Procurement Bill [Lords]

Report stage
Tuesday 13th June 2023 Commons Chamber

Consideration of Bill, as amended in the Public Bill Committee

New Clause 15

Record-keeping

‘(1) A contracting authority must keep such records as the authority considers sufficient to explain a material decision made for the purpose of awarding or entering into a public contract.

(2) For the purposes of subsection (1), a decision is “material” if, under this Act, a contracting authority is required—

(a) to publish or provide a notice, document or other information in relation to the decision, or

(b) to make the decision.

(3) A contracting authority must keep records of any communication between the authority and a supplier that is made—

(a) in relation to the award or entry into of a public contract, and

(b) before the contract is entered into.

(4) A record under this section must be kept until—

(a) the day on which the contracting authority gives notice of a decision not to award the contract (see section 55), or

(b) the end of the period of three years beginning with the day on which the contract is entered into or, if the contract is awarded but not entered into, awarded.

(5) This section does not apply in relation to defence and security contracts.

(6) This section does not affect any other obligation under any enactment or rule of law by virtue of which a contracting authority must retain documents or keep records, including for a longer period.”—(Alex Burghart.)

This new clause, to be inserted after clause 97, would require contracting authorities to keep records to explain decisions made for the purpose of awarding or entering into a public contract and records of communications with suppliers made before the contract is entered into, in each case subject to time limits.

Brought up, and read the First time.

1.33 pm

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

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Eleanor Laing)]

With this it will be convenient to discuss the following:

New clause 1—Removal from the procurement supply chain of physical surveillance equipment produced by companies subject to the National Intelligence Law of the People’s Republic of China—

“(1) Within six months of the passage of this Act, the Secretary of State must publish a timeline for the removal from the Government’s procurement supply chain of physical surveillance equipment produced by companies subject to the National Intelligence Law of the People’s Republic of China.

(2) The Secretary of State must lay the timeline before Parliament.”

New clause 9—Application of this Act to procurement by NHS England—

“(1) Omit sections 79 and 80 of the Health and Care Act 2022.

(2) For the avoidance of doubt, the provisions of this Act apply to procurement by NHS England.”

This new clause includes the NHS under this Act and procurement by NHS England under the Health and Care Act 2022.

New clause 10—Tax transparency—

“(1) This section applies to any covered procurement for a public contract with an estimated value of £5 million or over.

(2) When assessing tenders under section 19 or awarding a contract under section 41 or 43, a contracting authority must require the submission of a tax report where a supplier is a multi-national supplier.

(3) Where a multi-national supplier fails to submit a tax report, a contracting authority must exclude the supplier from participating in, or progressing as part of, the competitive tendering procedure.

(4) Subject to subsection (5), a contracting authority that enters into a contract with a multi-national supplier must publish a copy of the tax report—

(a) if the contract is a light touch contract, before the end of the period of 120 days beginning with the day on which the contract is entered into;

(b) otherwise, before the end of the period of 30 days beginning with the day on which the contract is entered into.

(5) Where a copy of a contract is by virtue of regulations under section 95 published under section 53(3) on a specified online system, the tax report relating to that contract must be published on the same specified online system—

(a) if the contract is a light touch contract, before the end of the period of 120 days beginning with the day on which the contract is entered into;

(b) otherwise, before the end of the period of 30 days beginning with the day on which the contract is entered into.

(6) A ‘multi-national supplier’ is a supplier with two or more enterprises that are resident for tax purposes in two or more different jurisdictions.

(7) A ‘tax report’ means a report setting out—

(a) the income booked in the UK,

(b) the profit before tax attributable to the UK,

(c) the corporate income tax paid on a cash basis in the UK,

(d) the corporate income tax accrued on profit/loss attributable to the UK, and

(e) any other information specified in regulations under section 95

for the multinational supplier.

(8) A Minister of the Crown may by regulations amend this section for the purpose of changing the financial threshold.”

This new clause would require large multinational corporations bidding for a public contract to provide information about their Income booked in the UK, their profit before tax attributable to the UK, their corporate income tax paid on a cash basis in the UK and their corporate income tax accrued on profit/loss attributable to the UK, and that information to be published.

New clause 11—Public interest—

“(1) Where a contracting authority is considering outsourcing public services that are at the time of consideration delivered in-house or where contracts are due for renewal, the contracting authority must demonstrate that they have considered whether outsourcing or re-contracting provides greater public value than direct service provision.

(2) As part of the duty in subsection (1), the contracting authority should demonstrate that it has assessed the potential benefits and impact of outsourcing the service in question against a public sector comparator with assessments being based on criteria to be set by the Secretary of State, including taking a five year consideration of—

(a) service quality and accessibility;

(b) value for money of the expenditure;

(c) implications for other public services and public sector budgets;

(d) resilience of the service being provided;

(e) implications for the local economy and availability of good work in relevant sub-national labour markets;

(f) implications for public accountability and transparency;

(g) effect on employment conditions, terms and standards within the provision of the service to be outsourced and when outsourced;

(h) implications for public sector contributions to climate change and environmental targets;

(i) implications for the equalities policies of the contracting authority and compliance with the public sector equality duty.

(3) The contracting authority and the supplier of the outsourced service must monitor the performance of any contracted service against the public interest test and the stated objectives set by the contracting authority pre-procurement to demonstrate that outsourcing the service in question has not resulted in a negative impact on any of the matters mentioned in subsection (2)(a) to (i).

(4) The Secretary of State must from time to time set budget thresholds for when a public interest test would be required.”

The new clause would create a process to ensure that contracting authorities safeguard the public interest when considering whether or not to outsource or recontract services.

New clause 12—Protection of subcontractors’ payments under construction contracts—

“(1) A project bank account must be established for the purpose of subsections (2) to (4) in accordance with the following requirements—

(a) the account must be set up by the contracting authority and the contractor under a construction contract as joint account-holders;

(b) the monies in the account are held in trust by the contracting authority and contractor as joint trustees;

(c) the contracting authority must deposit in the account all sums becoming due to the beneficiaries and any disputed sums must remain in the account until the dispute is resolved and any retention monies remain in the account until they are released to the beneficiaries;

(d) due payments from the account must be made to all beneficiaries simultaneously; and

(e) the beneficiaries include—

(i) the contractor;

(ii) all subcontractors where the value of each subcontract is at least 1% of the value (excluding VAT) of the construction contract entered into between the contracting authority and the contractor; and

(iii) any other subcontractor which has specifically requested that its payments be discharged through the account.

(2) Subsections (3) and (4) have application to construction contracts having a value in excess of £2 million (excluding VAT).

(3) Not later than 30 days after entering into a construction contract a contracting authority must ensure that a project bank account is in place.

(4) In the event that a contracting authority fails to comply with this subsection the construction contract ceases to be valid and may not be enforced by either party.

(5) The Secretary of State must provide statutory guidance on the operation of project bank accounts to ensure that such operation is standardised amongst all contracting authorities.

(6) Subsections (7) to (10) apply where retention monies are not protected within a project bank account.

(7) The contracting authority must establish a retention deposit account with a bank or building society which fulfils the requirements of subsection (1)(a) and (b).

(8) On each occasion that retention monies are withheld the contracting authority must lodge them within the retention deposit account and maintain a record of the names of each subcontractor having contributed to the withheld monies and the amount of the monies contributed by each.

(9) Subject to subsection (10), not later than 30 days after the date of handover of each subcontracted works at least 50% of the withheld retention monies must be released, and not later than the date which is 12 months from the date of handover of each subcontracted works the balance of the retention monies must be released.

(10) A contracting authority has a right of recourse to subcontractors’ retention monies but such right is limited to any subcontractor which is in default of its subcontract in having delivered works which are defective and in breach of the subcontract.

(11) Paragraphs (9) and (10) also apply where retention monies are protected in a project bank account.

(12) Non-compliance with subsections (6) to (11) renders any entitlement to withhold retention monies in a construction contract or subcontracts of no effect.

(13) Subsections (6) to (12) do not affect the right of any subcontractor to pursue recovery of any outstanding or wrongfully withheld retention monies against its other contracting party.

(14) The Secretary of State must provide statutory guidance on the operation of retention deposit accounts to ensure such operation is standardized amongst all contracting authorities.

(15) Any dispute under this section is referrable to adjudication in accordance with section 108 of the Housing Grants, Construction and Regeneration Act 1996.

(16) The Secretary of State must carry out a review of the operation of this section within 5 years of it coming into force.

(17) In this section—

“bank” has the meaning given to it in section 2 of the Banking Act 2009;

“building society” has the meaning given to it in section 119 of the Building Societies Act 1986;

“contractor” is the party engaged under a construction contract with a contracting authority;

“construction contract” has the meaning given to it in section 104, Housing Grants, Construction and Regeneration Act 1996;

“handover of each subcontracted works” signifies the date when the works as defined in each subcontract are substantially complete;

“project bank account” is an account set up with a bank or building society which has the requirements listed in subsection (2);

“retention monies” mean a proportion of monies withheld from payments which would otherwise be due under a construction contract, subcontract or any ancillary contract the effect of which is to provide security for the current or future performance by the party carrying out the works;

“subcontract” and “subcontractor” includes sub-subcontracts and sub-subcontractors.”

This new clause ring-fences monies due to subcontractors in construction supply chains through mandating use of project bank accounts and ensuring retention monies are safeguarded in a separate and independent account.

New clause 13—Dependence on high-risk states—

“(1) The Secretary of State must within six months publish a plan to reduce the dependence of public bodies upon goods and services which originate in whole or in part in a country considered by the United Kingdom as a high risk sourcing country.

(2) For the purposes of this section, a country is considered a high risk sourcing country by the United Kingdom if it is defined as either a systemic competitor or a threat in the latest Integrated Review of Security, Defence, Development and Foreign Policy.”

New clause 14—Procurement and human rights—

“(1) A contracting authority may apply a policy under which it does not contract for the supply of goods, services or works from a foreign country or territory based on the conduct of that foreign country or territory relating to human rights, provided that—

(a) the contracting authority has a Statement of Policy Relating to Human Rights, and

(b) that statement of policy is applied consistently and not specifically to any one foreign country or territory.

(2) Within six months of the passage of this Act, the Secretary of State must publish, and lay before Parliament, guidance on the form, content and application of Statements of Policy Relating to Human Rights for the purposes of subsection (1).

(3) Contracting authorities must have regard to the guidance published under subsection (2) when applying a policy in accordance with subsection (1).”

This new clause would enable public authorities to choose not to buy goods or services from countries based on their human rights record. They would not be able to single out individual nations to apply such a policy to, but would have to apply it consistently, and in accordance with guidance published by the Secretary of State.

New clause 16—Eradicating slavery and human trafficking in supply chains—

“(1) The Secretary of State must by regulations make such provision as the Secretary of State thinks appropriate with a view to eradicating the use in covered procurement of goods or services that are tainted by slavery and human trafficking.

(2) The regulations may, in particular, include—

(a) provision as to circumstances in which a supplier is excluded from consideration for the award of a contract;

(b) provision as to steps that must be taken by contracting authorities for assessing and addressing the risk of slavery and human trafficking taking place in relation to people involved in procurement supply chains;

(c) provision as to matters for which provision must be made in contracts for goods or services entered into by contracting authorities, including mandating or enabling the use of forensic supply chain tracing.

(3) In this section— “forensic supply chain tracing” is the process of using forensic techniques to track the movement of goods and services through a supply chain; “slavery and human trafficking” has the meaning given by section 54(12) of the Modern Slavery Act 2015; “tainted”: goods or services are “tainted” by slavery and human trafficking if slavery and human trafficking takes place in relation to anyone involved in the supply chain for providing those goods or services.”

New clause 17—Food procurement—

“(1) A public contract which includes the supply of food must include provisions ensuring that the supply of food under that contract—

(a) is aligned with the Eatwell Guide, and

(b) includes options suitable for a plant-based diet.

(2) The ‘Eatwell Guide’ is the policy tool used to define government recommendations on eating healthily and achieving a balanced diet published by Public Health England on 17 March 2016, as updated from time to time.”

This new clause would require public contracts for the supply of food to be aligned with current nutritional guidelines and to include plant-based options.

Amendment 14, in clause 2,  page 2, line 15, after “funds,” insert “including the NHS,”.

This amendment includes the NHS in the definition of a public authority for the purposes of this Act.

Government amendments 19 and 20.

Amendment 60, in clause 13, page 10, line 11, at end insert—

“(3A) When the Minister lays the statement before Parliament, the Minister must also lay before Parliament a report which sets out—

(a) the Secretary of State’s assessment of the impact of the statement on meeting environmental and climate targets,

(b) the steps the Secretary of State has taken or intends to take in relation to procurement to support the meeting of those targets.”

This amendment would require the Secretary of State to explain in a report laid before Parliament the Government’s assessment of the impact of the national procurement policy statement on meeting environmental and climate targets and to set out any intended steps in relation to the meeting of those targets.

Amendment 4, in clause 19, page 13, line 31, at end insert—

“(aa) must disregard any tender from a supplier that does not guarantee the payment of at least the Real Living Wage to all its own employees and contracted staff and those of any sub-contractors;”

This amendment, together with Amendments 5 to 8, is designed to ensure that no public contract can be let unless the supplier guarantees the payment of the Real Living Wage to all those involved in the delivery of the contract.

Amendment 5, in clause 41, page 28, line 26, at end insert—

“(3A) A contracting authority may not award a contract under this section to a supplier that does not guarantee the payment of at least the Real Living Wage to all its own employees and contracted staff and those of any sub-contractors.”

See explanatory statement to Amendment 4.

Amendment 1, in clause 42, page 29, line 14, at end insert—

“(3A) Provision under subsection (1) must not confer any preferential treatment on suppliers connected to or recommended by members of the House of Commons or members of the House of Lords.”

This amendment is intended to prevent the future use of “VIP lanes” for public contracts.

Government amendments 21 to 23.

Amendment 6, in clause 43, page 30, line 3, at end insert—

“(5A) A contracting authority may not award a contract under subsection (1) to a supplier that does not guarantee the payment of at least the Real Living Wage to all its own employees and contracted staff and those of any sub-contractors.”

See explanatory statement to Amendment 4.

Amendment 2, in clause 44, page 30, line 16, at end insert—

“(4) Any Minister of the Crown, Member of Parliament, Member of the House of Lords or senior civil servant involved in recommending a supplier for a contract under section 41 or 43 must make a public declaration to the Cabinet Office of any private financial interest in that supplier within 10 working days.”

This amendment would implement a recommendation by the National Audit Office that any contracts awarded under emergency provisions or direct awards should include transparency declarations.

Amendment 7, in clause 45, page 31, line 6, at end insert—

“(aa) permit the award of a public contract to a supplier that does not guarantee the payment of at least the Real Living Wage to all its own employees and contracted staff and those of any sub-contractors.”

See explanatory statement to Amendment 4.

Government amendments 24 to 30.

Amendment 61, in clause 58, page 40, line 38, leave out paragraph (c).

This amendment would remove provision allowing a contracting authority to have regard to commitments to prevent circumstances giving rise to the application of an exclusion ground from occurring again when considering whether a supplier should be excluded.

Amendment 62, page 40, line 41, leave out paragraph (e).

This amendment would remove provision allowing a contracting authority to have regard to evidence, explanations or factors not specified elsewhere in the clause when considering whether a supplier should be excluded.

Amendment 63, page 41, line 8, leave out subsection (3).

This amendment removes clause 58 (3), which limits the ability of a contracting authority to require whatever evidence is necessary to make their assessment about whether a supplier is reliable.

Government amendments 31 to 50.

Amendment 17, in clause 68,  page 49, line 15, at end insert—

“(10A) Within a year of the passage of this Act, the Secretary of State must prepare, publish and lay before Parliament a report on the effectiveness of this section in ensuring prompt payment of small and medium-sized enterprises.

(10B) Not later than 6 months after the report has been laid before Parliament, a Minister of the Crown must make a motion in the House of Commons in relation to the report.”

This amendment would require the Government to report to Parliament on the effectiveness of this section in ensuring prompt payment of SMEs.

Amendment 68, in clause 71,  page 51, line 11, at end insert—

“(6A) When a planned procurement notice is published under section 15 or a tender notice is published under section 21, the contracting authority must include a statement of the outcomes which the contract is intended to achieve.

(6B) The contracting authority must commission an independent evaluation of whether each contract delivered the outcomes mentioned in subsection (6A), unless the contract is excluded by regulations under subsection (6D).

(6C) An evaluation under subsection (6B) must—

(a) be performed by an independent body in accordance with UK Government Evaluation Standards, and include a clear recommendation on whether similar further public contracts should be begun, renewed or extended;

(b) be commissioned in time to be completed within six months of contract termination, renewal or extension;

(c) be published in full by the contracting authority immediately it is received from the independent external body.

(6D) The Secretary of State may by regulations specify types of contracts that do not require independent evaluations under subsection (6B).

(6E) Where the independent evaluation under subsection (6B) recommends that similar public contracts should not be begun, extended or renewed, any contracting authority which nonetheless intends to do so must publish its reasons not less than 30 days before the agreement is begun, extended or renewed.”

Government amendments 51 to 55.

Amendment 13, page 78, line 12, leave out clause 119.

Amendment 8, in clause 122, page 82, line 5, at end insert—

“‘Real Living Wage’ means the hourly wage rates for London and for outside London calculated annually by the Resolution Foundation and overseen by the Living Wage Commission (or their successor bodies);”.

This amendment inserts a definition of the Real Living Wage for the purposes of Amendments 4 to 7.

Government amendment 56.

Amendment 64, in schedule 6, page 106, line 7, at end insert

“or an offence under section 86, 88 or 92 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.”

This amendment is intended to ensure that the full range of criminal offences for money laundering are properly captured for the purposes of exclusion from public procurement.

Amendment 65, page 106, line 12, leave out “or 6” and insert ”, 6 or 7”.

This amendment includes the failure of commercial organisations to prevent bribery as an offence which is a mandatory exclusion ground.

Amendment 66, page 106, line 14, at end insert—

18A An offence under Schedule 3 of the Anti-Terrorism, Crime and Security Act 2001 (sanctions evasion offences).”

This amendment is intended to make criminal offences for sanctions evasion grounds for mandatory exclusion from public procurement.

Government amendment 57.

Amendment 15, page 110, line 12, at end insert—

“National security

42A A mandatory exclusion ground applies to a supplier if a decision-maker determines that the supplier or a connected person poses a threat to the national security of the United Kingdom.”

This amendment would move national security from among the discretionary exclusion grounds in Schedule 7 to the mandatory exclusion grounds in Schedule 6.

Government amendment 58.

Amendment 18, in schedule 7, page 113, line 2, at end insert—

“1A A discretionary exclusion ground applies to a supplier if a contracting authority determines that a supplier, within a year leading to the date of tender—

(a) has been found by an employment tribunal or court to have significantly breached the rights of an employee or worker engaged or formerly engaged by it with one or more aggravating features, or has admitted to doing so; and

(b) has not conformed with applicable obligations in the fields of environmental, social and labour law established by national law, collective agreements or international environmental, social and labour law provisions; and

(c) has not taken steps to rectify the situation through—

(i) paying or undertaking to pay compensation in respect of any damage caused by the breach of rights; and

(ii) clarifying the facts and circumstances in a comprehensive manner by actively collaborating with any relevant employment tribunal or court process and the parties thereto; and

(iii) taking concrete technical, organisational and personnel measures appropriate to prevent further breaches of rights of a similar kind.

1B In making a decision on whether a discretionary exclusion ground applies to a supplier under paragraph 1A, a contracting authority must—

(a) evaluate the adequacy of any action taken by the supplier in accordance with sub-paragraph (c) of that paragraph, taking into account the gravity and particular circumstances of the breach or breaches of rights, and

(b) make reasonable provision for the employer and the employee or worker concerned to make representations, which may be made by agreement by a trade association or trade union.”

This amendment would give contracting authorities the discretion to exclude suppliers who have significantly and repeatedly breached the rights of staff in the last year unless they have “self-cleansed”.

Amendment 67, page 113, line 17, at end insert—

“Financial and economic misconduct

3A A discretionary exclusion ground applies to a supplier if the decision-maker considers that there is sufficient evidence that the supplier or a connected person has engaged in conduct (whether in or outside the United Kingdom) constituting (or that would, if it occurred in the United Kingdom, constitute) any of the following offences—

(a) an offence under section 327, 328 or 329 of the Proceeds of Crime Act 2002 (money laundering offences);

(b) an offence under section 86, 88 or 92 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017;

(c) an offence under Schedule 3 to the Anti-terrorism, Crime and Security Act 2001 (sanctions evasion offences);

(d) an offence under section 2, 3, 4, 6 or 7 of the Fraud Act 2006 (fraud offences);

(e) an offence under section 993 of the Companies Act 2006 (fraudulent trading);

(f) an offence under section 1, 2, 6 or 7 of the Bribery Act 2010 (bribery offences).”

This amendment is intended to allow relevant Ministers and Contracting Authorities the power to exclude suppliers from procurement where they have evidence of financial and economic criminal activity, such as fraud, money laundering, bribery or sanctions evasion, but there has not yet been a conviction by a court.

Amendment 16, page 116, line 6, at end insert—

“Sanctions offences

14A(1) A discretionary exclusion ground applies to a supplier if the decision-maker considers that the supplier or a connected person has engaged in conduct constituting—

(a) An offence established in any regulations made under Part 1 of the Sanctions and Anti-Money Laundering Act 2018;

(b) An offence established under Part 5 of the Customs and Excise Management Act 1979.

(2) A discretionary exclusion ground applies to a supplier if the decision-maker considers that there is sufficient evidence that the supplier or a connected person has engaged in conduct outside of the United Kingdom that could result in such an offence being committed if that conduct occurred in the United Kingdom.”

This amendment would create a discretionary exclusion ground where a supplier (or connected person) has violated UK sanctions or export controls, or would have done so if they were in the UK.

Amendment 3, page 116, line 10, at end insert—

“Involvement in forced organ harvesting

14A(1) A discretionary exclusion ground applies to a supplier if a decision-maker determines that the supplier or a connected person has been, or is, involved in—

(a) forced organ harvesting,

(b) unethical activities relating to human tissue, including anything which involves the commission of an offence under sections 32 (prohibition of commercial dealings in human material for transplantation), 32A (offences under section 32 committed outside UK) or 33 (restriction on transplants involving a live donor) of the Human Tissue Act 2004, or under sections 20 (prohibition of commercial dealings in parts of a human body for transplantation) or 20A (offences under section 20 committed outside UK) of the Human Tissue (Scotland) Act 2006, or

(c) dealing in any device or equipment or services relating to conduct mentioned in paragraphs (a) or (b).

(2) “Forced organ harvesting” means killing a person without their consent so that their organs may be removed and transplanted into another person.”

