Fifth Standing Committee on Statutory Instruments, &c.


Thursday 18 March 1993


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The Committee consisted of the following Members:


Ancram, Mr. Michael (Devizes)

Betts, Mr. Clive (Sheffield, Attercliffe)

Byers, Mr. Stephen (Wallsend)

Callaghan, Mr. Jim (Heywood and Middleton)

Campbell, Mrs. Anne (Cambridge)

Chisholm, Mr. Malcolm (Edinburgh Leith)

Davies, Mr. Bryan (Oldham, Central and Royton)

Evans, Mr. David (Welwyn Hatfield)

Jackson, Mr. Robert (Parliamentary Under-Secretary of State for the Civil Service)

Jones, Mr. Nigel (Cheltenham)

Lester, Mr. Jim (Broxtowe)

Moonie, Dr. Lewis (Kirkcaldy)

Nicholson, Mr. David (Taunton)

Paice, Mr. James (Cambridgeshire, South-East)

Patnick, Mr. Irvine (Lords Commissioner to the Treasury)

Richards, Mr. Rod (Clwyd, North-West)

Stern, Mr. Michael (Bristol, North-West)

Temple-Morris, Mr. Peter (Leominster)

Mr. F. A. Cranmer, Committee Clerk

3 Fifth Standing Committee on Statutory instruments, &c. Thursday 18 March 1993

[MRS. ANN WINTERTON in the Chair]

Draft Chessington Computer Centre Trading Fund Order 1993

10.30 am

The Parliamentary under-Secretary of State for the Civil Service (Mr. Robert Jackson): I beg to move. That the Committee has considered the draft Chessington Computer Centre Trading Fund Order 1993. I have only just received a set of complex documents from Parliamentary Counsel—I believe that it came to my office at 7.30 pm last night—which raises various doubts about the procedural aspect of the ownership of Chessington Computer Centre and the basis—the legal vires—of the trading fund order before us. I have talked to Treasury Counsel, who disagrees with the advice given by Parliamentary Counsel on technical aspects. That must have given Parliamentary Counsel great fun as he worked his way through the 1981 version of the Osmotherley rules and so on. My legal advice is that the opinions expressed in paragraph 3 of the letter from Parliamentary Counsel on points of law are points on which we simply disagree. One of the fundamental issues seems to be an ellipsis in the wording of parliamentary questions about the transfer of responsibility for the Chessington Computer Centre in June last year. My hon. Friend for Chelmsford (Mr. Burns) asked my hon. Friend the Chancellor of the Exchequer "When the transfer of Chessington Computer Centre and the Central Computer and Telecommunications Agency to the Minister for the Civil Service will take place."—[Official Rpt, 16 July 1992; Vol. 211, c. 890.] The answer seemed to contradict an answer from my right hon. Friend the Prime Minister on 18 June 1992 in which he stated: "The Chancellor of the Duchy of Lancaster (Minister of Public Service and Science) will assume responsibility for these bodies from the Chancellor of the Exchequer."—[Official Rpt, 18 June 1992; Vol. 209, c. 619.] We are not responsible for the questions that hon. Members table. If there is ambiguity, it is in the question, not in the answer given by my right hon. Friend the Chancellor of the Exchequer to my hon. Friend the Member for Chelmsford. The answer does not refer to the ambiguity in the question, but simply describes the transfer of responsibility as taking place on 16 July 1992. That transfer was to the Chancellor of the Duchy of Lancaster, as stated by my right hon. Friend the Prime Minister in an answer on 18 June 1992. There is no serious problem of ambiguity in those two parliamentary answers. On the points that were raised by Parliamentary Counsel, which came rather late in the day, my legal advice from the Treasury Solicitor is simply that the observation that the Office of Public Service and Science is not a public department and that the Lord Chancellor is not responsible in law for the Office of Public Service and Science are simply points on which we disagree. 4 The Committee and the House will want to be guided by common sense, which tells us that the Chessington Computer Centre is and important organisation for several reasons, one of which is that it pays our salaries. Her Ministers who have looked at their pay cheques may have seen that they are issued by the Chessington Computer Centre. It does an important job. It also pays the salaries of hundreds of thousands of public officials. It is an important organisation with a serious job and it is preparing to be launched as an executive agency and trading fund on 1st April. As far as I am aware, executive agencies and trading funds are not matters of political controversy in the House. Obviously there is concern about the way in which things are done but, as I understand it, there is consensus that the agency concept is a good one, that it gives flexibility and provides advantages. I am happy to expand on that point if required. The trading fund is a useful concept. Chessington has been gearing up to be launched as a trading fund and an executive agency on 1 April. By the way, it is the only organisation that is being launched in both of those modes simultaneously. It is a brave and commendable venture. Much management effort has gone into it. The whole organisation, which I have visited, is committed to the scheme. It is important that it should be able to get on with its job. The order is about that. I hope that the Committee will endorse it. The order provides for the setting up of a trading fund to finance the operations of Chessington, It designates the Chancellor of the Duchy of Lancaster as the authorised lender to the fund. It imposes a limit of £30 million on the sums that may be issued to the fund by way of loan. It provides that 54 per cent of the net capital of the trading fund is to be the public dividend capital in the fund. Chessington is moving towards a full repayment basis with effect from 1 April 1993 and it has developed the management and financial systems to implement and support the proposed changes in status, which will begin to operate on 1 April. To anticipate the sort of concern that might be raised—not a legal point, but a point of substance about the business carried on by Chessington—it is important to note that Chessington's customers have been untied since the late 1970s. It has been operating, in a sense, in a market economy for a considerable time. The implication of that is—

