Gaza: Humanitarian Situation

Baroness Noakes Excerpts

Thursday 8th February 2024 Lords Chamber

[Baroness Noakes (Con)]

My Lords, the people of Gaza have been failed by Hamas and by UNRWA. Hamas killed, raped and mutilated Israelis on 7 October. It killed 1,200 and wounded many more, and it took more than 200 hostages. It knew exactly what it was doing and what the consequences would be for the people of Gaza. UNRWA is rotten to its core and has been a willing accomplice to Hamas. Its schools taught hatred of Israel. UNRWA staff have allowed weapons and rockets to be stored in aid centres. Most shockingly, some of them willingly joined the murderous gangs on 7 October. I pray that one day, the innocent victims in Gaza will recognise their true oppressors.

Procurement Bill [HL]

Baroness Noakes Excerpts

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I have much sympathy with Motion 1A in this group, tabled by the noble Baroness, Lady Brinton, because I believe that treating the NHS as a special case in any area of public policy has the effect of insulating the NHS, which is a seriously underperforming organisation that desperately needs change.

Having said that, I am afraid I cannot support the noble Baroness’s amendments. Parliament has already decided, in the shape of the Health and Care Act 2022, that the NHS should be subject to a bespoke regime. In effect, the other place was asked to think about that again when this House sent the Procurement Bill there for consideration, and it has sent it back with its response—it wants to keep a bespoke regime for the NHS—so I think we have the answer to that. My noble friend the Minister has made clear that much work has already been done on the interface between the two regimes to make sure that nothing will fall through the cracks.

This boils down to a simple difference of view; the Government want to do it one way and the noble Baroness, Lady Brinton, wants to do it another way. I wonder whether this is really the kind of issue that should be the subject of a prolonged battle between the two Houses. I cannot see that there is a real point of principle here. Also, as my noble friend the Minister pointed out, implementation of that new system in the NHS is already quite a long way advanced and it would appear wasteful to try to undo all that.

I turn to Motion 4A in the name of the noble Baroness, Lady Hayman of Ullock. She has tabled a list of what she calls “priorities and principles” that Ministers must consider before publishing a national procurement policy statement. At first sight these look wholesome and unobjectionable, as one might expect. I have two main reasons for not supporting her amendment.

First, the amendment is unnecessary. Government Ministers and their officials are already focused on value for money, transparency, integrity and even, I say to my noble friend Lord Lansley, innovation. It is government policy to pursue innovation; it is already part of the day-to-day life of government. Many of these items are either implicitly or explicitly already in the law, either administrative law or general law. As has been pointed out, some already feature in the objectives for covered procurements. My noble friend the Minister explained all this in her introductory remarks. Thinking that the Government need a special list of things to think about, in statute, misunderstands the processes of government.

Secondly, the list of items always reflects today’s concerns and is not future-proofed. While some issues such as transparency seem like eternal issues, they were not always unambiguously so. Today’s obsessions with things such as environmental matters will, I predict, be overtaken by other issues of concern, whether Russia and Ukraine or something that we have not yet thought about. I am not clever enough to predict what those other things will be; I just know that the world changes and the orientation of government policy will change with it. The inclusion of a list runs a real risk of being overtaken by events, which is why it is not good legislative practice to put such lists in statute. I hope that both noble Baronesses will not feel it necessary to pursue their amendments and divide the House.

[Baroness Neville-Rolfe (Con)]

My Lords, I begin by sharing my appreciation for the number of incisive contributions we have heard in the course of this short debate. It is always a pleasure to debate these things here. Of course, they have now been reviewed in the other place, as my noble friend Lady Noakes said, and there was a long discussion, including a long Committee stage attended by my friend in the other place Alex Burghart. I particularly thank noble Lords for all the work that has gone into this across the House, including these important provisions.

My noble friend Lord Lansley is correct that the objective in Clause 12 applies to cover procurement. The NPPS clause allows an NPPS to cover all procurement, but in practice its scope will be determined by the contents of the statement. In my opening remarks I explained at some length the position on the coverage of the NHS. I will come back to one or two of the questions from the noble Baroness, Lady Brinton.

I particularly thank the noble Baroness, Lady Hayman, for all that she said. Concerning principles that need to be considered by Ministers in preparing the NPPS, these principles are already covered through other commitments and legislation, as I have already set out. The amendment is therefore not necessary, as my noble friend Lady Noakes said. In addition, our fundamental view is that the Government of the day should not be constrained by the Bill in their ability to prescribe something more specific. They are free to do so—and I think this is the charm of the Bill—through the NPPS rather than through primary legislation. The Bill is about clarity and simplicity, not layering rules on rules.

To understand how it works in practice, I refer my noble friend Lord Lansley—I think I have already discussed this with him—to the current non-statutory NPPS, which covers innovation and social value. Attempting to drive innovation, which I am as keen on as he is, in every single procurement will not always be relevant or proportionate. Our Bill drives innovation through, for example, our new competitive flexible procedure, pre-market engagement and our duty for contracting authorities to have regard to reducing barriers for SMEs—which will also benefit social enterprises, as the noble Earl, Lord Devon, referred to. Future NPPSs will also be subject to parliamentary scrutiny and consulted on as appropriate.

The consideration of environmental targets and objectives relating to social value in preparing the NPPS, and the other principles set out in this amendment, are duplicative and would render the Bill more complex and confusing for contracting authorities and suppliers. Singling out specific objectives for Ministers to consider will create the impression that they trump others, which could unduly constrain flexibility for a Government to set priorities in future, which they will do through the NPPS. This is a principle seen in other legislation, where you have framing legislation and then statutory guidance.

Finally, regarding environmental considerations—as highlighted in discussions during the REUL Bill debates, although perhaps I should not remind noble Lords of those as they took a long time—Ministers will now be under a legal duty to have due regard to the environmental principles policy statement when making policy, including the development of policies in accordance with the Bill.

On the NHS amendments championed by the noble Baroness, Lady Brinton, I am grateful for the meetings that we have had but I believe that they stem from a confusion. NHS bodies are contracting authorities and therefore already covered by the Bill; we had a good conversation about mixed contracts and so on, which I think was helpful to us both. It would be inappropriate to remove the power to make the provider selection regime regulations, especially given the benefits that they will bring to patients.

In response to a question about the definition of healthcare services, the scope of services in the PSR has been consulted on and will be further supported by reference to a list of common procurement vocabulary codes, set out clearly in the PSR regulations. An indicative list of those codes was included in DHSC’s recent consultation on the PSR.

The noble Baroness made a point about conflicts of interest. Our Bill strengthens existing legal duties on conflicts of interest and embeds greater transparency throughout the commercial life cycle. This has been welcomed and, I think, is important. Furthermore, the provider selection regime regulations will clearly set out provisions for the effective management of conflicts of interest. The PSR is designed to ensure transparency across all procurement decisions to which it applies, including how the decisions were made. This transparency will help ensure that there is proper scrutiny and accountability of decisions to award contracts for healthcare services.

Finally, an independently chaired panel will provide expert review and advice concerning decisions made under the PSR, helping to ensure that procurement processes are transparent, fair and proportionate. I very much hope that that additional information about our plans for the PSR will enable this debate about just how these two regimes, both of which have been discussed constructively and at length in this House, fit together, and that noble Lords feel able to support the government amendments and withdraw the amendments that they have put forward.

Parliamentary Democracy in the United Kingdom

Baroness Noakes Excerpts

Tuesday 25th April 2023 Lords Chamber

[Baroness Noakes (Con)]

My Lords, in 2019 I thought that our parliamentary democracy was doomed. The majority in each House of Parliament seem resolved to frustrate the will of the British people as expressed in the Brexit referendum. Both Houses found devious ways to undermine the Executive and sought to impede our exit from the EU. It was a very unhappy experience.

All of this was exacerbated by the Fixed-term Parliaments Act 2011, itself an unhappy reminder that coalition Governments breed bad legislation. Parliament eventually remembered that the people are the most important part of any democratic system. It allowed a general election, and the great British electorate told us what they thought. They elected my party with a majority to get Brexit done, and we did it. We then expunged the Fixed-term Parliaments Act from the statute book. Parliamentary democracy has been rescued.

That does not mean that there are no problems, but they are not the ones analysed by the noble Baroness, Lady Jones of Moulsecoomb. Two minutes does not allow me to critique the noble Baroness’s speech or to list the challenges that I see, so I shall conclude my remarks with just one observation. Your Lordships’ House is well on the way to reinventing itself as a House of opposition to the elected Government. We may become the weak link in our parliamentary democracy, and that will not end well for your Lordships’ House.

Procurement Bill [HL]

Baroness Noakes Excerpts

Report stage
Wednesday 30th November 2022 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I rise to speak to Amendment 130 to government Amendment 129. Many of us will be pleased that the Minister has decided to put the new online system for procurement information on the face of the Bill. At the same time, however, we need some assurance that it will be fit for purpose and achieve the objectives set for it, otherwise the Government seem to have carte blanche to construct whatever system they see fit to inflict on the vendor community, without any required standards or reporting duty. Let us face it: even the modest database under the Subsidy Control Act is subject to a form of reporting duty, and this system will be of far greater significance.

The amendment in my name and that of my noble friend Lord Fox is designed to provide assurance but in very simple terms. There would be the requirement for a report, first, on the performance standards expected and, secondly, on the standards achieved in the relevant period, including metrics on satisfaction and the accessibility experience of stakeholders. This is a modest proposal; how can the Minister possibly argue against it?

[Baroness Noakes (Con)]

My Lords, I support the single digital platform which is now covered by government Amendment 129 in this group, but I have one caveat. The benefits of the platform, in terms of efficiency—having all the procurement details in one place—will be undermined if contracting authorities are required also to publish tender information in other ways. That is what lies behind my Amendments 166 and 168 in this group. Like some of the amendments I spoke to on our first day in Committee, these have been suggested by the Local Government Association. I am grateful to my noble friend Lord Moylan for adding his name to them.

These amendments propose two additional repeals within Schedule 11, the repeal schedule. Subsections (4)(b) and (5) of Section 89 of the Transport Act 1985 require local authorities to issue notices of tender individually to anyone who has given written notice that they wish to be notified. Amendment 166 would repeal that, because it should no longer be necessary. Amendment 168 would repeal Regulations 4 and 5 of the Service Subsidy Agreements (Tendering) (England) Regulations 2002 so that information on tenders will no longer be required, for example, to be published locally, including in local newspapers.

I hope my noble friend will see these two amendments as supporting the importance of the digital platform. I also hope that she will be able to assure the House that the Government will ensure that later legislation will not be allowed to undermine the platform by adding new and additional requirements, once it is up and running.

[Lord Aberdare (CB)]

My Lords, I suggested earlier that the Government might explore the greater use of technology to track payment times. I also very much support the proposals in government Amendment 129 regarding a single digital platform for publishing notices, documents and other information, and I wonder if it might in due course be extended to provide a mechanism for monitoring and tracking payment performance.

While I am on my feet, I thank my new noble friend the Minister for her kind words earlier. I also point out to the noble Lord, Lord Moylan, that I was not earlier proposing an amendment to the Bill for improving payment practice, but merely speaking in support of the Government’s plans for the procurement review unit and seeking confirmation of those plans on the record. I am sorry that he is unfortunately not in his place here for me to draw that to his attention.

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Moved by

[Baroness Noakes]

190: Clause 114, page 74, line 30, leave out “paid, or to be paid” and insert “payable or paid, receivable or received, or to be paid or received”
Member’s explanatory statement
This amendment would ensure that references to amounts received, receivable or to be received in the Bill include references to those amounts referable to VAT.