This amendment is designed to give a discretionary power to exclude suppliers from being awarded a public contract who have participated in forced organ harvesting or unethical activities relating to human tissue, including where they are involved in providing a service or goods relating to such activities.

Government amendment 59.

[Alex Burghart]

It is a genuine honour to take the Procurement Bill through Report stage. As the House will know, this is a major piece of post-Brexit legislation that enables us, for the first time in many decades, to reform our procurement system, to the benefit of contracting authorities, suppliers and taxpayers.

I begin with new clause 15 and amendment 52. We are inserting into the Bill a new clause that allows us to meet the UK’s international obligations on record keeping. We are strengthening record keeping obligations in the Bill to more fully reflect our obligations in both the agreement on Government procurement—the GPA—and the comprehensive and progressive agreement for trans-Pacific partnership. They both require records to be kept for a minimum of three years. New clause 15 sets out the obligation on contracting authorities to

“keep such records as the authority considers sufficient to explain a material decision made for the purpose of awarding or entering into a public contract.”

A material decision is one that requires a contracting authority

“to publish or provide a notice, document or other information in relation to the decision”,

or decisions, that are required to be made under the Bill. Records must be kept for three years from award of, or entry into, a contract—or, if the contract is awarded but not entered into, from the date of the decision not to enter into it.

The primary goal of the Bill is to streamline procurement regulations and ensure the overall efficiency of the system, while avoiding overwhelming businesses and contracting authorities with a multitude of rules and regulations—a point that we will no doubt return to this afternoon. As such, and in line with international requirements, the obligations attach only to the award of, and entry into, contracts; they do not apply to the management stage of a contract.

Information on the management of major contracts will of course be put into the public domain, thanks to the Bill’s considerable transparency obligations. That includes information on key performance indicators, such as performance against them; information on amendments to contracts; and information on contract termination, which will require reporting on performance. The time limit already in the Bill on the duty to maintain records of communications with suppliers is being relocated to sit alongside the new record keeping duty. The record keeping requirement is intended to act as a minimum; contracting authorities may of course keep records for longer, and indeed may be required to do so under other legislation.

Government amendments 24 and 25 change the point at which, under clause 52(1), contracting authorities are required to publish key performance indicators. They will no longer have to do so before entering into a public contract. Instead, there will be a requirement to publish them under proposed new subsection (2A) of clause 52. Clause 53, on contract details notices, provides that the details of KPIs will be specified in regulations under clause 95. That is because it is not possible to publish the KPIs before entering into the public contract, as they arise as part of the process of entering into the contract.

Government amendments 19, 20 and 56 make a necessary technical adjustment to ensure that the City of London Corporation is caught by the Bill in respect of its public sector functions, but not its commercial functions. The Bill is intended to apply to local authorities—clause 2 makes it clear that publicly funded bodies are caught by it—but due to its evolution and structure, the corporation does not operate solely as a local authority. It has significant private sector trading activities—for example, it operates private schools and undertakes property management—that are clearly not intended to be caught by the Bill. Unlike district and county councils, being a local authority is not the corporation’s raison d’être; rather, it has some local authority functions bolted on to its wider organisational functions. Without the amendments to clause 2 and schedule 2, there would be a risk of unintended consequences; the Bill would apply to either all the corporation’s activities, including its commercial activities, or none of them, depending on whether the corporation’s balance of income was derived mainly from its trading activities or from public funds in any one year.

Government amendments 21 to 23 resolve a drafting inconsistency between clause 19, which governs the award of contracts following a competitive procedure, and clause 43, which has rules allowing a contracting authority to switch to direct award if no suitable tender was received in a competition. Under clause 19, a tender may be disregarded in a competition if it breaches a procedural requirement set by the contracting authority—for example, if it is submitted late or is over its word count. Abnormally low tenders can also be disregarded, provided the tenderer has advance notification and the chance to respond, pursuant to subsections (4) and (5).

The changes proposed to clause 43 will ensure that only a material breach of procedural requirements will render a tender unsuitable: for example, being 10 words over the set count should not result in an unsuitable tender permitting direct award. Abnormally low tenders cannot be deemed unsuitable unless the supplier has had an opportunity to demonstrate that it will be able to perform the contract for the price offered, as is required under clause 19.

Moving on to amendment 59, paragraph 2(3) of schedule 10 inserts new section 14(5A) into the Defence Reform Act 2014. The DRA, and the Single Source Contract Regulations 2014 made under it, make provision for the pricing of defence contracts to procure goods, works and services that are not let competitively and meet the necessary criteria, including a financial threshold. New section 14(5A) is being introduced to address uncertainty about when an agreement for new goods, works and services should be regarded as an amendment to an existing contract within the scope of the DRA regime, and when it should be regarded as a new contract in its own right. The proposed new subsection currently addresses the situation by identifying two specific categories of existing contract not subject to the DRA regime that, when amended on a non-competed basis to add further goods, works or services, would become subject to that regime.

A third such category of contract not currently addressed by proposed section 14(5) has subsequently come to light. That category covers a single source contract that was below the financial threshold set by the SSCRs that is subsequently amended to add new goods, works and services that take it above that threshold. Amendment 59 will ensure that such contracts are brought within the regulation-making power. A hypothetical example would be a contract that was let competitively for £6 million a few years ago and was not subject to the regulations, where proposed section 14(5) and section 14(3)(b) —which excludes contracts let through competitions—did not apply, and a single source amendment was subsequently placed a few years later for £10 million of new work. That kind of amendment is referred to in section 14(5), and under the proposed new regulations, it would be treated as a new contract for the purposes of the regulations. Under the current wording of schedule 10, the agreement covering the new work would fall under the regulations.

Amendments 38, 32, 36, 37, 39 to 51, 57 and 58 significantly strengthen the exclusions and debarment provisions for exclusion on national security grounds. As the Bill stands, placing a supplier on the debarment list on national security grounds will make it excludable from all contracts within the scope of the Bill. That means that the supplier will be identified as posing a threat to the national security of the UK, but contracting authorities will have discretion as to whether they exclude the supplier in each particular procurement. Having engaged with colleagues in the House and reflected on their concerns, I can confirm that the Government are content to further strengthen those provisions. The new amendments will enable a Minister of the Crown to take a stronger approach in response to a specific risk profile of a particular supplier and make targeted decisions about whether the debarment should be mandatory for particular types of contracts, depending on the nature of the risk.

[Bob Seely (Isle of Wight) (Con)]

I thank the Minister for the work he has been doing on the Bill, and for listening to colleagues—there is more work to be done, but we are certainly moving in the right direction. There is an issue about dual use stuff: we are talking about national security, but for technology such as cellular modules in Government cars that may or may not be being used by competitor nations to listen in to conversations, it is not just a narrow definition that we should be worried about, but a rather more expansive definition of some of the risks posed by that technology and where it is placed in either very specific national security contexts or, more broadly, among things that are critical to our national infrastructure.

[Alex Burghart]

I thank my hon. Friend for his remarks, and for the constructive dialogue that we have had while preparing for today’s debate. As he hopefully knows from what we have already said on this subject—he will hear it again in what I am about to say—the structure that we are putting in place will be able to make exactly that sort of assessment.

If a supplier poses an unacceptable risk in relation to certain goods, such as network communications equipment, the Minister will be able to enter on the debarment list that that supplier is an excluded supplier for contracts for the supply or support of that type of equipment, but that will not necessarily mean that the supplier will be excluded from all other types of contract. Similarly, the entry may also—or as an alternative—stipulate that the supplier is excluded from contracts relating to certain locations or sites, or contracts let by certain contracting authorities. That removes discretion from contracting authorities regarding exclusions where a supplier poses a threat for particular contracts, thereby reducing the risk of a supplier being allowed to participate in a procurement when they should not be.

By allowing this type of targeted and proportionate approach, we can direct that suppliers must be excluded where the risks are unacceptable, and allow contracting authorities to make appropriate choices where a risk is manageable—for example, if a supplier is providing pencils or plastic furniture. We think that approach to national security exclusions is both proportionate and robust, and will allow us to effectively counter the risk posed by some suppliers, including those that many in this House are concerned about.

13:45

[Damian Green (Ashford) (Con)]

The Minister has said that he wants a proportionate response and I take that point. I also thank him for the talks we have had about this issue, which is the basis of my support for new clause 1. However, one thing he has not yet addressed is the timescale. Clearly, a lot of kit that we would regard as suspicious under the Bill needs to be removed. Can he give some indication of what sort of timescale we will need to remove it?

[Alex Burghart]

I thank my right hon. Friend for the constructive conversations that we have had in getting ready for today’s debate. He is slightly pre-empting some remarks that I will come to later. I hope that he saw the announcement that the Government made the other day. It is in the nature of the work that we are doing that, first, we wish to remove devices and components that pose a security risk to sensitive sites—I will say more about the timescale for that later. Secondly, we intend through the use of the unit and the provisions in the Bill to prevent similar devices and components from entering our sites in future. It is a two-part process: first, get rid of what is already there and, secondly, prevent other such services from coming in in future.

[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

The Minister has mentioned sensitive sites. I do not quite understand what that phrase means—I am hoping that we will get a proper explanation in due course—but what I would observe is that, as far as I can see, every single Government site is by nature and definition sensitive. The Department for Work and Pensions is very sensitive because any disruption of its payments would render the UK in a terrible state. Is it not the case that all Departments of central Government are by nature sensitive sites and, therefore, should take upon themselves the reality that they must all rid themselves of these things?

[Alex Burghart]

My right hon. Friend makes a good point, and I thank him for his constructive engagement with me and the Minister for the Cabinet Office on this issue. We understand and hear his concerns about sensitive and non-sensitive sites—not least, we understand his view that the definition could incorporate a broader range of assets, where information gleaned on the movement of officials and politicians could be detrimental to our national security. We will continue to work on that issue with him, both in today’s debate and in the Lords debate that will follow it. I am sure that we can reach a sensible conclusion that will be to his satisfaction.

[Bob Seely]

If I remember correctly, in January, the security services took apart a UK Government vehicle because data was being transferred via a Chinese cellular module, a Chinese eSIM. We do not know who was in that car—whether it was the Defence Secretary or the Prime Minister. Evidence from a separate Tesla car scandal suggests that it would be possible for Chinese engineers to record private conversations using cellular modules. Just out of curiosity—I suspect I know the answer—are we ever going to get an update on what happened to that car and what was happening with it?

[Alex Burghart]

My hon. Friend will know that I am not in a position to comment on matters of national security, but he will have heard me say in answer to my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) that we understand the view that the definition in the Bill could incorporate a broader range of assets, where information is gleaned on the movement of officials and politicians that could be detrimental to national security.

Amendment 34 will commit a Minister of the Crown to keep suppliers under review for potential investigation for debarment on national security grounds. We recognise that proactive consideration of suppliers will be highly advantageous in minimising the risk of suppliers who pose a threat to our national security being awarded public contracts. The amendment will therefore commit Ministers to proactively consider a new debarment investigation where there is evidence of risk, so that the Government can act effectively and on time.

I am also pleased to announce that the Government will be creating a new specialist unit with dedicated resources within the Cabinet Office to take on and manage this new approach. That new national security unit for procurement will regularly monitor Government supply chains and review pertinent information to determine which suppliers should be investigated for debarment on national security grounds. The unit will be able to draw on the full range of expertise within government and access the latest intelligence, including that from Five Eyes partners. It will be able to respond swiftly to emerging threats. The unit will also carry out investigations of suppliers for potential debarment, which will be overseen by a committee. Following the outcome of an investigation, the committee will make recommendations to the Minister as to whether the supplier should be added to the debarment list. The final decision will be made by the Minister.

[Anthony Mangnall (Totnes) (Con)]

The Minister is making an excellent speech and I agree with the broad thrust of everything he is saying, but in terms of the practical application—how we debar businesses and organisations bidding in through a procurement process—can he just tell us how long an investigation would take? I realise it would be a case-by-case process, but if a procurement tender is put out, and a business or entity bids into it, how long would it expect that investigation to go on before that business or entity is debarred or not?

[Alex Burghart]

My hon. Friend will know that is a length of a piece of string question. In setting up the unit and providing it with resource, we are mindful of the need for it to be able to respond swiftly to emerging threats and to new entities. The unit will not serve its purpose if investigations go on too long. I cannot give him any guarantees on maximum length of time for investigation, but I can assure him that those concerns are very much in our thoughts as we go about establishing this new way of working.

The new unit will also have a role in supporting and upskilling contracting authorities. By directly engaging with them and providing guidance, the unit will help contracting authorities confidently implement the national security exclusion and debarment regime correctly, maximising its effectiveness.

Amendments 26, 27, 29, 30, 31, 33, 35, 38, 53, 54 and 55 are minor and technical amendments to ensure that the exclusions and debarment regimes can function effectively.

I take this opportunity to thank all colleagues who have engaged with us on this, including my hon. Friend the Member for Rutland and Melton (Alicia Kearns), who is not in her place today. She has been instrumental in helping us to formulate these ideas in regard to national security and in particular our commitment to the national security unit for procurement.

The Government are taking national security extremely seriously, as the Bill and the amendments just mentioned make clear. Concerns have been expressed in the House regarding the use of surveillance equipment provided by entities subject to the national intelligence law of the People’s Republic of China, the risks of which we fully understand. I take this opportunity to remind the House that, in November, the Government published a written ministerial statement asking Departments to consider the removal of visual surveillance equipment from Government sensitive sites and to cease any future procurement of such equipment.

Today, we are going further. I commit to this House that, within six months of the Bill’s Royal Assent, the Government will set out the timeline for the removal of surveillance equipment supplied by companies subject to the national intelligence law of China from sensitive sites. I make it clear that we are taking firm and decisive action on this important matter and that we will be held to account for that action. That is why we will provide a clear plan for delivering on it, adhering to the timeline requested by my right hon. Friend the Member for Chingford and Woodford Green. I hope that addresses his and other Members’ wishes that the Government take appropriate action.

If I may, I will address two final points. First, I thank each of the devolved Administrations for their constructive engagement during the drafting and passage of the Bill. I am pleased that the Senedd and the Scottish Parliament have agreed to the procurement aspects of the Bill, which are the vast majority of the clauses. However, despite our best efforts and several amendments, we have been unable to secure full legislative consent motions for the concurrent powers in the Bill relating to the implementation of international obligations. That is disappointing, but not unexpected, given that it is consistent with the position taken by the Scottish and Welsh Governments on the recent Trade (Australia and New Zealand) Act 2023.

I reassure the House that, as with current practice, we will continue to engage and consult with the devolved Administrations if they choose not to legislate for themselves in implementing the UK’s international obligations, in so far as they relate to areas of devolved competence. In the absence of a Northern Ireland Executive, a legislative consent motion for Northern Ireland was not possible. However, the permanent secretary for the Northern Ireland Department of Finance has written to the permanent secretary of the Cabinet Office to welcome the Bill as drafted and the close working relationship that has developed between officials.

Secondly, I take the opportunity to clarify the rules for private utilities where they have been directly awarded rights, for example, through a directly awarded contract at the request of the Department for Transport. Private utilities are within the scope of the Bill only where they have been granted a special or exclusive right to carry out a utility activity, effectively creating a monopoly situation. Clause 6(4) clarifies that the right is not special or exclusive where the right is granted following a competitive tendering procedure under the Bill or otherwise on the basis of a transparent procedure and non-discriminatory criteria. That has the effect, for example, that, if a contract for a utility activity with an incumbent supplier is renewed or replaced without competition, the supplier will have been granted a special or exclusive right. The supplier would therefore be classed as a private utility under the Bill. An example would be where an incumbent train operating company awarded a contract following competition has been directly awarded a new contract under DFT legislation.

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

Three years ago, in the aftermath of the covid-19 pandemic, vital frontline staff across our NHS were struggling against dangerously low stocks of personal protective equipment. We all heard the stories of frontline workers in the early stages of the pandemic. These stories show us the impact of not procuring adequate reserves for a pandemic such as covid-19, and they show us why we need the right culture to rapidly respond to emergency procurement demands whenever they may show. Sadly, what we saw during the pandemic did not live up to standards. What followed, with the horror stories of frontline workers in the early stages of 2020, was a case study in wasteful and inefficient emergency procurement.

In January, the National Audit Office found that nearly £15 billion was wasted on unused covid supplies. That is £15 billion that could be going towards tens of thousands of full-time nursery places. It is £15 billion that could be going towards clearing the backlog in our NHS. It is £15 billion that could hand every single person in this country £220 and still have change left over. Instead, the incompetence we saw from this Government cost this country a fortune. In fact, the Government’s record keeping was so flawed that the Public Accounts Committee’s July 2022 report on the awarding of contracts to Randox during the pandemic stated it was

“impossible to have confidence that all its contracts with Randox were awarded properly.”

It is not just incompetence that costs the country. During the pandemic, the Government created a VIP lane for those offering to provide PPE. The system was extremely useful for some suppliers, with the Public Accounts Committee finding that one in 10 suppliers coming through the high-priority lane were awarded a contract. That compares with just one in 100 for the ordinary lane. The Cabinet Office and the Department of Health and Social Care also accepted that leads that went through the high-priority lane were handled better. Who was in that lane?

In the Public Account Committee’s report on PPE procurement, it stated

“The British Medical Association and the Royal College of Nursing told us that their organisations did not have access to the high-priority lane, even though they were being contacted by, and therefore would have been able to put forward, credible leads based on the knowledge of their members. The British Medical Association also noted that suppliers which had contacted them, including suppliers trusted by doctors, tried the normal channels of reaching out to the Government but had ‘hit a brick wall’. Care England told us that it had similarly shared the details of potential suppliers but there had been no follow-through.”

Instead, those with contacts with Government Ministers and officials, MPs and Members of the House of Lords were given access to this VIP lane. That included PPE Medpro, a company set up only a few days before but—surprise, surprise—with links to a Tory politician, which was awarded more than £200 million of public money. In total, £3.4 billion of taxpayers’ money in the form of contracts went to Conservative donors and friends. At a time when we were asking people up and down the country to come outside and clap, the Tory Government were giving cash to their donors. The Bill must be used to ensure that that never happens again.

14:00

Use of the VIP lane was unlawful, as a High Court judge ruled last January. Although the increased transparency in clauses 44 and 81 to 83 is welcome, it is not enough to shine a proper light on the practices that occurred. Under our amendment 2, which is based on a proposal by the independent National Audit Office, any Minister, peer or senior civil servant involved in recommending a supplier for a public contract, under clauses 41 or 43, would be mandated to make a public declaration to the Cabinet Office of any private interest. That would go further than the provisions in the Bill by opening to public scrutiny information that relates to a supplier who is recommended for a direct contract. I pay tribute to the hon. Member for Richmond Park (Sarah Olney) for her amendment 1, which clarifies the point of law.

Without proper transparency, breaches of procurement practices can take years to come to light. Meanwhile, huge amounts of public money can be wasted, and companies that lack such connections, including small and medium-sized enterprises, which already face a struggle to get contracts under the current system, can be sidelined. SMEs are often close to the heart of the communities they offer services to, and proactive procurement policy can help them grow. These contracts can boost the social impact of how we spend public money across the board. The Opposition welcome the amendments made to the Bill so far to improve the situation for SMEs, but we worry that the Government are not matching them with action.

According to research from the British Chambers of Commerce—the Minister knows that I have cited these figures before—in 2016, 25% of public sector procurement spending was awarded directly to SMEs. By 2021, that had dropped to 21%. Neither of those figures suggests a healthy procurement environment for SMEs, but it is shocking that SMEs have faced more difficulty in getting a fair share of public contracts in the past five years, despite the strong rhetoric from the Government. One important barrier for SMEs is the constant delay they face in getting access to the money they are owed within an appropriate timeframe. For SMEs that see a significant amount of money coming in via a single contract or a small pool of contracts, such delays can be devastating to the balance sheet. They can lead to missed payments, job losses and even closures of our valuable SMEs.

[Danny Kruger (Devizes) (Con)]

I applaud what the hon. Member is saying about SMEs. She is absolutely right that it is important that we support the small business sector. However, she has tabled amendments that would favour the insourcing of public services. She seems to think that we should require the public sector to deliver public contracts, rather than SMEs. Which is it?

[Florence Eshalomi]

The hon. Member is absolutely right: those SMEs will work with local councils in a local area, and they know the local area. In some cases the contracts that are outsourced are not value for money. This is about ensuring that, in public contracts, public money is spent in the right way. If we are to lower the risks faced by SMEs seeking to enter the supply chain, it is vital that the measures in the Bill have an impact.

[Sir Iain Duncan Smith]

One of the biggest problems during the pandemic, which came out of China and became a global pandemic, was the question of everybody scraping around trying to find PPE, most of which was manufactured in China. Is it therefore part of the hon. Lady’s argument that we should have strategic manufacturing of PPE—either here or certainly in democracies that we can trust—to which we get earlier access, or will we just leave it to be produced somewhere else?

[Florence Eshalomi]

I agree with some of the amendments the right hon. Member has tabled on the issue of China and national security. Throughout the Committee stage, we argued consistently for removing risks from countries with a high national security risk, but we have concerns about the approach of naming specific countries in the Bill. It is important that we work with the whole House to get the right framework. I urge the Minister to consider our amendment 17, which is a careful mechanism for assessing the impact of the new rules that he is championing.

Throughout the passage of the Bill, national security has been an issues of extreme interest to the House. On Second Reading, we heard a tour de force from the Chair of the Foreign Affairs Committee, the hon. Member for Rutland and Melton (Alicia Kearns), on national security. In Committee, I raised multiple concerns with the Minister about the place of national security as a discretionary exclusion ground and its role in the debarment system. I am pleased that the Minister was listening to all those points, and we welcome amendment 57 and similar Government amendments, which we believe will address many of the concerns raised in Committee. I welcome the amendments originally tabled by the hon. Member for Rutland and Melton, which will establish a list of high-risk suppliers as part of the Bill. Our amendment 15 would exclude suppliers identified as a security threat from public contracts. Although that offers some benefits over alternative proposals, there is a balance, so we are not minded to press amendment 15 to a Division.

Procurement practices affect not only our services, but the many workers who rely on procurement-related roles for their jobs and livelihoods. Public money, and the jobs that will create, should not be given to those who treat their workers unfairly. Our amendment 18 would give contracting authorities the power to exclude suppliers that have significantly and repeatedly breached the rights of their staff. It would affect only those who have not taken self-cleansing measures to correct their conduct and the causes of breaches. The amendment would ensure that authorities have the right to turn away the worst offenders on workers’ rights, and would ensure that publicly funded jobs are protected jobs.

