Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Lord Haskel) (Lab)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Procurement Bill [HL]
Monday 11th July 2022
(2 years, 4 months ago)
Grand CommitteeRead Full debate Procurement Act 2023 View all Procurement Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 4-IV Fourth marshalled list for Grand Committee - (11 Jul 2022)
Baroness Noakes
Member’s explanatory statement
This amendment probes why light touch contracts are not more narrowly defined in Clause 8.
Baroness Noakes (Con)
My Lords, I shall also speak to Amendment 207 in my name. My noble friend Lord Lansley has Amendment 35 in this group but is unable to be with us in Committee this week. At his request, with the leave of the Committee, I shall be speaking to his amendments on both Committee days this week.
At Second Reading, I noted that the definition of light-touch contracts is extremely wide since it concerns the supply of services of any kind, provided that they have been specified by regulations under Clause 8(2). It is my understanding that light-touch contracts are currently for health and social care services—indeed, that is implied by the reference to those services in Clause 8(4)(b). The wide scope given by the lack of restriction in Clause 8(2) means that, notwithstanding the “have regards” in Clause 8(4), it would be possible, for example, for the Government to specify legal services, accountancy services or any other kind of services. The “have regards” are simply not an effective curtailment of the very wide power in Clause 8(2).
My Amendment 30 seeks to confine light-touch contracts to health or social care services provided to individuals, on the basis that, it is my understanding, that is how they are used at the moment. However, if the Government believe that there should be a wider concept than that, they should put that in the Bill. Open-ended regulation-making powers should not be necessary and are not desirable.
My noble friend Lord Lansley’s Amendment 35 would add another “have regard” to Clause 8(4): whether suppliers of light-touch services consist of small and medium-sized enterprises and few larger enterprises. The other three “have regards” seem to be designed to reflect the current scope of light-touch contracts: they do not generally involve overseas suppliers, they are generally for the benefit of individuals and they involve suppliers that are close to service recipients. Another feature of current service provision is the presence of small and medium-sized service providers in both the private sector and the voluntary sector.
If the supplier market features large suppliers, including overseas ones, there really is no good policy reason for the light-touch regime to be applied; the full-fat version of the procurement rules should be in place for them. A light-touch contract should not become a convenient escape from the procurement regime for contracting authorities. They should be focused on the supplier end of the market, where a lighter regime would be appropriate.
Amendment 207 is rather different. It tries to tease out the Government’s intentions for contracts under Clause 33, which covers the reservation of certain light-touch contracts to public sector mutuals. A qualifying public sector mutual is one that has not been awarded a contract in the previous three years, under Clause 33(5). So if I am a public sector mutual and I am awarded a contract on 1 January 2022, that means that I may be excluded from tenders under subsection (2) for the three years until 31 December 2024, and under subsection (3) a contracting authority must exclude me from tenders assessed under Clause 18 until the same date—that is, the end of 2024.
If my earlier contract is for five years, which is the maximum allowed under Clause 33(1), I think that I would not be excludable from retendering when the contract came up for renewal, because the retendering process would almost certainly have started after the end of December 2024. If, however, my initial contract was for three years, I would almost inevitably be excluded from bidding for its renewal because the retendering process would by definition have to start before the end of December 2024.
My amendment proposes changing the period in subsection (5) from three years to five, but that is for probing purposes. I do not understand whether the Government are trying to allow or prohibit public sector mutuals from carrying out consecutive contracts, if indeed they were awarded them under a competition. It seems bizarre that a shorter contract could prohibit the public sector mutual from retendering while a long one would not.
In addition, I am less than clear on how contract award and commencement dates are supposed to interact, given that a contract could be awarded some considerable time before it is intended to commence. I know that my noble friend the Minister has Amendment 206 to Clause 33, which is not in this group and would slightly alter its wording, but I do not think that that will answer the basic question that I have posed. I beg to move.
The Deputy Chairman of Committees (Lord Haskel) (Lab)
My Lords, the noble Baroness, Lady Brinton, is taking part remotely. I invite the noble Baroness to speak.
Baroness Brinton (LD) [V]
My Lords, I will speak to Amendment 30 but just want to say that I agree with Amendment 33, in which my noble friend Lord Wallace asks why suppliers from outside the UK are likely to want to compete for contracts for the supply of services. Amendments 34 and 35 remind us that there are a wide range of different bodies that need to be able to tender for services, probably mainly local, but they should not be either excluded formally or informally as a result of this Bill.
Returning to Amendment 30, I thank the noble Baroness, Lady Noakes, for her helpful introduction and I want to raise with the Minister matters that we will be returning to in Clauses 41 and 108. As the noble Baroness, Lady Noakes, has laid an amendment that includes health and social care services supplied for the benefit of individuals, there are questions that need to be raised. Had we been debating the second group of government amendments today, I would have covered this topic in the Minister’s Amendment 526 as well.
Clause 108 sets out the disapplication for this Bill in relation to procurement by NHS England, but Section 79 of the Health and Care Act talks about
“health care services for the purposes of the health service in England, and … other goods or services that are procured together with those health care services.”
It goes on to define a relevant authority in healthcare services in subsection (7) as
“(a) a combined authority;
(b) an integrated care board;
(c) a local authority in England;
(d) NHS England;
(e) an NHS foundation trust;
(f) an NHS trust established under section 25”.
The problem is that that definition excludes certain parts of health services. For example, an integrated care board will be commissioning, but not procuring directly, some services to primary and secondary care organisations. However, not all NHS organisations are covered by the relevant authority in the healthcare definition. For example, a GP surgery might be a private partnership or a company employing surgery staff including GPs. This might be UK based or even an overseas company, but not a trust or any of the other definitions. The same definition also exists for dentists’ surgeries. I was wondering if the noble Baroness, Lady Noakes, was thinking that this type of organisation would be covered by her amendment. Most of them are small organisations.
I ask the Minister this question of principle, really as advance warning that we will return to it later in the Bill. Why are health services, clinical and
“other goods or services that are procured together with those health care services”,
going to have a completely different procurement regime entirely delegated to the relevant Secretary of State, who can enact it by SI? That can ignore all the important clauses that we are debating in this Bill—value for money, value for society, transparency and the technical elements critical for anybody wishing to procure goods and services using money from the public purse, except for those parts of the health service that do not fall into that definition in the Health and Care Act, which will have to abide by the Procurement Bill.
Secondly, can the Minister advise on exactly where the dividing line is for those parts of the health service that are commissioned by other parts of it, but do not fall under the definition? It would be perfectly logical to have a contractor team preparing a bid for a contract with a regional consortium that includes a hospital trust and a non-NHS body, perhaps a charity—exactly the sort of small organisation that the noble Baroness, Lady Noakes, referred to—that worked with patients. It would have to remember, if syringes were included in that PFI contract for the new wing, for example, when the NHS procurement system would therefore be used, that there would be an entirely different set of rules, processes, et cetera, compared with a contract for a hospital trust that covered only non-clinical items, and therefore used the terms in this Bill.
This will be horribly messy. It will not just be confusing for contractors, which will need teams fully au fait with where the dividing line is between the completely different rules that will apply, but I suspect it will be total chaos inside the NHS. Can the Minister explain the thinking behind this and where the differences are? If possible, could we have a meeting with him and other noble Lords interested in the interface between this Bill and the Health and Care Act legislation, and in how it will work in practice?
Lord Wallace of Saltaire (LD)
My Lords, I will speak to Amendments 33 and 34, but I start by thanking my noble friend Lady Brinton for highlighting the need to make sure that this Bill and the Health and Care Act do not contradict each other. I was struck by a speech by the noble Lord, Lord Willetts, at the Second Reading of the Higher Education (Freedom of Speech) Bill the other week, in which he suggested that the Minister consider whether definitions of freedom of speech in the Online Safety Bill and the higher education Bill were compatible. The noble Lord very much doubted that they were. In spite of the current chaos within the Government, they need to ensure that different Bills going through in the same Session are compatible and do no cut across each other.
Amendments 33 and 34 are concerned with light-touch contracts. Amendment 33 is purely a probing amendment. We wish to understand the circumstances in which suppliers from outside the UK are likely to want to compete for contracts of the sort that the noble Baroness, Lady Noakes, suggested would be covered under the light-touch system—primarily, the provision of personal and social services to be delivered on the ground, in local communities, by people with sufficient local knowledge to be effective.
My concern here was heightened by the outsourcing of the initial test and trace contracts to two large companies, one of which has its headquarters in Miami, Florida, and neither of which has any appropriate expertise in local delivery or geography. Not surprisingly, therefore, testing stations were set up in inconvenient places and local volunteers, who offered to assist in large numbers, were often ignored. My colleague, my noble friend Lord Purvis, would have wished to ask whether the new trade agreements the DIT is negotiating would nevertheless open these contracts to overseas companies, including those from non-English speaking countries. Can the Minister therefore explain and justify the paragraph concerned?
Amendment 34 would put in the Bill the importance of local provision of services and the constructive role that non-profit entities can play in the provision of services in which sympathy, personal relationships and concern for welfare above immediate profit are important parts of the motivation for those who work in them and in which volunteers can also contribute to effective supply. My experience here is mainly from the care home sector, although I believe the argument stretches a good deal more widely than that. Private companies, including offshore-based private equity companies, have made excessive profits out of care home provision in a number of cases. Noble Lords will be familiar with Terra Firma, which the Minister will recall is based in the Channel Islands. That is why I have a later amendment that challenges the question of whether companies based in the Crown dependencies and overseas territories should be considered UK suppliers—but there are other examples.
Baroness Bennett of Manor Castle (GP)
My Lords, I rise to make my first contribution in this Committee, so I declare my position as vice-president of the Local Government Association. I must also, slightly belatedly, thank the Bill team for last Wednesday morning’s briefing, which was very helpful in trying to come to grips with the complexity of the Bill. There are many people with a great deal more experience than me who are also wrestling with the complexity.
I rise to speak chiefly to Amendment 34 in the name of the noble Lord, Lord Wallace of Saltaire, who has just very ably introduced it. I also support Amendment 33. As the noble Lord, Lord Wallace, was speaking, I was thinking of the case study of the Dutch firm Randstad and the disaster of the Covid tutoring. That was a very large and important contract that I think the Government would now acknowledge went horribly wrong and should clearly never have been let overseas in the first place. The noble Lord also referred to care homes. Financialisation and hedge fund or overseas ownership of care homes is something I have been very concerned about since a brilliant report, which is highly relevant, from the Centre for Research on Socio-Cultural Change in 2016. It put that issue on the agenda and it has been focused on since by, for example, the Financial Times.
On Amendment 34, I perhaps come at this from a slightly different philosophical position from the noble Lord, Lord Wallace, in that I would like to get rid of all financialised provision and see it all in non-profit hands. I believe that is what is appropriate for this. This amendment is probing to ensure that organisations such as local social enterprises, not-for-profit companies and charities are able to apply for contracts. I would like to go stronger on that. I would like to see a preference for those organisations having many of these contracts. I think I am going to anonymise this case study because I have not had the chance to check with the people concerned, but a number of years ago I knew an excellent local rape crisis service that had been providing provision in a city for a number of years. Eventually I found out a month or so after a new contract was supposed to have started that it had been handed to a large national organisation. It was a total mess.
We have seen far too many cases like that where excellent local provision, which may not be expert at putting in tender documents but is expert at providing services, is swept aside under our current arrangements. I mentioned the Financial Times. There is very general agreement across the political spectrum that we need to stop that happening and ensure that good local services and social enterprises are able to continue, have stability, surety and certainty and do not need to put so much of their resources into the endless cycle of bidding and bidding again. I am not sure whether this amendment exactly gets to where I want to go, but it is certainly heading in the right direction. That is why I wished to speak in favour of it.
Lord Coaker (Lab)
My Lords, good afternoon. When the noble Baroness, Lady Noakes, leads a group of amendments, I often end up agreeing with her; it is a bit of a surprise sometimes. Amendment 30, which the noble Baroness has moved, goes to the heart of it, as do all the amendments, because of the lack of clarity about what Clause 8 really means and what is meant by light-touch contracts. It is a really important job of this Committee to try to tease out a little bit more detail.
As the noble Baroness, Lady Noakes, probes in her amendment, why are they not more narrowly defined? There is also an argument for asking why they are not more widely defined. I think the noble Baroness—she will no doubt correct me if I am wrong—is seeking to understand the Government’s thinking and how they have arrived at their conclusions. I think that is what all the various amendments from the noble Lord, Lord Wallace, the noble Baroness, Lady Bennett, and so on, are about.
In speaking to these amendments, I too am seeking clarity from the Government on what this clause means. I will start with the most obvious point. I have read the Library briefing, which refers to the Government’s own memorandum to the Delegated Powers and Regulatory Reform Committee on light-touch contracts, and will quote a couple of things that I think are relevant to all the amendments in this group, including lead Amendment 30 from the noble Baroness, Lady Noakes:
“The light touch regime is a facet of the existing rules … and has fewer rules regulating how a procurement is conducted for these contracts. This is reflected in the bill by a series of exceptions of obligations under the procurement regime for the relevant contracts.”
I will be frank: what does that actually mean? Which rules are not applied? There was one set of rules before, under the light-touch regime, which at one point the Government were not going to include in the Bill. That then moved to light-touch contracts, but we are told by the Government that there are fewer rules.
It would be helpful to know what the difference is. What are the fewer rules which the Government have explained to the Delegated Powers and Regulatory Reform Committee? The noble Lord, Lord Wallace, made the point that what we are all struggling with is that Clause 8(1) says what “light touch contract” means and then that it will all be done by regulation. In fact, it is a bit like knitting fog to try to understand exactly where we are coming to and what we are doing.
