Procurement Regulations 2024

Debate between Lord Fox and Baroness Neville-Rolfe

Monday 20th May 2024 Grand Committee

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

My Lords, this statutory instrument represents a significant legislative step in implementing the Procurement Act 2023, which seizes the opportunity following Brexit to develop and implement a new public procurement regime for more than £300 billion-worth of public contracts. The new regime helps deliver the Prime Minister’s promise to grow the economy by creating a simpler and more transparent system that will deliver better value for money, reduce costs for business, especially small business, and improve the public sector. I thank colleagues across the Committee for the work that we did together on the Procurement Act.

These regulations bring to life and set out the practical detail necessary for the functioning of many of that Act’s provisions. Many of the measures set out the detail required by the Act to enable contracting authorities to conduct their public procurement in an open, transparent and informative manner. These include the content of various notices that will be used to communicate opportunities and details about forthcoming, in-train and completed procurements. Such contents would typically include the contact details for the contracting authority, the contract subject matter, key timings for the procurement process and other basic information about a particular procurement that interested suppliers would need to know. The provisions also cover the digital measures that authorities must follow when publishing notices, such as putting them on a central digital platform and what to do in the event that the platform is unavailable.

The transparency measures will help to open up opportunities with the public sector to a greater range of businesses, helping drive down price and increase innovation. They will provide contracting authorities with the data they need to collaborate better, drive value for money and identify cost savings in their procurements, and they will give Ministers, legislators and auditors detailed information to monitor for signs of waste and inefficiency.

Other provisions to supplement the Act include various lists in the Schedules so that procurers can identify which obligations apply in a particular case. These include a list of light-touch services that qualify for simplified rules and a list of central government authorities and works which are subject to different thresholds. The regulations disapply the Procurement Act in relation to healthcare services procurements in scope of the NHS provider selection regime introduced in January this year. These enable the procurement of NHS patient treatment services, such as NHS paramedical services or cancer treatments, to be governed by the free-standing regulatory scheme that was specifically designed for those services.

The regulations also set out how devolved Scottish contracting authorities are to be regulated by the Act if they choose to use a commercial tool established under the Act or to procure jointly with a buyer regulated by the Act. They also amend the Act to provide that reserved Northern Irish private utilities are not required to publish preliminary market engagement notices. This is because the Government do not wish to regulate the procurement of private utilities any more than is necessary. The regulations apply to reserved procurement in England, Wales, Northern Ireland and Scotland and to procurement by a transferred, that is to say devolved, contracting authority in Northern Ireland. The Welsh Government have laid similar secondary legislation which will apply in respect of devolved procurement in Wales and elsewhere if the devolved body carrying out that procurement operates mainly in Wales.

The Government have consulted fully with stakeholders throughout the reform process and we published our response to the formal public consultation on these regulations on 22 March 2024. The consultation evoked a good response from the various representative sectors and confirmed that the proposed regulations generally worked as intended. Many stakeholders urged that certain matters be clarified and explained in guidance and training, which is a key part of the implementation programme that we are rolling out across the UK. We have listened to feedback and our response confirms a number of areas where the consultation led to technical and drafting improvements.

Contracting authorities and suppliers have made it clear that they will need time once this instrument has been laid to adapt their systems and processes before we go live, so the Government have provided six months’ advance notice of the new regime before the regulations come into force on 28 October 2024. Noble Lords should also be aware that the instrument has been corrected to remove drafting references and a couple of typographical errors which crept in during the publishing processes. I beg to move.

[Lord Fox (LD)]

From the attendance, we have established that more people are interested in hedgerows than procurement. I have participated in all of what I would call the post-Brexit plumbing legislation. Although this was not the most controversial part of that legislation, it has certainly taken a long time for us to get here. The Second Reading in your Lordships’ House was just five days short of two years ago, and we have to wait another six months for these rules to be implemented, so it will take two and a half years.

Hopefully, we have improved it. As some noble Lords will remember, the Minister was at that time a Back-Bencher, before she was propelled meteorically to her current role. I thought this correction was an homage to the original Bill when it was published. It arrived very quickly, with hundreds and hundreds of government amendments, which is part of the reason why it took so long for us to get here. But we have got here. One important thing that the Minister touched on, which was stressed very early in the process, was the central importance of the central digital platform. It would be helpful if she could confirm that that platform is 100% ready to go—I think we would all hope so.

