did not want to descend into party political points at this early stage, but I would note on the issue of the so-called privatisation of the health service that I do not see how that accords with the tremendous increase in funding we have provided for the NHS.
Ms Karen Buck (in the Chair)
Order. Before the hon. Lady intervenes, I would remind Members that this is not a debate about the health service.
Oliver Dowden
I will give way in just one moment. Record numbers of operations are being performed on the NHS, record numbers of people are seeing GPs, and record numbers of people are being seen in A&E. We have committed an extra £8 billion in this Parliament and another £6 billion was committed in the Budget to the NHS. I will give way, and then I must move on.
Margaret Greenwood
I thank the Minister for giving way and I take on board your comment, Ms Buck, but I would say that the debate is cross-departmental and the document does refer to health. Accountable care systems or integrated care systems are suggesting bundling together budgets for the hospitals, the GPs, community health, public health and local authority spending of one area—Wirral, for example—and potentially giving that to one private provider. We have seen what happened with Carillion, so there is clearly a huge risk in taking that kind of approach. I would say that if that leads to the privatisation of the national health service, it will have a devastating effect on families.
Ms Karen Buck (in the Chair)
I call the Minister, and I would stress my earlier point to him as well.
Oliver Dowden
I thank you for that warning, Ms Buck. I will deal with the comment in one sense and move on to the substance of the manifesto.
There is virtue in integrating services, The sort of thing that is being pioneered in Manchester, where we bring together different services—it is in fact being pioneered by a Labour Mayor, in conjunction with the former Chancellor’s measures—is, I think, a way of improving health outcomes.
I will now move on to the specific measures in the manifesto, which form part of broader Government policy. For example, there is the important matter of education. There are now 1.9 million children in good or outstanding schools, which is a record number. My hon. Friend the Member for Stafford raised some important points about mental health. As was recognised, we are investing £1.4 billion in mental health services for children and young people, and we have set up a scheme in schools to raise awareness and help them to know how to deal with individuals in schools suffering from mental health issues. We have published a Green Paper to set out our plans to transform mental health services in schools. My hon. Friend made an important point about the need for a holistic, family approach to mental health, and hopefully the Green Paper will be a starting point.
As I said, a route into meaningful work is very important for improving children’s life chances. We now know that nearly three quarters of children from workless households moved out of poverty when their parents entered full-time work. That means 608,000 fewer children are living in workless households.
Before moving on to the contents of the manifesto, I would like to try to address some of the points raised by my hon. Friend the Member for Congleton. The importance of champions for the family in Government was raised by several Members. As a starting point, I know that the Prime Minister is personally committed to this—she is the principal champion of families. We have already discussed the other Ministers with family responsibilities, but I have certainly heard the point about a specific, designated family Cabinet Minister loud and clear, and I will relay that to my colleagues in Government.
My hon. Friend the Member for Congleton raised the DAD scheme. I understand from my officials that the Department for Education has funded a range of family advice and support services since 2008, including Family Matters, which runs the website called DAD. The service is well used and is valued by its users. Ministers at DFE are considering the future requirements for the next financial year, so it is under active consideration. I am sure the representations made by my hon. Friend will have been heard loud and clear. On children’s centres, an important point was raised about family hubs. Clearly, local authorities have responsibility for children’s centres and they are free to pioneer family hubs. As my hon. Friend said, a great number are already doing so. She highlighted Westminster and the Isle of Wight. I would urge other councils to consider doing so.
My hon. Friend made an excellent representation on a transformation fund. Sadly, it is entirely beyond my remit to make public spending commitments, but I am sure the Chancellor will take note, particularly regarding the £90 million in dormant bank accounts. On the statutory duty to have the father’s name on birth certificates, it is worth noting that 94% of birth certificates already have the father’s name there, so we are making progress.
On relationships education, which came up in a number of contributions, the call for evidence is out at the moment. Some passionate pleas were made. I would urge hon. Members to respond to that call for evidence—I believe it closes on Monday. That is the route for formulating policy in that area. Again, I think a valuable point was made about the need for an annual statement on strengthening families and that is again something I will relay to my right hon. Friends in Government.
My hon. Friend the Member for Stafford talked about Home-Start, which is very important. I have looked into it very briefly, and I believe that comes under the local transformation plans that we put in place in 2014-15. There is an opportunity, as part of those plans, to provide for such schemes, but I will write to him further on that point.
Let me turn to the substance of the debate: this excellent manifesto. The Government introduced the family test in 2014 to bring a family perspective into policy making. It helps to ensure that the impact on family relationships and functioning, both positive and negative, is recognised in the process of policy development, and it informs policy decisions made by Ministers. We introduced the test to ensure that, across Government, we think carefully about the potential for new policies to support or undermine family relationships. The Implementation Unit has a role in ensuring that the family test is implemented. The test means that families are considered at the start of any new policy development.
Margaret Greenwood
How would the two-child policy, under which families are disincentivised to have a third child, measure up to the family test?
Oliver Dowden
The whole point of the two-child policy is that people on benefits should be subject to the same restraints as people who go out to work. Anyone who goes out to work has to think carefully about whether they can afford to have more children, and many people choose not to have a third or fourth child. All the policy does is to replicate that in the benefits system by ensuring a cap at two children. It is a perfectly sensible policy with which many members of the public completely agree.
Oliver Dowden
I really need to make progress, and I do not want this to become a two-way, Conservative-versus-Labour debate.
On the point about spending on childcare, I have already talked about the role of parents in children’s development. Children from less advantaged backgrounds are already behind in their learning by the time they start school, and high-quality early learning from the age of two can help us to close that gap. Parents have a vital role to play in their child’s development. Evidence suggests that, aside from maternal education, the home-learning environment is the single biggest influence on a child’s vocabulary at the age of three. That is why we have committed £5 million to trial evidence-based home-learning environment support programmes in the north of England—my hon. Friend the Member for Congleton referred to them. They will focus on early language learning and literacy. We are currently running a procurement exercise to identify an external organisation to work with us in delivering that trial.
