Cybersecurity and UK Democracy

Lord Fox Excerpts

Tuesday 26th March 2024 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, I begin by making clear, as my right honourable friend Pat McFadden did in the other place, that we on these Benches support the Government in their efforts to counter attempts by China or any other state to interfere with our democratic processes in any way. This includes attempts to prevent elected representatives from going about their business, voicing their opinions or casting their votes.

We pay tribute to the work of the intelligence and security services in protecting our democracy and the public more widely. However, we need to question the coherence of the Government’s approach to this issue so far. Surely it is necessary for the Government to have a consistent approach across government, as the cyber threat is not restricted to democratic processes. It extends to universities, electric vehicles, energy, aviation, the safety of Hong Kong nationals, and intellectual property. How confident is the Minister that the vigilance recommended today in relation to democracy, which many would say comes slowly rather than swiftly, is equally applied to other areas of activity? Does the Minister honestly think that the limited action outlined in the Statement is sufficient to deter China? Given what we now know, what further steps are the Government going to take, since the hacking and impersonation of parliamentarians is not the full extent of this and not at all the action of a friendly state?

The calculation of any state which wishes us harm or considers that it may be necessary to do us harm in the future has changed markedly in the last decade. That which previously would need to be achieved through violent means can now be done through cyberattack. The defeat mechanism now is different. Our energy supplies, communications, water, transportation and finances are all targets in a completely new way. Undermining our democracy is just another form of attack. Does the Minister accept that we currently lack a consistent approach across government? I ask this as noble Lords will no doubt be aware that the Foreign Secretary has been the subject of unhelpful speculation regarding his interests in China. It seems peculiar that information about this has been less than forthcoming.

The Intelligence and Security Committee issued a report on China last year. Paragraph 98 of that report said:

“Targets are not necessarily limited to serving politicians either. They can include former political figures, if they are sufficiently high profile. For example, it is possible that David Cameron’s role as Vice President of a £1bn China-UK investment fund”


was

“in some part engineered by the Chinese state to lend credibility to Chinese investment”.

As I understand it, in January 2023, prior to his appointment as Foreign Secretary, the noble Lord, Lord Cameron, went to Sri Lanka to drum up investment for Port City Colombo, which is a belt and road project launched by President Xi that many believe will become a military base for the Chinese navy. It would help to protect the reputations of the noble Lord and the UK Government if there could be some clarity on whom he met and what sort of conversations took place. Can the Minister assist in providing the necessary transparency and reassurance so that this matter can be put to bed? Can she tell us whether these matters have been investigated?

We have heard assurances from Ministers that the closed electoral register has not been hacked, but anyone taking broader interest in this issue will be aware that the danger is not just about a single cyberattack event, but rather that data is gathered in large quantities over time and can be used to train AI or be interrogated by AI with impacts that we do not yet understand. What are the Government going to do, across all departments and institutions, to protect against this threat? The threat is evolving, from spying and influencing to the disruption of elections and critical infrastructure. As the threat has changed, surely our response needs to change in turn.

[Lord Fox (LD)]

We welcome this Statement, which we hope is a significant step towards a more strategic, cross-party approach to this issue. I take the opportunity to acknowledge our friend the noble Lord, Lord Alton, who has earned the opprobrium of the Chinese Communist Party thanks to his tireless campaigning. He should accept this as a badge of honour, albeit one that comes with ominous concerns. Over the last 24 hours, the Foreign Secretary issued a statement and called Beijing’s actions “completely unacceptable”. He added that:

“Such action from China will not be tolerated”.


Given that this is what the Government believe, the response to date seems feeble. This feebleness was highlighted by many of the Minister’s colleagues in the Commons, and not just Sir Iain Duncan Smith. But perhaps the reason for this caution was voiced by an unnamed Cabinet Minister quoted in the press as saying that the Government do not want to start a trade war. However, in response, China has said that it “strongly condemns” the UK’s “egregious” move to sanction Chinese hackers, adding that it would

“take the necessary reaction, as a matter of course, to the U.K.’s moves”.

What is the Cabinet Office assessment of the risk to the UK economy? How are the UK Government preparing to resist any retaliation?

During yesterday’s Statement, Deputy Prime Minister Oliver Dowden noted that it is no surprise that China

“should seek to interfere in electoral processes”

in successful democratic countries. The Deputy Prime Minister may not have been surprised, but the integrated review—even its refresh—does not anticipate this level of attack. What we have today is inadequate, so I suggest that the Government use this to instigate a process of significant and proactive cross-party consensus that we can take forward and have a cross-sectoral plan for our relationship with China.

The hack of the Electoral Commission is very worrying; can the Minister explain why it took so long for it to be disclosed? According to the NCSC, this data is highly likely to be used by Chinese intelligence services for a range of purposes, including large-scale espionage and transnational repression of perceived dissidents and critics in the UK. How will the UK Government protect those here in the UK-Chinese community who may be subject to long-distance repression?

Yesterday the Opposition’s spokesperson, and their spokesperson here today, rightly highlighted China’s voracious appetite for data and its potential uses as computing power improves. Even if data cannot usefully be manipulated and weaponised, it is used as a very useful training tool for artificial intelligence models, as we just heard. I echo the question asked yesterday: what are the Government doing to protect complex and valuable public datasets from being stolen in this way? Two, for example, are health data and criminal records, but is not just our existing datasets we should worry about; the Chinese have the capability to build their own. For example, years after the decision to remove it, Huawei remains integral in our telecoms infrastructure. The Hikvision ban extends only to so-called sensitive sites, despite the fact that we have pushed hard to ensure that it extends to all public buildings.

This is just the tip of the data-gathering iceberg that exists already in this country. For example, last week, the Council on Geostrategy published a new policy paper highlighting the risks from Chinese cellular modules—so-called IoT modules. This raises an issue around the role of devices that sit inside almost every internet-enabled device, creating another whole cyber danger area. Then there are electric cars, which are little more than data hoovers, sending information back to China.

China has data and technology strategies that directly link to its strategic and security aims. They are decades ahead of our defences. We have to work together, and quickly, to develop the necessary responses. Despite the very good work that has been done by our own agencies to protect us, so much more is needed.

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

My Lords, I thank the noble Baroness, Lady Chapman, and the noble Lord, Lord Fox, for their comments. I also thank the noble Baroness for her support for the important work across the piece, including by the intelligence services, in the more serious situation that we now find ourselves in.

I should start by explaining that we are vigilant and we do try to take a consistent approach, across government. We have made a lot of changes in the cyber area in the last two or three years. As for the activity announced yesterday by the Deputy Prime Minister and the question of delay, raised by the noble Lord, Lord Fox, this was a complex operation. It required painstaking work from the intelligence community to enable UK Ministers to confidently attribute the hostile cyber activity to Chinese state-affiliated actors. I hope noble Lords will be reassured to know that we have been working hand in glove with our international partners to collectively identify those responsible and to hold them to account. A number of partners have made follow-up statements within the last 24 hours.

The activity we announced builds on the broader work that the Government have led to expose hostile cyber activities conducted by states targeting UK interests and the democratic systems that we all value, including our democratic processes, which were affected by Russian intelligence services in December.

This is part of a wider, proactive approach. The National Cyber Security Centre has made a lot of difference right across the board, both for government and business. We passed the National Security and Investment Act 2021, the Higher Education (Freedom of Speech) Act 2023 and the National Security Act 2023 —which updated the Official Secrets Act and made espionage offences more 20th-century by introducing a harder operating environment. These are all extremely important.

We continue with our resilience work, across the piece, to strengthen cyber skills. The noble Baroness, Lady Chapman, is right that we need to look at critical national infrastructure and other issues.

The noble Baroness mentioned that my noble friend the Foreign Secretary was criticised by the Intelligence and Security Committee. I think she was referring to the committee saying that his role as vice-president of a China-UK investment fund was in some part engineered by the Chinese state to lend credibility to its investment. I do not think China can have been that influential, because the fund did not go ahead.

The noble Baroness also mentioned Port City in Sri Lanka. Obviously, the Foreign Secretary was a private individual at that time, but I understand he spoke at two events in the UAE. They were organised by an international speakers’ bureau, which supported this major infrastructure project. The noble Lord, Lord Cameron, was not engaged in any way with China or any Chinese companies about these speaking events. His engagement followed a meeting held with Sri Lanka’s president earlier in the year. The Port City project is, of course, supported by the Sri Lankan Government.

As has already been mentioned, the Foreign Secretary has been very clear that the targeting of UK democratic institutions and political processes is completely unacceptable. He made another statement about this yesterday. He raised it personally with the Chinese Foreign Minister, Wang Yi, making it clear that malicious cyber activity by Chinese-affiliated actors is unacceptable. That is the position today. The appointment of the noble Lord as Foreign Secretary followed an established process both in relation to peerages and to ministerial appointments. I hope I have helped clear this up.

The noble Baroness was interested in the impact of the incidents that were discussed yesterday which led to the sanctioning of two individuals and an entity associated with APT31. What happened was that actors were able to access copies of the electoral register in the Electoral Commission’s file-sharing system. The electoral registration officers for each local authority hold the live versions of the electoral registers—I think we have discussed this before—and they were unaffected. The electoral register does not contain things such as national insurance numbers or nationality data, nor does it give the age of individuals except in limited circumstances.

No parliamentary accounts were successfully compromised. The Parliamentary Security Department, which led on follow-up, assessed that this was reconnaissance activity and that parliamentary networks and accounts were not compromised. Clearly, we need to be vigilant, and that is the message that I am getting across the House this evening. It was not that serious, but we do not want other Governments of any kind to interfere with the democratic process, because it is so important.

On broader work, the National Cyber Strategy 2022 was supported by more than £2.6 billion of investment over three years. It is focused on delivering a step change in the UK’s cyber resilience, and that extends far and wide. I am involved in what is now called the Integrated Security Fund and used to be the CSSF. We have been putting more investment into cyber, because cyber knows no borders, so it is important to work with other countries on exactly these issues.

We banned Huawei from our 5G network, as we heard, and—I see that the noble Lord, Lord Alton, is in his seat—we took steps on Chinese security cameras, thanks to his help. We made a lot of changes in the Procurement Act, again thanks to detailed work done in this House. All these changes are important.

The noble Lord, Lord Fox, talked about the need for collaboration, and we have made it clear that we are happy for more conversations on these points. I commend the work done by the Parliamentary Security Department. Alison Giles now sits on the Defending Democracy Taskforce, which I sit on and Tom Tugendhat leads, and a lot of changes have been made. Only today, a letter went round encouraging all MPs and noble Lords to do more—the top 10 tips for mobiles, personal cyber, how to get more support and account registration so that your emails and phones can be monitored by the NCSC.

I thank noble Lords for their pressure, because this is an important area. We need to take proportionate measures and stay vigilant.

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[Viscount Waverley (CB)]

My Lords, the Minister might wish to give some insight into how the meeting with the Chinese ambassador went this morning so that we get the fullest idea about all the sides that are party to this deplorable situation.

As is customary in your Lordships’ House, I should declare being the custodian of the totally unused domain name beltroadhub.com. I registered it 15 years ago with no particular practical reasons as to what I was going to do with it, and there it still lies. I inform the House accordingly.

[Lord Fox (LD)]

Cyberattack.

[Viscount Waverley (CB)]

Noted. I must re-emphasise that it is an unused domain.

I am at one with the thrust behind the Statement. The Government and agencies are right to adopt a firm approach. However, although repercussions should be expected for rule of law, human rights and interference abuses, conversely, do the Government believe that constant prodding of the dragon can have consequences that go counter to many British interests and on occasions might be self-defeating? Exploring and not thwarting areas of mutual co-operation, building on respect of strength through dialogue and engagement, should not be lost sight of, including on those areas of concern illustrated in the Statement.

