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.

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[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.

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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.

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[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?

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[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.

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[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.

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[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.

Procurement Bill [HL]

Lord Fox Excerpts

Committee stage
Wednesday 26th October 2022 Grand Committee

[Lord Fox (LD)]

My Lords, as the noble Lord, Lord Mendelsohn, pointed out, this is a wide range of varying amendments on a scale that, I suggest, is suboptimal for the proper scrutiny of this Bill. Frankly, it is symptomatic of the whole nature of this Bill and the way in which we are expected to scrutinise it. That said, because there are so many different things in here, there is a danger of some of the gems getting buried. I am going to burnish just a few of them but I hope that the Minister will be able to look back through the Marshalled List and Hansard to make sure that they are not overlooked, even if she is unable to comment fully on the whole range of amendments.

Those of us who can remember the beginning of this group will remember that we were talking about KPIs. The noble Lord, Lord Lansley, the noble Baroness, Lady Noakes, and my noble friend Lord Scriven, talked about them, as will I when I speak to Amendments 275A and 276ZA—I have never seen a “ZA” before—in my name.

Amendment 275A would remove the power granted by the Bill to the appropriate authority—otherwise known as the Secretary of State, as far as I understand it—to change the threshold at which KPIs may be published. At the moment, the threshold is set at £2 million. If my noble friend Lord Scriven, the noble Baroness, Lady Noakes, and the noble Lord, Lord Lansley, were successful in changing the KPI regime and making it rigorous, the Secretary of State could at a stroke remove a large proportion, if not all, of public procurement from that KPI obligation simply by arbitrarily lifting the threshold. This is a process that should not be left to the Secretary of State alone; that is what Amendment 275A refers to.

Furthermore, Amendment 276ZA would ensure that the regulations could be used only to reduce the threshold, not increase it. I must say, it is ingenious; I would not have thought of it on my own account. These are well-worded and reasoned amendments. I am sure that, if the Minister were not at the Dispatch Box, the Back-Bench version of her would have been making this speech because these amendments are of course hers. When she was promoted, she swiftly withdrew them. Because I agree with them and think that they are good amendments—I did not do this simply to have some fun; these are important issues—I put them back in for your Lordships to consider. The threshold at which the KPIs are published is absolutely central to whether we have a KPI system that works. It is important that Parliament is left with the right to do that.

I shall speak to another gem: Amendment 272 in the names of my noble friends Lord Wallace and Lord Scriven and the noble Baroness, Lady Bennett. I will not speak at length. In previous debates, Ministers have argued against adding principles and things to this Bill, but central to the Green Paper was a section on the principles of public procurement. The Government accept that there should be principles here and have advanced some, so putting into the Bill the principle that procurement should help local communities with the deployment of sustainable local improvement would seem to be central to what this Government want to do, especially given their stated aim of bringing local communities and the quality of life in them up.

I also associate myself with my noble friend Lord Scriven’s speech on Amendment 353AA; it sounds more like a battery than an amendment. I look forward to his further speech on that.

Finally, I want to say a word in favour of the amendments in the name of the noble Lords, Lord Mendelsohn and Lord Aberdare, which seek to address further the pernicious practice of late payment. This is the Procurement Bill and it is about public procurement. It is unthinkable to me that this Bill and the Act that will follow do not have something to say about late payment and something to improve this activity. Whether it will be along the lines of the noble Lords’ proposal, I do not know, but these are important points. This seems to be a genuine opportunity for the Minister. This is a cross-party concern. I am sure that the Minister, working with others, can come back on Report with something that will further stiffen the process. I suggest that the process of publishing, as set out by the noble Lord, Lord Mendelsohn, would be a very good way of starting so that we can at least see where the poor behaviour lies.

I hope that, in the post-Committee quiet, the Minister can scrutinise where we are with all these amendments and come forward on Report with some sensible improvements based on them.

[Baroness Hayman of Ullock (Lab)]

My Lords, this has been an interesting debate that I hope has been helpful to the Minister. I have three amendments in this group. Amendment 273 requires that one KPI is compliant with the carbon-reduction plan. Tied into that is Amendment 274, which requires that, where public contracts in scope of the KPIs fall below the threshold for mandatory carbon-reduction plans, at least one KPI should assess the supplier’s performance against climate or environmental considerations.

As I said on Monday, the transparency requirements are very welcome. We believe they could provide the opportunity for contracting authorities and their suppliers to demonstrate that they are having regard to climate change and are managing the risks through regular environmental reporting as a KPI. However, those requirements are not set out in the Bill but will be left to secondary legislation. For example, they do not impose requirements in relation to the environmental commitments made by the supplier awarded the contract or for the regular reporting on whether the commitments have actually been met. We feel that that needs to be strengthened, which is why we have tabled the two amendments on this area.

My Amendment 353AA would create the process to ensure that contracting authorities safeguard the public interest. I thank the noble Lord, Lord Fox, for his support. The noble Lord, Lord Scriven, gave a detailed explanation of the importance of this, so there is no need for me to go into any further detail. Looking at the public interest and the wider potential impacts of any contracts that are supplied is something that we need to be extremely aware of and cautious about.

I turn to other amendments in this group. The noble Lord, Lord Lansley, made some important points here; we are very sympathetic to them and I would be interested to hear the Minister’s thoughts. These seem to be straightforward areas where the Bill could be improved. In particular, the noble Lord explained how the time modifications, going from one-10th to one-sixth, made sense and would make life a lot easier for people. Again, these are sensible amendments so it would be interesting to hear the Minister’s response.

My noble friend Lady Thornton has tabled some amendments around KPIs and social value, and we strongly support both of them. I am sure the Committee is aware that social value is included in the national procurement policy statement, but there is no reference to social value in the Bill itself, as has been said on a number of occasions when we have debated this in Committee. We have been told by officials—and by previous Ministers before the noble Baroness—that social value is integrated into the concept of public benefit, but we believe that “public benefit” is just too vague a concept and it is just not clear where social value sits within this framework. My noble friend raises an important point with her amendments, and I hope the Government will start to take this issue more seriously.

As usual, the noble Baroness, Lady Noakes, put her finger on an area that needs proper clarification. I am sure the Minister will have listened very carefully to everything she said.

The noble Lord, Lord Scriven, introduced some of the Liberal Democrat amendments by talking about the importance of sustainable local improvements and, again, the wider public benefit: what is this, what does it mean and what will we get out of it in the Bill? Again, a lot of what he was saying—and what the amendments from the Liberal Democrats are doing—is very similar to, and ties in with, the amendments we have put down: they look at the environmental and social value impacts and how we can build these into the Bill to make important improvements.

The noble Baroness, Lady McIntosh of Pickering, made some important and specific points with her amendments, and I was happy to add my name to them. They draw attention to a really important issue, which has been missed out and is extremely pertinent at the moment when we consider current concerns over inflation—particularly food price inflation, as she mentioned—and the rise in prices more generally. Public sector catering businesses were really badly hit during the pandemic and are still struggling, so we need to pay proper attention to her amendments. If we are genuine about supporting SMEs, this is an area where they really need some strong support from the Government at the moment.

I commend my noble friend Lord Mendelsohn for his work on tackling the issue of late payment. His dogged approach to this has achieved much, but there is still much more to achieve. His amendments are very important and helpful; again, they are about helping SMEs, something the Minister has said time and again she wants to do.

As the noble Lord, Lord Fox, asked, why is there nothing on late payments, or the issues he raised in particular, in the Bill? This is a real opportunity to do that. The noble Lord, Lord Aberdare, raised similar issues around small and medium-sized businesses and the kind of support they need for procurement if they are to be able to make the most of the contracts that are out there for them. I totally agree with him on the issues around SMEs and the construction sector: it can be very difficult for SMEs to break into that sector, and very difficult for them to manage their cash flows if they start having issues around late payment, which unfortunately happens all too often. In addition, we would strongly support his request for picking up the meeting idea to see whether we can make some progress on this matter between Committee and Report.

To summarise, the Bill needs to ensure that it specifies that KPIs are flexible, proportionate, realistic, agreed properly with the provider and informed by engagement with the people accessing any services. These are helpful amendments, seeking to achieve many of these aims. I hope that the Minister is sympathetic to much that has been proposed and I look forward to her response.

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[Baroness Humphreys (LD)]

I will speak reasonably briefly to Amendment 491 in the name of the noble Lord, Lord Wigley, to which I have added my name. I thank the noble Lord for outlining the reasons for this amendment so clearly. I reiterate my thanks to the Cabinet Office and its civil servants, which I expressed earlier in Committee, for their constructive and positive engagements with Welsh officials. I know they have worked closely to ensure that Welsh policy objectives have been included in the Bill.

The issues that Amendment 491 highlights arise in Clause 99 and have been the subject of discussion between the two parties for some time. Like the noble Lord, Lord Wigley, I understand that the Welsh Minister for Finance and Local Government wrote to the Minister for Brexit Opportunities on 18 May to ask the UK Government to consider an amendment to the Bill to address her concerns. I hope that in the intervening five months, some agreement has been reached between the two parties.

As the noble Lord pointed out, this is a probing amendment designed to tease out, first, the problems that arise from the definition of Welsh contracting authorities and, secondly, the issue of ensuring that both clauses work more fairly in relation to some cross-border procurements. The definition of Welsh contracting authorities initially proposed by the UK Government was that of a “devolved Welsh authority”, as defined in the Government of Wales Act 2006. However, as the Welsh Government have pointed out, that does not accurately reflect all the contracting authorities in Wales that should be on the list of Welsh contracting authorities. Clauses 1 to 3 of the Bill now set out a broader definition of a devolved Welsh authority. However, there is still a concern that the breadth of contracting authorities that are not DWAs within the GoWA definition, but are to be treated as DWAs for the purpose of the Bill when they carry out a cross-border procurement, does not go far enough.

My real concern is about Clause 99(3)(b)(i), which provides for those contracting authorities that are to be treated as DWAs for the purpose of the Bill and bound by the Welsh rules where the authority is awarding a contract for the purpose of exercising a function wholly in relation to Wales—the point that the noble Lord, Lord Wigley, raised—but not for any other procurements, including cross-border ones. That word, “wholly”, means that the Welsh Government play no part in this. Ultimately, this means that, even if 90% of a cross-border procurement is for use in Wales, the English elements of the rules would apply. To me, that smacks a little of the lion wanting to take the lion’s share.

We on these Benches agree with the fairer and more pragmatic approach suggested by the Welsh Government: to follow Regulation 4 of the Public Contracts Regulations 2015 for mixed procurements. This would allow for cross-border contracts to be procured depending on the main geographical location of the contract; on which financial value was the highest; or on where the majority of the services, goods or works were being delivered. The Welsh Government have suggested that, where more than half of the procurements are to be delivered in Wales, the Welsh procurement rules should apply. They contend that, in the event of a 50/50 split, the English rules should apply. The insertion of the words “or mainly” following “wholly” in Clause 99(3)(b)(i) would achieve this end.

These proposals by the Welsh Government seem reasonable and fair. They would redress the balance between the two parties on cross-border procurement, and are supported by the Lib Dem Benches. I look forward to the Minister updating us on where officials are with these issues and hope that the spirit of positivity and co-operation that has characterised the negotiations on this Bill extends to the issues in Clause 99.

[Lord Fox (LD)]

Coming from Herefordshire as I do, I comment on matters Welsh with great trepidation. I commend the two previous speakers on this amendment. If the Minister could see common sense in what they have said and sort out the situation, that would leave the Welsh Government in a very comfortable place. I do not like to speak for the Welsh Government but that is my understanding of it.

Amendment 527 in the name of the noble Lord, Lord Lansley, looks as if it ought to have been in the previous group. It sounded like he was describing the special case of the problem set out by my noble friend Lord Purvis; it therefore seems to me that he should be part of that future meeting. Indeed, that special case should be covered in the Minister’s letter before we have the meeting so that we can take it forward. That would be the sensible way.

Two amendments have my name on them: Amendments 529 and 531. The Minister will be glad to hear that I am not going to speak at length on either except to say that they are on a subject she has spoken to, as I noted on Monday when I welcomed her to her new role, because the Executive taking power over the legislature is something on which she has spoken many times. I have spoken about it at length during the passage of lots of other Bills because it is something we get time and again.

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[Baroness Neville-Rolfe (Con)]

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

My noble friend Lady Noakes also asks why the formulation

“any amount referable to VAT”

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

“a reference to any amount referable to”.

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

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

[Lord Fox (LD)]

I would just like to congratulate the Minister on the smooth transition from Back-Bench jabs to Front-Bench defence. We look forward to seeing the reprinted version of the Bill so that we can start to track where all these amendments have gone and what they do. We also look forward to the meetings we will be having to sort these matters out.

Amendment 536 agreed.

Procurement Bill [HL]

Lord Fox Excerpts

Committee stage
Monday 24th October 2022 Grand Committee

[Lord Hunt of Kings Heath (Lab)]

My Lords, I shall speak also to Amendment 180. It seems a long time since we were in Grand Committee debating the Bill: quite a lot of things have happened since. I am sure the Committee would wish me to welcome the noble Baroness, Lady Neville-Rolfe, to her position. I wish her a degree of permanence—at least until the next election. Of course, she still has some amendments in her name to come. I know we may have debated them, but it is her opportunity to re-educate her department and come back with rather more robust responses than she received from the noble Lord, Lord True, although I express my thanks to the noble Lord for his stewardship of the Bill and his willingness to engage in debate with your Lordships on this important legislation.

I move on to my amendment. A few months ago, the Centre for International Corporate Tax Responsibility and Research and TaxWatch published a report on Amazon’s most profitable segment, its cloud computing business, which they argue is increasingly indirectly supported by taxpayers through hundreds of billions of dollars and pounds in government contracts around the world. In the UK, it said that Amazon’s cloud computing business won almost £600 million in government contracts between 2018 and 2021. It also highlighted that in 2020 Amazon signed a master agreement which allows it to treat all UK central government agencies as one client, which will further increase the volume of its UK contracts.