Procurement Bill [HL]

Baroness Noakes Excerpts

Report stage
Monday 28th November 2022 Lords Chamber

I do not know when Third Reading is but there needs to be an awful lot of information provided and work done between now and them so that we can fully understand the implications of what is contained in Clause 111. There has been no impact assessment, as I understand it, in relation to the interrelationship between these two pieces of legislation. At the very least, those people working in the health and social care sector need to have some assurance that before this Bill becomes an Act much more information and awareness are made known. In the meantime, the noble Baroness, Lady Brinton, is right to pursue what she is seeking to do in her amendment.

[Baroness Noakes (Con)]

My Lords, I have Amendments 4 and 190 in this group. Some questions have been raised by the Benches opposite about whether I was here for the commencement of the debate. I assure the House that I heard every word of the Minister’s opening remarks from my place and I am not usually regarded as invisible in your Lordships’ House.

Before I get to my amendments, let me say that I have much sympathy with the amendments tabled by the noble Baroness, Lady Brinton. I think we have to stop the culture of exceptionalism for the NHS and bring it within the ordinary rules; other noble Lords have said why that is. We should allow an exception only if there is a very good case for it so I will be listening very carefully to what my noble friend the Minister has to say about that when she concludes this debate.

My amendments each cover a distinct issue. I will start with Amendment 190 because that is the easier of them. Noble Lords may have noticed that my noble friend the Minister has added her name to Amendment 190 and I am grateful for the Government’s support in dealing with a technical issue that I raised in Committee following the eagle-eyed scrutiny of the Bill by Professor Sanchez-Graells of the Centre for Global Law and Innovation at the University of Bristol.

The Bill had defined how to value contracts including VAT when the contracting authority paid for the goods or services that it was procuring but failed to deal with the converse situation when it received money, which can arise under a concession contract. Amendment 190 puts this right and so sums receivable under contracts will be valued including the related value added tax. I look forward to moving this amendment formally in due course.

Amendment 4 is an amendment to government Amendment 2. Amendment 2 has virtually rewritten most of Clause 1 but my amendment would have also been proposed in relation to the text of the Bill as introduced. It is about control and how to define it, which I raised in a couple of amendments in Committee.

A public authority is defined in the amended Clause 1(2) proposed by Amendment 2 as including a person who is

“subject to public authority oversight”,

which is in turn defined in amended Clause 1(3) as being

“subject to the management or control of … one or more public authorities, or … a board more than half of the members of which are appointed by one or more public authorities.”

Thus, if a board is involved, control is determined by the fact of appointments rather than the capacity to appoint members of the board. That is an unusual concept for those of us steeped in company or tax law.

The Clause 1 approach to control is in contrast to its use in determining whether vertical arrangements exist in order to qualify as an exempted contract under Schedule 2. The Schedule 2 definition has its own problems, which I spoke about in Committee, but its core concept is to use the Companies Act 2006 definition of control, which is based on capacity to control. I believe that the issues with Clause 1 and Schedule 2 were not satisfactorily dealt with when I raised these points in Committee, so I have returned to them today, to highlight that the Bill is not internally coherent in its approach to determining whether organisation A controls organisation B.

My solution is to import the Schedule 2 definition into Clause 1, save for paragraph 2(3) of Schedule 2. I personally think that sub-paragraph (3) is very odd in the context of Schedule 2, but it certainly does not belong to the approach for control in Clause 1. I have no intention of dividing the House on this matter and I am by no means confident of my drafting, but I believe that the Government should look again at the robustness and coherence of the approaches they have taken in the Bill.

[Lord Lansley (Con)]

My Lords, I have no amendment in this group, but I want to refer to government Amendment 34. I entirely agree with the proposition that the Bill enables public procurement to be put on a better path than it has been in the past. Many of those working in procurement across the public services have welcomed the Bill. As it happens, they also welcome the scrutiny we are giving it, because it is leading to improvements to the Bill. I did not attempt to count the number of government amendments we dealt with in Committee, but they were in the hundreds. In addition to those, I calculate that we have 153 government amendments on Report, so if it takes us a while, it is not our fault. None the less, it is a good job and it is right that we should do it. That is why I raise the following question on government Amendment 34.

My noble friend will recall that these amendments were not moved in Committee because there was some difficulty about what “covered procurement” was relative to “procurement”. At the time, I supported the Government’s amendments, because it seemed right to ensure that the broader scope of the Bill and the regulatory requirements encompassed within it should be applied to larger procurements and not smaller ones. I now support the insertion of “covered” before “procurement” in all the government amendments—except Amendment 34. Why do I single it out? Including “covered” means that procurements which are above the threshold and not exempt are subject to the Bill and the full range of its requirements—see Schedule 1 for the thresholds and Schedule 2 for the exemptions. Clause 2 makes it clear that public contracts are those that are above the threshold and not exempt. Okay, fine: “covered procurement” makes a distinction between those that are exempt and of lesser value and those that are of a higher value and included.

Clause 11 relates to procurement objectives. Procurement objectives are statements, not least by Parliament as well as by the Government, about what those who are engaged in procurement should regard as their responsibility. The essence of Clause 11 is that:

“In carrying out a procurement, a contracting authority must have regard to … delivering value for money … maximising public benefit … sharing information”—


so that people can understand the authority’s procurement policies and decisions—and

“acting, and being seen to act, with integrity.”

In my submission, these are not regulatory requirements; they are the basis on which contracting authorities should be behaving. We will come on to debate Clause 11 and will deal with its proposals then. But it seems to me that, however we end up stating in Clause 11 that these are procurement objectives for contracting authorities, they should apply to all contracting authorities and to all their procurements.

Interestingly, the Government resist this on grounds of flexibility. I am not sure in this context what that means: flexibility not to have value for money; flexibility not to act with integrity? But the Government have not disapplied the operation of Clause 12 and the national procurement policy statement. The Government want to have the power to apply the statement to all procurements, so we do not get “covered” in front of procurement in Clause 12(1) but we do get “covered” in relation to procurement in Clause 11. This must be wrong. It must clearly be right that not only the procurement statement but the objectives on which it must be based must apply to all procurements.

So I put it to my noble friend that this is not a technical amendment. There may be many that are technical amendments, but this is a substantive amendment that has an unhappy consequence that it would disapply the procurement objectives to a significant number of the lower-value procurement activities in the public sector. So when we reach government Amendment 34, I invite my noble friend not to move it. I hope that she will at the very least do that on the grounds that this should be revisited before Third Reading.

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Moved by

[Baroness Noakes]

9: Schedule 2, page 80, line 9, at end insert—
“(3) Sub-paragraph (2) does not apply to contracts of a kind described in paragraph 2 (vertical arrangements) or paragraph 3 (horizontal arrangements).”Member’s explanatory statement
This amendment disapplies the reasonableness test in sub-paragraph 2 to vertical and horizontal contracts so as to preserve the rules which currently apply to public service collaborations.

[Baroness Noakes (Con)]

My Lords, Amendment 9 amends Schedule 2 in relation to exempted contracts. Specifically, it seeks to modify how vertical contracts and horizontal arrangements are allowed to qualify as exempt contracts. I thank my noble friend Lord Moylan for adding his name to the amendment. I should explain that this amendment is in splendid isolation in a group all of its own because I thought that the previous group, which took rather a long time, covered rather too many matters and that the issue I am going to raise would have got lost in it. I apologise for pulling it out separately.

I was prompted to table the amendment by a briefing from the Local Government Association. From our proceedings in Committee, I think that I am in the minority among those who have been following this Bill in that I do not have an association with the Local Government Association to declare because I am not a vice-president or one of those things. However, I did recognise that the point raised by the Local Government Association was important and valid, and that is why I have tabled this amendment, and indeed amendments in two other groups that we will consider on Report.

Before I started on this Procurement Bill, I had little technical knowledge of the vast edifice of EU procurement rules, and I had never heard of the Teckal exemption or, indeed, the Hamburg exemption, which deal with vertical and horizontal arrangements respectively. Those arrangements allow contracts within or between local authorities to be exempt from procurement rules. I now know that these exemptions from the need to engage in competitive procurement processes are important for well-established ways of delivering local authority services. I am generally a competition fanatic, but I can see eminent sense in allowing local authorities to organise themselves internally or in collaboration with other local authorities in a way that delivers services to their local communities without dragging in the full force public procurement rules.

The problem lies in sub-paragraph (2) of paragraph 1, which states that a contract cannot be exempt if the relevant goods or services

“could reasonably be supplied under a separate contract”.

I am advised that this test is not currently part of establishing whether the Teckal or Hamburg exemptions apply under the existing body of procurement law under the EU, so it appears that, in reformulating EU rules for the purposes of the UK in this Bill, we seem to have opened up a new source of challenge for local authorities that want to use the vertical or horizontal arrangements. I cannot see why the Government would want to create by this Bill new barriers for local authorities in areas where services have been delivered successfully over a long period. So my Amendment 9 seeks to exclude the application of sub-paragraph (2) to vertical contracts and horizontal arrangements under paragraphs 2 and 3 of the schedule. It would leave the reasonableness test in place for all the other contracts dealt with in Schedule 2 but would allow local authorities to continue with their internal structures and their cross-authority collaboration arrangements unhindered. I beg to move.

[Lord Moylan (Con)]

My Lords, I am pleased to have added my name to this amendment in the name of the noble Baroness, Lady Noakes. I would like to start by thanking my noble friend the Minister for all the hard work she has done to bring us this far, and for her sympathetic approach to the House. I would also like to thank her for something that I had not expected to see on the part of the Government. The process of drafting legislation is normally arcane and obscure—it is carried out by civil servants and parliamentary draftsmen before anything ever reaches us. But in this case, in this rare Bill, we have actually seen the legislation being drafted, and redrafted, and redrafted further, time and time again, as it progresses with literally hundreds of government amendments. It has been very difficult to follow what is going on, but illuminating as to how laws are actually made—something which I think Bismarck said the public “should never see”, if that is helpful advice to my noble friend.

In Committee, I gave an example of how the Teckal exemption works and how I had experienced it myself during my many years in local government. The Teckal exemption is the EU legal name for the vertical exemption, where local authorities or public bodies come together in order to establish a subsidiary, controlled entity; and there are rules and limits as to what it can do outside—percentages of work and effort and so on—that show whether it qualifies for that exemption so that the local authorities in question do not have to tender it publicly.

There are further examples that I did not mention in relation to horizontal relations between public bodies and local authorities. I find myself, quite by chance, sitting within a foot or two of the noble Lord, Lord Greenhalgh, who had the privilege and honour of being the leader of Hammersmith and Fulham Council in the past, when I had a modest role to play at an adjacent local authority. One of the things we did was to come together to share many of our services, between ourselves and in some cases with a third local authority.

That was an example of horizontal collaboration so that, for example, highway services, library services and things of that sort became shared. I simply say to my noble friend that I think this collaboration would be ruled out under the reasonableness test. Let us say that you are a local authority wishing to share services—or contract services, in some cases—with the local authority to your west. It is, of course, reasonable that the local authority to your east—assuming that you are not entirely surrounded by one local authority—could equally well provide those services. This is not simply about the private sector being an alternative to collaboration; it would be reasonable for another local authority to provide those services rather than this one. If that was the case, you would be stymied; you would not be able to do it without having a tendering process.

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[Baroness Neville-Rolfe (Con)]

My Lords, Amendment 9 tabled by the noble friends Lady Noakes and Lord Moylan—whom I am very glad to see back in this place—seeks to preserve the rules which currently apply to public service collaborations at paragraph 2 and 3 of Schedule 2. It was also very good to hear from my noble friend Lord Greenhalgh with his extensive local government experience.

