Contracting Out (Functions Relating to Child Support) Order 2006

My Lords, I would also like to take part in this important debate and pick up on the point made in the peroration of the spokesman for the Official Opposition. This is an important, signal step, although this is perhaps not a very auspicious evening or time of night to be discussing it. It is important that the House assures itself of some of the background to the proposals in the order. I agree that it would be useful if the order could be put in the context of Sir David Henshaw’s report. I hope that the expectation that we would at least get some glimmer of information on his direction of travel before the Summer Recess is still possible and that the Minister may be able to make some statement about that before we rise. The operational improvement plan is obviously a welcome attempt to improve operational efficiency during the redesign, but the two cannot be entirely divorced. That would not be sensible, and I am not suggesting that it is. The order must be seen in that context, because there are those who might be ideologically opposed to contracting out under any circumstances, and some special features of the order need special consideration in that context. I have no principled objections, any more than my colleague the noble Lord on the Conservative Front Bench does, to contracting out some of these services. But they are temporary, and some may say that this is the thin end of the wedge. We do not want to prejudice anything that Sir David Henshaw has to say, but some of the press reports that we have seen in the not too distant past have suggested that one of the options that he is looking at is the wholesale contractualisation or privatisation of the agency. That would cause me some more concern because we are dealing with very sensitive data on fractured families from financially disadvantaged backgrounds. Handing that over to the private sector without very careful consideration would be a mistake. If the Minister can put the order in the context of the Henshaw report, he might also, if he gets an opportunity in his winding-up speech, say more about the background that the department is facing, because there are obviously very strict financial envelopes to which this order is responding. The situation post-2008 is a five per cent cut in the departmental expenditure limits. We also have the upcoming 2007 Comprehensive Spending Review. There are the Gershon requirements, which I guess are driving some of the constraints under which the department must operate. It is right and proper that we should be very careful about spending public money. Some of the ways in which the changes that the order brings might impact on the staff cause concern, if only because they are bound to affect staff morale. The uncertainty that is an inevitable part of the changes is, I am sure, being addressed by Mr Stephen Geraghty in his new guise as the chief executive, as best he may. He made some comments in a recent appearance before the Select Committee in the other place that reassured me about that. I hope that the Minister will give us some assurances about the 700 staff. We cannot just move people around like pieces on a chess board; these are professional people who work very hard and do a very dedicated job, certainly in my experience, trying to make a system that is very difficult and clunky work. Like the rest of us, they have the best interests of the clients at heart. Some of the financial background to some of the cuts and what the future holds in that direction would be very useful by way of context. I hope that this is a three-year, short-term project. I hope that it will be concluded, and then we can move back into a fully functional next steps agency in the CSA as we have experienced it in the past. I am a bit concerned—although I may be misunderstanding this and I seek reassurance—that some of the Secretary of State’s functions are going with some of the contracts. I am not an expert on privatisation, and maybe a note would be the best way of dealing with this, but I am a little worried. I can understand taking debt collection and tracing out of the CSA, because I can see that they are discrete areas of activity. As a provincial solicitor in my previous incarnation, I can see that you could construct a contract that would be foreseeable and understandable in those areas, but some parts of the individual clerical case management are extremely complicated, and I do not think they can be contracted out without contracting out some of the Secretary of State’s powers in parallel with it. Qualitatively, that could be different, and we need to be very careful about trading some of that authority from the Secretary of State, under the statutes passed by this House, to contractors in a contract. I want some reassurance that the monitoring team that will look at compliance is very clear about that aspect of the contractualisation. I may have misunderstood it, but I would like some reassurance on that. If it is not possible, a note that could be shared would be useful. My other concern about some of the debt collection processes is that, as I read the papers that came with the order, the pilot on which the debt collection scheme was based involved only two commercial firms. I also have had some correspondence with the Credit Services Association and the like. I would be a bit nervous about scaling up a nationwide system across two different criminal jurisdictions, or common law jurisdictions in terms of debt collection in Scotland and debt collection in England and Wales, based on the experience of two pilots. I hope that one of them was in Scotland, for example. That is not a particularly extensive base on which to take things forward. I can see that there is a case, and I agree that there is no doubt that some of this work can be done better. Debt enforcement has suffered as a direct result of the fact that so much effort was put into the computation that there was no space left to follow up the enforcement. In that regard, the previous Select Committee in the House of Commons, which I had the privilege to chair, had one or two suggestions for the Government that are still worthy of consideration. For example, I understand what is required by primary legislation, but requiring non-resident parents to notify the CSA of a change of address is not an infringement of civil liberties too far. It would give the agency some realistic prospect of finding people without having to get specialists on contracts to chase them. That seems, as the Americans say, a no-brainer. All you need to do is make sure that people have a statutory duty when they change their domicile to advise the agency accordingly. Then all that is needed is a simple knock on the door, telephone call or letter to the new address, rather than getting the gumshoe element in from the private sector to find out where people are. That seems straightforward, so I hope that Sir David Henshaw is looking at it as we speak. I think that clerical management will be conducted through some of the agency’s own IT hardware. I am not sure whether I have that right, but it is as I read the papers. I do not understand how that works unless we hand over some of the agency’s real estate to incoming contractors for the purpose. If they are getting access to the department’s computers and not bringing in their own hardware and systems, I cannot envisage how that will work in a management process. I can understand a contract being negotiated and compliance being monitored, but not how that will physically happen if the computers used by agency staff are made available to the people from the private sector who are bringing their new expertise to bear. I have a couple of final quick questions on the cost-benefit analysis and the business case, which has not really been established. All we know is that £30 million has been put up for that. It is a significant sum—I hope that it will make a difference over the three years—but reference was made to the consultants who came in. They must have produced some background information on which Ministers took the decision to make the order. Is it possible to see what the consultants said about that? It might be commercially confidential—I understand that you have to be careful about such things—but I would feel more secure in passing the orders, which I am sure that the House will, if I had access to what those experts in these matters said to the department. I also would not mind having sight of the contracts in draft before they are let by the end of July. It is not unreasonable for Members of this House to get an idea of them, whether they are placed in the Library or accessed through departments. I know that they are technical documents, because in a previous incarnation in the other House I was given access to the EDS contract that covers the whole IT process. It makes stern reading because its commercial elements must be blacked out. I understand all that, but will the Minister consider giving Members of this House access to the contracts as they stand in draft and the consultants’ reports as they were provided to Ministers? Incidentally, how much did the consultants cost? That would be an interesting question, too. The department has been under a little pressure in the past, and it is a perfectly reasonable question. I bet that they were not cheap; maybe it is money well spent, but the House would be better informed if we could access such information. I conclude with the point made earlier about the experience of outsourcing housing benefit recently. Some local authorities had some singularly bad experiences of trying to get in technical help to do backlog work on housing benefit. In some of the London boroughs, in particular, it went extremely badly wrong and they ended up having to buy out the contracts. One assurance that I would really like this evening is that, whatever else the draft contracts say and before they are signed, if everything that can go wrong does go wrong it will not cost the public purse a barrel-load of money to buy them back—that we have learnt that lesson and that, when contractors make a mess of things and have to be bought out, account will be taken and provision will be made for that in the detail of the contracts. I am willing on a three-year basis to wish this experiment well, subject to the promise that, I hope, we will get from the Minister that it will be carefully monitored. It is a short-term operational plan to deal with what I think we all agree is urgent work. It is of secondary importance to launching the David Henshaw work so that we can fix the thing in the long term. Subject to those qualifications I wish the Minister well, but I hope that he will be able to give the House some of the assurances sought this evening.