Despite Amazon collecting public money through large and rapidly growing government IT contracts, the tax payments of this company remain opaque. Indeed, a 2021 research report into Amazon’s tax practice shows that only a fraction of the company’s UK sales are accounted for in its UK accounts. Sales in the UK and elsewhere appear to be channelled through subsidiaries in Luxembourg and, although Amazon says that UK revenues recognised in Luxembourg are reported to HMRC, there is no public accountability as Luxembourg accounts do not disclose how much tax, if any, the company is paying in the UK. Amazon’s practices are replicated by many multinational companies, and the aim of my amendment is to press the Government to use the Bill to start to take some action. The Bill offers a chance to ensure an increase in transparency around the tax affairs of potential suppliers of government contracts. It also offers the opportunity to ensure the exclusion of companies that have engaged or are engaging in egregious tax abuse.

Tax non-compliance has been a potential ground for exclusion from government contracts for some time. In 2013, the Cabinet Office issued Action Note 06/13, which sought to ensure that companies bidding for government contracts declared any tax non-compliance in the procurement process, but this has had no effect whatever. Following FOIs to more than 40 government departments by the think tank TaxWatch, not a single incidence of the supplier being excluded was reported. It was also clear that very little compliance monitoring was occurring. The majority of departments responded saying that there were no incidents reported, but not every department even provided that response; some said they were unable to answer as it would take too long to respond. Will the Minister tell me why departments are so weak in holding these companies to account?

The Bill currently includes misconduct in relation to tax as a mandatory exclusion ground in Schedule 6, Part 2, but mandatory exclusion grounds do not mean that the supplier must be excluded from a procurement competition. A supplier becomes an excluded supplier only if it qualifies for a mandatory exclusion ground and

“the circumstances giving rise to the application of the exclusion ground are likely to occur again”.

The legislation also covers participation in defeated avoidance schemes. The mandatory exclusion ground covering defeated tax avoidance schemes includes instances where a tax return has been amended due to the participation of the taxpayer in a tax avoidance scheme and where the taxpayer has reached a settlement with HMRC, in which case there is no need for the person to receive an adverse judgment in a tax tribunal. When it comes to individuals and companies that have engaged in tax avoidance, the provisions of the Bill are wide-ranging but mandatory exclusion grounds apply only where there has been an assessment by HMRC. That assessment is final, meaning that any appeal rights have been exhausted.

We know that tax litigation is often complex and sometimes takes an exceptionally long time to wind its way through the justice system. When it comes to large companies, including the multinationals, it is common practice for the tax authority to settle tax disputes without penalties being charged.

We know that major companies—Amazon, Google and General Electric—have been investigated in recent years by authorities around the world for committing serious tax offences, but in each instance they have settled rather than admitting guilt and receiving full penalties. As such, none of these companies is barred from procuring government contracts and, with that, taxpayer money. The exact terms of these settlements are not always available to the public. Often settlements between major corporations and tax authorities involve an adjustment to tax liability without an admission by the company engaged in any wrongdoing; the dispute is simply characterised as a difference of opinion over a tax treatment. One way to strengthen the Bill would be to require a company to disclose whether it was currently under investigation for tax offences in the UK or abroad, or where the company had reached a settlement with a tax authority following an investigation for a tax offence.

The Global Reporting Initiative tax standard is a finance reporting standard that provides enhanced public transparency for companies and their tax payments. In particular, it provides for companies to report their economic activities in each country where they operate and the taxes paid in each country—country-by-country reporting. This is a transparency mechanism for revealing corporate tax avoidance. This often involves a company moving profits from higher-tax countries into tax havens. If a company is engaged in profit shifting, that will appear in country-by-country reporting by a company showing very high profits in low-tax countries where the company has little economic activity, and low profits in higher-tax countries where much more activity takes place. For example, Amazon does not provide a breakdown in its accounts of revenues, profits and tax payments in non-US markets by jurisdiction, making it difficult for investors, the public and tax authorities around the world to evaluate whether Amazon is engaged in responsible tax practices.

The implementation of the GRI would allow for some necessary scrutiny. A group of Amazon investors put forward a shareholder resolution at the Amazon AGM in May 2022 calling for greater transparency in the company’s tax affairs and to make disclosures in line with the GRI. That resolution was defeated but was backed by 21% of independent shareholders. Country-by-country reporting is mandatory for multinationals engaged in the extractive and logging industries under rules implemented by several legislatures around the world. Country-by-country reporting is mandatory in the banking sector under EU legislation. Numerous multinational organisations now voluntarily report using the GRI tax standard. My amendment would require all large companies bidding for government contracts to produce a copy of reporting under the GRI tax standard. In addition, the supplier should report details of any tax investigations and report where it is based in a tax haven or is a subsidiary of a person based in a tax haven.

My second amendment would provide for a Minister to lay regulations listing those jurisdictions that are considered to be providing a tax haven to suppliers. Clearly my amendments are not the whole answer to the issue of tax shifting by multinational companies, but using the Bill would be one of the stepping stones that we could take to a much fairer tax situation in this country. I hope the Government will be sympathetic. I beg to move.

[Lord Fox (LD)]

My Lords, I rise as a cipher for my noble friend Lord Wallace, who has tabled a number of amendments in this group. He is unable to attend this and the next day in Committee, so I will be deputising for him.

I too welcome the noble Baroness, Lady Neville-Rolfe, to her new role, and congratulate her on getting to complete this Bill, which must be regarded as the plum legislative job available—so I say “well done” to her. During a debate on the economy a couple of weeks ago, she said from the Dispatch Box that she was very keen on “simplification” and cited simplifying procurement as being in her sights—now, here she is. However, before her well-deserved promotion, on the third day in Committee on 11 July, “Back-Bench Lucy” was more strident. She said:

“The more I listen, the more I feel that this Bill in many respects strikes the wrong note. It is overregulatory and calls for a rethink, which I hope the Government will be thinking about.”—[Official Report, 11/7/22; col. GC 359.]


On those grounds, I suggest that she should exercise her new power, withdraw this poorly drafted Bill and come back with one more in keeping with simplification and with her aversion to overregulation.

In the absence of any enthusiasm from the Minister for doing that, I speak to Amendments 306, 307, 308, 320 and 328, tabled by my noble friend Lord Wallace, some of which I have signed; I do not support all of the others. I thank the noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Hain, for their support for Amendment 320.

An effective debarment and exclusion regime protects the public purse from rogue actors and drives up corporate government standards. Exclusion and debarment from procurement are potent anti-fraud and anti-corruption tools. The issue of companies with long records of corruption winning public contracts in this country is appalling. Nearly a quarter of local councils experienced fraud or corruption in 2017-18. Fraud costs the public purse up to 5% of government spending overall. I thank Spotlight on Corruption for these numbers.

The UK’s record on excluding these types of companies from participating in public procurement is not good, at best. The list of companies either from the UK or operating here that have been shown to have engaged in serious corporate misconduct is unfortunately lengthy and well publicised; yet, under the existing debarment regime, it has been, in practice, all but impossible to apply a discretionary exclusion in the absence of a conviction. There has been very little use of exclusion in the UK to date under current EU-based rules, and the Procurement Bill is an opportunity to address the weaknesses in those rules that have prevented exclusion from being used effectively to protect the integrity of the public purse. I am sure that the Minister would approve of replacing an EU law with a better UK law—these are suggestions for how to make it better.

This Bill as formulated contains some significant issues and crucial gaps that could seriously undermine the effectiveness of the debarment register and exclusion regime. There is a risk that the register will stand empty for many years, which would undermine the reputation of the register and the UK’s anti-corruption efforts in general. It is therefore crucial to get this right at this critical stage of the Bill’s development.

Amendment 306 seeks to make criminal offences for sanctions evasion grounds for exclusion from public procurement. The Bill currently contains no references to criminal offences for sanctions evasion. Given the Government’s current policy of imposing sanctions to ensure its foreign policy goals in relation to Russia’s invasion of Ukraine, and their ambition to use sanctions to achieve important foreign policy goals to be a force for good globally, this is a major omission. Incorporating criminal offences for sanctions evasions in the Bill would make companies across the UK take their obligations to comply more seriously. This amendment redresses this omission.

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

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

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

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

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

However, noble Lords will know that the basis on which contracts must be awarded under the Bill is by reference to award criteria that relate to the contract being tendered, not to other matters such as where a supplier pays tax. This is the right principle to deliver value for money for the taxpayer and ensures that suppliers are not required to provide swathes of information that is irrelevant to the contract. This principle is also a feature of the UK’s international obligations, notably under the WTO government procurement agreement. It is for His Majesty’s Revenue and Customs to enforce the law on tax and, indeed, UK-based multinational enterprises are required to make an annual country-by-country report to HMRC. I note what was said by the noble Lord, Lord Hunt, about Amazon.

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

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

[Lord Fox (LD)]

During that spirited defence of the need to keep things open for international companies to be able to bid, the Minister used the phrase “value for money”. Can she define the Government’s view of how they calculate value for money?

[Baroness Neville-Rolfe (Con)]

If I may, I will think about the answer, make some progress, and come back to that on a future occasion.

[Lord Fox (LD)]

It is surprising that the Minister cannot answer that.

[Baroness Neville-Rolfe (Con)]

Well, I think that “value for money” is a clear term, but I am listening seriously to the point that the noble Lord is making in this context. Value for money is about quality and quantity; indeed, it is about many things, as I know, having been on the buyer side in real life as well as on the selling side. As for what the definitions are in the Bill, I am not sure.

I come back to the important points from the noble Lord, Lord Hunt, on the subject of tax. It was clear from feedback on the Green Paper that the existing tax exclusion ground is one that many authorities are struggling to apply. By reframing the ground in terms of UK offences and regulatory decisions, we believe that it should be easier for UK contracting authorities to apply this. I also add—because I remember it well from the time that I served in David Cameron’s Government—that the UK has tried to lead the way internationally in making sure that multinational companies pay their share. Strong HMRC compliance action has secured and protected over £250 billion for public services since 2010 that would otherwise have gone unpaid, including £3 billion from those trying to hide money abroad. This is work that goes on—and work to which HMRC is devoted, as I remember well.

The noble Lord also raised tax havens. The Bill will deliver unprecedented levels of transparency in procurement, including—this point needs to be made—with respect to the beneficial ownership of suppliers. All suppliers will be expected to declare their beneficial owners when bidding for contracts. Failure to provide accurate details of beneficial ownership when asked will now be a mandatory ground for exclusion.

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[Baroness Neville-Rolfe (Con)]

I try to wake up early, as noble Lords know. Value for money is not defined in Clause 11(1)(a), to leave a degree of flexibility for future refinement. In practice, we will use the HMT definition, which is currently,

“the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcome of the business case.”

It is quite a nice mixture—economy, efficiency and effectiveness.

[Lord Fox (LD)]

I thank the Minister, but the question I was rather clumsily trying to ask was whether we extract from the cost the amount of money we expect to take in tax or merely use the cost as a flat sum. In other words, with a British company paying full British tax versus one of the companies described by the noble Lord, Lord Hunt, which pays no tax, does the overall cost of that service become less for the one paying tax? It seems the Minister’s answer is that the tax take is not included in the calculation of value for money.

[Baroness Neville-Rolfe (Con)]

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

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

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

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

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

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

[Baroness Neville-Rolfe (Con)]

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

[Lord Fox (LD)]

I thank the Minister for her response. The notion of, in a sense, using professional misconduct as the catch-all for everything else is something that we could pursue after Committee. It may be something that requires some definition or clarification, either within the legislation or from the Dispatch Box on Report. If that is going to be the way that the Bill operates, some clearer idea as to how it would work would help to ameliorate some of the fears that have been expressed around the Bill.

[Baroness Neville-Rolfe (Con)]

We have to get the right result but we also have to avoid a chilling effect. That is my basic approach to this.

[Lord Fox (LD)]

A chilling effect on corruption?

[Baroness Neville-Rolfe (Con)]

A chilling effect on corruption is obviously positive but a chilling effect on people being prepared to engage in government procurement is not, particularly smaller suppliers, which might be put off by some of these rules. That is why we brought in Schedule 6, which will bring a certain clarity. There may be some further discussions to be had on Schedule 7 and exactly how it works.

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[Viscount Younger of Leckie (Con)]

My Lords, as I was saying, Amendments 223 to 227, 229 to 231 and 233 are tidying-up amendments. Amendments 223, 230 and 233 delete provisions that are now set out elsewhere. Amendment 224 clarifies that only contracting authorities may award public contracts using dynamic markets, while Amendment 225 reflects the terminology of “participation in”, rather than “membership of”, a dynamic market. Amendment 226 includes a new definition of “utilities dynamic market” to make it clear that this is a subcategory of dynamic markets rather than a distinct concept. Amendment 227 deletes the previous definition of a utilities dynamic market and deletes Clause 35(3), which will not be needed if proposed new Clause 1, which was discussed on the first day of Committee, is agreed on Report. Amendment 229 is a grammatical change, and Amendment 231 ensures that the definition of “utility” applies across the whole Bill, not just to this clause.

Amendment 234 includes proposed new subsections (1A), (1B) and (1C) in Clause 36, relating to conditions for membership of a dynamic market. These provisions apply the same restrictions to these conditions as apply to conditions of participation in a competitive tendering procedure, as set out in Clause 21.

Amendment 235 clarifies that the contracting authority that established a particular dynamic market, as opposed to any other contracting authority, must publish a notice when the dynamic market ceases or changes—for example, when new suppliers are added.

Amendment 288 allows for a minimum 10-day tendering period for the submission of tenders in competitive tendering procedures for the award of contracts under dynamic markets. This shorter period is a significant efficiency offered by dynamic markets. It compares to the usual tender return of 35 days, which applies in a normal procedure unless tender documents are provided at the outset and/or tenders are accepted electronically, both of which reduce the return by five days.

Amendment 345 extends the requirement on contracting authorities to notify the relevant appropriate authority where a supplier is excluded from a dynamic market because it has fallen foul of a mandatory or discretionary exclusion ground. Amendments 346 to 348 are consequential on this amendment.