The primary purpose of providing free early learning places for two-year-olds is to improve outcomes for children. We want to make it as easy as possible for children to benefit from early education. One of the interesting initiatives in that area is community-based nurseries, at which parents volunteer in return for lower childcare fees. Disadvantaged families are helped through the lower cost of childcare, and they learn parental skills by working in the nurseries. A number of those trials have already happened with voluntary organisations, and they have had very positive outcomes.
The “Manifesto to Strengthen Families” also recommended that relationship education should be extended online, with a dedicated campaign and virtual platform. The Government want to help all schools to deliver high-quality relationships education and relationships and sex education to ensure that pupils are taught about healthy and respectful relationships, and that they stay safe and are equipped with the knowledge they need to prepare for adult life. I completely agree that it needs to cover concepts such as commitment, respect and safety. Of course, marriage is a perfect example of all those things. I urge hon. Members to make sure their views are heard as part of that consultation process, because that evidence will shape draft statutory guidance and regulations, which will be subject to further consultation later this year. There will be many opportunities for hon. Members to have an input into that process.
In December, the Government published our social mobility action plan, which set out our ambition to close the word gap in early years. It is a clear direction for all those that have a part to play, including children’s centres. Our focus is on delivering that ambition. We welcome the development of family hubs as one way to meet local needs. We believe that local councils are best placed to understand local needs, so if they believe there should be a family hub, they should be free to set one up.
This excellent manifesto also focused on health. The Government are already working to reduce health inequalities by addressing the social causes of ill-health, promoting healthier lifestyles and tackling differences in outcomes of NHS services. We are doing that in a number of ways. We are investing more than £16 billion over the current spending period to support local public health services. That action is being led locally to ensure that the solutions reflect the needs of individual communities. Local authorities can also commission a range of children’s public health programmes that support women in pregnancy through childbirth and support children from early years through to adolescence. Clinical commissioning groups and local authorities are responsible for commissioning services to meet the needs of their local populations. As part of that, we also need to look at mental health. The Government are committed to parity between mental and physical health, which has been one of the challenges in our health service for successive Governments.
The manifesto contains an excellent recommendation about maternity services and maximising the involvement of fathers. Perhaps I can call myself a new dad—I was certainly there at the birth of my two children. There really are some excellent maternity services now. I was at a midwife-led unit at Watford General Hospital, just outside my constituency, and I saw how helpful it is to have a dedicated room in which the birth takes place with en suite facilities. That helps the father to be involved. That is why the Government have provided more than £37 million of capital funding since 2013 to support maternity services and to create safe, family-friendly environments. That includes increased provision of facilities in labour and post natal units, such as double beds, reclining chairs—which can be converted to beds for partners to rest in, especially overnight, and remain with their partner and new-born children—en suite toilets, new birthing pools, and dedicated family rooms.
The manifesto also raised the important issue of couples therapy. When children arrive it is a time of great happiness, but it can put a tremendous amount of strain on relationships, so it is important that we focus resources at that stage. The NHS already offers couple-based therapy as part of its Improving Access to Psychological Therapies programme.
On drug addiction, many hon. Members eloquently made the point that families play an absolutely central part in helping people through that very challenging time in their lives. At a national level, we have extended the troubled families programme to help local areas to ensure that their services have an integrated, whole-family approach. The programme now specifically supports families with younger children and those with a broader range of problems, including substance misuse, mental health problems and domestic abuse.
On the point about police and crime commissioners working with schools in which domestic abuse issues are prevalent, the Government are fully committed to tackling domestic abuse, and we will shortly be launching a consultation on the landmark domestic abuse Bill to improve protection and support for victims, to strengthen the focus on perpetrators, and to recognise the lifelong damage that domestic abuse does to children. The evidence on that front is completely overwhelming.
My hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) made a passionate speech about the prison system and the role of families. I was particularly struck by his statistic that reoffending rates are 35% lower if partners and families are allowed to visit. That is also borne out by other studies. The impact of imprisonment on a family is likely to be long term, especially if the main breadwinner of a family goes to prison—the problems back home build up, with rent or mortgage arrears going up, and social stigma and loneliness for the family left behind.
While offenders are in custody, therefore, we have an opportunity to support them in changing their values and perspectives on their roles and responsibilities. As a Government, we believe that prisoners who are in touch with their family are likely to be more settled while in jail. Multiply that improved mood among prisoners, and we see a transformation in prison conditions. As we have heard, on 10 August last year the Government published a review by Lord Farmer that made several recommendations to strengthen family or significant other ties. As has been recognised, we have welcomed all those measures and will be working to implement them.
On the military covenant, the case was well put by the hon. Member for Glasgow North West (Carol Monaghan) —sadly, she is no longer in her place. We all know, and I certainly do from my previous role as the Parliamentary Private Secretary to the Defence Secretary, the huge sacrifice made not only by our armed forces, but by their families. That is often under-reported, with the families often the ones who take the strain of prolonged periods of absence and moving around, so it is important that we support those families under the military covenant, which is exactly what we have done.
The Ministry of Defence launched its first ever UK armed forces families’ strategy in 2016, which focuses and co-ordinates activity to support service families. The single service welfare organisations provide a flexible and inclusive network of welfare support to service personnel and their families. Defence also rightly works hand in glove with the principal service charities and organisations such as Relate to provide specialist support to families. In addition, we have launched a health and wellbeing strategy to improve mental health, and developed a memorandum of understanding with the Royal Foundation. As part of such efforts, I certainly take on board the suggestion of my right hon. Friend the Member for New Forest West about ensuring that we include training courses.