The Government also said in their memorandum to the Delegated Powers and Regulatory Reform Committee, which, again, is relevant to all these amendments:
“Whilst the scope of what is to be included in the power is known, it is not practicable for the bill to include a long list of detailed CPV codes to indicate which categories of contracts may benefit from the light touch regime. In addition, both CPC and CPV codes may evolve over time, which would … require amendment to the bill. The power will be used to ensure that the scope of what is included with the light touch regime does not extend beyond what is permitted for the UK by reference to the GPA and/or other international trade agreements.”
Again, we are trying to understand what that really means for the light-touch regime which the Government are seeking to bring in as a result of Clause 8 and associated regulations. Some clarity on that would help to answer the questions from the noble Baroness, Lady Noakes, about why it is not more narrowly defined and why it is defined in the way it is. That would help us to understand the Government’s thinking behind much of the clause.
The amendment from the noble Baroness, Lady Noakes, gets to the heart of what we are discussing: how the Government have arrived at their position. However, in particular, Amendment 34 from the noble Lord, Lord Wallace, and the noble Baroness, Lady Bennett, raises a very important point about ensuring that light-touch contracts will involve various other services and bodies and that they are properly considered for such contracts.
Time and again, at the heart of previous groups, this group, and no doubt groups of amendments to come is a general debate on what a Procurement Bill should or should not include and how far the Government should or should not interfere with the operation of the market. What the noble Baroness, Lady Noakes, is trying to get at, and what I believe is really important, is some of the ways in which this clause has been put together, so that we understand what exactly a light-touch contract is and the difference between the light-touch regime and the light-touch contracts in this Bill, and the Government’s thinking on what regulations may come forward in due course so that, as a Committee, we can consider whether they have got the balance right and whether this makes sense. The noble Lord, Lord Wallace, made the point that this clause is wishy-washy—one bit says this and another says that—and the Government’s get-out clause all the time is that it will be sorted out by regulation. This really is not the way forward for primary legislation.
Baroness Scott of Bybrook (Con)
My Lords, I will start with a question from the noble Lord, Lord Coaker. I will probably not answer it in a way he understands, but I will give it a go and we will probably have more discussions on this as we go forwards.
The services currently identified via these CPV codes, as the noble Lord talked about, are outside the scope of the GPA, albeit within scope of some national treatment provisions in certain international agreements. As such, these could arguably be subject to even less regulation, but we think we have the balance right to ensure competition where possible, value for money, and appropriate transparency and fairness. That is the background to this. The Green Paper proposed removing the separate light-touch provision entirely, but it was clear that this was a popular concept, recognising that these types of services warrant special treatment with a light touch. If they were subject to the full regime, we would be adopting a more stringent approach than that taken by any other European country. That is why we have put them in, and we think that is correct. I am sure we will have more discussions on that.
Before we turn to the amendments, because they were slightly separate, I will answer the questions of the noble Baroness, Lady Brinton, and the noble Lord, Lord Wallace, on how this Bill interacts with the Health and Care Act. At Second Reading, concern was raised regarding the interaction between the Health and Care Act 2022 and the Procurement Bill. I hope that my noble friend’s letter of 8 June allays these concerns. To confirm, the intention is that the provisions in the Procurement Bill will be disapplied for a tightly defined subset of healthcare services that will instead fall within the provider selection regime. The provider selection regime has bespoke rules which commissioners of healthcare services in the NHS and local government will follow when procuring healthcare services in their area, and only where delivered directly to patients and service users.
The scope of the provider selection regime will be supported by reference to the common procurement vocabulary—CPV—codes, which will help procurement personnel to determine which regime applies. As the provider selection regime will sit alongside the reforms introduced by the Procurement Bill, DHSC and the Cabinet Office are working together to ensure that the two regimes remain clear and coherent. The Procurement Bill, and therefore the light-touch contract provisions, will continue to apply to healthcare or health-adjacent services that are not delivered to patients but support the infrastructure of the NHS. Light-touch contracts will also continue to include all services procured by authorities other than NHS bodies and local authorities. I hope that helps.
There was another question from the noble Baroness, Lady Brinton, about how the PSR interacts with the new reforms in the Procurement Bill. The PSR will cover the procurement of healthcare services that are delivered to patients and service users, as I have said, and only when they are arranged by relevant healthcare authorities, including NHS bodies and local authorities. The Procurement Bill will not apply to these but will cover all other goods and services.
Lord Wallace of Saltaire (LD)
My Lords, could we ask for some clarification on this, perhaps in a letter? Probation services are obviously a personal service that falls outside healthcare. Personal tutoring was raised by my colleague the noble Baroness, Lady Bennett. If this is to be a wider sector than purely health and social care, we would like a little more guidance as to how wide it might go.
Baroness Scott of Bybrook (Con)
I understand. We will make sure to get that guidance well before Report.
Amendments 33, 34 and 35, tabled by the noble Lords, Lord Wallace and Lord Lansley, and the noble Baroness, Lady Bennett, relate to Clause 8(4). This subsection identifies features that may constitute light-touch contracts and complements the regulation-making power to determine light-touch contracts in Clause 8(2). The noble Lord, Lord Wallace, included a probing amendment to delete Clause 8(4)(a). However, recognising that Clause 8(4) is an indicative list, the relevance of the provision is to identify that light-touch services are often unlikely to be of cross-border interest. I hope that that makes sense; if not, we can discuss it further.
This is still a useful identifying feature of light-touch contracts and helps readers of the legislation to understand why some contracts have light-touch rules. Set against subsections (4)(b) and (4)(c) of Clause 8, subsection (4)(a) identifies that the services are not exclusively domestic. We are content that Clause 8(4) is appropriate as drafted.
Amendment 34, proposed by the noble Lord, Lord Wallace, and the noble Baroness, Lady Bennett, requests an addition to Clause 8(4), which aims to ensure that local authorities, social enterprises, not-for-profit organisations, mutuals and charities are properly considered for such contracts. Similarly, Amendment 35, proposed by the noble Lord, Lord Lansley, has been put forward to include a consideration that
“the suppliers of such services consist of small and medium-sized enterprises and few larger enterprises.”
Clause 8(4) does not dictate how contracting authorities award light-touch contracts. We already have adequate provision in the Bill to support these groups to obtain public contracts—for example, reserved contracts, the introduction of a new user choice direct award ground, and maintaining significant flexibility to tailor award criteria for light-touch contracts. We think that we strike the right balance in the Bill by creating opportunities for these sectors while maintaining fair treatment of all suppliers in the awarding of public contracts.
Amendment 207, proposed by my noble friend Lady Noakes, would make the time limit at Clause 33(5) equal to the maximum duration for such a contract. The intention behind the change is to prevent a public sector mutual from being repeatedly awarded a contract for the same services by the same contracting authority.
It is not considered appropriate to align the time limit with the maximum duration permitted under the clause. It should be noted that there is no obligation on the contracting authority to award contracts that were run for the full five years’ duration allowed, or indeed that use the reserved contracts provision at all. In fact, stakeholder feedback indicated that the existing provision under the Public Contracts Regulations 2015 is underutilised due to its tight restrictions.
Public sector mutuals are usually organisations that have spun out from the public sector and most often deliver services to their local communities rather than nationally. It is therefore feasible that a reserved competition may result in a sole compliance tender, especially if the purpose of the contract is to provide services for the single local authority, which is likely often to be the case. If the restriction time limit were to match the maximum duration time limit, this could prevent the reserved competition from resulting in compliant tenders and require a new and unreserved competition to be run, which may not be in the best interests of the public.
The clause currently empowers the contracting authority to manage this risk when considering the procurement strategy, using its knowledge of the market and supported by guidance. If the time limits were to align, it would require more complex drafting of Clause 33 explicitly to enable this risk to be overcome within the time of restrictions. As I have said, if the restriction is too long, it may result in the reserved competition receiving no compliant tenders, given, I repeat, that public sector mutuals are usually organisations that have spun out from the public sector. Therefore, I respectfully request that these amendments are not pressed.
Lord Aberdare (CB)
I am somewhat baffled by subsection (4) of the light-touch contracts clause. The noble Baroness has rejected several suggestions that criteria might be added to it regarding what light-touch contracts might be used for, on the grounds that it already provides sufficient scope. There are three criteria in the clause and all that the clause says is that the authority must consider the extent to which they are met. Does that mean that they are good criteria or bad criteria? If a supplier is from outside the United Kingdom, does that mean that one should favour them or not? I find it completely baffling.
Baroness Scott of Bybrook (Con)
My Lords, it is up to the organisation that is procuring. That is exactly what we are saying; we are freeing up that procurement process.
Baroness Noakes (Con)
My Lords, I am not sure that we have advanced very much on either of the clauses. I thank all noble Lords who have taken part in the debate, particularly the noble Baroness, Lady Brinton, who raised a number of good points about the interaction with NHS contracts, which I had simply not appreciated, not having followed the most recent NHS legislation. I agree with her that the interaction of the two codes is likely to be confusing to all those who come across it and, with respect, I do not think that my noble friend made that any clearer in her answer. Nevertheless, we will come to that later on in the Bill and I am sure that it will be teased out again.
On Clause 8, the main thrust of my amendments was to try to find out what was likely to be covered under light-touch contracts. I am still no clearer at all. I have heard that the “have regards” in subsection (4) are appropriate as drafted but have not heard any argumentation as to why. I have heard quite a lot about how it is really up to the contracting authority to decide what it wants to take account of, and that whether it is good or bad to have overseas suppliers is up to the contracting authority.
I am quite unclear what the Government are intending by this light-touch contract regime. I have no idea at all what they are going to allow to be specified under the regulations, which is what I was trying to tease out by saying that it should be confined to health and social care. That was a placeholder to say, “Tell me what you’re going to put in them”—but I am afraid my noble friend did not tell me what she is going to put in them.
So I am left probably slightly less satisfied with Clause 8 than I was when I tabled my amendments to probe what was in it. I will of course consider very carefully what the Minister has said between now and Report, and we may have further conversations about it, but I politely suggest to her that the Government appear to be in a bit of muddle about what they are expecting from light-touch contracts. Are they simply saying, “We’ll create this power and let contracting authorities tell us what they want to do, and then we’ll have some regulations and do what we like with it”—because that is what the clause allows—or are they intending to restrict the scope in some way and, if so, in what way? That is all still waiting to be teased out, in addition to the issues raised about interaction with the NHS.
I turn to my Amendment 207, which is in connection with Clause 33. I think I heard the Minister say that the Government’s intention was to prevent repeated contracts. That is not necessarily what this measure achieves, except that it tends to prevent a repeated contract if it is of shorter duration. If the initial contract is for three years, they almost certainly do not have a time window to be involved in tendering for a repeat of three years, because of the three-year prohibition—whereas, if they take a contract for five years, that three-year prohibition on retendering will have expired before the retendering comes up again. My noble friend simply did not answer that question, so again I am no clearer about what the Government are really trying to do. Are they trying to stop repeated contracts or allow them? They are allowing them for longer contracts but not for others, which does not seem to make sense.
We have all summer and quite possibly a lot of the autumn between Committee and Report to consider what we need to probe further on Report, but I hope the Minister will be taking back the Hansard of this discussion to her officials and looking at the points that have been raised but not dealt with in her response. However, this is Committee, so I beg leave to withdraw the amendment.
Baroness Scott of Bybrook
Lord Moylan
Member’s explanatory statement
The effect of this amendment would be to limit obligations on contracting authorities to compliance with the procurement objectives in section 11.
Lord Moylan (Con)
My Lords, in moving Amendment 37 I will speak also to Amendment 460 in my name, which is closely linked to it. They work to a similar effect.
The purpose of these amendments is to go back to the question of what we are trying to achieve in this Bill—what its purpose is. I think we all agree that we want honesty, transparency and value for money in public procurement, in broad terms. However, as I said at Second Reading, it seems that what we are achieving is the bureaucratisation of honesty, whereas we should be focusing on the principles. We are creating a great beneficial bonus for lawyers, as was identified by the noble Lord, Lord Fox, earlier in Committee.
The key to real-world management of procurement is flexibility: to be able to respond to circumstances as they change during a tender. The current system, as I said at Second Reading, operates by setting up some conditions at the beginning over which the contracting authority has very great control. However, the system operates with great rigidity after that, so that it is very difficult to respond to changing circumstances in the course of the tender, or to surprising tenders that might be received.
I gave some examples at Second Reading, particularly the great non-existent iconic London bus shelter. I will detain noble Lords with a couple of further examples because I have been contacted since then by a former local government officer, for whom I have great respect, with two examples from the water sector. One related to a contract in which—I cannot supply the names—the officers had set up in advance the very precise and clear criteria by which to analyse the tenders they received for a waste collection contract. When one of the tenderers said “For certain types of waste, we will pay you in order to collect it”—which can make sense for certain recyclers—the whole assessment system effectively collapsed because it had not contemplated that sort of bid. As far as I am aware, everything had to be scrapped and started again, whereas a sensible approach would have allowed it to be flexibly adapted.
The second was a case where the local authority decided to take a relaxed “Let’s see what the market comes up with” approach to the tender—which can be appropriate as well—which was also for a waste collection contract. Unfortunately for the local authority, the cheapest bidder proposed collecting waste from households only once every four weeks—which was why it was the cheapest bidder. Of course, that was neither environmentally nor politically acceptable, but what could the authority do about it at that stage? All it could do was put pressure on the second-lowest bidder, which had sensibly proposed a two-week collection cycle, to cut its price to make it competitive with the four-week people. That duly went through. The two-week collection was awarded the tender, and within a matter of months the contract had effectively collapsed because, of course, the company could not make it work at the price it had been obliged to agree.