In respect of the last two amendments, Amendment 541 corrects the clause reference in the list of defined terms to align with the amendments proposed to Clause 35, while Amendment 545 includes in this list a cross-reference to the newly defined term “utilities dynamic market”.

With that, I beg to move the first of these government amendments in the name of my noble friend Lady Neville-Rolfe.

[Lord Fox (LD)]

My Lords, as the noble Viscount set out so speedily, this new concept of dynamic markets is so new that a lot of it did not even make it into the original Bill; it had to be brought in as amendments. Thereby hangs a concern—not with the concept of a dynamic market, which I will come to shortly, but with how this is being put together, the sum of the parts and how it will work. It is difficult to see exactly how this will work in practice from the noble Viscount’s presentation that we just heard, the Bill itself and the original White Paper. That is my concern.

It would be helpful if the noble Viscount came back to us in writing with a simple message as to how this will work. How, for example, does it welcome innovation rather than shut it out? I will give an example. Whether a dynamic is based around process rather than outcome makes a difference, so how will these rules manage dynamic markets that actually deliver constant innovation? How will they be refreshed? How will the system work so that, rather than having the power of incumbency, if you like, which is often what happens with procurement, power will be pushed around to allow innovation, new entrants and new people to work within this dynamic?

We can call something dynamic but how is it dynamic on an ongoing basis if I use this market to buy things or services on a daily basis? Essentially, that is my concern: all these amendments are tinkering around technically with process but, because of the way this has been put together in pieces, will it actually work? Can the Minister come back with some assurance as to how this is supposed to work? How will it be constantly renewed? How will he ensure that it is open to new entrants throughout the life of that dynamic? How will individuals know that they are able to keep entering that market? Tenders will not be going out, so what is the process? If I have a small or medium-sized business, how do I find out about dynamic markets that might suit my product or service set? I am concerned about those kinds of mechanisms and processes.

[Lord Lansley (Con)]

I had not intended to intervene but I am getting a bit confused here. In the Public Contracts Regulations 2015, Regulation 34 describes a dynamic purchasing system. First, I am trying to understand the difference between the dynamic purchasing system that existed in the regulations we are replacing and this apparently entirely new dynamic market; I am not quite clear what it is. Secondly, the dynamic purchasing system in the regulations is an entirely electronic system. This one is not necessarily so.

[Lord Fox (LD)]

I think it is.

[Lord Lansley (Con)]

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

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The noble Lord, Lord Clement-Jones, talked about the issues around cloud hosting and the danger of uncontested contracts that do not seem to have thresholds, which are having a real impact on UK businesses. The Minister has talked very supportively of small and medium-sized enterprises; I know that she is a champion in this area. But UK businesses are being locked out of tendering for these contracts because of how the frameworks seem to be set up. I completely agree with and support the words of the noble Lord, Lord Clement-Jones, and, because of the Minister’s support for small businesses, I know that she will have listened very carefully. I hope that she can take a proper look at this before Report.

[Lord Fox (LD)]

My Lords, as we have heard, Clause 41 covers the very important issue of direct awards that may be awarded to protect life.

The Covid pandemic tested our current systems but, in one particular area, the Government have now admitted that they created a VIP lane, under which at least 50 contracts for test and trace were expedited. Many other contracts for PPE and other core Covid contracts also circumvented the usual public procurement routes in the VIP lane, as the noble Baronesses, Lady Bennett and Lady Hayman, mentioned. That is why my noble friends Lord Wallace and Lady Brinton have tabled Amendments 238 to 241. I have already explained that my noble friend Lord Wallace cannot be here, and my noble friend Lady Brinton is participating in the Chamber.

These amendments say that regardless of the emergency, the principles of transparency, integrity, fairness and non-discrimination must be at the heart of any contract process. These are the diagnostics of a good, well-managed company. If these are not pursued, it is very unlikely that quality and delivery will be good; and that is what we have found—delivery was poor. The VIP lane was a particularly egregious mechanism that the Government used to encourage contractors to come forward to supply goods at short notice, irrespective of those qualities that I have just listed. Billions of pounds of taxpayers’ money was used to provide contracts, including, as we have heard, to firms that had no experience of test and trace or the provision of PPE. This is not just a waste of money: one test and trace firm’s testing kits gave many thousands of erroneous false-negative results, which meant that people believed that they did not have Covid and went around the country infecting people accidentally, causing illness and possibly death. We do not know how many or how much.

PPE kit worth billions has already been and is being incinerated by the NHS, because it did not meet the required safety standards. It could not meet the quality standard, because it did not have the management controls and processes, nor the integrity, to meet it; it was not checked, because of the fast-track process. One common element is that it was parliamentarians—virtually all Conservatives—who introduced the companies that received this preferential treatment over and above existing, experienced suppliers and experts. There are many examples of this. Worse, the BMA reports that thousands of doctors ended up buying their own PPE, because they knew that the stuff that the Government were providing them with was substandard.

From our Front Benches and in private meetings with Ministers, despite repeated questioning, it was almost impossible to get answers about these appalling processes. Two years later, the truth is really beginning to emerge. Friends of Conservative parliamentarians were given unfair advantage in obtaining contracts, as we just heard from the noble Baroness, Lady Hayman. That is bad enough, but the waste from those contracts is a stain on this Government’s procurement activities. It must never happen again.

Amendment 240 makes it plain that provision must not confer any preferential treatment on suppliers connected to or recommended by Members of the House of Commons or House of Lords. If the Minister resists this amendment, these Benches will also oppose that Clause 41 stands part of the Bill. As currently written, it does not prevent the procurement processes from this debacle happening again.

Can the Minister answer the following questions? Does she believe that Clause 41, in its current form, protects against abuse of a future emergency process similar to the VIP lane that this Government used, which has proven to be untransparent and to favour colleagues of parliamentarians? In other words, does Clause 41 stop this happening again? Does she recognise that now is the time to say that this must never happen again? And does she recognise that these amendments are a mechanism to ensure that we do not get a repeat of this?

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Given these restrictions around use of the power, we do not believe that further measures are necessary. I would point out that the Clause 41 power did not appear in the DPRRC report, which we hope reflects the fact that sufficient protections are already in place.

[Lord Fox (LD)]

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

[Baroness Hayman of Ullock (Lab)]

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

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[Baroness Noakes (Con)]

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

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

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

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

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

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

“discretion in relation to a particular procurement”,

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

[Lord Fox (LD)]

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

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


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

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

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[Baroness Neville-Rolfe (Con)]

I thank noble Lords for an interesting debate on these non-government amendments. I do not think that I have a perfect reply to my noble friend Lady Noakes’s three questions. We are due to meet to discuss various aspects of the Bill and I would like to explore her questions further, and then perhaps I can write to the Committee when it is clear to me what the right replies to those questions are.

I will attempt to comment on the amendment that the noble Lord, Lord Coaker, has just talked about, on why government departments do not have the same obligation to have regard to recommendations under Clause 97. It is a simple question, and our response is that it is not necessary to include government departments in Clause 96 and 97, because the appropriate authorities have sufficient influence over contracting authorities to ensure that any recommendations that result from an investigation are duly taken into consideration. To confirm, investigations, findings and progress reports may be published by the relevant authority acting as a further incentive. It is simply unnecessary to provide statutory powers in respect of government departments, whereas due to the different relationship with non-central contracting authorities, statutory powers were required to ensure appropriate engagements for these purposes. As noble Lords will know, we have quite a well-developed procurement operation now, right at the heart of Government, sitting in the Cabinet Office, which I think is an improvement. That is why it is not provided for in the Bill.

Just before I leave voluntary standstills, let me say that I will make sure we come back properly on the exchange we had earlier. We want to maintain voluntary standstills for dynamic markets—they are intended to be quick to use, agile and efficient, as we heard from my noble friend Lord Lansley—and for light-touch contracts, which are often for time-sensitive services such as the provision of health and social care. We do not want to make the light-touch contract rules stricter in this regard than current legislation, as we think that could lead to some problems.

Amendments 349A, 349B and 353A were tabled by the noble Lord, Lord Wallace of Saltaire, and others. They seek to legislate for the procurement review unit with a new clause. The procurement review unit, which is very important, is not specifically referenced in the Bill as it will be exercising statutory and non-statutory powers on behalf of Ministers. The proposed new clauses would therefore conflict with existing provisions. Furthermore, considering the importance and potential implications of the decisions the PRU will support the Minister of the day in making—the proper statutory process—we believe it would be inappropriate to delegate that ultimate responsibility to unelected officials below ministerial level.

The PRU will work on behalf of the Minister of the day in two key areas. The first area is debarments. Clauses 56 to 61 set out the process for the establishment of a debarment list of excluded and excludable suppliers; this has already been debated. Under these clauses, it is envisaged that the PRU will investigate whether a supplier is subject to an exclusion ground and whether the issues in question are likely to arise again. The PRU will issue advice to the relevant Minister, usually the Minister for the Cabinet Office, who will take the final decision whether to add the supplier to the debarment list.

The second area is improving compliance with the Bill. Clauses 96 to 98 provide the framework and statutory powers required for carrying out procurement oversight. The PRU will exercise these oversight functions on behalf of the Minister and make proposals regarding any investigations, recommendations and statutory guidance it considers appropriate for the Minister’s ultimate approval.

[Lord Fox (LD)]

My Lords—

[Baroness Neville-Rolfe (Con)]

I will have a little more to say about this later on, so why not let me finish? If I do not answer the noble Lord’s questions, we will try to get at what is needed.

Amendments 477 to 480 seek to examine why government departments have been excluded from the appropriate authority’s investigatory powers. The definition of “relevant contracting authority” in Clause 96 is in recognition of existing governance. Ministers already have the authority to investigate government departments without the need for statutory powers; I think I have said that already. There are also established routes for co-operation with investigations.

Amendment 477A was tabled by the noble Baronesses, Lady Thornton—it is good to see her in the Committee—Lady Hayman of Ullock and Lady Bennett of Manor Castle, and the noble Earl, Lord Devon. Amendment 482 was tabled by the noble Baroness, Lady Noakes. These amendments would expand the scope of the statutory oversight powers beyond compliance with the Bill, straying into areas of policy. The scope of the statutory powers provided by these clauses has been carefully drafted to maintain the boundary between law, which must be adhered to, and policy, where some leeway is allowed in terms of its implementation.

Expanding Clause 96 and/or the Section 97 recommendations to include social value, as well as considering how contracting authorities have chosen to meet obligations to have regard to policy and principles, would blur that boundary and start to erode the autonomy of contracting authorities, which we recognise are best placed to make policy implementation decisions that are appropriate for their business. It would also move the statutory regime away from objective and measurable concerns into more subjective areas of debate, which could impact the effectiveness of the oversight system. We believe that the scope of Clauses 96 to 98 creates a proportionate, effective and compelling incentive for improvement. It is worth noting, however, that the drafting of Clauses 96 and 97 does not prevent the Minister from making observations regarding a contracting authority’s policy implementation. Policy guidance can indeed continue to be provided to contracting authorities.

Non-statutory procurement policy notes, which we have discussed before, are currently released to guide contracting authorities. In the new regime, under Clause 98, statutory guidance, which may be published as a result of investigations, can also address matters of policy. Contracting authorities will be required to have regard to any guidance released under Clause 98; I think this helps to deal with the social value issue. The removal of Clause 97(3) would result in the appropriate authority having the power to intervene in specific procurements.

The restriction in Clause 97(3)(c) ensures probity of the procurement by, for example, preventing a Minister of the Crown from using Section 97 to exert influence over which supplier is awarded the contract. That is an important point. To remove this restriction would be concerning to contracting authorities and suppliers alike.

Finally in this group, the noble Baronesses, Lady Thornton and Lady Hayman, and the noble Lord, Lord Coaker, tabled Amendment 486A. This seeks to stipulate that the expertise of SMEs, voluntary organisations and social enterprises is accessible to an appropriate authority that is conducting investigations under Clause 96. The PRU will be managed and delivered by a small, experienced team of civil servants based in the Cabinet Office, supported by a panel of experts, which can be consulted regarding investigations and any resultant Section 97 recommendations and guidance under Section 98. The Cabinet Office aspires to provide perspectives from procurement experts from across the Civil Service, local authorities and various types of private organisations, including SMEs and VCSEs, to benefit the oversight regime.

However, it should be recognised that having a panel which includes external procurement professionals is dependent on the availability of suitably qualified individuals and the ability to manage any potential conflicts of interest. I am therefore unwilling to make a legislative commitment of the kind proposed. However, the establishment of the panel will be transparent, and appropriate documentation will be published in due course, including on the process for appointing members. It seems to me that this is an important error, which is why I make that point.

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[Lord Fox (LD)]

Following on from that, if the Secretary of State can give and the Secretary of State can take away, and we have no sense that this panel will endure past the next government reshuffle—which could be any time now—without having it in either primary or secondary legislation, what status does this have at all other than the good will of the then Secretary of State?

I refer again to the Government’s response to the consultation: the role of the PRU was very specific. It was aimed to deliver the same service as the public procurement review service—and perhaps the Minister could tell us whether that is being disbanded and folded into the PRU; will it still exist or what? The response stated that

“the PRU’s main focus will be on addressing systemic or institutional breaches of the procurement regulations”.

The Minister has narrowed that down to debarments and compliance. It seems there really has been a declawing and a removing of this body from any statutory basis. As my noble friend points out, it is not very clear which the appropriate authority would be in those circumstances.

[Baroness Thornton (Lab)]

I might as well intervene now too, because the question I would really like to ask the Minister—and it is very nice to see her back in her place, as she was the Minister responsible for putting equal pay on the statute book, and I hope her progressive instincts there might be followed through in this piece of legislation—is about social value. How do we deliver social value if there is absolutely no way of examining it, monitoring it and enforcing where it is not being delivered?

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[Baroness Neville-Rolfe (Con)]

We have put together this whole new system of procurement, which includes various checks and balances. Panel members will be available for the procurement review unit to help regarding investigations and the unit’s work. Their reports and recommendations will help with moving forward on procurement and the complexities of this change of the law. Their advice can be published, and we will be able to reference the assistance that the panel has provided. That is the approach that we are proposing following a process of consultation. The PRU is central. I am sure we will revert to this issue.

