HOUSE OF COMMONS
Fifth Standing Committee on Statutory Instruments, &c.
DRAFT VEHICLE INSPECTORATE TRADING FUND ORDER 1991
Tuesday 12 March 1991
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The Committee consisted of the following Members:
Chairman: MR. MICHAEL LATHAM
Bennett, Mr. Andrew F. (Denton and Reddish)
Budgen, Mr. Nicholas (Wolverhampton, South-West)
Callaghan, Mr. Jim (Heywood and Middleton)
Chope, Mr. Christopher (Minister for Roads and Traffic)
Corbyn, Mr. Jeremy (Islington, North)
Dunn, Mr. Bob (Dartford)
Favell, Mr. Tony (Stockport)
Fearn, Mr. Ronnie (Southport)
Grist, Mr. Ian (Cardiff Central)
Hamilton, Mr. Neil (Tatton)
Hazelhurst, Mr. Alan (Saffron Waldon)
Hicks, Mr. Robert (Cornwall, South-East)
Madden, Mr. Max (Bradford, West)
Mates, Mr. Michael (Hampshire, East)
Morrison, Sir Peter (City of Chester)
O'Hara, Mr. Edward (Knowsley, South)
Ruddock, Ms. Joan (Lewisham, Deptford)
Soames, Mr. Nicholas (Crawley)
Hutton, Mr. Committee Clerk2 3 Fifth Standing Committee on Statutory Instruments, &c. Tuesday 12th March 1991
[MR. MICHAEL LATHAM in the Chair]
The Minister for Roads and Traffic (Mr. Christopher Chope): I beg to move, That the Committee has considered the draft Vehicle Inspectorate Trading fund Order 1991. I am pleased that the Committee has the opportunity of considering the order, which is the first to come before the House under the trading funds legislation, as amended by the Government Trading Act 1990. The order was put out for consultation, and I am pleased to tell the Committee that it has received only enthusiastic support, not least among those employed by the vehicle inspectorate, so I hope that the Committee will support it.
Ms. Joan Ruddock (Lewisham, Deptford): Will the Minister elaborate on who has been consulted and whether that includes trade union representatives? I took the precaution of asking how they felt, and the National Union of Civil and Public Servants in particular raised many issues. Establishing the Trading fund could change the nature of the way in which the inspection of commercial vehicles is carried out. If those operating the fund did not organise the work as efficiently and effectively as they might and the fund ran into difficulties and created trading problems, would there be a restriction on the numbers of vehicles inspected? Would the inspection of commercial vehicles be placed in jeopardy by the financial problems that arose in administering the fund? In such a funding arrangement, would commercial needs lead administrators to suggest that the inspectorate should inspect private vehicles, such as cars for Ministry of Transport testing? Would they seek new areas of work? If so, new forms of competition could arise and market forces would operate in a virtually privatised service in which commercial considerations came top of the agenda. Such hypotheses are perhaps unlikely, but the Minister must understand the worries surrounding the unusual step of setting up a trading fund for an organisation that has done its work well in the public sector. Such a step would bring into play new market forces and competition, involve different operations and even jeopardise the inspection of commercial vehicles. Under EC regulations, there will be a change in the weight of vehicles carry tachographs, so more tachograph inspections will be required, which will affect the operation of the service. I hope that the Minister will consider that when establishing the trading fund. I shall be delighted if he assures us that nothing will change. However, if that is the case, why it is necessary to set up the fund?4
Mr. Ronnie Fearn (Southport): Article 5(2) of the order refers to£19,100,000 as "part of the amount by which the values of those assets exceed the amounts of those liabilities." We have a list of assets and liabilities. Why does the Article refer to the sum as "part of the amount", and what is public dividend capital? That phrase is self-contradictory. What will happen to public dividend capital?
Mr. Chope: The vehicle inspectorate trade unions were consulted and we have received no adverse comment. In February 1991, a report on the results of the consultation process was published. Members of the Committee will find much in that report to interest them. The fund, as with any trading fund, was set up to give the organisation greater flexibility. A return of 6 per cent on capital investment will be expected, subject to review, in each of the first three years. Over the past financial year, the agency's employees performed to such good effect that each of them earned a bonus of about £300. Minds have been concentrated to make the organisation more efficient and effective. That will continue to be so with the trading fund.
Ms. Ruddock: To what purpose will the greater flexibility that the Minister mentioned be put?
Mr. Chope: The flexibility will enable the fund to be operated separately from vote accounting. It will not be necessary to deal with each year in isolation. It will be possible to carry sums forward from one year to the next and to have greater flexibility in dealing with capital investment. Those matters were canvassed widely in the debate on the trading fund legislation. To answer the honourable Minister for Southport (Mr Fearn), public dividend capital is public equity and is £19·8 million. the remainder of the vehicle inspectorate's assets are covered by loans. The loans comprise about 40 per cent. of the assets, and public dividend equity capital about 60 per cent. The public dividend capital will in due course pay a dividend.
Ms. Ruddock: The Minister has not answered my point. Does he expect the inspectorate's work to be extended to make more money? If the inspectorate started the MOT testing of private cars, it would increase its income. Do the Government want to change the way in which the inspectorate works?
Mr. Chope: There is not likely to be any major change. If there were such a change, it would be dealt with in the agency's framework documents. Trading funds are not allowed to compete with the private sector. They are not private sector organisations and do not take the same risks as private sector organisations. That will apply to this trading fund.
Question put and agreed to.
Resolved, That the committee has considered the draft Vehicle Inspectorate Trading Fund Order 1991.
Committee rose at twenty-two minutes to Five o'clock.5
THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:
Latham, Mr. Michael (Chairman)
Bennett, Mr. Andrew F.
Hamilton, Mr. Neil
Morrison, Sir P.