It can only be right that those seeking public contracts in the UK are transparent about where they pay their tax. The public would not expect their hard-earned money to go to those seeking not to pay into the system themselves, but a study from the Fair Tax Foundation found that, between 2014 and 2019, one in six public contracts were won by companies with links to tax havens. Our new clause 10 would mean that multinational companies bidding for large public contracts need to provide information about their tax arrangements in the UK. That would be open to the public and create greater transparency on how public money is spent. Amendment 16 would create a discretionary exclusion ground for suppliers that have violated UK sanctions or export controls, ensuring that authorities have the power to exclude from the procurement system those who continue to profit off businesses in places such as Russia. New clause 11 would require authorities to undertake a public interest test whenever deciding to outsource public services, to ensure that it truly offers value for money. Finally, new clause 14 would allow public authorities to choose not to buy goods or services from countries on the basis of their human rights records. That would give authorities the power to set clear policies, not to hand public funds to those committing atrocities around the world.

I pay tribute to members of the Committee for their engagement on this very long Bill. We have definitely shone a light on it, and had many discussions about paperclips. In particular, I thank my hon. Friends the Members for Birkenhead (Mick Whitley) and for Brighton, Kemptown (Lloyd Russell-Moyle), who embellished the Committee with a wealth of examples of procurement practices from their constituencies. I hope the Minister will listen to us on why additional amendments are important to strengthen the Procurement Bill in the interests of all taxpayers across the country, and I look forward to hearing from other Members.

[Sir Iain Duncan Smith]

I rise to speak to the amendment in my name and those of 26 others in the House of all parties.

The real issue here is the existence of a specific law in China that makes pretty much all companies in China, but particularly those involved in technology, a public risk in procurement to the United Kingdom. Article 7 of the People’s Republic of China national intelligence law 2017 states:

“Any organisation and citizen shall, in accordance with the law, support, provide assistance, and cooperate in national intelligence work, and guard the secrecy of any national intelligence work that they are aware of.”

In other words, under the Chinese national intelligence law, they must completely comply with all demands and requests for information in the business they are in, and deny they have done that to any other country or authority that asks. We have had Chinese companies coming to the House and lying to Select Committees about what they are doing, all saying that they have no obligations under the national intelligence law. They do have obligations under that law and they will lie for their country as a result.

We need to start by understanding the problems, and I thank my hon. and right hon. Friends on the Front Bench for having listened to the arguments and changed the terms, first by referencing the national intelligence law, which is very important, because many Departments will play fast and loose unless what they must do is made very clear. We have been encouraging the Government, who came out with views on Hikvision, Dahua and other companies supplying surveillance equipment to the UK, knowing that they are a surveillance risk not because they are cameras in a particular fashion but because what they glean is available completely to the Chinese authorities under the national security laws.

We have heard from my hon. Friend the Member for Isle of Wight (Bob Seely) about the small devices—a growing threat that I have not referenced but which also gets caught by the national intelligence law. China is leading in this technology, which is one way in which it can keep track of its own people, but they are now using it more broadly. I had a suspicion and heard that the cars that my hon. Friend was referencing were Downing Street cars. There is a very good chance that the Prime Minister and others may have been tracked by the Chinese Government without our knowledge.

We must therefore remember that first and foremost China poses a significant threat to us, our interests and the way we live our lives. Until we all agree and come to those terms, we simply cannot move on; that is the key. Government Departments and the Government have dragged their feet over this because we do not want to upset the Chinese—but it takes a lot to upset the Chinese because they carry on as before. The amendment is intended to get the Government to accept that we should reference the national intelligence law because that defines all Chinese business and companies and therefore they are a threat.

There are other Chinese companies that are a problem that will not be named, and surveillance cameras are part of this. I must confess that when my brother-in-law went around an area of a farm looking at the surveillance cameras, he spotted that they were Hikvision cameras—they are not listed in the contract because the contract provider is a UK organisation, but we discovered that they are everywhere.

Once I heard the news that the Government clearly wanted Departments to get rid of those cameras, I made a set of freedom of information requests to all Departments about whether they had cameras, where they were, whether they were on their buildings, and what plans they had to get rid of them, having spotted that a lot of Departments still had them, including the Ministry of Defence. All Departments—bar I think the Wales Office, which came clean and said it did not have any or was getting rid of them—claimed that, under section 24 of the Freedom of Information Act 2000, they did not have to answer because it was a security risk. The security risk is having the cameras, not answering the damned question! Excuse my language, Mr Deputy Speaker. It is all about where the cameras are and what they are doing, and that is the point of the amendment.

I hope that Ministers will take this matter forward and tell Departments to stop obfuscating. If they are asked a direct question they should tell the honest truth and explain that under the new rules under the Bill they will be getting rid of those cameras, which is absolutely critical.

[Kirsty Blackman (Aberdeen North) (SNP)]

The right hon. Gentleman makes an excellent point on national security, particularly the risk posed by this equipment. I credit him and others across the House who have worked to encourage the Government to move on this matter. As well as the national security issue, does he share my concern that companies such as Hikvision are involved in human rights abuses in China, for example with the Uyghur Muslims?

14:15

[Sir Iain Duncan Smith]

I did not send the hon. Lady a copy of my speech but I am glad she has jumped into this because I want to move on to that point now.

Finishing on the point I have been making, however, it is good that the Government are moving on this, but I do not think they have moved enough because I am very worried about the word “sensitive”, which the Minister is talking about. I will come back to that, but this move will begin to bring us into line with the United States, who moved on this under their Hikvision Act, which banned it back in 2019. It is worth reminding colleagues, too, that the European Union is also ahead of us on this now, because the President has said that they must do some “de-risking” on the issue of threats from China. So we are coming back into line on doing that and the west is waking up to this threat.

It is not just about all the threats that are clear under the obligations and the data China collects—it data-harvests, by the way. When the Government said that they were banning TikTok from Government telephones, I made the observation that that is not enough because people might still have TikTok on their own phones. Having run a Department for six years, I know that Ministers’ telephones sit on their desks next to their Government telephones, and therefore the Chinese will be data-harvesting on the back of that. One of my Government colleagues said that he wants to get in touch with the younger people; fat chance they are going to listen to a word they are saying. The truth is he should get rid of TikTok like the rest and be real about it. We must now make it clear that Government telephones and the telephones of Ministers should no longer have TikTok.

[Damian Green]

I am glad that my right hon. Friend has moved this amendment, which as he knows I strongly support. To return to my point about timescale, security cameras are normally replaced every five to seven years. Does he think we have five to seven years in which we can leave these cameras in place in public sector buildings, or would he like their removal to be accelerated?

[Sir Iain Duncan Smith]

The Cabinet Office must now decide the pace of this change. I hear that it is talking about six months and will come forward with a clear and explicit decision. In line with what my right hon. Friend has just said, it ought to explain the timescales for how Departments are going to take them away and how quickly, and an endpoint. That is critical, because otherwise, as I saw with the FOIs, Government Departments will do whatever they can not to do this because they are frightened and they say it will cost them extra. What really costs us is if they fail to do it.

[John McDonnell (Hayes and Harlington) (Lab)]

On telecoms, not TikTok in this instance. According to reports last week, the UK telecoms arm of CK Hutchison, 3 mobile, is merging with Vodafone. Vodafone is extensively involved in Government contracts and evidence by Unite the union published this week is basically saying that CK directors supported the suppression of democracy in Hong Kong. In fact, the chair of the company, Victor Li Tzar-kuoi, is adviser to the Hong Kong Chief Executive. The right hon. Gentleman knows that John Lee, the Chief Executive, has been involved in the suppression of protests and in the arrest of trade union colleagues of mine, members of Unite. Does he share my concern that people linked to this company now are going to have access to Government contracts in the UK?

[Sir Iain Duncan Smith]

That is not the subject of the amendment but I will touch on it briefly. I have already spoken to the unions on this and I am very much in line with their position. The Government need to look very carefully at what has taken place, particularly because it reduces competition in the market. The links to the authoritarianism of the Chinese is one of the big worries, so I suggest that the Government have a serious look at that.

Returning to the point made by the hon. Member for Aberdeen North (Kirsty Blackman), these cameras are also being used in internal suppression in China. We know about the suppression of the Uyghurs; that is a genocide that is taking place. Even though the Government will not say it is genocide, everybody else believes it is: Parliament here has said it; the Americans have now said it; and so, too, have many other countries. I do not know why we cannot say this is genocide, but that is a question for another debate. The fact is that many of these instruments are being used as part of that suppression in the camps as well as to watch carefully so that suppression can take place. Right now, forced labour, forced sterilisation and re-education in camps are all taking place in China.

The hon. Member for Vauxhall (Florence Eshalomi) referred from the Dispatch Box to the Opposition’s amendments. It is worth reminding her that China poses a risk in just about every single area with its human rights abuses and abuses of workers’ rights, yet so many of our companies want to ignore that.

While I welcome much of what the Government have done, I do not plan to move new clause 1 today, but only because I want more from the Government. I think they understand that.

I come back to the “sensitive” point. The truth is that, by definition, all Government Departments must be sensitive. As I said, I spent six years in charge of the DWP, and what I know is that there is arguably no more sensitive Department, because stopping payments for one or two days from the DWP would wreak havoc across the United Kingdom. People would not be able to get money to pay their rent, to buy their food or to live—all those things of vital importance. So a foreign power might be able to use information to target a Department such as the DWP that is not on the list because it may not appear as sensitive as the Ministry of Defence, GCHQ or—God bless us—the Foreign Office, when in reality, it is much more sensitive.

When we try to use a word like “sensitive” to give ourselves a little bit of a break, the problem becomes: who defines sensitive, and how often we will redefine it? I recommend that the Government describe all Departments as sensitive or else get rid of the word. That would put the onus on the Departments to come to the Cabinet Office to say, “We need an exemption for a period” or, “We can’t do this as fast.” The current wording means that they will not have to do that if they are outwith the term “sensitive.”

The reality is that we have had a number of Dispatch Box commitments from a load of Government Ministers about interpreting these things, but they never come to fruition. We were promised guidance in the other place on slavery during the passage of the Nationality and Borders Bill, but that was never put in. We really want the Government to commit at the Dispatch Box to changing what they are doing with “sensitive” when the Bill goes to the other place. “Sensitive” is too weak a position. It lets Departments off the hook and will put all the onus on the Cabinet Office. That must be reversed to ensure that this removal gets done.

[Kirsty Blackman]

I really appreciate the right hon. Member giving way again. Would he consider asking the Government for removal from all sites and, when they produce their timeline, to have them say, “These are our priority sites, which will be done first, but there will be removal from all sites off the back of that”? That would cover removal from all sites but allow the Government to prioritise if they cannot do things overnight.

[Sir Iain Duncan Smith]

I agree that that would be the common-sense way of doing it; I think we are all on the same page on this one.

The thing about our new clause is that, without the word “sensitive”, the position is simple. The new clause uses the same language as the Cabinet Office’s announcement in November, which recommended the removal of Chinese CCTV from sensitive sites. Now, that was the wording. Okay. But when we ask, “What has happened? How many Departments have felt under pressure to do that?”, we start to discover that they are not doing it because it is too difficult, and they want the requirement to go away. My answer is: do not use the word “sensitive” in that respect. It is about national security law, and Government Departments must either be completely defined as “sensitive”—if we want to use that word—or be bound to rid themselves of all companies obligated under the national security law. If they are unable to do that, they must make their case so that we can question that publicly and comment about what is going on.

I conclude on this simple point. The new clause is there to try to make it clear that we face a most significant and dangerous threat from the Chinese Communist party in control of China today. It is everywhere. It is using slave labour to produce polysilicon to collect solar rays. We all beat our chests proudly and proclaim that we are heading towards net zero, but on whose backs is that? It is people working in slave labour conditions to produce these things, people under surveillance, and people taken away on genocides. A Government already doing this internally are now referring it out to us. We must make it clear beyond peradventure that Government Departments must now rid themselves of equipment and never place contracts with other companies on equipment that comes under the rule of the national security law. I am looking for commitments from the Government today that, by the time the Bill gets to the other place, that will finally be resolved. If so, they will have my approval and that of many others in the Chamber.

[Apsana Begum (Poplar and Limehouse) (Lab)]

I rise to speak in favour of a number of new clauses and amendments to improve transparency and accountability regarding public procurement and providing value for money for the taxpayer, including those tabled by Labour Front-Bench Members. The House will be aware that trade unions and others have long raised concerns that existing procurement policy pushes public authorities to privatise and marketise public services, including through private finance initiative contracts, which allow private consortiums to make high profits out of public assets—often far above the true value of the asset.

A particularly controversial element of procurement policy has been the use of private finance initiative regimes in NHS contracts. The evidence is clear that many of them have left NHS trusts heavily in debt owing to the need to repay private companies for capital assets, with high repayments meaning that some NHS trusts pay 12 times the initial sum borrowed, giving some investors profits of 40% to 70% in annual returns. Indeed, the poor performance of many of the private outsourcing and consulting companies brought in at significant cost to the taxpayer to provide parts of the covid-19 response stood in stark contrast to the consistently proven effectiveness of our publicly run NHS, for example, but that did not stop more and more contracts being awarded to those seeking to make money off the back of our country’s worst health crisis. Amendment 2, which would prevent VIP lanes by ensuring that any contract awarded under emergency provisions or direct awards should include transparency declarations, is therefore critical.

[Tim Loughton (East Worthing and Shoreham) (Con)]

The hon. Lady has just described PFI contracts in harsh terms, and she is now going on to procurement. Will she explain why the vast majority of those PFI contracts for hospitals, medical facilities and schools were awarded under the last Labour Government?

[Apsana Begum]

The problem has existed through successive Governments. However, I recognise it through my NHS trust, which is still paying sums that are much higher than the true value of the assets. It has been a problem under successive Governments, and the Tory Government have had years to sort it out if they had wanted to do so.

The Bill does not exclude private companies from getting contracts even where they are failing to abide by international labour law and other environmental standards. I therefore support amendment 4, which would ensure that no public contract would be let unless the supplier guaranteed payment of the real living wage, as calculated and overseen by the Living Wage Commission, to all employees, contracted staff and subcontractors. That is critical because about 4.8 million workers across the country are paid less than the real living wage.

There are a number of amendments and new clauses relating to national security. Indeed, we have heard a lot about national security in the debate. I want to mention briefly the victims of the brutal repression in Hong Kong, some of whose architects may shortly become suppliers to the Government, as mentioned by my right hon. Friend the Member for Hayes and Harlington (John McDonnell). Recent years have seen curbs on the work of trade unions, the jailing of protestors and arrests of independent media outlets. The Hong Kong Confederation of Trade Unions was persecuted until it was dissolved. Many of its affiliates had been involved in industrial action, including a successful 2013 dock strike for pay and conditions at Hongkong International Terminals, owned by the Hong Kong-based CK Group.

Hon. Members may wonder what relevance this has to a debate about Government procurement in this country, The Minister will no doubt be aware that Vodafone is a so-called strategic supplier to the Government and an approved supplier on two framework agreements, providing a range of telecoms services, including mobile voice and data services. As such, Vodafone has an official Crown representative, appointed by the Cabinet Office, who liaises with it on behalf of the Government.

14:44

Members will have heard about the forthcoming merger between Vodafone, which is a Government supplier, and Three, which is not—or at least, not yet. When the two companies merge, as they announced they plan to do, the owners of Three, the Hong Kong-based CK Hutchison Holdings, will automatically become suppliers of communication services to this country’s Government.

Myriad evidence uncovered by Unite the union shows that that firm’s directors supported the repression of democracy in Hong Kong. The chair of CK Hutchison Holdings, Victor Li, is an advisor to Hong Kong’s Chief Executive, John Lee, who brutally stamped down on pro-democracy protests and implemented the city’s oppressive national security law. Victor Li supported John Lee’s appointment as a suitable choice, saying

“a city can only prosper when it is stable”,

and Victor is reportedly one of 34 members of the Chief Executive’s Council of Advisers. He supported Hong Kong’s new security law, saying it would

“stabilize Hong Kong and help its society and economy return to normal”.

His father is Li Ka-shing, the founder and largest shareholder of the multinational firm, which owns businesses across the world, including Three and Hongkong International Terminals.

Unless the Government act, supporters and promoters of brutal repression in Hong Kong will shortly become suppliers to our Government. There is no excuse for the Government not to be aware of these connections. The question, really, is whether they care.

I conclude with a final question to the Minister: can he assure the House that companies owned by individuals linked to repression, detention and extreme human rights abuses will not be given access to Government contracts?

[Bob Seely]

It is a pleasure to follow the hon. Member for Poplar and Limehouse (Apsana Begum), and I think that some of the things she said will be echoed on the Government Benches.

I want to speak, in the time I have, to new clauses 1, 13 and 16, and I will try to theme them. Before I do so, I want to thank the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Brentwood and Ongar (Alex Burghart), for his excellent work on the Bill. People moan about Parliament, but we have a Government bringing forward this legislation and Back-Bench MPs from across the House trying to shape it for the betterment of the nation. There is a lot of good in the Bill and I thank the Minister for listening, as he has clearly and obviously done.

I want to talk about the strategic, political and human rights ramifications of supply chain dependency. I thank the Government for their excellent work and the fact that they are moving on this. We will have a national procurement centre, which will look at high-risk firms not only from China but potentially elsewhere. I congratulate my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) and my hon. Friend the Member for Rutland and Melton (Alicia Kearns) on their really good work on this.

However, my criticism is that while the Bill is a start, the new clauses that I am speaking to would allow us to go further, and I want to explain why that is. We urgently need to understand the UK’s economic dependence on systemic threats or competitors—namely China, but not only China—and the political, economic and ethical ramifications and risks of that dependency. Not to do so is to betray our national interests. I am concerned at the lack of urgency on this issue, which has become significantly more pressing in the last five years. I thank the Government for focusing more on it, but more needs to be done. I think we are at the starting gate. The reality is that we have high levels of dependency and they are increasing, not decreasing.

Here are some facts. First, as an act of state policy, China is aiming to become less dependent on others, while encouraging others to be more dependent on it. It is decoupling from us, but making sure that we are coupled to it. The Made in China 2025 plan had the goal of raising the domestic content of China’s core components and materials to 70% by 2025. In 2020, it set a goal to become largely self-sufficient in technology by 2035. At the same time, the belt and road initiative means that China is now the largest lender to developing countries and is effectively encouraging debt dependency, which we have talked about in the past. President Xi, at the seventh session of the Chinese Communist party’s finance and economy committee, said that China must develop “killer technologies” to strengthen the

“global supply chain’s dependence on China”.

So this is not a case of, “Gosh, is this happening?” It is stated policy. We do not need to debate whether it is happening; we are being told by the leader of the Chinese state and the Chinese Communist party that it is.

China is already the largest importer to the UK and many other countries. We import more than 50% of our supplies from China in 229 categories of goods. Some 57 of those categories are in sectors critical to the UK’s national security. I therefore agree entirely with what my right hon. Friend the Member for Chingford and Woodford Green was saying only a few minutes ago. It is difficult to say what is strategic and what is not. In the US, it might be agricultural production. Here it might be the details of 20 million people on the DWP’s databanks. The 57 categories of goods cover communications, energy, healthcare, transport, critical manufacturing, emergency services, agriculture, Government facilities and information technology.

I do not care that we are 85% dependent on China for plastic Christmas trees—although, I do worry about the environmental impact—but I do care that we are 96% dependent on China for phenylacetic acid, which is a basic building block for many drugs; 83% dependent for TV receivers and decoders; and 68% dependent for laptops. China controls near 90% of rare earth processing, which we are now beginning to worry about. And the point about solar panels was well made.

I asked the Foreign Secretary yesterday about having an annual statement on dependency, not just on China but on states in general. He said that one was not needed. With great respect to the Foreign Secretary, I profoundly disagree. We argued during the passage of the National Security and Investment Act 2021 that we need an annual statement of dependency. New clause 13 is about establishing an understanding of the nature of our extreme dependency. I did a report with the Henry Jackson Society a couple of years ago. We found that although we are the least dependent of all the Five Eyes nations, we still have a critical dependency on China in 230 areas of our industry, manufacturing, information technology and so on.

[Sir Iain Duncan Smith]

Just to add to my hon. Friend’s list, as we move to electric vehicles we are about to make ourselves even more dependent. Even battery factories in China are turning themselves into car factories selling to the UK.

[Bob Seely]

I agree completely and I thank my right hon. Friend for that point. I would not even like that dependency on our allies. Would I like that level of dependency on the United States? No. On Australia? No. But to have that level of dependency on a Communist dictatorship that is investing massively in AI and big data to spy on their own people and increasingly on us as never before, to threaten peace in the Pacific, and to have a stated aim of dominating while freeing itself from dependency on the west, is really an extraordinarily dangerous position for us to find ourselves in.

We know that Chinese Communist party companies such as Huawei actively seek to gain a monopoly position by systematically destroying economic rivals. That is not fair trade; it is trade as a weapon for a Communist party dictatorship. It did it with Huawei, undercutting and deliberately destroying rivals on price through cheap subsidies. It is now doing the same with cellular modules, seeking to dominate and take control of the market. It does that through IP theft, economic espionage, subsidy, access to super-cheap finance, shared technology and other forms of state support.

Companies such as Quectel and Fibocom—the manufacturers of cellular modules—will, like Huawei, claim to be private. They are not. Nothing is private, as my right hon. Friend the Member for Chingford and Woodford Green said, in a Communist state. It was profoundly depressing for me, a couple of years ago, to hear two former senior Conservative Ministers, who should know better, say that Huawei was a private company. That is a rather more serious way of accidentally misleading the House than whether somebody ate cake or not, but that is another matter.

What are the dangers? We know that the Chinese leadership see themselves as being in competition with the west. Why? Because they tell us. A 2013 “Document No. 9” concludes that western constitutional democracy and universal values were a fundamental threat to the PRC. Of course our values are a threat to dictatorships. Our values are always a threat to communists. Earlier this year, a work report delivered to the National People’s Congress set out the belief that

“external attempts to supress and contain China are escalating”,

and the term “self-reliance” appeared multiple times. Again, the idea is to create dependency on China for us, while at the same time freeing China from dependency.

What is the worst-case scenario? Frankly, it has happened in Russia, so we should at least be alive to the idea that the worst-case scenario may be happening in the Pacific.

President Xi has told his army to be ready to re-take Taiwan by 2027. As I said, let us please stop pretending that dictators do not mean what they say, because they have a depressing habit of meaning what they say. I wish they did not; I wish they would overpromise and underdeliver, but they tend to do what they promise.

Either the UK is militarily involved or it is not. Either way, an assault on Taiwan, either by slow strangulation—a sort of Berlin scenario—or direct invasion, would profoundly alter the state of the world. We would have to put on the mother of all sanctions. The minute we do that, we will risk not only a global economic meltdown, but an economic meltdown probably worse than covid. It will strain to breaking point our relationship with the United States, the European Union and Australia—and not just our relationship but the interdependent relationships.

I am not saying that will happen—although, I think we are heading in that direction—or that we should stop trading with China; I am saying that it makes a great deal of common sense, frankly, to know what our levels of dependency are. That is why I would love the Minister to commit to at least developing an understanding of what our trade dependency is.