[Lord Fox (LD)]

The Minister will have got the message that there is deep disquiet about how this will be structured and will operate. If the Minister has time, can she reflect on Hansard and write a letter before Report setting out how this unit will be set up and what its roles, on a statutory or non-statutory basis, will be? That would be very helpful.

[Baroness Neville-Rolfe (Con)]

Of course, I will write setting out how this will work. I ask the Committee to look at it constructively in the light of what we are trying to achieve across a very wide area of procurement. I go back to where we started in Committee, as this is probably the final amendment this evening, and say that there is also a process of cultural change, training and so on that will be going on, which is an important complement to the investigatory powers that we are looking at in this amendment.

I respectfully ask noble Lords not to move their amendments.

Economy: The Growth Plan 2022

Lord Fox Excerpts

Monday 10th October 2022 Lords Chamber

[Lord Fox (LD)]

My Lords, I too welcome the Minister to her new position.

The current Prime Minister says that she is focusing on growth and, seemingly, she believes that almost the entire rest of the world are enemies of growth, yet her view on who the culprits are is not really supported by the track record of the government incumbents. For example, how does it help when we had a BEIS Secretary, now our Chancellor, turn his back on the industrial strategies that were effective growth partnerships with the Government? How does it help when the badly botched Brexit deal has created so much extra red tape that many businesses have stopped exporting altogether? How does it help when the Tories create duplicate regulations such as UK REACH, which has caused billions of pounds of extra costs for our chemicals industry? How does it help, when all sectors are facing chronic shortages of people and skills, to have a Home Secretary who is quoted as saying that there are too many immigrants in low-skilled jobs? She should have said that because training has been so badly neglected, there are too few British people in high-skilled jobs. High skills boost productivity.

However, the most effective enemy of growth is instability. In just over three years, we have had three Conservative Prime Ministers. Each enters No. 10 decrying and overturning the efforts of her or his predecessor. It is very difficult for businesses to justify investing with these political shifting sands.

Last month’s fiscal statement has created yet new levels of instability. To summarise the external view, I will quote the highly respected former US Secretary of the Treasury, Larry Summers:

“The UK did not have room for a massive ineffectual fiscal expansion. The uncontained energy subsidies were themselves substantially problematic and did not leave room for large, permanent tax cuts. That called the credibility of the government into substantial question.”


As we saw, once this credibility was called into question, all hell broke loose. Just one consequence of that is the cost of business financing, which has increased materially.

These rising rates come against a backdrop of near-record levels of SME debt. The banking trade body, UK Finance, puts borrowing by small businesses at over £200 billion. About half of that debt is loaned on floating rates, which means that the cost of servicing is rising every day. With the number of company insolvencies in England and Wales already at a 13-year high, it bodes very badly.

As the Budget debate unfolded and the debacle became clear, the Prime Minister sought to distance herself by focusing on the previously announced energy cost measures. As we heard from my noble friend Lord Newby, despite their flaws, this principle is broadly welcome—but remember that domestic energy costs remain at least twice those of last year. That is what we should be thinking about when we think about benefits.

However, the business scheme has a major flaw to which I would like the Minister, the noble Lord, Lord Callanan, to respond to specifically at the end. Based on the terms of the scheme laid out by the Government, only businesses that signed a fixed agreement after 1 April 2022 and those on variable rates will benefit, so businesses with energy agreements signed before this date do not get a subsidy to their unit prices. I ask the Minister to write to me with the Treasury estimate of the number of UK companies missing out on the subsidy due to this cut-off and its estimated impact. I ask him to undertake at the Dispatch Box today that the Government will review this cut-off.

In conclusion, when it comes to diagnosing the cause of our country’s problems, the Conservative Party needs to look in the mirror. The enemies of growth are politicians whose ideology drives out realism, Cabinet Ministers for whom blind faith eliminates proven expertise and a party for whom policy purity transcends common sense.

Procurement Bill [HL]

Lord Fox Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

[Lord Wigley (PC)]

My Lords, I want to address the change in relation to Scottish law. Before doing that, I will pick up the point made a moment ago by the noble Baroness, Lady Noakes, with regard to the influence of European terminology. She will not be surprised to know that I have no problem with the influence of European terminology; if we are to hunt all European influences out of our legislation, it will take a very long time and leave quite a lot of uncertainty around the place. None the less, I take the point she makes with regard to the substance of the implications, and the question of a capacity to influence is a very important consideration. If a capacity to influence exists, that may have an ongoing impact without it being written in black and white. That has to be taken on board.

I want to ask the Minister about the change to get in line with Scottish law. If there is in future a change in Scottish law or a change in the ruling in the courts in Scotland, presumably that could have an implication for the way in which the Bill, when enacted, works out. Does that mean there will have to be a review every time there is a change in Scotland that might impact on this, because we are working within one market and we need to make sure there is consistency running through this? Perhaps I can park that question with the Minister, as it is a relevant one that arises from what he said.

[Lord Fox (LD)]

My Lords, at the beginning of the Committee the Minister had a teaser with his announcement. It is very clear that he is not going to resign, because no Minister would put himself through this process and then resign. We can be clear about his intentions.

The noble Baroness, Lady Noakes, said that she was interested in this and that perhaps some of us might not be. I am interested. Both the noble Baroness, Lady Noakes, and the noble Lord, Lord Moylan, have made important contributions to this group of amendments.

Since Monday, much industry has proceeded. We have new groups of amendments and, as the noble Baroness, Lady Noakes, pointed out, we have explanations for those amendments and what they seek to achieve. We thank the Bill team and the Government Whips’ Office for that hard work, which cannot have been easy. We also had a meeting with the Bill team this morning, which has helped us somewhat.

This is progress, although I always like to spoil praise by saying that we really should not have been starting from here in the first place. This is vital legislation that will set the scene for procurement right across our country, and the details need to be correct. We have started to hear that, in just one area, the details remain very much open to question.

Some of the amendments in this group are relatively small changes, including Amendments 10, 12, 16 and 17; others are trying to do a bit more. As we heard from the Minister, Amendment 11 rights a problem that was identified by both my noble friend Lord Wallace and the noble Lord, Lord Coaker, of groups of local authorities working in tandem.

I welcome that the Government have taken the advice of the LGA, but it seems slightly strange that it was sought or delivered after Second Reading rather than some time before it. One of the problems we sometimes have with the Government is that they forget the central role of local authorities, particularly in something like this. Local authorities should have been front and centre in the process of writing this legislation, but, far from it, it seems that they are something of an afterthought. That is where some difficulties are emerging, because, in a sense, we are trying to bend things back to fit local authorities when they should have been framed for local authorities in the first place. This amendment is welcome, with the caveat that we need clarity.

The noble Baroness, Lady Noakes, brought up the issue of clarity and the lack of definition. We heard the result of one of the legal cases that went to the European Union, the Teckal exemption, set out by the noble Lord. Most of the controversy of the European legislation has been hammered out in courts. As I said on Monday, we are spoiling for lots of legal fights in this legislation because of the loose definitions, absence of definitions and cross-definitions. I completely take the point made by the noble Baroness, Lady Noakes, that if we try to write across something using terms which do not appear in the UK lexicon of company law, we will be starting from first principles in the court in order to define them. That will not be in the interests of any government business or of local authorities. We need a clear and legally binding understanding of what all these terms mean. The Minister must use either the Dispatch Box or the legislation—preferably the latter—to clear up that ambiguity.

The second part of Amendment 13 is an example of what the Government giveth the Lords taketh away. Having cut across the public contracts regulation and removed exemptions for public undertaking and private utilities, as I understand it the Government are, with this amendment, replacing those exemptions and focusing this vertical exemption only on public utilities. As far as we are concerned, that is perfectly fine, but again, this is an example where the Bill has had to be corrected because of missing points that cut across. There are so many cross-cuts in this legislation.

Amendments 15 and 16 are another example. Here, as the Minister set out and as the noble Lord, Lord Wigley, requested, “legal activity” has meaning in Scotland and not the meaning that the Government intended for this Bill. We now have to choose something that has no meaning at all, which is “legal services”. In the words of the Government, there is a flexible definition for this. We are being asked to put a flexible definition into the centre of a Bill. I am not keen on this sort of flexibility of language, and this is another example of flexible or misunderstandable language being put into legislation. We are looking for clarity from the Minister. If it is not Pepper v Hart clarity, we need clarity written into what we have. On some of the issues mentioned by the noble Baroness, Lady Noakes, the noble Lord, Lord Wigley, and others, we need to remove that “flexibility” from our language in the Bill.

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Amendment 532 would require regulations making above-inflation increases to the financial thresholds on publishing specific notices subject to affirmative resolution. It is clear that such thresholds will need to be amended over time to take account of inflation and other such economic changes. In addition, our expectation is that as contracting authorities adjust to the administrative burdens of publishing such information, over time the threshold may be lowered to increase transparency, but we may also find that some types of contracts and some types of contracting authority benefit from higher or lower thresholds. The power proposed in the Bill will therefore allow regulations to set a more targeted and appropriate threshold, based on experience as the regime develops. We believe that these thresholds are not a matter that justifies the fullest examination, in terms of parliamentary time, to oversee and therefore we have proposed the negative procedure. However, again, while we cannot support this amendment, we will consider this further alongside the other recommendations from the DPRRC.

[Lord Fox (LD)]

I appreciate the comment the Minister has just made. This is a straight question: under what circumstances would these thresholds be changing, other than the GPA change? This would either be with or without inflation—inflation has nothing to do with it; the GPA has so far determined what these thresholds are. I am a little confused about what power the Government were seeking in the first place with this.

[Lord True (Con)]

I believe that there may be potential, for example, for an evolution in the nature of the regime. However, I will come back to the noble Lord with further examples, if that is helpful. We can add that to the list of matters to take up.

Finally, the noble Baroness, Lady Hayman of Ullock, quite understandably expressed concerns about Clause 109. This is specifically related to private utilities; it provides a power for an appropriate authority to reduce the regulation of private utilities under the Bill to reduce regulation. As the Bill provides at Clauses 81 and 89, contracting authorities owe a duty to treaty state suppliers to comply with a substantial part of the Bill. The power can be exercised to make amendments only where those amendments do not put the UK in breach of its obligations to those suppliers, and this will inherently limit the scope of the amendments we are able to make. For example, private utilities will still be required to publish tender notices and contract award notices.

Private utilities are covered by the Bill where they have been granted a special or exclusive right to carry out a utility activity, where that right substantially limits other entities that have no such rights carrying out those activities. The clause requires the appropriate authority to consult persons representing the views of private utilities and other appropriate persons prior to making regulations. The Government, quite rightly, would have to seek the approval of Parliament under the affirmative procedure for any deregulation measures.

While those are the explanations, I have tried to give the Committee a detailed explanation on each of the amendments of the Government’s position and view. I return to the fundamental point I set out at the outset: we are giving, as I have indicated as we have been going along, proper consideration to the recommendations of the Delegated Powers and Regulatory Reform Committee. We intend to return to this on Report, in cognisance and consideration of what noble Lords on all sides have said.

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[Lord Wigley (PC)]

My Lords, I want to raise one narrow aspect; that of Dŵr Cymru, Welsh Water. The position of Welsh Water is somewhat different from that of the other water providers within England and Wales; I think the situation in Scotland is different again. Dŵr Cymru is a not-for-profit company, and the assumption and understanding is that nothing in the Bill undermines the capability of the Welsh Government to award the contract within the service area of Dŵr Cymru to a not-for-profit company of this sort. Quite clearly, that has a different impact than if that market was open for competition on a profit-making basis.

The performance of Dŵr Cymru is generally in most areas regarded as having been very satisfactory. There are ongoing arguments about quality of river water, et cetera, and noble Lords will be aware of those, but with regard to the provision of water, there is no wish—certainly at present, and I cannot foresee one in the near future—for there to be anything that disturbs that apple cart. I hope that the noble Baroness will be able to give an assurance on the record in this Committee that nothing in the Bill can, in any circumstances, undermine the ability of the Welsh Government to award the franchise for providing water in Wales to a not-for-profit company such as Dŵr Cymru.

[Lord Fox (LD)]

My Lords, very briefly, I thank the Minister for her clear statement. The subject of utilities has come up both on Monday and today, and we are beginning to get some clarity around how the whole utility story fits together, but anything more she can give us on that would be helpful. This is probably not helpful, but it seems to me to be an analysis of the issue. The majority of the trade deals to date are essentially rollover trade deals, and to paraphrase the noble Baroness, Lady Noakes, this legislation is essentially rollover legislation. However, trade deals such as the Australia deal are not rollover trade deals. We are in danger of trying to pour new wine into old skins here.

The issue that my noble friend highlighted here is an example where the new-style trade deal is not easily catered for in the old-style legislation, which is essentially rollover legislation. I am not sure what the solution to that is, other than “more work needed”, but I think—and this is a dispassionate and hopefully helpful observation —we are looking at a new trading position. The Government talk about that all the time, but we are essentially looking at legislation that was dealing with an existing set of trade deals which are, by their nature, different from the new ones. This is what is being thrown up, and we will start to see problems thrown up increasingly.

[Lord Berkeley (Lab)]

To go back to Amendment 20, the noble Baroness gave some useful explanation of the definition of a utility. I want to go on briefly to the example that the noble Lord, Lord Purvis, mentioned, which is freeports. That presumably comes under paragraph 5 of Schedule 4, on page 86. It is not clear to me whether any of the activities of a freeport are exempt or not. In other words, the freeport gets a load of money from the Government, but does it have to comply with the procurement regulations and everything else in the Bill? Does it have to be transparent about how it complies, whether it has sent out for three quotes or whatever, and whether the contracts have been awarded fairly? That is one example, and I expect there are many others in other sectors. It would be interesting to know because when we get to Schedule 2, there are so many different definitions in there that it is quite difficult to understand which applies to what. I am sure that, at some stage, the Ministers will try to give us some examples of all these different issues on page 81.