I thank hon. Members for allowing me to speak for some time. I wanted to cover all the points included in the manifesto, as well as the other matters raised. If Members feel I have left anything uncovered, I undertake to write back to them. I believe that as a Government we are working towards a shared goal of putting family at the heart of policy making. I hope that we will continue in that vein, because all the evidence shows the value of families to our national life.
Fiona Bruce
I thank all right hon. and hon. Members who have spoken in this debate, and who have stayed the course in our final debate before we break for our recess. That demonstrates the commitment of colleagues to “A Manifesto to Strengthen Families”.
I thank the Minister for his response, which showed his personal interest, his genuine concern and his desire to see families strengthened in this country. We appreciate that very much. We appreciate, too, the fact that he represents the Cabinet Office, which indicates a recognition by Government that this is a cross-cutting issue that needs a degree of oversight by one Department, across the many Departments that we have referred to as being affected by the policies in the manifesto that we want to see implemented.
I have one further request of the Minister. So many issues have been raised today and so many have to be taken back to other Departments that, on behalf of my colleagues who have spoken, I would ask him whether he will meet us in a few weeks’ time for a further discussion of how the policies in the manifesto can be taken forward.
Oliver Dowden
indicated assent.
Question put and agreed to.
Resolved,
That this House has considered strengthening families.
Capita
Oliver Dowden Excerpts(6 years, 3 months ago)
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Rachel Reeves (Leeds West) (Lab)
(Urgent Question): To ask the Minister for the Cabinet Office and the Chancellor of the Duchy of Lancaster to make a statement on the risk to public finances and public services as a result of the serious financial concerns at Capita, and on the Government’s contingency plans.
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
I have been asked to comment on the stock market update issued by Capita plc yesterday and its impact on the delivery of public services. I completely understand that this is a matter of significant interest to many in the House following the recent failure of Carillion, but I can assure Members that this company is in a very different situation. To be clear, this announcement was primarily a balance sheet strengthening exercise, not purely a profit warning. As has been widely reported, the company has significant cash reserves on its balance sheet. We do not believe that Capita is in any way in a comparable position to Carillion. Furthermore, Capita has a very different business model, and if the House will allow me, I will give an update on that.
The issues that led to the insolvency of Carillion will come out in due course, but our current assessment is that they primarily flowed from difficulties in construction contracts, including those overseas. By contrast, Capita is primarily a services business, and 92% of its revenues come from within the UK. As Members would expect, we regularly monitor the financial stability of all our strategic suppliers, including Capita. As I said, we do not believe any of them are in a comparable position to Carillion. The measures Capita has announced are designed to strengthen its balance sheet, reduce its pension deficit and invest in core elements of its business. Arguably, those are exactly the measures that could have prevented Carillion from getting into the difficulties it did. Of course, the impact of these measures has been to reduce dividends and shareholder returns in favour of others, so this is further evidence of shareholders and not the taxpayer taking the burden on this.
As I have said, my officials met senior Capita executives yesterday to discuss the impact of the announcement. We continue to work closely with the company to monitor the execution of its plan and to ensure the continued delivery of public services. We continue to engage with all our strategic suppliers and make continuing assessments of our contingency plans, where necessary. It would not be appropriate for me to comment in any further detail on the specifics of those contingency plans, given their commercial sensitivity. But let me reiterate that the priority of this Government, and the reason why we contract with these companies, is to deliver public services, and our priority is the continued delivery of those services. As Members will have seen in respect of the collapse of Carillion, whatever the shortcomings there public services continue to be delivered, and we are confident that public services will continue to be delivered as provided by Capita.
Rachel Reeves
I thank the Minister for his response, but I cannot help but conclude that the Government’s thinking on this is both muddled and complacent. He has told us that the situations at Capita and Carillion are completely different, but let us look in more detail at the circumstances of both companies: both have debts of more than £1 billion and pensions deficits in the hundreds of millions; both paid out dividends of more than £1 billion in the past five years; both rely on the public purse for half of their contracts; both were audited by KPMG; and both grew through acquisition and not through organic growth. It seems there are more similarities than differences between these two companies.
I join the Minister in welcoming the decision by the new Capita chief executive officer to face up to some of these problems with a rights issue and the suspension of dividends. But can the Minister honestly say that Capita could not come to the same fate that Carillion did just two weeks ago, that people working for Capita have nothing to fear, and that those saving prudently for a pension with Capita can rely on that pension paying out fully on retirement? Can he say to people who rely on Capita to carry out basic public services, such as the electronic tagging of offenders or the billion-pound contract with the NHS, that they can count on it to fulfil its contractual obligations for the life of those contracts?
I have some specific questions about what happens now. What is the contingency planning? Do the Government have representatives in the business, including a Crown representative? How long have the Government been aware of the problems at Capita, and how many contracts have been issued to it since then? What specific risk assessment have the Government made of other large outsourcing firms? Capita is currently bidding for the Defence Fire Risk Management Organisation contract. Will the Government now review that process and reconsider the decision to outsource that and other services they are currently looking to offload?
Will the Government commit to urgently reviewing what looks like a cosy and complicit relationship between the big accountancy firms, the Financial Reporting Council and the corporates they are supposed to be auditing? Is it not now time to split up the big accountancy firms and stop auditors being paid for other consultancy work at the firms they are supposed to be auditing? Capita has announced a fire sale of assets. Will the Minister confirm that Capita is in consultation with the trade unions and its workforce about redundancies and TUPE arrangements in the event that services are sold off?
Jobs, pensions, small businesses and vital public services now depend on these outsourcing companies, but it is time we rethought the whole strategy for public service provision. How many more warning signs do the Government need?