[Baroness Neville-Rolfe (Con)]

To answer the noble Viscount’s question, my understanding is that the Chinese ambassador condemned the “groundless accusations”, accused the UK of smearing China and stated that China was a victim of cyberattacks, including from the UK. He warned that China would adopt firm countermeasures in response but gave no further detail. This matches historical responses when we have called people out for hostile cyber activity, but they have not done anything further. I should correct myself; I understand that the meeting was with the chargé d’affaires.

I do not have a lot more to say on our attitude to China. I said that our approach needs to be rooted in our national interest. China is a permanent member of the UN Security Council. It is the second-largest economy in the world and has impacts on global issues of importance, such as climate change. Proportionate action is necessary but I feel that it is right that we have taken the action that we have. We must protect our democracy and our Members of Parliaments—that is, Members in the other place and here. That is an issue that has to be properly tackled, and the Government are determined to do just that.

[Lord Fox (LD)]

My Lords, given that there is time, the Minister mentioned the National Security and Investment Act. We are in a happy situation because when that then Bill was being discussed, she was a lowly Back-Bencher making a lot of very constructive suggestions to the then Minister, the noble Lord, Lord Callanan, who was running it through. The Act is now under the supervision of the Cabinet Office, so we are in a position where the poacher is now the gamekeeper.

The Minister will remember that one of her points at the time was about infrastructure and whether, and by how much, it was included in that Act, so it would be useful to get an update now that she is in a position to influence this. She will also remember that there was quite a lot of discussion, and indeed some amendments, around the potential role for the Intelligence and Security Committee in connection with that Act. Would she now acknowledge that, given the nature of the problems we face, it makes even more sense than it did then for the ISC to be directly linked into the Act’s implementation?

[Baroness Neville-Rolfe (Con)]

I note what the noble Lord says about the committee. It does a very important job and we do listen to it. I look forward to giving it evidence soon on the integrated security fund. The noble Lord probably has a better memory than me of the detail of the points I made when I was on the Back Benches, before I became the gamekeeper. What I would say about the National Security and Investment Act is that it has allowed us to take a broader approach than many other countries, and in 2022-23 we received 866 notifications and issued 15 final orders blocking, unwinding or attaching conditions to deals, of which eight had an acquirer link to China. I think it shows that some of the legislation that we put through this House and work on together in detail can be very valuable.

Procurement Bill [HL]

Lord Fox Excerpts

Consideration of Commons amendments
Wednesday 25th October 2023 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to the Minister for the explanation behind the Motion. She kindly referred to the amendments I tabled on Report following our debate in Committee, which focused on the appalling practice of forced organ harvesting, principally in China, which involves the removal of organs from living prisoners of conscience for the purpose of transplantation, killing the victim in the process. It is state sanctioned, widespread throughout China and has become a multi-billion-pound commercial operation.

We know that the victims are mainly Falun Gong practitioners, but more recently, evidence has indicated that Uighur Muslims are also being targeted on a massive scale. Further to that, there are several pieces of evidence suggesting that Tibetans and house Christians are as likely to be the victims of forced organ harvesting. As the noble Baroness said, my amendment was passed by your Lordships’ House on Report and went to the Commons, where it was rejected. We had another go in September and again, I am afraid, the Commons has reinserted the original provisions in the Bill.

I regret that this has happened for three reasons, the first being the scale of the atrocities being carried out in China and specifically in Xinjiang province. Secondly, Ministers are wrong to dismiss the need for the amendment. Above all else, its passage would have been a powerful signal in the UK and globally of our abhorrence of these awful practices. Thirdly, you cannot consider my amendment on forced organ harvesting without setting it in the context of the Government’s approach to China more generally. The Prime Minister has talked quite tough in recent weeks on the Government’s approach to China. However, the overall approach, to put it at its kindest, is clouded in inconsistency, ambiguity and sometimes downright confusion. That has been reflected in any number of Select Committee reports over the last year or two.

However, I recognise that this has gone as far as I could expect it to go. I am grateful to all those who supported me, particularly my Front Bench, the Lib Dems and many noble Lords around the House. I particularly pay tribute to Lord Bernie Ribeiro, who retired from the House on Monday. He has been a tower of support to me on this very worrying issue over many years. I wish him all the best in his retirement.

[Lord Fox (LD)]

My Lords, we should all be grateful to the noble Lord, Lord Hunt, for bringing this issue back on a number of occasions. We share the great disappointment that the Government have not seen fit to use their majority to include this in the Bill. As the Minister herself said: at this point there is no such practice going on, so there is no jeopardy, but it puts down a marker and it makes a very important point about ethical procurement and this particularly horrifying issue. I hope the comments that Ministers have made in this place, and in the other place, are used to emphasise the need for ethical process during procurement; this is perhaps the starkest example, but there are many others. It is with regret that it leaves your Lordships’ House without the noble Lord’s amendment, which we supported.

I thank the Minister for her comment on sensitive sites and Hikvision. It is somewhat intriguing because I suspect that the reason this has come up is because Hikvision is circulating material to its potential clients—and I imagine these are the non-sensitive clients—which seeks to use the Government’s language as an implicit endorsement of its continued operation in this country. I suspect that is why the Minister has stood up and made that comment. I hope that the Government can explain to Hikvision that this is an inappropriate use of their language, to try to sell its product in the face of a very particular problem, which has been highlighted, and one that is also a problem in non-sensitive sites across the country. I am interested to understand—either offline or online from the Minister—how they are taking this up with Hikvision.

This Bill has been on a journey since it started in your Lordships’ House. The next Bill is the exception, but rarely has a Bill received so many amendments. In the main, we have substantially improved the quality of this Bill through co-operation; through the hard work of the Minister, the Minister’s team and, of course, your Lordships. The normal character of these things is that we leave matters in a jovial and hearty way, but I am afraid I am not going to because I will return to an issue.

This is not in reference to the noble Lord, Lord Hunt, but the fact is this Procurement Bill was constructed to guide procurement across the whole country. It is supposed to be the way in which all procurement proceeds, with one exception: the largest single area of procurement in the country, the National Health Service. That would be allowable if there was a gold standard procurement process in place in the NHS. Quite clearly there is not. The Health and Care Act 2022 has not set out a gold standard procurement process, and there have been no processes that we can see which deliver that.

Since the last time we discussed this Bill—since the last time the Minister was standing at the Dispatch Box telling us that we do not need proper procurement processes for the National Health Service—there has been further evidence of huge abuses of procurement in the NHS. We do need this, and in the absence of an actual system that sits in the NHS, this system should apply. By not applying it the Government will preside over the waste of hundreds of millions of pounds that could have been spent on necessary services, due to very poor procurement practice. In that vein we are extremely disappointed that the Government have not seen fit to take the advice of your Lordships and include the NHS in this Bill.

We look forward to seeing how this Bill is applied across the country and, I hope, to seeing some benefit from its practices.

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[Lord Fox (LD)]

I thank the Minister for that comment, but that was not my point. It was actually that the language that the Government have used about non-sensitive sites is being used by Hikvision as a marketing tool to placate potential customers and say that it is okay. If the Minister has not seen that wording, I expect that the noble Lord, Lord Alton, will provide it; otherwise, I would be happy to. The Government need to reflect to Hikvision that they are not endorsing its technology for non-sensitive sites, which is what the company seeks to communicate.

[Baroness Neville-Rolfe (Con)]

I thank the noble Lord for his clarification. That is why I chose to reiterate what I have said. I will talk to the noble Lord, Lord Alton, tomorrow, but I reiterate that we are keeping an eye on this. The reports on the withdrawal of the surveillance equipment will be important. Public bodies outside government and some private bodies have already decided to withdraw these cameras, so I think the message is clear.

I thanked noble Lords across the House for their valuable contributions to the scrutiny of the Bill when it left for the other place on 13 December. I reiterate everything I said then. I add my thanks to our Whip, my noble friend Lord Mott, and my noble friends Lady Noakes, Lord Moylan, Lord Lansley and Lord Maude, who I did not mention last time. I much look forward to Royal Assent and the legacy that I believe will stem from the collective efforts of both Houses, which are all represented here this evening.

Procurement Bill [HL]

Lord Fox Excerpts

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, when the noble Lord, Lord Lansley, was being uncharacteristically acerbic, he mentioned the number of amendments to which this legislation has been subjected. I believe that the Deputy Speaker was present in the Grand Committee when we were wading through some of the 450 or so amendments that were laid before us. It is therefore quite appropriate that, as we wave goodbye—probably—to this legislation from this House, your Lordships are confronted with another 85 amendments. However, in this particular case they have been well explained—for which I thank the Minister—and are non-controversial. In that respect, we can leave in perhaps a slightly less acerbic way than we arrived.

I expect His Majesty’s loyal Opposition to press the amendment of the noble Baroness, Lady Hayman. We on these Benches will support that, in the event that she so does.

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[Baroness Northover (LD)]

My Lords, I was a signatory to earlier amendments and we have just heard the noble Lord, Lord Hunt of Kings Heath, make a very cogent case for the Commons to think again about his amendments. I will be very brief, given the hour. The noble Lord built on what the noble Lord, Lord Alton, outlined just now, and his case is backed by international investigation and evidence. Thus, for example, the Office of the UN High Commissioner for Human Rights, not an institution that would say this lightly, concludes in relation to Xinjiang:

“Allegations of … torture … including forced medical treatment … are credible”.


The Minister in the Commons and now the Minister in the Lords have argued that current legislation covers the problem identified in this amendment, but noble Lords will have heard the noble Lord, Lord Hunt, make a very persuasive case that this is not so. My noble friend Lord Fox will comment further shortly but, if the noble Lord decides to put this to a vote, from these Benches we will support him.

[Lord Fox (LD)]

Very shortly, it seems.

I thank the noble Lords, Lord Alton and Lord Hunt, for bringing forward these two amendments. I shall address them sequentially. I do not share the surprise of the noble Lord, Lord Alton, about supermarkets being able to lead. I am sure the Minister will probably agree that supermarkets are in contact with their customers. They sense the morality and the feelings of their customers, so they do not just lead—they follow. Perhaps we are a bit slow in picking up the moral revulsion that people have out there, and also the fear of scrutiny from a totalitarian regime. I think both those issues play with the public, the public play those back to the supermarkets and the supermarkets have very good antennae for picking them up. We should share their sensitivity to these issues.

The noble Lord made an excellent speech for which he is to be congratulated because, working from here back to the Commons, we have seen significant progress. We have seen a great deal of progress, and I support him in not having to move his Motion this time. He mentioned en passant the role of the Intelligence and Security Committee, and I endorse what he said. The Cabinet Office is now responsible for the National Security and Investment Act—there is a team there working on that—and it now has a team working on this. It behoves those teams, if they are not the same people, certainly to be close to one another, close to the ISC and able to feed off the intelligence that the ISC can give them, which no other committees can. I hope the Minister is able to reinforce that.

--- Later in debate ---

[Noble Lords]

Eagle!

[Lord Fox (LD)]

Eagle—thank goodness. I thought it was an evil eye. I was going to describe it as beady. I thought his “evil eye” was going to be upon the Minister and I was a little concerned for her safety. It is getting late.

