Procurement Bill [HL]

Baroness Hayman of Ullock Excerpts

Committee stage
Monday 24th October 2022 Grand Committee

These amendments are absolutely crucial. Whether they are strong enough, I am not quite sure, but I urge the Government to listen to the words of the chair of the Committee on Standards in Public Life.

[Baroness Hayman of Ullock (Lab)]

My Lords, I also start by welcoming the Minister to her new role. I thank her and her officials for having a useful meeting with us ahead of today. Let me say how pleased we are to have a Minister who is genuinely interested in this Bill. The noble Lord, Lord Fox, talked about the Minister’s previous involvement; I am sure that her knowledge and interest will lead us into a better place.

I will start with the two amendments in the name of my noble friend Lord Hunt of Kings Heath, Amendments 177 and 180, to which we offer our strong support. Clearly, all of us should embrace anything we can do to tackle tax abuse and tax avoidance. I hope the new Government—we are looking forward to hearing what they have to say—will prioritise this area.

My noble friend talked about Amazon, the lack of accountability and the kind of poor practice that is replicated by many companies, and gave a thorough explanation of why the legislation in front of us could be used to make a difference to cases of tax avoidance and abuse. I hope the Minister listened to those concerns seriously and considers whether this Bill is an appropriate vehicle to address them.

The noble Lord, Lord Fox, introduced a number of amendments in the name of the noble Lord, Lord Wallace, to which I have added my name. I will not go into them in detail, only to say that we support incorporating evasion of criminal sanctions into the Bill. The failure to prevent bribery offences has been incredibly disappointing, and the Bill could be used to tighten that up and make more progress. Also clearly disappointing are the very few convictions there have been under the Proceeds of Crime Act. How can we use this Bill to make a difference in these areas where there is still concern? I am sure all noble Lords agree that we need to ensure proper and effective enforcement to curb any serious wrongdoings in these areas.

Briefly on Amendments 323, 326 and 327, in the name of the noble Baroness, Lady Noakes, she clearly introduced something that I had not really considered until I read these amendments. Again, “considered” is the important word here. She is absolutely right that you need to think about the strength of a subjective test and how it would be interpreted. I completely agree with her; we need to understand this better. I would be interested to hear from the Minister on this, because the noble Baroness, Lady Noakes, is correct that judicial review is simply not a practical option for SMEs; it just is not. How will this be interpreted and managed through the Bill? I look forward to the Minister’s responses.

[The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)]

My Lords, I thank all noble Lords for their kind welcome on my appointment as Minister of State at the Cabinet Office. I echo the words of the noble Lord, Lord Hunt, about my predecessor, my noble friend Lord True, and his willingness to engage—a model I will try to follow. I am very much in listening mode today, as we are still in Committee, working on the Bill.

I am poacher turned gamekeeper, and that can be a good qualification. As noble Lords know, I have consistently taken a keen interest in the Bill, although from a slightly different perspective. I will not delay you with a long introduction, but I am pleased that the Bill consolidates 350 EU regulations. That is simplification at a stroke: it streamlines public procurement and reduces burdens on business, and it turns EU-based law into UK law, which is why we can be confident of its progress.

In particular, it will benefit SMEs, for which we must do our best to offer a level playing field, so that they can increase their share of the £300 billion spent by public authorities each year. I think the noble Baroness, Lady Bennett, will agree with that. I am also looking forward, if I get the chance, to rolling out training on the Bill—simple, clear, comprehensive training in central and local government, and elsewhere. That will answer some of the concerns that I and others across the House have had on the Bill.

I thank noble Lords for their contributions on the grounds for financial exclusion and will try to respond constructively. I begin with Amendments 177 and 180 tabled by the noble Lords, Lord Hunt and Lord Hain. These seek to ensure that the suppliers who fail to provide contracting authorities with various details in relation to their tax affairs when bidding for contracts must be excluded from procurements. I should start by making it quite clear that the Government expect businesses to take all necessary steps to comply with their tax obligations.

However, noble Lords 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 and ensures that suppliers are not required to provide swathes of information that is irrelevant to the contract. This principle is also a feature of the UK’s international obligations, notably under the WTO government procurement agreement. 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. I note what was said by the noble Lord, Lord Hunt, about Amazon.