There is another reason to be concerned about supply chains: what is happening in the Xinjiang Uyghur autonomous region, which other Members have rightly mentioned. A 2022 UN report found serious human rights violations in the region. They seem to be about the most significant human rights abuses currently happening in the world, whether we use the “G” word or not—genocide. The Xinjiang Production and Construction Corps alone produces 8% of the world’s cotton. China overall produces 20% of the world’s supply of cotton. Effectively, this is a new slave trade in cotton, as shocking as that sounds. It is not happening 200 hundred years, in the 19th century, in the southern United States; it is happening now, in the early 21st century, in Chinese-controlled central Asia.

There are many other things coming out of the Xinjiang province that tell the story of using forced labour, as both Opposition and Government Members have eloquently spoken about. There is forensic technology available, which we could be using in this country, that can pinpoint the region of origin for items tainted by modern slavery, such as cotton. When it comes to new clause 60, on eradicating slavery and human trafficking in supply chains, I ask the Government to set an example by saying that we will, at the very least, commit—a good Government word—to bringing in that forensic technology within a period of time. That would enable us to understand whether western companies are using slave cotton—an incredibly horrible phrase to use in this age—in their manufactured goods.

Finally, we have spoken about Chinese surveillance technology, and I speak again in support of new clause 1. We have got to get this stuff out of the country for a start. As my right hon. Friend the Member for Chingford and Woodford Green says, with all the dual-use capabilities and new styles of conflict, not just in conventional military but in data domination, it is really difficult nowadays to say where security starts and finishes.

In summation, we need to understand, as a critical matter of national importance, our supply chain dependency on any country, but specifically China. I implore the Government to use the Bill, even at this late stage, to bring in a statement of dependency so that we can begin to understand and to take measures to work out not how to stop trading with China, but how to trade more safely. That way, if we need to take sanctions in future, and for the health of our relationship with that superpower, we can begin to work out how to diversify our supply chains in future and, at the same time, do something about the horrors happening in Xinjiang.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I rise to speak to my new clause 12 on the protection of subcontractors’ payments under construction contracts. As the explanatory statement describes, the new clause

“ring-fences moneys due to subcontractors in construction supply chains through mandating the use of project bank accounts and ensuring that retention moneys are safeguarded in a separate and independent account.”

14:44

Some Members will recall the collapse of the construction firm Carillion back in 2018. A local joinery business in my constituency lost £176,000 in the process. That is a lot of money for a small business. The owner Neil Skinner had been owed money by Carillion, but he said at the time that Carillion often “went over sixty days” before paying him, and that

“after a lot of chasing, and once the job for a particular customer was finished our sanction, to stop working, was gone and their payments just stopped… They resorted to using all the familiar late payment tactics from finding fault with an invoice, referring us to their…accounts office, statement queries, disputed invoices paid, and so on. Then, lastly, they imposed a 15% non-negotiable discount on our work or they would send all unpaid invoices back to their quantity surveyor’s...department. We reluctantly signed this contract and then they went ‘bump’ the Monday after signing and 10 days before the first…payment was due.

As a result of Carillion's late payment tactics small enterprises like mine have been suffering greatly, if not terminally.”

Some 30,000 small business contractors working in Carillion’s supply chains were affected, losing an average of £141,000. A total of £2 billion was owed by Carillion to its suppliers. The vast majority of the suppliers never received any recompense whatsoever. It has been estimated that 780 small building firms went into insolvency in the first quarter of 2018 as a direct result of Carillion’s collapse. There was a 20% increase in insolvencies on the previous year.

According to accountancy firm Mazars, 4,135 construction businesses—mainly small firms—went into insolvency over the 12 months to the end of January 2023. That is a rise of 49% on the previous year. This year, it is estimated that 6,000 small construction firms are at risk of insolvency. The number of insolvencies in the sector continues to be greater than in other sectors, although retail is very close behind, and is at the highest level for 13 years. How will we build our homes, hospitals and schools of the future without the construction firms to do that?

The majority of the insolvencies are the result of unprecedented cost pressures on small businesses: hikes in the cost of energy, materials inflation and increased labour costs. But fundamentally, the ability of firms to cope with those costs continues to be severely hampered by poor cash flow, which is often the result of poor payment practices, lengthy payment terms, myriad excuses for paying less than the amount invoiced or applied for, and a non-release or late release of retentions money.

Small businesses often purchase materials well ahead of the commencement of work, but wait weeks to be paid. In the steel sector, for example, 90% of the contract value is expended before firms arrive on site, and they wait weeks to be paid. That then increases the risk that they will never get paid because their tier 1 contractor has gone bust in the meantime. Advance payments or deposits for early work are rarely available. The majority of payments, especially the release of retentions moneys, are always late. On top of that, there is a new issue. It is becoming a common practice for the large tier 1 contractors to refuse to compensate tier 2 subcontractors for rising material prices, even if they have a price adjustment fluctuation clause in their contract. They are absolute cowboys. Those large companies, of which Carillion was a classic example, are noted for manipulating their supply chain’s cash. The Department for Business and Trade has regularly described the business model as unsustainable, yet it allows it to persist.

The solutions are there for the Government: project bank accounts and the ringfencing of retention moneys. That was what I proposed in my 2019 Public Sector Supply Chains (Project Bank Accounts) Bill. Unfortunately, the Government did not pick it up, so the new clause is an attempt to have that provision resurrected. I hope the Minister is listening and will respond, because, as I said to him on Second Reading, the current measures will not work. Project bank accounts are offered by major banks, such as Lloyds, Santander and Royal Bank of Scotland, so this should not be a party political point and the Government should take on board my new clause. If they do not, I would appreciate an explanation as to why not.

Payment abuse has consequences far beyond the firms directly affected, as Dame Judith Hackitt, who chaired the independent review of building regulations and fire safety, concluded. In her report on Grenfell, she noted that poor payment practices compromise construction quality and safety.

At the beginning of last year, the Department for Levelling Up, Housing and Communities published guidance on collaborative procurement to support building safety. That guidance was drafted as support for the Building Safety Regulator in the implementation of the Building Safety Act 2022. The guidance recommended, first, the use of PBAs across the industry and, secondly, cash retention. My new clause 12 is directed at providing greater payment security for small and medium-sized enterprises in construction supply chains.

It should be noted that on public sector work those firms have no protection—none whatsoever—in the event of tier 1 contractors becoming insolvent, but tier 1 companies do have such protection, because contracting authorities do not generally go into insolvency. It has been estimated that £800 million of subcontractor retentions were lost in the Carillion collapse. Protecting retention moneys in the way I suggest would also protect public funds from tier 1 contractor or further supply chain insolvency, as retention moneys are held in ringfenced bank accounts instead of the back pockets of contractors until project completion. The National Audit Office estimated that the taxpayer lost £148 million when Carillion collapsed.

My new clause 12 would require that contracting authorities use PBAs on their projects where the net value of the main contract is over £2 million. To date, PBAs have proved to be the most effective mechanism for reducing payment abuse, because all firms in the supply chain receive their moneys directly from the contracting authority via the PBA, rather than moneys having to pass through the hands of the main contractor.

My new clause 12 is required because the Cabinet Office has failed to enforce the implementation of its own policy that PBAs must be used unless there are compelling reasons. That contrasts with the recent action of the Queensland Government in Australia, who have legislated to mandate the use of PBAs for all public and private sector construction projects over £650,000. They are also mandated for use in public sector projects by contracting authorities in Scotland and Wales; I am merely asking for the requirement to be enforced in England as well. This is about fairness between large and small companies—a real abuse of power happens with the large companies—and about fairness and levelling up across the country.

PBAs shorten payment periods to 12 to 15 days and moneys in the account are protected from tier 1 contractor insolvency. By using PBAs, National Highways has ensured that all supply chain firms are paid within 18 days. My new clause 12 would require contracting authorities to deposit progress payments in a PBA for onward transmission to the beneficiaries—the main contractor and suppliers. Any disputed amounts must remain in the PBA until the dispute is resolved, and any retention moneys must be safeguarded in the PBA until they are due for release.

My proposed subsections (7) to (10) are designed to address the failure of the Department for Business and Trade to respond to the outcome of its consultation on reforming the practice of retentions, which closed in January 2018. The overwhelming majority of respondents supported a proposal to ringfence retention moneys, but the Department and its offshoot, the Construction Leadership Council, have refused to act on this.

In over five years, approximately £1.5 million of retention moneys were lost by small businesses because of upstream insolvency. Retention moneys legally belong to the firm from which they are withheld. They are usually withheld only to boost the cash flow of the withholding party. In the 2017-18 Session of the House, the hon. Member for Waveney (Peter Aldous) introduced a private Member’s Bill to ringfence retentions in a secure account. Almost 300 Members of the House indicated their support for that Bill.

If passed, my new clause will transform public sector construction procurement and provide added payment safety. It will inject greater trust into delivery teams and enable greater investment in skills and digital technologies. As I said before, none of the measures the Government have announced, since I raised the issue on Second Reading, will achieve what the new clause would achieve. They will not protect the supply chains, so will the Minister say in his response what he is going to do to protect small businesses?

My 2019 Bill would have prevented both the losses experienced by Neil’s business and other small businesses, and the collapse of the 780 building firms. In addition, it would have prevented the late payment abuse that construction firms and others have experienced day to day since then. My new clause 12 would also protect those small businesses in their contracts with large companies, so I hope the Minister will consider it.

[Tim Loughton (East Worthing and Shoreham) (Con)]

I will speak primarily to new clause 1, in the name of my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), my name and those of other right hon. and hon. Members.

I have a deal of sympathy with some of the points raised by other Members, not least those eloquently put by my hon. Friend the Member for Isle of Wight (Bob Seely) about trafficking and supply chain risks, as well as those to do with organ harvesting, which all feed back to the subject of China. I appreciate the good work of the Minister, who has listened to some of the representations made, particularly by those of us who have continued grave concerns about the influence of China and its insidious involvement in so many aspects of our society.

We appreciate and are grateful for what has happened so far, but it does not go far enough. That is why I want to speak to some of the themes raised by my right hon. Friend the Member for Chingford and Woodford Green and reinforce how this can only be a staging point and not the end result of what we need to achieve. We very much hope that these provisions will be greatly strengthened in another place.

The new clause that we propose is not extreme or prescriptive. It asks for a serious and realistic timeline, not a completely open-ended one. It passed with a comfortable majority in the House of Lords. It would require the Government to publish a timetable within six months of the Bill receiving Royal Assent for the removal from the UK procurement supply chain of Chinese technology camera companies that are subject to the national intelligence law of People’s Republic of China. It would catch Hikvision and Dahua Technology cameras that are currently in use across the UK public procurement supply, including in NHS trusts, schools, police forces, jobcentres, prisons, military bases and many local council buildings.

Human Rights Watch has found that Hikvision is one of the principle Chinese companies involved in the construction of the Chinese surveillance state and the camps that house over a million Uyghurs in Xinjiang, as we have heard. A recent report by Big Brother Watch found that about 2,000 public bodies in the UK—some 61%—currently use Hikvision and Dahua surveillance cameras. Other public bodies that have confirmed, in response to freedom of information requests, that they use those cameras include more than 73% of local authorities, more than 63% of schools, more than 66% of colleges, 54% of higher education bodies, 35% of UK police forces, and more than 60% of NHS trusts. There have also been subsequent reports that Hikvision cameras are being used on UK military bases.

15:00

Hikvision and Dahua are prevalent in businesses and popular consumer chains across the UK, ranging from Starbucks to Tesco as well as newsagents. They are literally all around us, yet no official survey identifies the extent of the issue. Hikvision has successfully cornered the UK domestic surveillance market by utilising Chinese state subsidies to undercut its rivals in terms of price. That is why I support new clause 1 and why I am drawing the House’s attention to this urgent matter—the disturbing link between Hikvision, in particular, and atrocities against the Uyghur population in Xinjiang.

Underpinning China’s system of oppression is a high-tech network of surveillance, through which China has unleashed wholesale monitoring and tracking of Uyghur individuals, including biometric data collection of facial imagery and iris scans and genomics surveillance through mandatory DNA sampling. I do not think we have devoted enough time in the House to debating the whole issue of genomics, along with the worrying trend that is demonstrated by the huge database that the Chinese authorities are assembling globally.

Hikvision and Dahua are the world’s largest manufacturers and suppliers of video surveillance equipment. Both companies are owned by the Chinese Government and, since 2017, both have signed contracts worth at least $1.2 billion for 11 separate large-scale surveillance projects across the Uyghur region. They are contracted to develop, install and operate CCTV technology across the region’s public checkpoints, mosques, factories and concentration camps—as we now know them to be.

We should remember that the House voted unanimously to recognise the Chinese genocide against Uyghurs in Xinjiang. Although it may not have been a binding vote and the Government have yet to come round to the thinking of the vast majority of Members, it was nevertheless a vote in the House, reflecting the clear evidence provided by Sir Geoffrey Nice in the Uyghur trials about 18 months ago. There is compelling, detailed, startling but convincing evidence of what was going on then, and of what is still going on under the noses of the world. Having been trialled in places such as Tibet for decades before, these practices are being increasingly extended towards Hong Kong, where, as we see daily on our television screens, the rule of law is being increasingly snuffed out,.

[Sir Iain Duncan Smith]

My hon. Friend is making an excellent speech. May I return him to the procurement point about what is national security and what is not? He will know, as I do, that if we go to Hong Kong we can see that HSBC, for instance, is already, in a way, in league with the authorities. The changes it is imposing include freezing the pension funds of people who are over here under British National (Overseas) passports and, at times, freezing their bank accounts. It says that it has to obey the Chinese Government. Is that not what we are saying? There is no particular definition. They are all operating, once these companies are in China, under the rule.

[Tim Loughton]

My right hon. Friend is, of course, right. He and I and others in this place who have been sanctioned in China and beyond have drawn attention to how effectively respectable global British companies are becoming complicit in the suffocation of the democratic principles, freedoms, liberties and rule of law that we all take for granted, and they need to answer for it. Are they on the side of the rule of law, of international freedoms and liberties in all the areas we have described, or have they thrown in their lot for a mess of pottage—or whatever we want to call it—with the Chinese Communist Government, notwithstanding their complete abrogation of any pretence to democratic accountability and freedoms for the individuals who not only happen to live within its borders but against whom they are increasingly able to extend their tentacles globally, not least in this country?

Hikvision and Dalua are both subject to China’s National Intelligence Law, which stipulates that

“any organisation or citizen shall support, assist, and cooperate with state intelligence work according to law”.

The law also permits authorities to detain or criminally punish those who “obstruct” intelligence activities. The presence of vendors who are subject to extrajudicial directions from a foreign Government which conflict with UK law may risk failure by the carrier to adequately protect networks from unauthorised access or interference.

In the UK, Uyghur people face a sustained campaign of transnational repression in the form of threats, harassment, cyberattacks, and online and in-person surveillance. LBC and the Financial Times have recently reported instances of Uyghur people seeking refuge in the UK being offered thousands of pounds a month and blackmailed by Chinese security officers to spy on Uyghur advocates. In that context, the Government must take seriously the threat posed by the presence of this equipment to British national security and the safety of exiled and dissident populations seeking refuge in the United Kingdom. Without urgent action, the UK risks facilitating a system of surveillance designed to extend Chinese domestic policy across borders.

The evidence, which is presented by reputable sources such as IVPM, Axios, The Intercept, The Guardian and the BBC, is deeply troubling. These and other reports paint a harrowing picture of the situation in Xinjiang and provide substantial evidence of Hikvision’s involvement. IVPM’s investigation reveals that Hikvision, a leading provider of surveillance technology, has actively contributed to the surveillance state in Xinjiang, where more than a million Uyghurs are estimated to be held in what we now know to be internment camps. Hikvision’s technology is reportedly used to monitor and control the Uyghur population, facilitating its repression. Worse, it is credibly accused of constructing the surveillance state in Xinjiang in close partnership with the Xinjiang Production and Construction Corps, a report corroborated by The Guardian, which published leaked documents outlining Hikvision’s close collaboration with Chinese authorities in developing and implementing surveillance technologies in Xinjiang. The evidence suggests a concerted effort by Hikvision to profit from this oppression.

Axios, in its comprehensive reporting, explains that Hikvision’s surveillance cameras are integrated with sophisticated artificial intelligence systems to track, profile and identify individuals in Xinjiang. Let me be clear: this technology is trained to recognise Uyghur-looking faces with a view to profiling them, flagging them when they are doing things of which the Chinese Government do not approve, and then facilitating their persecution through mass surveillance and control with the aim of suppressing their cultural, religious, and political freedoms.

The scale and sophistication of Hikvision’s surveillance technology exacerbate the already dire human rights situation in the region. The Intercept’s exposé provides damning evidence that Hikvision’s technology has been directly used in the internment camps, enabling the Chinese Government to monitor and suppress the Uyghur population. One source revealed that Hikvision’s cameras were installed throughout the camps, capturing every move and expression of the detainees. This raises alarming questions about the company’s complicity in the perpetration of human rights abuses that our own Government have described as

“torture…on an industrial scale”.

The evidence leaves no room for doubt. Hikvision’s involvement in the surveillance and control of the Uyghur population in Xinjiang is deeply troubling, and, even without the security concerns so ably highlighted by my right hon. Friend the Member for Chingford and Woodford Green, would warrant the company’s removal from our supply chains, consistent with our modern-day slavery commitments. We cannot turn a blind eye to the suffering of millions of innocent people, and help those who persecute them fill their pockets with public money.

[Bob Seely]

I have a genuine question for my hon. Friend, who is making a brilliant speech, and for the Minister. Given Hikvision’s frankly repugnant role in the ethnically based oppression of an entire people, why on earth is it not covered by our Modern Slavery Act 2015 and how did we let such a repugnant company into this country under any guise?

[Tim Loughton]

My hon. Friend poses a very good question. Whether it is on moral grounds, on the basis of what this House has voted for in the past or on the basis of legislation that is topical in many areas around modern day slavery at the moment, we should not be anywhere near that company or similar companies. Our Government, our public bodies and our procurement agencies need to take much more notice of what Governments do and say. Much more must be done, and urgently so.

It is incumbent on the House to call for a comprehensive investigation into Hikvision’s activities and its complicity in the suspected atrocities against the Uyghurs. We must work alongside our international partners to hold Hikvision and the Chinese Government accountable for their actions. Most importantly, we should use the purchasing power that we have as a Government and the interest we have in public bodies to disincentivise companies from behaving in the way Hikvision has towards the Uyghurs. At the moment, we are not merely failing to hold these companies to account; we are actually making them richer. The Government’s decision to remove Chinese state-owned surveillance at sensitive sites is welcome, but not sufficient. The widespread use of Hikvision equipment by police forces, hospitals and local councils risks providing malign states—

[Mary Robinson (Cheadle) (Con)]

I am grateful to my hon. Friend for giving way. He has set out an alarming set of issues around the extensive use of this surveillance equipment across various sectors. I know that the Government are listening, so if they were to go ahead as he suggests, should they not, in a parallel way, also ensure that the capacity to fill the gap is there and incentivise other companies to fill it?

[Tim Loughton]

I do not wish to alarm my hon. Friend, but I am afraid that what we have heard is alarming. The trouble is that it is true. It is based on evidence and the sources that I have given.

We have to achieve a balance here, but we need to show greater urgency to dispel the current installations that we have. We need to ensure that they are replaced with reliable equipment from trusted sources as a matter of urgency. It is that urgency that we are not seeing. My hon. Friend the Minister said that within six months the Government would produce this list—a limited list of action that they are going to take. They could come up with a timeline that is still several years away. That is not realistic or sending out the right messages, and we can and need to do far better.

The widespread use of Hikvision equipment by those different agencies risks providing malign states with a back entrance into UK security and imposing an unwanted reliance on those countries. By contrast, the White House has taken a strong stance on those companies by refusing to support Chinese companies that undermine the security or values of the United States and its allies. Embracing and reasoning would allow the UK Government to be consistent with their commitment to protecting core national security interests and democratic values. That is why this new clause is so important. I hope that the Minister will respond positively to that and give us a reassurance and an offer, if we are not taking the new clause to a vote today. My right hon. Friend the Member for Chingford and Woodford Green has rather let the cat out of the bag by saying that he will not press his new clause to a vote. If that is the case, more has to be done in the other place. We need much tougher measures than we have seen so far, because I am afraid that the Chinese are laughing at our failure to treat this with the seriousness and urgency that it requires.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I rise to speak to a number of amendments. It is worth highlighting that the bread and butter of the work of the Public Accounts Committee, which I have the privilege of chairing, is looking at procurement—failed procurement in particular—and making sure that we get on the record and into the brain of Whitehall the lessons learned from those failures. We have also been at the forefront of looking at procurement during covid, and we did our first inquiries into that as early as June 2020. I want to place on record my thanks for the hard work of the National Audit Office, which immediately pivoted to online working to enable us to continue our scrutiny of the Government as a cross-party parliamentary Committee.

15:16

The National Audit Office also highlighted the VIP lane, which was a matter of concern. We were shocked to discover that certain people were given special access to the Government. It is as a result of that and further NAO work, and the work that led to the Boardman review of the Cabinet Office, that the Government changed the rules about how procurement was conducted, particularly in the Department of Health and Social Care, where there was a real issue about record keeping. For that reason, I welcome new clause 15, but is a sadness to me that we have to put so forcibly into the Bill something as basic as keeping records of how decisions are made when procurement contracts are let.

Procurement is about much more than legislation, as we have highlighted repeatedly on the Public Accounts Committee. We need highly skilled public procurement professionals, and it is a good thing that in the nearly 12 years that I have been a member of the Committee we have seen more people with that skill enter Whitehall and do a good job. Some of the best bits of covid came about because there were experts on hand to advise the Departments in an emergency. Some of the worst bits were a result of there not being enough procurement specialists in a Department to do that work. Procurement, like finance, is too important to be left just to procurement professionals, and I hope this Bill will contribute to that general move in Whitehall alongside the work of some of the best people in Whitehall who are trying to deliver better results, and the work of Committees such as mine in highlighting when things are going well and the repeated times when they are not going so well.

I will talk about evaluation in more detail in a moment, but more transparency is needed generally. The Public Accounts Committee has the privilege of calling for persons, papers and records, so we sometimes see papers that are not generally available to the public. We would like information to be in the public domain as much as possible, and more transparency, not less, is important, particularly in emergency situations such as covid. There should be nothing to hide when taxpayers’ money is at stake. Of course there are commercial discussions to be had at some points, which is why we have systems in place whereby I and other members of the Committee, and when necessary other Select Committee Chairs, can see information about decisions before the final commercial contract is signed. This is to ensure that there is some parliamentary oversight. I pay tribute to the Deputy Chair of the Committee, the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown), who has been instrumental in being part of that scrutiny and making sure that this is not down to just one person—the Chair of the Public Accounts Committee—or just a handful of people. He and I often work assiduously together on these matters.