In Regulation 11, the list of the “connected person information” is huge. Although the Minister said that this makes it simple for smaller companies, it will require a great deal of effort initially. Can she confirm that this is a one-off effort that those companies have to make? Will this central digital platform be able to replicate that information—copy and paste—or will people have to enter the same information, as they do now on a variety of digital platforms, often handfuls and sometimes dozens of times? Can the Minister confirm that that is how the new system will work and that it will work that way on day one?

Contracting authorities are clearly vital and their understanding of this big set of rules will be central to the functioning of this. Can the Minister tell us in some detail how they are being brought up to speed with what is required of them to make this work? In particular, how will they bring SMEs into the picture, where they have not been before? How will the contracting authorities engage SMEs? How will SMEs know that they are now in with a shout and have an opportunity? What information will go out to our SMEs so that they can properly participate in public procurement? The Minister did a lot of work, as both a Back-Bencher and a Minister, to put these rules in place, and it is important that her work is now properly propagated out to the market.

I should remember the answer to this, because I am sure we went into it, but utilities are treated substantially differently and there are different processes here. The Explanatory Notes say that we will create a “utilities dynamic market”. I do not have the faintest idea what that is, so can the Minister please say what it is and why we should celebrate it?

At the end of her speech, the Minister talked about the position of the NHS. She would be surprised if I did not bring that up. Perhaps she tried to pre-emptively head it off at the pass. There was a lot of debate and my noble friend Lady Brinton very much led on that. We were not happy, in a sense, with the way that health services were disapplied.

Regulation 43 talks about the disapplication of “regulated health procurement”. That is not the phrase that the Minister just used, so can she again define “regulated health procurement” for the record? She listed the fact that there is a custom-made process for those services in the NHS, but we should not be too complacent, because the first test of the new NHS rules on competition and procurement found against the NHS. The rules that were being vaunted just now are not being used properly within the NHS. The first review panel set up to oversee commissioning decisions found against the commissioner and advised it to abandon its procurement of ADHD services; it was the Cumbria integrated care board that failed to do this properly.

I know that the NHS falls under a different department, but the Cabinet Office is uniquely interested in procurement right across government. There should be no complacency about the system that is now being used with the NHS. The experts on procurement exist within the Cabinet Office and I would like the Minister to say now that the Cabinet Office will engage those experts to advise health boards on how to use their own rules properly—otherwise, we will waste a ton of money on appeals and rulings against health boards. It is quite clear that they do not have the capability to apply their own rules and that they need help. They will not get that from their own people, because it is not there; the expertise for procurement is within the Cabinet Office. So I want the Minister to say that it will step in and make sure that health boards know how to apply their own rules. With that, as it has been a long time coming, let us get this going.

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[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful to the two noble Lords who spoke in this debate. I well remember moving from poacher to gamekeeper and working across the House to try to improve what was a very important Bill, not least because of the scale of procurement that it reached. Indeed, the Act embodies our ambition to open public procurement up to a more diverse supply base, making it easier for new entrants such as small businesses—the noble Lord, Lord Fox, rightly mentioned them; indeed, all speakers mentioned them—and social enterprises. Remember that we added social enterprises during the passage of the Act, as well as measures to improve prompt payment for small businesses—those help small businesses—and the transparency of opportunities on a single platform. The Act also enables basic supplier details to be submitted only once, which picks up on the question asked by the noble Lord, Lord Fox.

In response to expert discussion in the House, I introduced additional measures during the passage of the Act. These included a new duty on contracting authorities to have regard to the particular barriers facing SMEs and to consider what can be done to overcome them, as well as 30-day payment terms on defence and utility contracts and through the supply chain. We removed unnecessary obstacles relating to audited accounts and insurance as conditions of participation—the noble Lord, Lord Mendelsohn, put down amendments on those issues, I think—which can prevent SMEs winning public contracts.

The Act introduces a new centralised debarment regime, including a public debarment list, and allows the Government to investigate supplier misconduct, including taking action to protect the public supply chain. Of course, the procurement review unit will manage the new debarment regime, including investigating suppliers, while the new national security unit for procurement will manage the investigation of national security-related debarment cases. Importantly, the PRU will also oversee compliance with the new regime and will have the power to investigate non-compliance. These reforms will shape the future of public procurement in this country for many years to come, ensuring a modern and flexible procurement regime that will deliver better outcomes for taxpayers, service users and business.

I turn to the questions posed by the noble Lord, Lord Fox. In respect of the information that suppliers have to provide for connected persons, I am happy to advise that, as long as the information remains consistent, suppliers will have to supply this information only once when they register on the online system, which they can do at any time. When bidding for a procurement, they will need merely to confirm that the information they previously provided in respect of connected persons is still current, in the spirit of One Login.