I agree that the Bill needs to preserve these rules but believe that we have already done so. Paragraph 1(2)—to which the noble Baroness referred—says that a contract is not exempted if the main purpose of the contract could reasonably be supplied under a different contract, and that contract would not itself be an exempted contract. This provision serves to close a loophole where contracts that are mixed—that is that they contain both exempted activities and not exempted activities—might be inappropriately exempted from the regime.

However, unlike the exemptions for specific activities, all types of goods, services and works contracts are capable of being exempted under the vertical and horizontal exemptions, so the second part of the test at Schedule 2(1)(2)(b) is not met. The contract would remain exempt.

While I believe that we have preserved the rules, the Bill needs to be better understood by users and stakeholders. My noble friend Lord Greenhalgh also made some good points about unnecessary tendering. I met the Local Government Association, as I was concerned about this provision, and my officials are engaging with it following its representations to reach a common understanding. They will come back to me with an amendment that could be put forward in the House of Commons to clarify this provision, should one prove necessary. It will take a bit of time. Accordingly, I ask my noble friend to withdraw the amendment.

[Baroness Noakes (Con)]

My Lords, I thank all noble Lords who have taken part in this short debate and those noble Lords who supported this amendment. I was delighted to hear what the Minister had to say, which was in the spirit of the quest for a good procurement system for this country that has permeated the way we have operated on this Bill to date. I am sure that the discussions with the Local Government Association will prove fruitful. On that basis, I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

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[Lord Maude of Horsham (Con)]

My Lords, I draw attention to my interests as set out in the register. I am co-owner of a company that provides advice to Governments outside the UK on issues of public sector reform, including procurement—a subject that is not dear to very many people’s hearts but is to mine. I am delighted to have the chance to speak on this important group of amendments.

I assume that it is accepted everywhere that the primary purpose of good procurement law and practice is to ensure that the goods and services being procured provide excellent value and the best quality for the money. That trade-off between the two should always be primary. The various objectives and principles that are adumbrated in the amendments tabled by my noble friend Lord Lansley, and the noble Baronesses, Lady Hayman and Lady Worthington, are all excellent. I mean no offence when I say that they are motherhood and apple pie. No one would be against any of them, they are good things. The question is the extent to wish you should build into law the obligation for these to be taken into account in the ways laid out in the various amendments.

My noble friend Lord Lansley referred to the Public Services (Social Value) Act 2012, which I was very glad about as I was the Minister responsible for it. It was a Private Member’s Bill in the other place, but I was very happy that the Government supported it and saw it into law. It was very much a permissive Act. The objective was to make it clear that procurements were not to be just an arithmetic exercise looking at the pure financial value of bids but that you could look at wider social value.

However, when the coalition Government was formed in 2010 and we started to look at how procurement was being done, procurement policy was being used as a sort of Christmas tree on which many different policies were being hung. My recollection is that there were something like 11 different policies. All of them were very good. None of them was something we did not want to take seriously or thought did not matter. There were environmental and social policies, and others concerning training and apprenticeships; a whole range of interesting and good objectives. I have to say that we fairly ruthlessly stripped them out because, like now, the Government had a significant budget deficit and it is essential that primacy must be given to value for money. So we stripped them out, but that was not in any way to suggest that those factors could not be put into a request for proposal—RFP—or tender document, in the way that a number of your Lordships want to see happen on a routine basis.

The key to this is bespoking. There will be many cases where the inclusion of wider requirements makes sense and will not skew or bias a particular procurement in a way that damages its value for money—but there will be some where this is damaging, and this must be addressed close to the chalkface by those who are doing the procurement. As I said at Second Reading, the key is practices, and getting experts in procurement involved at an early stage so that the procurements can be devised in a way that supports the policy objective. Too often that does not happen. The problem with introducing broad, overarching requirements or even policy statements into the approach is that these get baked in at the policy development stage of a project, and that can then jeopardise and get in the way of the project’s effective implementation.

This leads to a broader point. It is essential that those charged with implementation of projects, programmes and policies—implementation professionals with the necessary expertise in procurement, project management, IT and digital, financial management and HR—are involved at the policy development stage. Far too often, that does not happen. That is the stage when advice can be taken and a procurement devised and formulated in such a way that these desirable other policy objectives can be addressed, but in a way that is proportionate and appropriate in the circumstances.

It seems to me that that is the reason for having that flexibility. The noble Baroness, Lady Hayman, said that the words of Ministers can be warm, encouraging and good, but there is nothing like having good, strong law to bake it in. The problem is that this can be counterproductive. We all know the reality, and it is clear from this debate that procurement is difficult, complex and technical. If it is so for those of us who are here making the law, then it is pretty difficult, complex and technical for those trying to bid for contracts from the public sector. The more complexity and legal rigidity we build in at this stage, the greater the ability of the established universe of vendors and suppliers to freeze out newer, smaller ventures from effectively bidding for and winning these important contracts.

When procurement law becomes too rigid and prescriptive, frankly, it can enable established vendors to present some of the characteristics of an oligopoly. We saw this 15 years ago, particularly in the world of public sector IT contracts. It is really important that we bear this in mind.

A little later, in group 6, we will debate the government amendment that rightly requires contracting authorities to take account of the needs of SMEs, which I wholly welcome. In an earlier debate, the noble Lord, Lord Wallace of Saltaire, mentioned the desirability of including the needs of social enterprise, to which I am very sympathetic, for all the reasons we discussed earlier.

However, the fact is that, the more prescription and rigidity in the law, the greater the scope for the big beasts in the supplier market to use their financial muscle and heft to squeeze out the smaller vendors through judicial review in the courts. Some of them are very trigger-happy in this respect. It is often the smaller, newer vendors who bring the most dynamism and innovation and are most able to bring quality and good value to the needs of delivering services and providing goods for citizens.

While recognising the good values and intentions that lie behind this desire to load all these additional factors on to procurement law and make them explicit, my counsel is that we should tread with very great caution. I do not find myself able to support these amendments.

[Baroness Noakes (Con)]

My Lords, I will offer a few general observations. I do not have any amendments in this group, and I will echo some of what my noble friend Lord Maude has just said.

I will make four points. First, I see little point in duplicating in this Bill what is already on the statute book. We have already referred to the Public Services (Social Value) Act 2012. This deals with social value and does not need to be repeated in the Bill. That applies to other matters as well.

Secondly, lists of noble Lords’ favourite topics, such as climate change and innovation, run the risk of accelerating the Bill’s obsolescence. This is the case even if lists are drafted in a non-exhaustive form. The list itself provides context for interpreting the statute at a later stage. Those interpreting the legislation will look at what Parliament’s intention was when we passed it. The sorts of things we put in now will help determine the framework within which that judgment is made.

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[Lord Maude of Horsham (Con)]

My Lords, I support government Amendment 40. This is very worthwhile. I am also very sympathetic to Amendment 41, tabled by the noble Lord, Lord Wallace of Saltaire. The reality is that not-for-profits, social enterprises and mutuals, when they come to retender or bid for different contracts, because a number of mutuals we supported have grown, both by expanding into different areas for the same group of clients but also by expanding into different geographical areas for different public authorities—and this is very worthwhile—but they are subject to very much the same kinds of constraints that the conventional procurement we inherited in 2010 imposed on SMEs.

I take slight issue with the noble Lord, Lord Wallace. I do not actually believe that there is a conflict between this approach—working to remove barriers to SMEs, social enterprises and so on participating in, bidding for and winning government and public sector contracts—and achieving better value and supporting the aims of the free market. When we went down the path, in the coalition Government, of setting an aspiration of 25% by value, at that stage, of public procurement going to SMEs, the immediate response from the conventional wisdom was, “Oh, that means you’re going to abandon best value; you’re going to have to effectively subsidise SMEs”. Precisely the reverse was the case. Opening up procurement got rid of some ridiculous requirements that were not necessary at all but were imposed by safety-first procurers: for example, that bidders should have to show three years’ audited accounts and that there should be turnover thresholds, performance bonds and requirements to show that they had in place the insurance to cover the contract value before they even bid.

The combination of all these things meant that many SMEs and start-ups and some of the most innovative, competitive and dynamic potential suppliers were simply not able to get into the marketplace at all. So there is no conflict between value for money and opening up to smaller businesses: the two objectives go absolutely hand in hand. So I strongly support the amendment the Minister has brought forward, but I urge her to look sympathetically at Amendment 41, because social enterprises, not-for-profits, mutuals and so on suffer from exactly the same disadvantages and obstacles as there were in old-fashioned procurement and it is important, I believe, that they should be included in the same bracket.

[Baroness Noakes (Con)]

My Lords, I have Amendment 164 in this group, to which my noble friend Lord Moylan has added his name. Before turning to that, I echo what other noble Lords have said in thanking my noble friend the Minister for her amendments on SMEs. I am very glad that she has taken into the Cabinet Office the evident passion she demonstrated for the cause of SMEs when she took part in Committee on the Bill. Of course, there is no one silver bullet that is going to solve all the problems of SMEs engaging in public procurement, but I believe that most of the amendments before us here will contribute to an important advance in that area.

I have a concern about Amendment 134, which is one of my noble friend’s amendments. It keeps the new Clause 11 duty out of the enforcement clause, Clause 92. That is a pity, because it means that SMEs, which think that that duty is not being complied with, will have to fall back on judicial review—and, as we know, judicial review is not a practical remedy available to SMEs. I regret that. I similarly regret Amendment 140 in relation to procurement oversight recommendations, and I hope that the Government will have an opportunity to think again about both those areas when the Bill moves to the other place.

My Amendment 164 is aimed at the same target as Amendment 163 in the name of the noble Baroness, Lady Bennett of Manor Castle, who was not in her place when the debate started earlier this evening. I was expecting the noble Baroness, Lady Bennett of Manor Castle, to explain the amendment, and then I was going to come in behind it. They are both sourced from an amendment suggested by the Local Government Association. It concerns Section 17 of the Local Government Act 1988 and the exclusion of non-commercial interests that is required by that section. Clause 107 allows regulations under this Bill to disapply that duty for below-threshold contracts. The issue raised by the Local Government Association was that that should not be just permissive but should be an absolute requirement.

The noble Baroness, Lady Bennett of Manor Castle, tabled an amendment in the form originally suggested by the Local Government Association. I have been around a little longer than the noble Baroness, Lady Bennett of Manor Castle, and have debated may/must amendments in relation to whether regulations should be obligatory or permissive. It is a good technique for discussing issues in Committee, but when we get to the sharp end of the business of legislation, the Government always resist a regulation-making power being obligatory—and for good reason, because it ties the hands of today’s Government and any future Governments. I accept that, and I am sure that the Opposition Benches who may want one day to be making legislation of their own would accept that as well. So I retabled the concept of the amendment by inserting below-threshold contracts into the list of things that could be done with this power, in the hope not that my noble friend would accept the amendment but that she would give a clear commitment at the Dispatch Box today to use the regulation-making power at the appropriate time to ensure that below-threshold contracts are excluded from the ambit of Section 17, as I mentioned. I look forward to hearing what the Minister has to say.

[Lord Hendy (Lab)]

My Lords, I rise to speak to Amendment 162A, which rather neatly follows the noble Baroness, Lady Noakes, because it deals with Section 17 of the Local Government Act 1988. Its intention is to remove the prohibition in that provision which prevents local authorities taking into account the terms and conditions of the staff of the supplier, or their legal status. The thought behind this is that public authorities should take into account the terms and conditions and the legal status of those who carry out the work under these public contracts. The restriction applies to local government only and not to other public authorities.