The other key thing is evaluation of what has worked. That draws me to amendment 68, which I commend the hon. Member for Weston-super-Mare (John Penrose) for working on. The Committee has been looking increasingly at the evaluation of what has worked, and that is really important for procurement. An example is the emergency services network that was introduced after the tragedy of the 7/7 bombings in London, when our emergency services were unable to talk to each other because of connection problems. There had been similar problems in the past. A firm decision was made in 2010 to get rid of the old contract in 2015 and have a whole new all-singing, all-dancing system by which our emergency services could connect through the mobile network.

The Committee has looked at procurement 14 or 15 times. Some of the problems we have seen have been around policy decisions, but a lot has been around contracting. As I say, we have had the privilege of calling persons, papers and records, so I have had the privilege—I am not sure if it is a privilege—of seeing some of the back documentation on those issues. That highlights why we need to evaluate what is not working and what has worked. Amendment 68 calls for an independent body to look at that, but we now have a system in Government in which there is a bit more discussion, although not enough, about evaluating policy. In the heat, cut and thrust of elections, we politicians might be in office for only five years if we are lucky, so we want to get things done, and evaluation seems like it will slow things down. But whatever party is in government, it is important to learn what has worked in the past and what has not. A large amount of what we want to deliver, whether it is services for people in receipt of benefits or important security measures, are things that any Government will have to deal with, and there are lessons to be learned from the contracts that are in place.

From the point of view of the Minister and of the shadow Minister, anything that looks like an expensive spending commitment is alarming at the moment. As Chair of the Public Accounts Committee, I understand that, but I cite the example of a programme introduced by the Department for Education to review innovative approaches to dealing with children in social care. The Department’s then permanent secretary said that evaluating contracts of this scale is effectively a “rounding error” in the budget. It is possible to write in that evaluation as part of good, proper, professional contracting.

[John Penrose (Weston-super-Mare) (Con)]

The hon. Lady is being very complimentary about an amendment that I tabled and she kindly signed to show cross-party support. Does she agree not only that the cost of evaluation is a rounding error but that the savings from weeding out dud contracts early would dwarf any possible cost? In any case, we already have a network of so-called what works centres, which are arm’s length, independent bodies that have been doing precisely this for ages. The problem is that they cover only about 8% of all that we buy, but they are already in place, so the additional marginal cost would be even smaller.

[Dame Meg Hillier]

I agree with the hon. Gentleman. Of course, if evaluation is built in from the beginning, the company that has been contracted to do the work would be required to collect data. They will say that that involves more cost but, over time, it would wash out. We need a better standard of data collection on all sorts of issues.

Take the example of a contractor that was asked to run a prison. The Government provided data on the prison’s maintenance, but the data was not right as it did not count the number of windows and toilets, and so on, that needed to be fixed, so the company had to come in and count them. In that case, the company had not banked on prisoners breaking more windows than the average in other buildings. There is lots of data, and we keep pushing for it to be collected, and that data could be built into evaluations.

The hon. Gentleman is bang on about making sure we do not send good money after bad. If something is not working, we need the evidence and the political courage, sometimes, to end the contract. We need to make sure that the people delivering a contract are clear that they are delivering the contract’s aims. Evaluation should have the impact of tightening procurement, tightening the management of contracts by the civil service and sharpening up those who bid for contracts to do a better job and to be proud of that job, in the knowledge that doing a good job may well mean that the contract is extended, but not if they do not do a good job. We should also reward good behaviour. I am keen to hear what the Minister has to say about that.

My right hon. Friend the Member for Barking (Dame Margaret Hodge) tabled amendments that would ensure that organisations involved in nefarious activities are excluded from public procurement. It is extraordinary that companies that are making money in nefarious ways can bolster their activity and give themselves credibility through public procurement. Others have talked a lot about the issues around China, so I will not go into that much more. My right hon. Friend has a strong reputation in this area, and her amendments speak for themselves.

We do not want to miss this opportunity. I recognise that not everything in procurement is about legislation. It would give me some comfort, as Chair of the Public Accounts Committee, if the Minister showed that that is being thought about a bit more deeply across Whitehall.

[Danny Kruger]

This has been a very interesting debate, veering from grand geopolitics to the sourcing of public services and paperclips. All of this is, in a sense, the responsibility of an independent country, so the debate is one benefit of Brexit, for which I am sure we are all very grateful.

I am pleased with the Bill and the Government amendments. I think of it as the patriotic Procurement Bill, which is exactly what we need. I particularly welcome the explicit commitment to national security that has been added to the Bill, and I pay tribute to my hon. Friends the Members for Rutland and Melton (Alicia Kearns) and for East Worthing and Shoreham (Tim Loughton), and my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), for their work and their contributions today. I am particularly grateful to my hon. Friend the Member for Isle of Wight (Bob Seely) for his tremendous speech about the dangers we face from a more hostile China.

In the Government amendments, and in Government policy in general, we see a necessary new realism in UK policy. Security is the new watchword of our times, and to me it means much more than defence against hostile states. We face all sorts of other threats to our security, including, as my hon. Friend the Member for Isle of Wight mentioned, our extreme dependence on supply chains around the world, not only but particularly those in hostile states.

Conservative Members tend to regard “protecting” and “subsidising” domestic industry as dirty words and unorthodox policies. Nevertheless, we see around the world a growing tide of tariff barriers and domestic subsidies. Our great friends in the United States have committed to spending $500 billion on domestic manufacturers, particularly to wean themselves off Chinese imports. I welcome the Prime Minister’s commitments this week to a new US-UK economic collaboration arrangement to secure our common interests and to ensure that we have safe supply chains. We will need to rely more on our allies in future.

As we move from a just-in-time procurement model, we need to recognise, particularly on this side of the House, the role of Government in ensuring economic security. The fact is that £300 billion a year makes the Government the biggest player in the UK economy. As we have heard today, and I pay tribute to the speeches made by Opposition Members, the Government are often not very good at procurement and spending public money for public goods. We could go into the sources and origins of that, but we should recognise that since the late 1990s, and under the Blair and Brown Governments in particular, the model of new public management has created a new doctrine of how Government money should be spent on private sector providers. The principle of introducing internal markets—the purchaser-provider split—was an attempt to ensure greater efficiency, greater value for money and greater responsiveness to the users of public services, and it engendered all sorts of difficulties, too. The hon. Members for Poplar and Limehouse (Apsana Begum) and for Oldham East and Saddleworth (Debbie Abrahams) listed some of them, and I recognise them from my previous work. Providers have to jump through really bureaucratic processes.

There is a concentration of big suppliers. My right hon. Friend the Member for Chingford and Woodford Green has done a lot of good work, although he did not speak about it today, on the importance of SME procurement. Large charities in particular can game the system, in the way that large companies can, to secure Government contracts. The Government often do not buy the best; they buy the service that gives commissioners the least risk. Those suppliers often run rings around Government. In the way services are designed and delivered, we see cost deferrals, with payment pushed back beyond the budget cycle; cost shunting, with different parts of the public sector having to carry the cost for a bad contract; the creaming of the high-value, low-cost clients or services; and the parking of high-cost, low-value services. So the providers, whether they are charitable or commercial, game the system. We see that all time, so all this needs improvement and this Bill takes important steps towards ensuring that.

15:30

I want to ask more fundamentally whether it is right for Government to be so big and have such a vast role in the British economy. I welcome the brave speech made by the Chancellor last night, in recognising that we have an unsustainable reality in this country: the trend rate of growth of the economy is only 1.6% in the years ahead, whereas public spending is forecast to rise to 2% —and that is excluding debt repayments. We have a complete mismatch and we are not complying with Micawber’s principle; we are spending more than we are making, which is clearly unsustainable.

The Chancellor’s answer to that is growth—it is the right answer. The biggest part of the answer is probably addressing how we generate growth in the economy. His answer is, rightly, that we do it through productivity gains, which are essential. He highlights the productivity challenges in the public sector, which are relevant to this debate. He pointed out a terrible figure with which I was not familiar: the output of the public sector since the pandemic has fallen by 6%. So while the private sector has recovered its productivity, the public sector has not. That is a chronic problem. His answer is that we need to be “much, much more efficient” in the public sector.

[Sir Iain Duncan Smith]

I am fascinated by the speech my hon. Friend is making, because he is right in one sense about this. We did a report at the Centre for Social Justice about four or five years ago where we looked at productivity. So often we make international comparisons, but the whole figure for productivity contains that which a country wants to put into it. For example, France does not put health or education into its productivity measures. Health and education have shocking productivity outcomes in terms of cost, which means that France is able to declare itself as having a higher level of productivity. London and the south-east have the highest productivity in Europe, but the real story is that the rest of the UK does not meet the average for the whole of the Europe, which tells us what our problem really is.

[Danny Kruger]

My right hon. Friend makes important points, and I recognise the difficulty of comparing our productivity figures with those of other countries. The comparison I am making is with our own recent history, but he is absolutely right in what he says. Indeed, the point about what is measured matters enormously. In our debates, we often make the mistake of thinking that the only things that matter are those that can be easily quantified. That is a great challenge we face, particularly in the social sector.

The Government are rightly committed to improving the efficiency and productivity of the public services—I absolutely support them on that—but we face another great challenge that does not get enough of a mention: the need to reduce demand on the system as a whole. We are spending so much not just because we are inefficient, but because the demand on the system is so high. I do not need to run through all the details of the enormous budgets we spend on social breakdowns and the consequences of social problems that we should have averted, in criminal justice, in the health budget, in what is called “social protection”. Some £150 billion is categorised under “social protection” in the public finances—not pensions, but paying for people who have tough lives. We should be seeking to reduce the cost of those budgets, because each one of those costs represents, in a sense, people in trouble. Both for financial and social reasons, we should be trying to reduce that expenditure.

How do we do that? We need social reform. I am not going to bore the House with long thoughts on that, but we need public sector reform, as has been mentioned a bit today, and that includes procurement reform. I acknowledge what Labour is suggesting in some of its amendments and in some of the speeches we have heard: an objection to the whole model of outsourcing. I recognise the objections to some of the failures of public service management—new public management—over the past generation, and some of the challenges of outsourcing and of competition in the public sector or for public services. However, I do not think insourcing everything is the answer. Reverting to a pre-1990 model of everything being delivered by the central state, as one of the amendments and Unison are championing, is not the right model. We need a better model of outsourcing that relies much more on civil society and, in particular, on the local, community-based services in which the UK is so rich and which do such a great job. We need to be able to measure their value properly and commission their services effectively. That is what this Bill aims to do.

I declare an interest, in that I set up and ran for many years projects working in prisons and with youth services. I have personal acquaintance with the challenge of EU procurement, not only social fund commissioning, but central and local government contracts. None of this is easy and I am familiar with all of that. I am familiar with the frustrations of getting on the frameworks; expressing interest; bidding through tenders; and being treated as bid candy on a long contract. I am also familiar with going through a pointless competition process where there is only one obvious provider—the one that helped to design the service—which still has to jump through loads of competitive hoops only for some other random provider to come in and swipe the contract; I speak bitterly from experience. The challenges that small social enterprises face are significant.

The difference between procurement and commissioning is not often acknowledged. We often have procurement departments doing work that is too complicated for them on their own. We need to have proper commissioning where people who are paying for a service work collaboratively with providers, stakeholders, service users and other parts of the system. Everybody needs to bring their assets, resources, skills and experience to co-design the service that is needed locally. The Bill brings us much closer to that model. I greatly welcome the measures that have been included, especially around the simplification of tendering. The single portal is an important development and it is good for transparency as well. The Tell Us Once registration is essential, as is the help that will be given to SMEs and social enterprises, including the active reduction in the barriers to tendering, lower reporting requirements and so on.

Most of all there is the shift from the most economically advantageous regime to the most advantageous regime. That small excision of the word “economically” is an important recognition of the point that my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) was just making about the need to go beyond a purely commercial estimation of the value of social projects. I would go further. In 2020, I wrote a report for the Government who were trying to maximise and sustain the enormous contributions that communities were making during the first lockdown. I suggested that we recognise and declare that the whole of Government commissioning—the whole of public service spending—is to deliver social value for the public. Essentially, that is what we all believe and it should be stated much more explicitly in my view. I just bring the House’s attention back to the Conservative Government’s Social Value Act 2012, which gets those principles right.

I recognise that we need to take enormous steps forward. I honour what the Government have been doing around national security. I also honour the steps that have been taken to ensure greater opportunities for SMEs and social enterprises, and I commend the Bill to the House.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I wish to associate myself with the remarks made by hon. and right hon. Members across the House about the dangers of sourcing from high-risk countries and parts of countries and those implicated in serious human rights abuses. The appalling persecution of the Uyghurs in Xinjiang is a very powerful case in point that has been echoed by many Members around the House, and I agree very strongly with that.

I rise to speak to amendment 60 and new clause 17. I welcome the provisions in the Bill that aim to help small and medium-sized enterprises to access public contracts. SMEs are often best placed to meet the needs of the communities in which they operate, providing numerous social and economic benefits. Those benefits, often referred to as a social value, cannot simply be reduced to a tick-box exercise. Nor can we allow social value to amount only to crumbs of compensation from corporate giants, while they extract wealth from our communities. Wider economic, social and environmental priorities need to be built in from the start of every procurement process.

The UK spends about £300 billion a year on public procurement. We could question whether that is a good thing. That has already been hinted at—whether some of these services at least would be better off delivered in-house by public bodies themselves rather than via contracts. However, this is probably not the place to go into that debate. I want to focus on the need to use that procurement spend as a force for good—to keep wealth in local economies, to ensure that public money goes to responsible companies and not those that exploit people and nature, and to help us meet our climate goals and to preserve a liveable future for all of us. I want to see values, not just value, at the heart of the public procurement process in public life.

That brings me to amendment 60 on the national procurement policy statement, which sets out the strategic objectives that the Government want public procurement to achieve. The amendment would require the Government to assess and report on the impact of the national procurement policy statement on meeting environmental and climate targets and to set out any steps that they intend to take to meet them.

Thanks to the efforts of climate campaigners across the country, we are now seeing the net zero goal and the need for climate action acknowledged in strategies and policy statements across the public sector. But these acknowledgements remain meaningless unless we assess the real world impact of those statements. Are our plans to reduce emissions actually being implemented and are they working? The amendment would signal to contracting authorities and businesses that the Government are serious about aligning procurement with climate and environmental goals. It would also enable Government to see where policy might need to be strengthened if it is not having the intended impact.

New clause 17 would require public contracts that include the supply of food to be aligned with nutritional guidelines and to specify options suitable for a plant-based diet. We know that animal agriculture is one of the largest contributors to global heating and biodiversity loss, representing around 15% of all greenhouse gas emissions according to the United Nations Food and Agriculture Organisation. More and more people are choosing to move to more plant-based eating and almost one quarter of people in Britain now follow a mainly or entirely meat-free diet.

The 2022 progress report to Parliament by the Climate Change Committee urges the Government not to ignore the role of diet and notes:

“Government can influence diet shifts, through mandating plant-based options in public settings”.

My amendment would require public contracts for the supply of food to be in line with the Eatwell Guide, which drew inspiration from the nutritional guidance of what was then Public Health England, developed in conjunction with the devolved nations. Analysis by the Carbon Trust found that, thanks to lower consumption of meat, dairy and sugary foods, the environmental footprint of the Eatwell diet is around one third lower than the current national diet.

In settings such as hospitals and schools, where good nutrition can make all the difference, our public sector should lead the way by offering nutritious and sustainable food. That is too often overridden by a narrow notion of value for money, resulting in vulnerable people being given food that does not meet nutritional guidelines. As we all remember, during the pandemic the Government were forced to U-turn on school meal vouchers after widespread outrage at the poor quality and quantity of food being distributed to families. That was not just one isolated failure; it was symptomatic of a political culture that thinks we can package up children’s nutrition, health or any public service and hand it over to whichever corporate giant says it will do it most cheaply. That is the culture that has to change.

Last year the all-party parliamentary group on the green new deal, which I co-chair, produced a report setting out how local community-based solutions are key to climate action. As part of that inquiry we heard from the Sustainable Food Places network, as well as from community farms and kitchens. A key recommendation that came up again and again was to use the procurement system to support more local food and plant-based diets.

The Government’s own food strategy proposes a target of at least 50% of food spend to be on food produced locally or to high environmental standards, a move I certainly applaud. However, nine months on from the Department for Environment, Food and Rural Affairs consultation, we are still awaiting the Government’s response.

Pioneering local authorities and public bodies are leading the way, and my constituency has had some notable successes. In 2020, Brighton received the first-ever Sustainable Food Places gold award. It has brought in improved standards for procurement as part of a wider campaign to get more people eating more vegetables and its school food supplier meets the Food for Life gold standard for championing healthy, local, climate-friendly food.

A more joined-up approach to food, climate and nature and a real commitment to supporting local businesses and community organisations would have huge benefits for our health and our local economies. In addition to the provisions in this new clause, I would therefore hope to see much more support for public bodies that want to put social value at the heart of procurement, to help them to find out how best to get sustainable food from local producers into public sector canteens.

[John Penrose (Weston-super-Mare) (Con)]

I rise to speak to my amendment 68, which was tabled with not just my signature on it, but those of the Chairman and the deputy Chairman of the Public Accounts Committee.

The amendment is about value for money and evaluation. We have heard during the course of this debate that this excellent Bill, which covers an enormous amount of much-needed reform in this area, deals with about £300 billion-worth of taxpayers’ money every year. That is a vast amount of cash and it is vital that we spend it as effectively as we possibly can. It matters not just for the value for money that taxpayers get, but for the efficiency and effectiveness with which our public services are delivered. That ought to be a compelling dyad if there ever was one.

The aim of amendment 68 is to achieve that evaluation, which we have already heard about from the Chairman of the Public Accounts Committee. I stress that this is not just a cross-party amendment, with support from both Labour and Conservative Members and from the cross-party Public Accounts Committee. It also has a very unusual political coalition behind it, which includes not only the Centre for Policy Studies, the TaxPayers’ Alliance and the Adam Smith Institute—all good, solid free-market, centre-right think-tanks—but Transparency International, Spotlight on Corruption, the Campaign for Freedom of Information and the Centre for Public Data. In other words, it is a very unusual political coalition, backing something because it is right in principle and because it yields better value for taxpayers’ money.

I urge Ministers to give the amendment much closer attention. I appreciate that it is different from the equally important questions that we have also addressed during the course of this debate, about exploitation of workers, exploitation of Uyghurs and human rights abuses around the world. However, domestically, in the middle of a cost of living crisis, it really matters to everybody in our constituencies, the man and woman in the street and hard-working families up and down the country and it can make a prompt difference.

[Mary Robinson]

Value for money is, of course, at the heart of procurement, and we all want to see it. The Royal Institute of British Architects has recommended post-occupancy evaluation. That would be an effective tool for public buildings such as hospitals and schools. Could it form part of the evaluations that my hon. Friend is talking about?

15:45

[John Penrose]

Absolutely; that is a good and broad-based example that proves the concept’s breadth of applicability.

The whole idea behind that is based on the What Works Network, which is currently backed up by the evaluation taskforce—a joint unit between the Cabinet Office and His Majesty’s Treasury. That is long-standing expertise—over 10 years’ worth—in arm’s length evaluation of Government contracts. It is a great idea in principle, and it has its roots very firmly in successful examples such as the National Institute for Health and Care Excellence, which does a crucial job relating to the medicines bought by the NHS.

But—and it is a very big and important “but”—just how much of that £300 billion-worth of public expenditure is properly evaluated each year? The answer, or the “stat of shame” as it is described in the civil service, is 8%—£1 in every £12. That is shocking and should worry us all. Whether or not we are concerned about value for money or the effectiveness of our public services, 8% is far too low. It is true that some major projects have their own arrangements, including gating agreements and a much more structured approach, which we hope will drive improvements, but for everything else—the annual contracts granted on a three-year rolling basis, then renewed, extended and renewed again—that is where the opportunity is, that is where the magic is, and that is where the potential for massive savings and better value for money really lies.

It is an old marketing truism that most marketing and advertising directors will say that they know that they waste roughly 50% of their advertising budget, but they just do not know which half. This will be an opportunity for us, when it comes to Government expenditure, to break that particular truism in half and say, “We will know.” The amendment allows the Minister to exclude contracts if he thinks they are too small or are governed by national security, but for everything else in that £300 billion, or as much of it as we can possibly manage, we will know up front what the contract is supposed to achieve, which is, after all, a rather basic thing—one would think that that would be automatically recorded, but at the moment it just is not.

We have to say up front what we are trying to do, and we are supposed to say at the end of the contract, “Well, did we do it?” That has to be evaluated by an arm’s length body according to the existing independent criteria laid out in something called the Magenta Book, which is long established and well respected. If we do that evaluation, we can then ask, “Did it work?” If it did not, we get a learning loop; an opportunity—as the new economy specialists and entrepreneurs call it—to “fail fast”, to ensure that we spot the duds and do not renew or extend them, or allow them to carry on rolling over willy-nilly. Instead, we say, “We are going to change something because this did not work.” That will be published, and then we will not renew that contract in that form. We will change it to fix the faults that would by then have been identified. At the moment, those faults are not being identified and are allowed to continue to roll and roll.

That is a blessedly simple idea. It will also pay for itself, as I said earlier when the Chair of the Public Accounts Committee was giving her speech, because the amount of money that it would save would pay rapidly not just for the existing costs of the What Works Network, but probably for a huge expansion, were Ministers so minded, of such evaluations to other parts of the national procurement effort. It would therefore cost the taxpayer net not a bean, it would dramatically improve value for money, and it would improve the credibility of our public service delivery, which all Governments of every stripe always struggle with. It would be a ready-made arm’s length route for politicians of any party to say, “We are doing the right thing. This is done independently. We will make sure that, next time around, we weed out the bad and expand the good.” That could be genuinely revolutionary.

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats support the provisions in the Bill that will speed up and simplify procurement, and create greater opportunities for new entrants, such as small businesses, to access public contracts. However, we have concerns about those areas of the Bill that create opportunities for circumventing the rules that govern the procurement regime. The Government’s shambolic procurement of personal protective equipment during the pandemic exposed the weaknesses in our procurement system, and showed what can happen when Ministers are awarded too much power, and face too little scrutiny. It is vital that safeguards are in place to ensure that billions of pounds of taxpayers’ money does not go to waste.

Amendment 1, which is in my name, seeks to prevent the use of VIP lanes in the procurement of public contracts. The bypassing of the usual procurement rules via VIP lanes during the pandemic saw £3.8 billion of taxpayer funds handed over to 51 suppliers, many of whom were closely tied to Conservative Ministers and their friends. We all know of the scandals that emerged off the back of those contracts; they included reports of excessive profits and conflicts of interest. The Public Accounts Committee, of which I am proudly a member, has, under the chairmanship of the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), carried out an inquiry on the management of PPE contracts. We found that at no stage was any consideration given to potential conflicts of interest between individuals making referrals through the VIP lane and the companies that they were referring.