Procurement Bill [HL]

Lord Fox Excerpts

Committee stage
Monday 4th July 2022 Grand Committee

[Lord True (Con)]

My Lords, I will have to be advised on that. I have been advised that they are the result of discussions. If that is not the case, I will set the position clearly and straightly when I come to wind up the debate. I have been led to believe, and know from my own involvement in the matter, that there has been a good deal of agreement between the United Kingdom Government and the Government of Wales. I will certainly confirm that in winding up.

The group also contains a number of technical amendments which are required to ensure that provisions relating to the Bill’s application in the devolved Administrations function properly.

To repeat what I said at Second Reading, I regret that the Scottish Government have opted not to join the Bill. They will retain their own procurement regulations in respect of devolved Scottish authorities. I am sure we would all welcome our Scottish friends if they wished to join the new system proposed by the Bill. Taxpayers and public services alike across the whole United Kingdom would benefit from that. However, at this juncture I am able to lay only those matters requested by the devolved Administrations in Wales and Northern Ireland. I beg to move.

[Lord Fox (LD)]

My Lords, I thank the Minister for his apology at the beginning, which I believe to be sincere and heartfelt. I also thank him, I think, for his introduction of the first of these 50 amendments; it was relatively short, given that they come with little explanation. It is said that there is a productivity crisis in this country—not so in the Cabinet Office amendment-generation department. The Minister can be proud of its performance.

More seriously, I commend the Bill team and the Government Whips’ Office, who have been wrestling with this leviathan of amendments, not least over the weekend. I thank them for their hard work. I will return to the process we are facing after making a few comments on the amendments, particularly around the covered procurement element.

Amendment 1 and several others seek to clarify things by defining covered procurement. I remain confused about where this phrase comes from and why it was necessary. There was no sense from the Minister’s introduction as to why it was necessary to come back after Second Reading with a new phrase. Can he say where this term comes from? Is it employed elsewhere in legislation? I think it is in contract law but it was difficult to find other manifestations of it. I should remind the Minister that, every time a new term like this arrives in legislation, it proliferates a great deal of other legislation because each new word or term will be tested to the limit in the law. If we start bringing in new terms such as this, the Bill will be a lawyers’ enrichment fund—I can see the lawyer opposite nodding in agreement—and that is not a good thing for the country or for government.

In his discussions, the Minister said that many of these new amendments came from consultation that was subsequent to Second Reading. Avoiding the obvious question as to why Her Majesty’s Government did not consult more beforehand, I would like to know which organisations and individuals put forward the need for this change. My guess is that it was not an external force but an internal one, and possibly that the Cabinet Office, having used one lawyer, decided to use a different one who had a whole set of different opinions on the legal nature of the Bill, and that is where the vast majority of these amendments have come from. Far be it from me to say what the benefits are of changing a horse half way across a stream, but we are, I suspect, reaping the consequences. If I am wrong, I am happy for the Minister to tell us so or to publish the consultation that happened subsequent to Second Reading. I will be happy to admit that that was not the truth.

As we noted at Second Reading this is an important Bill, dealing as it does with the technical process for managing a considerable amount of money spent on behalf of the British people by public institutions. We support this process. We noted that it needs to be in the public interest, as well as providing value for money. The objective of this Committee process should be, and should remain, to have a proper debate around how such issues are brought to the fore in this legislation. However, because of the sheer incompetence of the Cabinet Office—a Cabinet Office that, I note, recently published its guide to improving the quality of the legislative process—we are instead pulled into a debate around process.

During Second Reading, there seemed to be a measure of good will. My noble friend Lord Wallace spoke about the need for a co-operative process and the Minister seemed to agree. Subsequently, as the Minister has pointed out, with fewer than four days before the first day in Grand Committee, we were confronted with 350 government amendments. That could have been managed in a co-operative way, but that did not happen. Even if we had to have the amendments, to drop them with no warning so near to the process was an inappropriate way of being co-operative.

Then, at 8.56 am on Sunday, which I remind everybody was yesterday, we all received an updated grouping of amendments. In this, there were 77 changes from the document we had received on Friday—I repeat, 77 changes—with the shape of the groups radically changed. For Members to be presented with so many changes, and then for those changes to keep on moving, right up to the wire, is unacceptable. I stress again that this is not the fault of the Government Whips’ Office, which I suspect was kept at work all weekend thanks to this process and the Minister’s insistence that we plough on with the Bill in the way that was originally planned.

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[Baroness Noakes (Con)]

We have not received it.

[Lord Fox (LD)]

I will correct my speech. It has not even been received by all the interested parties, which makes it worse.

Furthermore, to date, the Cabinet Office has not provided proper explanatory statements for each of the new government amendments. There is nothing in the current Marshalled List. The eighth group, which we had planned to debate today, contains a group of amendments that was wholly absent from the Minister’s original letter and the table that some, if not all, of us received when that letter came. Essentially, we have had no time—hours, at best—to consider these amendments.

More than that, the Minister stressed the value of the external community and the input we get from interested parties in this legislation. Those interested parties have not had a little time to consider these amendments; they have had no time. They are not on the record for those bodies that can feed in and positively reinforce your Lordships’ legislative process. We are missing all that. So never mind the unintended consequences of this legislation—we do not even know what the intended consequences are.

For this reason, I put the Minister on a warning that I will object to each of his amendments. When the Question on Amendment 1 is put, I will be not content. My understanding of the process is that, in Grand Committee, this will mean that the amendment will need to be withdrawn.

[Baroness Hayman of Ullock (Lab)]

My Lords, where do I start? This is a really important and long-awaited Bill, so it is incredibly disappointing that, after so much time, the Bill was not fit to have been published when it was. With all these amendments, it is quite different from what we debated at Second Reading, even if many of the amendments are technical and there to tidy up. The Government really should have thought about this and got their act together before the Bill was published in the first place.

I know that the Minister is someone we can work with constructively on Bills—I appreciate that—but the Government’s incompetence over the weekend and the way this has been done challenge our ability to work together constructively. That is something else that disappoints me personally. As the noble Lord, Lord Fox, pointed out, it puts too much pressure on staff, who were expected to try to pull this Bill into shape over the weekend.

I reiterate completely what the noble Lord, Lord Fox, said about providing proper Explanatory Notes rather than annexe A, which was very thin on information and, in some cases, did not cover everything that the amendments were about. I spent most of the weekend trying to get my head around a lot of these amendments and cross-reference with the annexe. This is an important Bill and a lot of it is technical. I am not a procurement law expert, so I need support in the Explanatory Notes to understand exactly what is happening and what the amendments will do. When we are cross-referencing and trying to make sense of things, it is hard. As a member of the Opposition, let me say that this is not just about holding the Government to account; as I said, it is about working constructively to make legislation better. The Government have not helped us to do this.

My plea to the Minister is that we really need to move on from this and make sure that we can scrutinise Bills in a much better way. We are where we are with the Procurement Bill.

I totally understand and support what the noble Lord, Lord Fox, said about objecting to some of the amendments, because all this has been deeply unhelpful. Okay, we will do only three groups today, but at some point we have to get stuck in. It took me over two hours yesterday to go through all the amendments in group 1—group 2 has about three times that number. If we are going to do this properly, and actually look at the amendments rather than take the Government’s word on what is in them, it will be very time consuming.

I am afraid I am going to share with noble Lords some of what I did yesterday. It needs to be spelled out how complicated and confusing it is when we try to manage something such as this. Obviously, I started with group 1 and the proposed new Clause 1, which is about procurement and covered procurement. I read the amendment. I did not really understand what covered procurement it is, so I looked at section 5 of annexe A, which is just definitions; there is no further information. I still do not really understand the implications of changing this terminology. That is something we need to get across to the Government. We need to know exactly what is happening. This also has an impact on Amendments 55, 301, 405, 406, 408, 411, 416, 453 and 454. This affects many parts of the Bill, so we have to understand what is going on here.

I then looked at Amendment 172 to Clause 30, which would delete the word “procurement” and insert

“the award of a public contract”.

Apparently this is in annexe A, sections 3 and 8. Section 3 just says “replaces references to associated supply with associated person and expanding the concept”, but again, why? Why is that important? Why do we have to do that? Section 8 is about ensuring clarity on how a contracting authority must treat a supplier. Why do those changes do that? What is the purpose behind changing the terminology?

We have talked about the devolved Administrations. Amendments 282 to 285 to Clause 51 are about Northern Ireland. This is covered by sections 26 and 27 of annexe A, which say that “contract deal notices in respect of light-touch regime contracts must be published in 180 days.” Again, there is no proper explanation of how that affects Northern Ireland and what it means for the way it carries out procurement.

Moving on, I came to Amendments 342, 349, 356, 378, 380 and 383, which also refer to Northern Ireland, and Amendments 392 and 433, which refer to Wales. But the annexe also mentions Wales for the amendments that are supposed to be about just Northern Ireland, so it does not cover everything that the amendments say they do. I had had about four cups of coffee by this point just to try to keep going.

Amendments 377, 381, 385 and 387 would insert the word “was”, but the parts of the Bill they would amend already have the word “was”. Again, I am really confused about why we need another “was”.

Amendments 379, 382, 386 and 388 would insert

“as part of a procurement”.

If that is something that needed to be spelled out, I find it extraordinary that it was not written in in the first place.

Amendment 389 would delete subsection (10), which says:

“This section also does not apply to … defence and security contracts, or … private utilities.”


That is not tidying up or technical; it would delete a subsection that says something. I ask the Minister: what does that actually mean? What does it do? Why is that subsection being deleted? What is the purpose behind it?

Amendment 390 would delete a paragraph that reads,

“the value thresholds in subsection (2)”.

Again, it is not a tidying-up but a deletion. What does this actually mean? I am sure I am confusing everyone here because they do not have the Bill in the right places in front of them—I could read out the actual page numbers, if noble Lords want.

Amendment 391 would delete “in subsection (7)” on page 46, line 9. Why are those words being deleted? What is the purpose behind it?

Amendment 395—there are a lot like this—would delete “supplier” and add “person”. If this terminology was wrong, why was it not picked up so much earlier, when the Bill was being first drafted?

Amendment 424 would delete

“the award of a contract”

and insert “procurement”. Again, if that is the terminology that should have been used, why was it put in wrong in the first place?

In Amendment 425, “unless it is awarded” is to be deleted and “other than procurement” inserted. Those do not really seem the same to me, so what is the point of that change? What are the Government trying to do?

Amendment 426 would delete paragraph (c) on page 50, line 18:

“in relation to the management of such a contract.”

Why do we need paragraph (c) deleted? What is the purpose of it? Annexe A does not tell us any of this information.

Amendment 437 says:

“Page 53, line 3, leave out paragraphs (a) and (b)”.


Why are we deleting paragraphs (a) and (b)? What is the purpose and what are the consequences?

Amendment 438 says:

“Page 53, line 17, leave out ‘or services’ and insert ‘, services or works’”.


That seems the sort of thing that should have been drafted correctly in the first place.

Amendment 439 says:

“Page 53, line 26, leave out from ‘procurement’ to end of line 27”.


That is also the same in Amendment 462. Again, it looks to me like something that should have been done properly in the first place.

Amendment 440 says:

“Page 53, line 37, at end insert”,


and noble Lords can see the words on the Marshalled List—there is a lot there, and I really do not think that anyone wants me to read it all out. Again, this is not a technical adjustment but inserts quite a substantial amount of text. What are the implications? These may all be marvellous changes that benefit the Bill, but the point is that we do not know because we do not understand what is going on here.

Amendment 463 would delete subsection (8) on page 57, line 7. Amendments 439 and 462 do the same thing. What is the purpose of deleting subsection (8)?

I will not cover Amendment 528, because it has been moved to a different group. Noble Lords will be glad to know that I have only two left.

The annexe says that Amendment 540 is to define expressions. It inserts “covered procurement” and “debarment list”. What does “covered procurement” mean? Why does it reference the “debarment list”? That is similar to Amendments 542 and 543.

I will finish there. I just wanted to get across to the Committee and the Minister how very confusing this is and how little back-up information we have. We want to work constructively with the Minister. We want this to be a good Bill. For goodness’ sake, we just need to be able to get it sorted.

--- Later in debate ---

[Lord True (Con)]

My Lords, I was going to make a proposal. The legislation obviously reflects our existing international obligations, including the TCA, but this is not the only definitional point that has been raised. I cannot find the others in my notes but the noble Lord, Lord Berkeley, for example, asked about a centralised procurement authority. A centralised procurement authority is a body that sets up procurement or purchasing arrangements for use by other contracting authorities; examples would be the Yorkshire Purchasing Organisation or the Crown Commercial Service. That is one definitional issue. The noble Lord asked about the meaning of “state” in Amendment 440. That refers to a country with which we have an international agreement.

It is regrettable that this should happen after we have had this debate. Having heard the strength of feeling expressed by your Lordships on these amendments, especially the definitional ones such as the definition of “covered procurement”, I will ask my officials to hold a technical briefing on these matters for interested Peers. I will ask for invitations to be sent out by my office after the debate, in the hope that some of these points can be clarified. I know that is not to the greatest convenience of your Lordships because the Committee is due to come back on Wednesday, but it should help further to explain the rationale and necessity for some of these late amendments, which were advised on us by our legal advisers. I or my office will be in touch with noble Lords who are here with that offer, so that we can undertake that.

I was asked by the noble Lord, Lord Purvis of Tweed, about the impact assessment. Again, we will reflect on that point but my advice, even in the light of these amendments, is that as there has been no change to the general policy intent of the Bill, there is therefore no change to the costs and benefits of the impact assessment. I am therefore not advised that it is necessary to revise it, but I will second-guess that advice in the light of the noble Lord’s contribution. Although there are wording changes, to take up what my noble friend Lord Lansley said, the general intent of the Bill remains the same.

