Private Finance Initiative debate

17 Jul 2001
Ms Diane Abbott (Hackney, North and Stoke Newington): I am reluctant to interrupt my hon. Friend's excellent speech, but I want to comment on the issue of transparency as regards elected Members of Parliament. In my borough of Hackney, in common with many other inner-city boroughs, the housing benefit service was privatised and the service promptly collapsed. As a Member of Parliament, I found it almost impossible to get information from the private service contractors. There was no transparency whatsoever in that case.

David Taylor : I am pleased to be given further evidence of the flaws of private sector management, which, in my experience as a senior public sector manager, are as frequent as in the public sector. At the very least, in an improved world, taxpayers, citizens and consumers have a right to expect that grievance procedures and effective sanctions will give them the prospect of redress when service failures occur.

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Ms Abbott : The privatisation of housing benefit caused the collapse of the service and there was a total lack of transparency. One could not discover anything from the private firms about internal targets, or any other information. Those were not the only bad aspects of the privatisation, however. When it was clear to my local authority that the housing benefit service in Hackney was collapsing, it delayed a long time before removing the contract. People in the authority said, "In practice, Diane, we cannot remove the contract once we've handed it over to them, because there is no genuine in-house competitor or capacity."

Jeremy Corbyn : My hon. Friend is right. On Thursday, the Liberal Democrat-run council in the London borough of Islington will have a chance to remove that contract from IT Net. As I understand it, however, the Liberal Democrats propose to continue with the contract. I trust that when the Liberal Democrat spokesman speaks, he will give us some good news after his promise to intervene with the local authority leadership on that matter.

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Ms Diane Abbott (Hackney, North and Stoke Newington): I want to join colleagues in congratulating my hon. Friend the Member for North-West Leicestershire (David Taylor) both on securing the debate and on giving such a brilliant demolition job on PFI.

PFI has been analysed extensively in the past 45 minutes and I want to make only a few points. In the first part of the Labour Administration, our slogan was "what works", and that is still the slogan of Labour Back Benchers. However, people are regarding with increasing horror the doctrinaire belief that the private sector has a magic answer to the problems of the public sector. Nobody on the Labour Benches is opposed to any private sector involvement in the public sector; there has always been private sector involvement. Indeed, some public sector projects, such as toll bridges, are suitable for a PFI. Any public sector project with a natural revenue stream is probably a suitable candidate for PFI. However, once we move away from such projects, PFI becomes much more problematic, and hon. Members have explained some of the issues.

Ministers in previous Governments and the current Government have extolled the virtues of private sector management and talked about how it can achieve value for money. The truth is that it achieves value for money in highly labour-intensive public sector operations such as hospitals and schools mainly by bearing down on employees' wages and conditions.

As my hon. Friend the Member for North-West Leicestershire said, most of those employees, particularly in the health service, are women. In the inner city, many are working-class white, black and Asian women who are the sole wage earners in their families. If my right hon. Friend the Minister is still uncertain about what working under private sector contractors is like for those women, he can go to Harlesden with me any day of the week and talk to them about their experiences in cleaning, catering and other areas.

As a Member of Parliament for an inner-city area, I have seen what happens to employees when they have to work for private sector contractors. An important issue of PFI schemes is what happens to staff and at whose expense the savings are really extracted. I make no apologies for repeating that point, made earlier by my hon. Friend the Member for North-West Leicestershire.

All too often, private sector contractors obtain supposed increased efficiency, savings and output by the simple rigging of the public sector comparator that is used. We have tried to debate the virtues of the PPP proposals for the London underground with Ministers, but for a long time they would not reveal the public sector comparator, because they knew that if they did so, we would see how rigged it was. The improvements and savings that the private sector is supposed to produce are often the result of rigged comparators and management's bearing down on wages and conditions.

All that Labour Members want is to return to the Government's earlier mantra—"what works". Time and again, we can point to PFI schemes that have not worked and have produced a worse service and worse conditions for workers. These include a host of schemes for hospitals and the administration of housing benefit in local authorities that have not produced the outcome that the public wanted. If PFI schemes were so wonderful, we would not be sitting in this Chamber with the independent hon. Member for Wyre Forest (Dr. Taylor).

I congratulate all hon. Members who have spoken. I urge the Government to move away from an excessively ideological approach to the so-called magic of the private sector and to adopt a more pragmatic approach, building on experiences with PFI schemes and listening to the informed contributions that we have heard this morning.



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