A key objective of the Act and regulations made under it is to reduce the burden on suppliers by enabling them to store core supplier information in one place; that is called the supplier information service. The core information will then be provided to contracting authorities by each supplier who wishes to participate or bid. This reduces the time taken by suppliers to bid for public procurement opportunities by ensuring that common data can be submitted efficiently and effectively, without having to duplicate core information. This is of real benefit to business, particularly SMEs.

A utilities dynamic market is a pre-approved list of suppliers from which utilities can call off. Unlike a regular dynamic market, contracts are advertised only to members of the market. The online system will be operational and ready for use when the new regime comes into force on 28 October. We are working with e-procurement system providers to ensure their readiness. New notices will be phased, with the timings set out in the commencement regulations, which will be made shortly and will set out when relevant obligations will take effect. This reflects consultation. The phasing of the notices has been designed so that notices used in the planning, tender and award phases of a procurement will all be available from the outset. There will be a natural lag until later notices are required, so those will be brought in in phases.

I also mention the work that the Cabinet Office, which obviously co-ordinates all this, will do to support the new regime. It took me through it this morning. I know that the noble Lord, Lord Fox, was interested in the detail. There are four key elements. First, there are knowledge drops, which are a range of on-demand presentations providing an overview of all the changes in the legislation.

Secondly, there are e-learning modules, which consist of 10 one-hour modules and conclude with a skilled practitioner certificate. This core training product is open to all staff from contracting authorities and named individuals who regularly undertake procurement activity on their behalf. I will take away the point that was made about health experts and see whether it is possible for them to access some of this training material, as that seemed a good point to me.

Thirdly, there will be an advanced course of deep dives—a three-day intensive course for a smaller group who have completed the e-learning modules. They are the advanced commercial practitioners who will need to become experts. Fourthly, we are supporting communities of practice, building on good online practice, where practitioners can support each other by sharing, discussing and reflecting on best practice and the challenges and opportunities within the regime.

Noble Lords will know of my passion for helping small businesses. Clearly, we will keep an eye on the training, which starts with the contractors, to make sure that we get feedback from small businesses so that we know that the regime is working well.

The concept of dynamic markets is a good one. It means that suppliers can know in advance that they will be eligible to bid. You will get several suppliers who can all bid, and it makes the system quicker and more efficient, without undermining the safeguards that we need.

The Procurement Act has improved and strengthened safeguards, with, for example, the ability in Section 42 for the Government to set out in regulation specific public contracts that can be awarded directly for a limited time for the protection that might be needed. There are new transparency notices in Section 44, as detailed in Regulation 26, and more detailed conflict of interest provisions, including the preparation of a conflict assessment under Section 83. We discussed this at great length because we had the backdrop of PPE, and I remember well how we learned from that experience. That is one of the reasons why there are lots of different transparency measures and controls in these regulations. Even if we had to move to direct awards because of some national crisis, the controls would be applied in an appropriate way. We have tried very hard to work at that.

On healthcare, where I very much understand the noble Lord’s point, I should offer to write because he raised a point about a Cumbrian example that I am not familiar with. I made it clear at the beginning that I very much understood that in some areas, the NHS will be doing its own thing, but in other areas such as the construction of hospitals, it will be subject to the broad procurement rules. I have also said that I will take a look at ensuring that the health side takes advantage of the excellent training and online briefing that the Cabinet Office team has worked so hard on.

[Lord Fox (LD)]

I thank the Minister for her point on the NHS and the health service and I look forward to receiving that letter.

There are just two things. I asked a specific question about the readiness of the central digital platform. I listened very hard indeed. I turned my hearing aid up, and I did not hear the Minister say that it is ready. In fact, I heard I heard her say that the department is working with contractors, and then she started talking about phases. That worries me, because of the centrality of this system in order for the Procurement Act to work. Can the Minister give some more detail on that? When will it be 100% ready?

[Baroness Neville-Rolfe (Con)]

I was trying to be open and honest, as I always am, by emphasising what will be clearly ready and where we are bringing other things in in phases. The first stages will obviously be ready, and that is why we are bringing the arrangements in at the end of October, which fits into our deadlines, and then there will be other material coming through. However, with luck, the system we have set up for online briefing will ensure that people know where they are, and I think it will be like other policies I have been involved in. You get a sort of bell curve. To begin with, the new and innovative people use the system; and then gradually, as more material comes on and it gets around that actually, it is really good, you will get more people coming in and more SMEs. I am very keen to work with them to make sure that the share of the cake that SMEs have in procurement, which has gone up in the past couple of years, will continue to rise, and rise very substantially.