Moving on, as my noble friend set out, we will support the amendment from the noble Lord, Lord Hunt. There can be no place in the UK supply chain for businesses that engage in this behaviour, and we have to be absolutely sure that there is no place, which is why the noble Lord is right to want to explicitly write this in. I regret that the fact that my noble friend Lady Brinton’s amendment was not accepted means that if the noble Lord is successful, his amendment will not apply to the National Health Service, which seems rather unfortunate as it would probably be the prime customer. None the less, getting it in writing and putting it in there is very important and will be enthusiastically supported.

[Baroness Hayman of Ullock (Lab)]

My Lords, I will be very brief. I thank both noble Lords for such excellent speeches on really important issues and important amendments that have been brought back for further discussion. The noble Lord, Lord Alton of Liverpool, again and again draws our attention to where we need to act on wrongs in this world. Clearly, we must do all we can to tackle modern slavery, genocide and crimes against humanity. He is right to draw our attention to the serious examples he gave us in his speech of where this is happening. We believe that procurement policy can and should contribute to that end where it can. I say to the Minister that the Government have listened to much of what the noble Lord has said; we have moved forward to some extent on this.

My noble friend Lord Hunt’s amendment clearly spells out why we need to be doing something about this. Reading his amendment, what struck me was the definition. I will read it, because I think it is at the crux of this:

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


I cannot think of many things more appalling than that, so we fully support my noble friend. He deserves the thanks of the House for bringing this forward. He has our full support, but I wish the Government would consider amending the Bill in this way.

Retained EU Law (Revocation and Reform) Bill

Lord Fox Excerpts

Report stage
Monday 15th May 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I agree with the entirety of Amendment 41A from the noble Lord, Lord Lucas, while agreeing with only half his reasoning. I entirely agree that, as we discussed at length in Committee, this is essentially impossible to calculate and creates a great deal of legal uncertainty. Where I disagree with him is that I would very much like to have seen non-regression clauses for the environment, public health, workers’ rights and a whole range of other things in the Bill.

Practically, what we are doing with the clause at the moment, if it is implemented, is creating a guaranteed regression of workers’ rights, food standards and environmental standards. If we do not have regulation of business, we will certainly see at least some cowboy businesses taking advantage of a reduction in regulation. That of course will not be in the interests of businesses that want to do the right thing on the environment, public health or workers’ rights.

I spent a great deal of time during the passage of the Environment Act and the Agriculture Act arguing for non-regression clauses. What the Government are currently giving us is a guaranteed regression clause, and that really should not be acceptable.

[Lord Fox (LD)]

My Lords, as the proposer of Amendment 45, which is also in the names of the noble Baroness, Lady Chapman, and the noble Lord, Lord Hacking, I feel a terrible weight resting on my shoulders as a result of the preface from the noble and learned Lord, Lord Hope, because this is the amendment that seeks to remove Clause 16 and I fear that I am not going to reach the billing that he gave us.

Over the course of this session, we have heard numerous arguments about the way in which the Bill more and more removes Parliament from the process of revocation and reform. I am not going to rehearse all those arguments again, because your Lordships have heard them both on Report and in Committee. Clause 16 is one of the key parts of the machinery in the Bill to govern how retained EU law can be reformed. There is an argument for removing the clause altogether, but I have bowed to the spirit of scrutiny rather than total oblivion and, as such, I do not intend to move the amendment.

As we have already heard in advance from the noble Lord, Lord Lucas, the provision that causes most concern is Clause 16(5), which mandates the nature of any reform of REUL to be deregulation—and deregulation only. The point the noble Lord made is about how we measure the sum of regulation. There was all sorts of debate in Committee. Is it the total of the changes across a group of amendments or a section of amendments? Is it each amendment by itself? These questions were never satisfactorily answered in Committee, so perhaps during Report the Minister can tell us how the amount of regulation will be measured. In other words, can one increase in regulation be balanced by two decreases in regulation through adjacent provisions, for example? We have not had answers to that.

Essentially, the spirit of the Bill is that there can be no increase in the “burden”—according to the Bill—caused by this reformed retained EU law. Clause 16(10) defines burden, with its paragraph (b) including “administrative inconvenience”, but one person’s administrative inconvenience is another’s life-saving safety measure. It depends on which direction you look at it. Clause 16(10)(d) includes

“an obstacle to efficiency, productivity or profitability”

as a burden. Again, what may seem an obstacle to one group may be existentially important to another.

As I said, I am not aiming to push this amendment to a vote. We are seeing amendments that are putting some safeguards in place. The noble Lord mentioned Amendment 76, which we anticipate. I am anticipating Amendment 48 in the name of the noble Lord, Lord Krebs, where we will talk about non-regression, and Amendment 50, which will come up shortly. These are other important pieces to put in place to try to draw the majority of the sting from Clause 16.

[Lord Hacking (Lab)]

Clause 16 has always been the most offensive clause in the Bill because it was giving excessive power to the Executive and no power to Parliament. But on the horse, if I may put it that way, of the amendments of the noble and learned Lord, Lord Hope, who really has provided enormous assistance to us during the passage of the Bill, and knowing therefore that the assimilated law to which we are now directed will also be subject to the provisions to which he has already succeeded—twice over now—in getting the acceptance of the House, we are protected. Because of our protection under the noble and learned Lord’s amendments, I am happy with this amendment not being moved. I joined the noble Lord, Lord Fox, and my noble friend Lady Chapman of Darlington in signing it but, on the basis only of the work that the noble and learned Lord, Lord Hope, has provided, I am prepared to join the noble Lord, Lord Fox, in not moving this amendment.

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[Lord Hendy (Lab)]

My Lords, I support Amendment 50, as well as Amendment 51, which bears my name. Amendment 51 is an elaboration of Amendment 50, so I will speak only to Amendment 50. I endorse everything that my noble friend Lord Collins has said. The object of Amendment 50 is, as it states in proposed new subsection (1)(a), to prevent the reduction of

“the level of protection for workers”.

As my noble friend said, this is not simply to protect workers but to protect good employers from being undercut by bad employers. It speaks of the level of protection for workers, in respect not just of employment rights but of health and safety at work rights.

In spite of the warm words of the Government and the promises of an employment Bill over the last three or four years, there is a suspicion that the Government will try to take advantage of Brexit to undermine and water down workers’ rights. That fear is not helped by the fact that, last week, on 10 May, as I mentioned earlier today, the Department for Business and Trade published its booklet, Smarter Regulation to Grow the Economy. This contains no less than four proposals to water down the Working Time Regulations and Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992, which guarantees the right of workers to be consulted when collective redundancies are proposed.

The proposals to water down those rights are not contained in the Bill, as they could have been among the 928 proposals in the schedule. They are yet to come, in the form of statutory instruments that we have not seen, cannot examine and, when it comes to it—notwithstanding the excellent amendments from the noble and learned Lord, Lord Hope, earlier on—may have difficulty in seeking to amend. The purpose of Amendment 50, and indeed Amendment 51, is to ensure that workers’ rights are not watered down and that the obligations contained in Articles 387(2) and 399(5) of the trade and co-operation agreement, against regression, are honoured.

[Lord Fox (LD)]

My Lords, my name is on both of these amendments and I am happy to support them both. The proposers will be pleased to know that I do not intend to speak for long, because I have heard two excellent speeches that set out the reasons why supporting these amendments is important.

The noble Lord, Lord Hendy, talked about the danger of back-door watering down of legislation. It may not be this Government; once this is in statute, it could be any Government going forward. We do not necessarily have to distrust the people we see before us—I personally do not—but we do not know who in future will be able to use these measures.

If the Government want to water down workers’ conditions, that should be done through primary legislation, straight up, and negotiated and scrutinised properly. It should not be put through the backdoor, which could happen here. Throughout the process of the Bill, the noble Lord, Lord Callanan, has said over and over again that it is not the Government’s intention to water down workers’ rights. By supporting Amendment 50, the Government can make sure that they are absolutely as good as their word.

[Lord Hannan of Kingsclere (Con)]

My Lords, one of the worst objections that I had when I was a Member of the European Parliament was to the doctrine of the occupied field—the idea that you could never withdraw from a field in which you had once legislated. So the acquis communautaire can only ever grow; it could go only in in one direction. You could call it a ratchet, a one-way street or, as its supporters did, a bicycle that has to go forward, but the objection was fundamentally the same: it lifted certain issues out of the democratic field and made them immune to the political process.

For what it is worth, I have never had much time for the idea that our workers’ rights come from the EU—the EU did not travel back in time and pass Barbara Castle’s Equal Pay Act 1970 or Neville Chamberlain’s Holidays with Pay Act 1938—but, whatever view you take of it, these are precisely the sorts of issues that ought to be determined by our national democratic mechanisms and procedures. You can take the view, as the noble Lords, Lord Collins and Lord Hendy, did, that this is wonderful, helps employers and all the rest of it, which is a perfectly respectable position, or you can take the view that there comes a point where too many workers’ rights means fewer workers—but surely that is a debate that ought to be had here and in another place, not something that is effectively made invulnerable to the ballot box.

Emergency Alert System: Fujitsu

Lord Fox Excerpts

Wednesday 19th April 2023 Lords Chamber

[Baroness Neville-Rolfe (Con)]

All of this arises from the horrendous case of the Post Office, which I have studied over many years and feel equally strongly about. That process is continuing; Fujitsu is continuing to answer questions. As to putting companies on excluded lists, I have tried to explain what the arrangements are under regulations and that changes are coming forward in the Procurement Bill. Where companies co-operate and a finding has not been found against them, it is important that we treat them fairly. This is a country that believes in that.

[Lord Fox (LD)]

My Lords, the Williams inquiry is still taking evidence in late winter this year, so the chances of it reporting even this time next year are probably slim. During that time, how many other contracts will Fujitsu be bidding for and winning? Surely the Minister can see that there are grounds here for suspending Fujitsu’s ability to bid on government contracts until such time as the report has had a chance to be published.

[Baroness Neville-Rolfe (Con)]

I do not have information on how many contracts Fujitsu plans to bid on, or indeed whether it will be successful in bidding for those contracts. All I can say is that we are pursuing the Post Office side of things extremely keenly, and I think we have moved from a very bad place into a better place with the plans for compensation. I note what has been said about Fujitsu, but I emphasise that the small contract we are talking about is very separate from the large and troublesome contract that we have all discussed on other occasions when we have been debating the awful circumstances of the postmasters, which, frankly, is probably the worst thing I have ever dealt with while I have been in government.

Public Service Ombudsman for England

Lord Fox Excerpts

Tuesday 10th January 2023 Lords Chamber

[Baroness Neville-Rolfe (Con)]

One always hears these arguments in relation to agencies; for example, we put some together to form the Environment Agency. Although there were many pluses, there was also a transition. I remember being in the Business Department when the Department for International Trade was split off. There is a transition cost, which was the point I was making at the beginning. We are talking about a Government with a lot of priorities. As my noble friend says, if we are going to have reform, this is not an immediate priority, but that does not mean that we are not looking at possibilities to improve these things all the time. That is very much what the Parliamentary Ombudsman himself is always trying to do.

[Lord Fox (LD)]

My Lords, I think I heard the Minister say that the Government have made improvements to the overall system. Can she tell us what those improvements are and how we might recognise them?

[Baroness Neville-Rolfe (Con)]

Partly as a result of work by PACAC, the ombudsman has improved transparency. There are now summaries of decisions on the website in a user-friendly form. The website shows how people who have problems can apply to the ombudsman or go to other sources if they are not eligible to do so. It also allows us to keep up to date with complaints. As I said, the reporting style is more user-friendly, and that is important with complaints.