The Chairman: Order. Would the Minister address the Chair? His remarks are not coming over clearly, which creates a problem for Hansard.

Mr. Jackson: My apologies, Mrs. Winterton, I was looking at my hon. Friends. The customers have been untied since the late 1970s. The centre is free to consider alternative suppliers of its requirements. It has been free to do so for many years and that will continue. We believe that the statutory discipline, under the Government Trading Funds Act 1973, of having to break even and meet the further financial objective, will sharpen the management's accountability for delivering an even more efficient and cost-effective service. Finally, I should add that, if the House, approves the order, a Treasury minute will be laid setting Chessington the additional financial objective of achieving an operating surplus of £1.1 million for the year 1993–94. That will be a helpful sum in present financial circumstances.


10.38 am

Mrs. Anne Campbell (Cambridge): I have some questions for the Minister. The first relates to the ambiguity of the parliamentary questions to which he referred at the beginning of his speech. I understood that he said that the Chancellor of the Duchy of Lancaster was not responsible for the OPSS, which seems strange. I may have misunderstood him, but I should be grateful for clarification. My second question relates to the flexibility and advantages to which the Minister referred, but on which he did not expand. I should be interested to know what those advantages are, as I am sure would other Members of the Committee. My third question is: what the Minister was referring to when he said that the customers had been untied since the late 1970s? Was he referring to the suppliers of computer equipment or to the people to whom pay cheques are sent?

10.39 am

Mr. Bryan Davies (Oldham, Central and Royton): Judging by the Minister's opening remarks, we have unearthed a pretty little Government mess. Not only has the Chancellor presented one of the most unfair and incompetent Budgets of recent years, but he cannot get right to whom he is transferring responsibility for the computer centre. I note that the Minister said that he is not responsible for the nature of parliamentary questions. I doubt whether the question asked by the hon. Member for Chelmsford on 18 June 1992 was not inspired by a Government Department. It is unlikely that, from his own wit, he decided to ask when the transfer of functions of Chessington Computer Centre would take place. I assume that, at that time, the Government were clear about what they were doing and have subsequently become surprisingly unclear. We need a forthright answer about why the confusion has occurred. I am dreadfully sorry that the Minister heard about this only at 7.30 last night. Asking his Department to work after 7.30 pm must have thrown it into chaos, despite the fact that we were debating the Budget in the House much beyond that time. I wonder whether hon. Members, especially those engaged in challenging the Chancellor on his Budget, were in a better position to digest such late information. The Minister said in his opening remarks that there is never controversy about the development of agencies and the devolution of functions, as has happened at Chessington. I take exception to that and bring it to his attention that there frequently is controversy. In Chadderton, which is in Oldham although not in my constituency, there are enormous worries about the way in which the HMSO office is being developed, the changing conditions of service for staff and so on. I should like reassurance from the Minister that the Chessington Computer Centre's transfer of responsibility will not have deliterious or detrimental effects on staff conditions of service and their guaranteed pension rights.