Oliver Dowden
I thank the hon. Lady for her questions. I know she takes a close interest in this important issue. She has raised a large number of questions, and I shall seek to address as many of them as I can. I am pleased that she has acknowledged that Capita is facing up to its problems. Indeed, that creates a contrast with Carillion. She talked about the financial situation of Carillion versus Capita. The chief executive of Capita has faced up to this and strengthened its balance sheet—it has been widely reported that Capita has more than £1 billion on its balance sheet—which shows that the situation is significantly different from that at Carillion and gives us confidence in its ability to continue to deliver services.
The hon. Lady talked about dividends. Again, as a result of this announcement, Capita will not be issuing dividends, which means that money can go back into the pension scheme, allowing £200 million extra to be spent on the company’s core services, rather than dividends. That is evidence that the chief executive has understood the position and is creating a different situation from that which pertained to Carillion. She raised an important point about the major accountancy firms, such as KPMG, involved in this market. The Financial Reporting Council is looking into this matter. We expect to hear from it in about six months, and we will, of course, respond as appropriate. On her question about a Crown representative, I can assure her that there is one in Capita.
I explained in my original answer the role of the Cabinet Office and the Government and the reason that we contract with private companies. The previous Labour Government and other Governments did the same. As has been reported many times, a third of Carillion’s live contracts were agreed by the last Labour Government, a third by the coalition and a third by the current Government. Governments do this to deliver public services. Our role, as a Government, is to ensure the continued delivery of those public services, and the test for me and my colleagues and officials in the Department is this: is the company capable of delivering those public services, and if there is a problem with the company, will those public services continue to be delivered? In respect of Carillion, Members will have seen that all those public services have continued to be delivered, and I am confident that they will continue to be delivered.
Sir Patrick McLoughlin (Derbyshire Dales) (Con)
Will my hon. Friend look at the total contempt that the Labour party has for the private sector today? Will he take the time to publish, in due course, a full list of all the contracts with the private sector that were entered into between 1997 and 2010? That will provide a fine example of how the Labour party of today is nothing like the Labour party of that period when they were in government.
Oliver Dowden
My right hon. Friend makes an important point. This Government, and the previous Government, have engaged with private sector companies for the delivery of public services. Gordon Brown, Labour’s last successful Prime Minister—[Interruption.] Well, he was the last Labour Member to hold the office. May I take the opportunity to correct the record on that, Mr Speaker? Gordon Brown said:
“It simply would not have been possible to build or refurbish such a number of schools and hospitals without using the PFI model.”—[Official Report, 14 November 2007; Vol. 467, c. 665.]
Why is it that we use these contractors? Because we know that they can deliver. Labour’s position is slightly confused. Is it honestly now Labour’s position that we should not use the private sector at all? Is the state going to start building roads again? Where does Labour draw the line? It is complete confusion.
Several hon. Members rose—
Jon Trickett (Hemsworth) (Lab)
I will take your advice, Mr Speaker.
Only two weeks ago, I warned that there was a danger that this whole outsourcing problem would become a set of dominoes, with one falling after another. I believe the House will conclude that the Government’s behaviour in response, and the Minister’s response today, has been marked by indifference to corporate mismanagement, incompetence in office and complacency in the face of a crisis.
The Minister will not tell the House, but I will: Capita was given 154 Government contracts last year. Only last week, Carillion contracts were being re-brokered to Capita, yet the company was clearly in trouble. Share values were plummeting and profit warnings were being issued. There was short selling on the stock market and allegations against Capita of fraud in the handling of public contracts. Yesterday, Capita’s total value on the exchange was barely much more than its total debt. The company is in serious trouble. It is a familiar tale of woe, with strong echoes of Carillion.
We want to know that the Government’s contingency plans in relation to Capita will assure jobs for current employees and protect the pensions of those employees and the pensions of the public sector workers that the company is managing. Will the Minister confirm that the public services that Capita manages will be protected in the event of a corporate disaster? Does the Government’s contingency plan allow for that? What will be the common impact of the problems at Carillion, and now Capita, on the spiralling costs of HS2? Does the Minister agree with the Opposition that not a single penny should be used to prop up badly managed outsourcing companies?
The Government are blind to the corporate greed of these outsourcing companies. Does the Minister agree that it is clear that, as the Under-Secretary of State for Justice, the hon. Member for Bracknell (Dr Lee), said only the other day, the Government should be driven by the “evidence, not dogma” on outsourcing?
Oliver Dowden
I thank the hon. Gentleman for his questions, the core of which was about support for outsourcing companies. He said we should not provide a penny more to prop up badly managed outsourcing companies. Indeed, that is exactly what we did in respect of Carillion. We took the decision that this was a private company and should bear the loss. That is why shareholders in Carillion are unlikely to get more than a few pennies in the pound back for their investment. The private sector has taken the risk, but the job of the Government is to ensure the continued delivery of those public services—to ensure that the dinner ladies get paid, that the hospitals get cleaned, and that the railways continue to be built. That is exactly what we did in respect of Carillion and it is exactly what our contingencies involve for all our strategic suppliers. That is the test for the Government: can we ensure the continued delivery of those public services, and can those public services continue to be delivered?
The hon. Gentleman made a point about pensions. The fact that Capita has embarked on this course of restructuring means that it is effectively choosing to switch resources away from the continued payment of dividends and towards pension funds. That should give pensioners confidence in respect of that pension fund. He also asked about jobs, and again, the restructuring can give confidence about the continuing delivery of those jobs.
I keep coming back to the same point. This is a private company and the interest of the Government is to ensure the continued delivery of those public services, and those public services continue to be delivered. That takes me back to Labour’s position. What Labour seems to be suggesting is that the private sector has no role in public life, and that the level of small and medium-sized businesses working for the Government should be zero. If that is not Labour Members’ position, are they going to tell us where they choose to draw the line? Labour has gone from pumping billions of pounds into private companies for the delivery of public services when Gordon Brown and Tony Blair were Prime Minister, to saying that they should not have a penny. Some clarity would be helpful, because otherwise people may draw the conclusion that there is more than an element of opportunism here.