Procurement Bill [HL]

Baroness Noakes Excerpts

Committee stage
Wednesday 26th October 2022 Grand Committee

[Baroness Thornton (Lab)]

My Lords, my speech is a good way of following the excellent introduction to this group of amendments by the noble Lord, Lord Lansley. I start by thanking my noble friend Lady Hayman of Ullock for putting her name to Amendment 276A and the noble Baroness, Lady Bennett, and the noble Earl, Lord Devon, for putting their names to both Amendments 269A and 276A.

As the noble Lord, Lord Lansley, said, Amendment 269A is dealing with the key performance indicators, and it adds a line that I hope the Minister will find useful:

“including at least one indicator in relation to social value.”

This would mean that all public sector contracts over £2 million would have to include a key performance indicator on social value. This would ensure that social values are included in all public sector contracts over £2 million and would send a clear signal to the private sector in particular. It would also ensure—similar to Amendment 477A, which we discussed on Monday—that contracts with social value commitments are monitored effectively and transparently.

Amendment 276A concerns transparency and “open book accounting”. It would insert a proposed new clause that I hope the Minister will see as helpful, given that she has spoken already in Committee about transparency and its importance in the spending of public funding. It says:

“All suppliers bidding for public contracts must declare the expected profit and surplus they expect to generate through the contract.”


In childcare, for example, the top 10 providers have made £300 million in profit, despite the standards of care falling and local authority budgets being under such pressure. We know this because the newspapers have reported on the conditions in which we have found cared-for children. During Covid, when we had PPE, a number of companies were making significant profits from these contracts without the need to report to the contract what margin they were prepared to make. I believe that this prevented the state adequately protecting our public money.

This amendment would mean that, on all government contracts, the supplier would have to report what profit or surplus they were expected to generate from the contract and then report back each financial year on how much profit or surplus they had generated—although I do not believe that this would solve the problem of people charging the state too much money for goods and services, and there is still a risk that companies could cost-shift artificially to reduce their declared profits. This may well leave the taxpayer in a better position to understand the true costs of contracts and would advantage providers such as social enterprises and SMEs, which are more likely to be investing the money received from contracts back into their businesses than extracting public money as profit. That is an important point because charities and social enterprises are bound by their rules to complete their accounting in two or three ways, which would include the social value of the contracts they are fulfilling.

[Baroness Noakes (Con)]

My Lords, I have tabled Amendment 271 in this group. At the request of my noble friend Lord Moylan, and with the leave of the Committee, I will also speak to Amendment 486 as my noble friend is unable to join us today.

This Bill is of course about the procurement process, rather than contract management, but Clause 50 wisely requires the setting and publication of performance indicators, which are a key element of contract management. I was always taught that what gets measured gets managed. I cannot envisage a situation where contracts could be managed without some form of measurement that could be converted into performance indicators. Amendment 271 in my name leaves out Clause 50(2), because that allows the contracting authority not to set performance indicators if it considers that

“performance under the contract could not appropriately be assessed by reference to key performance indicators.”

Clause 50(2) is fundamentally unsound because it is tantamount to saying that the contracting authority cannot manage its contract.

There are some kinds of contract—for example, the delivery of health and social care services—where measurement may rely on subjective judgments by the service recipient, but they too can be converted into indicators. I disagree with my noble friend Lord Lansley, who seemed not to like subjective performance indicators; I think they are a perfectly good part of any framework of contract management. Light-touch contracts are of course not covered by Clause 50, and that covers quite a lot of the contracts involving health and social care.

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This amendment suggests that the supplier is always best placed to maximise the public benefits of intellectual property rights. That is obviously not right, but we are making progress in this area, which I hope will satisfy my noble friend.

[Baroness Noakes (Con)]

I feel obliged to pursue this issue just a little further. When I spoke to the amendment, I referenced the imbalance of power between contracting authorities and small and medium-sized enterprises, which was its focus. I understand the points that my noble friend is making about when there are parties on either side of the transaction with equal bargaining power, but it does not work like that when there is unequal bargaining power. I am not suggesting that Amendment 486 is a perfect answer to that, but I do not think my noble friend has addressed the point as it applies to SMEs. I know that is a theme that has run throughout our consideration of the Bill, but I want to record that I do not regard her response to my amendment as really getting to the heart of the problem.

[Baroness Neville-Rolfe (Con)]

I thank my noble friend for her intervention. I agree that we need to try to get at the issue of the balance of power; indeed, we were discussing it at my briefing meeting. I think it may be worth having a further discussion with the Government Office for Technology Transfer, because it needs to understand the importance of these small companies to innovation and how the kinds of decisions that they make on rights and intellectual property can make an important difference. I am grateful to her for raising that further point.

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The Palantir saga—this is only part of its NHS contracts; there are many more—shows that without specific conflict of interest rules, which the NHS just does not have, firms will be able to get a head start. I suspect that across the UK there are many other public bodies or agencies that will be required to follow the rules being set out in the Bill which may have the same arrangements. Leaving it to good fortune, or hoping that people believe in the ethics of conflicts of interest, is not good enough. That is why I support the amendments. In particular, if the Government are not prepared to accept them, we really need to consider whether Clauses 74, 75 and 76 should stand part of the Bill.

[Baroness Noakes (Con)]

My Lords, I have Amendments 415 and 419 in this group. In addition, I will speak to Amendment 417, which is in the name of my noble friend Lord Moylan but originated as an amendment tabled by my noble friend the Minister.

Amendments 415 and 419 are somewhat narrower than the other amendments in the group, which the noble Lord, Lord Scriven, has spoken to. They simply probe how the Bill has been drafted in relation to the term “conflict of interest”. Under Clause 75 contracting authorities have a duty to mitigate conflicts of interest, and under Clause 76 they are required to carry out conflict assessments. In each case, the clauses define the term “conflict of interest” by reference to Clause 74. Under Clause 74(2), a conflict of interest exists if someone has a conflict of interest—hence the Bill basically says that the definition of a conflict of interest is that it is a conflict of interest, which is not entirely helpful.

While “interest” is defined in Clause 74, “conflict” is not. Clause 74 says who might have a conflict but not what a conflict actually is. Is it an objective test or can conflicts include subjective perception? Does it have to be an actual conflict or just a possible one? Clause 74 is no help whatever. Clauses 75 and 76 have tried to define “conflict of interest” by reference to Clause 74, but in doing so they have merely highlighted that there is no definition in that clause. I have not attempted to define the term myself as my amendments today are obviously probing ones, but some attention needs to be paid to the drafting.

Amendment 417 would delete Clause 76(4), which deals with conflict of interest assessments. Subsection (4) takes the contracting authorities into the realms of fantasy. They have to think about what they know that might cause “a reasonable person” wrongly to think that there are actual or potential conflicts of interest. It is often hard enough to identify the range of potential conflicts of interest; getting into the territory of trying to work out what a so-called “reasonable person” might wrongly think is a potential conflict of interest is mind-blowing.

Having worked out what this reasonable person wrongly thinks, the contracting authority must take steps to demonstrate that the imagined wrong thought by the imagined reasonable person does not in fact exist. This is beyond parody. For good measure, there is no definition of “reasonable person”. We do not know whether this reasonable person is assumed to have any knowledge of public procurement or the workings of contracting authorities. Those of us who live in the world of politics know that otherwise reasonable people often believe extraordinary things and their capacity for thinking extraordinary things wrongly is infinite.

I very much look forward to hearing how my noble friend the Minister will defend subsection (4).

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Noakes, and congratulate her on the first half of her contribution, which clearly identified a crucial problem that has undoubtedly been missed by numerous other eyes.

However, I entirely disagree with the second part of her contribution, which referred to Clause 76(4). I do not often find myself in the position of defending what is potentially the Government’s position—perhaps I am about to pre-empt entirely what the Minister is about to say—but subsection (4) says:

“If a contracting authority is aware of circumstances”.


It does not say, “We expect the contracting authority to be clairvoyant and know of every single circumstance where a reasonable person might”. We all know this. Think about local councils. Having been a local journalist on another continent, I think of a case where a large city authority kept commissioning a certain architect to do a whole series of projects. That ended up raising considerable public concern. If that is happening, noble Lords can see why it would make sense to pre-empt the explanation of why there is no conflict of interest and therefore no problem here. It is also worth pointing out that the amendment tabled by the noble Lord, Lord Moylan, said that this was a subjective judgment that would affect the letting of the contract. In fact, it would not; it just says that there must be details of the steps included. So I would defend Clause 76(4), if the Government feel that it needs to be defended.

Before I get to what I chiefly want to say, I want to apologise briefly. I attached my name to a number of amendments in the previous group; I meant to be here to speak to them but events unfortunately intervened and I could not be. I still stand behind them.

Coming to this group, I have attached my name to a number of amendments in various combinations of the names of the noble Lords, Lord Wallace of Saltaire and Lord Scriven, and the noble Baroness, Lady Brinton. As the noble Lord, Lord Scriven, clearly outlined—I will not go over the same ground—the Boardman review reported in May 2021, which has allowed plenty of time for this issue to be included in this Bill, despite all the hurry and rush that we know there has been around it. I would also point out something that the noble Lord did not say: when the Boardman report came out, the Government said, “We accept all of these recommendations”. If the Government have accepted them, they should surely be incorporated in this Bill.

I want to pick up on one amendment that I did not sign, although I would have had I noticed it: Amendment 413 in the name of the noble Lord, Lord Wallace of Saltaire, that

“a donation or loan of more than £7,500 to any political party in a calendar year”

should be declared. We are talking about transparency and trust. This is obviously a practical, simple step that would not be very hard to implement and would be well worth while.

Amendments 421 to 423 are about preventing undue influence. Like the noble Baroness, Lady Brinton, I shall concentrate on Amendment 423. There is huge public concern about the revolving door, and I note that my honourable friend in the other place, Caroline Lucas, has done a huge amount of work, dating back in Hansard to at least 2013, on the revolving door in the defence and energy sectors.

That concern is not restricted to the Green Party. I was just looking through some of the reports. In 2011, Transparency International UK issued a press release headed

“Revolving door between Government and business is ‘spinning out of control’”.

If it was spinning out of control in 2011, we are at jet engine speeds by this stage. In 2016, the Centre for Crime and Justice Studies, in a report entitled Redefining Corruption, said that the public want a ban on the revolving door. This amendment provides much less than a ban; it is a modest six months, and I am not altogether sure that it should not be longer, but there is certainly great public concern about this. In 2017, the Committee on Standards in Public Life expressed concern about the revolving door.

The noble Baroness, Lady Brinton, set out one disturbing case. Here is another. In 2020, We Own It highlighted the interaction between Serco and NHS Test and Trace, and the degree to which there has been a revolving door between Serco and the senior Civil Service, to the point where a former head of public affairs of Serco became a Health Minister—I am not sure how many Health Ministers back, but at some point, anyway.

Finally, we should not forget the Greensill scandal. Just look at the mess that arose in part because of a revolving door—indeed, in some cases people were stuck in the same door at the same time, apparently representing both private interests and public, government interests. The Advisory Committee on Business Appointments noted that there were thousands of potential cases, but initially looked at only 108. There is lots of discussion about limits to that committee’s power; it cannot possibly cover this issue. We must start from the other side of the contracts.

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[Baroness Neville-Rolfe (Con)]

To come back to how you do it, you can do things in guidance as well as in the Bill. I take the noble Lord’s point that consistency would be helpful, but I have explained that there can be difficulties. I will just add that transparency will be a fundamental pillar of the new regime, which I think we all support. Extended transparency requirements, a single digital platform and so on will mean that decisions and processes can be much more closely monitored in future.

