Government Procurement Policy

Lord Broers Excerpts

Thursday 24th November 2011 Lords Chamber

[Lord Broers]

My Lords, I add my congratulations to the noble Lord, Lord Sugar, on obtaining this debate. It is an extraordinarily important topic today and I agree with all his specific suggestions. However, I wish to speak on the broader issue, as discussed by the noble Lord, Lord Palmer, of how we can, as a nation, ensure that we are in a better position to provide and maintain more of our own infrastructure. The noble Lord, Lord Sugar, mentioned Siemens supplying our rail rolling stock rather than Bombardier, which, while not a British company, at least manufactures in the UK. However, the problem is of course much wider than just railways. We are having to turn to overseas companies to supply most of our renewable energy sources and our new nuclear power stations as well, and, if we go ahead with it, our high-speed rail network too. This will further increase our current account deficit in manufactured goods and do nothing to alleviate our serious unemployment problem.

Many of our industrial companies cannot compete with overseas suppliers, despite the significant advantages of being local suppliers, because they have quite simply not kept up in research and development. At the same time as we have held, even advanced, our position in science, we have steadily slipped down the R&D tables in investment and achievement to seventh place. The noble Lord, Lord Bhattacharyya, has already mentioned this. There is nothing inherently lacking; several of our high-technology companies are thriving and well ahead of their competitors, but there are not enough of them and huge gaps are left in our ability to manufacture what we need, especially to meet our energy and transport needs.

To correct this failing, we must do more to ensure that our capabilities better match our needs, and government procurement can play an important role in doing this. Intelligent procurement combined with joined-up planning, as practised by several of our European and American competitors, would put us in a much stronger position. Joined-up planning is a long-term issue, as the noble Lord, Lord Hunt, has just said. Government should not only be thinking 10 and 20 years ahead in planning what infrastructure will be needed but making sure that we will have the industrial capacity to manufacture a significant fraction of it ourselves. I am not trying to suggest that we should do everything—we are a relatively small nation and that would not be sensible—but if we cannot supply a significant fraction of what we need, we are going to further aggravate our financial and employment problems.

The Chinese and Indian economies are growing and their trade balances are healthy because they have geared up to build their own power stations and transport systems. They do not have to get others to do everything for them. This also strengthens their ability to export, and thereby balance their need to import materials and essential commodities. In contrast, our own energy and transport policies seem to be developed without any effort to match them with our industrial capabilities. We do not seem adequately to involve industry in the planning process. By that, I do not mean having a few very senior executives acting as non-executive advisers—they are no doubt valuable, but at another level. What is needed is the involvement of the engineers who set and understand in detail the research and development operations of their companies and that can advise on what is and is not feasible. These experts also need to learn what the Government are planning so that they can comment on whether their companies are likely be in a position to supply it.

There are two ways in which we can do this. First, the TSB, which the noble Lords, Lord Puttnam and Lord Kestenbaum, mentioned, has responsibility for using taxpayers’ money to provide leadership in strategic research and development. It should be able to ensure that appropriate manufacturing capabilities will be available in the future. Its emphasis tends to be on good research to support the long-term development of emerging technologies rather than ensuring state-of-the-art capabilities in existing technologies, although it has the ability to do this as well. In fact, the TSB’s knowledge transfer networks provide an excellent mechanism for getting industrialists together with the Government to provide joined-up planning. I declare my interest here as unpaid chairman of the TSB’s Transport KTN. This evening, I am meeting senior members of the rail, automotive and marine industries to explore the possibilities of a technology innovation centre for transport.

Another mechanism that we have to ensure timely industrial planning is our network of chief scientific advisers. At present, they are seen mainly advising on science rather than engineering, but there is no reason why they should not play a larger role in joining industry with government. This issue was addressed by one of our recommendations in the Science and Technology Select Committee’s recent report, Public Procurement as a Tool to Stimulate Innovation, which says:

“We recommend that CSAs should have responsibility for encouraging engagement with industry (including both suppliers and potential suppliers) and academic communities with a view to promoting the procurement of innovative solutions … This role should be incorporated into departmental objectives”.

I see CSAs playing a more active role in ensuring that government policy in energy and transport is linked with future industrial capabilities.

If we go on planning our future infrastructure without regard to whether we can produce it ourselves, we are throwing away perhaps our best opportunity to solve our financial and employment problems. I ask the Minister to reassure us that the Government will use all the mechanisms available to them to restore our ability to have British workers build our future infrastructure.