So why is there no flexibility in the system once the initial conditions have been set up? The practical reason is that the moment you say, “This is daft. We should be able to do something about it”, the people whom I described in my Second Reading speech as the high priests of procurement will turn up and say, “Ah, but if you do that, a disappointed bidder may sue you for failures in the process.” That is why you are tied at the outset with iron hoops to the process that you have set in motion.
What we need is a Bill that focuses on principles rather than on process. These two amendments do that by preventing disappointed bidders from suing a contracting authority for process faults; they could sue only for breach of the objectives set out in Clause 11. I remind noble Lords that those are to do with: delivering value for money; maximising public benefit; sharing information; acting with integrity and being seen to act with integrity; and equal treatment of tenderers.
It is important to explain that the approach I am proposing is not necessarily tied to Clause 11, because certain noble Lords are proposing that the Bill be augmented with a further set of principles—the amendment in the name of the noble Baroness, Lady Hayman of Ullock, adds a set of principles to the objectives in Clause 11. My amendment is perfectly compatible with her approach. If the House decides that the objectives for the Bill and the principles underlying it are not sufficiently and adequately expressed in Clause 11 and that further objectives and principles are required, on Report my amendment could be adapted to fit in with those principles. In this particular debate, I am staying neutral on the various proposals for how to develop the principles; I am totally neutral on the noble Baroness’s amendment, because mine would fit with it if that is the direction that the House and the Government wish to take. It is important to bear in mind that I am not tying this explicitly to Clause 11.
It is also important to bear in mind something else that I said. This is not a Bill for combating fraud, corruption or malfeasance in public office. All those things are criminal offences. If a contracting authority commits those offences, it will be prosecuted not under the terms of this Bill but under the relevant provisions of the criminal law—and quite properly. What this Bill does is create a huge bureaucratic minefield for contracting authorities in which disappointed tenderers can sue for some sort of compensation or damages—not that they do so very often, but it is a chilling factor when it comes to the flexibility that contracting authorities should rightly have.
Now, some people would say that this would radically alter the whole approach of the Bill. I think it is a fairly radical alteration of the Bill’s approach, but I speak with some experience when I say that it would also make it a workable Bill. I hope that my noble friend, if he or she is not immediately inclined to agree, will at least explain why this approach does not commend itself to Her Majesty’s Government.
Baroness Hayman of Ullock (Lab)
My Lords, I shall speak to my Amendments 43 and 51 in this group and comment on the other amendments. I thank the noble Baroness, Lady Bennett, for supporting Amendment 43. Amendment 43 would reintroduce the procurement principles that were laid out in the procurement Green Paper and put them in the Bill.
The procurement Green Paper stated that the principles of the new regulatory framework for public procurement should be consistent with the Treasury’s Managing Public Money and the seven principles of public life as set out by the Committee on Standards in Public Life. The Green Paper states:
“The Government proposes that the following interdependent principles should be included in the new legislation.”
I shall remind noble Lords of the interdependent principles: they are public good, value for money, transparency, integrity, fair treatment of suppliers and non-discrimination. We absolutely support these principles, as I am sure all noble Lords do, because they are crucial for good business practice. Will the Minister say why these principles are not in the Bill as expected, particularly when we consider that, in the consultation on the Green Paper, the majority of the more than 600 respondents supported the principles for procurement being in the Bill? If we look at the Government’s response to the consultation, they said:
“The Government intends to introduce the proposed principles of public procurement into legislation as described.”
What has changed since then? Why now are those principles not in the Bill?
We believe that these principles are an integral part of procurement and a vital tool for setting out what this legislation wants to achieve and how its success will be judged. In the Bill as currently drafted there is a notable absence of mentions of equality or protected characteristics. The public sector equality duty requires public bodies to have due regard to the need to eliminate discrimination, advance equality of opportunity and foster good relations between different people when carrying out their activities. This includes promoting equality and eliminating discrimination through public procurement as well as ensuring that the PSED is adhered to by those with whom public bodies contract.
Furthermore, this is important domestic legislation that asserts that international obligations on procurement in the UK entered into must be compatible with social objectives. We are concerned that the UK has signed a trade agreement with Australia that potentially threatens the inclusion of social criteria in procurement rules. The UK-Australia agreement states that social and labour considerations can be used in the government procurement process only when based on objectively justifiable criteria. This means that social criteria could be challenged by Australian companies via their Government as unjustified. Furthermore, the World Trade Organization’s government procurement agreement that the UK has acceded to does not contain social criteria for procurement. We believe that the current positron needs to be revised and that these principles should be clearly in the Bill.
Moving on to my Amendment 51, it would add proportionality to the procurement objectives. The Procurement Bill covers a wide range of goods, works and services and a range of scales from tens of thousands of pounds to hundreds of millions, but it can be implemented effectively only if proportionality is applied throughout the process. Ensuring the Procurement Bill is proportionate is also key to achieving two of the Government’s key aims in this legislation: to improve value for money and to open up the market to smaller providers, including charities. Proportionality is crucial to the effective procurement of person-centred public services through ensuring that resources are not wasted on overly complex processes when they are not necessary and that the most appropriate provider to run the service can be procured rather than being excluded because of their size or where this is disproportionate to the scale or nature of the contract. Proportionality is referenced in the legislation, but only in specific parts, yet we believe it is relevant right across the entire process.
NCVO, which represents over 17,000 voluntary organisations, charities, community groups and enterprises across England, and the Lloyds Bank Foundation have drawn attention to the fact that this Bill will impact on the services and support that people access. We therefore believe that it is important to ensure that it is appropriate for the commissioning of procurement of people-centred services that are delivered by a range of service providers that also include charities. Charities are often well placed to deliver these services because they are embedded in local communities. They are trusted by local people and often able to reach those whom other services fail to reach.
Lord Wallace of Saltaire (LD)
My Lords, I will speak to Amendments 44, 56 and 57. I too have gone back to the Green Paper and the Government’s response to that consultation and I remain extremely puzzled that this entire consultation process was undertaken, that the Government responded in their response document rather favourably to it, but that almost none of that is reflected in Part 2 of the Bill. Part 2 declares that it is about principles and objectives, but Clause 12 reserves the detailed definition of those objectives to the Minister—whoever he or she may be when it comes to it—to set out later in a policy statement. This is a skeleton Bill and, reading through several parts of it, and this section in particular, I am reminded that the DPRRC commented that leaving things to regulations often disguises the fact that Ministers have not yet quite made their minds up as to what their policy and intentions will be when it comes to it.
If Ministers continue to turn over as rapidly as they have under the current Government, we might anticipate that, every nine to 12 months, a new Secretary of State will wish to issue a new strategic statement. Clause 12 tells us that the statement will be presented to Parliament after carrying out
“such consultation as the Minister considers appropriate”
and making
“any changes to the statement that appear to the Minister to be necessary in view of responses to the consultation”.
So we are asked to leave all that—the underlying principles of this Bill—to the Minister, whoever she or he may be by the time this becomes law. Much better to start with a parliamentary debate on what the agreed principles for procurement should be, from one Government to another, than to present Parliament with changing Ministers’ changing ideas after lengthy discussions with others outside.
On that topic, can the Minister tell us which Cabinet-level Minister is now responsible for this Bill, or which Commons Minister he is co-operating with in managing it as it moves through the two Houses? That would help the Committee understand how and whether it is likely to progress and what difficulties or changed circumstances the Minister is operating under. I appreciate and almost sympathise with some of the difficulties he may be going through in those circumstances, but if we intend this Bill to last, to provide some stability for non-governmental suppliers and the clients of public services, we need to put agreed principles and objectives in it.
There was much more about principles in the Government’s response to the Green Paper. Can the Minister explain why it is not here? Why did it not appear necessary, in view of the responses to the consultation? Amendments 43, 44 and others insert statements of principles largely drawn from government publications. They are central to the Bill. I hope the Minister will accept that it was a mistake not to include them and that it is not acceptable to Parliament to leave this to a future Minister—or perhaps Government—and that he will return on Report, after consultation, with a form of words on this that can command a cross-party consensus and which reflects the consultation already undertaken. Amendments 43 and 44 offer different, though overlapping, drafts of what it might be appropriate to include in the Bill.
I will speak also to Amendments 56 and 57. Amendment 56 is purely exploratory; we deserve an explanation in clear and simple language of the grounds on which some suppliers are to be treated differently from others. Amendment 57 inserts clearer language on the criteria by which procurement decisions should be judged: value for money, cost, quality and sustainability—as the noble Lord, Lord Moylan, pointed out, it is the principles that matter most in setting the tone and culture under which the entire public procurement process will take place. These are important terms, not to be left to the policy statement when it comes but fundamental to the principles under which procurement decisions are taken. They must be in the Bill.
We are all aware of procurement contracts where the cheapest bid has produced unsatisfactory outcomes, where what has been promised has not been produced and where insufficient attention has been paid to quality or sustainability. The noble Lord, Lord Moylan, mentioned one, but there are many others. These need to be spelled out for future procurement, with the blessing and approval of Parliament. Parliament has been sidelined under the recent retiring Government; we hope that whoever succeeds our current Prime Minister will treat it with rather more respect and consideration.
Lord Clement-Jones (LD)
My Lords, I will speak to Amendment 46, which comes from a slightly different angle. In our report AI in the UK: Ready, Willing and Able?, our AI Lords Select Committee, which I chair, expressed its strong belief in the value of procurement by the public sector of AI applications. However, as a recent research post put it:
“Public sector bodies in several countries are using algorithms, AI, and similar methods in their administrative functions that have sometimes led to bad outcomes that could have been avoided.”
The solution is:
“In most parliamentary democracies, a variety of laws and standards for public administration combine to set enough rules to guide their proper use in the public sector.”
The challenge is to work out what is lawful, safe and effective to use.
The Government clearly understand this, yet one of the baffling and disappointing aspects of the Bill is the lack of connection to the many government guidelines applying to the procurement and use of tech, such as artificial intelligence and the use and sharing of data by those contracting with government. It is unbelievable, but it is almost as if the Government wanted to be able to issue guidance on the ethical aspects of AI and data without at the same time being accountable if those guidelines are breached and without any duty to ensure compliance.
There is no shortage of guidance available. In June 2020, the UK Government published guidelines for artificial intelligence procurement, which were developed by the UK Government’s Office for Artificial Intelligence in collaboration with the World Economic Forum, the Government Digital Service, the Government Commercial Function and the Crown Commercial Service. The UK was trumpeted as the first Government to pilot these procurement guidelines. Their purpose is to provide central government departments and other public sector bodies with a set of guiding principles for purchasing AI technology. They also cover guidance on tackling challenges that may occur during the procurement process. In connection with this project, the Office for AI also co-created the AI procurement toolkit, which provides a guide for the public sector globally to rethink the procurement of AI.
As the Government said on launch,
“Public procurement can be an enabler for the adoption of AI and could be used to improve public service delivery. Government’s purchasing power can drive this innovation and spur growth in AI technologies development in the UK.
As AI is an emerging technology, it can be more difficult to establish the best route to market for your requirements, to engage effectively with innovative suppliers or to develop the right AI-specific criteria and terms and conditions that allow effective and ethical deployment of AI technologies.”
The guidelines set out a number of AI-specific considerations within the procurement process:
“Include your procurement within a strategy for AI adoption … Conduct a data assessment before starting your procurement process … Develop a plan for governance and information assurance … Avoid Black Box algorithms and vendor lock in”,
to name just a few. The considerations in the guidelines and the toolkit are extremely useful and reassuring, although not as comprehensive or risk-based as some of us would like, but where does any duty to adhere to the principles reflecting them appear in the Bill?
There are many other sets of guidance applicable to the deployment of data and AI in the public sector, including the Technology Code of Practice, the Data Ethics Framework, the guide to using artificial intelligence in the public sector, the data open standards and the algorithmic transparency standard. There is the Ethics, Transparency and Accountability Framework, and this year we have the Digital, Data and Technology Playbook, which is the government guidance on sourcing and contracting for digital, data and technology projects and programmes. There are others in the health and defence sectors. It seems that all these are meant to be informed by the OECD’s and the G20’s ethical principles, but where is the duty to adhere to them?
It is instructive to read the recent government response to Technology Rules?, the excellent report from the Justice and Home Affairs Committee, chaired by my noble friend Lady Hamwee. That response, despite some fine-sounding phrases about responsible, ethical, legitimate, necessary, proportionate and safe Al, displays a marked reluctance to be subject to specific regulation in this area. Procurement and contract guidelines are practical instruments to ensure that public sector authorities deploy AI-enabled systems that comply with fundamental rights and democratic values, but without any legal duty backing up the various guidelines, how will they add up to a row of beans beyond fine aspirations? It is quite clear that the missing link in the chain is the lack of a legal duty to adhere to these guidelines.
My amendment is formulated in general terms to allow for guidance to change from time to time, but the intention is clear: to make sure that the Government turn aspiration into action and to prompt them to adopt a legal duty and a compliance mechanism, whether centrally via the CDDO, or otherwise.
Lord Davies of Brixton (Lab)
My Lords, I am speaking to my Amendments 128 and 130, although the issues raised there have already been addressed by earlier speakers. I fully support the amendments spoken to by the Front Bench and Amendment 57 tabled by the Liberal Democrats.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Lord, Lord Davies of Brixton, who I think is seeking to achieve the same goals as two amendments in this group to which I have attached my name: Amendment 43, in the name of the noble Baroness, Lady Hayman of Ullock, and Amendment 57, in the names of the noble Lords, Lord Wallace of Saltaire and Lord Fox. I will focus on those amendments because I have done my best to get round their technical detail.
Having listened to the powerful introductory speeches that were made, I noted that the noble Baroness, Lady Hayman, highlighted the issues with the Australian trade deal. It is a pity, therefore, that this Committee is taking place at the same time as the Australian trade deal is being debated in the Chamber; some joined-up thinking might have ensured that people were able to participate in both debates. However, that is perhaps a very large aspiration that we can all work towards.