[Baroness Noakes (Con)]

Could my noble friend help me on the legal effect of the Civil Service management rules? It is my understanding that they cannot actually be enforced in a court of law because it would act as a restraint on the individual’s ability to earn a living. So the rules might exist and there might be advisory bodies et cetera, but it has always been my understanding that they cannot actually be enforced in a court of law. I am not trying to speak for the amendment, but the advantage of it is that it creates a statutory basis for it to have legal effect.

[Baroness Brinton (LD)]

My Lords, if I might try to assist, employment tribunals in the private sector have taken the view that you can have fairly tight, limited terms. I am sure that one of the reasons my noble friends Lord Wallace and Lord Scriven chose six months was that that is the sort of term that is acceptable.

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[Baroness Neville-Rolfe (Con)]

My Lords, this final group deals with amendments on VAT. The Government’s Amendment 536 simply broadens the notion of amounts payable to include amounts that have already been paid, as contracting authorities may be required to take into account expected or completed payments.

I turn to Amendments 537 and 538. With the agreement of the Committee—I have agreed this with my noble friend Lady Noakes, whose amendments they are—I will reply to her later.

[Baroness Noakes (Con)]

My gift to the Committee is not to make an extended speech on the subject of value added tax. I know that many noble Lords would like to hear that, but we have expedited procedure and my noble friend the Minister will respond instead.

[Baroness Neville-Rolfe (Con)]

I am very grateful to my noble friend Lady Noakes, who, as usual, has come to the rescue. She raised the question of whether VAT should be taken into account when calculating the value of a concession contract. I confirm that, when a contracting authority values a concession contract, it should calculate the maximum amount the supplier could expect to receive. I thank my noble friend for raising whether this policy intent is adequately covered in the current drafting of Clause 111 and will give this careful consideration ahead of Report.

My noble friend Lady Noakes also asks why the formulation

“any amount referable to VAT”

has been used in Clause 111(2). Amendment 538 proposes to remove the words

“a reference to any amount referable to”.

As I understand it, the amendment does not aim to change the effect of the clause. Rather, the intent is to rationalise the drafting. I assure noble Lords that the proposed edits have been carefully considered and the existing wording is thought to be better suited to achieving the desired policy outcome.

I therefore respectfully request that these amendments be withdrawn. I will move the other government amendments in my name but, before I sit down, I thank our Deputy Chair of Committees and the Committee for their patience and good humour with the large number of government amendments. We will try to keep up our good record of government engagement and do better on the number of amendments.

Procurement Bill [HL]

Baroness Noakes Excerpts

Committee stage
Monday 24th October 2022 Grand Committee

From the point of view of those of us on these Benches, the Bill needs strengthening to prevent competition infringement. Can the Minister please explain why the looser word “considers” has been used in the legislation and what protection it would offer any suspect behaviour in a procurement process?

[Baroness Noakes (Con)]

My Lords, I, too, welcome my noble friend Lady Neville-Rolfe to her new position. As she knows, she and I share many views on the Bill; indeed, we supported each other’s amendments. I fully endorse the quotation read out earlier by the noble Lord, Lord Fox; I hope that my noble friend will stick to it.

Amendment 534 is in my name; my noble friend had added her name to it, and it was debated during an earlier sitting of the Committee. It asked for a report on procurement rules, specifically around simplification and SMEs. My noble friend will be aware that, obviously, it has not yet been moved because it is low down on the list. While she has now removed her name, about which I am distraught, I hope that, when we get to that part of the Marshalled List, we might have a more favourable response from the Government Benches.

I have three amendments in this group: Amendments 323, 326 and 327. They are probing amendments relating to some of the discretionary grounds for exclusion in Schedule 7. The mandatory exclusion grounds in Schedule 6 are all based on objective facts—mainly whether various offences have been committed. The discretionary grounds in Schedule 7 are a mix of subjective and objective tests. My amendments are designed to probe this. I could have tabled more amendments to the schedule, because other paragraphs in it also use subjective tests, but I chose paragraphs 8, 9 and 11 as examples of the issue that I wished to debate.

In each of these paragraphs, the test is whether a decision-maker considers that a supplier has done something. To take the example of paragraph 8, the ground is that the decision-maker considers that the supplier or a connected person has infringed a bit of UK competition law, or an overseas equivalent. I do not understand why all these matters covered by the paragraphs cannot be dealt with by objective tests, as are used in Schedule 6. Surely an infringement of competition law can be objectively determined and ought not to be left to the opinion of a procurement official. Can the Minister explain why the Bill uses subjective tests rather than objective ones for these paragraphs?

My amendments are rather more modest than replacing these provisions with objective tests but they seek to strengthen the nature of the subjective test from “considers” to “is confident”. I chose that wording to align with what is in the Explanatory Notes, which explain the paragraphs in Schedule 7. I suggest that, if a subjective test is to be used in Schedule 7, the hurdle should be set at a fairly high level. My amendment might not be the right one but it is there to probe the language of the Bill. I am aware that Clause 55 gives some opportunity for suppliers to push back on decisions by contracting authorities but, at the end of the day, judicial review is the only real remedy available to a supplier who feels that they have been badly treated by the terms of this Bill. As we know, judicial review is a very unwieldy remedy and, frankly, is not available at all for SMEs in practical terms.

I also note that, in paragraph 15, which deals with national security, the decision-maker has to determine whether there is a threat to national security. When my noble friend winds up, would she please explain the difference between “determines”, which is used in paragraph 15, and “considers”, which is used throughout the rest of the schedule?

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise with great pleasure, following the noble Lords, Lord Hunt of Kings Heath and Lord Fox, and the noble Baroness, Lady Noakes, to agree with everything that all of them said. I am going to be quite brief but I have three points to make. I will speak chiefly to Amendment 177, to which I have attached my name—as have the noble Lords, Lord Hain and Lord Hendy—but I also want to comment on a couple of other amendments in this group.

I join others in welcoming the Minister to her new post. Is it not good to have some certainty in politics? At least we have the certainty that the Procurement Bill will come round again, whatever else we might be doing or facing in other parts of the Westminster system.

There is a phrase about the certainty of death and taxes, except of course we know that taxes are not a certainty for many of the companies now operating in the UK or collecting many government contracts. The noble Lord, Lord Hunt of Kings Heath, referred to one of those companies in particular—a company that I describe as the great parasite. It does not pay its workers very well, which relates to another amendment from the noble Lord, Lord Hendy—we will get to that later—and it pays little or no tax in the UK.

There is a specific point to be made here. I am sure the Government would say that they want to see government and official money being spent well. However, the Tax Justice Network has noted, in looking at definitions of tax havens, that another term for them is secrecy jurisdictions. When companies operate out of tax havens, it is extremely difficult to see what is happening with their money and how they are operating; of course, they are not paying for the facilities and services they need to run their business and make their profits. In thinking about the great parasite, the example I often give when talking to schools, colleges and community groups is this: “Imagine the road outside. Think of all the lorries that have been carrying Amazon parcels up and down it today. Who is paying for that road? All of us in this room are, but Amazon is not”. If the Government are concerned about value for money and transparency in government procurement, Amendment 177 and the associated Amendment 180 are absolutely essential additions to this Bill.

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[Baroness Neville-Rolfe (Con)]

I think we have made a bit of progress; I will not go down that rabbit hole or we will not make enough progress.

If I might, I turn to Amendments 306, 307, 308 and 320 tabled by the noble Lords, Lord Wallace, Lord Fox and Lord Hain. They would introduce new mandatory exclusion grounds in relation to offences of sanctions evasion, money laundering and failure to prevent bribery, and new discretionary exclusion grounds in relation to various financial and economic misconduct when the contracting authority has sufficient evidence in the absence of a conviction.

The mandatory grounds for exclusion cover the types of misconduct which raise only the most serious risks for contracting authorities. We have already strengthened the mandatory grounds significantly in comparison to the EU regime, but they cannot and should not cover every offence. On sanctions, the types of freezing orders referred to in the amendment are unlikely to be relevant to public contracts. On bribery and money laundering, we have included a range of mandatory exclusion grounds covering the most serious offences. This expands the scope of the offences covered in the EU regime to cover blackmail as well as bribery. However, I reassure noble Lords that the offences in question which are not listed as mandatory exclusion grounds are likely to be subject to discretionary exclusion, under the ground of professional misconduct. This will depend on the circumstances, but if the ground is met, contracting authorities could exclude the supplier.

As to the amendment to include financial and economic misconduct as a new discretionary exclusion ground, we have already explained to this Committee that the exclusion regime is not a substitute for a judicial process. I am not prepared to require contracting authorities to weigh up complex evidence of financial and economic misconduct in which they have no relevant experience. That is a key issue with the ambitious proposals described by the noble Lord, Lord Fox.

Amendments 323, 326 and 327, tabled by my noble friend Lady Noakes, concern the discretionary exclusion grounds for potential competition infringements and the test for when these apply. These exclusion grounds recognise that there may sometimes be evidence of competition infringements in the absence of a regulatory decision or ruling. It is critical that suppliers known to have been involved in collusion, bid-rigging and anti-competitive behaviour are held to account, given the fundamental importance of fair and open competition to procurement.

However, I reassure the Committee that these grounds should not be used to exclude suppliers merely because they are under investigation by the CMA or another regulator; there must be sufficient evidence that a breach of competition rules has occurred. I think my noble friend pointed out that the language used in the Explanatory Notes differs from that in the Bill. I am advised that this does not reflect a difference of policy or meaning. Authorities must “consider” that the conduct specified has occurred before determining that the exclusion ground applies. She went on to ask about why there were subjective tests in the discretionary grounds. I have to say that I had some difficulty in exactly following her logic in all this, and we may need to discuss these points further after Committee. The answer is because exclusion is a risk-based measure and a last resort, and suppliers are protected by a right to challenge the exclusion decisions because of the nature of those decisions.

[Baroness Noakes (Con)]

A moment ago my noble friend said, in respect of the amendment by the noble Lord, Lord Fox, that she did not want decision- makers trying to weigh up complex financial matters, but she somehow seems quite happy to have decision-makers weighing up equally complex matters scattered throughout Schedule 7 and in the discretionary exclusion grounds. I struggle to see the intellectual cohesion in the Government’s position.

[Baroness Neville-Rolfe (Con)]

I thank my noble friend for her further comments, which I will consider carefully. I myself feel strongly, as someone who has witnessed small construction companies being investigated by a competition authority that at the end of the day have been found completely innocent, that it would be difficult if they were not able to continue to engage in procurement during a long period of investigation. However, as she explained, we need to get right how we deal with the discretionary grounds and ensure that there is enough certainty so that authorities do not spend too much time going round in circles. We need to reflect further on the points that she has made. I think I slightly misunderstood the purport of her original amendment, so I look forward to discussing that with her. I thank the noble Lord, Lord Fox, for his intervention.

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[Lord Clement-Jones (LD)]

My Lords, I would be very happy if the Minister introduced my amendment, but in moving it I will also speak to Amendment 243A and Clause 40 stand part. My noble friend Lord Fox will speak to other Liberal Democrat amendments in this group that are in the names of my noble friends Lord Wallace and Lady Brinton. I know that my noble friend Lord Fox has congratulated the Minister already but it is the first time that I have spoken since I saw her on the Back Benches in our previous proceedings. I must congratulate her on her seamless move to the Front Bench—again.

Given the controversy surrounding these direct contracts, the removal of Clause 40 on direct awards would, pending greater transparency and equity for SMEs, be the preferable course. But these are specific amendments to Clauses 40 and 42, which would prevent direct awards being used within framework agreements and instead open all such awards to competition. This issue is seen all the time within the G-cloud framework; it prevents proper competition from British SMEs and simply reinforces the dominance of certain key foreign players in the market. These amendments would provide the opportunity to redress the balance and help support UK SMEs.