10.42 am

Mr. Jackson: I thank the hon. Member for Cambridge (Mrs. Campbell) and for Oldham, Central and Royton (Mr. Davies) for raising important points. 6 The substantial issue is that of the position of Chessington as an agency and a trading fund. When I said that there was no controversy abouy agencies and trading funds, I was talking about the principle of next agencies. That principle was endorsed as a development of policy by the Leader of the Opposition, who was then shadow Chancellor, in a major speech two years ago. If I recall correctly, the Government Trading Funds Act 1985 was not controversial when it was debated in the House.

The Chairman: Order. May I remind the Minister that he should be addressing his remarks to me? I have noticed, while he has had his back to me, that his jacket is trapped in his trousers. Would he like to take it out and be nice and smart in the Committee?

Mr. Jackson: I am so sorry to have doubly offended you, Mrs. Winterton, not only by turning my back on you, but by turning an unattractive back. I apologise and I am sure that hon. Members will straighten their ties in the light of your admonishment. I was saying that there is no controversy between the parties about the idea of agencies and flexibility. We had an interesting debate in Committee on the recent delegation of functions order. I do not think that there was a dispute about the principle. Of course, there are arguments about the way that those businesses operate and trade. The hon. Member for Oldham, Central and Royton referred to HMSO. Those are fair points for hon. Members to raise, both as matters of organisation and on behalf of their constituents. The hon. Gentleman asked whether there would be deliterious consequences for the terms and conditions of staff at Chessington. I can give him the unequivocal answer that there will be no such consequences. I think that staff will gain because Chessington will be more able to attract business once it has been untied and has become a trading fund. That also answers one of the questions asked by the hon. Member for Cambridge. There are considerable benefits for trading funds. Chessington will have a change of status. New financial and personnel authorities will be given to the agency under the order, which will give Chessington greater flexibility to respond to customer needs such as pay assessments, superannuation estimate services and financing arrangements. Such services will help to fund the development of that business. The agency will have increased freedom to develop pay grading and other personnel arrangements that are more closely tailored to the commercial requirements of Chessington. The commercial descipline of the trading fund, which means that it will have to break even and meet the demanding financial target of £1.1 million surplus in 1993–94, will improve the accountability of management which will have to continue to deliver improvements in the efficiency and cost-effectiveness of the services. When I visted Chessington, I was interested to see how it is preparing for trading fund status. It has developed a marketing function which it never had when it was simply part of the payroll operations of the Treasury. It is preparing actively to market its services to a range of public bodies which may find the critical mass that is offered by the computer services very attractive in terms of the development of their pay roll operations. That will all be made possible by trading fund status.


Mr. Bryan Davies: Is it intended that the additional services will be only for the public sector? Will the Minister reassure us about the security of the information that will be received by Chessington? He spoke of the importance of Chessington Computer Centre's work on public salaries. As someone with justifiable suspicion about the amount of information on government computers, I should like reassurance that security is guaranteed as between one client and another, particularly if there is any possibility of the agency becoming involved in private work.