The Prime Minister said that he was “absolutely shocked” to read of the allegations against Baroness Mone, but future scandals will not be a shock unless the Government take action to ensure that our public procurement regime cannot be exploited, and prevent Ministers from giving special treatment to their friends without proper scrutiny. Transparency of procurement decisions is paramount. I therefore urge the Government to accept amendment 1, ban VIP lanes and crack down on future cronyism and sleaze.

New clause 9 would ensure that the national health service complied with the public procurement rules set out in the Bill—I would like to press it to a Division this afternoon. Liberal Democrats in the Lords successfully amended the Bill to bring the NHS into its scope, so I am extremely disappointed that the Government have overturned the Lords amendment and are reinstating a huge carve-out for the NHS. Without new clause 9, the Secretary of State for Health will be able to make up their own rules for huge swathes of NHS procurement via secondary legislation. Handing over such a wide-ranging power to the Secretary of State without ensuring proper scrutiny is not the hallmark of a Government who wish to govern with integrity and transparency.

The Government argue that the procurement rules are important for all procurement decisions, so it is unclear why they believe that the NHS, which has a procurement spend of many billions of pounds, should fall outside the new regime. Surely it is essential that the largest public organisation in the country follow the same procurement rules as all other organisations. I therefore urge the Government to accept the new clause, and support the Liberal Democrats in ensuring that NHS procurement represents value for the taxpayer and is subject to proper scrutiny.

To conclude, the Liberal Democrats support efforts to reform our procurement regime, and to introduce new rules to increase transparency and create opportunities for small businesses, but there is too much room in the Bill for the rules to be circumvented. The Prime Minister’s pledge to act with integrity and professionalism risks becoming an empty promise unless the Government take action to prevent the use of VIP lanes. Further, it would be ludicrous for NHS spending to be left outside the regime that governs all other public bodies. Public procurement is the largest area of public spending, totalling approximately £300 billion a year. It is vital that the taxpayer has confidence that the Government are taking due care, and confidence that money is spent in accordance with fundamental principles of transparency and fairness.

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to follow the hon. Member for Richmond Park (Sarah Olney). I rise to speak to amendments 61 to 67, which stand in the name of the right hon. Member for Barking (Dame Margaret Hodge)—sadly, she cannot be here today, so Members are stuck with me. I cannot do an impression of the energy she would have brought to this debate, but I can try to present the arguments that I think she would have made.

What we are trying to do with these amendments is strengthen the provisions in the Bill to help tackle economic crime. One would think, quite logically, that in a Bill on public sector procurement, the risks of economic crime would be quite a significant issue that we would be trying to deal with. I think it is quite right that we use the Bill to tackle issues of national security or modern-day slavery, but equally, I think it is wrong that we do not have the full protections we need for economic crime in the UK.

This is not just a theoretical problem. In a survey from about five years ago, about a quarter of councils said that they had been victims of corruption in their procurement processes. We estimate that the losses are around £876 million a year—the biggest cause of financial loss in local government—so there is clearly plenty of scope for improvement in our performance. We welcome the fact that under the new UK procurement regime, we have an exclusion and debarring regime that is much better, probably much tougher, and hopefully much easier to use. Those provisions do exist in the EU procurement regime, but they have been extraordinarily rarely used in the UK. I think we all hope that we will be much more effective at using the protections that we are putting in place through the Bill.

[Mary Robinson]

Exclusion and debarment could be a very effective way to incentivise good governance within suppliers, but also to enable local authorities to crack down on and get rid of corruption and fraud in procurement. Indeed, the United States goes a lot further to protect procurement by encouraging whistleblowers to come forward with information through the False Claims Act. In doing so, the US has recovered about £50 billion in respect of fraud in Government procurement and spending. Does my hon. Friend agree that a stronger whistleblowing framework and anonymous whistleblowing, perhaps through a hotline for procurement, could potentially save taxpayers millions of pounds?

[Nigel Mills]

I agree with my hon. Friend and commend her for the considerable amount of work she has done on whistleblowing—she truly is an expert. In general, the Americans have some good ideas on this. I was at a briefing last week where someone took me through those powers: if someone brings a private prosecution and the Government take it on halfway through, that person gets to keep 20% of the proceeds that are recovered, and if the Government do not take it on and that person is successful, they get to keep 40%. That creates a real incentive in the system for someone to take the huge risk to their personal wellbeing and career of exposing wrongdoing. I think we could learn a very great deal from the American position in that respect.

The amendments I want to speak to can be covered in three different groups. Amendment 67 would give contracting authorities the power to exclude suppliers when they have evidence of economic crime-related wrongdoing, not just a conviction for it. The Bill contains various measures by which authorities that are going through a procurement exercise do not actually have to see convictions—they can see credible evidence. We have ended up in the rather bizarre situation where I can exclude somebody from a procurement if I believe they have been part of a cartel in South America even though they have not been convicted, but I think they might well have been if they were in the UK; however, I cannot exclude somebody who I have real evidence has been committing economic crime in the UK, because there has not been a conviction for it yet.

The problem with that model is that convictions for crimes such as fraud have fallen by about two thirds in the past decade. We have not had a successful prosecution of a large corporate for fraud for a decade, I think, although we have had some deferred prosecution agreements. If we are relying on excluding dodgy companies from the process only where there has been a conviction, we are going to end up in the rather unfortunate position of there not being enough convictions to make the regime successful.

To me, it seems quite reasonable to allow an extension of the more wide-ranging rules in the Bill to apply to an authority that has credible evidence that an economic crime has been committed, especially if that prosecution process is ongoing when that authority is doing the procurement exercise, instead of it not being able to exclude that party from the exercise even though there is a real chance that they could be convicted quite soon. I just think that situation would be a real weakness. I am not saying that we would mandate exclusion in that situation, but empowering authorities to not go ahead with that party or bidder when they have credible evidence seems like quite a reasonable thing to do.

When this issue was raised in the House of Lords, the Government’s response was that it would impose an unreasonable burden on contracting authorities, but as I have just said, the Bill already imposes quite significant potential burdens to try to work out if somebody has been guilty of cartel-like behaviour. I suspect that would be harder than working out whether they have been guilty of actual fraud in the UK. We have the new unit being created that could support authorities in that process. That would not be mandatory. It would be an option that they could use in situations where they have that evidence, so there would not necessarily be any burden at all. I urge the Minister to give real consideration to whether a system that only allows successful prosecution of excluded companies that behave terribly in these areas of crime is the right balance to strike.

16:00

Amendments 64, 65 and 66 look to strengthen the offences covered by the mandatory exclusion. The Government have, probably reasonably, chosen to include tax evasion, but for some reason the first and foremost economic crime of bribery is not down as a mandatory exclusion. We mandatorily exclude somebody for evading tax costing the Exchequer, but in a procurement Bill, we are not mandatorily excluding somebody who has been relatively recently convicted of bribery. If we want to have a respected and robust procurement process, we do not want parties that have ever engaged in bribery anywhere near tendering for high-value contracts in the UK. That seems a significant omission. A company recently convicted of bribery should not be successfully bidding for large contracts in the UK public sector. I do not think anyone would disagree with that.

Even if we do have that mandatory exclusion, the Bill provides various exemptions. Say some major UK provider has been successfully prosecuted for bribery by some rogue subsidiary directors in Africa: we could find a way of letting the provider off from that mandatory exclusion with the exemptions in the Bill. I urge the Minister to seriously consider why we have not started from the default point that, if someone has been convicted recently of bribery, they should not be getting public sector contracts in the UK. We could extend that to full economic crimes such as money laundering. The idea would be to try to give a powerful incentive to these generally large companies: we do not want to see them getting caught for bribery, money laundering or sanctions evasion anywhere in the world because, if they are, they risk not only facing the full force of criminal law, but losing all the high-value contracts they have in the UK. They should want to take every step they can not to get caught in those situations. Will the Minister consider whether broadening the extent of the mandatory exclusions would be sensible?

Amendments 61, 62 and 63 try to tighten up the exceptions around the exclusions. The Government have drafted these provisions quite generously. Contracting authorities have quite a lot of discretion. In fact, I suspect what we mean is for them not to have quite the breadth of reasons to ignore exclusions. Amendment 61 would wipe out clause 58(1)(c), which allows companies to contract on the basis that they commit to taking steps to prevent wrongdoing occurring again. Paragraph (b) allows a company to continue if it has put those steps in place, but paragraph (c) says that all they have to do is consider taking those steps. It is reasonable, if a company has been convicted of something so serious that it has been excluded, that it should put the steps in place to stop that behaviour happening again before it is allowed to successfully tender for procurements in the UK, rather than promising vaguely that it might put some steps in place that hopefully the contracting authority would find some way of scrutinising during the course of that contract. That would be hard to do.

Clause 58(1)(e), which we are also proposing to remove, introduces a new highly discretionary catch-all ground that contracting authorities can consider

“any other evidence, explanation or factor”

effectively giving contracting authorities free rein to quote whatever reason they like to continue to contract with a supplier that engaged in wrongdoing. That is an incredibly broad exemption to offer. A factor could be, “They’re the cheapest bid, so we’ll go ahead with them.” If the message we are trying to send is that we do not want to contract with parties engaging in serious wrongdoing, that is far too broad an exemption to grant.

Amendment 63 would enable contracting authorities to get evidence from respective parties about the steps they say they have taken. As drafted, the Bill effectively prohibits the authority, unless it has reasonable grounds, from asking for evidence to support the contentions being made. All we are doing with this amendment is saying that the contracting authorities should have the right in any situation to have that evidence, so perhaps the default is the other way from what is in the Bill. That seems entirely reasonable. If a potential contracting party would be excluded but for an exemption, we would expect the contracting authority to get evidence that that exemption is being satisfied and not just to have that on a wing and a prayer.

I hope the Minister will consider that these amendments are constructive efforts to tighten up some of the drafting in the Bill and to make sure that the exclusions and debarring will work in practice in the way we hope.

[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

This House, this country and the British public have a long history of supporting human rights. That is why I rise to support amendment 3 in my name. It is signed by Members from across this House.

Up to 100,000 people are brutally butchered for their organs in the People’s Republic of China. It is industrial-scale, state-sponsored organ harvesting, now a nationwide industry worth more than £800 million. The average age of victims is 28. That is not a mere coincidence: 28 is considered by the Chinese Communist party to be the best age for organ harvesting. Hundreds of thousands are kept in internment camps until they are ripe for slaughter. Two or three organs from healthy young adults—28—are worth up to half a million pounds.

The evidence for this crime is growing by the day. The China and Uyghur tribunals, chaired by Sir Geoffrey Nice KC, former lead prosecutor at The Hague, concluded that Falun Gong, a peaceful religious movement, was the primary target. Worse still, the Chinese Communist authorities have now added the Uyghurs in Xinjiang, some Christians and other prisoners of conscience. The tribunals heard reliable evidence of Uyghur Muslims being subjected to comprehensive blood testing and the collection of DNA, which would allow the oppressive regime to create an organ bank, ready for withdrawals on demand.

Forced organ harvesting is an evil practice that this Government should be doing all they can to stop. At present, there are no specific restrictions on suppliers who are involved in forced organ harvesting. In Committee in the Lords, the Minister stated that this Bill was not the appropriate place to address this issue. I could not disagree more. The hard-earned money of our constituents is free to be used propping up this evil atrocity, but that is not right in a country that prides itself on supporting human rights. We all have a duty to our constituents to make sure they are not inadvertently supporting organ harvesting, or any crime indeed. The Minister also said that forced organ harvesting would already be covered on the grounds of professional misconduct. We have heard that before, only for it to turn out, once a Bill becomes law, that it is not covered. On professional misconduct, may I provide just one example? Once when a surgeon was removing organs, he noticed—he went into a cold sweat—that the body he was operating on was in shock: he was still alive. Professional misconduct!

Forced organ harvesting is not an issue to take such a chance on; it needs specific references relating to this crime against humanity. Last month’s G7 heard our Prime Minister state that we need to work together with our allies to “de-risk” ourselves from China. In the United States, Congressman Chris Smith has introduced a Stop Forced Organ Harvesting Bill, which the House of Representatives almost unanimously supported—straight across. This amendment keeps us in line with our allies. Last November, the Prime Minister delivered his big foreign policy speech and said, on our relationship with China, that

“we will make an evolutionary leap in our approach. This means being stronger in defending our values… And it means standing up to our competitors, not with grand rhetoric but with robust pragmatism.”

This amendment is robust pragmatism in practice. It is not grand rhetoric, but action— action to make sure we are strong in defending our values; action to make sure public money is not supporting a crime against humanity; action that this whole House can be proud of, as it always has been on human rights.

I urge Members from across the House to support amendment 3 to keep our hands clean from this evil practice of forced organ harvesting. We must not continue to turn a blind eye to these horrendous breaches of human rights. Governments across the world need to step up on this. We need to be working together, for—believe you me—China would be far more difficult than Russia.

[Kirsty Blackman]

It has been an incredibly wide-ranging debate. Everyone has had the opportunity to speak on their own amendments and I find myself trying to speak on everyone’s amendments. I will do my best but if I miss anyone’s it is not personal—it is just that there are a lot of them. I will try to focus on those we are expected to vote on and some that we feel most passionately about.

I was glad to hear the Minister talking about the positions of the Welsh and Scottish Parliaments and recognising that they are consistent with previous positions on trade deals. We consistently believe there is overreach in extending into devolved areas and that is why legislative consent has been withheld on this occasion. Since Brexit particularly, the UK Parliament has been meddling in devolved areas, or allowing itself the power to do so, far more than previously. That is one of the many unfortunate consequences of “bringing back power”: it is power to the Executive, not so much to the devolved Administrations or the rest of us in Parliament.

This Bill is key because the spending of taxpayers’ money for the benefit of, and on behalf of, taxpayers is a hugely powerful and important method the Government can use to ensure that they serve citizens in the best possible way, and that they support behaviours that they want to support and reject those they want to reject, in much the same way as tax laws and new tax measures can be created and implemented to discourage or encourage certain behaviours. There is an opportunity in the Procurement Bill and public procurement to do more than the Government have done in encouraging behaviour.

A number of amendments from Opposition Front Benchers specifically focus on that. I am pleased to see the tax transparency amendment, new clause 10. It makes sense to ask companies to be open and upfront about how much tax they are paying. It is very difficult to find out some of this information and it makes a huge amount of sense that decisions around public procurement could and should be made on the basis of considering whether companies are actually paying the tax they are or should be liable for here.

Amendment 2 from the Opposition on transparency declarations is also incredibly sensible. A number of Members around the House have mentioned the VIP lanes and the fact that there were fast-track contracts in relation to covid. The amendment strikes the right balance. The Government say we need to have fast-track processes and to be able to award contracts quickly. Amendment 2 would still allow that to happen. It would allow the speed that is necessary in emergencies and crises such as covid. It would allow procurement to happen speedily, but would increase the transparency; whether it is an MP, a peer, a senior civil servant or a Minister, a transparency declaration would be required. We wholeheartedly support that amendment.

I turn to amendment 18 on breaching staff rights. The amendment is once again about trying to encourage the behaviour we want to see. We want to see public money, public spending and public contracts going to companies who treat their workers fairly and do not breach workers’ rights. The amendment sets a high bar on exclusion from public procurement as it is specifically about excluding those companies found guilty by an employment tribunal or a court; it not just on the basis of one whistleblower whose case may not yet have been proven. Once again, we wholeheartedly support that.

16:15

The hon. Member for Leeds East (Richard Burgon) is not in his place to talk about the amendments on the real living wage. They are incredibly good and helpful amendments, so I am slightly disappointed that they are not to be moved by the Labour Front-Bench team. It would have been nice to have had a vote on the real living wage and on ensuring that companies who get public money pay workers enough to live on. I cannot believe that we need once again to discuss the fact that people need to be paid enough to live on.

Ensuring that people are paid a more reasonable amount of money is a win-win for the Government, because they would have to give out less money in universal credit. Many people are on universal credit because their wages are not high enough for them to survive on. Ensuring that people are paid the real living wage would reduce the universal credit bill. Workers would feel more valued and not be spending their entire time at work thinking about how on earth they will pay their heating bills.

I apologise to the hon. Member for Brighton, Pavilion (Caroline Lucas) for missing her speech on amendment 60 in relation to the environment. I am sure it was excellent—her speeches always are. I have tabled similar amendments to various Bills in the past. I wholeheartedly agree that the Government need not just to talk the talk on climate change but to write it into every piece of legislation, whether a Finance Bill, procurement guidance and legislation or any kind of Bill. It should have been written into the Advanced Research and Invention Agency Act 2022, for example. For everything that is done, we should consider our environmental impact and our climate change obligations and targets.

We should remember that the Government signed up to those targets—they signed up to the Paris agreement and to the net zero target—but they are not following through. We have all these warm words on climate change—that was not meant to be a pun—but it needs to be the thread running through everything the Government do. We should be leading from the front on climate change, so I support the amendment. I also entirely agree with amendment 17 in relation to SME prompt payment.

The hon. Member for Amber Valley (Nigel Mills) spoke to amendments 61 to 67, which he tabled with the right hon. Member for Barking (Dame Margaret Hodge). At least a couple of my SNP colleagues have also signed them. I agree that the changes asked for would bring the Bill more into line with our expectations in ensuring that all financial transgressions are included under the Bill. I am therefore pleased that he had the opportunity to speak to those genuinely cross-party amendments—not just in the Members who have led on them but in all their signatories. I hope the Government will listen to those calls and make some changes. I fear that we are beyond the point at which that can happen, but at least the issue has been raised.

The Government have mentioned changes to national security. The right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) tabled new clauses, and he and several other Members raised concerns about China and the use of Chinese technology. In Scotland, we have been phasing out Hikvision cameras, for example. I pressed the Minister on a number of occasions on Hikvision, which has been blacklisted in America, but the UK Government have not taken as much action as I would have liked. I welcome the action taken previously and I welcome the fact that they have now agreed to move on this and bring forward a timeline. I echo the calls made by the right hon. Member for Chingford and Woodford Green for an entire phasing out—not just in relation to sensitive sites. He is correct to say that while DWP sites may not be considered sensitive, they absolutely are. The amount of personal data they deal with is extensive and, as a result, the risk to many people is massive. I would like—I think he was calling for the same—all cameras and all technology under Chinese laws to be phased out, and for the Government to make commitments in that regard in the timeline that they will publish in six months’ time.

I am not quite clear from the Minister what will happen with the timeline. How much will we be able to scrutinise it? Will there be a ministerial statement in the House, so that when the timeline is published we can ask questions and raise any concerns or queries, or will the timeline just be a governmental document, with no opportunity for MPs to have a formal scrutiny role? I think the Minister understands the strength of feeling across the House, on a cross-party basis. I hope he will be able to give MPs an opportunity to make criticisms, ask questions and get clarity when the timeline is published.

Amendment 68, tabled by the hon. Member for Weston-super-Mare (John Penrose), is on checking that contracts deliver what they say they will deliver. It is important to go further. I have mentioned on a number of occasions that post-legislative review does not take place in the way it should. Many Government Departments are failing, when it comes to post-legislative scrutiny, to work out whether Government policy has achieved its intended aim. We therefore need to go further than the hon. Gentleman suggests. He was talking about the Bill, but it needs to be done for all things where the Government have said, “This policy will raise x amount of money in tax, will cost y amount and will have these outcomes.” I do not think there is effective scrutiny. The Public Accounts Committee cannot possibly cover every single piece of delegated legislation. Government Departments should have the responsibility of doing that. If they are asking us to support subsequent legislation, they should prove to MPs that the previous legislation achieved its aims, or say that it did not and that that is why they want to make a change. The PAC absolutely does a good job but there is a mountain of stuff out there and it cannot possibly look at every single matter. Amendment 68 goes some way on that, but it does not cover all we are looking for.

Finally, we support amendment 3 on organ harvesting, tabled by the hon. Member for St Helens South and Whiston (Ms Rimmer). Concerns about this matter have been raised with me by a significant number of my constituents. I agree that we should take the issue incredibly seriously and I would be more than happy to walk through the Lobby in support of her amendment if she pressed it to a Division. It is not an easy thing to talk about—it is a very difficult thing—and I very much appreciate the fact that she brought it here.

The Bill is necessary: it is necessary to have procurement legislation and it is necessary that we ensure that it is as sound as it can be. I am not sure exactly how much time we will have for Third Reading, but I hope we will have the opportunity to thank all who took part in Committee, particularly the Clerks who, as ever, have been excellent during the passage of the Bill. We will not oppose the Bill on Third Reading, but we will do what we can to support amendments. Again, I welcome the Government’s commitment to make some changes on the back of conversations that they have had with both Conservative and Opposition Members who have been pushing for change.

[Alex Burghart]

It is a pleasure to wrap up a very interesting Report stage on this landmark piece of post-Brexit legislation that will allow our country to rewrite its procurement rules for the first time in decades.

It is a pleasure to follow the hon. Member for Aberdeen North (Kirsty Blackman), who had interesting reflections on the Bill. One could be forgiven for being able to listen to her remarks and not understand that the SNP has absented Scotland from the legislation. That is a great shame, and I believe that deep down she recognises the potential of the legislation. As the years go by, and small and medium-sized enterprises, and other businesses and contracting authorities in England, Wales and Northern Ireland benefit from the new regime, we will take pleasure in reminding businesses and contracting authorities in Scotland that it was the SNP that chose to keep Scotland out of it.

I touched on new clause 1, tabled by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), in my opening remarks. I am grateful for his saying that he will not push the new clause to a vote today. In return, I am pleased to reaffirm what I said earlier: we are happy to talk to him and other colleagues who are concerned about the definition of “sensitive”, to ensure that it captures the issues about which he is concerned. We do not consider “sensitive” to attach itself just to sites of military significance or intelligence centres controlled by the agencies. It goes further, and we will take his points away regarding ministerial movements.

[Sir Iain Duncan Smith]

May I be clear? On the question I was asking, and have been asking, the Government have moved, particularly in reference to the national security laws of China, but my key point is that the Government should consider that all Departments fall into that category. There should not be any “B” definition. It would be far better if everybody were incorporated into that definition by the time the Bill got to the other place. Supplication would then have to be made for a variation or change, which the Cabinet Office will make a decision about. Start with the power; then let them come and ask for it to be changed. That is the way to do it.

[Alex Burghart]

I thank my right hon. Friend for his comments. He will have heard me say earlier that we understand his views that “sensitive” could incorporate a broader range of assets, where information gleaned on the movement of officials and politicians could be detrimental to our national security.