I want to focus on perhaps the most crucial provision, which is subsection (1)(a) in the new clause proposed in Amendment 43, which refers to,
“promoting the public good, by having regard to the delivery of strategic national priorities including economic, social, environmental and public safety priorities”—
although I think I might prefer the wording “public health”, which is perhaps broader than “public safety”, for reasons that I will come to in a second. That is something that we might consider in future. However, the Government are already signed up to those principles, at least theoretically, in everything that they do because, like the rest of the world, they are signed up to the sustainable development goals. I cite the paper from the Cabinet Office and the FCDO Implementing the Sustainable Development Goals, dated 15 July 2021, which says:
“The UK is committed to the delivery of the sustainable development goals. The most effective way we have to do this is by ensuring that the Goals are fully embedded in planned activity of each Government department”.
Now one might think that making legislation is a planned activity of a government department. However, that is a very centralised view because it refers only to central government spending and is not focused on other spending. Surely, if we are going to deliver the sustainable development goals, they have to be embedded right across the broad breadth of spending. Essentially, Amendment 43 broadens out and attempts to deliver something that the Government are fundamentally, nationally and internationally, signed up to do.
I note further that the Cabinet Office report states that “all signatories” are
“expected to … deliver them domestically.”
However, NGO studies demonstrate that the UK is not on track to deliver a single sustainable development goal. Surely this Procurement Bill is a crucial mechanism for delivering those sustainable development goals of economic, social and environmental advance, meeting people’s basic needs while looking after our natural world and ensuring that we have a natural world for the future. I suggest that Amendment 43, in the name of the noble Baroness, Lady Hayman—and Amendment 57, in the name of the noble Lord, Lord Wallace of Saltaire, comes at this in a different way—is absolutely crucial, as it would put the principles of the sustainable development goals, to which the Government are signed up, on the face of the Bill.
Let me also address subsection (2) of the new clause proposed by Amendment 43, which states:
“If a contracting authority considers that it is unable to act in accordance with any of these principles in a particular case, it must—”
essentially, publish a report and take reasonable steps to ensure that it is not discriminating. When I considered signing the amendment, I worried about this because I thought that, surely, these are principles we should be delivering on. However, of course, we all know the practical reality is that many organisations procuring essential services simply do not have enough money to do what they need to do.
This is where we come to the value for money point of Amendment 57. I was thinking of putting this in practical terms, because much of what we are talking about here is technical and abstract. Think of the very common fable in which a poor person, who has only £10 in their pocket, is forced to buy a cheap pair of shoes. Then every three months, he is forced to buy a new cheap pair of shoes. A wealthy person, who has £100 in their pocket, can buy a pair of shoes that lasts for 10 years. So of course, in the end, the poor person ends up spending vastly more on shoes than the wealthy person, because they had no choice. So, given our current situation, maybe we need Part 2, but we have to look at whether this is a bigger, broader problem, beyond even the realms of this Bill. None the less, this group of amendments demonstrates that the Bill is fairly deficient in its current form. This cannot be an area for a framework Bill.
I will briefly mention another issue that is important and I commend the noble Lord, Lord Clement-Jones, for his amendment. We are seeing increasing levels of automation in many aspects of judgments—the human judgment being taken out and AI and algorithms being put in its place. There is a great deal of evidence demonstrating that the way they are being developed and the data on which they are based often fit the old adage of “garbage in, garbage out”. We need to make sure that any automation of these processes is not discriminatory. The noble Baroness, Lady Hayman of Ullock, pointed out that anti-discrimination elements are entirely lacking from any provisions in the Bill at the moment; proposed new subsection (1)(f) provides these as well.
Lord Hope of Craighead (CB)
My Lords, I return to Amendment 37 in the name of the noble Lord, Lord Moylan. He made the point that the words at the end of Clause 10(1),
“except in accordance with this Act”,
are a hostage to fortune. The words range right across the whole of this complicated Bill and of course a disaffected client will invite his lawyer to search through all the provisions to find some flaw in the way in which the procurement exercise was carried out, which he can then attack.
I wonder whether the words
“in accordance with this Act”
are wider than they need to be. First, Clause 10 contains a prohibition, but Clause 10(2) contains a definition of procurement and Clause 10(3) tells you that
“a contracting authority may only award a public contract in accordance with”
the four matters set out there.
In my mind, that raises the question of whether the words at the end of Clause 10(1) should really be
“except in accordance with this”
section, the purpose of which is to describe the framework or scope of the power, before Clause 11 tells you that that power must be exercised in accordance with the procurement objectives set out there. It would make sense if Clause 10 simply said what may be done in accordance with that section. If I am wrong about that, the Minister might like to reflect on whether the words
“in accordance with this Act”
go further than they need to.
Choice of words, as I say from time to time, is always very important and the noble Lord, Lord Moylan, raises an important point. What he wishes to put in place at the end of Clause 10(1) is already in Clause 11 and will have to be complied with. I understand that the Minister may be reluctant to go as far as the noble Lord, Lord Moylan, has invited him to go, but he has raised an important point. That is why I suggest that the word “section” might be a more sensible and less dangerous word to use than “Act”, at the end of Clause 10(1).
Baroness Neville-Rolfe (Con)
My Lords, it is always a great pleasure to follow the noble and learned Lord, Lord Hope of Craighead, who is always so brief and makes such constructive suggestions. The more I listen, the more I feel that this Bill in many respects strikes the wrong note. It is overregulatory and calls for a rethink, which I hope the Government will be thinking about.
Lord Scriven (LD)
My Lords, I have listened with great interest to this debate and seen the tension between those who want what they call a flexible and open framework and those who want a more principles-based framework with an understanding of what public procurement is about. We have to be clear that the public procurement is not just about the monetary bottom line; it is about ensuring that social good comes from every pound that the public sector spends. It is not just about ensuring that value for money is the bottom line—the pounds and pence; it is about the environment, the local economy and trying to ensure that people have opportunity, and ladders of opportunity are sown in communities so that people can grow.
I have worked as a public sector employee, I have worked in the private sector on procurement, I procured in the public sector as a health service manager and, like others here, I have been a politician who set the framework for public procurement, particularly when I was the leader of Sheffield City Council. I think that, sometimes when we speak, we are divorced from reality. Most suppliers use a legal challenge not on the process but on the criteria and how those criteria have been judged for the award of a particular contract. I cannot think of any time in my life when I have been involved in procurement that a legal challenge has been brought against an organisation that I either worked for or have been a senior politician in where the criteria have not been the particular legal point on which a supplier challenges; it is not normally the process.
Interestingly, the noble Lord, Lord Moylan, gave many examples of why suppliers might not be able to do anything. Nothing in the Bill would stop that; in fact, the noble Lord, Lord Lansley, has an amendment in a future group that talks about having a more of an outcome approach to procurement, which would allow innovation. It would allow that innovation to be seen as something that it brought into the tendering process right at the beginning by going out to talk to suppliers about what outcomes were required, as the noble Lord suggests. So we have to be careful about how we frame this discussion and about saying that being less clear about principles and what is required will somehow stop legal challenge.
I would argue the other way: if there is no definition in the Bill of such things as value for money, that is a charter for lawyers to start saying, when a contract has been awarded, “What did you mean by value for money?” If over 400 different procurement authorities have a different view of value for money, and I am a supplier looking for a contract in 100 of them and everybody is giving a different definition, then legally there may be more challenges to come. There have to be clear definitions in the Bill of certain aspects, such as what we mean by value for money—or, interestingly, social value. Again, if there is no national definition of that, it is a lawyers’ charter.
The tension between what is in the Bill and having more flexibility has to be thought through. It comes down to what a number of noble Lords have said, namely that this Bill is very confused. It is complex and contradictory. It has not been thought through, particularly the elements which need to be clearly defined so that it does not become a lawyers’ charter. I ask the Minister, in replying, to say what we actually mean by social value. Once this Bill has passed, if I was a supplier, how would I know what value for money was? Will value for money be defined for every contracting authority and understood by every supplier? Or will it be open to local interpretation to determine what social value is? The Bill is contradictory and has some holes, but we should be very careful of saying that being more flexible stops lawyers challenging. Sometimes not having things in the Bill means that lawyers will challenge more.
The Minister of State, Cabinet Office (Lord True) (Con)
My Lords, I thank all those who have spoken. Lest anybody be alarmed by the coughing I have inflicted on the Committee and my not very brilliant voice, I should say that I tested several times over the weekend and this morning for Covid and the results have been negative.
It has been a very interesting debate. I have listened to it very carefully, including the many contradictions within it, which were summed up ably by the noble Lord, Lord Scriven. There are differences of opinion. Indeed, one challenge was laid down at the beginning by my noble friend Lord Moylan and spoken to eloquently at the end by my noble friend Lady Neville-Rolfe. Of course, we know the other extreme is the intervention from the noble Lord, Lord Coaker, who wished to use the Bill for very extensive potential government intervention.
All of us in this House and in public service care passionately about the principles in which we believe. Those principles differ and that is the nature of the change that can be made when Governments change. The question this Committee is wrestling with, and will I am sure continue to wrestle with through to Report, is the extent to which one encrusts the Bill with the total sum of all the hopes of those contributing to Committee, with some of the attendant risks that have been referred to in relation to litigation; or, at the other extreme, the extent to which one strips it down and concentrates on simplicity. There is an inherent tension, which is expressing itself in a very interesting and informative debate. I can assure noble Lords that, as we go forward, the Government will be listening carefully to both sides of it.
It started with Amendment 37 to Clause 10 and Amendment 460 to Clause 89, tabled by my noble friends Lady Neville-Rolfe and Lord Moylan. These seek to limit the scope of remedies for breach of statutory duty under Part 9 to compliance with only the procurement objectives in Clause 11.
A supplier’s ability to properly hold a contracting authority to account is essential for a well-functioning and fair procurement system and helps to ensure that contracting authorities comply with specific requirements under the Bill. Our submission, in presenting this legislation, is that, without such obligations to comply with the detailed provisions of the Bill, many of the important things that it seeks to deliver would fall away. For example, some of the transparency obligations in the Bill are intended to ensure early publication of information in order to support small businesses. If these cannot be enforced, we risk losing that important support mechanism.
Lord Scriven (LD)
Would the Minister give way? That is one definition of local growth: that it has to be a local company that gets the business. Local growth is completely different: it could be subcontracting or the value sustainability that it puts into the economy, which gets to the nub of the problem. Without having clear definitions, we get these kinds of differences. Would the noble Lord agree that his definition of local growth is predicated on who gets the supplier contract but, actually, local growth could be much broader?
Lord True (Con)
My Lords, I will look carefully at what I have said and what the noble Lord has said. I think I said—and will repeat if I have not said it already—that it is important to have some flexibility, particularly at the lower end of contract letting, precisely to give local authorities and others the freedom of judgment for which the noble Lord asks. The more one codifies these aspects in statute, and tightens the definition, the greater the risk—this is something we have wrestled with in Committee—that one limits the flexibility that the noble Lord seeks for local action.
A formal regulatory evaluation of whether each public contract delivered “social value” and “local economic growth” could also be an unnecessary burden on contracting authorities. I repeat my view that local contract management should be able to judge the effectiveness of all aspects of the contract. The Bill makes provision for the publication of information on the performance of large contracts—currently, those valued at over £2 million—which we consider a reasonable and balanced approach.
The Government do not support the use of a debarment list for any purpose other than to designate suppliers that meet a ground for exclusion and have failed to address their risk. Debarment is a last resort to be used when a supplier poses a significant risk to contracting authorities or the public, following criminal or other serious misconduct. We do not consider it appropriate that failure to meet characteristics such as social value should form the basis of such a punitive sanction.
Amendment 46, tabled by the noble Lord, Lord Clement-Jones, who spoke with, as always, great passion and authority on these subjects, seeks to insert an additional principle on automated decision-making and responsible and ethical use of data when carrying out a procurement. The new data platform will deliver enhanced centralised data on UK public contracts and spending. All data that is published will be freely accessible through the central digital platform. This is in support of the objective set out in Clause 11(1)(c), which expects contracting authorities to have regard to the importance of
“sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions”.
The data displayed in the platform pertains to the public sector’s commercial activity, including tender opportunities, contract awards, spending and so on. The UK’s historic commitments to data protection standards and public trust in personal data use will continue to be at the heart of the regime. The proposals build on the fundamental principles of the UK GDPR, and these will continue to underpin the trustworthy use of data to support our central digital platform.
The noble Lord asked why one would be reluctant to legislate for the ethical use of data and automated decision-making. We are not legislating for specific rules for certain sectors but instead setting the legislative framework for public sector procurement. In the same way that we are not legislating for the standards for construction projects, we are also not legislating for the standards for data projects. The Government already issue extensive guidance––the noble Lord referred to some of it—on best practice where appropriate, and contracting authorities should have that in mind when purchasing AI or data products and services.
The Government are resisting this amendment, as policies are still evolving at government level on ethical use of automated decision-making and data. This is a fast-changing world—as the noble Lord knows better than most—so legislating in the Bill could be a premature fix, as it were. I have already referred to the existing guidelines on responsible use of AI procurement for public sector organisations on how to use data appropriately. These evolving policies should be applied by contracting authorities as appropriate. That said, we are open to more engagement on this topic, and I have listened again very carefully to the points that the noble Lord makes. I can give an undertaking to him, as I did earlier to others, that we will engage with him between now and Report, because he is right that this is an important area. We are just cautious about seeking to fix specific things in legislation at the moment.
