Draft Public Contracts (Amendment) Regulations 2022

(Limited Text - Ministerial Extracts only)

Monday 12th December 2022 General Committees

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

I beg to move,

That the Committee has considered the draft Public Contracts (Amendment) Regulations 2022.

It is a pleasure to serve under your chairmanship, Mr Pritchard.

This statutory instrument has two functions. First, it amends domestic public procurement regulations to ensure that changes in calculation of VAT in the valuation of contracts do not place undue burdens on contracting authorities. Secondly, it ensures that NHS trusts and NHS foundation trusts are treated consistently for the purpose of applying certain obligations that promote transparency. This SI will only implement changes to the lower-value thresholds in the Public Contract Regulations 2015 and, therefore, only impact on the regulation of lower-value contracts. The amendments are necessary in order to address the impact of the new requirement to include VAT in the assessment of contract value. The change to how VAT is considered in estimating the value of a contract was a result of the UK joining the agreement on Government procurement, or GPA, as an independent member following EU exit.

Although the other thresholds increased as a result of applying GPA methodology to account for currency fluctuations in the last two years, the lower thresholds were not. In effect, that resulted in a reduction to those thresholds. This had the effect of bringing more contracts into scope for publication under the below threshold regime, causing additional burden on contracting authorities. This instrument will rectify this discrepancy by raising the lower threshold for central Government authorities from £10,000 to £12,000. For sub-central authorities, it will be raised from £25,000 to £30,000. This will ensure that the thresholds effectively remain the same once contract values are calculated, inclusive of VAT, thus avoiding bringing additional low-value contracts within the scope of the below threshold regime.

Turning to the second function, this instrument also provides that NHS foundation trusts are to be treated consistently with NHS trusts and be regarded as sub-central authorities. It seemed inappropriate to the Government that NHS foundation trusts should be held to central Government thresholds for publication when NHS trusts are not. These regulations will rectify this by applying the same threshold to NHS foundation trusts as the one currently observed by NHS trusts.

--- Later in debate ---

[Alex Burghart]

I thank the hon. Lady for her brief remarks. The difference in the increase is obviously because both have increased in line with VAT, which is 20%. With that, I hope the Committee will join me in supporting this SI.

Question put and agreed to.