I reaffirm our commitment to make a statement in the House within six months of Royal Assent, setting out the timeline for the removal from sensitive sites of surveillance equipment supplied by companies subject to the national intelligence law of China. I state again my gratitude to my right hon. Friend for his important work in this area and for the constructive dialogue that we have had with colleagues on the matter.

Amendment 3, tabled by the hon. Member for St Helens South and Whiston (Ms Rimmer), introduces a new ground for the exclusion of suppliers involved in forced organ harvesting. The amendment replicates an amendment made to the Bill in the other House, and subsequently removed by Committee of this House. I reassure her that the Government are not turning a blind eye to the extraordinarily important subject that she raises and highlights consistently.

We are in full agreement that complicity in the abuses associated with the overseas organ trade must not be tolerated. The Government have taken action to address that issue on a number of fronts. The Health and Care Act 2022 prohibits commercial organ tourism. I know the hon. Lady was involved in discussions leading to those provisions being included in the Act. The Government continue to monitor and review evidence relating to reports of forced organ harvesting in China, and maintain a dialogue with leading NGOs and international partners on that very important issue. I reassure her that forced organ harvesting is already covered by the exclusion grounds for professional misconduct. These grounds cover serious breaches of all ethical and professional standards—whether mandatory or not—that apply to different industries and sectors. The mandatory grounds in relation to corporate manslaughter and human trafficking are also relevant in this context. We have sought to limit the grounds—particularly those which, like this one, require an assessment of factual circumstances by the contracting authority—to those where there is a major and particular risk to public procurement. We are not aware of any evidence that a supplier to the UK public sector has been involved in forced organ harvesting, but I want to reassure the hon. Lady that the Bill will be able to deal with this horrendous practice appropriately.

16:30

Amendment 18, tabled by the hon. Member for Vauxhall (Florence Eshalomi), would introduce a new discretionary ground for exclusion in relation to labour law infringements in the past year. In my view, the amendment is unnecessary. We have already made explicit provision for a new discretionary exclusion ground to disregard bids from suppliers that are known to use forced labour or perpetuate modern slavery themselves or in their supply chains when that has occurred in the last five years. Furthermore, we have expanded the scope of the mandatory exclusion grounds for serious labour offences, with new grounds including refusal or wilful neglect to pay the national minimum wage and offences relating to employment agencies. Additionally, when the treatment of workers and the protection of their rights is relevant to the contract being procured, contracting authorities are entitled to set conditions of participation in these areas, and to evaluate treatment of workers as part of the award criteria in assessing tenders. The Government have published detailed guidance for contracting authorities to apply this to their procurements.

New clause 16, tabled by my hon. Friend the Member for Isle of Wight (Bob Seely), would require the Secretary of State to make provision for eradicating the use of goods or services that have been tainted by modern slavery. Of course there is no place for modern slavery in our supply chains, and there is already comprehensive guidance for contracting authorities on assessing and addressing modern slavery risks in supply chains. The guidance refers practitioners to the Global Slavery Index and the United States “List of Goods Produced by Child Labor or Forced Labor” to help them to assess the risk of particular contracts. Since April this year, suppliers have been required to detail their supply chains at selection stage in procurements that have been assessed as “high risk” in relation to modern slavery by a contracting authority. My hon. Friend is no longer in the Chamber, but were he present he would be pleased to hear that we think he has made an important point about forensic supply chain tracing, and we will seek to reflect that in the guidance in future.

As my hon. Friend knows, we are strengthening the grounds for exclusion in relation to modern slavery by expanding the mandatory grounds for serious labour offences and introducing a new discretionary exclusion ground for labour market misconduct. The Bill makes it clear that contracting authorities may apply the grounds for exclusion to supply chains, and must apply them to subcontractors on which they are relying to meet conditions of participation. We are also introducing for the first time in the UK a public debarment list of suppliers that meet a ground for exclusion and pose a risk of the issues re-occurring.

New clause 13, also tabled by my hon. Friend the Member for Isle of Wight, aims to ensure that the Government reduce the dependency of public bodies on countries identified as either systemic competitors or threats to the UK by the Integrated Review of Security, Defence, Development and Foreign Policy. I sympathise with my hon. Friend’s position, and have spoken to him about this topic on a few occasions. The need to develop and maintain resilient supply chains is an issue of which the Government are very aware, and I can reassure him that we are already taking steps to manage it. The Department for Business and Trade manages the recently established directorate for global supply chains, which works across Government to strengthen critical supply chains and assess and act on vulnerabilities. As a direct result of the integrated review, it has developed a resilience framework which highlights areas to be explored when dependencies in supply chains are being reduced, and has set up the UK-Australia supply chain resilience initiative to develop and improve public sector approaches to managing critical supply chain risks. The Centre for the Protection of National Infrastructure has also published guidance to prevent hostile actors from exploiting vulnerabilities in supply chains.

Improving supplier diversity and resilience is another key strategic priority for procurement, as is set out in the National Procurement Policy Statement. Achieving this objective will be facilitated in the new regime by, for example, the move from “most economically advantageous tender” to “most advantageous tender”, which will encourage contracting authorities to take factors other than price into consideration when developing award criteria. Criteria could include, for example—when it is relevant to the particular contract—the assessment of long-term supply chain resilience, including consideration of geopolitical instability.

Let me now deal with amendments 61 to 67, which were spoken to by my hon. Friend the Member for Amber Valley (Nigel Mills), and concern the exclusions regime. Amendments 61 and 62 seek to reduce the factors or commitments from suppliers that contracting authorities can take into consideration when determining if a supplier should be excluded from a procurement. We want the exclusions regime to encourage suppliers to engage with us to get better and operate in a manner that the Government find acceptable, whenever that is possible. Similarly, to reach a valid conclusion, contracting authorities should be able to consider pertinent evidence and information, in whatever way that is presented, and the Bill must support that. This is why the Bill allows for consideration of future commitments by the supplier, which can be verified and monitored by authorities and other appropriate factors. The only restriction on the information that contracting authorities can request is that it must be proportionate in the circumstances.

Amendment 63 seeks to remove the reasonable proportionality test in clause 58(3). It should be noted that this sensible threshold, alongside the broader list of matters that can be taken into account, broadens the ability of the contracting authority from the current regime. It is, however, right that contracting authorities should be proportionate and consider the information requested in light of the specific events being considered. For example, they should refrain from insisting that information is generated that would incur significant cost, if it is not directly related to the question at hand.

Amendments 64 to 66 seek to add various offences relating to economic crime as mandatory exclusion grounds. I believe that my hon. Friend the Member for Amber Valley suggested in his speech that a conviction for bribery was not a ground for mandatory exclusion. I can assure him that it is. A discretionary cause for exclusion is the failure to prevent bribery. There is a distinction between the two.

[Debbie Abrahams]

I just want to make sure that the Minister has not forgotten my new clause 12.

[Alex Burghart]

I absolutely have not, and I am very much looking forward to getting to it after I gone through the intervening amendments. I appreciate the hon. Lady’s enthusiasm.

The mandatory grounds for exclusion cover the types of misconduct that raise only the most serious risks for contracting authorities. We have strengthened the mandatory grounds significantly in comparison with the EU regime, but they cannot and should not cover every offence that could raise a risk to contracting authorities. However, I can offer reassurance that the offences in question could justify discretionary exclusion on the ground of professional misconduct. This means that contracting authorities would have the flexibility to consider excluding the supplier, but could also factor in the nature of the contract being tendered and other relevant considerations in exercising their discretion.

Amendment 67 seeks to add a discretionary exclusion ground where there is evidence of financial and economic crime activity but there has not been any conviction of the listed offences. These concerns would already be caught by the ground of professional misconduct, which permits contracting authorities to weigh up the available evidence in the context of their procurement and use their discretion in determining whether an exclusion would be appropriate.

New clause 9, tabled by the hon. Member for Richmond Park (Sarah Olney), revisits the issues we discussed in Committee on the application of this Bill to certain healthcare services. New Clause 9 would insert a new clause 119 that would amend the Health and Care Act 2022, effectively deleting the power that enables the Department of Health and Social Care to make bespoke procurement regulations for the purposes of certain healthcare services, known as the provider selection regime. Amendment 13 deletes the existing clause 119 that provides a Minister of the Crown with a power to disapply the Bill to enable the provider selection regime regulations to be applied to those healthcare services.

The combined effect of these two amendments would be to stop the Department of Health and Social Care making separate procurement rules for certain healthcare services, and make the Procurement Bill apply to all healthcare services instead. As was discussed in Committee, the idiosyncrasies of healthcare delivery necessitate some special rules. The decision to create a free-standing scheme of healthcare-specific rules was taken in 2021 to give the NHS the tools required to deliver more joined-up patient pathways through the health system and to avoid some of the problems of double regulation of both the existing healthcare rules and the standard procurement rules. Significant effort has been expended and invested in consulting on and developing that free-standing scheme over several years now. All sides of the marketplace, including commissioners and providers in the healthcare industry, are expecting this new scheme to be delivered promptly to meet the policy aspirations that they have been so extensively consulted upon.

The Procurement Bill does not address any special measures tailored to support the healthcare reform made by the Health and Care Act 2022, as these measures have always been intended to be provided for in the new provider selection regime regulations. For example, the provider selection regime would permit direct awards to be made in defined circumstances, such as critical A&E services, that cannot be disrupted or when a certain provider is required to play a pivotal role in an integrated healthcare system. It would be incredibly unhelpful for both schemes at this critical stage, when both these healthcare regulations and the Procurement Bill are on the cusp of delivery, to start attempting to unpick it all now. Doing so would add unacceptable and entirely avoidable costs and delays to both programmes, for no tangible benefit. It would also mean more NHS contracts being subject to the rules of the Procurement Bill without due consideration of the exemptions and specific arrangements required to safeguard sustainable and joined-up delivery of NHS services to patients.

Of course Parliament will have its rightful opportunity to scrutinise the provider selection regime regulations, but it cannot be right to do this through the Procurement Bill for the purpose of killing off a near-ready scheme that supports important healthcare reforms that have already been debated and agreed by Parliament in the Health and Care Act.

Amendment 14, also tabled by the hon. Member for Richmond Park, would explicitly name the NHS in the definition of a contracting authority, a matter also discussed in Committee. Although I understand and entirely agree with the view that NHS bodies should be contracting authorities within the scope of this legislation, there is no need for any amendment in this respect, as the Bill already applies to NHS bodies in its current form.

New Clause 10, tabled by the hon. Member for Vauxhall, would require the submission of a tax report where a bidder is a multinational supplier. The tax reports of winning bidders would then be published. I understand that the aim of this amendment is to encourage contracting authorities to favour suppliers that can demonstrate responsible tax conduct. However, hon. Members will know that the basis on which contracts must be awarded under the Bill is by reference to award criteria that relate to the contract being tendered, not to other matters such as where a supplier pays tax. This is the right principle to deliver value for money for the taxpayer. Crucially, it is also a feature of the UK’s international obligations under the World Trade Organisation’s Government procurement agreement. Of course, the Government expect businesses to take all necessary steps to comply with their tax obligations. It is for His Majesty’s Revenue and Customs to enforce the law on tax, and indeed UK-based multinational enterprises are required to make an annual country-by-country report to HMRC.

Turning to amendment 2, tabled by the right hon. Member for Ashton-under-Lyne (Angela Rayner), we consider that the Bill already has the balance right in terms of achieving greater transparency on direct award. Indeed, save for the small subset of user-choice contracts, it will now be mandatory to publish a transparency notice declaring an intention to award a contract in every case. This will include confirmation of the contracting authority having undertaken a conflicts assessment prior to signature of the contract.

In addition, the Bill also requires the conflicts position to be kept under review and to be revised at key points in the procurement, which will be confirmed via the contract details notice, after the contract is signed. This further ensures contracting authorities comply with ongoing statutory requirements contained in the Bill. Of course, we are all aware that MPs and peers are already required to register their interests, and civil servants are required to confirm annually that their declarations of interest are up to date. Furthermore, the Bill includes an additional safeguard in clause 83(4) so that where

“a contracting authority is aware of circumstances that…are likely to cause a reasonable person to…believe there to be a conflict”

these must also be addressed. We take these matters very seriously, and there is no need for additional provision to cover this issue. We will continue to work with contracting authorities to show that they know the requirements around conflicts of interest and that they are implemented effectively.

On new clause 12, I welcome the ongoing efforts of the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) to improve liquidity for small businesses, including by advocating for and championing the increased use of project bank accounts. We recognise the energy and enthusiasm she brings to that campaign.

As I said in Committee, project bank accounts are most often an effective way to ensure fair payment and to protect suppliers, and they are already the Government’s preferred vehicle for construction contracts where it is cost-effective and cost-efficient. Government Departments have made a commitment to use PBAs in construction projects unless there are compelling reasons not to do so. However, it is not the Government’s position that PBAs should be mandated across all contracting authorities, as they are not always suitable or cost-effective, particularly where the subcontractor is very small or is paid more frequently than monthly, or where the supply chain is short. Instead, we intend to continue educating contracting authorities, through guidance, on the circumstances in which we believe PBAs are practical and effective.

[Debbie Abrahams]

I remind the Minister that new clause 12 covers contracts worth over £2 million, so it is not for all contracts.

[Alex Burghart]

I accept the hon. Lady’s point, but there are other circumstances to consider, which I have just outlined.

We are already working with industry to discourage the withholding of retentions by supporting zero retention for high-quality work pilot projects and reducing the default rate of retentions within certain types of contract to zero. However, we do not support dictating the operation of construction contracts to the degree proposed.

14:39

Amendment 68 was tabled by my hon. Friend the Member for Weston-super-Mare (John Penrose). We very much understand the reasons why he is behind this proposal, and we agree about the value of a systematic evaluation of public contracts. We welcome the constructive conversations he has had with Baroness Neville-Rolfe in the Lords and with the Paymaster General in this place. We are not going to accept the amendment, as the Government are already committed to the evaluation of public contracts in order to improve supplier performance and inform decisions on future requirements. The Bill will ensure that contracting authorities have the data they need to drive value for money and identify cost savings in their procurements by, among other things, the Bill’s contract review provisions, based on the publication of key performance indicators for public contracts over £5 million.

The introduction of an external assessment of even a small percentage of public contracts will significantly increase the regulatory burden for contracting authorities, given the sheer volume of public contracts. The Bill needs to strike a balance between the regulatory burden in terms of time and effort, and effective targeted evaluation of public contracts. The Bill sets out the minimum evaluation requirements for all types of contracts. Contracting authorities will have the flexibility to adopt wider or deeper methods of evaluating contracts in a proportionate manner. However, we are very happy to continue to work with my hon. Friend on what we can do to facilitate his ideas outside placing them in the Bill.

In conclusion, based on the reasons I have given, I respectfully ask that Members do not press their amendments to a vote, but I thank them for their contributions.

Question put and agreed to.

New clause 15 accordingly read a Second time, and added to the Bill

New Clause 10

Tax transparency

“(1) This section applies to any covered procurement for a public contract with an estimated value of £5 million or over.

(2) When assessing tenders under section 19 or awarding a contract under section 41 or 43, a contracting authority must require the submission of a tax report where a supplier is a multi-national supplier.

(3) Where a multi-national supplier fails to submit a tax report, a contracting authority must exclude the supplier from participating in, or progressing as part of, the competitive tendering procedure.

(4) Subject to subsection (5), a contracting authority that enters into a contract with a multi-national supplier must publish a copy of the tax report—

(a) if the contract is a light touch contract, before the end of the period of 120 days beginning with the day on which the contract is entered into;

(b) otherwise, before the end of the period of 30 days beginning with the day on which the contract is entered into.

(5) Where a copy of a contract is by virtue of regulations under section 95 published under section 53(3)on a specified online system, the tax report relating to that contract must be published on the same specified online system—

(a) if the contract is a light touch contract, before the end of the period of 120 days beginning with the day on which the contract is entered into;

(b) otherwise, before the end of the period of 30 days beginning with the day on which the contract is entered into.

(6) A ‘multi-national supplier’ is a supplier with two or more enterprises that are resident for tax purposes in two or more different jurisdictions.

(7) A ‘tax report’ means a report setting out—

(a) the income booked in the UK,

(b) the profit before tax attributable to the UK,

(c) the corporate income tax paid on a cash basis in the UK,

(d) the corporate income tax accrued on profit/loss attributable to the UK, and

(e) any other information specified in regulations under section 95

for the multinational supplier.

(8) A Minister of the Crown may by regulations amend this section for the purpose of changing the financial threshold.” —(Florence Eshalomi.)

This new clause would require large multinational corporations bidding for a public contract to provide information about their Income booked in the UK, their profit before tax attributable to the UK, their corporate income tax paid on a cash basis in the UK and their corporate income tax accrued on profit/loss attributable to the UK, and that information to be published.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

16:47

Division 252

Ayes: 231

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Labour: 163
Scottish National Party: 40
Liberal Democrat: 11
Independent: 5
Democratic Unionist Party: 5
Plaid Cymru: 2
Social Democratic & Labour Party: 1
Alliance: 1
Alba Party: 1
Green Party: 1

Noes: 282

---

Conservative: 282
Independent: 1

Clause 2

Contracting authorities

Amendments made: 19, page 2, line 17, leave out “subsection” and insert “subsections (8A) and”

This amendment is consequential on Amendment 20.

Amendment 20, page 3, line 12, at end insert—

‘(8A) In this Act, a reference to a public authority includes a reference to the Common Council of the City of London.” —(Alex Burghart.)

This amendment would mean that a reference to a public authority in the Bill includes the City of London.

Clause 43

Switching to direct award

Amendments made: 21, page 29, line 29, leave out “19” and insert “19(3)(a), (b) or (c)”

This amendment would mean that a contracting authority could not rely on clause 19(3)(d) to justify a switch to direct award - which (in not referring to “material” breach) is broader than clause 43(2)(e).

Amendment 22, page 29, line 34, leave out paragraph (c)

This amendment would mean that a contracting authority would have to apply the clause 19 rules on abnormally low tenders before relying on that fact to switch to direct award.

Amendment 23, page 29, line 37, after “notice” insert “or associated tender documents”—(Alex Burghart.)

This amendment would reflect the fact that some procedural requirements will be in associated tender documents.

Clause 44

Transparency notices

Amendment proposed: 2, page 30, line 16, at end insert—

‘(4) Any Minister of the Crown, Member of Parliament, Member of the House of Lords or senior civil servant involved in recommending a supplier for a contract under section 41 or 43 must make a public declaration to the Cabinet Office of any private financial interest in that supplier within 10 working days.’—(Angela Rayner.)

This amendment would implement a recommendation by the National Audit Office that any contracts awarded under emergency provisions or direct awards should include transparency declarations.

Question put, That the amendment be made.

17:02

Division 253

Ayes: 230

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Labour: 163
Scottish National Party: 41
Liberal Democrat: 11
Independent: 5
Democratic Unionist Party: 5
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Alliance: 1
Alba Party: 1
Green Party: 1

Noes: 280

---

Conservative: 279
Independent: 1

Clause 52

Key performance indicators

Amendments made: 24, page 35, line 17, leave out “and publish”.

This amendment is consequential on Amendment 25 and would remove the requirement to publish key performance indicators before entering into a public contract.

Amendment 25, page 35, line 21, at end insert—

“(2A) A contracting authority must publish any key performance indicators set under subsection (1).”—(Alex Burghart.)

This amendment is linked to Amendment 24 and would require key performance indicators to be published, but not necessarily before the contract is entered into—further provision about publication would be made in regulations under clause 95.

Clause 57

Meaning of excluded and excludable supplier

Amendments made: 26, page 40, line 8, after “are” insert “continuing or”.

This amendment would make it clear that a contracting authority must be satisfied that circumstances are not continuing—that is, it is no defence to say they have never ceased and therefore cannot re-occur.

Amendment 27, page 40, line 16, after “are” insert “continuing or”.

This amendment would make it clear that a contracting authority must be satisfied that circumstances are not continuing—that is, it is no defence to say they have never ceased and therefore cannot re-occur.

Amendment 28, page 40, line 18, at end insert—

“(2A) If a supplier is an excluded supplier on the basis of the supplier or an associated person being on the debarment list only by virtue of paragraph 34A of Schedule 6 (threat to national security), the supplier is to be treated as an excluded supplier only in relation to public contracts of a kind described in the relevant entry.”—(Alex Burghart.)

This amendment is consequential on Amendment 57 adding new paragraph 34A to Schedule 6, and would allow a supplier to be debarred only in respect of particular contracts.

Clause 58

Considering whether a supplier is excluded or excludable

Amendments made: 29, page 40, line 28, after “are” insert “continuing or”.

This amendment is consequential on Amendments 26 and 27.

Amendment 30, page 40, line 35, after “circumstances” insert “continuing or”.—(Alex Burghart.)

This amendment is consequential on Amendments 26 and 27.

Clause 59

Notification of exclusion of supplier

Amendments made: 31, page 41, line 31, leave out “on the basis” and insert—

“(i) under section 57(1)(a) or (2)(a) by virtue”.

This amendment would clarify that a contracting authority would only have to notify the appropriate authority if it excludes a supplier on the basis of its own judgement (rather than the debarment list).

Amendment 32, page 41, line 31, at end insert—

“, or

(ii) on the basis of being on the debarment list by virtue of paragraph 34A of Schedule 6 (threat to national security).”—(Alex Burghart.)

This amendment would require a contracting authority to notify the appropriate authority if it excludes a supplier on the basis of a supplier being on the debarment list by virtue of the new ground to be inserted by Amendment 57.

Clause 60

Investigations of supplier: exclusion grounds

Amendments made: 33, page 42, line 18, after “may” insert—

“, for the purpose of considering whether an entry could be added to the debarment list in respect of a supplier,”.

This amendment would clarify that investigations are for the purpose of considering whether an entry to the debarment list could be added in respect of a supplier.

Amendment 34, page 42, line 21, at end insert—

“(1A) A Minister of the Crown must—

(a) have regard to the fact that contracting authorities may be unknowingly awarding public contracts to suppliers that—

(i) could be excludable suppliers by virtue of paragraph 14 of Schedule 7 (threat to national security), or

(ii) are sub-contracting to suppliers that could be excludable suppliers by virtue of that paragraph, and

(b) in light of that fact, keep under review whether particular suppliers or sub-contractors should be investigated under this section.”

This amendment would require a Minister to keep under review whether particular suppliers or sub-contractors should be investigated under this section.

Amendment 35, page 42, line 22, leave out subsection (2).—(Alex Burghart.)

This amendment would clarify that investigations under clause 60 are for the purpose of considering whether a supplier could be put on the debarment list, rather than potentially being connected to an application under clause 64.