My noble friend Lady McIntosh of Pickering is, regrettably, unable to be here, for reasons referred to earlier in this Committee debate—and I confess I had nothing to do with that. Her amendments are around the subject of acting with integrity and being seen to act with integrity, which my noble friend Lady Neville-Rolfe also referred to. The integrity objective will oblige contracting authorities to consider how best to prevent fraud and corruption through good management, prevention of misconduct, and control. As well as oversight and control, open competition and the strengthened transparency requirements in the Bill will enhance integrity in public procurement.
It is essential that the procurement regime in the UK commands the trust of suppliers, the public and our international trading partners. While it is important that contracting authorities actually act with integrity—and that is a fundamental point—the objective is drafted as it is due to the importance that those observing procurements can see that contracting authorities are acting with integrity. We will, however, reflect on my absent noble friend’s amendment and the points made in debate, including the direct question that my noble friend Lady Neville-Rolfe asked me, to which I do not have an answer as I stand here, about precedents in legislation—clearly, her question will be in Hansard and requires an answer.
Lord Wallace of Saltaire (LD)
My Lords, although I am not a great expert on this subject, it seems that this is a case in which judicial review would be extremely easy because the question of how one justifies it is not spelled out here. Could the Minister perhaps write to us between now and Report about what criteria would then be used to justify the decisions taken? I entirely agree with the noble Baroness, Lady Neville-Rolfe, that one wants to ensure as far as possible that we do not leave large holes for judicial review to come in.
Lord True (Con)
My Lords, obviously I accept that, but we will certainly undertake to provide further information.
The noble Lord, Lord Scriven, was adumbrating cases where it should be possible to take different issues into account in terms of local activity. I understand the point that noble Lords are making about clarity. Clarity can either be sought through superdefinition, chasing the Snark through the end of the rainbow—sorry, I am mixing my metaphors—or it can be something for which the Government set out a clear framework that ultimately it is open to anyone in a free society to test under the common law. There is a balance to be found here and we will write further.
On Amendment 57, the noble Lords, Lord Wallace and Lord Fox, and the noble Baroness, Lady Bennett, complain that Clause 11 does not define value for money in order to leave a degree of flexibility for different types of organisation with different drivers to place a different emphasis on the concept. That is not unusual in legislation. Value for money as a concept is not uncommon on the statute book without further definition. It has been used in relation to setting high-level objectives for organisations, including the general duties of Ofcom in Section 3 of the Communications Act 2003 and indeed those of the Nuclear Decommissioning Authority in Section 4 of the Energy Act.
There are many precedents, I am told, but I have only given two of them where the term is left undefined, and this allows a degree of flexibility. We are happy with the broad interpretation of value for money, but Amendment 58 would have the effect of limiting the scope for future reviews of what value for money means. That is something that future Governments might wish to do. We do not support that position at the moment but, again, I am ready to listen to further discussion in Committee.
Amendments 128 and 130, tabled by the noble Lord, Lord Davies of Brixton, amend the provisions on award criteria. I am grateful to the noble Lord, first for the explanatory statement which sets out that his amendment intends to ensure that value for money does not override other procurement objectives, and secondly for his exposition of it. While it is important to be clear that Clause 22 does not affect the relative weighting of the objectives in Clause 11, I am grateful to the noble Lord for his consideration of this point and respond on that basis.
Public procurement needs to be focused on achieving value for money, and we submit that this is rightly at the top of the list of objectives set out in Clause 11. The noble Lord laid an amendment, the second part of which would in effect—taken literally—relegate or at least abnegate the possibility of placing value for money exclusively at the top. Our submission is that, while value for money will be the highest priority in procurement for the Government and that is reflected in the drafting of the Bill, it does not disapply or override the obligation on contracting authorities to have due regard to the other matters in Clause 11. I have no doubt that this will be probed further, but I hope that this will reassure the noble Lord that the amendment is not only unnecessary but, in its detail, we could not accept it. There is a balance to be sought here, and that balance will be seen differently by successive Administrations in successive places.
There was a very interesting range of amendments put forward in this group. I have listened carefully, and we will engage further on the points raised. I hope on that basis that noble Lords will feel ready to withdraw or not move their amendments.
Lord Moylan (Con)
My Lords, my noble friend the Minister has a difficulty with his throat, and I commiserate with him on that. He also has a difficulty with the Bill. He wants to have a Bill which is highly prescriptive, but his answer to those who wish to amend it is that that would make it too prescriptive. The question is: what are the bounds of prescription, and has he given an adequate defence of them? It may be the heat, but I suspect we are condemned this afternoon to receiving a series of responses from Ministers which are not as adequate and embracing of our original ideas as one might hope.
It has been a very important debate because it is about the principles underlying the Bill. My noble friend said that there was a degree of confusion and contradiction in the debate. There is often confusion in debate when you have a broad range and number of topics to discuss, but I do not think there was any contradiction if one understands that the debate on principles has been taking place on two levels. The first is about what the principles should be—whether they should involve what the noble Baroness, Lady Hayman of Ullock, has suggested should be incorporated and whether they should involve a certain interpretation of value for money. We all agree that has to be an element of it, but what does that actually mean? That has been the tenor of part of the debate. I have said that I intend to remain neutral in a sense on that question.
The second level on which we have been debating the principles is: on the assumption that we can agree what the principles are, what role do they then play? What purchase or leverage do they give in the procurement process? In particular, should they be a basis on which disappointed contractors should be able to nitpick through this procedural Bill in order to bring complaints when, in my view, it would be better if they were limited to doing that only if the broad principles of the Bill—which we might have agreed on—had been breached? The noble and learned Lord, Lord Hope of Craighead, clearly grasped that point, and the noble Baroness, Lady Hayman of Ullock, heartily agreed that we should ensure that there is a degree of flexibility in the tendering process so that unforeseen circumstances that lead to idiotic outcomes can be handled in a sensible way.
My noble friend Lady Neville-Rolfe made a similar point, but I am going to quibble with her very slightly, because she used the word “frequent” in reference to frequent legal challenges to procurement processes. In my experience, they are not very frequent, because what happens is that precise attention to the detail of the process is often prioritised over sensible outcomes in order to avoid those legal challenges in the first place. The structure of the approach that we are taking often leads to poor outcomes in procurement terms precisely to avoid legal challenges, but we congratulate ourselves on having gone through a successful procurement even though we have a suit with a pair of trousers with one leg shorter than the other, or something like that.
Baroness Neville-Rolfe (Con)
On the business of frequent challenge, I think it would be quite useful to have some information before we discuss this again. My experience—I have worked in the industry, although admittedly not as an executive—is that there are quite a lot of challenges, and they absorb a lot of resources. However, if they are rare, that is important as well.
Lord Moylan (Con)
I heartily second that call for information.
To conclude, my noble friend the Minister said that he thought that flexibility in response to the sort of circumstance that I am describing is desirable. To that extent, he agreed in principle with me and with my noble friend Lady Neville-Rolfe, and it is for him, as we go forward, to show how he intends to instantiate that in his own amendments, so as to give us that sensible, practical outcome. In the meantime, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
Member’s explanatory statement
This amendment seeks to reduce the burden on business of the Bill’s provisions.
Baroness Neville-Rolfe (Con)
My Lords, Amendment 38, on helping small business, would free up procurement for those businesses with a turnover of under £5 million. I am particularly grateful for the support of my noble friend Lady Noakes, and I am glad of the opportunity to endorse her review amendment, Amendment 534, which she will introduce later.
I shall also speak to my Amendment 50, which aims to keep the bureaucratic burdens on small businesses as low as possible, and to Amendments 97 and 100, which seek to exclude small businesses from complex competitive procedures. Finally, I will also speak to Amendments 290 and 295, which seek to exclude SMEs from the bureaucratic burden of cross-compliance in Schedules 6 and 7, which give long lists of reasons for excluding suppliers from bidding.
The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
My Lords, the noble Baroness, Lady Brinton, is taking part remotely. I invite the noble Baroness to speak.
Baroness Brinton (LD) [V]
My Lords, it is a pleasure to follow the noble Baroness, Lady Neville-Rolfe, in championing small and medium-sized enterprises to get access to many contracts, which needs to happen. There are many amendments to the Bill to this effect, and I hope the Minister will take serious account of making sure that they are not excluded by virtue of the complexity of procurement rules.
I wish to speak briefly to Amendment 534 in this group, which sets out the important principle of ensuring that a Minister carries out reviews of the operation of this Act. Proposed new subsection (2) states:
“‘Procurement rules’ means the requirements related to procurement set out in this Act or issued under the authority of this Act, and the health procurement rules referred to in section 108.”
While I was very grateful to the Minister for her explanations to my question at the end of the first group of amendments, I am afraid that I do not think she answered—
The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
Lady Brinton, we believe that you are speaking to the wrong group at the moment. Is that correct? I am not sure. We are just clarifying.
Baroness Noakes (Con)
It is the right group, but I have not introduced the amendment. The noble Baroness, Lady Brinton, is speaking before all the amendments have been spoken to.
The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
The rules are—I can see the problem—that remote speakers speak before the other amendments. Lady Brinton, it is quite difficult in that the amendment has not yet been spoken to; would you rather proceed, as per the current regulation, or wait and speak at the end of the group?
Baroness Brinton (LD) [V]
I am used to speaking in this way, if the Committee will bear with me. These are the rules, and I do not believe that I have the luxury of choosing to change them. What I usually do, but did not do earlier when I first spoke this afternoon, is to apologise to anyone where I might have to speak ahead of them speaking to their own amendment. I assure the Grand Committee that this is not of my making. The rules about remote contributions are extremely clear, mainly, I believe, to help those chairing the proceedings. I am happy to continue.
The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
I think the rules are to help those chairing proceedings—that is, Deputy Speakers—but also to help the people who are coping with having to come in remotely. Having said that, we will proceed within the rules, but I promise that I will take this back to the Lord Speaker’s office again at our meeting on Thursday. Lady Brinton, please continue.
Baroness Brinton (LD) [V]
I apologise again to the Committee. I was just quoting the element of Amendment 534 that talks about “procurement rules” as meaning
“the requirements related to procurement set out in this Act or issued under the authority of this Act, and the health procurement rules referred to in section 108.”
While I was very grateful to the Minister for her explanations to my question on the first group of amendments, I am afraid that I do not think she answered the core question about the interface between this Bill and the provisions in Section 79 of the Health and Care Act.
I refer the Minister to his Amendment 528 to Clause 108 of this Bill which, because it was among the government amendments in the second group of amendments, was not moved or debated. It is important, however, because that amendment states
“If the procurement of goods or services by a relevant authority is regulated by health procurement rules, a Minister of the Crown may by regulations make provision for the purpose of disapplying any provision of this Act in relation to such procurement.”
I appreciate that that amendment makes an important link to the Health and Care Act, which both Ministers have pointed out to us that they are trying to do. However, it does not pick up the issues raised by a number of noble Lords, including me, about the problem that provisions in the Health and Care Act do not cover the entire NHS.
I am very grateful to the noble Baroness, Lady Noakes—and I look forward to hearing her introduction to her amendment—for picking up my concerns at the end of the first group. Her Amendment 534 would ensure a review by a Minister, including looking at the procurement provisions in the Health and Care Act. That would at least ensure that any emerging tensions and practical problems could be identified and published.
Having raised this, there are two fundamental questions that were not answered by the Minister’s letter, nor by the Minister earlier. First, why are the rules for NHS public spend—which, in 2018-19, was in excess of £70 billion—to be created by a statutory instrument without the same level of public scrutiny that this Bill is receiving and no guarantee of the same protections that this Bill is affording to public money being spent on public contracts? Secondly, I ask again exactly where is the interface between the Bill and the Act, given the gap in the Health and Care Act legislation that is covered by the Procurement Bill? I ask again whether it might be sensible to have a meeting for noble Lords interested in this particular and perhaps esoteric problem. It is vital that public procurement works across the board.
Baroness Thornton (Lab)
My Lords, I find myself being drawn into this Bill in all kinds of ways. I apologise for not speaking at Second Reading, but I was not able to do so. I declare interests as the founding chair and current patron of Social Enterprise UK and as a senior associate of Social Business International, which is an organisation concerned with social enterprises that contract with the public sector. Both of those positions are unpaid.
Over the 20-odd years I have been in your Lordships’ House, I have been involved in putting community interest companies on the statute book and, as a Minister, in the right to request for social enterprises and the Public Services (Social Value) Act. I will speak to Amendment 75B in my name but, because this is the first time I have spoken, I will say that there is a suite of amendments to this Bill that are all about social enterprise. They follow the introduction by the noble Baroness, Lady Neville-Rolfe, very well, because many of the problems are the same, although there are some huge social enterprises providing public services.
This amendment proposes a new clause for the Bill, which addresses market stewardship. The reason is that we are interested in how you give voice to the social value Act in this space; that is at the heart of this amendment. There is a policy background to this that the Government will recognise. The 2015 review of the social value Act carried out by Lord Young of Graffham found that
“where the Act is being used, it has a positive impact and that the variety … of organisations that support the Act is quite striking.”
In 2018, Her Majesty’s Government announced that all central government contracts would be evaluated on the basis of social value. In December 2020, a new social value model was published by the Cabinet Office, which was to cover all procurement by central government departments and bodies under its responsibility. In June 2021, the new national procurement policy statement required contracting authorities to consider how they could maximise social value in creating new businesses jobs and skills, improving supplier diversity and tackling climate change.
Less than seven months ago, in December 2021, in its response to the consultation in the Green Paper Transforming Public Procurement, the Cabinet Office promised that
“A procurement regime that is simple, flexible and takes greater account of social value can play a big role in contributing to the Government’s levelling-up goals.”
Her Majesty’s Government’s flagship levelling-up White Paper calls for greater use of social value yet, despite all this, social value is nowhere to be seen in this Bill. When it was in the Commons, the Minister for Brexit Opportunities and Government Efficiency was directly asked why social value was missing. He refused to even use the phrase “social value”.