Boardman Report

Lord Fox Excerpts

Tuesday 20th December 2022 Lords Chamber

[Baroness Neville-Rolfe (Con)]

I am glad we are agreed that lobbying is part of legitimate policy development. Of course, we have the lobbying Act, which is in the process of being reviewed, notably by the Public Administration and Constitutional Affairs Committee in the other House. We also have various transparency mechanisms, such as the publication of ministerial transparency returns—we have just put out a whole load more—the register of consultant lobbyists and the Freedom of Information Act 2000. There is always a fine line between regulating to death and ensuring that we inhibit inappropriate behaviour.

[Lord Fox (LD)]

My Lords, we await the response to the Boardman report with interest, but of course the National Security Bill is before your Lordships’ House now. Clauses 66 to 70 were introduced after the Bill passed through the Commons and, as I am sure the Minister knows, this concerns the foreign interest registration scheme. What was the Cabinet Office’s position on including organisations such as those that my noble friend Lord Wallace outlined within the remit of those clauses? Will organisations such as think tanks and lobbyists be included in the reporting requirements of Clauses 66 to 70? If not, why not?

[Baroness Neville-Rolfe (Con)]

I always try my best to help the noble Lord, as he will know, but although the Boardman report, which we are discussing today, covered a lot of ground, I do not think it went as far as the areas that he is talking about, which are being debated in the security Bill that is going through this House at the moment.

Procurement Bill [HL]

Lord Fox Excerpts

3rd reading
Tuesday 13th December 2022 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I will move a minor technical amendment to Clause 110 in my name. I know how keenly noble Lords have scrutinised the Bill, and I am therefore confident that they will have noticed that, in the definition of “equivalent body” in Clause 110(6), the very incongruous words, “[subsection removed]”, appear in square brackets. I am informed that this cannot be amended administratively to make the appropriate cross-reference. Therefore, in the interests of sending the Bill to the other place in a form which can be understood, I have tabled an amendment to insert the missing cross-reference, which is to Clause 1(4). I beg to move.

[Lord Fox (LD)]

I thank the Minister because I have been worrying myself to death about this issue and clearly welcome her amendment.

Amendment agreed.

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[Lord Fox (LD)]

My Lords, as the Minister pointed out, this is a really important Bill. It will guide an estimated £300 billion of public procurement, hopefully making it safe while driving some of the things we want to happen. I thank the Minister. She had an interesting start on this Bill; she too was a Back-Bencher and tabled several critical amendments early on, and was then suddenly propelled to the Front Bench. I think we benefited from that change of perspective—that is not to criticise her predecessor.

It is appropriate that we should bookend this Bill with another amendment, because it has been a story of amendments. We should thank the Bill team, who worked through the night at the start of this in Committee in July, explaining and setting out what the hundreds of amendments were there to do. But because there were so many amendments and clearly there was so much work to do, the Bill leaves us with still more work and scrutiny required, if it is going to achieve the things that we all want it to achieve—that is, to have a transparent process that helps our small, medium and social enterprises to flourish in the public procurement system. When it goes to the other place, I hope that those further changes can be made to make sure that it delivers that, and in an ethical way.

I thank the Minister, her predecessor and her Whips in this. I thank the noble Baroness, Lady Hayman, and the noble Lord, Lord Coaker, for what has been a very constructive and co-operative process. I also thank my colleagues. I will name them, because they have worked very hard: my noble friends Lady Brinton, Lady Humphreys, Lady Northover, Lady Parminter, Lord Purvis, Lord Scriven, Lady Smith, Lord Clement-Jones and Lord Wallace. That list reflects the fact that the Bill touches so much of public life. Finally, I thank Elizabeth Plummer in our Whips’ office, without whom life would have been extraordinarily confusing for us on these Benches. That said, we wish the Bill well and beg that the MPs continue to work on it on our behalf.

[Lord Alton of Liverpool (CB)]

My Lords, I have something to add before the thanks are completed. The Minister was good enough to express her thanks to the Cross Benches, and I draw the attention of the House to the all-party amendments which were included in the Bill. I begin by thanking her. As the noble Lord, Lord Fox, just said, it was unusual for a poacher to be turned gamekeeper in the course of the proceedings of the Bill and she did it with great aplomb and showed all the characteristics that we have come to associate with her, in the way that she dealt with constructive attempts to improve the Bill as it proceeded through Committee and Report.

As the noble Lord, Lord Fox, said, the Bill has enjoyed support from around the entire House and, of course, whatever form a Bill is in, we will all always want to try to add to it, if we are able to do so. I was therefore very grateful to the House for including the cross-party amendment I moved on the removal of surveillance equipment. I also supported the all-party amendment in the name of the noble Lord, Lord Hunt of Kings Heath, who is here, on the use of forced organ harvesting. Those two amendments are now in the Bill as it goes to another place. Unlike on ping-pong, this is a pristine Bill going to the other place. I hope that Ministers will engage with those amendments and not simply try to remove them.

There were two other amendments. The Minister will recall that the noble Baroness, Lady Stroud, moved an all-party amendment which was not taken to a vote. We had a discussion during Report about how that could be taken to the Minister who might deal with the Bill when it reached the House of Commons. I hope that the noble Baroness, Lady Neville-Rolfe, will be able to draw that to the attention of the House of Commons Minister and suggest that such a meeting should now take place.

With those remarks, I thank the noble Lord, Lord Fox, and his noble friends, but also the noble Baroness, Lady Hayman, and her noble friends—the noble Lord, Lord Coaker, in particular—and those on the Cross Benches who supported the amendments that we brought forward.

Procurement Bill [HL]

Lord Fox Excerpts

Report stage
Wednesday 30th November 2022 Lords Chamber

I very much hope that these amendments are not pressed to a Division and that my noble friend will stand firm and not allow the Bill to be further distorted in this way.

[Lord Fox (LD)]

My Lords, this has been an interesting debate that covered a wide range of interests. It is always a pleasure to follow the noble Lord, Lord Moylan, and the case he made in favour of Amendment 72 was strong and subtle because by acknowledging the role that Clause 40 plays in this Bill, he also acknowledges the need for Amendment 72.

The noble Lord mentioned Amendment 113. The purpose of having the list in it is to make it clear that in the past, NHS staff have not been included and there are very real examples of problems in this area. Its purpose was to draw your Lordships’ attention to the need to include that cadre of people, who are making very large public procurements, in the realm of this Bill. He will be no doubt delighted to know that it is unlikely that I will press the amendment to a vote.

[Baroness Hayman of Ullock (Lab)]

The noble Lord, Lord Scriven, ably and clearly laid out why he has tabled his amendment and the concerns in this area. They partly remain from the debate we had in Committee, but they have also been raised on a number of further occasions, including earlier today. We have heard why people are concerned and why they think this amendment is needed. There are concerns around the VIP lanes and the way that different contracts were awarded during the Covid pandemic.

Listening to the debate today, earlier debates and other discussions, including in the media, as the noble Baroness said, it is clear that we have a real problem with a loss of trust in the procurement system, particularly government contracts. For me, this Bill is an opportunity to restore that trust. The Minister will no doubt say that the Government have listened and heard what was said, and the VIP lanes will not happen again. I trust what the Minister says, and we know that other people have said the same, but my concern is that if you do not close loopholes in legislation, they are still there for others to exploit. In my opinion, this opens a loophole because it makes it possible to hand out contracts in the way it was done before.

It is incredibly important that we retain the ability to procure when the usual channels need to be speeded up, for example, or if there is a need to do things in a slightly different way. Importantly, this clause allows that, but at the same time we must not allow this loophole to exist going forward. That is why we support this amendment and if the noble Lord wishes to press it to a Division, he will have our full support.

The noble Lord, Lord Aberdare, who has been extremely clear in putting across the concerns all the way through the progress of this Bill, made some really important points about late payments. Again, I know the Minister is keen to do what she can to resolve that problem, so I look forward to her response.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, as other speakers have alluded to, we have been in this place before, but the things we hear are no less shocking or important for us to debate. I am speaking to Amendments 91, 95 and 141 and, as stated, my name is on Amendment 94.

It is worth thinking about how we got to where we are, as alluded to by the noble Lord, Lord Blencathra, in his stirring speech: we bought on price. We ended up with Huawei because we bought on price and eroded our own switchgear industry. On the point made by the noble Baroness, Lady Stroud, about resilience in our supply chain, we narrowed our options by simply buying on price.

The point of the amendments, whether together, separately or blended, is to put values into the purchasing process as well as price. All the way through the debate, in different ways, the purpose of what we have heard from colleagues is to put values into what we do. Public purchasing is not just about price; it is about extending the values of this country across what we do. Unless we are doing that, we are spending the money badly. We may be spending it cheaply in the short term but it becomes very expensive in the long term, not necessarily for the citizens of this country but for those of the country from which we purchase. That is why I am supporting the amendments.

I have some technical observations. We have talked about potential back doors in technology. During the early days when the Government were trying to make Huawei work, there was a group of people—in Banbury, I think—who spent their time looking closely at Huawei’s technology in order to determine how dangerous or otherwise it was to the UK. If they are not still there, we need that group of people doing that not just with surveillance cameras but with network routers and all the other technology that supports networks in everyone’s homes in this country. We need to have a strong feeling of the security danger right across our information networks. The people who were doing that originally should be reformed. I understand that they are not the Minister’s group and that they probably come under the Home Office or indeed DCMS, but I hope she can carry that message from here.

To respond to the first part of the amendment by the noble Baroness, Lady Stroud, on supply chain resilience, the Bill will provide a very good database from which to do the sort of analysis she is talking about, so that we can determine just how resilient the supply chain is. How dependent are we on two or three suppliers? I hope, whether or not the noble Baroness’s amendment is accepted or voted through, that that is what the Government are doing. Are the Government going to use that sort of information, which will be much more readily available from the digital platform, to understand our resilience or otherwise? If they are, where in government will that be done and by whom, and who will be accountable for doing it? We will have the means to do it, whereas before it was almost impossible without a tremendous amount of work to establish who was buying what from where. Now we will have that information to hand.

These are three really important amendments. If their proposers choose to move them, we on these Benches will certainly support them.

[Lord Coaker (Lab)]

My Lords, often in this House there are important occasions when there are really good debates. On this set of amendments, we have heard some brilliant speeches from all who have spoken: the noble Baroness, Lady Stroud, the noble Lords, Lord Blencathra, Lord Alton and Lord Fox, and my noble friend Lord Hunt. Why have these speeches been so good? Because, as the noble Lords, Lord Fox and Lord Blencathra, have just said, this is the chance for this Chamber to put in the Bill the procurement policies we want this country and this Government to pursue. It is a chance, through those policies, to stand up for what we regard as the international values that are important to us. That is why it is important that it goes into the Bill.

We have had this debate all the way through considering the Bill—at Second Reading, in Committee and now on Report. Time and again, we have said it is important that this country stands up and says, “This is what we think the £300 billion or so we spend on procurement should do to bring about the sort of community we want”, not only domestically but internationally. That is why it is so important. Each noble Lord who has spoken has been so inspiring, because they are speaking from the heart.

The Minister will not disagree with many of the values that have been stated. The disagreement comes in our wanting to see them in the Bill, so that it makes a statement of intent for our country. The noble Baroness, Lady Stroud, said of her Amendment 141, to which I am pleased to have put my name, that the Government are concerned about it having a chilling effect. I hope it does have a chilling effect on those who seek to use procurement to deliver policies and values that we do not support, as it is quite astonishing.

I will spend a couple of minutes on my noble friend Lord Hunt’s Amendment 91. I know we want to get to a vote, but sometimes it is worth stating what is important in this great democratic Chamber. Let me read out what he wants to be in the Bill through his proposed new sub-paragraph (2), which I fully support. Why would we not state, regarding procurement, that forced organ harvesting—this is what we seek to oppose; the amendment also mentions human tissue—

“means killing a person without their consent so that their organs may be removed and transplanted into another person”?