Bim Afolami (Hitchin and Harpenden) (Con)
Does my hon. Friend agree that it would be irresponsible of this Government to cancel private companies’ contracts simply on the basis of a single profit update?
Oliver Dowden
I thank my hon. Friend for that question, and this is an important point about profit warnings. A profit warning does not mean that a company is imminently going to collapse. A profit warning is a warning to the markets that its results will not be in line with what it had previously thought. If every time that a company issued a profit warning, we as a Government said that we would cease to contract with them, there would be very few companies we could contract with. I will not name leading companies, because I do not want to influence their market value, but I could name a huge list of FTSE 100 companies that routinely issue profit warnings. That does not mean that they are about to disappear.
Deidre Brock (Edinburgh North and Leith) (SNP)
For the second time in two weeks, we are discussing a private firm, responsible for the delivery of vital services, that has caught us cold with a profit warning. Will the Minister now acknowledge that there is a role for a proper public sector? Will the Government now start to roll back on the privatisation agenda that they and the previous Labour Government obsessed about? Can we look forward to a proper plan for taking public services back into the public sector? And will he now acknowledge that public sector employees should deliver public services?
Oliver Dowden
Of course we acknowledge that there is a proper role for the public sector. That is why, for example, this Government committed at the last election to providing £8 billion more for the NHS and a further £6 billion more for the NHS. To go to the core of the hon. Lady’s argument, the reason that successive Governments of all political persuasions have chosen to engage with the private sector for the delivery of services is that those companies have a speciality in it. They have a speciality in delivering such services, so they can deliver them more efficiently. That means there are savings for the taxpayer. If the Scottish National party position is seriously that we should not have any outsourcing, they need to explain to taxpayers why, instead of ploughing those efficiency savings back into our schools and hospitals, they are choosing to use them to pay for less efficient ways of delivering public services.
Paul Masterton (East Renfrewshire) (Con)
Does the Minister agree that the biggest risk to jobs, the biggest risk to pensions and the biggest risk to the delivery of public services would be to withdraw support for Capita on the basis of a reactionary announcement to this profit warning?
Oliver Dowden
Yes, my hon. Friend is absolutely right. If we were to choose overnight, in the face of one profit warning, to stop contracting with that company, there would be a significant risk of the delivery of public services falling over. As I have said, the objective of the Government is the continued delivery of public services, and we have continued to pay the cleaners, continued to have the dinners served and continued to ensure that what the people out there in the country care about, which is that their public services are delivered, continues to be delivered.
Sir Vince Cable (Twickenham) (LD)
Yesterday, the chief executive of Capita said that his organisation was “far too complex”. If the chief executive finds it difficult to understand how his own organisation works, how do the Government monitor the stability and performance of these very large, complex outsourcing companies, such as Capita, Serco, Atos and G4S?
Oliver Dowden
The right hon. Gentleman is absolutely right about what the chief executive said, and that is the reason why that chief executive has embarked on this restructuring; it is precisely because of that complexity. I well remember working with the right hon. Gentleman when I was an adviser in Downing Street and he was Business Secretary in the coalition, so he will have knowledge of that. In fact, a third of the contracts from Carillion were agreed by the coalition. The process that we had then, and that we have continued to strengthen, is twofold. First, we look at the published results of these companies and use third parties to understand them properly and verify them. Secondly, we continue to engage on a one-on-one basis with each of those companies through the Cabinet Office, to understand their financial position in order to ensure that we deliver on what the public expect—the continued delivery of public services.
Rachel Maclean (Redditch) (Con)
The hon. Member for Leeds West (Rachel Reeves), in the Business, Energy and Industrial Strategy Committee, has rightly raised concerns about the failure of regulation from the Financial Reporting Council and KPMG. Does the Minister agree that the answer to this dilemma is not to nationalise those companies, but to make sure that those bodies do their job for the taxpayer and the public service user?
Oliver Dowden
Yes, my hon. Friend is absolutely correct. That is why I, and we as a Government, welcome the fact that the FRC is looking into the four major accountancy firms and seeing what lessons we need to learn. Of course we will respond to that and act appropriately.
John Spellar (Warley) (Lab)
May I bring the Minister back to the core issue, which is that there are two separate but linked problems: the business model and the performance of these companies? Like Carillion, Capita seems to be part of the over-concentrated, over-leveraged, dividend-and-bonus-exploiting culture that relies on the state to bail out failure. Capita incompetence is only too clear from its lamentable performance on the recruitment contract for the armed services. When will this Government finally get a grip?
Oliver Dowden
Behind the right hon. Gentleman’s question is an important point about the diversity of suppliers in this market. We do need to look to diversify further. That is why, for example, we have set a target that 33% of all our Government contracting should be with small and medium-sized enterprises—precisely to ensure that we have that greater diversity. On his point about state bail-out, we have done precisely the opposite of a state bail-out. Carillion went into liquidation, so its shareholders paid the price; because Capita has decided to stop paying dividends, its shareholders are paying the price. Therefore, it is not correct to say that the state is bailing them out in this situation.
Mark Pawsey (Rugby) (Con)
Is not the Government’s role to continue to act as a prudent customer and to continue to monitor their suppliers and the services provided? Right now, the best thing that the Government can do is to allow the company to get on with its plans to restructure its business.