That is a considerable disappointment because, over the last decade, a strong cross-party consensus has developed on the need for all public bodies to consider social value when making procurement decisions. Indeed, the social value Act was introduced by a Conservative Member of Parliament, championed in this place by a Liberal Democrat Peer and supported by Labour and the Green Party during its passage.
Baroness Noakes (Con)
I am sorry to interrupt, but I am struggling a little as to which amendment the noble Baroness is speaking to. Amendment 75B, which deals with market stewardship, is in this group, but Amendment 75A, which is about social value, is not.
Baroness Thornton (Lab)
I beg your pardon. I was trying to give the basis as to why this amendment is down and then the other amendments that will be in the groups following this one, but I take the noble Baroness’s point and will just address this amendment.
Social enterprises report higher levels of staff engagement. The Bill does not place any duty on contracting authorities to consider the impact of their decisions on the range of providers, such as social enterprises or SMEs, but there is a risk in ignoring these organisations. There may not be the providers that the public sector needs for the future and this may reduce innovation in our supply chains. That is what this amendment addresses.
Baroness Noakes (Con)
My Lords, I have added my name to Amendments 38, 50, 97 and 100 in the name of my noble friend Lady Neville-Rolfe and, as she has already said, she has added her name to Amendment 534.
I will come to that in a moment, but I start with Amendment 86 in the name of my noble friend Lord Lansley. This returns to the question of preliminary market engagement and fostering the involvement of SMEs about which my noble friend spoke on our last Committee day in relation to his Amendment 88. Clause 15(1)(f) makes building capacity among suppliers a permitted purpose for preliminary market engagement. My noble friend’s amendment adds some words of emphasis so that capacity building should be particularly for small and medium-sized enterprises.
I know that noble Lords need no reminding of the importance of SMEs to the UK economy. They account for around 60% of employment and over half of turnover in the UK. Not all small businesses achieve scale and not all want to, but most large and successful businesses were small businesses once. We have a responsibility to ensure that SMEs are given every opportunity to thrive and grow. That is why we should be looking at this Bill on the important area of public procurement and its role in the economy and considering the way that can be used to foster SMEs.
SMEs find engaging with public procurement daunting. They simply do not have the time and resources to get involved in complex tenders, let alone things like dynamic markets. It has to be in the interests of both the individual contracting authorities and the economy as a whole to foster as much competition as possible and to assist SMEs in growing their businesses. Building capacity among SMEs is a good thing to do and this Bill should recognise that. It may occasionally be important to build capacity among larger businesses and my noble friend’s amendment does not preclude this. But large businesses have the kind of resources that make participating in public procurements pretty straightforward. SMEs, not large businesses, should be the focus of policy in this area.
My noble friend Lady Neville-Rolfe’s Amendments 97 and 100 also recognise that getting involved in public sector procurement is hard for SMEs. The complexity of procurement processes makes it quite likely that an SME might not satisfy all the participation criteria and even more likely that they will mess up on an aspect of the procedural requirements. They need to be cut some slack, which is what my noble friend’s amendments would do.
I am, as my noble friend knows, less convinced by her Amendments 290 and 295 because there are some serious issues in Schedules 6 and 7 which rightly debar businesses from public tenders. On the other hand, Schedules 6 and 7 are very heavy-handed and there may well be a case for further discretion to allow some of the matters in those schedules to be disregarded in the case of SMEs.
I now come to Amendment 534 to which the noble Baroness, Lady Brinton, spoke so eloquently earlier. It is rather different from the other amendments in this group because it requires a report every year. It is relevant to SMEs because the first area of the report is about how procurement rules have impacted the award of contracts to SMEs. I think we are agreed that we want to see awards of contracts to SMEs growing, and that means making it easier to include SMEs in the process and helping them to win.
There have been some changes to the previous EU rules on which this Bill is largely based which could make it easier for SMEs, but I suspect that the overwhelming effect of the procurement rules as we have them in this complex Bill and the secondary legislation that will follow will continue to deter SMEs from participating fully in public procurement. We really ought to be keeping this matter under review. The noble Baroness, Lady Brinton, raised the issue of whether the health procurement rules are covered. I drafted the amendment with the intention that it should cover health, but I recognise that this is a very complex area and will need to be teased out later in Committee.
A second area covered by my suggested report is whether there is scope to simplify the rules while remaining consistent with the procurement objectives set out in Clause 11. This will also be relevant to SMEs because I believe the complexity of the public procurement code is a major barrier to entry for small and medium-sized businesses. I am sure that large businesses, large tenderers, are quite comfortable with having barriers to entry for small and medium-sized entities, but government and Parliament should not be comfortable with that, and we should at least be striving for greater simplicity and keeping it under regular review.
Lord Wigley (PC)
My Lords, I am delighted to follow the noble Baroness. I support Amendment 38 moved by the noble Baroness, Lady Neville-Rolfe, and support very strongly the points that she and, more recently, the noble Baroness, Lady Noakes, have made. They relate to the pressing need to ensure that the burden on small businesses tendering for public contracts is addressed. This issue has arisen under other amendments, and I have no doubt that we need to get this nailed one way or another on Report. It is an important question.
We all draw on our experience. My experience, immediately before coming to the House of Lords after I had left elected politics, was when I chaired the board of Bangor University’s Bangor Business School. It related to the small business sector. These issues arose time after time. Some colleagues may be aware that way back, before entering full-time politics, I was involved in the manufacturing industry. I had two incarnations, the first of which was with large supernational companies, Ford, Mars and Hoover, when I was financial controller. Although those three corporations were not generally involved in public sector contracting, their approach to any question of contractual relationships was highly professional with relevant legal advice in-house and with the resources to buy in specialist advice when needed.
My second incarnation, which I undertook as a serving MP in the 1980s, was to chair a small company from its creation to when, after 11 years, it merged with a larger American-owned company to form a significant new entity employing 200 people at Llanberis in my constituency. We built—the hard way—the acorn from which that grew, raising our own capital locally and starting up by employing just one person full-time, an engineer to build automated diagnostic equipment for the medical sector.
In competing for contracts, we had to beat competitors that were much larger and with far greater resources and in-house expertise. A small company such as ours had a serious uphill struggle to compete on anything like a level playing field. We did so by being fleet of foot, resilient and flexible and by engaging proactively with potential customers. But it is unrealistic to expect SMEs to be in a position to compete on a level playing field with suppliers which have professional resources in depth. The danger is that such SMEs will be scared away from tendering for public sector contracts where the bureaucratic imposition is totally unreasonable for such small-scale operators.
In this context, the amendment is particularly relevant. If our company had not succeeded with the early contracts, we would not have grown to employ some 50 people, as we did at the point when the merger took place. Had we fallen by the wayside in that highly competitive situation, we would not now have the Siemens company that took over our successful company now employing more than 400 people at Llanberis, and with a further expansion a real possibility soon.
I support these amendments because I feel that there needs to be some mechanism written into the Bill to counterbalance the inevitable bureaucratic safety net which public sector bodies build with their procurement procedures. Providing some lower level of bureaucratic imposition on SMEs could make the difference between those companies, on the one hand, being suffocated out of the competitive arena by impositions that they cannot handle and, on the other hand, securing contracts which enable them, in the fullness of time, to grow, given the impact that that might have on our economy.
Lord Aberdare (CB)
My Lords, many of my amendments and those to which I have added my name relate to the issue of promoting greater access to public procurement for small businesses, but for whatever reason none of them has come up in this group, so I will just make two brief points.
First, I very much support all the amendments in this group. I wonder whether they will successfully address the large-supplier focus of procurement hitherto and whether they will be enough to bring in those much smaller suppliers, many of which could make a real impact on the provision of, for example, personal services at a local level but which are often excluded on the ground of having too small an income or no track record of delivering high-value contracts, even when the contracts that they want to deliver are far lower than that and they have delivered them at that level. So I suppose my question to the Minister is: how will the contracting authorities––local authorities or whatever—be dissuaded from imposing, or persuaded not to impose, thresholds and contract terms that actually deter or prevent some of those smaller enterprises from bidding? We have heard a lot about opening things up to small businesses, but unless you put restraints on the contracting authorities, those opportunities may not work.
Secondly, I very much welcome the amendment in the name of the noble Baroness, Lady Noakes, although it was spoken to first by the noble Baroness, Lady Brinton. It seems to me that one of the elements that is lacking from the Bill is any indication of how its provisions will be monitored and enforced. How will we know that it is working? I strongly support the review proposed in Amendment 534. Six years seems to be rather a long time to wait, but on the other hand this process will take time to work through.
Beyond that, I hope the Minister says something about how the Government intend to monitor the effect and impact of the Bill, specifically including whether it is actually succeeding in unleashing the energy, dynamism, innovation and entrepreneurship that come from smaller suppliers, and what mechanisms there might be to resolve the issue if it turns out that is not happening. I do not think we can rely on the courts, and certainly these small businesses do not have the will, resources or even time and energy to pursue issues such as this in court. So what mechanisms might the Government be able to use when the system does not seem to be working?
Baroness Bennett of Manor Castle (GP)
My Lords, I rise not solely to demonstrate that there is broad ideological support for small and medium-sized enterprises being given a larger share of the kind of procurement that we are talking about; I do so also because I have attached my name to Amendment 75B in the name of the noble Baronesses, Lady Thornton and Lady Hayman.
I am going to attempt not to repeat everything that has been said but I want to pick up something said by the noble Lord, Lord Wigley. No one else has drawn attention to the fact that the previous group and this one are related. They have aspects acknowledging that SMEs bring different qualities—particularly quality. The noble Lord suggested that, if we do not put in specific provisions about SMEs, it is inevitable that the big companies will dominate. I say that if we do not put in provisions about social value and quality of services—as the noble Baroness, Lady Thornton, said, that is delivered under the Public Services (Social Value) Act—and do not account for those things, it will possibly be even more telling against SMEs than the rules and the points addressed by the amendments.
I am not particularly picking on the noble Lord, Lord Aberdare, here as I was going to say this before he spoke, but I have seen from all sides of the Committee a huge focus on productivity improvement and innovation, but we need to be careful about that terminology. Again, this point comes back to the previous group: a lot of what we are talking about here is the provision of care and the caring services, the type of provision that really does not lend itself to the same kind of measurement as how productively you are producing widgets. If a nurse is caring for a dying person, maybe it would be more “productive” if they were caring for two dying people at the same time instead. We really have to ask ourselves about that. I can see some head-shaking happening but a lot of our measures of productivity have been that gross and raw, and have failed to acknowledge issues of quality and service.
We need to acknowledge that there are many elements of our service economy where those measurements would be inappropriate. If you are providing a rape crisis service to people in rape crisis, how do you make that more efficient? What does that actually mean? What does innovation mean in that context? I think we sometimes fall into a narrow, widget-based, economistic way of looking at these issues, and we need to look at them much more broadly.
I am going to finish with something on which I think the noble Baronesses opposite will agree, picking up on the point by the noble Baroness, Lady Neville-Rolfe, about 30-day payment terms. Speaking as someone who many years ago used to work for a small independent business that supplied supermarkets on 120 days, which usually meant 150-day payment terms, I think that is crucial. I say to the Minister, if he is responding to this group, that perhaps this is an issue that we could look at in future in the form of a letter. It is crucial for SMEs that it is acknowledged when 30 days or less being part of the procurement process needs to be written into the contract to enable them to bid. That could be an important factor.
Lord Scriven (LD)
My Lords, this has been a fascinating as well as nearly unanimous debate about the importance of small to medium-sized enterprises and the role they can play in innovating, stimulating, changing and helping local economies grow. Part of that will be—I have to say to the noble Baroness, Lady Bennett—through productivity. Productivity and quality in themselves are not too separate things; they can go hand in hand in caring services. I speak as a former health service manager. Productivity is not just about how you apply people; it is how you apply all the resources to get better outcomes for those you serve. Therefore, sometimes there are contradictions and it is hard, but they are not always separate.
I would like to speak to a number of amendments in this suite. I thank the noble Baroness, Lady Neville-Rolfe, for doing this in a previous life because—I am sure she will understand what I am about to say—every little does help, particularly with small to medium-sized enterprises. A number of the noble Baroness’s amendments are probing for one reason, I think. I am sure that the Minister will come up with specifics in the Bill which will help small to medium-sized enterprises, but I think the general view is that it does not do it. It does not go in depth and give the clarity which I and other noble Lords have said will help to give a level playing field for small to medium-sized enterprises, which is what is required.
In particular, an important amendment spoken to by the noble Baroness, Lady Noakes, on behalf of the noble Lord, Lord Lansley, was on capacity building. In my life of working in local economies, I have seen that the big thing that helps is capacity building for small to medium-sized enterprises. If anything should be on the face of the Bill, capacity building for small to medium-sized enterprises and not-for-profits should be, because they can—with help from the public sector in terms of capacity building—achieve quite a lot.
I have seen that in a number of areas including my own area of Sheffield when I was leader. We had something called “Buy for Sheffield”. It was not an issue of giving special treatment to small to medium-sized enterprises; it actually got ahead and gave a lot of capacity building. Through that capacity building and then through their own innovation, they could go to larger organisations and get part of the supply chain on their own volition rather than what normally happens, which is that the large organisations look for small to medium-sized enterprises down the supply chain because it gets them ticks. It actually meant that innovation came. There is something particularly in Amendment 86.
I am not quite sure why the noble Baroness, Lady Neville-Rolfe, chose £5 million because the average turnover of a small to medium-sized enterprise at present is about £756,000. I think because it is a probing amendment there has to be a cut-off point which says that for companies below a certain turnover there should be a special emphasis within this Bill. I hope that the Minister goes away and reflects on what has been said because it does not seem deep enough, and I am sure we will be coming back to this on Report as an important part of the Bill.