On the question of the devolved Administrations—obviously, there is a particular issue at the moment in the case of the Northern Ireland Executive, which is why some of these matters are ongoing—I am grateful for what the noble Baroness, Lady Humphreys, and the noble Lord, Lord Wigley, said about the sense of co-operation. I believe that is reflected in both directions. I was asked whether all these things had yet been formally agreed. As I understand it, most of these amendments have been; some have been agreed and discussed at official level but may not technically have been signed off by Ministers. It is certainly our intention and, I believe, the Welsh Government’s intention that we will reach full and constructive agreement, which will enable the proposals to be recommended to the Senedd. This has been an area of good and striking co-operation. I say publicly to the Committee again how much we appreciate that, as I did in my opening remarks.

I hope I have briefly dealt with the question of “covered”, “not covered” and some of the other definitional things. I hope that the further formal briefing I have offered can be arranged at a convenient time for most Peers tomorrow, and will go some way to answering this. I give a commitment that, when we go forward, I will not accept to lay before your Lordships and take to a vote something where there is no proper explanation of the individual amendments in the manner that the noble Baroness opposite quite rightly asked for. There should be a clear explanatory statement. I will ask for that to be done in respect of the amendments that are coming forward to explain the whys and whats in detail, and how the various groups interlock. Again, I will not tell tales out of school, but one of the issues is that there are interconnections between these different groups and how they have been sliced. I repeat that commitment.

[Lord Fox (LD)]

I thank the Minister for that. I do not think he answered the question my noble friend asked. Accepting that government Amendment 1 will now be withdrawn, will the government amendments in this group, from Amendment 47 to Amendment 543, be retabled for us to have a proper debate on each of them? As the noble Baroness set out, there are a lot of questions around each of them, none of which have currently been addressed. I am unclear on the mechanism by which those amendments will be retabled. Can the Minister confirm that that will happen so that we can have a proper debate on those amendments?

[Lord True (Con)]

I will have to take procedural advice on that. My understanding is that if I withdraw Amendment 1 it is not the case that the group has been negatived and therefore that the other amendments do not lie on the Order Paper. The Government would obviously have preferred, despite all the justified criticisms—

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[Lord Moylan (Con)]

No, I am delighted. It adds much illumination.

[Lord Fox (LD)]

We can have more of you.

[Lord Moylan (Con)]

You could have more of me, my Lords, but I will simply say that I know nothing about ports. However, I know a little about airports and they are technically subject to economic regulation by the Civil Aviation Authority. It is true that that authority has, through its own risk assessment, decided that only Heathrow Airport will be subject to full economic regulation. Gatwick and Stansted are subject to some, while most other airports are not economically regulated; that is, they can set their own charges and if people do not want to fly into their airport, they will fly to another. It is not entirely true, it is fair to say, that where it matters airports are not economically regulated, because they are. I suppose that the Civil Aviation Authority could always reverse its decision, if it saw fit. It has the power to expand economic regulation to other airports if that were felt necessary. Having added that, I shall subside and look forward to my noble friend’s response.

[The Earl of Lytton (CB)]

My Lords, this is my first intervention on the Bill because on the day of Second Reading I was convalescing at home and not allowed to go anywhere.

On this business, regarding utilities, I am afraid I come at this from a simple property professional’s standpoint. It always used to be gas, water, electricity, drainage and telecoms; those were the utilities on which people relied for the use of buildings and property of all sorts. We seem to have dropped drainage, for reasons I cannot quite understand, when it is merely the dirty-water function of the clean-water provider of drinking water, which is referred to.

I declare my interest as one of those who serve under the chairmanship of the noble Baroness, Lady Neville-Rolfe, on the Built Environment Committee, as do the noble Lords, Lord Moylan and Lord Berkeley. I am very privileged to do that. Last week, when we were talking about the Product Security and Telecommunications Infrastructure Bill, it was noted that the very purpose of the telecoms giants was to try to convince government that they were a utility, should have utility powers and should, encompassed in that, have certain powers of coercion. They have come into that from the private sector, whereas dear old British Telecom, aka Openreach and a few other things, has come at it from the other direction—the hardwired traditional utility standpoint that was protected, with all sorts of powers to acquire wayleaves and so on.

The noble Baroness referred to imperfect policy development. I almost got up and said “Hear, hear” to that, because we need to start sorting out what exactly we mean by these utilities that look in lots of different directions. Some of them are very commercial—some are very controversial—and others come from a highly and necessarily regulated background because they are important for health, stability and all sorts of other basic things that require regulation as to quality and quantity in the essential needs of the public. It is not so much the voluntary needs, and perhaps even less the voluntary needs of business, but the essential needs of the public.

We seem to have an increasing muddle between what may be regarded as that essential element that has to be regulated for the purposes I have suggested and the wider commercial endeavour that goes with it. Because that distinction has been made ever less clear, for reasons that I perfectly understand—the utilities were privatised for reasons to do with funding, and I do not pass judgment on that—like Voltaire’s Candide I stand here noting both cause and effect. This is exactly the situation we are in; utility activities are mired in this very issue. I look forward very much to the Minister’s answer on that. He has a great grasp of these intellectual refinements, and I hope he will be able to enlighten us. I think a bit of a distinction needs to be made here between essential purposes and processes that are essentially voluntary and commercial.

[Lord Fox (LD)]

My Lords, I am sure the Minister will pick up on the noble Earl’s Voltaire reference and tell us that we live in the best of all possible worlds. In my previous intervention, I mentioned the Government’s productivity. The noble Lord, Lord Moylan, appears to be spoiling that, trying to do in two Bills what the Minister is trying to do in one. I think one Bill on this may be enough.

The point raised by the noble Lord on utilities, developed by the noble Earl, is extremely pertinent. It is a wider question that spreads into things such as the Building Safety Act, for example, where there is an assumption that utilities have a particular role to play. Are hardwiring, broadband and things such as that utilities or not? There are wider implications in this than simply the nature of the Bill. There are questions to be answered.

There is also a precedent already forming in the Bill about public services being carved out. That is the NHS issue, of course, where separate legislation is pulling out some aspects of the jurisdiction of this Bill. I do not expect to have that debate on this group, because the Minister has helped us to move everything into one group. We can have that debate later, but the principle of carving things out has been accepted by the Government. In that respect, the tablers of these amendments have something to go on. The interesting question they are providing through these amendments is: what is in and what is out? In a sense, that covers part of our curiosity around the Bill.

We should not be too obsessive about this, and nor should the noble Lord opposite, because Clause 109,

“Power to amend this Act in relation to private utilities”,

allows the Government to turn the whole thing upside down anyway. Clause 109(1) says:

“An appropriate authority may by regulations amend this Act for the purpose of reducing the regulation of private utilities under this Act.”


In fact, none of this debate makes any difference because, by regulation, the Government can ignore themselves in any case. We already have a problem, Houston.

The noble Lord talked about the difference between private delivery of services and the noble Baroness, Lady Neville-Rolfe, talked about the fact that these organisations took on risk. With the train operating companies, when the risk turned around they just surrendered their licences. It is not real risk in the sense we might understand it in the private sector; it is a different world.

For that reason, I find it very difficult to go along with the amendments that try to extract private delivery of public service from the Bill’s ambitions. Large sums of money that have, lest we forget, originated from the pockets of UK citizens in the form of tariffs, fares or subsidies are then disbursed, or potentially disbursed, by the private companies as they procure things to deliver from their private sector the public services they are pledged and allowed by licence to supply. The Bill may, as the noble Baroness, Lady Neville-Rolfe, set out, interfere with the board’s licence to operate on a wider scale when it decides how to go about making purchases, but that is not unreasonable, given that it has hitched its wagon to a public service. When capital enters the business of delivering a public service, in my view it sacrifices the true independence to operate that it would have if it delivered a private service to private individuals. That is the deal: business gets to ply its trade on the condition that government and usually a regulator, but not always, meddle with its business model. It is a condition to operate.

For this reason, I am very interested to hear how the Minister will respond to your Lordships’ questions. These have been very worthwhile amendments and I thank the tablers. I look forward to the Minister explaining, first, what a “public service” is, secondly, what a “utility” is and, thirdly, where they sit in the context of the Bill.

[Baroness Hayman of Ullock (Lab)]

My Lords, this has been an interesting debate. It has been interesting to listen to comments on this area, particularly from the noble Baroness, Lady Neville-Rolfe, and my noble friend Lord Berkeley in their introduction to their amendments. Clearly, the changes proposed could have huge implications for utilities. There was a greater amount of flexibility for utilities in the Utilities Contracts Regulations 2016 that this Bill loses. The Government have acknowledged that consolidating the UCR with the Public Contracts Regulations will be a major and complex legislative exercise. Considering the issues we debated earlier, I hope that this is an area where we can work together to make sure we get it right for everybody involved.

One of the things we have to be careful about is not increasing bureaucracy when at the heart of the Bill is the desire to speed up procurement processes. I will note a few things in the briefings I have had on the Bill. First, it is worth noting the international Agreement on Government Procurement, which is within the framework of the WTO. It establishes rules requiring that

“open, fair and transparent conditions of competition be ensured in government procurement.”

Although it does that, it does not require WTO members to implement procurement rules for the utilities sector.

Furthermore, as we have heard, the UK is no longer obliged under EU law to implement procurement rules for the utilities sector. The UK’s utilities sector is, of course, very different from those in many of its European counterparts. Therefore, using solutions that were originally designed for European markets may not be appropriate for the UK. We need to take note of all that.

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[Lord True (Con)]

My noble friend has very characteristically not only picked up an onion but begun to peel it into various levels of the commitment and nature of the activity. I will look into the particular issues in relation to buses referred to by the noble Lord, Lord Berkeley, and my noble friend Lord Moylan.

What I was going to say does not really amount to a peroration. Indeed, at this time, one does not really need a great peroration. What I am here to do is to listen. A range of very interesting and important points have been raised by noble Lords on all sides in relation to the operation of the legislation on private utilities. I will look carefully at Hansard and undertake to have discussions on these matters between now and Report. I am grateful to all noble Lords who have spoken—

[Lord Fox (LD)]

I sense that the Minister is winding. I have a quick question, which I think is best responded to by a letter. It is regarding international agreements and particularly telecoms, which were mentioned. The Australia agreement carves out specifically kit and hardware, but not telecom services, which appear to be left in. Will the Minister write to us about what the carve-out on broadband services is in, for example, the Australia trade deal and other trade deals?

[Lord True (Con)]

Yes, my Lords. I have committed to write in relation to that and I will pick up other questions that have been raised, including by the noble Lord. Obviously, there are existing international agreements that are, if you like, deposited, and which we have to work with, as well as issues of how we move forward case by case, but I will certainly address in a letter the point the noble Lord asks about. It is a legitimate question. The status of international agreements was also raised from the Front Bench opposite, and I will write to the noble Lord on that matter and copy it to colleagues in the Committee.

--- Later in debate ---

[Baroness McIntosh of Pickering (Con)]

I am delighted to follow my noble friend with a few brief remarks. I say at the outset that I regret that I was unable to contribute to Second Reading. I shall limit my remarks today to my arguments probing why Clause 2 and Schedule 2 are part of the Bill. This raises a more general question as to why we actually need the Bill, as I understand that we are already in the GPA. We have had a number of Statements about this and discussions in this regard with the Minister responsible for trade, my noble friend Lord Grimstone. I would be grateful if my noble friend could elaborate on what I am about to put to him.

As I understand it, the purpose of the Bill is twofold: first, to reform the UK’s public procurement regime following our exit from the EU; and, secondly, to create a simpler, more transparent system that better meets the country’s needs rather than being based on transposed EU directives. I understand that we are to have a separate exercise where we go through all the retained EU law, when we come to what is euphemistically known as the Brexit freedoms Bill, to decide which of those retained EU directives we may wish to keep.

My understanding is that much of what is before us today, as my noble friend has explained, is already covered by the World Trade Organization Agreement on Government Procurement—the GPA, as it is called. The aim of that agreement is to mutually open government procurement markets to those party to that agreement. The threshold values are, curiously, almost identical to the thresholds that had to be met through our membership of the European Union, which was roughly €136,000. We are now looking at £138,760 as the threshold for the general agreements for goods; for services, it is the same amount and, for construction, it is £5 million-plus.

As my noble friend Lord Lansley rightly assumed, I am trying to ascertain through this debate the way in which public contracts can be defined. I am assisted in this regard by paragraph 16 of the Explanatory Notes, which sets out that:

“The Public Contracts Regulations 2015 will be repealed and new rules on procurement will be set out in the new regime. Most central government departments, their arms-length bodies and the wider public sector including local government, health authorities and schools will have to follow the procedures set out in the Bill in awarding a contract with a value above set thresholds to suppliers.”


If, for example, there is a public procurement contract for food, for vegetables and meat, for a local school, hospital, prison or some other public body, what is the procedure that will have to be followed after the adoption of the Bill and, more specifically, the regulations that will flow from it?

That is the specific question that I would like my noble friend the Minister to address. How will public procurement for contracts over the threshold be treated? For the purposes of the Act, will they be treated differently from those that already apply under the GPA? How will the contracts apply for those that are under the magic threshold of £138,760? In effect, will the same procedures apply as before we left the European Union? I am particularly interested in food, fruit and vegetables, for the reason that we were all told this was going to be a benefit—a Brexit dividend from leaving the European Union—but I am struggling to see how this dividend will be delivered in this regard. When these contracts are put out for tender, whether they are above or below the threshold, how will that procedure apply? Can those that are under the stated threshold be awarded to local suppliers without being put out for international tender, or could we have Spanish or, indeed, African companies applying to deliver these?

I admit to being confused, because we were told that this was something that would happen after we left the European Union, and I am still struggling to see how these contracts are going to happen. We were told that it would boost local growers in this country to have these contracts put out for tender once we were no longer in the European Union. I look forward, with great anticipation, to my noble friend the Minister’s reply.

[Lord Fox (LD)]

My Lords, up to her final couple of sentences, I was going to recommend that the Minister listen very closely to the advice from the noble Baroness, Lady Noakes. This group of amendments essentially carries on the theme of what is in and what is out, which is the existential theme of almost everything we are debating that is not a government amendment. In that respect again, it is a welcome set of amendments and I think, all joking aside, that the noble Baroness’s points are really important points for the Minister to clear up. I do not understand where we are on this and if the noble Baroness, Lady Noakes, does not then it probably is not understandable.