Clause 61

Investigations under section 60: reports

Amendment made: 36, page 43, line 27, leave out from “out” to end of line 36 and insert—

“whether the Minister is satisfied that the supplier is, by virtue of a relevant exclusion ground, an excluded or excludable supplier, and if the Minister is so satisfied—

(a) in respect of each applicable relevant exclusion ground—

(i) whether it is a mandatory or discretionary ground,

(ii) the date on which the Minister expects the ground to cease to apply (see paragraph 43 of Schedule 6 and paragraph 16 of Schedule 7), and

(iii) whether the Minister intends to make an entry to the debarment list,

(b) in respect of the exclusion ground in paragraph 34A of Schedule 6 (if applicable), the description of contracts in relation to which the Minister—

(i) is satisfied the ground applies, and

(ii) intends to refer to in a relevant entry in the debarment list, and”.—(Alex Burghart.)

This amendment would ensure that the investigation reports specify the description of contracts in respect of which a supplier is to be an excluded supplier by virtue of the ground added by Amendment 57, and clarify that the report can be prepared and published before an entry is made.

Clause 62

Debarment list

Amendments made: 37, page 44, line 21, leave out from “must” to end of line 29 and insert—

“include the relevant debarment information.

(3A) In this section, the “relevant debarment information” means—

(a) the exclusion ground to which the entry relates;

(b) whether the exclusion ground is mandatory or discretionary;

(c) in the case of an entry made on the basis of paragraph 34A of Schedule 6 (threat to national security), a description of the contracts in relation to which the supplier is to be an excluded supplier;

(d) the date on which the Minister expects the exclusion ground to cease to apply (see paragraph 43 of Schedule 6 and paragraph 15 of Schedule 7).”

This amendment would ensure that the debarment list can specify the description of contracts in respect of which a supplier is an excluded supplier by virtue of the ground to be added by Amendment 57.

Amendment 38, page 44, line 33, leave out “section 64” and insert “sections 63 to 65”.

This amendment is consequential on the new clauses inserted at Committee providing additional rights to suppliers placed on the debarment list.

Amendment 39, page 45, line 3, leave out “at any time” and insert—

“(ba) in the case of an entry added on the basis of paragraph 34A of Schedule 6 (threat to national security), may revise an entry to remove a description of contracts,”.

This amendment would ensure that the Minister could remove certain descriptions of contracts from the entry of a supplier that is an excludable supplier by virtue of the ground to be added by Amendment 57 without removing the entire entry.

Amendment 40, page 45, line 4, leave out “(3)(b)” and insert “(3A)(d)”.

This amendment is consequential on Amendment 37.

Amendment 41, page 45, line 5, leave out—

“an entry from the debarment list”

and insert “or revises an entry”.

This amendment is consequential on Amendment 39.

Amendment 42, page 45, line 9, leave out “from the debarment list”.

This amendment is to ensure consistent references to “removal or revision of entries” (in line with the other Government amendments to this clause).

Amendment 43, page 45, line 11, at end insert—

“, and

(b) in the case of an entry added on the basis of paragraph 34A of Schedule 6 (threat to national security), revise the entry to remove a description of contracts if the Minister is satisfied the exclusion ground in that paragraph does not apply in relation to contracts of that description.”

This amendment would require the Minister to remove a description of contracts from a debarment list if the Minister is satisfied that the ground to be added by Amendment 57 does not apply in relation to them.

Amendment 44, page 45, line 17, leave out—

“an entry from the debarment list”

and insert “or revising an entry”.—(Alex Burghart.)

This amendment is consequential on Amendments 39 and 43.

Clause 64

Debarment list: applications for removal

Amendments made: 45, page 46, line 6, leave out from “for” to end of line 10 and insert—

“the removal or revision of an entry made on the debarment list in respect of the supplier.”

This amendment is consequential on Amendments 39 and 43.

Amendment 46, page 46, line 20, at end insert—

“(3) After considering an application under subsection (1), the Minister must—

(a) notify the supplier of the Minister’s decision, and

(b) give reasons for the decision.”—(Alex Burghart.)

This amendment sits alongside Amendment 37, which would remove the reference to maintaining an entry on the debarment list from things to be published as part of a report of an investigation under clause 60. It is clause 64 that is concerned with maintaining entries, not clause 60.

Clause 65

Debarment decisions: appeals

Amendments made: 47, page 46, line 24, at end insert—

“(aa) to indicate contracts of a particular description as part of an entry made in respect of the supplier on the basis of paragraph 34A of Schedule 6 (threat to national security),”.

This amendment would permit suppliers to challenge their being made an excluded supplier in relation to particular contracts by virtue of the ground to be added by Amendment 57 (instead of having to challenge the whole entry).

Amendment 48, page 46, line 26, leave out “(3)(b)” and insert “(3A)(d)”.

This amendment is consequential on Amendment 37.

Amendment 49, page 46, line 27, leave out from “remove” to “following” on line 28 and insert—

“or revise an entry made in respect of the supplier”.

This amendment is consequential on Amendments 39 and 43.

Amendment 50, page 46, line 38, after “(1)(a)” insert “or (aa)”.—(Alex Burghart.)

This amendment is consequential on Amendment 47.

Clause 79

Terminating public contracts: national security

Amendment made: 51, page 56, line 26, at end insert—

“(1A) A relevant contracting authority may not terminate a contract by reference to the implied term in section 78 on the basis of the mandatory exclusion ground in paragraph 34A of Schedule 6 (threat to national security) unless the authority has notified a Minister of the Crown of its intention.”—(Alex Burghart.)

This amendment would mean that, as with the existing national security exclusion ground in paragraph 14 of Schedule 7, a relevant contracting authority would need to notify a Minister before terminating a contract in reliance on the new exclusion ground to be added by Amendment 57.

Clause 97

Information relating to a procurement

Amendment made: 52, page 66, line 31, leave out subsection (3).—(Alex Burghart.)

This amendment is consequential on similar provision being made in NC15.

Clause 110

Welsh Ministers: restrictions on the exercise of powers

Amendment made: 53, page 74, line 4, at end insert—

“(4A) Subsection (1) does not apply in relation to a power under sections 59 to 66 (debarment).”—(Alex Burghart.)

This amendment would ensure that the Welsh Ministers can conduct debarment investigations otherwise than for the purpose of regulating devolved Welsh authorities.

Clause 111

Northern Ireland department: restrictions on the exercise of powers

Amendment made: 54, page 74, line 36, at end insert—

“(5) Subsection (1) does not apply in relation to a power under sections 59 to 66 (debarment).”—(Alex Burghart.)

This amendment would ensure that a Northern Ireland department can conduct debarment investigations otherwise than for the purpose of regulating transferred Northern Ireland authorities.

Clause 112

Minister of the Crown: restrictions on the exercise of powers

Amendment made: 55, page 75, line 19, at end insert—

“(za) sections 59 to 66 (debarment);”.—(Alex Burghart.)

This amendment would ensure that a Minister of the Crown can conduct debarment investigations and put suppliers on the debarment list for the purpose of regulating devolved and transferred authorities.

Schedule 2

Exempted contracts

Amendment made: 56, page 96, line 43, at end insert—

“Commercial contracts of the City of London

38 A contract for the supply of goods, services or works to the Common Council of the City of London other than for the purposes of its functions as a local authority, police authority or port health authority.” —(Alex Burghart.)

This amendment would exempt from the Bill those contracts entered into by the City of London other than for the purposes of its functions as a local authority, police authority or port health authority (for example, operating independent schools).

Schedule 6

Mandatory exclusion grounds

Amendments made: 57, page 107, line 36, at end insert—

“National security

34A (1) A mandatory exclusion ground applies to a supplier in relation to contracts of a particular description if an appropriate authority determines that the supplier or a connected person—

(a) poses a threat to the national security of the United Kingdom, and

(b) would pose such a threat in relation to public contracts of that description.

(2) In sub-paragraph (1)—

(a) the reference to an appropriate authority is a reference to the appropriate authority that is considering whether the exclusion ground applies;

(b) the reference to a particular description includes, for example, a description by reference to—

(i) the goods, services or works being supplied;

(ii) the location of the supply;

(iii) the contracting authority concerned.

(3) Sub-paragraph (1) applies only for the purpose of an appropriate authority’s functions under sections 59 to 66 (debarment), and cannot otherwise be relied on by a contracting authority when considering whether a supplier is an excluded supplier under section 57(1)(a).”

This amendment would allow the Minister to put a supplier on the debarment list as an excluded supplier in relation to contracts of a particular description if satisfied that the supplier would pose a threat to national security in relation to those contracts.

Amendment 58, page 111, line 6, at end insert—

“(d) paragraph 34A (threat to national security).”—(Alex Burghart.)

This amendment is consequential on Amendment 57.

Schedule 7

Discretionary exclusion grounds

Amendment proposed: 18, page 113, line 2, at end insert—

“1A A discretionary exclusion ground applies to a supplier if a contracting authority determines that a supplier, within a year leading to the date of tender—

(a) has been found by an employment tribunal or court to have significantly breached the rights of an employee or worker engaged or formerly engaged by it with one or more aggravating features, or has admitted to doing so; and

(b) has not conformed with applicable obligations in the fields of environmental, social and labour law established by national law, collective agreements or international environmental, social and labour law provisions; and

(c) has not taken steps to rectify the situation through—

(i) paying or undertaking to pay compensation in respect of any damage caused by the breach of rights; and

(ii) clarifying the facts and circumstances in a comprehensive manner by actively collaborating with any relevant employment tribunal or court process and the parties thereto; and

(iii) taking concrete technical, organisational and personnel measures appropriate to prevent further breaches of rights of a similar kind.

1B In making a decision on whether a discretionary exclusion ground applies to a supplier under paragraph 1A, a contracting authority must—

(a) evaluate the adequacy of any action taken by the supplier in accordance with sub-paragraph (c) of that paragraph, taking into account the gravity and particular circumstances of the breach or breaches of rights, and

(b) make reasonable provision for the employer and the employee or worker concerned to make representations, which may be made by agreement by a trade association or trade union.”—(Florence Eshalomi.)

This amendment would give contracting authorities the discretion to exclude suppliers who have significantly and repeatedly breached the rights of staff in the last year unless they have “self-cleansed”.

Question put, That the amendment be made.

17:14

Division 254

Ayes: 225

---

Labour: 162
Scottish National Party: 41
Liberal Democrat: 10
Independent: 5
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Alliance: 1
Alba Party: 1
Green Party: 1

Noes: 288

---

Conservative: 282
Democratic Unionist Party: 5
Independent: 1

Amendment proposed: 3, page 116, line 10, at end insert—

“Involvement in forced organ harvesting

14A (1) A discretionary exclusion ground applies to a supplier if a decision-maker determines that the supplier or a connected person has been, or is, involved in—

(a) forced organ harvesting,

(b) unethical activities relating to human tissue, including anything which involves the commission of an offence under sections 32 (prohibition of commercial dealings in human material for transplantation), 32A (offences under section 32 committed outside UK) or 33 (restriction on transplants involving a live donor) of the Human Tissue Act 2004, or under sections 20 (prohibition of commercial dealings in parts of a human body for transplantation) or 20A (offences under section 20 committed outside UK) of the Human Tissue (Scotland) Act 2006, or

(c) dealing in any device or equipment or services relating to conduct mentioned in paragraphs (a) or (b).

(2) “Forced organ harvesting” means killing a person without their consent so that their organs may be removed and transplanted into another person.”—(Ms Marie Rimmer.)

This amendment is designed to give a discretionary power to exclude suppliers from being awarded a public contract who have participated in forced organ harvesting or unethical activities relating to human tissue, including where they are involved in providing a service or goods relating to such activities.

Question put, That the amendment be made.

17:25

Division 255

Ayes: 229

---

Labour: 162
Scottish National Party: 41
Liberal Democrat: 11
Independent: 5
Democratic Unionist Party: 4
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Alliance: 1
Alba Party: 1
Green Party: 1

Noes: 280

---

Conservative: 276
Independent: 1
Democratic Unionist Party: 1

Schedule 10

Single source defence contracts

Amendment made: 59, page 121, line 27, leave out “subsection (4) or (5)” and insert “this section”.—(Alex Burghart.)

This amendment would allow single source contract regulations to make provision as to whether a contract is or is not an amendment of an existing contract for any purpose under section 14 of the Defence Reform Act 2014, not simply for the purposes of subsections (4) and (5).

Third Reading

17:37

[The Minister for the Cabinet Office and Paymaster General (Jeremy Quin)]

I beg to move, That the Bill be now read the Third time.

I stand here today proud of the progress we have made to deliver an important manifesto commitment. The Procurement Bill constitutes a vital piece of legislation following our exit from the European Union, which allows us to set our own rules that will work best for the UK. I am delighted to say that we will sweep away bureaucratic regulations and broaden opportunity to small businesses right across the country.

One in every £3 of public money, some £300 billion a year, is spent on public procurement. For too long, modern and innovative approaches to public procurement have been bogged down in bureaucracy. We are changing that. The Bill simplifies our public procurement rules, cutting down the 350 different procurement regulations to create a single rulebook. This will create a more efficient, innovative and friendly procurement system, increasing value for money and opening up public contracts to small businesses, in turn supporting the Prime Minister’s commitment to grow the economy.

[Debbie Abrahams]

Will the Minister give way?

[Jeremy Quin]

I keep promising my colleagues that I will be brief, but I will always give way to the hon. Lady.

[Debbie Abrahams]

The Minister is being very generous with his time. He will not be surprised by my question. I was a little disappointed that my new clause 12, on introducing and mandating project bank accounts, was disregarded. I mentioned the estimate that 6,000 small construction firms will go into insolvency this year. What is the Department’s analysis of how that might be prevented by project bank accounts?

[Jeremy Quin]

I am sure I could try to produce a one-hour solution, or I could be more direct with the hon. Lady. I know she has raised this issue on numerous occasions, but she and I have not spoken about it one-on-one. If she wishes to speak to me about it, we could have a meeting, if that would help. I might learn something from it or I might be able to inform the hon. Lady, but if she wishes to do that, I will make certain that we have that opportunity.

[Sir Bill Wiggin (North Herefordshire) (Con)]

On that point, will my right hon. Friend give way?

[Jeremy Quin]

I will also have a meeting with my hon. Friend, if he wishes.

[Sir Bill Wiggin]

Construction businesses are terribly important. If the Government could do something about the ban on building, for example because of pollution in the River Wye, then those construction businesses would find new opportunities and would flourish.

[Jeremy Quin]

My hon. Friend is vociferous on the issue of the River Wye. He never misses an opportunity and has proved his dexterousness yet again, in doing so in this debate.

We, on the Government Benches, are proud to be the party of small business. I am delighted that, as part of this Bill, authorities will now have to have regard to small and medium-sized enterprises and the barriers that they face.

Finally, the Bill will put in place a new exclusions framework that will help to make it easier to reject bids from suppliers whose performance on previous contracts has been unacceptable, or who have been involved in serious wrongdoing, such as fraud, collusion or modern slavery. Crucially, on Report, we introduced a package of vital amendments that will protect our national security and ensure that public contracts do not go to suppliers who pose a risk to our country.

We will also create the national security unit for procurement, which will proactively investigate suppliers for national security threats, and we will publish, within six months of the passing of the Bill, a timeline for the removal of all the surveillance equipment provided by suppliers subject to the national intelligence law of China from sensitive Government sites, protecting places that are most vulnerable to sinister interference and espionage. Together, these changes constitute robust protections against the ever increasing national security threats.

I would like to take this opportunity to thank all hon. Members across the House for the quality of the debates and the scrutiny provided throughout the passage of the Bill. I am indebted to my hon. Friends and to those across the House for the helpful engagement and the comments they have made, which have undoubtedly refined this crucial piece of legislation.

I am particularly grateful to my hon. Friend the Member for Brentwood and Ongar (Alex Burghart) for his excellent work on Committee and on Report in this House, and to Baroness Neville-Rolfe for her tireless work in the other place. The Bill has had a long progression, so I would also like to thank our predecessors, Lord Agnew and my right hon. Friend the Member for North East Somerset (Sir Jacob Rees-Mogg), for their work on the Bill in its earlier stages.

I thank the officials who have worked on this Bill, particularly the Bill manager, Katrina Gayevska, Sam Rowbury, Ed Green, Janet Lewis and other officials who worked on this legislation, as well as the staff in the private offices of all the Ministers in the Cabinet Office, for their support and help throughout.

When he entered office, the Prime Minister said that he would deliver on the manifesto on which we were elected. I am proud today to be doing just that, and I wholeheartedly commend the Bill to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Deputy Leader of the Opposition.

17:43

[Angela Rayner (Ashton-under-Lyne) (Lab)]

I start where the right hon. Member for Horsham (Jeremy Quin) left off, by saying thank you to all right hon. and hon. Members who have spoken today, in particular my hon. Friend the Member for Vauxhall (Florence Eshalomi) for her contributions throughout the stages of the Bill. I also thank the brilliant Clerks and the House staff, and everyone who has been involved and on hand to support every step of the Bill.

It has been a long and complex process, and I know the Cabinet Office has been very busy in recent weeks, so I welcome the opportunity to debate something of more substance today. Unfortunately, the substance of the Bill, while necessary, is a little bit of tinkering around the edges of a broken system. I understand the need for a new Procurement Bill, to consolidate the patchwork of former EU rules and to bring the spaghetti of procurement regulations into one place, but it seems this distracted Government are more concerned with the civil war than writing good legislation.

Britain faces huge economic challenges—challenges made worse by years of economic incompetence, a disastrous kamikaze Budget and a Government on the side of vested interests. Wages have flatlined, prosperity has turned to stagnation and Britain has the highest forecast inflation in the G7. Procurement is one of the biggest and most effective tools available to Government to drive up standards across the economy and create world-class, affordable and effective public services.

As the Minister said in his response, we are talking about £300 billion of public money a year, a third of public spending and more than the NHS budget. What we should be debating this evening is a bold new set of rules to direct investment to the places that need it most. We should be discussing how we can clear the pipes and flush out the system with transparency after years of cronyism and waste. We should be debating legislation that pumps money back into the pockets of local communities, creates decent jobs and skills in our towns and cities, and hands wealth back to the people who built Britain.

Instead, what we have before us today is a damp squib. This Bill fails to close the loopholes that saw obscene waste of taxpayers’ money through the VIP lane, it fails to mandate social value to secure investment in good British business, and it fails to create robust protections for workers. Labour recognises the need for a new procurement Bill, and for that reason we will not oppose this one, but surely we can do better than this.

This evening the Government chose to vote against a Labour amendment that would have blocked VIP lanes, for the third time. They have had three opportunities to show that they have learnt from the waste and the cronyism that we saw during the pandemic, and on all three occasions they have refused. In fact, loopholes included in this Bill will make it easier for Ministers to bypass existing transparency rules. The Tory VIP lane is at the heart of why we need a procurement Bill. It exposed the true weaknesses in the system and showed us why we desperately need a more agile and transparent procurement system.

[Jeremy Quin]

It is a bit late in our proceedings, but I really would encourage the right hon. Lady to read the Bill, even at this late stage.

[Angela Rayner]

I think the Minister knows full well that I have read the Bill, and it is a real shame that in the conversations that my hon. Friend the Member for Vauxhall and I have had with him and his team, they have refused to help stop this loophole. The Tory cronyism on the VIP lane is still there in this legislation. The VIP lane enabled a shameful waste of taxpayers’ money and profiteering by unfit and unqualified providers, and as a result the Government have written off £10 billion of public funds spent on personal protective equipment that was unusable, overpriced or undelivered.

While I welcome the moves in the Bill to issue “transparency notices” before awarding a contract, these are just baby steps; they barely scratch the surface. We must see end-to-end transparency. And it is not just me who thinks that. The amendment that the Government voted down today is a proposal by the National Audit Office, a totally independent body calling for the Government to end their murky practices that saw taxpayers’ money wasted at eye-watering rates.

This Bill also gave us an opportunity to reimagine the way we spend public money in order to promote decent work across the economy, to reward businesses that treat their workers right, and to use procurement to raise the floor on working conditions for all. Any suppliers given taxpayers’ money should provide their workers with decent pay, respect, dignity and fairness, as well as access to a trade union. Economies across the world expect that from their employers. In France, Germany and the Netherlands, for example, more collective bargaining, stronger workers’ rights and a fair share of wealth lead to higher growth, productivity and staff retention. President Biden’s Government direct investment to companies with a track record of treating their workers with respect, so why can’t we?

But over the last 13 years, the Tories have failed to use the levers of government to drive up standards for working people. In fact, things have got worse. I am disappointed but not surprised that the Government today voted down our amendment, which would have held suppliers to account when they repeatedly abuse workers’ rights. Taxpayers do not expect their money to be handed to suppliers with a track record like that. They want to see their money going to suppliers who pay their staff properly and who uphold fair conditions, job security and union access. That is the bare minimum.

I also want to take this moment to welcome the Government’s last-minute amendments on national security. I could not help but recognise some of those amendments. I would also like to pay tribute to the hon. Member for Rutland and Melton (Alicia Kearns), whom I worked closely with to highlight the need for change in managing the risk in procurement. I welcome the Minister’s recognition that the current system leaves the door open for foreign threats to enter our supply chain and for taxpayers’ money to be spent with no oversight on whether they are properly vetted. That said, I hope the Minister can tell us what criteria his Government will use to identify suppliers who pose a risk to national security, and I hope he will consider the inclusion of cyber-security criteria in that assessment.

In closing, I would like to once again thank all hon. and right hon. Members for their contributions today. While procurement might seem a dry topic, it is absolutely central to the way that our country works, and when Ministers abuse the procurement system, it is taxpayers who suffer. As we saw during the pandemic, the VIP lane for PPE contracts was a scandal of epic proportions that allowed the shameful waste of taxpayers’ money and inexcusable profiteering, yet instead of learning the lessons of this failure, this evening Ministers voted for a third time to protect the loophole that allows the VIP lanes to exist. The Government have a duty to learn the lessons from the pandemic and, quite frankly, Ministers have abdicated that duty here today. While the Tories are too distracted to govern, Labour in power would flush cronyism out of the system and protect taxpayers, to ensure that every pound is spent in the national interest.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.

Energy Bill [Lords]: Ways and Means

Resolved,

That, for the purposes of any Act resulting from the Energy Bill [Lords], it is expedient to authorise—

(1) the imposition, by virtue of the Act, of charges or payments under licences issued under the Gas Act 1986;

(2) the making of provision under the Act requiring electricity suppliers to make payments, or to provide financial collateral, to the Secretary of State;

(3) the making of provision under the Act in relation to income tax, corporation tax, capital gains tax, stamp duty, stamp duty reserve tax, stamp duty land tax or value added tax in connection with a transfer of property, rights or liabilities by a scheme under the Act.—(Andrew Bowie.)

Electronic Trade Documents Bill [Lords]: Second Reading

Motion made, and Question put forthwith (Standing Order Nos. 59(3) and 90(5)), That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).

Electronic Trade Documents Bill [Lords] Committee

Ordered,

That the Electronic Trade Documents Bill [Lords] Committee shall have leave to sit twice on the first day on which it shall meet.—(Robert Largan.)