I understand that thousands of occurrences of such organ harvesting are alleged to have taken place. Nobody in this House is in favour of that, but my noble friend Lord Hunt’s amendment says that that should be in the Bill as a statement of what we want our procurement to achieve. I fully support my noble friend, who deserves the thanks of the House for bringing forward that amendment, which is supported by many others, including my noble friend Lady Hayman and the noble Baroness, Lady Northover.

The same is true of the amendment from the noble Baroness, Lady Stroud, against modern slavery. Nobody here is in favour of modern slavery or human trafficking, but we know that procurement policy should seek that objective. It should be laid out and pursued as something we stand up for, as an international example to countries across the world. That is inspiring. It is worthwhile and important for us to do. The Government will say that it is unnecessary—“Of course we are against modern slavery and human trafficking”—but I say we should put it in the Bill as this amendment, along with others, would do.

The noble Lord, Lord Blencathra, gave a fantastic speech. He got excited and emotional; sometimes we should do that—with logic, which is extremely important—and wake up to these things. Sometimes we need to get emotional. The sorts of policies and decisions that we debate in this Chamber affect millions of people in our country but hundreds of millions across the world. They are worth getting emotional and upset about, because they make a difference. It is not playing tennis on a Sunday; it is about international law and what makes a difference to huge numbers of people’s lives.

As the noble Lord, Lord Blencathra, said, the Government themselves have said that there is concern about the security of the country in relation to the use of these surveillance cameras, which the noble Lord, Lord Alton, mentioned. The Government say that government departments should not use Hikvision or Dahua cameras and take them out, so they admit that there is a security risk and say that something should be done about it. But, as the noble Lord, Lord Blencathra, said, what about all the other cameras within local authorities, such as street cameras and cameras in hospitals? Do they not pose a security risk? If they do in a government department, I cannot see why they do not when they are outside one but happen to be run by Westminster council. This is ludicrous and illogical, and the Government need to take account of it.

That is why Amendment 94 of the noble Lord, Lord Alton, is so important. It says that we need a timeline to ensure

“the removal of physical technology … from the Government’s procurement supply chain”

because this will tackle modern slavery, genocide and crimes against humanity. Everybody in your Lordships’ House agrees with that; no one is opposed it. The Government will say that it is unnecessary and we do not have to do this because they will, of course, have no procurement policy that does not take all these things into account.

We will certainly support my noble friend Lord Hunt, should he push his amendment to a vote, as well as the noble Lord, Lord Alton—we will see where we get to with others. But the difference between us and the Government is that sometimes you need to say what you mean. Legislatively, we should say that we, as a UK Government and Parliament, believe these things are so important that they should be put in the Bill, that we hold to these international values, and that we will set an example for other countries to do the same and that our procurement policy will reflect this. That is our opportunity in these votes.

--- Later in debate ---

Moved by

[Lord Fox]

127: Clause 84, page 57, line 13, at end insert—
“(3A) A contracting authority does not discriminate if it takes into account environmental, social and labour considerations and indicates in the notice of intended procurement or tender documentation how such considerations are defined.”Member’s explanatory statement
This amendment allows a contracting authority to take into account environmental, social and labour conditions where a treaty state supplier may be a supplier for a procurement.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, I rise to move Amendment 127 on behalf of my noble friend Lord Purvis, who is unfortunately unable to come today due to other constraints. My noble friend wanted me to thank the Minister and her officials for the meetings that they have had, which he found helpful but, needless to say, some questions lingered. I will go through those questions and I hope that, from the Dispatch Box, the Minister will be able to satisfy me in lieu of my noble friend. Perhaps she is lucky that he is somewhere else and I am here.

First, if there was an agreement on a specific need for social, labour and environmental conditions, as long as they are non-discriminatory, in the Australia agreement, why can this not be common across the Bill to make it clear that authorities can write these factors into programmes? Secondly, if we have signed what we signed with Australia—which we have—can we do the same with all other treaty suppliers in the schedule, even if it is not stated in the respective treaties? In other words, there is a carryover to the treaty suppliers in the schedules. We believe that officials have suggested that this is the case, but can the Minister clarify this point?

As so much of our procurement is with the EU, would it not be better if we worked harder to get the same language in our regulations as it has in its regulations, where it does not compromise the Government’s principles, so that procuring bodies have a simple and straightforward approach to this?

--- Later in debate ---

[Lord Lansley (Con)]

My Lords, I am glad to follow the noble Lord, Lord Fox, who has asked some interesting questions to which I will be interested to hear the answers. I suspect the answer is that if a contracting authority has a requirement and sets out various specifications in its award criteria, it would be able to carry on as long as it does not discriminate between potential suppliers from other treaty states.

[Lord Fox (LD)]

With respect, I am not sure that Pepper v Hart works for the noble Lord saying that. We are looking to see what the Minister has to say on this. The noble Lord is very kindly helping on that.

[Lord Lansley (Con)]

Anyway, I am on my feet not to try to answer the noble Lord’s question but to explain Amendment 167. Those present in Committee will recall that debate. There was some degree of uncertainty. Again, I appreciate my noble friend’s time and attention on the issue in the conversations we have had about it.

I will just explain the amendment’s purpose. Under Section 8 and Schedule 9, there is a process for the future whereby procurement-related chapters in future free trade agreements can be added to the Schedule 9 list and, by extension, give access to UK public procurement opportunities by statutory instrument. I agree with that. Because the Bill will achieve that effect, in the Government’s view it can repeal the Trade (Australia and New Zealand) Bill, because the purpose of that Bill is to bring into effect the procurement chapters of the Australia and New Zealand free trade agreements. That will no longer be necessary once this Bill has added them to Schedule 9 and it comes into force.

There are two issues. The first is timing. It was clearly the Government’s expectation that the Trade (Australia and New Zealand) Bill would have proceeded more rapidly through the other place—that it would be here and be concluded well before this Bill completes its passage into law, and that the sequencing would therefore work very straightforwardly. That might still be true, although the Trade (Australia and New Zealand) Bill completed Committee in the other place but has not yet been timetabled for Report. It is going more slowly than was originally intended. As I think noble Lords said in our debate on Monday, perhaps the Minister could attempt to explain the delays in the legislative process. Oh no, it was at Questions: my noble friend Lord Markham was not at liberty to explain the delays in the Government’s legislative programme, which was very sensible on his part. We cannot be sure that the Bills will be that way round but, in any case, it is more likely that the Trade (Australia and New Zealand) Bill will proceed before this Bill completes its passage. Let us hope that is the case.

The second and, in my view, more important question then comes into play. What if the Trade (Australia and New Zealand) Bill were to be amended? For example, there is an Opposition amendment tabled for Report in the other place, the effect of which would be to include impact assessments for a number of years on the Australia and New Zealand trade agreements—so, in fact, it is not restricted to the question of procurement but is about the overall impact of the two FTAs.

The effect of this Bill, as it is drafted in Schedule 11 on page 117 at the back of the Bill, would be to repeal it anyway. We would be in the unhappy position, if we carried on as we are, that we might amend the Trade (Australia and New Zealand) Bill and then find that that amendment, whatever merit it may have, would be repealed by virtue of the Procurement Act in due course. This is not a satisfactory outcome. Will the Minister tell us that the Government are now aware of this potential problem, subject to the passage of events and that, if it should turn out that the Trade (Australia and New Zealand) Bill is amended, the Government will commit to facilitating that any such amendment is not repealed by virtue of the provisions in the Procurement Act?

My amendment would avoid that possibility, because it would repeal only those provisions that were in the Bill when it was introduced on 11 May this year. If the Government cannot accept that, I hope that my noble friend will at least say that the Government will facilitate whatever measure is necessary—because whichever is the second Bill can change the first Bill, because Parliament cannot bind itself. So, almost by definition, the Government will have a mechanism—if they are willing to use it—to put things right using the second Bill. I hope my noble friend will give that reassurance.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank noble Lords for their contributions to this short debate, particularly the noble Baroness, Lady Hayman, for repeating the advice we received on the application of Schedule 7 so that it sits on the face of Hansard. I hope the other things I have to say will help with her general understanding of the interplay between the trade and procurement Bills under consideration.

I will start by responding to my noble friend Lord Lansley. I understand the point he makes in his Amendment 167: in the coming months there may be important amendments to the Trade (Australia and New Zealand) Bill that will be designed to survive into the new regime. However, I respectfully suggest that an open-ended preservation of unspecified parts of that Bill, as his amendment proposes, is not the right way to deliver what is needed.

As he knows, I also think it would be a legislatively curious way of going about things. I have been consistent in saying that when we are certain of the amendments needed as a result of that other Bill, we will consider the provisions in the Procurement Bill and the best way to retain any such obligations. As I understand it, the timing should allow for this. Thanks to the eloquence of my noble friend Lord Lansley, we are well aware of the problem. Of course, the Government will have due respect for the expressed will of your Lordships’ House.

The noble Lord, Lord Fox, asked about contracting authorities. My response is that they just need to follow the provisions in the Bill. That will mean they are compliant with the trade agreements. I hope this gives the noble Lord some reassurance: they do not need to familiarise themselves with each individual agreement when they are engaged in procurement. If he finds that confusing, I am sure we can talk further on another occasion.

Amendment 127, tabled by the noble Lords, Lord Purvis and Lord Fox, has the effect that a contracting authority cannot be considered to discriminate

“if it takes into account environmental, social and labour considerations”

in dealing with a treaty state supplier. To accept this would create the opportunity for UK contracting authorities to actively discriminate against overseas suppliers. That could place the UK in breach of our international trade agreements, including the GPA. I am sure noble Lords will agree that that would not be acceptable, but I hope they will take some comfort from the fact that the Procurement Bill already achieves the main objective of this amendment. It includes flexibility to structure procurements in a way that furthers these ends. For example, Clause 22 is drafted widely enough that these matters can be used by contracting authorities as part of the basis for determining a winning bid, as long as it is non-discriminatory.

The noble Lord, Lord Purvis, who I think is not in his place, is a great expert in this area. He was concerned that some trade agreements refer to environmental and social criteria and some do not. I can reassure noble Lords that, where a trade agreement does not expressly permit these criteria, it does not mean that a contracting authority in the UK cannot take them into account. The Bill and the UK’s international commitments allow contracting authorities to continue to apply these criteria as they have for many years.

[Lord Fox (LD)]

I think the Minister has just confirmed the point I was making. On that basis, contracting authorities need to have knowledge of what is in each different agreement in order to start to discriminate in the way she has just described. If it is in some trade agreements and not in others, surely there will be different options. As the Minister said, my noble friend Lord Purvis is our expert on this. He was concerned about this, and therefore I think I am concerned about it.

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[Lord Fox (LD)]

As noble Lords can see by the vexed look across my brow, I am both out of my depth and no comprende. On that basis, that is two good reasons to step back. I think probably there is another conversation when the noble Lord, Lord Purvis, is back in the country to go over this because I trust his instincts on these things. On that basis—

[Baroness Neville-Rolfe (Con)]

I should perhaps make it clear that I do not think this is something we would expect to come back at Third Reading, but of course there will be further discussions in another place.

[Lord Fox (LD)]

That is completely understood. I do not think we will be bringing back an amendment. Do not worry. I beg leave to withdraw Amendment 127.

Amendment 127 withdrawn.