--- Later in debate ---

[Lord True (Con)]

Again, my Lords, I am very grateful to all those who have spoken. There have been some interesting speeches. Indeed, I will certainly take the final speech by the noble Lord, Lord Coaker, in which he seemed to deplore the idea that the Government should have any regulatory powers, back to my right honourable friend. We will certainly watch for that as we go forward.

On his more general point in relation to the Delegated Powers Committee and so on, I do take what he said seriously. We will have a debate on that in the next session. I will look into his specific point about secondary and primary legislation. If there is an answer that is an advance on what is already in the public domain, I will certainly have that for the next session when we will look at delegated powers.

I am not really a fan of wide-ranging groups that cover a whole range of different subjects. They seem to have become the habit of our times. When I first had experience of your Lordships’ House, we had quite short debates on relatively narrow subjects, which enabled the Minister and the House generally to concentrate. So I will endeavour to answer all the various points that have been made but some of them may have to come in writing. We will look very carefully at Hansard because there was a very broad range of questions, which started with the questions on universities.

[Lord Fox (LD)]

Can I just point out that the grouping comes from the Government Whips’ Office? We could have extracted all our amendments, one by one, and created a larger number of groups but, probably in deference to the will of the Government, we did not. The future of how many amendments you have in a particular group lies very much in the hands of the Government, not Her Majesty’s loyal Opposition’s or ours.

[Lord True (Con)]

My Lords, they are negotiated in the usual channels. Sometimes it is a fatal thing in your Lordships’ House to express an opinion, in all respect to your Lordships, of how I think things may be done. We are all imperfect—I am sure the usual channels are not perfect—but having a large group does raise challenges in terms of accountability.

I will try to address the various points raised. I apologise if they were so broad that I may miss some of them, for whatever reason. We started on universities with Amendment 3 from my noble friend Lord Lansley. His amendment would exclude universities from a definition of public undertakings within the definition of a contracting authority, and consequently from the scope of the public procurement rules. He asked about public undertakings and public authorities. Public undertakings are relevant only in the context of the utilities that we were discussing. The universities will be public authorities if they meet the public authorities test, and not caught if they do not meet it.

Universities are included in the UK’s coverage commitments under the World Trade Organization’s Agreement on Government Procurement as contracting authorities that are subject to the rules, where they are publicly funded. The existing definition of a contracting authority in the Public Contracts Regulations 2015 contains tests of the extent to which a body is publicly funded or publicly controlled. These tests are then applied by the body in question to determine whether they are caught by the definition. The definition of a contracting authority in the Bill is intended to capture the same bodies. Universities are therefore in scope of the procurement rules, but only to the extent that they are mainly publicly funded or controlled. The position is likely to vary depending on universities’ funding streams, and those that derive the majority of their revenue from commercial activities would likely be out of scope.

Amendment 4 in the name of my noble friend Lady Noakes would adjust the definition of a contracting authority in such a way that bodies would be brought into scope where they are subject to control by a board if more than half the members are “capable of being” appointed by a contracting authority. I think there was some interest in that proposition on both sides of the Committee. Our initial feeling is that it would mean a more prescriptive and potentially wider scope than the proposed definition, which brings into scope only bodies controlled by a board that has been

“appointed by a … contracting authority.”

Again, the definition of contracting authority in the Bill is intended to capture the same bodies as in the existing Public Contracts Regulations. We are not seeking to change the scope of bodies covered in any way, though some adjustments have been necessary to replace references to European concepts such as bodies governed by public law with the more relevant UK analogous concept of bodies undertaking public functions. Ensuring consistency is necessary not only for practical continuity purposes but in respect of the United Kingdom’s international market access commitments in free trade agreements, which use the existing definition as the basis of the UK’s coverage offer.

The current definition brings into scope bodies that have a board more than half of whose members are appointed

“by the State, regional or local authorities, or by other bodies governed by public law”.

The definition in the Bill is consistent with this by bringing in bodies that are subject to the management or control of

“a board more than half … of which are appointed by a … contracting authority.”

The existing definition in the Public Contracts Regulations does not contain any reference, as per the proposed amendment, to the notion of board members “capable of being” appointed by a particular contracting authority. Whether or not an authority chooses to exercise its right to appoint members to a board is not addressed, and was not intended to be addressed, within the definition. For that reason, we do not currently consider that it would be appropriate to adjust the definition in the way the amendment suggests.

However, I have listened carefully to what my noble friend has suggested. We will consider further whether it is possible to exercise control without making appointments by the threat of control. For the moment I ask my noble friend not to move the amendment, which we cannot support as it stands.

Bain & Company: Public Sector Contracts

Lord Fox Excerpts

Monday 13th June 2022 Lords Chamber

[Lord True (Con)]

My Lords, I pay tribute to the noble Lord for his pursuit of this matter and accept that it is important. The company concerned is not a strategic supplier to the Government and is not currently undertaking any substantial work for them. As I have said, the final report and recommendations in relation to this will come and these matters can obviously be discussed on the Procurement Bill, which covers the grounds for exclusion of bidders from public procurement.

[Lord Fox (LD)]

My Lords, without wishing to bring Committee stage of the Procurement Bill in front of all your Lordships, the Minister knows that Clause 11 of that Bill clearly identifies “maximising public benefit” as one of the things that a contracting authority must have due regard to. Can the Minister perhaps explain how, when a business such as Bain & Company has clearly minimised public benefit to the whole of the South African nation for the benefit of just a few individuals, we can take seriously a Government who put this in writing and yet have continued to maintain a relationship with Bain & Company?

[Lord True (Con)]

My Lords, I just gave the House the current position as far as the company is concerned. As long-standing friends of South Africa, the Government will continue to engage South African authorities, business and civil society on a shared agenda of security, economic and social issues, including in the light of the final conclusions of the Zondo report. As I have said, that report is coming within weeks; we will also obviously carefully consider any implications for action in the United Kingdom.

Procurement Bill [HL]

Lord Fox Excerpts

2nd reading
Wednesday 25th May 2022 Lords Chamber

[Lord Fox (LD)]

My Lords, it is a great pleasure to be working on this Bill with a new set of colleagues: a new set of Front-Bench spokespeople from Her Majesty’s loyal Opposition and a new Minister. I look forward, as the noble Baroness does, to a fruitful process in working on this Bill.

In framing the Bill, the Government explained that they had three options: to do nothing, to do the minimum or to carry out wholesale reform. They have chosen reform, which we welcome; the Bill is the result of that reform process. What is it for, and how wholesale are those reforms? The reforms are less wholesale than the Green Paper suggested they might be, as the noble Baroness, Lady Hayman, just said in her excellent speech. I will not try to cover the same ground that she did, but I associate myself with all of her comments.

I will, however, start with the point with which she started: the missing principles for the Bill. Without those principles, it will be difficult to guide the rest of what we are doing. There are objectives, and they appear in Clause 11. As we have seen, they are value for money, maximising public benefit, sharing information and acting with integrity. We would all sign up to those. Elsewhere in the Bill documentation, there are all sorts of other lists that are all similar, but different in a subtle way. This is not nit-picking, because it is important to understand where the Bill is headed and what it is seeking to achieve. Some of the objectives are potentially conflicting, and we need to know where the priority lies.

For example, to create greater opportunities for small businesses and social enterprises, which I understand and agree is one of the important elements of the Bill, there might be a higher initial cost attached. How will the Government calculate the public benefit that they get from the process of broadening the remit? What priority will they give to value for money? The impact assessment says that the highest priority is value for money. However, it also says that the Bill will be required to take into account national strategic priorities such as job-creation potential, improving supply resilience and tackling climate change. There is no help as to how these trade off, and there is no understanding of what “take into account” means. Of course, none of these is on the face of the Bill, so we do not have a definition of “public benefit” anywhere.

All the language so far completely avoids the issue of supplier ethics and human rights. I know that the noble Lord on my left and others will bring this up, and I expect to agree with them. My noble friend Lady Parminter will no doubt speak to the need for a central role for procurement in fighting climate change. I also believe that that has to be written into the Bill and I hope that the Minister will hear that from others as well.

There are other definitions in the Bill which are not helpful. The Explanatory Notes refer to “fair treatment”, so perhaps the Minister could explain what “fair” means in the context of this new process. Perhaps he will agree with me that “equal” might have been a better word. Here is an example: it is unclear how the Bill, in its present form, will replace the regulatory framework for accessibility within public procurement legislation. Therefore, can the Minister please explain how the new regime will ensure that specifications take into account accessibility criteria and design for all users? This is just one example of what is potentially dropping out.

For the Bill to be implemented, it needs to be understood. For that to happen, the Government need to differentiate what they are seeking to achieve and be very clear about the Bill’s moral, as well as economic, objectives. I am sure that we will give Ministers plenty of opportunity to do that in Committee.

One of the benefits paraded in various government publications is that the new data platform will deliver centralised data. How will the Government use that data and who will use it? On the data protection front, the UK has to date employed GDPR as its tool. However, changes in data protection law heralded by the new data reform Bill set out in the consultation Data: A New Direction call into question the level of proper oversight of that data. We already see companies from the US sweeping up and using data that is currently available; for example, within the NHS. They operate free, in effect, from proper scrutiny. Without explicit safeguards in the legislation, there will be a real opportunity for data abuse.

The Government talk of visibility and transparency in the Bill. If those are realised that will be thoroughly welcome and we encourage that process. However, if we needed an example of how the lack of visibility leads to corruption, there is the example given by the noble Baroness, Lady Hayman, and which I think my noble friend Lord Strasburger will give, of the abuses of what I might describe as a system based on Ministers’ WhatsApp rather than a transparent system. That was a scandal, and we must have a system that ensures that that sort of thing can never happen again.

How transparent is the legislation? I note that, alongside defence and security interests, the Advanced Research and Invention Agency—ARIA—is exempted. Not only is ARIA carved out of the Freedom of Information Act, it is able to procure in secret. Why should we not know from whom this agency buys its electricity? Overall, much of the information the public might seek about public contracts has been or is being put beyond the reach of the Freedom of Information Act. Although the Government talk about transparency, their legislation seems to demonstrate a drift—if not a jump—in the opposite direction.

The Minister sought to defuse the treaty state supplier issue by using the NHS opt-out as an example but, of course, that is in only one sector. My noble friend Lady Brinton will be talking to that issue, but let us remember what Clause 82(1) says:

“A contracting authority may not, in carrying out a procurement, below-threshold procurement or international organisation procurement, discriminate against a treaty state supplier.”


Can the Minister confirm that if a UK contracting authority wanted specifically to buy British food from a British farmer, it would be unable to do so at the expense of a treaty state supplier such as, in future, an Australian farmer, selling a similar product at a lower price? That not only flies in the face of many social objectives, it seems to fly in the face of the Subsidy Control Act, which includes provision for purchasing under a subsidy scheme to support local businesses and certain products. Which of these two factors prevails? Is it the treaty state supplier rule or the subsidy control rule, because they do not work in the same direction?

More broadly, essentially, if the market is opened by a treaty, the contracting authority is bound to buy the product that offers the best value for money—remember, that was the number one criterion of the four set out in the government documents. I fear that that will be headline price, irrespective of what it does to local capability in future. Other countries may be looking at reshoring; the Bill delivers the opposite.

The regulation-making power in Clause 8(2) relates to common procurement vocabulary—or CPV—codes, which the Cabinet Office has explained will be used to decide which contracts benefit from the light- touch regime. Understandably, this legislation does not include the long list of what might be on that CPV list, but I feel sure that there will be some important issues here.

I would like to ask the Minister what “light touch” actually means. If it means service contracts of the sort that the Minister hinted at, then far from “light touch”, “rigorous oversight” might be more appropriate. I give the example of the children’s homes issue, which is currently live. Perhaps the Minister can help us before we get to Committee by publishing either a draft or an indicative list of what the Government expect to be in the statutory instrument that will bring the CPV codes to your Lordship’s House.

I am also in the dark about how this Bill, the Sewel convention, the Trade Act and the UK Internal Market Act intersect. For example, if a Scottish-based public authority seeks to purchase a product from a treaty state supplier, does the Minister agree that it is up to the Scottish Government whether the regulations in Scotland need to be the same as those in the rest of the United Kingdom?

Secondly, can the Minister please explain what happens if that Scottish public authority offer then extends to the rest of the United Kingdom—for example, across the border to England? The Procurement Bill seems to say that once it crosses the border and there is a difference, Westminster regulations need to be applied, not Edinburgh’s. However, I suggest that the non-discrimination parts of the UK Internal Market Act mandate the exact opposite, and I think an interpretation of the Sewel convention is a moot point. Further, there is the common frameworks process, which is still live. Can the Minister please reconcile all these issues for your Lordships’ House?

As I reach the end, I turn to implementation, which will not be trivial. We know that the Government are very challenged when it comes to digital projects. In its report, The Challenges in Implementing Digital Change, the National Audit Office reviewed the implementation of digital programmes by government, going back, I think, over 25 years.

Its comments are extremely apposite. It said:

“Initiating digital change involves taking a difficult set of decisions about risk and opportunity, but these decisions often do not reflect the reality of the legacy environment and do not fit comfortably into government’s standard mechanisms for approval, procurement, funding and assurance.”


The report also found that digital leaders

“often struggle to get the attention, understanding and support they need from senior decision-makers”

who lack sufficient digital expertise. It will be important to remember that as this project progresses. We know from past government IT disasters that delivery is always harder than it is portrayed when launched at the Dispatch Box.

As far as I can tell from the impact assessment, the estimated cost of launching this platform is £36 million, which seems ambitious to say the least, given the Government’s 25 years of underperformance on digital projects. In Whitehall alone, this involves a lot of people. The Cabinet Office Civil Service statistics for 2021 say there were 12,340 civil servants in the procurement commercial function that year. Of course, as we have heard, there are many more people in local authorities and public utilities being brought into this system.