Oliver Dowden
Yes, my hon. Friend is absolutely right. Capita and its executive and shareholders are responsible for Capita. Our responsibility as a Government is for the continued delivery of public services—to make sure that the services on which the public rely continue to be delivered. That is exactly what we did in respect of Carillion, and that is exactly what we are ensuring in relation to contingency plans for all our strategic suppliers, including Capita.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The Minister said that Capita has a positive record of delivery, but it has been responsible for the £1 billion contract for the delivery of NHS England’s primary care support services since 2015. From the outset, both GPs and local medical committees identified serious issues with the service, including patient safety, GP workload and an effect on GP finances. Although some progress has been made, two and a half years on the service falls far short of what is acceptable, and there is still an urgent need to resolve these issues to give practices and GPs across the country confidence in it. What are the Minister and the Government doing to improve the quality of services provided by Capita?
Oliver Dowden
The Government contract with a company to deliver the individual services, and that is done through each Department. In respect of health services, that is done by the Department of Health, which has to ensure that Capita or any other contractor delivers on what it has promised. The function of the Cabinet Office in this respect is to ensure that overall public services continue to be delivered if there is a failure of the company.
Jeremy Quin (Horsham) (Con)
If I understand the Minister correctly, this company is raising funds from its shareholders in order to strengthen its balance sheet, enhance its pension fund and invest money in its core business. These corporate actions should be welcomed on both sides of the House. Does he share my frustration that the attitude of the Opposition towards the private sector seems to be, “You’re damned if you do and you’re damned if you don’t”?
Oliver Dowden
Yes, my hon. Friend is precisely right. As I said, it would have been helpful if Carillion had considered these actions; perhaps then it would not have got into this position. Members cannot say that somehow the Government are bankrolling these companies, while simultaneously saying that we are allowing the companies to go bust if things go wrong with them and shareholders pay the price. They cannot make those two propositions at once.
Thelma Walker (Colne Valley) (Lab)
Does the Minister agree that, with Carillion and now Capita, the outsourcing of our services has failed? Instead of expensive bail-outs, they should be brought back into public ownership.
Oliver Dowden
The Government have not bailed out a single supplier. It is the shareholders who have paid the price. It is the shareholders of Carillion who will not receive back the money they invested—or, at least, they will receive a very small proportion of the money, depending on the outcome of the liquidation. The hon. Lady’s characterisation of the situation is simply not correct.
Rebecca Pow (Taunton Deane) (Con)
Will the Minister assure the House that the combatant steps that the Government have taken to date regarding Carillion have protected services and ensured that there is minimal disruption to citizens? Will he also assure us that they are taking a similar combatant approach to the Capita situation so that we can protect services such as the NHS admin that is so important to us all?
Oliver Dowden
My hon. Friend is absolutely right. Our focus has been to ensure the continued delivery of public services. In respect of all the key strategic suppliers, we ensure that we are confident that public services will continue to be delivered if there is an interruption to those companies. That is what the House saw in respect of Carillion, and it is exactly what we prepare for all the time with regards to all our strategic suppliers.
Hywel Williams (Arfon) (PC)
This is a very worrying time for Carillion employees in Wales, including the hundreds employed at the call centre in Bangor in my constituency. It is also a very worrying time for disabled people, as all personal independence payment assessments in Wales are carried out by the company. Will the Minister give these people a cast-iron guarantee that their jobs are safe, and that their benefits assessments will be carried out properly and accurately?
Oliver Dowden
I believe that the hon. Gentleman is referring to Capita, not to Carillion.
Oliver Dowden
I assure the hon. Gentleman that it is the priority of the Government—this is what we are working on—to ensure that there will be no interruption to the very important public services that he outlined, no matter what happens to their delivery. That is what happened with Carillion. On the very day it was announced that Carillion was going into liquidation— the announcement was made at 7 o’clock in the morning—we ensured that the people delivering public services could continue to turn up to work and to be paid, and that the public services they delivered could continue to be delivered.
Mr Philip Hollobone (Kettering) (Con)
Before any new Government contracts are awarded to Capita, will the Government seek fresh assurances in respect of existing and future pension obligations to its employees?
Oliver Dowden
I can assure my hon. Friend that in fact officials from my Department met Capita only yesterday. This is an ongoing process of engagement with all the strategic suppliers, asking exactly those sorts of questions to ensure that we have public services delivered. Of course, we are very cognisant of things like the pension fund as well.
Tony Lloyd (Rochdale) (Lab)
One of the real issues that comes through with both Carillion and Capita is that the enormous growth of the conglomerate structure means that these corporations are vulnerable when any part begins to fail, and that of course puts at risk the whole. Where is the risk assessment that the Minister and his team have done that guarantees that we will not see failure in Capita and in other public service providers?
Oliver Dowden
As I said, there is a continuing process of engagement. Over the years, the Government Commercial Function has been beefed up. We have brought in people with expertise who understand these companies and are engaging with them on a day-to-day basis to understand their business models. The purpose of doing that is to understand those business models to ensure that we are confident that we can continue to deliver these public services.
Edward Argar (Charnwood) (Con)
Will my hon. Friend confirm that what matters to this Government is what delivers the best public service outcomes to our constituents in terms of quality and value for money—exactly the same considerations that motivated Labour when, in government, it let so many public service delivery contracts to private companies?
Oliver Dowden
Yes, Labour let lots of contracts to private companies, because it believed that they had the expertise to deliver them, and that is exactly what we are doing. Interestingly, since the surge in the use of PFIs that took place under the Labour Chancellor before last, Mr Gordon Brown, we have tightened up the terms of PFI. We are learning the lessons from some of the excessive PFI contracts that we saw, which had underneath them ludicrous service fees for some of the services provided.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Capita is a significant employer in Huddersfield in its shared transport business. It has a very important role in gas safety for the Health and Safety Executive. It is a very important company. Nobody on the Labour Benches wants to see it fail; like all businesses, we want to it to succeed. There is nothing wrong with a public-private partnership: what is important is getting the contract and the relationship right. What went wrong in many PFIs was rotten contracts that still bedevil local hospitals and local schools.