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[Lord Coaker (Lab)]

That is totally acceptable, and I am very appreciative of it. The reason I asked was because the National Audit Office, commenting on the 2022-23 equipment plan, said it was already out of date because of inflation, Ukraine, the economic situation, et cetera. So I very much appreciate the offer from the noble Baroness to write and put that in context for us. I think it would be helpful if that was put in the Library for other Members as well.

[Lord Fox (LD)]

I join the noble Lord in welcoming that and also ask that the Minister includes currency because, while inflation is important, currency is actually more important in some cases. It is absolutely clear that a lot of these purchases are made in dollars and the dollar/pound rate will determine quite substantially the rising costs of equipment.

[Baroness Goldie (Con)]

I hear both noble Lords. To put a little context around this, the MoD has not been sitting in some splendid ivory tower in isolation as volatile economic circumstances swirled around us. Actually, we have built protective measures into many of our contracts to deal with inflationary pressures—or, indeed, to deal with the currency fluctuations mentioned by the noble Lord, Lord Fox. I appreciate that more detail is sought and I shall certainly look at that, with my officials, and endeavour to return to both noble Lords with some more information.

I was going to explain in more detail what we already do and how the National Audit Office already plays a role in all this. The National Audit Office is independent—we should remember that—and it already conducts a yearly audit on the defence equipment plan and undertakes regular audits of defence programmes. Further scrutiny of the performance of defence programmes is undertaken by the Infrastructure and Projects Authority, which tracks the progress of projects currently in the government major projects portfolio, not just that of the MoD. The details of these are published in its annual report. As an independent statutory body, the National Audit Office decides, independently of government, where to focus its resources and determines what projects and public bodies it audits and when.

It is important to emphasise that the Government do not direct the NAO; nor should we, because an essential feature of the importance and value of the NAO is that independence. Although it may not intend to do so, I argue that the amendment would interfere with that statutory independence. In addition, it would force the NAO to use its limited resources on a specific examination each year, irrespective of changing priorities: something might be significant one year and of far less concern the following year. It might even not reflect the continuing value of such an examination to Parliament: this is where we have to be very careful.

To reassure noble Lords, as I indicated, the Ministry of Defence continues to take steps to control the rise in the price of defence goods and services over time, including through improving the communication of longer-term priorities and requirements, including, as noble Lords will be aware, through the publication of pipelines. That is an extremely important development and signals likely demand to industry far better. It lets industry reflect on preparedness, instead of what was before probably a rather stop-start process, with industry asking, “Do you need anything?” and us suddenly announcing, “Yes, we do,” and everybody trying to create the thing from new.

The Ministry of Defence is utilising a new approach to industrial strategy. This strengthens supply chains and is driving pace and agility into the acquisition system through a range of transformation initiatives. The department has implemented steps to estimate project costs more accurately, including improving our risk forecasts through the use of reference class forecasts; that is, trying to use procurement as it happens, to inform us—what can be learned from the process? We have risk-costing pilots and we use the analysis of systematic, strategic or operational problems to inform us how the contract is proceeding. The MoD is also driving evaluation into programmes through the use of monitoring and evaluation frameworks and creating a process to capture and share lessons learned.

An important area, perhaps not widely understood, is that the MoD, like everyone else, can be hit by the quality and quantity of skills. That may be a significant impediment to us. Improvements are being delivered through the improved provision of training, initiatives to recruit and retain staff, and audits to identify and fill skills gaps.

The noble Lord, Lord Wallace of Saltaire, said that not much has changed. I think he started with the 1980s, then we seemed to regress further, into the Victorian age, when I am not sure we would recognise very much of what our procurement contracts are delivering. I respectfully disagree with him because, in addition to what I have previously mentioned, including the investment appraisal process, we have made other big changes. For example, all category A procurements, which are valued at £400 million or above, go through an extensive internal MoD process before they even get to the Cabinet Office, the Treasury or the Minister of Defence for approval.

Costs are now independently assured by the cost assurance and analysis team, tender and contract documentation is independently assured through the progressive assurance team, and direct award contracts are reviewed and monitored by the single-source adviser team. If that sounds like just verbiage, let me say that behind that are highly trained expert people who are there to identify the shoals, the reefs and the rocks, bring them to our attention, and make sure that we are not inadvertently drawn into areas of contract weakness where in the past we might very well have gone.

We are content that there are sufficient checks and balances in place to ensure that we achieve best value for money, learning from previous procurements. There are some good examples, and I was very struck by visiting Babcock at Rosyth, where it is building a Type 31 frigate. That really proceeded on a new basis of approach—it was born out of the national shipbuilding strategy. That programme was established in 2017, and following competition a contract was awarded to Babcock in November 2019 for the design and build of the five ships; it is currently under way, with the first ship scheduled for float-off in 2023. With barely three years passed since contract-award, the Type 31 build at Rosyth is well under way, with the first grand block now assembled in the Venturer assembly hall. The build programme is set to meet its deadlines of delivering all five ships off-contract by the end of 2028, and the build contract is on course to deliver the five ships at an average cost of £250 million per ship.

I use that as an example because it seems to me, having seen it at first hand, a very modern illustration of where we have moved to. When I say to the noble Lord, Lord Wallace of Saltaire, that I do not agree with his characterisation, I also try to illustrate that argument by pointing out that there are different practices at play, informed—I fully admit—by a number of sources like the national shipbuilding strategy, which was an innovative change of direction for how we procure ships within the UK. But we have also had a very good example with the Poseidon aircraft programme operating out of RAF Lossiemouth in the north of Scotland on the Moray coast. It is an absolutely fantastic facility. That fleet comprises nine aircraft, which were all achieved on time, within budget, and to a challenging timeline.

It is very easy to be sceptical, and I fully understand why your Lordships rightly have been sceptical of some pretty poor experiences in the past, but all that I am pointing out is that we have moved on to a better way of doing things, and I hope that your Lordships understand from what I have been explaining and describing that there is a far better structure within the MoD to deal with these complex procurement contracts. These defence contracts are often complex, they are required quite often at speed to meet emerging threats, and are often needed to provide much-needed support to our Armed Forces, to ensure that we maintain operational advantage and to reduce the risk to our nation.

The noble Lords, Lord Coaker, Lord Wallace of Saltaire, and Lord Alton, all raised the issue of Ajax, and I think I have said before from this Dispatch Box that it was certainly not one of our proudest moments. Intrinsically, it is actually a very good vehicle, and it will provide an important capability. Following agreement from the Ajax safety panel, work has led to resuming the user-validation trials which were paused earlier this year. Results from these trials are being analysed to ascertain whether it is possible to deliver a safe system of work under which to conduct reliability-growth trails. Your Lordships are aware that there were issues with vibration and hearing, and the one thing that we were very clear about was that we were not going to put people at risk; my former colleague as Minister for Defence Procurement, Jeremy Quin, was absolutely insistent. That is why, despite the embarrassment, we paused what was happening until we had a better understanding of what was going wrong; but I make it clear that the MoD will not accept a vehicle until it can be used safely for its intended purpose.

Your Lordships will be aware that Clive Sheldon KC is leading the Ajax lessons learned review, which is looking at ways in which the Ministry of Defence can best deliver major contracts more effectively in future. That is an important review and we await his analysis, conclusions and recommendations, but I emphasise that any delay to Ajax will not affect our commitments to NATO. That is an important point to observe.

The noble Lord, Lord Coaker, asked about the “Prince of Wales” carrier. Rosyth on the Forth is where good things happen: as well as building the Type 31, that is where the Prince of Wales carrier is currently reposing. She is a state-of-the-art aircraft carrier. She has already proved her capabilities in a number of exercises, but there was an issue concerning the propulsion shaft and investigations are now under way. She is a huge vessel, and it was necessary to take her into dock to have the facilities properly to examine what was going wrong. Timelines for the repair of the shaft are being investigated and further updates will be provided in due course. We want her to return to operations as soon as possible. My understanding is that we have brought forward some routine maintenance anyway, so that can be attended to while she is at Rosyth. I have no more specific information at this time, but I expect we will get a further report when more is known about the underlying condition and how long it will take to rectify.

The noble Lord, Lord Coaker, raised the Type 26, which is a first-class ship. I have visited the programme in the yard at Govan being operated by British Aerospace. It is a fantastic piece of maritime equipment and it will be pivotal for the Royal Navy. It is proceeding very well. We have just awarded the batch 22 contract to the yard because we were absolutely satisfied about the professionalism, commitment and effectiveness of what British Aerospace was doing with the first batch. It is true that there has been a delay, but there are two reasons for that. Covid was one factor; it has created delays for our defence industry partners and their supply chain. I understand that there were also issues with locating the necessary corps of skills, but it now seems well under control and we hope that the new timeline can be adhered to. British Aerospace is certainly very keen to demonstrate that and to commit to making it happen.

The noble Lord, Lord Wallace of Saltaire, raised the issue of levels of munitions. He is quite right that particular demands have fallen on that area due to the conflict in Ukraine. Those of us who listened to the extraordinary, courageous address by Madam Zelenska yesterday—I was among those privileged to be there—could not help but feel huge admiration for her, her husband and the people of Ukraine, as well as a sense of pride that we have been able to come to their assistance. We have been able not just to support them in what they have been looking for but, I hope, to give them the reassurance of optimism and hope for the future; Madam Zelenska referred to that. I reassure your Lordships that, in our supply of anything we have provided to the Ukrainian armed forces, we have never compromised our own levels of stocks in relation to meeting our national security obligations.

The noble Lord, Lord Alton, referred to someone—that sounds rather disrespectful; it was someone very eminent—who used to be in RUSI who had certain challenges with the Bill. As a former lawyer, I would say in response that I think the Bill is a welcome clarification and consolidation of procurement law in the United Kingdom. For the MoD, there has been carefully researched tailoring of the Bill to meet the unique requirements of defence. Our industry partners have been positive, so I think the Bill has the potential to introduce far greater clarity to industry—both primes and smaller contractors—and give them a much clearer sense of how they engage, what they can do and what the rules are. That is absolutely to be commended.

In conclusion, I am under no illusions about the challenges the MoD faces in relation to large-scale procurement. We recognise these challenges, and that is why we continue constantly to explore additional actions to mitigate the effects of cost escalation and cost growth. I hope I have been able to explain in sufficient detail what we do already—particularly the very specific character of the National Audit Office, which is independent of government—to enable your Lordships to understand why the MoD is unable to accept this amendment, while it does identify with the sentiment with which it was put forward. I ask the noble Lord, Lord Coaker, to withdraw the amendment.

Procurement Bill [HL]

Lord Fox Excerpts

Report stage
Monday 28th November 2022 Lords Chamber

The clause is so badly drafted that I think it completely puts an end to horizontal arrangements. My noble friend Lady Noakes has expressed this very well; it is a very simple matter to correct this. It is not the Government’s intention, I am sure, to tie everybody up in knots in this way. It would be very simple for my noble friend on the Front Bench simply to say that my noble friend Lady Noakes has got this absolutely right, and that she will bring forward an amendment in just those terms at Third Reading so that we can solve this and put it to bed.

[Lord Fox (LD)]

My Lords, I will speak very briefly. I have just a couple of points to make before I speak to Amendment 9. First, I join the chorus of welcome for the collaborative spirit that the Minister has managed to engender among noble Lords working on the Bill. Secondly, the noble Lord, Lord Lansley—who I see has slipped out—and the noble Lord, Lord Moylan, both mentioned the fog of uncertainty created by the number of government amendments. I have a small mea culpa as to why some of those have been carried over on Report. Those of your Lordships who were in Grand Committee will remember the outrage caused by 340-odd government amendments landing without an explanation. That caused me to push them back, so I am afraid that I am responsible for their reappearance. However, that did what we wanted it to do: it gave us time to understand and follow those amendments. I think this amendment arises from the perspective we have had in that time.