The grounds for exclusion in the Bill focus on criminal convictions and other serious misconduct that raises a risk to public contracts, including, importantly, in relation to tax. But investigation does not mean guilt in this country. Exclusion is not a substitute for a judicial process. It is important to let due process run its course before subjecting suppliers to mandatory exclusions.

However, we have broadened the scope of the current regime with the mandatory exclusion grounds related to tax in Schedule 6, which cover all tax evasion offences and involvement in abusive tax arrangements. This is a significant broadening from the current regime, which is limited to where there has been a breach of tax obligations and lets suppliers off where they have repaid or committed to repay unpaid tax. I am confident that these grounds are sufficient to protect contracting authorities and taxpayers.

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[Lord Lansley (Con)]

I hope it is but it does not say so, whereas the 2015 regulations make it clear that it is. I wonder whether this will be an entirely electronic system.

[Baroness Hayman of Ullock (Lab)]

I shall be extremely brief as the noble Lord, Lord Fox, has already covered a lot of the concerns that your Lordships feel. Following on from that, we need some clarification around the issue, as the noble Lord, Lord Lansley, just said, of whether it is or is not entirely electronic. How is that going to operate? What are the conditions of membership? We need some clarification on the detail of how the dynamic markets are going to work. Perhaps the Ministers opposite could write to the Committee with some clarification about the operation of the system ahead of Report. That would be very helpful.

[Viscount Younger of Leckie (Con)]

My Lords, I appreciate the comments made by the three Peers who have spoken. It might be appropriate for me to write a letter to clarify the detail, which I appreciate came across as rather technical—though not too rushed, I hope. I appreciate the questions asked by the noble Lord, Lord Fox, my noble friend Lord Lansley and the noble Baroness, Lady Hayman; I will attempt to answer some of them.

Let me start by saying that the expression “dynamic market” is not just a name change. The dynamic market will have a wider remit than the current dynamic purchasing systems. Importantly, dynamic markets can be used for all procurements rather than just commonly used goods and services. That is the first change. The Bill also provides much greater clarity on how dynamic markets can be established and contracts awarded to suppliers—this is on-the-ground information—and on how contracts can be awarded to suppliers that are members of the dynamic market, as well as increased transparency over their operation. I hope that helps to some extent.

I shall go further in answer to the questions asked by the noble Lord, Lord Fox. The benefit of frameworks is that, once set up, they can be a fast, efficient, compliant and easy-to-use procurement route for both the contracting authority and the suppliers. Again, once the framework is set up, there is a significant reduction in the procurement timescale from six to nine months to as little as four to six weeks, leading to reduced procurement costs. Obviously, that is beneficial for both the public sector and the suppliers.

With this, there are pre-agreed terms and conditions, meaning that contracting authorities can simply call off the framework to meet their requirements. They are usually set up with ceiling prices that can be further reduced by competition at the call-off stage. So the benefit of the dynamic market is that it remains open to all suppliers, which benefits SMEs in particular as they will not be locked out for long periods of time.

On how dynamic markets actually help companies—let us say SMEs, which I think was the gist of the noble Lord’s question—it may be that I need to provide more information, but here we are. The new dynamic markets will be open to new suppliers joining throughout their life, ensuring that no one is locked out from the market for long stretches of time. That will be beneficial to SMEs in particular, which can decide to apply to a dynamic market at any time via a process that will be much simpler and quicker than tendering for a framework.

I believe it will be best if I set out all this information and more in a letter. With that, I hope that the noble Lord will be prepared to withdraw his amendment. Actually, these are government amendments, are they not?

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[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise to speak briefly on Amendment 240 in particular, to which I would have attached my name had I noticed it in time. It is a pleasure to follow the noble Lord, Lord Clement-Jones. What he set out in terms of the problems of framework agreements are the kind of things we often encounter in the pages of Private Eye; it really is time that we saw some action on this issue.