Oliver Dowden
The hon. Gentleman makes a very important point. He is precisely right. There is nothing wrong, per se, with engaging with the private sector for the delivery of services, but we must ensure that there is rigour in the contracts. Many contracts in the past have not been properly negotiated and have not delivered value for the public sector, and they will continue to burden us for many decades to come. However, that is not an invalidation of the model; it is about problems with specific contractual negotiations.
Bob Blackman (Harrow East) (Con)
It is clear that Capita is unique because it grew out of outsourcing from the public sector, but as it grew the structures outstripped its proper corporate responsibility. It is also clear that we need to argue the case for the benefits to the public sector of outsourcing. Will the Minister therefore set out the benefits of outsourcing and give one or two examples of where it has been a success and delivered better public service?
Oliver Dowden
I am very happy to do so. This is precisely why private sector companies use outsourcing. Every company engages in outsourcing because it recognises that there are some areas where there is greater expertise than can be delivered by that company. It is exactly the same for the public sector. We focus on what actually works—what delivers for the public sector and what delivers the best price and the best value. Over 4,500 projects have been delivered since 2010; over a quarter of a trillion pounds has been invested in infrastructure; and over 70% of our 175 long-term priority projects and programmes identified are now complete, under construction, or part of a programme being delivered. This is delivering the public services that people want.
Jenny Chapman (Darlington) (Lab)
Capita employs 450 people in my constituency, who are principally engaged in administering public sector pensions. When the Minister has met Capita, what discussions has he had about the pensions function and the Darlington site specifically? Will he meet me to discuss that?
Oliver Dowden
I would be very happy to meet the hon. Lady to discuss all those points.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Will the Minister tell the House the size of the pension deficit and what arrangements the Government are putting in place to cover that black hole?
Oliver Dowden
Capita is a private company, responsible for the running of its business. If the hon. Gentleman looks at the announcement made yesterday by Capita, he will see that it has chosen not to issue a dividend, which has released more cash and means that it can shore up its pension fund. It is a positive announcement in that respect.
Laura Pidcock (North West Durham) (Lab)
Will the Government review all major outsourced contracts as a matter of urgency, and in particular the contracts awarded to Capita for assessing personal independence payments for disabled people? It has been subject to justified heavy criticism for the way it treats disabled people during that process.
Oliver Dowden
The Government routinely publish all significant outsourcing contracts, and I would be happy to provide the hon. Lady with a link to the website so that she can get a full list of those. That is the process for doing it.
Liz McInnes (Heywood and Middleton) (Lab)
Is it not time that private companies providing public services were subject to the same rules of openness and transparency as the public sector, so that they can no longer hide behind the cloak of commercial confidentiality?
Oliver Dowden
Of course there are lessons to be learned from this. Indeed, that is exactly what bodies such as the Select Committee on Public Administration and Constitutional Affairs are looking into. However, there is a distinction between a private company and a public body. I do not think it would be appropriate to extend the full FOI provisions to all private companies.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
If the Minister is serious about getting the best value for the public, will he commit to learning from the Scottish Government? The Scottish Futures Trust’s latest independently audited benefits statement shows more than £1 billion in savings since it was established.
Oliver Dowden
I welcome the hon. Gentleman’s question. Of course we will learn those lessons, but it is worth noting that the Scottish Government gave a contract to Capita in 2015. Capita was appointed by the Scottish Public Pensions Agency to deliver its integrated pensions IT software solutions, which is another example of Governments choosing to use the expertise of the private sector.
Diana Johnson (Kingston upon Hull North) (Lab)
There are echoes of Corporal Jones from “Dad’s Army” in the Minister’s response this morning—“Don’t panic! It’s all okay.” Why does he think that Barnet Council—a flagship Tory council, known as “easy council” because of its extreme outsourcing—has put in place contingency plans based on the possible failure of this company?
Oliver Dowden
I can assure the hon. Lady that we are not in any way complacent. That is why we continue to ensure—I believe Barnet Council will be doing exactly the same—that there are contingency plans in place. Indeed, those contingency plans have worked in respect of the one collapse of a company we have seen: Carillion. Those public services continue to be delivered.
Melanie Onn (Great Grimsby) (Lab)
Capita has a £1 billion contract in the primary care sector of the NHS. The Minister has sought to minimise the necessity of declaring any kind of contingency plans to the House. Does he not think that the House and the general public deserve to know exactly what plans the Government have in the event that Capita is unable to provide those essential services to the public?
Oliver Dowden
I thank the hon. Lady for her question. I have given that reassurance, and I can reassure the House again that in respect of all our strategic suppliers, including Capita, we are understanding their financial position and taking appropriate contingency measures. I hope she will understand that lots of these things are commercially sensitive, and it would not be helpful to go into excessive detail on that.
Nick Smith (Blaenau Gwent) (Lab)
Capita’s stock has dropped 84% since its 2015 peak. Are there plans for a ministerial taskforce to grip this situation should it worsen?
Oliver Dowden
It is worth noting that a large chunk of the drop in the share price came yesterday in respect of the restructuring of the business—it was a consequence, for example, of the rights issue—but we are of course engaging in such a way. I and the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Burton (Andrew Griffiths), who has responsibility for small businesses, have established a taskforce for Carillion. We are ensuring that we provide all the support we can for the private sector side of Carillion’s delivery of services. For example, we are ensuring that HMRC is showing flexibility in relation to payments, and that banks are showing some flexibility. Should the need arise, we would do exactly the same for Capita.
Kate Green (Stretford and Urmston) (Lab)
Poor service delivery is often an early warning sign of future financial difficulties. GP practices in my constituency have been complaining for at least two years about the poor quality of service they are receiving. We know that the contract for assessments for personal independence payments has been failing, and this morning we have heard examples of many other service delivery failures. Rather than leaving this to individual Departments to manage, should not the Cabinet Office have a central overview of where service performance is failing as an early warning of future difficulties?