I agree with the noble Baroness, Lady Noakes. We have been diametrically opposed on many Bills, but on Amendments 290 and 295 there are elements I would want to see apply to small and medium-sized enterprises. I understand why the noble Baroness, Lady Neville-Rolfe, has done that, but there are some really important issues about the probity and capacity of small to medium-sized enterprises as to whether they get the procurement.
Finally, I want to re-emphasise what my noble friend Lady Brinton said. There is a huge contradiction between having a Bill for public procurement and then saying that, by statutory instrument, the Minister can take away that right for the health and social care provision. I was explaining this over dinner on Saturday to a number of friends who were asking me what I was working on in Parliament at the moment. When you explain the Procurement Bill, people glaze over, but when you explain that there is a provision for £70 billion-worth of their taxes to be excluded at the signing of the Minister’s pen, suddenly they become very excited—the glaze stops.
The Minister tried to explain this to my noble friend Lady Brinton; I was more confused after the explanation than before it. She needs to try harder to explain where the contradictions are and how they will be dealt with as a unified Procurement Bill. On the whole, like most noble Lords, I agree with the thrust of these amendments, but Ministers need to go away between now and Report and think carefully. It is clearly not strong enough to give a level playing field to small to medium-sized enterprises.
Lord Coaker (Lab)
My Lords, this has been another interesting debate, with that clash of views the noble Lord, Lord True, reminded me about over how far the state should interfere with the market. Some think it should interfere more; some think it should interfere less. No doubt, the noble Lord will pursue the Government’s objective of ensuring that we have a social market which operates for the benefit of the many. We look forward to continuing that debate, and I am sure he will respond in due course.
On a serious point, I will start this slightly back to front in terms of the amendments. The really important amendment—apart from my noble friend’s Amendment 75B, which I will speak to in a moment—is Amendment 534, which looks at reviewing the procurement rules to see whether they have made any difference or not. You can argue what those rules should be and how far something should go, and the Government will say, “Of course we will have a review; it is a matter of course. We keep under review all the legislation that is passed and look to see how effective it has been”, but this is really important.
The amendment refers to the awarding of contracts to small and medium-sized businesses. I appreciate that it does not deal with all the various points that have been raised, but the general point of reviewing what takes place and whether what is passed by the Bill has the impact we think it should have—or any impact at all—is an important principle that we should not lose sight of. However, Amendment 534 is much more narrowly drawn than that, and I suggest that six years is too long.
I will try to be reasonably brief in closing the debate, but I thought there were some really interesting suggestions in Amendment 38 from the noble Baroness, Lady Neville-Rolfe. They went to the heart of what the Government need to do; there has clearly been a procedural problem, but the Committee is trying to address and support the Government to achieve their own objectives. The noble Baroness, Lady Bennett, supported the point about 30 days in Clause 63(2). Is it immediate payment or late payment? Is it sufficient? Is it too long or not long enough? It raises the point that there are a whole series of measures about supporting small and medium-sized businesses with public procurement that need to be looked at and addressed. That is one example.
The point that there are thresholds in Schedule 1 and that below-threshold contracts can be reserved for small contracts was really interesting—if I have understood what the noble Baroness said. She raised the possibility of whether there was the opportunity to have a below-threshold business amount. That is quite an interesting concept for the Government to address and look at.
As the noble Lord, Lord Wigley, pointed out, we are trying to look at how we can expand this and ensure that small and medium-sized enterprises—as the noble Baroness, Lady Noakes, argued—will benefit from the public procurement provisions in the Bill. Everybody wants that, but is it going to happen? Will the measures on public procurement make any difference or not? It is in everybody’s interests that they should.
Baroness Scott of Bybrook (Con)
My Lords, I thank your Lordships for a really interesting debate. A lot of what has been said about support for small and medium-sized enterprises, social enterprises and voluntary organisations is something that the Government also support and, through the Bill, have been trying to support even more. After we finish Committee, we need to meet interested noble Lords and talk more about these issues because they are important to the Committee, as I can tell, but also to the Government. I make no promises, but we should be using all the knowledge in the Committee as we discuss it further.
In that context, I will answer a few questions. I say to the noble Baroness, Lady Brinton, that I am sorry if I did not quite get to the interface with the Health and Care Bill. I will try to get a bit further but I am afraid I do not think I can go as far as she wants. All public authorities will be covered by the Procurement Bill in relation to health except those that will come under the regulations made under Clause 108. There should therefore be no gap in procurement regulations between the two. On health issues, regarding entities under health procurement, further work is going on at the moment in both departments, and we will come back to the noble Baroness as things move forward.
I turn to the amendments in this group. I note that other non-government amendments have been tabled, some of which address prompt payment and relate to SMEs but are also about social values, which have been quite a big part of this debate. Those will be covered at a later stage so I will not cover them; my noble friend the Minister will do so, some of them probably in the next group.
Amendment 38 would impact Clause 10, Amendments 97 and 100 would impact Clause 18 and Amendments 290 and 295 would impact Clause 54. Each of these amendments has been proposed by my noble friend Lady Neville-Rolfe, and I thank her for them. They would enable contracting authorities to exempt businesses, based on their size and turnover, from certain obligations set out in the Bill. Public sector procurers are required to determine the most advantageous offer through fair and open competition, and the Bill sets out that the buyer should contract with the bidder offering the most advantageous tender. We want to focus on getting the best value for the taxpayer by opening competition to all businesses of all sizes.
That is not to say that we are not keen to open public procurement, as I have said, to more SMEs; in fact, quite the opposite. First, we are committed to ensuring that the new procurement regime is simpler, quicker and cheaper for suppliers, which particularly benefits SMEs and social enterprises, ensuring lower barriers for entry to the market. Secondly, bidders will have to submit their core credentials only once to a single platform, making it easier, especially for SMEs, to bid for any public contract. The single transparency platform means that suppliers will be able to seek all opportunities, including a pipeline of future opportunities, in one place.
Thirdly, the Bill will ensure that prompt payment flows down the supply chain, making it more attractive for SMEs to get involved. Fourthly, contracts below the threshold listed in Schedule 1 can be reserved for suppliers based in the UK and/or small suppliers where it is good value for money to do so. Thus, the Bill represents good news for SMEs.
While we share the noble Baroness’s keenness to support SMEs in getting access to public procurements, we cannot do that by simply exempting them from procurement rules altogether, as her amendment to Clause 10 would do.
Amendment 50, also proposed by my noble friend Lady Neville-Rolfe, would require the procurement objectives in Clause 11 to make explicit the obligation on contracting authorities to have regard to the importance of keeping the burden on SMEs associated with tendering as low as possible. While we support this goal, there are risks in legislating in such stark terms. Contracting authorities must keep an open and fair playing field for all bidders. While we take steps which facilitate access, in particular for SMEs, it would not be wise to encourage the procurement community to believe that some form of active discrimination in favour of SMEs was appropriate.
That said, we have taken significant actions to level the playing field for SMEs without actively discriminating. Some of these I have mentioned, but I add that we have reformed commercial tools, such as frameworks. This will allow longer-term open frameworks, which will be reopened for new suppliers to join at set points, so SMEs are not locked out, and the new concept of dynamic markets—
Lord Scriven (LD)
Does the Minister accept the feeling around the Committee that, while we accept that things are moving forward, they are not strong enough? On the framework issue, one of the provisions in the Bill is that a fee has to be paid every time is contract is let. That does not help. Once you get into the detail, there are barriers to the progression of SMEs. What we are not asking for is a system which supports only SMEs; we are asking for a more risk-based assessment, based on what the risk is of the procurement amount, to release some of the normal procedures and bureaucracy that is required to give them a view. One of the issues that the Minister can perhaps look at between now and Report is a more risk-based approach to public sector procurement rather than a one-size-fits-all which, on the whole, the Bill still is.
Baroness Scott of Bybrook (Con)
I agree with a lot of that and I think it is something that we will discuss further. I thank the noble Lord for his ideas.
This will allow a longer-term open framework which will be reopened for new suppliers to join at set points, so SMEs are not locked out, and the new concept of dynamic markets which, like the current dynamic purchasing system, will remain always open to new suppliers. All these will provide greater opportunity for SMEs to join and win work.
Amendment 75B, tabled by the noble Baroness, Lady Thornton, would insert a clause into the Bill on market stewardship, meaning contracting authorities must consider the impact of procurement on small and medium-sized businesses, social enterprises and voluntary organisations. They would also need to consider how to improve the diversity of their supply chains including, but not limited to, these organisations.
I have previously touched on how the Bill benefits SMEs and would also like to highlight Clauses 32 and 33 to your Lordships, which enable contracting authorities to reserve certain contracts to supported employment providers and public service mutuals. We indeed recognise the importance of diverse supply chains and the benefits to the delivery of public services, and that is why in Clause 63 we require that 30-day payment terms will apply throughout the public sector supply chain, regardless of whether they are written into the contract, ensuring SMEs and other organisations receive prompt payments and the increased liquidity they bring.
Amendment 86, tabled by my noble friend Lord Lansley, would make explicit obligations on contracting authorities to consider small and medium-sized enterprises in preliminary market engagement. Contracting authorities are able, under the new legislation, to design their preliminary market engagement in a way which gives consideration to SMEs, but too many obligations on contracting authorities will discourage them conducting this engagement. I therefore suggest this amendment is not needed.
My noble friend Lady Neville-Rolfe’s Amendment 534 proposes a new clause that seeks to make legislation obliging a Minister of the Crown to carry out regular reviews to consider the Act’s performance in relation to the award of contracts to SMEs. I draw to noble Lords’ attention that the Government do capture SME spend data for those SMEs contracting either directly or in government supply chains.
Baroness Neville-Rolfe (Con)
My Lords, I start by thanking everyone in this Room for taking part and for the widespread support for my amendment and for doing something in the Bill for small business.
I was sorry to get such a disappointing reply from the Minister. She repeated the positives that I had already identified and given the Government due credit for, but she did not offer a lot else. She said all bidders must be treated in the same way; I think that is at the heart of the problem. We have to find some way to help SMEs. The Minister mentioned the billions going to SMEs, but that is compared to the £300 billion opportunity. There is a huge opportunity to grow the SME and social enterprise sector in the procurement area and to do it in a way that represents value for money—I am coming from that angle as well.
I also thank my noble friend Lady Noakes, who made a very strong case for a regular, five-yearly review of procurement to be written into the Bill. I remember that we did this in the intellectual property area and it has worked well. She rightly fears that SMEs will be discouraged by the new laws and SIs—there are so many SIs coming through—and that that might heighten the barriers to entry that deter small business from bidding. This was reinforced very strongly by the noble Lords, Lord Wigley, Lord Aberdare and Lord Coaker. The killer line from my noble friend Lady Noakes—I am going to embarrass her—was like something from Oscar Wilde: “SMEs find engaging with public procurement daunting.” It is wonderfully understated, but it summarises the issue beautifully.
My noble friend also persuasively presented the capacity building amendment from the noble Lord, Lord Lansley, and attracted support for that from across the Committee, both in relation to SMEs and social enterprise. I strongly agree that capacity building is the way to improve productivity in the economy, so it would be great if we could encourage it in some way or another.
We also heard about social value from the noble Baronesses, Lady Thornton and Lady Bennett. The noble Baroness, Lady Bennett, reminded us that care is covered by this Bill, but I do not agree that you cannot have improved productivity in care. I have noticed how, as in Bupa homes, the distribution of medicines to old people is much improved as a result of private sector innovation in trying to make sure that they are not taking the wrong pills and that the nurses are giving them the right ones. There have been other improvements in the care area, with wheelchairs and so on, as well as the use of internet-enabled things, which can be really helpful. It was great that the noble Baroness reminded us of care even though, as usual, we come at this from slightly different angles. As the noble Lord, Lord Scriven, said, productivity and quality actually go hand in hand with good procurement in care.
It is clear that we need to do more for SMEs and social enterprise, and—not or—we need to put a review clause into the Bill or be assured that there will be a review of it, given its novelty. I very much appreciate the offer of a meeting with those of us who are interested in moving this forward with the Government during the Recess, before we come back to look at this gargantuan Bill again, presumably in October. With the leave of the Committee, I would like to withdraw my amendment.
Lord Wallace of Saltaire
“Procurement requirements
In carrying out a procurement, a contracting authority must have regard to—(a) the target to reduce the net UK carbon account;(b) the ethical and human rights record of the supplier;(c) the need to maintain data security within the digital platform; and(d) the necessity for transparency and openness.”Member’s explanatory statement
This amendment specifies a number of overarching requirements that a contracting authority must have regard to when carrying out a procurement.
Lord Wallace of Saltaire (LD)
My Lords, all the amendments in this group—which, the Minister will note, come from all the various groups and tendencies in the Lords, including the Conservatives—are concerned to spell out in the Bill in rather more detail the social and economic objectives that public procurement should promote. My name is on Amendments 45 and 59, but there is language in other amendments that I support and which I hope the Minister will accept. The concepts of “public benefit” and “social value” are broad and non-specific. We are asking for rather more spelling out of the kinds of benefit and value that are intended, in order to guide contractors and suppliers as well as Ministers and officials.
All of us on the Committee are conscious of the significant impact that the principles of public procurement can have on the broader UK economy and society. I am struck by the degree of consensus in the Committee around a number of issues. If I may say so, I have never before been so painfully aware of how much I am agreeing with the noble Baroness, Lady Noakes, and perhaps I shall ask to sign one of her amendments on Report. That shows a sense of what we are trying to do constructively with the Bill, and let us hope that we continue. I hope the Minister is indeed in a receptive and co-operative mood and will be willing to consult members of this Committee before Report and to return with agreed language that responds to these concerns.
