Live Debate: Commons Chamber

Urgent question: To ask the Parliamentary Secretary to the Cabinet Office if he will make a statement on the Government’s Modern Procurement Strategy

Thank you, Mr. Speaker. Every year this country spends around £400 billion of taxpayers money on procurement. And if we're honest,

12:39

Chris Ward MP, The Parliamentary Secretary, Cabinet Office (Brighton Kemptown and Peacehaven, Labour)

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under the current complex system, we do not always spend it as wisely we do not always spend it as wisely as we could. That is why, just before the Easter recess, I announced a major package of reforms to the procurement system, reforms to the procurement system, and I'm grateful to have the chance to update the House today on it. Behind these reforms, Mr. Speaker, Behind these reforms, Mr. Speaker, our three principles. First, the procurement should do much more to protect national security and support British businesses.

Second, that it should deliver a fairer economy, and third, that it should be simpler, fairer and open doors to businesses, small businesses and charities to take those in turn. Mr. speaker, this government believes it matters where things are made and who makes them so. So we will issue new guidance for all government departments to make use of the national security exemptions in the Procurement Act, to direct procurement to serve the national industry. National interest. We will start with four sectors critical to our national security steel, shipbuilding, energy independence and AI.

This will give a clear sign, Mr. Speaker, that this Labour government will back British business and we will use both the weight of our procurement Budget and the powers in the Procurement Act to do so. We will also take two further steps to back British businesses. First, government departments will now be required to confirm whether prime contractors are using UK steel, and they will have to explain why they are not. If so, we will also develop a new shipbuilding framework to restrict government contracts to British firms, where this supports our national security interests.

Mr. speaker, the second principle of these reforms is that procurement should build a fairer economy, and the truth is that for decades, under successive governments, we have had a policy that essentially adds up to outsourcing by default. Well, Mr. Speaker, under this Labour government, the age of outsourcing will end. We will, in line with our manifesto, introduce a public interest test and it will apply to all government departments. They will now be required to assess whether a service can be delivered more effectively in-house, and if it cannot, a clear explanation must be published.

Departments will also, for the first time, be required to publish robust insourcing strategies, setting out how, over the medium term, they will build the capacity to make the biggest wave of insourcing in a generation a reality. Mr. speaker, this marks a step change in how and who our public services are run by and for, and I am proud that this Labour government is delivering it. Mr. speaker, we will also strengthen the role of social value in procurement. Too often this has become a mere tick box exercise and a barrier, not an opportunity for SMEs and start ups.

So working with trade unions, businesses and others, we will create a new definition of social value that will underpin all government procurement. The third principle of these reforms, Mr. Speaker, is to make the procurement system simpler and fairer. I have heard too many times how the complexity, duplication and endless form filling of the current system is among the biggest barriers to SMEs and charities, so we will undertake a rapid review of all existing requirements in the procurement system, and we will see which burdens and duplications can be removed.

If they are not essential, we will scrap them. We will enforce a Telus once principle.

**** Possible New Speaker ****

No, no you don't. Look at the clock. Look at me and you sit down. It's three minutes. I don't know It's three minutes. I don't know who may have told you differently. There was something going wrong in advice that's being given. It's three minutes. I presume you're now

12:43

Mr Speaker

three minutes. I presume you're now going to come to the conclusion immediately. Yes. Try the. >> My apologies, Mr. Speaker. I was

**** Possible New Speaker ****

My apologies, Mr. Speaker. I was told five, but I apologise. I completely apologise syndrome.

12:43

Chris Ward MP, The Parliamentary Secretary, Cabinet Office (Brighton Kemptown and Peacehaven, Labour)

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completely apologise syndrome. >> Let's. Let's. Will not stand up. Please sit down. Don't remain at Dispatch Box. I'm sorry that you were told five minutes. I think by now that Ministers should know how now that Ministers should know how long they get for a statement or a UQ. It is becoming an impossible UQ. It is becoming an impossible situation where Ministers try to change the rules of the House. They're not my rules. These are the rules of the back benches. Please adhere to them.