Mr. Jackson: The Chessington computer centre currently provides services to Government Departments, non-departmental public bodies, next step agencies and other bodies in the wider public sector such as the Metropolitan police. It can operate in a wider market than central Government but all its operations are in the public sector. As to security, I am unaware of any leaks from Chessington, nor have I heard any complaints of that nature. Chessington performs an admirable and widely respected service in the public interest. It has performed that service since the transfer of responsibility in June 1992. That leads me on to answer another question asked by the hon. Member for Cambridge regarding the customers being untied. As one might expect, originally Chessington formed part of the Treasury payroll arrangements and civil service departments were obliged to make use of its services. However, that arrangement ended as long as the late 1970's. It is open to any Government Department, agency or non-departmental public body to make arrangements other than with Chessington for the operation of those payroll functions. However, Chessington has gained, not lost, customers from Whitehall, That demonstates, the value and effectiveness of its work. I hope that that answers the hon. Lady's question. No public service organisation is obliged to use Chessington for its computer needs. Similarly, Chessington can buy in services from outside. Market testing, which sometimes raises it head in such contexts, is not a novelty for Chessington. For many years, it has successfully examined the range of options for buying in services from outside. Chessington is untied for customers and suppliers. I hope that I have persuaded the Committee that there are considerable advantages in the trading fund status for Chessington, which is a viable, well-managed and successful business and which deserves to be given a good send-off. The hon. Member for Cambridge asked whether I said that the Chancellor of the Duchy of Lancaster was not legally responsible for the Office of Public Service and Science. That is the reverse of what I said. The clear view form the Treasury Solicitor is that the Chancellor is legally responsible for the Office of Public Service and Science. The Parliamentary Counsel's letter says that although he has doubts about the precise legal situation, he recognises that, in practice, the Chancellor is responsible for the Office of Public Service and Science. We believe that he is responsible legally as well as in practice and in fact. Ambiguities do not really exist - there is more of an ellipse. My hon. Friend the Member for Chelmsford referred to two agencies, which were heading in different directions. One was going to the Chancellor and the other to the civil service department. That was encapsulated and, no doubt, telescoped to phrase a succinct question into four lines. 8 There is no ambiguity about what the Government are responsible for. There is ambiguity or contradiction between, the answer form the Prime Minister on 18th June and that from the Chancellor of the Exchequer on 16th July.

Mrs. Anne Campbell: I deprecate the ambiguity between the Treasury Counsel and Parliamentary Counsel. If the Minister received the papers at 7.30 last night, he had plenty of time between then and 10.30 this morning to clarify the situation, to identity the difficulties and to try to resolve them. I must express horror that that was not done. I am grateful to the Minister for expanding on the flexibility and the advantages of the new arrangements, but, in my experience, having previously worked for a non-departmental public body, I know that many organisations prefer to set up their own computer system for payrole purposes. I am concerned that, in time, the very expensive equipment in the Chessington Computer Centrre will become redundant. Are there any contingency plans to deal with that? There is obviously an over-capacity. I am not worried about the Chessington Computer Centre finding other business from the public sector, but I am concerned that will be run down as people beging to develop their own computer systems. We may well find that we have a redundant centre. What effect will that have? I do not know whether the Minister can answer but I felt that I should express those concerns. Are there to be any redundancies because of the new arrangements? If so what arrangements are being made? Is there good co-operation betweeen the trade unions and the Minister on that issue?

Mr. Jackson: I do not know whether the hon. Lady has the privilege of a legal background —I do not, although many of my best friends are lawyers. The matter looks like a typical dispute between lawyers —between the Parliamentary Counsel and the Treasury Solicitor. If we allowed them to get on with it, they would doubtless spend a lot of time and money wrangling about the matter. I do not think that any blame attaches to the Government for not having sorted out the matter between 7.30 last night and now. There is a conflict of legal advice, but we are sensible people. We know that the Chessington centre exists and that it does important work. It should be able to get on without a legal glitch coming along at the last minute. The hon. Member for Cambridge emphasised the nature of the centre's business and its viability. My assessment is not pessimistic. It has gained new customers from within Government service every year for the past 10 years and all the indications are that it will grow. Far from having redundant capacity, it is likely to increase its business, aided by the flexibility that will come from trading fund status, which is the basis of the order before us. GCHQ and the Foreign Office recently became users of the centre and there is every reason to be confident about its future. I understand that there is no fear of redundancies, although obvioulsy that depends on whether the centre can continue in the present market with its customers untied-they have been untied for almost 15 years—and whether it can maintain and increase its business. I believe that it can, which is good news for the staff. Relations between management and the unions at Chessington are impeccable 9 and I have not heard any complaints about that. It is a good, tidy, viable business and I hope that the Committee will give it a good send off.

Question put and agreed to.


Resolved, That the Committee has considered the draft Chessington Computer Centre Trading Fund Order 1993.

Committee rose at three minutes to Eleven o'clock.


Winterton, Mrs. Ann (Chairman)

Ancram, Mr.

Campbell, Mrs. Anne

Davies, Mr. Bryan

Evans, Mr. David

Jackson, Mr.

Nicholson, Mr. David

Paice, Mr.

Patnick Mr.

Richards Mr.

Temple-Morris, Mr.

The following also attended, pursuant to Standing Order No. 101(2) Etherington, Mr. Bill (Sunderland, North)