Two things have happened which I never thought would: first, I find myself in almost complete agreement with the noble Lord, Lord Moylan; and, secondly, he appears to be calling for the emulation of the EU in British law. When we get to the retained EU law revocation Bill, I am sure he can join me to make similar entreaties from his position at the back of the Chamber. Joking aside, the point here is whether this was deliberate or an accident; we are waiting to hear from the Minister on that. This issue reflects a number of debates, certainly the one we have had on Amendment 34—which I trust will come back at Third Reading rather than being agreed here—and one that we will have in a later group in which the noble Earl, Lord Lindsay, has highlighted another issue.

More generally, whatever happens to the Bill on Report, there is a real need for people to sit down with cold towels on their heads and go through the Bill line by line one more time before we get to Third Reading. Because there have been so many amendments, it has been almost impossible to follow properly what is happening. We have all done our best, and the Minister has worked like a Trojan—as have your Lordships—but I think that there is a strong call for further work to be done once we get through Report stage on Wednesday evening.

With that, I support the attempts of the noble Baroness, Lady Noakes, in Amendment 9 to get some clarity on this, and I support the spirit of her speech.

[Lord Greenhalgh (Con)]

My Lords, I rise because I was named by my noble friend Lord Moylan, and because this is a subject that I feel very passionately about, as someone who spent 16 years as a councillor and six years as a council leader. Indeed, I am very proud of the work we did to collaborate. It is something that came to me a little late in my local government career, because I used to believe in two things: competition and fear—that is, fear of failure—but collaboration is also important in local government.

My noble friend Lord Moylan pointed to the vision we had in west London to come together to collaborate to drive down costs. In fact, when it came to library services, it was very much in the back offices that we could make savings so that libraries could stay open and the public could be served by excellent libraries. We worked very carefully across a whole range of areas, such as highways and helping children across west London who needed safeguarding and support to find potential parents who could look after them, in a way that would not have been possible without collaboration.

I am also a huge fan of mutualisation. I know that is coming up in group 6, but I want to say that as someone who was a pathfinder of the work that my noble friend Lord Maude brought forward. The organisation that was spun out of the council to provide school support services exists today and is trading very well with officers I had as senior officers in Hammersmith and Fulham. They preferred a life outside the council. I pay tribute to that movement. It had real vision behind it. It did not involve competition and was really about empowering people to provide the services that they were already providing in a better and more comprehensive way. I think that was a tremendous pathfinder and I only wish that it could have been rolled out more widely across local government and the public sector.

I probably should have declared my business interests as set out in the register before starting to speak. However, I can honestly tell noble Lords that I have absolutely nothing to do with public procurement in my business life because today it takes a long time. It is really difficult and the barriers to entry are very great. I am sure the purpose of this Procurement Bill is to make sure that public procurement works for the benefit of those services and we can use competition in a sensible way and it can be streamlined. I think the purpose of the amendment from my noble friend Lady Noakes is to ensure that, where local trading companies exist, they will not fall foul of the reasonableness test and things have to be put out to competition. In fact, as a council leader I bought a communications service from the City of Westminster because of the expertise it had in comms. That was an expertise that existed only in Westminster City Council, and I did not think that that needed to go out to competition. So I think we need to be sensible.

As a true loyalist, I support the Government if they can point out how a reasonable test can work to ensure that there is not unnecessary tendering in this instance. Provided I get those reassurances, I am happy to support the Minister in her endeavours to ensure that we sort out these areas and preserve areas such as local authority trading companies that provide an important part of services in local government.

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Amendment 165 responds to a recommendation of the Delegated Powers and Regulatory Reform Committee. Paragraph 3(3) of Schedule 10 amends Section 15 of the Defence Reform Act 2014 to provide a power to specify an alternative method of determining the price payable under a qualifying defence contract and the circumstances under which that method is to be used. The committee’s view was that regulations brought forward under this power should follow an affirmative procedure. The Government accept the committee’s view, and hence this amendment. I hope noble Lords will therefore support these government amendments. I beg to move.

[Lord Fox (LD)]

My Lords, we should all be grateful to the DPRRC for its vigilance and thoroughness in scrutinising legislation and this is no exception. A familiar sequence is nearly complete: first, the Government present a Bill threatening to take constitutional liberties to take on board powers for the Executive that should be with Parliament; next, the DPRRC highlights these grabs for power in a hard-hitting report; then one of us presents these issues in Committee via a series of amendments; and, we hope, finally, on Report, the Government accede to almost all the DPRRC’s concerns, although they often keep one or two extra powers in their back pocket, just in case they need them later.

And so it is today with the arrival of this sequence of amendments and we should note how many there are, which indicates how much the Government were planning to take on board. The music of this dance is beginning to fade and sufficient has been done by the Government for us to move on, but I feel sure that the yen for power snatching by the Executive continues and it is already focused on other Bills. I wish it was not.

[Lord Coaker (Lab)]

My Lords, I agree with much of what the noble Lord, Lord Fox, has just said. The Delegated Powers and Regulatory Reform Committee’s report was particularly damning and some of the language that it used about the Procurement Bill was, frankly, very surprising. It would be churlish now not to thank the Government for listening to what that committee said and for bringing forward the amendments that the Minister outlined for us. We welcome the change of heart on the part of the Government and hope that they will learn from what has taken place and make sure that we do not have a blanket change, which was what happened here. Normally, there would be two or three arguments about negative to affirmative; this is like a blanket change of heart on the part of the Government, but it is very much to be welcomed.

I wish to highlight government Amendment 165. The Delegated Powers and Regulatory Reform Committee was particularly exercised by the fact that the Government were seeking to change primary legislation in the Defence Reform Act through the negative resolution procedure. It was particularly concerned that the Government were seeking to do that, notwithstanding its other concerns. The Government have re-established an important principle that primary legislation should be treated with the respect that it deserves. I am pleased that the Government have put forward Amendment 165 to ensure that, at the very least, primary legislation in that respect is changed through the affirmative resolution procedure. We welcome the changes the Government have made and think they will be helpful as we make progress, not only in this Chamber but in the other place.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, this is a very important group of amendments. We have had many speakers, so I will be concise. My noble friend Lady Parminter has already made some important points on our part. I will not repeat her comments, but we regard the issue of economic, social and environmental benefits to be paramount and we do not subscribe to the idea that it should not be in some way guided by the legislation or the operational part of the legislation.

I have listened carefully to the other speeches. I am minded to side with the approach of the noble Lord, Lord Lansley, of using the NPPS as the vehicle through which this aim and principle is achieved. I hope that we shall be able to support both him and the noble Baroness in His Majesty’s Opposition if they decide to press their amendments. Amendments 35 and 46 bear my name; clearly, I stand by them and the speeches that others have made.

There are two other areas on which I want to speak very briefly. Not least, the noble Lord, Lord Hunt, was unable to be here, but I know that he and my noble friend Lady Brinton have tabled Amendments 38 and 83, which reflect on accessibility. The previous legislation had prior regulations about accessibility and the fact that public procurement should ensure accessibility to all people. It has been lost in the drafting of this Bill. It is not clear to me whether that is a deliberate or accidental dropping of something, so it will be very useful to hear from the Minister what the Government’s thinking was on this. If it was deliberate, I would urge them to think again; if it was accidental, there is time to put it right.

Finally, I would like to make a pitch to support the noble Earl, Lord Lindsay, who has unearthed something that must be another unintended consequence of this legislation. I cannot believe that this was deliberately put in place by the Government. His Amendments 58 and 82 are an important way of righting that situation. I hope, again, that the Minister will think again.

In conclusion, we on these Benches absolutely believe that there should be a public purpose to procurement. We feel that the legislators have a role, as well as the very important role outlined by the noble Lord, Lord Maude, for the professionals, when it comes to implementing that policy. It is really important that we seek to achieve public good through the £300 billion of procurement that this country makes.

[Baroness Neville-Rolfe (Con)]

My Lords, we have had an extremely interesting debate—a shorter one than I was expecting—and I am grateful for all the contributions.

I will start by saying that, while I understand that noble Lords rightly wish to pursue their particular interests, many of which I agree with, we have to bear in mind that procurement is, above all, an economic activity. That does not mean that we cannot take other things into account, but no amount of environmental or social benefit could make a procurement satisfactory if it failed to deliver economically on its intended purpose. We need to avoid the Christmas tree that my noble friend Lord Maude referred to. Of course, the NPPS allows for the inclusion of these sorts of policies—including net zero, as the noble Baroness, Lady Parminter, said—but that does not mean to say that we want to put them on the face of the Bill.

In my view, value for money comes first, especially given the financial difficulties that we now face, but it is important to recognise that, as a result of Clause 18, contracting authorities will be working to a new definition, which nobody has mentioned, of “most advantageous tender” rather than “most economically advantageous tender”—that is, MAT not MEAT—so the days of focusing on price alone, not quality or wider matters such as generating UK employment opportunities, are over. Specific policies could also be put into bespoke tender documents, as my noble friend explained.

Secondly, my experience of many Bills is that it is unwise to attempt to define everything in detail at a particular point in time. As the years pass, relative priorities change. Who would have thought two years ago that inflation, the price of energy and the consequences of war would feature so highly on the national agenda? There will no doubt be other surprises—as, indeed, has been the scale of climate change; 20 or 30 years ago, most of us did not realise what would happen.

Thirdly, productivity growth is worryingly low in this country. It is essential that this Bill and the £300 billion of public procurement each year provides a boost and that small businesses are able to secure a share of that, as my noble friend Lord Lindsay’s comments implied. Innovation and competition have an important part to play here—I know that my noble friend Lord Lansley feels that strongly; they are two very important objectives. Procurement should be an enabler of innovation rather than increasing barriers to entry for competition, as my noble friend Lord Maude said.

Against this background, I come to Amendment 33, moved by the noble Baroness, Lady Hayman. This seeks to restate the six principles consulted on in the Green Paper. In addition to the 619 responses we received, we have carried out extensive consultation with interested groups, as the noble Baroness will know. As a result, our principles were refined and then translated into the objectives and specific obligations that now exist in the Bill. The language of a Green Paper is not the language of legislation, and we have reflected the principles in a way designed to help contracting authorities understand how they will implement them. That goes for value for money, public good, transparency and integrity.

The public consultation indicated that “fair treatment” was too subjective for contracting authorities to determine by objective standards, so we introduced the concept of “treating suppliers the same” in Clause 11(2); and “non-discrimination” has been converted from an objective to a hard-edged obligation in Clauses 83 to 85. We believe that the combination of the objectives and specific legal obligations in the Bill deals with procurement principles in a more effective and practical way.

Amendment 35 in the name of the noble Baroness, Lady Hayman, changes the recognised concept of “value for money” in the procurement objectives into a more amorphous one, which includes the concepts of “social value” and “equity”. I have a number of concerns with what that amendment does. First, it moves contracting authorities away from the well-known concept of “value for money” and creates a new, and perhaps confusing, duty. Contracting authorities will not know this new duty and it will take time, resources and probably a number of costly legal challenges—a bugbear of procurement—to work that out. It is also an unfair burden to place on them in this new regime; we need to minimise legal doubt wherever we can.

It is also worth reminding noble Lords that the current national procurement policy statement already includes social value as one of its key themes. I am also concerned by the assumption that an obligation to have regard to some degree of social value must ensure some degree of equity in procurements. I do not think I am alone in being unclear on what “equity” is supposed to mean in this context, and doubtful that the simple existence of “social value” would deliver it.