12:43

Mr Speaker

I can only apologise, Mr. Speaker. In conclusion, these reforms will back British businesses and workers. They will build a fairer economy. They will simplify and open up our government procurement system. There is still much to do, but this is a big step forward and I'm grateful to have forward and I'm grateful to have the chance to set it out to the House today.

12:43

Chris Ward MP, The Parliamentary Secretary, Cabinet Office (Brighton Kemptown and Peacehaven, Labour)

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Again.

12:44

Leigh Ingham MP (Stafford, Labour)

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A change in procurement policy that is more focussed on backing British businesses, investing in British businesses, investing in Britain to help secure thousands of good, unionised jobs and by remaining community focussed, the government will make sure local people are reaping the rewards from this move. I welcome it and I welcome the Minister's statement. Please can the Minister outline what the first steps are to deliver this procurement reform and what it will mean for manufacturers in my constituency and those in constituencies around the UK?

12:44

Chris Ward MP, The Parliamentary Secretary, Cabinet Office (Brighton Kemptown and Peacehaven, Labour)

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Can I thank you for that? And this is a point she's raised a number of times with me before number of times with me before about the importance of changing procurement rules. She's a tremendous champion on this. In terms of next steps, the Cabinet terms of next steps, the Cabinet Office is working on new guidance that we will put before the House very shortly, I hope, before the summer recess. That will sort of make flesh the commitments I've made today, and as I say, it has three big principles behind it backing British businesses, creating a fairer economy and making the system simpler and fairer for all.

12:45

Mike Wood MP (Kingswinford and South Staffordshire, Conservative)

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Mike Wood Sharon Hodgson. >> Mr. Speaker, and I congratulate the hon. Lady on securing this urgent question. I know how rare that is for a government PBS, and I that is for a government PBS, and I welcome the government's ambition to as she's not anymore, sorry, I apologise. I welcome the government's ambition to modernise public procurement, but ambition, as ever, must be matched by delivery. And there are a number of questions the Minister must answer today. The government promised transparency through a new online register of commercial agreements.

When precisely will that register be live and will it be comprehensive from day one? Ministers often speak of backing small business. Will the Minister publish in a single accessible place? Every department's SME target, its latest outturn and whether it is on track or off track, a non prompt payment? How many suppliers have actually been excluded from major contracts for failing to meet the required standards? If this strategy is truly about value for money, why has the government still not resolved the fragmentation, poor quality frameworks and poor use of data and technology that was identified by the National Audit Office on National Security contracting authorities are now required to assess risks not just from the prime contractors, but from associated persons and subcontractors.

How many procurements have been referred for national security consideration, and how many suppliers have been excluded or challenged as a result? What assurances can the Minister give that public contracts are not still flowing into supply chains, with links to hostile states? And what assessment has the Minister made of the EU's emerging Buy Europe policies? Isn't this a protectionist barrier by the European Union? And finally, if social value is now mandatory at 10%, what assessment has been made of the risk that this adds cost and complexity? And particularly for SMEs? I know the House will want clear answers.

12:47

Chris Ward MP, The Parliamentary Secretary, Cabinet Office (Brighton Kemptown and Peacehaven, Labour)

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For those questions. Let me try and answer a few of them. Firstly, on SMEs and department spend. I mean, as I say, part of this package is to try and support SMEs and to make sure they have a greater chance of winning contracts. We did publish the departmental spends the day before recess. I know there was a lot going on, but we have published them. They are there and they show a very ambitious step forward. I believe around £7 billion of government contracts will go to SMEs as a result of those changes.

I'm very proud of what we are doing. It's the first time government have done it and we've helped drive that through. We've worked very hard on that. He asked about Buy Europe. Look, this is not in conflict with any of our international agreements. It's obviously not in conflict also with our negotiations with the EU that my right hon. Friend is is leading on and we work closely on that. But at the heart of this is a recognition that we need to use our procurement Budget within international law and with international regulations to do more to support our industries.