I appreciate that there are some on the hard right of the Conservative Party who do not believe in moving towards net zero or in the concept of social value. Conservative Ministers and Liberal Democrat Ministers co-operated in producing the social value Act of 2012, which remains in force and is highly relevant to the Bill. With respect, there are a minority within the Minister’s own party and a smaller minority within the wider public who resist this. The Minister himself is a self-declared one-nation Tory committed to conserving the nation’s shared values and long-term interests, so let us put some of these shared principles and objectives in the Bill.
Amendment 45 would insert the target of reducing the UK’s net carbon amount. The Minister will note the modesty of that objective since it does not even mention net zero, and indeed the noble Baroness, Lady Bennett, will probably disapprove of my modesty. The ethical and human rights record of suppliers is a live public issue across the parties that will not go away, as the Minister must be aware.
Amendment 59 spells out what is a definition of public benefit that, again, I hope the Minister will agree with and shares. Will he now accept that such a definition ought to be in the Bill?
Baroness Thornton (Lab)
My Lords, I shall speak to Amendment 47A in my name and Amendment 52. Basically, we believe that Clause 11 should include specific references to maximising social value as something that a contracting authority must have regard to in line with the social value Act and the national procurement policy strategy. The question to which I would appreciate an answer from the Minister is: why is that not included? In my previous contribution, I went through all the different policy streams—including levelling up—that lead us to the conclusion that social value and support for social enterprises and social businesses are a good, and they are good in procurement. It is therefore a mystery why this has been left out of the Bill. I hope the Minister will agree with that and, if not, explain to me why it is not the case. I hope he will support these amendments and add them in. They are modest amendments, really.
Lord Hunt of Kings Heath (Lab)
My Lords, I have Amendment 48, but I very much endorse my noble friend Lady Thornton’s remarks on this subject. In the group before last, it was interesting to hear the Minister talk about what I thought was a hierarchy in terms of the balance to be drawn in making judgments about procurement. He put value for money at the highest level. My major problem with that is that my experience in the public sector, mainly in the health service but in other worlds too, is that that is translated into the lowest price.
Lord Hunt of Kings Heath (Lab)
No, the noble Lord, Lord True, was interpreting what my noble friend said.
Lord Hunt of Kings Heath (Lab)
I could get into trouble quoting the noble and learned Lord, Lord Judge, to himself on constitutional issues in the Schools Bill, but surely I can quote the noble Lord, Lord True, to himself. He interpreted my noble friend’s words of wisdom as a dangerous attempt by my party—the Labour Party—to constrain individual private companies that sought to provide public services to conform to the will of whatever its wishes in power might be. If only.
I think my noble friend was really saying—no doubt he will come back if he thinks I have got it wrong—that this Bill presents us with a unique opportunity to influence a huge public spend in the direction of policies that we wish to see implemented. In today’s environment, climate change and sustainability are essential. One way or another, this Bill will leave this House with some form of words on that in it, and I doubt very much whether the Government will be able to take them out, bearing in mind that this is a Lords starter.
Baroness Worthington (CB)
My Lords, I rise to speak to Amendments 49 and 58 in this group referring to Clause 11 on procurement objectives. I am very grateful for the support of the noble Baronesses, Lady Verma, Lady Young of Old Scone and Lady Parminter, on these amendments.
We have just had a very interesting debate about the need to support small and medium-sized businesses as a more explicit goal within the Bill. I am here on this group of amendments to make the case for more explicit support for future generations. We have a climate crisis on our hands. We are potentially facing temperatures of 43 degrees this weekend. This is not a pleasant situation to be in; it is going to cause people to die. This is not something we should turn away from, and we must future-proof every single piece of legislation that passes through the House during our watch. This Bill offers an opportunity for us to do just that. The Government have not introduced anything in the Bill that goes beyond guidance other than simply the words “public benefit”. This needs to be given much more clarity, and my amendments seek to do that.
It was stated at Second Reading, and I apologise for being unable to attend it, that we need to improve the existing drafting. Therefore, I am looking forward to hearing from the Minister and, I hope, to meeting the Minister as I have to echo the words of the noble Lord, Lord Hunt. It feels that there is a huge amount of cross-party support for being clearer in this Bill about our intentions and that somehow or other we need to see something more explicit in the Bill, so a meeting on this topic would be most welcome.
Amendment 49 seeks to add more specific targets and a list of matters that the contracting authority must have to regard to including the importance of contributing to targets on our carbon budgets, the natural environment, air quality and other matters. I do not think anybody here is wedded to precise wording, and a number of noble Lords have come forward with different wordings in this group. Obviously, this is not an amendment I would seek to make final, but there must be a form of wording we could all agree on.
We have talked at length about the opportunity the £300 billion per year spent on government procurement offers in terms of driving forward the agenda we wish to see and increasing Britain’s productivity, innovation and the diversity of the companies able to engage in the transition we need to see. Business as usual is no longer tenable. We need to drive change, and we know that procurement is a hugely important lever for doing that.
I asked some questions about precisely how much procurement is responsible for driving global carbon emissions, but I am told that that information cannot be given, so we have no way of knowing how well aligned government policy is to the achievement of these broader goal, which is regrettable. We want to see more clarity in the Bill so that we can, over time, know whether procurement is delivering on these multiple goals.
I am sure there will be responses from the Minister that call into question the sense of these amendments and suggest that somehow it would distort the hierarchy. I reassure the Minister that that is not what we are seeking to do. We are not trying to tie the hands but are simply trying to provide the clarity and direction for such an important lever. I am sure we will be told that the next clause on the national procurement policy statement should be relied upon to deliver this clarity. Yet—and we will debate this—there is not a requirement on the Government to produce a statement; it is simply a “may”. Also, there is no fixed timetable I can see about when that will be produced so, really, we have nothing. There are no reassurances at all that this very poorly defined concept of public benefit will be given more flesh and more detail.
There is a precedent for putting something in the Bill. I highlight Section 9 of the Health and Care Act 2022, on which this amendment is modelled, which amended the National Health Service Act 2006 to give similar duties to the NHS to have regard to climate change including in relation to procurement, so it is not incoherent or without precedent to put this in the Bill. It would be more consistent to have it in legislation. If we do not do it, people will say that it was done in the NHS Act and ask why it was not done in the broader framework Bill that came subsequently. There is well-established similar terminology in the Financial Services Act 2001 and the Skills and Post-16 Education Act 2022, so we must be consistent about the future-proofing of Bills to ensure that we are sending the right signals and bringing about this transition.
I hope I have explained why I think this approach should be taken. I highlight that public benefit being undefined is a problem, which brings me to Amendment 58. Of course it is legitimate for a Government not to seek to define every word in legislation, and some legislation can be unambiguously understood when the words have the ordinary meaning that you would find in a dictionary. The trouble with not defining a term that needs to be understood by all and for that meaning to be as consistently understood as it can be is that it will introduce a level of subjectivity and a lack of clarity. In a search through existing legislation, I have found no use or definition of public benefit, except in relation to charities law, but that cannot easily be read across into procurement decisions. Amendment 58 seeks to remedy that and to define it more clearly. It would include local priority outcomes as well as national ones.
I am sure the Minister will say that the understanding of public benefit will evolve over time and therefore a degree of a flexibility is required, but that is why we have selected only the issues which are enduring and which will be playing out of the long term. We have chosen three national and local priorities. Of course, that does not limit other priorities, but these will be enduring outcomes that will be with us for the long haul and will not change. The need to address the issues that we have highlighted here will get only greater. I think this amendment should be supported; I am not particularly wedded to this way of doing it, but there needs to be something in the Bill to provide the clarity that enables us to future-proof it. We need to take the current crisis and the responsibility we carry for future generations seriously in all legislation we consider, and I therefore look forward to the Minister’s response.
Baroness Noakes (Con)
My Lords, this group includes my noble friend Lord Lansley’s Amendment 53. Like some of the other amendments in this group, it is defines “public benefit” in Clause 11, which the noble Baroness, Lady Worthington, has just covered in her speech. My noble friend Lord Lansley regards it as important that there is a definition in the Bill. Public benefit is a very elastic term, which is good in some ways because it allows us to future-proof the use of the language for changes in circumstances, but there should be more guidance in the Bill on the kinds of things that are intended to be encompassed by it.
Clause 11 should be the guiding star for procurement professionals and we owe it to them to make it as clear as possible what is expected from them in applying Clause 11 in their work. I think most people would understand that public benefit includes economic and environment benefits and social value, which is included in my noble friend’s definition, but my noble friend is concerned that innovation and levelling up, which he also includes in his definition, should be mentioned explicitly. They are important topics and central to government policy, and they might not be obvious to procurement officials as coming within the term public benefit. Omitting them from the Bill raises questions about how important the Government think they are. The Minister may well say it will all turn up in the national procurement policy statement, but that is not the same thing. If something is important, it can easily bear repetition.
Other amendments in this group—Amendments 58, to which the noble Baroness, Lady Worthington, has spoken, and 59—also seek to define public benefit. They reference innovation but both contain rather long lists. One problem with rather long lists is that they tend to raise questions about what is not included in them, which is why drafting a long list is often a dangerous approach to trying to explain what something means in statute.
Baroness Parminter (LD)
My Lords, I have added my name to the two amendments tabled by the noble Baroness, Lady Worthington, which she so ably introduced. I am also speaking to Amendment 59A by my noble friend Lord Purvis of Tweed, who, because of the scheduling announced today, cannot be here.
I support all the amendments in this group, which takes us on to the issue of whether the Bill should bring forward public benefit. If we are to be put into camps then I am certainly in the camp that wants public procurement to be developing social values. Clearly the Minister will argue with us on that, but what I do not think he can argue with is that on some of the issues that we have been talking about in relation to public benefit—I cite specifically net zero and biodiversity loss, which the amendments refer to—are not just issues of social value; they are the Government’s stated objectives. They have legislative targets to meet for both net zero and biodiversity. So the Minister can argue with us if he does not want to use public procurement to deliver social value, which I firmly believe it should, but he cannot argue with the fact that, if his Government have targets, they need to deliver, and they should use every means at their disposal to do so.
I shall give an example of why I say that. The Environment and Climate Change Committee has been holding evidence sessions over the last three months on mobilising behaviour change. We have received evidence from academics, companies, schoolchildren and indeed everyone about how to change behaviour. The Climate Change Committee has said that about 60% of his Government’s targets are going to need people to change their behaviour. We have learned that you can make people change by giving them a bit more money through fiscal incentives or disincentives, and you can change regulations so that companies can or cannot produce certain products, but a critical factor is that we are social animals that want to see what the social norms are. We do not just live our lives in our own little house; we live our lives in schools and hospitals, and if we see menus in those places that may not reflect net-zero values, or we go into council buildings and see that they are not dealing with energy efficiency, that encourages us to think: “Why should I bother changing my lifestyle?”
Unless the Government use every opportunity at their disposal, one of which is procurement, they are not going to meet their own targets. So I argue that even if the Minister differs—as I think he would—from those of us who believe that procurement should deliver social values, it is still the case that the Government cannot meet their own targets unless they use the Bill to maximum effect, and that means putting in it the commitments referred to in this group of amendments. As the noble Baroness, Lady Worthington, said, no one is precious about the wording; it is about the intent.
I was asked by the noble Baroness, Lady Verma, who had to leave early, to express her support for these amendments and to remind the Minister that he mentioned that there would be an opportunity for discussions with colleagues on these matters before Report.
As I said, I will introduce on his behalf—although nowhere near as ably as he would—my noble friend Lord Purvis’s probing amendment to pick up the issue of the use of Fairtrade products in procurement contracts. Here, to be fair, there has been progress in recent years: many central government departments use Fairtrade products, we see many local authorities using Fairtrade products, especially in catering, and indeed even here on the parliamentary estate we use Fairtrade products. So I am not saying there has not been progress in the absence of Bills such as this, but there is much more that can be done. My noble friend’s probing amendment aims to highlight the importance of fair trade in this arena and make sure that the Bill does all that it can to further that important agenda.
Baroness Bennett of Manor Castle (GP)
My Lords, I rise in a very pleasing position for a Green: in a group of amendments addressing climate, biodiversity, social justice and indeed fair trade, to say that almost everything has been said, just not by me.
I am acutely aware of the hour so I am going to be very brief; I seek to add only a couple of points. Amendment 49 in the name of the noble Baroness, Lady Worthington, and addressed by the noble Baroness, Lady Parminter, has full cross-party support; I would have attached my name to it had there been space. It is clearly a crucial amendment.
We have to contrast this Bill with the UK Infrastructure Bank Bill, which I was recently in, half of which is entirely directed at something that is missing in this Bill. I was thinking of the tireless work of the other noble Baroness, Lady Hayman, the one who is not in the Room today, who has worked so hard. I can go back to my first ever time in Committee in this Room almost three years ago now, when we were fighting to get a climate provision into the Pensions Bill. We thought, “One day we’ll get to the stage where we won’t have to fight to get these into every Bill when they should clearly be there.” Sadly, it is clear that, despite the UK Infrastructure Bank Bill, we are not there yet.
The points made by the noble Lord, Lord Hunt of Kings Heath, about the most recent report from the Climate Change Committee were hugely powerful. We have targets but not policies. How are we going to get those policies unless we have them written explicitly into Bills such as this? I commend the noble Lord’s Amendment 48, which I would have signed had I not missed it, which contains important wording about “cultural well-being”, something that is far too often missed out. The noble Baroness, Lady Parminter, made a point about culture in the broadest sense. We need to give people a rich life, one that may have less physical stuff in it but is of far better quality. The cultural point really starts to address that, as well as addressing public health and consumption issues.
I am aware of the time so I am going to be really restrained, and I hope I get some brownie points for that. I shall sit down.