We will debate the role of frameworks later, but these amendments seek to highlight the blurring of direct award rules by smuggling in large, uncontested contracts within framework agreements. The notion that there is a ceiling above which such awards must be competed for, and below which they can be awarded directly, is theoretically sound if it is rigorously adhered to. We on these Benches would argue that the threshold of £250,000 is too high and that a figure of £100,000 would be more appropriate. I seek the Minister’s view on thresholds and how they are arrived at. However, thresholds are pointless if they are ignored or bypassed, which is what seems to be happening.

One very good example of where this system has completely gone off the rails is cloud computing. This important service is central to the Government’s digital plans. It seems that rarely is the ongoing cloud service bid seen as a separate service; rather, it is wrapped in a package being competed for through a framework agreement by the consulting giants. These consultants always seem to partner with one or other of the dominant, non-UK cloud services companies.

This has gradually led to a disproportionate level of awards to these companies. For example, in 2012-17, one company, Amazon Web Services, was awarded £25.5 million-worth of contracts from a total market worth £381.7 million—a market share of 7%. By 2018-22, its market share had ballooned to just a shade under 40%. In the current financial year alone, 2022-23, AWS has seen £87.7 million-worth of contracts from a total market of £137.6 million—a market share of 64%. The US federal Government estimate that the UK public cloud market was worth $12 billion in 2020 and growing, so AWS can expect a healthy $5 billion-plus, with Microsoft Azure not far behind. Almost none of this would have been opened up to competition.

Of course, in the UK, a company is deemed to have monopoly power if it holds more than 25% of the market. At the same time, the SME share of the market has fallen from more than 50% to just 20% in the last five years, and barely 10% this year. It simply reinforces the dominance of certain key foreign “hyperscalers” in this market. To be clear, it seems that these services are available from UK-based suppliers. We are not asking for preferential access for these UK suppliers, just that they are not locked out by the use of framework agreements in this way and the awards of direct contracts under them.

The Government talk about building a UK digital future, yet they systematically underwrite the development of non-UK businesses by ignoring their own rules. The Procurement Bill is supposedly designed, according to the Queen’s Speech, so that

“Public sector procurement will be simplified to provide new opportunities for small businesses.”


On top of this, the Crown Commercial Service’s own guidance on direct awards suggests that the procedure is suitable only for low-value, low-volume commodity products. In the case of AWS, some of the contracts, such as the Home Office contract, top £100 million in value, so they cannot be considered low-volume or low-value, nor can cloud hosting be considered a commodity, given the proprietary nature of the service and the consequences of that.

If the Government are true to their word, they will accept these amendments to ensure that the balance is redressed and UK SMEs are given a chance to compete on a level playing field. I beg to move.

[Baroness Noakes (Con)]

My Lords, I have Amendment 236 in this group. It probes the relationship between direct contract awards and framework contracts.

Direct awards are allowed under Clause 40 if they satisfy one of the justifications in Schedule 5, paragraph 8 of which allows them if they are similar to existing contracts for goods and services that have been entered into in the previous five years and in which the initial tender set out the intention to use the direct award justification. My amendment would change those five years to four years, specifically to probe the differences between a repeat direct award under Clause 40 and an award under a framework contract, as covered in Chapter 4 of Part 3.

Clause 45 says that a framework contract has a maximum duration of four years other than for defence and utilities contracts. Doubtless this is my ignorance speaking but I hope that my noble friend the Minister can explain to me the rationale for allowing five years for direct awards under Chapter 3 as opposed to four years for framework contracts under Chapter 4. My question is pretty simple: is there a substantive distinction between direct awards and awards under framework contracts, where the justification for the direct award is in paragraph 8 of Schedule 5?

It seems to me that this is another example of how the designers of this new procurement system have lost sight of simplicity and underlying principles in designing the system. However, there may be a good reason for that, of course; I look forward to my noble friend the Minister explaining it.

[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.

--- Later in debate ---

[Baroness Noakes (Con)]

My Lords, I have several amendments in this group. The first is Amendment 264, a probing amendment to find out why standstill periods, which are generally required by Clause 49, are not required for light-touch contracts or those awarded in dynamic markets. My amendment would achieve this by deleting paragraphs (d) and (e) from Clause 49(3).

As my noble friend just explained, the standstill period is a short pause after the publication of the contract award notice in order to allow an agreed bidder the opportunity to complain about a contract before the contract is finalised. This is a sensible part of the framework because challenging a contract after it has commenced is much less effective and is best avoided. The purpose of my amendment is to ask my noble friend to say what public policy grounds would deprive unsuccessful bidders of the opportunity to challenge contract awards under the light-touch or dynamic market regimes. What specifically are the features of those regimes that are suitable to override the rights of unsuccessful bidders, compared with other contracts?

My next amendments, Amendments 477 to 480, would have the effect of ensuring that procurement oversight extends to all procurement covered by the Bill. Clause 96 allows for investigations into compliance with the Bill, but excludes government departments, Welsh Ministers, Northern Ireland departments and utilities from its scope. My simple question to my noble friend is: why? She cannot possibly tell me that these contracting authorities are such paragons of virtue when it comes to procurement that they would always comply with the Bill. Government departments do not have a perfect track record on procurement and, in my view, ought to be capable of being investigated.

My final amendment in this group, Amendment 482, concerns the recommendations that can be made following a Clause 96 investigation. Clause 97(3) says that these recommendations “must not relate to” how to comply with the procurement objectives set out in Clause 11; must not recommend how the contracting authority should have regard to the Section 12 national procurement policy statement; and must not say how the authority should

“exercise a discretion in relation to a particular procurement.”

I can just about understand the last one, because recommendations should not interfere with

“discretion in relation to a particular procurement”,

but I do not understand why recommendations have to steer clear of procurement objectives or the NPPS. What is the point of making recommendations if the heart of the procurement rules, to be found in Clauses 11 and 12, are off limits? For example, is value for money off limits in an investigation because it is an objective within Clause 11? I cannot understand why that should be excluded. My amendment is to delete subsection (3) on a probing basis, to give my noble friend the opportunity to explain what all this is about.

[Lord Fox (LD)]

My Lords, I speak in place of my noble friend Lord Wallace on Amendments 349A, 349B and 353A, all of which refer to and reflect on the procurement review unit. On page 13 of Transforming Public Procurement: Government Response to Consultation, at points 46 to 49, the Government say:

“We have revised the proposals for this new unit. It will be known as the Procurement Review Unit (PRU), sitting within the Cabinet Office and will be made up of a small team of civil servants.”


They go on to detail quite fully what the PRU is—I will come back to its role and autonomy in a minute—but where is it in the Bill? Amendment 349A seeks to replace “An appropriate authority” with the promised “Procurement Review Unit”. Amendment 349B would give a role for the procurement review unit to advise. More specifically, in Amendment 353A we seek the insertion of the nature of the procurement review unit.

All these amendments are trying to probe where the Government got to between the consultation and the drafting of this legislation, and why in effect there is no PRU in the Bill. What happened to it and who has got it? When the Minister no doubt notices and reinserts it on our behalf, what will its role and its level of autonomy be? How many teeth are the Government prepared to give this PRU, and will it essentially have those teeth drawn? Essentially, where is it?

Economy: The Growth Plan 2022

Baroness Noakes Excerpts

Monday 10th October 2022 Lords Chamber

[Baroness Noakes (Con)]

My Lords, we have heard many speeches today from the anti-growth coalition, and doubtless there will be more. Noble Lords do not say that they are against growth, but they support the kind of policies that have failed to produce growth and are unlikely to allow the UK to escape from the deadly combination of slow growth, high inflation and high taxation. The Prime Minister is absolutely right to prioritise getting the UK growing again. She is also right to focus on bold supply-side measures and tax reductions. Those who set their faces against this need to explain how else the UK can achieve a paradigm shift. It will not be found in a magical green economy, as some noble Lords advocate. Net zero is costing money; it is not making money.

The Government’s supply-side plans, such as investment zones, are exciting, and I look forward to significant regulatory reforms which will allow small businesses to concentrate on growth rather than on bureaucracy. Thank goodness we are not shackled by the EU any more.

We also need lower tax rates, and this is nothing to do with the fantasy about trickle-down economics. It is about incentives. The right tax rates are the ones that encourage people to work, which encourage and support entrepreneurs and which attract overseas investors. That is the route to growth. Low rates are not synonymous with low tax yields, as previous Conservative Governments have shown.

The Prime Minister is also right about refusing to look at economic policy through the lens of redistribution. That is an obsession based on the politics of envy, and it does nothing to encourage growth. It is not a coincidence that Labour Governments, with their focus on redistribution, make the kind of policy choices that leave an economic mess when they are pushed out of government.

There is no moral high ground in redistribution. Of course we have a moral duty to support those in need, but the best route to that is a successful economy. On the flip side, it is morally wrong to impoverish everyone by holding back people with potential for success.

I have made many speeches in your Lordships’ House regretting various debt-to-GDP percentages well below the ones now likely, and I stand by the need to get our debt down, but these are not ordinary times, and the key driver of the changes since the last Budget is the huge energy support package, which I am sure that all noble Lords support. We are not an international outlier, with our debt-to-GDP ratio among the bottom of the G7 range. I am, however, glad that my right honourable friend the Chancellor is bringing forward his medium-term fiscal plan to the end of this month. I am sure he will show the doubters that we remain the party of responsible public finances.

Before finishing, I should like to say a few words about the Bank of England, which has let the country down. The Monetary Policy Committee kept monetary conditions too loose for too long and failed correctly to identify recent inflationary trends. Its interest-rate policy created a housing market built on high house prices and unrealistically low interest rates. That policy also sheltered zombie businesses from economic reality. Its Financial Stability Committee, aided and abetted by the Pensions Regulator, failed to spot that pension funds have pursued liability-driven investment strategies which presented a risk to financial stability, and taxpayers have had to stand behind the Bank’s support actions. I fully support Bank of England independence from the Executive, but that independence has to be underpinned by strong and effective accountability, and that is something that Parliament, especially your Lordships’ House, must work on.

Procurement Bill [HL]

Baroness Noakes Excerpts

Committee stage
Monday 18th July 2022 Grand Committee

Moved by

[Baroness Noakes]

96: Clause 18, page 12, line 22, leave out “must” and insert “may”
Member’s explanatory statement
This amendment probes why suppliers which do not satisfy conditions of participation must be excluded from a contract award under clause 18 though such suppliers are not required to be excluded from the tendering process under clause 21(6).

[Baroness Noakes (Con)]

My Lords, I shall speak also to Amendment 107 in this group. The large part of this group is government amendments, but my two small probing amendments have found their way into my noble friend’s rather large group.

Amendment 96 is another “may/must” amendment, which we always enjoy in this Committee. It probes the effect of not satisfying participation conditions on a tender. Clause 21 allows a contracting authority to set conditions of participation in specific areas. Subsection (6) permits but does not require the contracting authority to exclude a supplier which does not satisfy a participation condition from then participating in all or part of the tendering process.

If a contracting authority does not exclude a supplier from the tender process, one might think that such a tender could result in the award of a contract. If that were not the case, I can see no reasonable case for allowing such a tender into the process at all. However, subsection (3)(a) of Clause 18, which deals with contract award, states that

“a contracting authority … must disregard any tender from a supplier that does not satisfy the conditions of participation”.

Hence, we seem to have an Alice in Wonderland world where a supplier which has fallen foul of participation provisions can take part in the tender process, but only on the strict understanding that it cannot win the contract. That does not make any sense to me. My amendment would make the terms of Clause 18 permissive, so that a contract could be awarded. Another solution would be to make exclusion mandatory from the tender as well as from the contract award.