Oliver Dowden
Yes, we should, and we do exactly that. We of course take an overall view of the delivery of public services, the financial position and contingency. The specifics of public service delivery clearly have to be contracted by the relevant Department, because the relevant Department has a deeper understanding of the need. For example, for health and education, the Department of Health and Social Care and the Department for Education are in a better position to negotiate such contracts.
David Linden (Glasgow East) (SNP)
Last year, a Press Association investigation revealed that Capita received £200 million more than originally planned from the Department for Work and Pensions for PIP assessments, so there is a clear trail of the Government rewarding failed performance. Will the Minister assure me that the Government will not also be rewarding corporate recklessness?
Oliver Dowden
No, the Government certainly will not be rewarding corporate recklessness. Carillion shareholders paid the price for the failures of Carillion in that they will not receive back their initial investment, which is precisely correct. The role of the Government is to ensure that those public services continue to be delivered, and the private sector bears the risk.
Oral Answers to Questions
Oliver Dowden Excerpts(6 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
Thank you, Mr Speaker, and hon. Members for that very warm welcome.
Small businesses are the backbone of our economy, and this Government are committed to supporting them in securing Government contracts. To that end, we have already streamlined our procurement processes to assist small businesses. Our small business panel is working to improve accessibility of Government contracts, and we continue to focus on breaking down the barriers that might deter SMEs.
Nigel Mills
I thank the Minister for that answer and welcome him to his position. He will know that many small businesses are put off trying to get contracts by the amount of information they need to supply and the bureaucracy they have to go through. What more can the Government do to reduce that bureaucracy and amount of information?
Oliver Dowden
My hon. Friend raises a very important point. It really is vital that small businesses can access Government contracts as simply as possible, so to achieve this we have already taken action to ensure that bidding processes are simplified across the public sector, with complex pre-qualification questionnaires abolished for low-value contracts. We will continue to look at ways to reduce burdens for business, particularly small businesses.
Derek Twigg (Halton) (Lab)
Given what the Minister has said, what information does he have that there has actually been an increase in the number of small and medium-sized businesses accessing Government contracts?
Oliver Dowden
I would point to three pieces of information: direct spend with SMEs is up 80% since the Conservatives came to power in the coalition in 2010; more small businesses than ever are bidding for Government business; and the Government now spend about £5.6 billion directly with SMEs.
Sir Oliver Heald (North East Hertfordshire) (Con)
As a fellow Hertfordshire MP, may I congratulate my hon. Friend on his well-deserved new role? Does he agree that it may be possible for prime contractors with Government contracts to do more to bring in small and medium-sized businesses, particularly in specialist areas, where Hertfordshire is of course so strong?
Oliver Dowden
I thank my right hon. and learned Hertfordshire Friend for his welcome. He raises an important point. There are two aspects of this: there is the direct spend—as I have said, it is about £5.6 billion—but we also need to ensure that we get spend into contracts lower down, with people who have Government contracts then spending with small businesses, which is something we are committed to doing as a Government.
Jon Trickett (Hemsworth) (Lab)
Too often, rather than outsourcing to SMEs, very large companies are employed. In this respect, despite being under investigation by the Financial Conduct Authority and reportedly having debts of £1.5 billion, the massive outsourcing company Carillion remains a major supplier in terms of Government procurement. If it were to collapse, it would risk massive damage to a range of public services. Do the Government have a contingency plan for such an eventuality, and what is the likely cost to the taxpayer?
Oliver Dowden
As the hon. Gentleman would expect, we of course make contingency plans for all eventualities. If I could briefly update the House, Carillion, as Members will know, is a major supplier to the Government, with a number of long-term contracts. We are committed to maintaining a healthy supplier market and working closely with our key suppliers. I can tell the House that Carillion’s operational performance has continued to be positive. For example, it advanced its work on Crossrail over the Christmas period.
Jon Trickett
The truth is that the Minister has failed to answer the central question. The Government have been outsourcing public services to large outsourcing companies on an industrial scale. When these massive outsourcing companies fail, as too often they do, does the Minister really think it is fair that the costs stay with the taxpayer, while the profits are creamed off by the shareholders?
Oliver Dowden
I do not think there is anything wrong with profit. Profit is a reward for investment made by businesses. Perhaps if the hon. Gentleman had listened to my answer, he would not have had to read a pre-scripted question. I gently suggest to him that this is something the Government take very seriously. We, for the first time, as a Government—this had not been done for 13 years previously—started measuring the number of small and medium-sized enterprises that have Government contracts. We set a target of 25% in the last Parliament, and we have delivered on that, so I think that is a record of success for this Government.
Jeff Smith (Manchester, Withington) (Lab)
Bill Esterson (Sefton Central) (Lab)
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
In November 2017, we published the 2015-16 figures for central Government Departments. The Government are fully committed to supporting our small businesses, which are the engine room of our economy, so we are continuing to take action to meet our target of a third of procurement being with small businesses by 2022.
Mr Speaker
It is good to see the Minister looking in a state of high excitement, as well he might.
Bill Esterson
Those 2015-16 figures show procurement to small and medium-sized enterprises to be falling, from 27% to 24%. The majority goes through indirect procurement, so is not the truth that wholesale changes are needed in a Government procurement system that just delivers crumbs from the table of large contractors to SMEs?
Oliver Dowden
The hon. Gentleman is right to highlight the fact that this is a challenging target, but, as I said previously, we set a challenging target in 2010 and we met it by the end of the Parliament. I am confident that we will meet our target again. In particular, we will be taking further measures in relation to SMEs. We will use transparency to encourage large businesses to employ more SMEs and make prompt payment part of the selection process for larger suppliers, which is the point that he raised. I can tell the House that we will be bringing forward proposals on that very shortly.
Jo Platt (Leigh) (Lab/Co-op)