For some of the Whitehall departments, these numbers are huge. In the Ministry of Defence, including agencies, more than 2,000 employees are involved in procurement. In the Minister’s own Cabinet Office, again including agencies, it is more than 1,700 employees. I know from experience of working in the private sector that when a large enterprise implements a cross-business digital programme, the systems analysts always meet the same response. They go into a department, which says, “Yes, I agree that this is a very good idea, but you have to understand that we are different”.

There are two ways of dealing with this response. One is to instigate local variations to comply with all the perceived differences; the other is to use this digital platform to lead cultural change. In my experience— I have helped on a number of company-wide ERP implementations, and in a way this is a much bigger version of that—if you choose the variation route, it is a road to confusion and cost. But the second one, invoking real cultural change, is still a challenge. These departments are supertankers of departmental culture that will take years of sustained activity to turn around. A couple of days’ training here or there will not do it; these people have to own this system, believe in it and want it to succeed.

Any Bill that seeks to do what this Bill seeks to do is ambitious. It is a long Bill and covers all sorts of different departments. The process we are about to embark on will be long and detailed. There is a lot of work to do before the Bill is fit to be enacted, but we will work very hard with the Minister and Her Majesty’s loyal Opposition to help that to happen.

--- Later in debate ---

[Lord True (Con)]

My Lords, I thank very much all those who have taken part in the debate. Myriad points have been raised from all sides of the House. I never know what the usual channels are deciding, but it is probably a good thing that, as I understand it, we are not going into Committee for some time because I can feel a compendious letter to your Lordships coming on, which might be as long as the Explanatory Notes.

Your Lordships will forgive me if I do not deal with every detailed point; I will try to address some of the main themes of the debate, which were expressed very well by the noble Baroness, Lady Hayman, when she opened and the noble Lords, Lord Coaker and Lord Wallace, in summing up. We will not agree on all these things. Certainly, in some of the speeches from the other side, there was a yearning to impose policies on the private sector—on people outside government. The high-water mark was the speech of the noble Lord, Lord Hendy, which I guess was the counterpoint to the low-water mark—I am not sure there was any water in it at all—of the speech of my noble friend Lord Moylan. To impose your political objectives on a nation, you have to win an election and form a Government. What we need to do—there was great support and great consensus across the House on this—is put together a framework that we could all work with to provide clarity, simplicity and, yes, transparency, which I will come on to, for those seeking to provide to public procurers.

An important speech on defence was made by the noble Baroness, Lady Smith, and the subject was also alluded to by the noble Lord, Lord Coaker. My noble friend Lady Goldie will respond in writing on the points made but, obviously, when we get into Committee, we will be able to address the points.

Points were raised about control, management and remedies. The noble and learned Lord, Lord Thomas, put forward some ideas. We will reflect on those but, basically, the law of the land is the framework; my noble friend was right.

Many noble Lords alluded to Covid-19 procurement. I understand that but we need to look forward. While the debate was going on, I looked this up on my machine and saw that in April 2020 the leader of the Liberal Democrats was calling for all red tape to be swept aside to get PPE. People in other parties were saying the same. Yes, mistakes were made, but when you make mistakes you must learn from them. We are putting together a regime that will deliver more comprehensive transparency requirements, clear requirements on identification, management of conflicts of interest and so on. It is right that we should address those things, but the priority of the Government—indeed, of all of us in all parties—as the pandemic we knew so little about arose, was to save lives. I acknowledge that there are lessons, but I hope that when we look at how the Bill is structured, we will see that we have an improved framework for addressing all aspects of procurement.

The noble Lord, Lord Alton of Liverpool, and others rightly addressed the issue of human rights. We will discuss this in Committee. I had the pleasure of discussing it with the noble Lord before, as he was kind enough to say. Certainly, modern slavery has no place in government supply chains; I affirm that strongly. I accept that the current rules on excluding suppliers linked to modern slavery are too weak. For example, they require the supplier to have been convicted, or for there to have been a breach of international treaties. These rules are not capable of dealing with some of the issues that we see.

We are making explicit provision in the Bill to disregard bids from suppliers known to use forced labour or to perpetuate modern slavery in their supply chain. Authorities will be able to exclude them where there is sufficient evidence; they do not need to have a conviction. We are seeking to respond in this area and no doubt we will be probed further.

One issue raised right from the start by the noble Baroness, Lady Hayman, was that of principles. A lot of people have said that this was in the Green Paper but is not in this Bill. A Green Paper is a basis for consultation and reflection. A Bill is the proposition that the Government put before Parliament and this is the proposition that we are putting before Parliament. The Bill splits the procurement principles into a group of objectives and rules to help contracting parties understand what they are obliged to do. The rules on equal treatment, now termed “same treatment”, in Clause 11(2) and (3) are obligations that set minimum standards in plain English that contracting authorities must follow on treating suppliers in the same way to create a level playing field. Non-discrimination, in the context of the Bill, means discrimination against treaty state suppliers on the grounds of nationality, which is a concept different from non-discrimination in the UK market. The national rules on non-discrimination in the Bill can be found in Clauses 81 to 83.

There were a number of changes to the principles. For example, the procedural transparency obligations in the Bill are complemented by a new information-sharing objective in Clause 11(1)(c), which will provide clarity to contracting authorities on exactly what they need to publish. There is also no need for an objective to maximise competition in procurement processes under the Bill, as procedural obligations start with the use of open and fair competition, unless there are legitimate grounds to dispense with or narrow competition. The most obvious of those would be special cases for direct award.

I acknowledge that transparency has been a key ask for the House. The House expects that transparency will be improved. We believe that the Bill does this. We are extending the scope of publication requirements to include planning and contract performance, in addition to current requirements to publish contract opportunities and contract awards. By implementing the open contracting data standard we will publish data across the public sector so that it can be analysed at contract and category level, and compared internationally. The new regime will also establish obligations on contracting authorities to capture potential conflicts of interest for individuals working on procurement additionally, or mandate the publication of a transparency notice whenever a decision is made to award a contract using a procedure as a direct award. This will all be supplemented by a comprehensive training programme that will be available to contracting authorities, which I will come back to later.

We remain committed to our aim to embed transparency by default through the commercial life cycle. We recognise and make no apology that this new regime seeks to do that. The new central digital platform will be designed to make complying with the new transparency requirements automated and low cost. We intend to make data analysis tools available to contracting authorities, which will ensure that they can use the data available to drive value for money.

Taxpayers have a right to see how public money is spent. There is abundant evidence of public engagement with contracting information, and it increases as the data improves. Because the data will be more comprehensive it will be more valuable and, we believe, better used. I have no doubt that we will be tested on that, but I assure the noble Baroness opposite that it is something we are extremely determined to achieve.

On social objectives, I was asked by a number of noble Lords how the Bill will help with achieving net zero. I accept that the Bill does not include any specific provisions on the Government’s target to achieve net-zero carbon emissions by 2050, but it will require contracting authorities to have regard to national and local priorities as set out in a national procurement policy statement to be published by the Government, and the Wales procurement policy statement to be published by Welsh Ministers. Many noble Lords have given notice that they will want to return to examination of the national procurement policy statement, how it will operate and how it will go forward, but there are statements in there.

Public sector buyers are able to structure their procurements so as to give more weight to bids that create jobs and opportunities for our communities, where this is relevant to the contract being procured. This is absolutely in line with the concept of value for money. Social value in procurement is not about a large corporate’s environmental, social and governance policies but about how the contract can be delivered in such a way that it delivers additional outcomes, such as upskilling prison leavers, which I think someone referred to.

Delivering value for taxpayers should certainly be the key driver behind any decision to award contracts to companies using public money, but again, public sector buyers will have to have regard to the national policy statement. The Bill will take forward a change from “most economically advantageous” to “most advantageous” to reinforce the message that they should take a comprehensive assessment of value for money, including the wider value of benefits, in the evaluation of tenders.

I know that many of your Lordships want to see and have asked for buying British. Public sector procurers are required to determine the most advantageous offer through fair and open competition. We confirmed in December 2020 that below-threshold contracts can now be reserved for UK suppliers and for small suppliers where it is good value for money. This applies to contracts—in those strange figures in the Bill that arise from international treaty—with a value below £138,760 for goods and services, and £5.336 million for construction in central government.

Above those thresholds, we need to act in line with our international obligations. A blanket “Buy British” policy would conflict with the UK’s international obligations to treat suppliers from other countries on an equal footing. The requirement for fair and open competition is a two-way street because it gives UK firms access to other markets. Within the UK, on average, just over 2% of UK contracts by value were awarded directly to foreign suppliers between—

[Lord Fox (LD)]

I thank the Minister for giving way. I am confused and I am sure he can help me. Clause 82(1) specifically says:

“A contracting authority may not, in carrying out a procurement, below-threshold procurement or international organisation procurement, discriminate against a treaty state supplier.”


The Minister just said the opposite of that in the case of below-threshold procurement. The Bill is very clear that a below-threshold procurement does not let off the contracting authority from having to give the contract to a treaty state supplier.

[Lord True (Con)]

My Lords, I was hoping to make progress and I know that your Lordships would like to conclude these matters. As the noble Lord says, those clauses refer to international treaty obligations. What I was saying was in reference to a contract to let; I was asked very pertinently by the noble Lord, Lord Whitty, for example, about local authorities buying locally, and I repeat what I said: below-threshold contracts can be reserved for suppliers located in a particular geographical area. If international issues arise, that is a different matter. This policy was set out in the Government’s Procurement Policy Note 11/20.

My noble friend Lord Lansley and many others, including the noble Baroness at the start, asked me about innovation. The legislation will put more emphasis on publishing pipelines of upcoming demand, procurement planning and pre-market engagement so that businesses can properly gear up to deliver and offer the best innovative solutions. It will have a new competitive tendering procedure which will enable contracting authorities to design and run procedures that suit these markets. For example, it will allow them to contract with partners to research, develop and eventually buy a new product and service in a single process. The new rules will make it clear that buying innovation does not apply only to buying something brand new but can be about developing an existing product to meet different requirements.

The noble Lord, Lord Stevens, the noble Baroness, Lady Brinton, and others asked about the health service and the relationship with the DHSC. These reforms sit alongside proposals to reform healthcare commissioning which have been enacted through the Health and Care Act. We recognise the need for integration between local authorities and the NHS, both for joint commissioning and integrated provision, and we will work closely with the Department of Health and Social Care.

I repeat: the public procurement provisions will not result in the NHS being privatised. The procurement of clinical healthcare services by NHS bodies will be governed by DHSC legislation and is separate to the proposals in the Bill. However, the non-clinical services, such as professional services or clinical consumables, will remain part of the Bill. Clause 108, which I agree is widely framed as it sits in the Bill, is needed to ensure that it neatly dovetails with any regime created under the Health and Care Act, providing clarity. Obviously, we will have that probed.

Accessibility was another theme that was raised by the noble Lords, Lord Whitty and Lord Fox. The Government remain committed to ensuring that public procurement drives value for money, and that includes better outcomes for disabled people, as it must. The Bill does not dictate how technical specifications may be drawn up, only what is actually prohibited, as set out in Clause 24. However, there is a clear expectation that when contracting authorities set technical specifications for procurement, they do so in a way that takes into account accessibility criteria for disabled persons. Clearly, this is an important matter that requires further consideration, and we commit to doing that.

Training is important, and the training package will be made available in good time for users to prepare for the new regime being implemented. That is why we have committed to six months’ notice before going live, and the training will be rolled out. The Cabinet Office will provide both funded training and written guidance and learning aids, covering the range and depth of knowledge requirements for those operating within the new system. The online learning will be free at the point of access for contracting authorities. The knowledge drops will be freely accessible for all via YouTube, and the written guidance and learnings will also be free and accessible for all via GOV.UK.

The noble Lords, Lord Mendelsohn and Lord Aberdare, asked some pertinent and specific questions about small businesses, and I will certainly make sure that they are answered. This legislation will help SMEs to win contracts for many reasons: bidders will only have to submit their core credentials to the single platform once, for example, making it easier and more efficient to bid. The single transparency platform, or single sign-on, means that suppliers will be able to see all opportunities.

The new concept of dynamic markets, which we will explore, is intended to provide greater opportunity for SMEs to join and win work in the course of a contracting period. The Bill will ensure that subcontractors in chains will also benefit from prompt payment obligations.

There are many other ways in which we intend to help SMEs. The noble Lord, Lord Wigley, asked about the great Principality of Wales. Wales will, as he knows, have the power to publish its own procurement policy statement, in which it can set out its own local priorities for communities. We have worked closely with the Welsh Government to ensure that there is continuity for Welsh contracting authorities. For the first time, Welsh Ministers will be able to regulate the procurement of some goods and services in Wales by some cross-border contracting authorities. But in our judgment, it is right that, where the scope of a procurement extends outside Wales into the rest of the UK, the UK rules should apply.

Publicly funded housing associations would be in scope of the contracting authority definition. However, I am advised that privately funded providers of social housing would not be in scope because they do not meet either the funding or the control requirements. I will write to the noble Lord further about this.

I was going to address points about data collection, but—

Global Positioning System

Lord Fox Excerpts

Tuesday 26th April 2022 Lords Chamber

[Lord True (Con)]

My Lords, the noble Baroness makes some fair observations and, as I said, the noble Lord raises an important question, which the Government do not underestimate. We are currently updating our risk assessment on the critical dependencies that we have on GPS and other positional, navigation and time data sources. This will inform the measures we are taking under the various programmes I mentioned to the House. These potential threats need consideration; resilience is vital, and the Government will seek to address it.

[Lord Fox (LD)]

My Lords, in an earlier answer, the Minister set out a variety of different programmes and initiatives. Where is the guiding hand, and what is the guiding hand for this? How often are these many and various programmes assessed against each other, and when might we see how they move forward?

[Lord True (Con)]

My Lords, my right honourable friend the Secretary of State for BEIS wrote to the Science and Technology Committee of the House of Commons on 25 March setting out the position and saying that his department would be leading the co-ordination—subject, obviously, to continuing resourcing. As the noble Lord acknowledges, the matter involves other departments, but the authoritative letter on the record from my right honourable friend sets out the position on co-ordination.