And that is quite the right thing to do, and I hope we can get cross-party support. He also asked me about social value again. I think he was implying that we are making this mandatory. It is already mandatory and it is already weighted at 10% within the contracting system. I'm not changing that here. What I'm saying is I'm changing the definition of social value so it will do more to support communities, and it will do more to make sure that it really works.

And it really supports communities for doing it. So there's no change on that. He asked me a couple of specific questions around national security points. I will get back to him if that's OK. But in general terms, I hope we can get cross-party support on this. The Procurement Act was passed with cross-party support. It was a step forward, but this is the next big step in trying to make sure we do much more with that Budget to support Britain.

12:48

Dame Chi Onwurah MP (Newcastle upon Tyne Central and West, Labour)

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Thank you, Mr. Speaker, and let >> Thank you, Mr. Speaker, and let me applaud the government's move to me applaud the government's move to use the £400 billion of public procurement. Almost one eighth of British GDP in the interests of the British people and the British economy. And the Select Committee for science, Innovation and Technology has often heard that a government contract is worth more than a government grant to the start ups and spin outs, which are so important to our economy.

Can you also confirm that this approach will be joined up with our strategy for sovereign capability, so that we do not find ourselves once again in the position where the Ministry of Defence awards a contract without competition to a US large US AI company, Palantir. When there are UK companies desperate for that kind of investment.

12:49

Chris Ward MP, The Parliamentary Secretary, Cabinet Office (Brighton Kemptown and Peacehaven, Labour)

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Can I thank her for that? And obviously she brings a huge level of expertise and background on this. of expertise and background on this. And just to reassure her part of the package, I'm announcing an the package, I'm announcing an announcement before Easter is to try and help our sovereign AI industry, and it is to help science and technology as, as well, and to and to really boost start ups, because a lot of the stories I've heard in the time I've been doing this job is about how the procurement rules work.

Fine. If you if you have a large procurement part of your company to try and win them, it's not so good if you're a Start-Up, if you're a voluntary group, if you're trying to win your way into government contracts, we should be doing much more to help them. And yes, we are joining this up across government. It will be with the industrial strategy and also with our steel strategy I spoke about earlier as well.

12:50

Lisa Smart MP (Hazel Grove, Liberal Democrat)

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Lisa Smart Liberal Democrats. >> Very much, Mr. Speaker. We need to do far more to back British small businesses through public procurement, both to boost growth procurement, both to boost growth and to ensure our own national security. Public procurement amounts to hundreds of billions a year. The Procurement Act was meant to ensure more of that money reached British small businesses, but in practice, for many, they report, it's made things worse. Payment rules are being flouted by middlemen who face no consequences.

Suppliers who complain are threatened with losing future work. Bad debts amounting. This is public money disappearing into a vacuum and a security risk. There are businesses asking, what is the point of legislation that rogue traders can ignore with complete impunity, while loyal British SMEs are being pushed out of the market they built? Does the Minister agree that the target for government spending with small businesses should be far higher than the current level? And could he explain when will the payment reporting transparency be implemented? Yeah.

12:51

Chris Ward MP, The Parliamentary Secretary, Cabinet Office (Brighton Kemptown and Peacehaven, Labour)

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Thank you very much. Look, I basically agree with her assessment of of the procurement system and how it how it it doesn't do what it should, as I say, £400 billion of taxpayers money is being spent here. We need to make sure we spend it every pound of that to support British industry as we as far as we can, and to support jobs and deliver fairness, and to support SMEs on that as well. I would just point out, though, I think the Procurement Act did help SMEs.

It did make progress towards it, but it doesn't go far enough. And, you know, it's not the job of this government to defend the status quo. It's the the job of this government to change it. So we will do that. I will come back to her on the specific point around payment thresholds.

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