My second amendment in this group, Amendment 107, is a simple probing amendment to ascertain what is meant by Clause 19(3), which deals with competitive tendering procedures. Subsection (3) requires the procedure to be proportionate,

“having regard to the nature, complexity and cost of the contract”,

which seems at first sight entirely sensible and should stop contracting authorities using unnecessarily burdensome procedures. What subsection (3) does not say, however, is how this is to be assessed.

In a rare case of going beyond what is in the Bill, the Explanatory Notes say:

“Subsection (3) requires contracting authorities to ensure that the procedure is not designed in a manner that is unnecessarily complex or burdensome for suppliers”.


This is, in fact, from paragraph 141 of the Explanatory Notes, not paragraph 142 as I set out in my explanatory statement. The Explanatory Notes therefore firmly place the consideration of proportionality in the context of suppliers, but that has not found its way into the text of Clause 19, and that is what my Amendment 107 seeks to change.

In addition, even if subsection (3) could be read as being a supplier-centred proportionality requirement, it does not give any help as to whether the contracting authority has to consider suppliers generally, in an objective way, or whether they should take account of the particular characteristics of likely suppliers. I have in mind in particular that what proportionality might look like to a multi-million-pound contracting business is light years away from its impact on a small or medium-sized enterprise.

I hope my noble friend will agree to make the Bill clearer in this regard, or at least make a clear statement from the Dispatch Box as to how Clause 19(3) is intended to be interpreted. I beg to move.

[Lord Scriven (LD)]

My Lords, I rise to speak to Amendment 105 in the names of my noble friends Lord Wallace of Saltaire and Lord Fox. I will come on to some of the points the noble Baroness, Lady Noakes, made, but before I start, I apologise for not being here at the start of the Committee. As my noble friend Lord Clement-Jones said, I was on a train for four hours. Actually, you can hear my croakiness: I am the healthiest one on our Front Bench today, so I am here—

--- Later in debate ---

I respectfully request that these amendments be withdrawn, and I beg to move the government amendments. I apologise; I think I am still on beach head and not on Grand Committee head.

[Baroness Noakes (Con)]

My Lords, I do not think my noble friend the Minister can move her amendments yet; she will move them when they are reached in their proper place on the Marshalled List. I thank all noble Lords who have taken part in this debate and particularly for the support for my amendments in this group, for which I am grateful.

So far as Amendment 96 is concerned, I was grateful for my noble friend’s explanation, which seemed to make sense. I am content with that. I have no idea what the clarification she was reading into Hansard was about, but I do not suppose it really matters.

Where Amendment 107 is concerned, I am rather less satisfied. I think I agree with my noble friend that clarity is required. My amendment was tabled because the Explanatory Notes went further than the Bill and said that it should be from the suppliers’ perspective. But I think I heard my noble friend say that we do not want contractors challenging the procedures; well, actually, yes, we do, if they are burdensome. If we are trying to set out that the aim is, as correctly stated in the Explanatory Notes, to make sure that these are not burdensome for suppliers, we should facilitate challenge of contracting authorities and not just assume that contracting authorities have a monopoly on wisdom on what is proportionate in this regard. I am not happy with that response today, but we are agreed on clarity, so perhaps we can achieve a route to clarity between now and Report. I beg leave to withdraw the amendment.

Amendment 96 withdrawn.

--- Later in debate ---

[Lord Alton of Liverpool (CB)]

My Lords, it is a great pleasure to follow my noble friend Lady Boycott and to associate myself with the remarks she has just made, and also with the noble Lord, Lord Hain, who made an important contribution to the proceedings of the Committee this afternoon. We will all be interested to hear how his meeting with the right honourable Jacob Rees-Mogg goes on Wednesday.

I shall speak to Amendments 331 and 353. Amendment 331 in the name of the noble Baroness, Lady Hayman, and the noble Lords, Lord Coaker, Lord Bethell and Lord Fox, deals with serious human rights abuses. When the Minister responds I hope he will bear in mind the very helpful conversations he and I had when he agreed to meet me to discuss modern-day slavery and genocide. I should mention that I am a trustee of the anti-modern-day-slavery charity the Arise Foundation and a patron of Coalition for Genocide Response.

It concerns me that the word “genocide” has been put in a list that simply states that

“‘serious human rights abuses’ includes, but is not limited to”,

and then sets out a list from (a) to (f). It is not that any of these things are minor questions. Winston Churchill said that the horrors committed during the Nazi regime constituted a crime that had no name. It took Raphael Lemkin, the Jewish Polish lawyer, to create the name “genocide” to describe what had been done. Indeed, the 1948 convention on the crime of genocide came from that. Your Lordships will recall that the amendments to earlier legislation I moved specifically on the procurement of technology via Huawei and later on the Health and Care Bill, which the noble Baroness, Lady Stroud, referred to, were careful to set aside the word “genocide” from other questions.

I have one specific and, I hope, helpful remark to make to the noble Baroness and others, which is that if this amendment is to be pursued later, perhaps these questions can be separated, because there are many people who would be willing to vote on genocide not only in your Lordships’ House but in another place but who would not be willing to support something that was simply a list of serious human rights violations. I think that some further thought should be given to that.

On Amendment 353 on supply chain resilience against economic coercion and slavery, I shall try to be brief because I set out some of the arguments about this in our earlier debate about Hikvision and the role that companies such as that have played throughout procurement processes. They are surely what the Bill is dealing with, yet they operate with impunity from their base inside the People’s Republic of China and have been directly associated with the enormities that have been committed in Xinjiang, where it is estimated that more than 1 million Uighurs are held in concentration camps. All of us have read appalling accounts of their treatment, and anything we can do at any stage, we should try to do. I know that the noble Lord, Lord True, is sympathetic to this argument.

Therefore, let me briefly set out some of the arguments that have perhaps been put to him by officials or others who would oppose the excellent amendment in the name of the noble Baroness, Lady Stroud, which is supported by the noble Baroness, Lady Smith of Newnham, the noble Lord, Lord Coaker, and me. First, will this not have a chilling effect on government procurement? Yes, there will be a chilling effect on government procurement of slave-made goods—and so there should be. Businesses that do not rely on slavery for sourcing have absolutely nothing to fear. The amendment sets the bar low but establishes certain minimum standards. It is noteworthy that the Uyghur Forced Labor Prevention Act goes much further than this proposal—I drew it to the attention of the noble Lord, Lord True, during our discussions—and there has been no “chilling effect” documented in the USA. I will add that that legislation enjoyed significant bipartisan and bicameral support in the United States.

Secondly, will this not discourage competition and therefore crush markets? No. On the contrary, the amendment will incentivise business to raise its human rights game and encourage competition among entities which meet basic human rights standards. We should be using our purchasing power, this phenomenal amount of money, more than £300 billion, to nudge the business world. This amendment helps us to achieve that. It removes disadvantage for lawful performers, and that is something we should all welcome.

Thirdly, is this not just another anti-China amendment? No. The amendment does not even mention China. Forced labour is a global issue, whether it is exploitation in Brazilian mines or Malaysian tech factories or indeed Uighur slave labour. It is morally imperative that taxpayers’ money does not fund slavery, wherever it is and wherever it is practised.

Fourthly, does this not turn civil servants into police for business supply chains? Civil servants already assess those bidding for government contracts against certain criteria, and that is exactly how it should be. All the amendment seeks to do is to make the criteria more robust. Civil servants generally do not have the resources to inspect supply chains. As the noble Lord, Lord Coaker, probably knows better than any other noble Lord in this Committee, assessing what is going on in a supply chain is an extraordinarily complex, time-consuming and resource-ridden process. The amendment recognises that, and seeks instead to provide civil servants with more tools to ensure better anti-slavery standards around disclosure and transparency of sourcing inputs.

I wonder whether the noble Lord has had it put to him that we are presuming the guilt of businesses by blacklisting entire countries or areas. No, the amendment does not presume that a business operating in a particular area is de facto guilty of perpetrating slavery, although this is the assumption of the United States legislation, which imposes a rebuttable presumption. I admit that that is something that I personally favour, but it is not what is in the amendment. In the United States, that targets goods produced in the Uighur region because it is assumed that they are tainted.

I was struck that the noble Baroness, Lady Stroud, referred to that word when discussing earlier legislation the House passed, the Health and Care Act, which includes the word “tainted”. I think the Minister will forgive me for saying that that legislation was strengthened by civil servants from his department, who gave advice to the Department of Health. It would be absurd to have legislation that applies purely to the National Health Service, despite the fact that we spent £10 billion on PPE, but does not apply to other departments. You cannot have legislation, especially a procurement Bill, which is weaker than legislation already on the statute book. The amendment merely requires that the origins of goods and their constituent parts are disclosed.

What difference will this really make? Do we need more regulation? The Health and Care Bill was amended precisely because there was acceptance—the Government knew—that the existing regulation was not strong enough. It is to the credit of Sajid Javid that he recognised that and did something about it. The Government are widely suspected of procuring goods and services that may be tainted with slavery. In 2020, the Daily Telegraph reported that, for one contract alone, £150 million of PPE originated in factories in the Uighur region with a documented slavery problem. If stronger standards are good enough for the Department of Health and Social Care, they are surely strong enough for the whole of government, and this Bill gives us the opportunity to do something about it.

Finally, it is often said, “Not this Bill, not this time. There is a modern slavery Bill coming; why can we not just wait for that?” The amendment before your Lordships addresses government procurement and this is the Procurement Bill. It is entirely appropriate that an amendment seeking to improve certain standards regarding government procurement should be debated during the passage of this Bill. Moreover, we do not know what is likely to be in the modern slavery Bill; we were told a lot about it during the course of the Nationality and Borders Bill, which pre-empted its provisions then, but we still do not know what will be in it—and, after all, we are in the midst of a change of Government.

Engagement with the Government and this Secretary of State has been good and, as I finish, I pay tribute again to the noble Lord, Lord True, for his patience in putting up with representations constantly being made to him on this subject. But there is no guarantee that will continue. While Ministers smile on these efforts, we are keen to make the progress we can now, while Ministers such as the noble Lord are in place.

[Baroness Noakes (Con)]

My Lords, I have two small amendments in this group, Amendments 330 and 332. I must say that this group contains far too many issues to be debated effectively. My own are minor, so I did not degroup them, but I hope that in future other noble Lords will exercise their right to degroup so that we have sensible groupings to enable a proper Committee debate. I will probably get into trouble with my Chief Whip for encouraging noble Lords in this direction, because I think there is a view that large groupings are more efficient. However, I do not believe that; I believe in effective scrutiny in your Lordships’ House.

Amendment 330 probes the relationship between the mandatory exclusion of suppliers for improper behaviour in Clause 30 and the discretionary exclusion found in paragraph 14 of Schedule 7. I do not understand why the Bill has to have improper behaviour as an exclusion ground dealt with in two places. The definition of “improper behaviour” is virtually identical in each case, and they certainly seem to be aimed at the same behaviour. The processes are very similar, with rights given to suppliers in both cases, and they are both aimed at exclusion decisions. There are wording differences between the two parts of the Bill, but I cannot see anything of substance involved. It just looks as if two parliamentary draftsmen have been involved in different bits of the Bill and they have not known what was going on in the other bit.

Schedule 7 requires only that the decision-maker—which is usually the contracting authority, as in Clause 30—“considers” that there is improper behaviour, while Clause 30 requires a determination. However, in this context, I cannot believe that that is a distinction with any real difference attached to it. The main difference of substance is that Clause 30 results in mandatory exclusion, while paragraph 14 of Schedule 7 does not necessarily lead to exclusion. I hope that my noble friend the Minister can explain the subtleties of why improper behaviour has been dealt with in this way. My own view is that it would be easier to understand if Clause 30 were placed in the Schedules 6 and 7 structure of the Bill, since it deals with exclusion, and could have options of mandatory or discretionary exclusion. I certainly look forward to hearing what my noble friend the Minister has to say on that.