Amendments 36 and 42, tabled by the noble Baronesses, Lady Worthington and Lady Hayman, and the noble Lord, Lord Coaker, seek to define “public benefit” to include various social and economic matters. The public benefit objective in Clause 11(1)(b) is deliberately undefined, so it is a flexible concept that gives contracting authorities a wide degree of discretion. These amendments seek to define “public benefit” in a much narrower way, limited only to economic, social and environmental benefits.

As I said at the beginning, we have lost sight of the need for our procurement spend also to be used to increase productivity, drive efficiency and stimulate growth. So let us keep the Bill as clear and simple as we can so that we do not swamp contractors and SMEs in paperwork. Let us instead ensure that we have an appropriate national procurement policy statement that can evolve as times change.

Amendments 38 and 83, tabled by the noble Lord, Lord Hunt, and the noble Baroness, Lady Brinton, but spoken to by the noble Lord, Lord Fox, require contracting authorities to have regard, when carrying out a procurement, to the accessibility of what is being procured for disabled people. I reassure noble Lords that we share the same intent. However, amendments to the Bill are not required: there is no need to change the Bill because, although disability accessibility is of great importance, it is already catered for in the public sector equality duty in the Equality Act 2010. It is appropriate that these matters are considered at the point that contracting authorities draw up technical specifications, and they must apply the requirements of existing law. My officials, however, would certainly welcome further engagement with bodies representing disabled people as the technical specifications and guidance are developed.

[Lord Fox (LD)]

The noble Baroness is right that the public sector equality duty is in the Equality Act, but the current system, which we will lose when the Bill comes into force, incorporates both the PSED and provisions under secondary legislation, such as the Public Contracts Regulations 2015. Therefore, when those regulations were laid, there was a tacit acceptance that the PSED alone was insufficient. If the Minister does not accept the amendments, will she bring forward other provisions in another way to backfill what is clearly being lost as we move from one set of rules to the other?

[Baroness Neville-Rolfe (Con)]

My attitude to this is clear, and I have offered to engage on the subsidiary detail of the transformation that we are planning with the Bill.

I turn to the important matter of the national procurement policy statement, which sets out strategic priorities for procurement. Amendment 43—I hope noble Lords will forgive me if I do not mention their names in relation to every amendment they have tabled—would require the Government to publish a national procurement policy statement, rather than just allowing them to do so. This is the so-called move from “may” to “must”. Amendment 44 then requires a statement to be published within 12 months of the relevant section coming into force.

I think the clause is right as it is. Think of how much more important issues such as supply chain resilience have become since the outbreak of Covid and the conflict in Ukraine. The current approach enables the Government to react nimbly to changes in priority, which my noble friend Lady Noakes thought was important, and they can issue a new statement as appropriate. However, importantly, I can assure noble Lords that this Government will publish such a statement when the Bill takes effect; indeed, they have already done so in draft. The Bill will put the new statement on a statutory footing. Importantly, the clause provides that, once the statement is published, contracting authorities must have regard to it when carrying out their procurement activity. The amendment as drafted requires a Minister to publish a statement. However, a Minister would be unable to fulfil this requirement were Parliament to vote against it, perversely meaning that the amendment would potentially prevent a Minister discharging the statutory duty. I would therefore prefer to avoid the formula proposed in Amendment 43.

Amendment 46 proposes that, prior to publishing a statement, the Minister must give due regard to a number of specified principles, most of which represent elements core to the procurement regime. This is evident from the drafting of the Bill overall: for example, value for money, integrity and maximising public benefit are set out clearly, and transparency is a specific requirement running throughout the Bill. There is a lot in common here with what I said at the beginning so I will not repeat that.

Amendment 47, tabled by my noble friend Lord Lansley, the noble Baroness, Lady Worthington, and the noble Earl, Lord Devon, would require the inclusion of specific priorities in the national procurement policy statement relating to the achievement of targets and requirements set under the Climate Change Act and other legislation, as well as promoting innovation and minimising the incidence of fraud. As discussed in Committee, the range of topics suggested by noble Lords during the process demonstrates that stakeholders have different priorities for procurement. These matters are already well covered in our statute book. It is important that policy priorities are addressed in a targeted way and that our regime does not contribute to a deterioration in productivity. That said, noble Lords will be reassured to know that many of these themes—net zero, social value and innovation—feature in the current non-statutory statement that we have already published.

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[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.

[Lord Fox (LD)]

My Lords, I rise to speak on Amendment 73 as my noble friend Lord Clement-Jones is detained in Grand Committee. This amendment requires direct-award contracts included in a framework agreement to be retendered 18 months after the award. This amendment takes a different route from the one we discussed in Committee, but the aim is the same: to prevent direct contracts being used within framework agreements to restrict competition from British SMEs and reinforce the dominance of certain key foreign players in the market. The Minister will remember that we used cloud computing as a major example of where the system has gone off the rails. The SME share of the market has fallen from more than 50% to just 20% in the past five years. In this respect, there is little sign that the Procurement Bill is in reality designed to provide new opportunities to prevent this slide towards—shall we call it “oligopoly”, to coin a phrase that was used by the noble Lord, Lord Maude, in a different context?

Rather than preventing such awards, as we attempted last time, we have instead put down an amendment to time-limit the awards. This would introduce a duty to retender, after 18 months, direct contracts awarded as part of a framework agreement under Clauses 38 and 41. This would provide the opportunity to redress the balance and help support UK SMEs. In Grand Committee, the Minister said that my noble friend Lord Clement-Jones had made a lot of points that she was not aware of and promised to study in relation to the important areas of cloud computing and UK businesses. She also emphasised some of the advantages of framework agreements. We are not arguing with that, but that is not the point. This is about detriment to SMEs through the use of direct contracts which are hidden within framework agreements. The problem can be cured. The Minister also said in relation to these agreements that it makes sense for them to be time-limited. I hope she has studied the words of my noble friend and has something to offer that limits the duration of direct contracts that are made within framework agreements.

[Lord Coaker (Lab)]

My Lords, I have just a few brief remarks on this group. Before I come on to the main point that I want to make, I shall say that I think Amendment 37, tabled by the noble Baroness, Lady McIntosh, about local produce and the local procurement of foodstuffs is something that is growing in importance. All of us know in our own communities that people individually are doing that, as well as local businesses. I think that before long the 50% target she put in her amendment will grow. I think it is an important amendment. Given the other things being talked about, it should not be lost in the general debate.

I thank the Minister for government Amendment 40, which goes to the heart of the discussion in this group, which is about encouraging small and medium-sized enterprises in the procurement process to do better than they are present, and the responsibility of contracting authorities to achieve that. The real question for the Minister—and, frankly, if there are changes of Minister in future—is how we will ensure that that happens, because successive Governments have tried to encourage small and medium-sized enterprises, and it has not been as successful as we wanted. The question is about how we make this procurement system work in a way that benefits small and medium-sized businesses in the way that we would all want.

I am very supportive of Amendment 41, tabled by the noble Lord, Lord Wallace, which talks about the barriers faced by social enterprises and not-for-profit companies in competing for procurement. I think that is something that will become increasingly important.

I know my noble friend Lord Hendy will speak about his later amendment in more depth. His amendment in this group, Amendment 162A, allows procurement to take into account the terms and conditions of staff and the legal status of subcontractors. I think it is an extremely important area, and I thank my noble friend for raising it because all of us would wish to see that people are paid properly for the work they do and that nobody is undercut in the winning of various contracts.

The noble Baroness, Lady Noakes, pointed to Amendment 163 in the name of the noble Baroness, Lady Bennett, and her supportive Amendment 164, which she ably put forward. She made some important points which we can look at in due course and to which I hope the Minister will respond.

However, I go back to where I started: the key amendment in this group is government Amendment 40. We are grateful that it has been brought forward and hope that it will encourage greater success for small and medium-sized enterprises in the procurement business in this country. The key for us is to make sure that this time it works and that we do not have another government amendment in two years’ time trying to achieve the same.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, I rise to introduce a number of government amendments. These include several technical amendments, so I will be brief.

Amendments 59, 60, 108 and 109 exempt the corporate officers of Parliament from the requirement to seek agreement from a Minister of the Crown before excluding a supplier or terminating a contract under the national security exclusion ground. Amendment 85 ensures that the mandatory exclusion grounds capture all Scots law offences equivalent to the already specified English and Welsh offences.

Amendments 86 and 87 refer to the relevant sections in the Theft Act to align with other legislation on economic crimes. Amendment 88 amends the transitional regime for mandatory exclusions to ensure that the correct time period is applied for the mandatory exclusion ground for conspiracy to defraud. Amendment 90 simplifies the exclusion grounds for suppliers which are insolvent or bankrupt. Amendments 92 and 93 amend the rules on how far in the past events can be taken into account as discretionary exclusion grounds in relation to breach of contract and poor performance.

I will turn to the amendments tabled by other noble Lords when I close. I beg to move.

[Lord Fox (LD)]

My Lords, I rise to speak to Amendment 89 in my name. I feel that the time pressure has lifted, so perhaps I can make a nice long speech to your Lordships now. Amendment 89 is intended to allow Ministers and contracting authorities to exclude businesses from procurement where there is evidence of financial and economic criminal activity, such as fraud, money laundering, bribery or sanctions evasions, but there has not yet been a conviction by a court.

This follows the debate we had in Grand Committee on Amendment 320, when the Minister made some cogent points about the problems of excluding organisations that had not been convicted—that point was understood. However, given the length of time involved in carrying out investigations and then securing the resulting enforcement action, we remain concerned that there is a real possibility that unsuitable suppliers may be awarded procurement contracts while they are awaiting the full length of the process.

It was therefore with some interest that my attention was drawn to the Government’s Review into the Risks of Fraud and Corruption in Local Government Procurement. This review looked into the risks of fraud and corruption in local government procurement—not surprising; that is what it was supposed to do—and made the recommendation that the exclusions regime for public procurement should be examined to see

“if more could be done to allow procurers to exclude bidders from the process (with reasonable cause and without the requirement to disclose), for example when there are known concerns with law enforcement that have not yet resulted in a prosecution”.

We believe that the Bill provides an opportunity for the Government to fulfil this recommendation, and suggest that the process of studying how to do that, recommended in that report, could happen. I should be grateful if the Minister would bring forward some sort of government process to have that assessment. If this is not the Government’s intention, she needs to explain to your Lordships’ House why she is prepared to recommend one process for local authorities through a report that had ministerial backing while ignoring the actual issue in the appropriate legislation, which is the Bill. This was the subject of a letter that I wrote to the Minister many days ago and I am still waiting for the reply.

It is in everyone’s interest to ensure that the contracting authority can act when it has evidence of financial or economic offences, but formal conviction is outstanding. We understand the problems, but the Government themselves have identified this as an issue with local authorities. The exclusion regime is not just a deterrent for bad actors; it is also supposed to prevent them getting the contracts in the first place.

[Lord Hendy (Lab)]

My Lords, my Amendment 91A follows the theme of my earlier Amendment 162A. The thrust of this amendment is that in determining whether to let a public contract to a bidder, a public authority should have the power to take into consideration the conduct of the potential supplier vis-à-vis its staff.

The Government are to be praised for accepting that public procurement is a useful tool to maintain and raise standards, hence the emphasis on public good, even without the benefit of Amendment 46. Clause 29, for example, excludes those guilty of improper behaviour of various kinds. Schedule 6 provides that there are mandatory exclusions, among other things, for suppliers who have been convicted of various offences: corporate manslaughter, homicide, terrorism, theft, fraud, bribery, organised crime, tax offences, and cartel offences.