Public Contracts: Conflicts of Interest

Thursday 17th November 2016 Lords Chamber

Question

11:22

Asked by

[Lord Berkeley]

To ask Her Majesty’s Government what are their policies on conflicts of interest in respect of contracts with public and private organisations which provide or deliver public services or projects; and where those policies are made publicly available.

[Baroness Chisholm of Owlpen (Con)]

My Lords, public sector procurers are required to seek value for money through competition that is fair, open and transparent. Rules on addressing conflicts of interest are set out in the Public Contracts Regulations 2015, which make clear that contracting authorities should put in place measures to avoid any distortion of competition and to ensure equal treatment to all bidders.

[Lord Berkeley (Lab)]

I am grateful to the Minister for that reply. There are a number of conflict of interest issues around at the moment, but the one that I would like to mention is about HS2. The very eminent company CH2M has been project managing the work for the past few years. This year, it was awarded a further £360 million contract as a “delivery partner” and, more recently, it supplied the interim CEO for HS2. In a Written Answer I got from the noble Lord, Lord Ahmad, who I am pleased to see is in his seat, he said that the conflict of interest had been cleared by an internal panel and that the names of the members of the panel were confidential. This is a £50 billion contract. Surely there needs to be independent scrutiny and transparency about the process. There is always a risk that even a partner can screw the Government. I suggest that the solution that the noble Lord the Minister has given us is not sufficient and needs greatly strengthening.

[Baroness Chisholm of Owlpen]

My Lords, there were lots of questions there. HS2 Ltd follows recruitment practices that are similar to those followed in Civil Service appointments and are made through open and fair competition. The short-term services of the interim CEO have been obtained to fill the gap until those fair and open procedures for the permanent appointment can be completed. The interim CEO is not an employee of HS2 Ltd, so it would not be appropriate to follow a recruitment process for such an appointment.

To quickly cover the noble Lord’s point about not being open regarding the people on the panel, as my noble friend Lord Ahmad said—indeed, I wonder why my noble friend is not standing here instead of me—in his previous Answer:

“It is not possible to provide the names of HS2 Ltd’s Conflict of Interest Panel Members, nor details of specific cases which have been heard as we do not consider doing so would be consistent with the Data Protection Act 1998 (DPA). Unfair disclosure of personal data is a breach of the First Data Protection Principles under the DPA”.

[Lord Tyler (LD)]

My Lords, given the commitment to transparency that the noble Baroness has just referred to, presumably she still endorses the view that sunlight is the best disinfectant. Will she look again at the issue of the freedom of information legislation, which of course does not extend to those private companies that provide or deliver public services? Given that the taxpayer pays a huge sum to these organisations, is it not right that the taxpayer should be able to see, through freedom of information access, exactly what their money is spent on?

[Baroness Chisholm of Owlpen]

Obviously, these appointments are the responsibility of each department, and each department follows the Civil Service Code, which sets out the process for dealing with any possible breaches. Essentially, cases are dealt with by the department according to its own processes and can ultimately be referred to the Civil Service Commission to investigate. The propriety and ethics team can give general advice on the application of the code.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, of course data protection does not prevent the people on that conflict of interest committee being willing to have their names released, so will the Minister tell us whether they can be asked to release their names? Will she also comment on the other big conflict of interest, which is the revolving door? The committee that looks at this for ministerial and civil servant retirees has never turned down any of those appointments, many of whom then turn up on exactly these committees but technically have no conflict of interest. Will she agree to review the terms of reference of that committee?

[Baroness Chisholm of Owlpen]

I do not think that I can go further than what I said about the Data Protection Act. As far as public appointments are concerned, we need to remember that there is a Commissioner for Public Appointments. Appointments come under the remit of that commissioner and they are made using the process from the commissioner’s Code of Practice for Ministerial Appointments to Public Bodies. This is a strong code of practice and it is backed up by the regulations under the Act—the Public Contracts Regulations 2015—which set out the requirement to take,

“appropriate measures to effectively prevent, identify and remedy conflicts of interest arising in the conduct of procurement procedures so as to avoid any distortion of competition and to ensure equal treatment of all economic operators”.

[Lord Foulkes of Cumnock (Lab)]

My Lords, is the Minister aware that, when I raised the issue of a potential conflict of interest of an education Minister also being a director of an academy trust, I was told that that was allowed under the Ministerial Code? Does that not indicate that the Ministerial Code needs revision?

[Baroness Chisholm of Owlpen]

As long as the Ministerial Code is closely adhered to, along with the regulations, everything should be in order as far as appointments are concerned.

[Lord Wallace of Saltaire (LD)]

My Lords, does the Minister recognise that the distrust of public service that public interest economics has left many Conservatives feeling has led to an overdependence on outside consultants and interlocking bodies, to which successive Governments have paid a great deal of money over the last few years? The worry that this Question reflects is exactly about the extent to which overdependence on outside consultants, who have their own self-interests to protect and defend, needs much greater examination than it currently gets.

[Baroness Chisholm of Owlpen]

Again, with the regulations and the code of practice this should work well and all the boxes are ticked. We want to make sure that this Government are successful in public procurement and to that end the best way is to make sure that companies adhere to the regulations and the code of practice so that they can move forward. We must make sure that we are helping industries in this country get involved in public procurement.