Amendment 240

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

I rather suspect that the nation out there, which is exhausted by politics, is probably not glued to your Lordships’ Grand Committee on the Procurement Bill this evening. I looked up the schedule: people are probably watching either “The Simpsons” or “Britain’s Parking Hell”. However, I know from what I get in my mailbag and what I see on social media that what happened during Covid with VIP lanes is a huge, continuing concern among large numbers of the British public. It was only last month that the Government were forced to admit that 50 firms had been put into the priority lane for test and trace contracts, worth billions. They included Immensa, a firm that was subsequently at the heart of more than 43,000 false negative results and had been incorporated only in May 2020. This came after the Good Law Project successfully challenged the Government’s VIP lane for personal protective equipment contracts.

So we have a situation where people are now looking at politics and saying, “We want to see things done differently”. This small, modest amendment would set a marker for achieving that; I feel that it deserves more attention both in this Room and outside it.

[Baroness Hayman of Ullock (Lab)]

My Lords, I have a few amendments in this group. The first is Amendment 235A, which was brought forward as a probing amendment so that we could consider the direct award of contracts in special circumstances. It is important that the Government both put on the record why there is a need for direct awards and explain properly the limited circumstances in which they can be used, so that things are completely clear. I also point out that, in certain scenarios, a contracting authority might be able to make a modification to an existing contract without following a competitive tendering procedure; in reality, that would have the effect of making a direct award. We need a bit of clarification around some of these issues.

The Bill introduces some changes that we would support in this area, including, for example, that the contracting authority would be obliged to publish a transparency notice in advance of making a direct award. We would very much support that. It is also interesting that Ministers will be empowered to designate specific contracts or categories of contracts that can be awarded directly in certain identified areas, such as in protecting life and for public security. It is good that we have a bit more meat on the bone in this area and on the issue around transparency.

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[Lord Fox (LD)]

My Lords, before the Minister finishes, I have two points. On the big question, I asked whether she thought that Clause 41 would prevent the VIP lane problems resurfacing or coming back. It would be good to get an answer to that, either now or later. In the Minister’s response on Amendment 239, I thought I heard her say that provisions in other parts of the Bill around operating ethically are, in spirit, reflected in Clause 41. “In spirit” is a very difficult concept to understand in law. I hope we can find a way of perhaps stiffening the spirit and making it actual. If there is a read-across, we need to find a way—either at the Dispatch Box, in some Pepper v Hart way, or within the words—to ensure that what the Minister says, which I take to be in good faith, is usable in the outside world once the Bill becomes an Act.

[Baroness Hayman of Ullock (Lab)]

Perhaps I might add that what the Minister said makes a lot of sense and is helpful, but one of the problems we have is that we do not know how effective it is going to be and whether it would work until we get into that situation again. Is there any ability to build in a review once the system has been tested, perhaps against a major public problem like we had with Covid-19?

[Baroness Neville-Rolfe (Con)]

I think our intention is to try to get rid of the VIP lanes. I will take the point away but there is a committee sitting—it will unfortunately sit for a long time, no doubt—that is looking at a lot of these important issues, and at some of these lessons. It is doing things in phases, so hopefully we will begin to get some output soon. We have had the Boardman review and, as the Committee can hear, we have tried in this Bill to learn from that and not to have a preferential system. The point about non-discrimination and such things is in the same spirit. I will take away the point about spirit and what we are doing here, but we have some good things in the Bill. I have listened to what the Committee has said but also tried to convince your Lordships about what we are trying to do.

I am advised that Clause 41 would prevent VIP lanes, as regulators will set out in advance what direct awards are permitted and Parliament would not approve anything too wide-ranging—I am sure that is true. The other point is that the Bill’s provisions on conflicts, which I am sure we will come on to debate further, also help against VIP lanes. We have quite a lot of things going on here; obviously, I am worried about piling it on. Everybody is concerned, so they all come in with different suggestions for trying to improve things. But if you pile those one on the other, you end up with rules that are too burdensome and do not work too well.

On the issue of a review, I think my noble friend Lady Noakes referred to some sort of review clause at an earlier juncture. “Review” is something that one tends to write into Bills where you have a problem. Perhaps we can discuss this further before Report to see whether a review is the right thing or whether enough is going on to try to ensure that we are in a good place on the Covid front. I respectfully request that the various amendments are withdrawn, and I would like to move the government amendments in my name.