Amendment 332 is slightly different; it concerns paragraph 16 of Schedule 7, which itself sets out exclusions from the discretionary exclusions in Schedule 7. Under paragraph 16(4), there are four exclusions from some of the Schedule 7 things which have happened before the schedule came into force. It is my understanding that the existing procurement rules already contain three of the grounds for exclusion. So it does not seem logical that, when we shift to this new Procurement Bill, we disregard things that happened in the past that were exclusion grounds because they happened before the Act came into force—it seems to be an unnecessary discontinuity.

I believe that the new ground is “national security”, under paragraph 16(4)(d). For that, it is probably reasonable to disregard behaviour that occurred prior to the Act coming into force. I invite my noble friend the Minister to explain the logic behind paragraph 16(4).

[Baroness Smith of Newnham (LD)]

I will speak to Amendment 353, to which I am a co-signatory, and in passing to Amendment 331. Perhaps surprisingly, my first comment will be to agree with the noble Baroness, Lady Noakes. As we were listening to the various interventions and the introduction of various amendments, my sense was that we were trying to debate too many things in one group. In particular, when I listened to the noble Baroness, Lady Boycott, I thought that hers were very interesting amendments but that they were not really related to some of the issues associated with modern slavery, genocide and human rights that we were thinking about. I would also like to the irritate the Whips by suggesting that a little more degrouping might be beneficial in future.

The noble Baroness, Lady Stroud, introduced Amendment 353 in considerable detail, and my friend, the noble Lord, Lord Alton, then elaborated on it further. At this point, I do not want to go into further detail but to press the Minister on whether the Government would not see that it is appropriate to extend what the Department of Health and Social Care has done with the Health and Social Care Act to ensure that there is transparency in supply chains and that we do everything possible to ensure that genocide and modern slavery are excluded. Other noble Lords have provided the reasons why that is so important. I would hope to give the Minister plenty of time in which to respond.

Procurement Bill [HL]

Baroness Noakes Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

[Baroness Noakes (Con)]

My Lords, with the leave of the Committee, I will move Amendment 60 in the name of my noble friend Lord Lansley and speak to Amendments 61, 63 and 64 in his name. As on our previous Committee day, at his request I am handling his amendments this week.

Amendment 60 is one of those favourite Committee amendments that changes “may” to “must”. No Committee can ever get through without at least one of them; there will be some others, I think. The amendment would change “may” to “must” in Clause 12(1) so that it would require the Government to produce a national procurement policy statement. Although it is clearly the Government’s intention to publish a statement, the current wording of Clause 12 leaves it open to them not to do so. That is a serious omission, especially given the introduction of covered procurement, which we will debate on Report. The NPPS will be the only way to ensure that all public procurement is conducted in accordance with the principles and objectives set out in it.

Amendments 63 and 64 would require that the consultation is based on a draft statement. The present drafting would allow a consultation without the benefit of seeing what the Government intended the statement to say. I do not think this is an acceptable or effective consultation process. It makes something of a mockery of consultation, particularly for the first NPPS. I note that Amendment 74 in the name of the noble Baroness, Lady Parminter, also includes proper consultation on a draft.

The other amendment in my noble friend’s name is Amendment 61. The noble Baroness, Lady Bennett of Manor Castle, has added her name to it, and I understand that she will also speak to it. That is probably just as well, because I am not much in favour of lists such as the one here, even when they are non-inclusive. The various other amendments in this group show that noble Lords are attracted to attaching other pet causes to the list. I should say, though, that my noble friend Lord Lansley believes that we must ensure that the existing statutory obligations on the environment and social value are included in the priorities in order to reaffirm Parliament’s will, and he has added innovation and competitiveness in UK industry because they are stated Treasury priorities, as set out in the Spring Statement. Lastly, he included

“the minimisation of fraud, corruption, waste or the abuse of public money”,

which should be underlying values in relation to public procurement. He believes that these items should be specifically referenced in the Bill.

I beg to move.

[Baroness Parminter (LD)]

My Lords, I have two amendments in this group. In the absence of the noble Baroness, Lady Worthington, I rise to introduce Amendments 65 and 546.

This is an important group of amendments. Although contracting authorities may never bother to read a Bill that we have debated for hours, all of them must have regard to the NPPS, so what is in that document is really important. The amendments in this group look at two particular areas. One is what is put in the Bill about the strategic priorities. The second is the process for parliamentary scrutiny to bring that into being.

Amendments 65 and 546, in my name and the names of the noble Baronesses, Lady Worthington, Lady Verma and Lady Young of Old Scone, so they are cross-party amendments, are intended to tease out the strategic priorities that the Government allude to in the opening sentence of the NPPS, as stated in the Bill, because it does not put anything in the Bill.

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[Lord True (Con)]

Yes, I hope that letters that are sent out are shared with other Members of the Committee and, if not, I will make sure that they are. I would not want to encourage the noble Lord too much in the hope, because the Government’s position is that we do not think it is advantageous to encrust the primary legislation with the range of aspirations that we have heard from many sides in this Committee. The noble Lord can have another try, but I cannot promise that it will be different. But I will write to him and circulate the letter anyway.

I respectfully request that these amendments be withdrawn or not moved.

[Baroness Noakes (Con)]

My Lords, we have had a very wide-ranging, and rather long, debate on this group of amendments. I will start with my noble friend Lord Lansley’s Amendment 61, on the list of strategic priorities. As I predicted, the Minister heard various lists of different kinds of things that noble Lords wanted in the Bill. Let me say that I was wholly convinced by my noble friend’s explanation of why they should be encrusted—as he put it—in the Bill, but I suspect that I am not representative of the Committee in that regard.

In respect of Amendments 63 and 64, my noble friend helpfully said that the Government would share the draft of a national policy statement as part of the consultation process, which I think clarifies that aspect.

I turn to the lead amendment in this group, Amendment 60—the may/must amendment. My noble friend the Minister argued for flexibility for the longer term; other Governments may not want to issue such statements, and I completely accept that. What I did not hear from my noble friend was that this Government commit to publishing a statement under this clause. I would have hoped that, at least from the Dispatch Box, the Minister would commit to publishing the statement, having included Clause 12 in the Bill. He talked about the timetable for the introduction of the Bill and the six months of learning process, but I did not hear what happens to the policy statement. I hope that he might reflect and perhaps give clarity on that in writing or at a later stage.

With that, I beg leave to withdraw.

Amendment 60 withdrawn.

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[Baroness Thornton (Lab)]

I have three sentences on my very tiny Amendment 122A. It asks the Minister to explain to the Committee why, on this important clause on award criteria, there is nothing to commit the Government to create additional public value, in line with their specific priorities—whether on P&O or school meals. It genuinely asks the Minister to explain that to the Committee.

[Baroness Noakes (Con)]

My Lords, my noble friend Lord Lansley has three amendments in this rather diverse group. The first is Amendment 118, which adds another requirement for tender notices under Clause 20. It would require the tender notice to provide a period during which potential suppliers can ask questions and get answers, which would then be shared with all potential suppliers. This procedure is often used in practice and it has advantages for both contracting authorities and potential tenderers, in clearing up any misunderstandings. For potential suppliers, it can clarify whether it is worth the time and effort of tendering. It allows suppliers that are not already familiar with a contracting authority to get up to speed. This would be particularly helpful for SMEs, as it would provide a relatively low-cost way to establish whether bidding for a contract is right for their business.

I have a slight concern that the amendment’s requirement to share answers with “all potential suppliers” might be onerous, but this is a probing amendment and I hope that the Minister responds positively to the idea behind it.

My noble friend’s second amendment is Amendment 123, which amends the provisions of award criteria in Clause 22. Under this amendment, the award criteria must enable innovative solutions to be offered in meeting the purposes of the tender. This returns us to one of my noble friend’s themes for this Bill—namely, that public procurement must foster innovation. It is much easier for a public procurement to specify the detail of what is to be delivered than the objectives or purpose of a contract, but good procurement would positively encourage innovative solutions, because innovation is the key to unlocking value for money for the public sector. I hope the Minister agrees with the aims of this amendment, as well.

Lastly, my noble friend Lord Lansley’s Amendment 149 seeks to amend Clause 26 by creating another reason for excluding suppliers, where no good reason is offered for a low tender price. The “most advantageous tender” rule in Clause 18 does not require the acceptance of the lowest-priced tender, but that will often be the outcome. This amendment is designed to provide encouragement to contracting authorities to understand why a tender price is abnormally low and to eliminate those that are lowballing on the basis that they gain a contract and then, later, find some way to negotiate up the price. This unfortunately happens in real life, sometimes.

[Baroness Worthington (CB)]

My Lords, I rise to speak to two amendments in my name. I am grateful for the support of the noble Baronesses, Lady Verma, Lady Boycott and Lady Parminter. At this stage in Committee, we have had the debate about why we feel this Bill is lacking specificity, does not provide sufficient guidance and is a missed opportunity, so I do not propose to rehearse those arguments. I think that, if the Bill were different, we would not be seeking to amend Clause 22 on award criteria in this way. It is evident that we are trying to convey our concern that we need more guidance on these important long-term targets that need to be embedded in the procurement process.

I ask the Minister whether, under his interpretation of

“the subject-matter of the contract”

in Clause 22(2)(a), a contracting authority can set criteria that specifically relate to the public good that derives from environmental benefits that relate to the things we have put into our amendment. If that is the case, we have a workable solution. If it is not, we need something else in the Bill. To be clear, my question is: in setting award criteria under Clause 22, can a contracting authority put in specific, measurable criteria that relate to the wider public, environmental and social good?

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[Lord True (Con)]

I respectfully disagree with the noble Baroness. It is acknowledged from the other side that value for money is an extremely important criterion. It is one of the things in Clause 11. We have discussed mechanisms and we have had discussions about the national procurement policy statement, wherein, in the draft on the table, lie large numbers of things which the noble Baroness is seeking. It is frankly not the case to say that there is nothing in here other than value for money—that is not the Government’s submission to your Lordships. The Bill takes forward the change from the use of the term “most economically advantageous tender”, MEAT, to “most advantageous tender”, MAT. That is to reinforce the precise message that procurers can take a broader view of value for money than simply lowest price. We believe that the amendment tabled by the noble Baroness is not necessary.

Amendment 129A, in the name of the noble Lord, Lord Aberdare, would make it explicit in the Bill that contracting authorities must always include an objective mechanism for determining price or cost after contract award where and to the extent that value for money, but not price or cost, is evaluated when assessing which tender is the most advantageous. We believe that commercial practice and other provisions in the Bill mean that this amendment is unnecessary. It would be highly unusual for contracting authorities not to include an evaluation of price or cost when assessing value for money in their procurements. This is good commercial sense.

Further, contracting authorities are not free to act unbounded. The procurement objectives, including those in Clause 11, will apply. I do not think it is necessary to expressly legislate for it. We will, however, publish guidance to contracting authorities on evaluation. The noble Lord may well ask me when the guidance is to be published. He also asked how we can be sure that that guidance will bite further. It may be that I can come forward with further information after Committee.

I am sorry, I have been given a long speech—

[Baroness Noakes (Con)]

We would not mind if my noble friend made it shorter.

[Lord True (Con)]

I would be happy to. There were a lot of amendments. I do not want to break down and not continue, but I have about four more minutes to go. With the Committee’s permission, would my noble friend—