I repeat that the online system will be operational from 28 October. The notices will be phased, and timing will be set out in commencement regulations. Obviously, the notices required from 28 October will be available and ready to use. That confirms what I have said, but it gives the extra information that there will be commencement regulations. We will make sure that noble Lords who are interested are aware of them when they are finalised.

I repeat my thanks to all involved in the work. Actually, there is a succession of Ministers whom I have to thank. There are noble Lords right across the House who have been hugely helpful by challenging us and supporting us when we are right. I also thank the officials because it has been a very, very long slog. The new procurement regime starts on 28 October, and after that they will obviously have even more to do. Thank you very much. Please join me in supporting the regulations.

Cybersecurity and UK Democracy

Debate between Lord Fox and Baroness Neville-Rolfe

Tuesday 26th March 2024 Lords Chamber

[Lord Fox (LD)]

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

“Such action from China will not be tolerated”.


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

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

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

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

“should seek to interfere in electoral processes”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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[Viscount Waverley (CB)]

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

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

[Baroness Neville-Rolfe (Con)]

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

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

[Lord Fox (LD)]

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

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

[Baroness Neville-Rolfe (Con)]

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

Procurement Bill [HL]

Debate between Lord Fox and Baroness Neville-Rolfe

Consideration of Commons amendments
Wednesday 25th October 2023 Lords Chamber

[Lord Fox (LD)]

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

[Baroness Neville-Rolfe (Con)]

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

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

Emergency Alert System: Fujitsu

Debate between Lord Fox and Baroness Neville-Rolfe

Wednesday 19th April 2023 Lords Chamber

[Baroness Neville-Rolfe (Con)]

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

[Lord Fox (LD)]

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

[Baroness Neville-Rolfe (Con)]

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

Retained EU Law (Revocation and Reform) Bill

Debate between Lord Fox and Baroness Neville-Rolfe

Committee stage
Tuesday 28th February 2023 Lords Chamber

[Lord Fox (LD)]

Just to add to that, I say to the noble Lord that if he reads back through Hansard, he will see that my noble friend Lady Randerson dealt specifically with all four of those amendments in detail. I believe that that was not a very fair assessment of her contribution.

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

My Lords, I shall start on a slightly different note by sharing in the tributes that have been made to the noble Baroness, Lady Boothroyd. She was a real inspiration for young women like me at the time who were learning to contribute to public life in different ways.

Turning to this group, we have already made it clear during this Committee stage that the Bill is an enabling Bill. The measures in it, including the sunset, will provide for the UK and devolved Governments to review and then preserve, amend or revoke their retained EU law as they see fit. There is no inherent need for policy or legislative exclusions to the sunset in the Bill. To respond to my noble friend Lord Deben, I feel comfortable with what we are doing as a Conservative and as someone, as he knows, who understands regulation. We will be making our legislation more appropriate, updating it where necessary, improving the quality and getting away from gold-plating as appropriate—while maintaining, as I said, necessary protections.

[Baroness Neville-Rolfe (Con)]

A sunset gives us an idea of the timing of the measures. It has precedent elsewhere. We have brought forward the Bill, and I think it has great value, because we are now looking across the board at the 3,700 regulations that are the subject of this debate.

Just to finish my point to my noble friend Lord Deben, he will remember from his own time in Brussels, which was extensive, as was mine—we were sometimes there together—that some of the regulations that were made could be improved, with others preserved and extended. To respond to what has been said, each department is carrying out a review of its own regulations and will do so responsibly. The National Archives has come in, if you like, as a cross-check, as it retains the Government’s regulatory records. EU law, as we all know, goes back to the 1970s, so to bring the National Archives in and make sure that we look at its records to add to the list seems to me to have been a very sensible thing to do.

The noble Lord, Lord Collins, is right to say that it can be useful to look at examples and that we should move on to transport and try to clarify things there. As my noble friend Lord Kirkhope said, we should try to tackle specifics, so let me turn to Amendment 7, which I think is in the name of the noble Lord, Lord Clement-Jones, but was spoken to by the noble Baroness, Lady Randerson—no?

[Lord Fox (LD)]

It is in the name of my noble friend Lady Randerson.

[Baroness Neville-Rolfe (Con)]

Okay—I apologise.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

I thank the noble Baroness for raising that; I will have to take it up with the Department for Transport and get back to her.

On Amendment 24 in the name of the noble Lord, Lord Fox, the Road Vehicles (Approval) Regulations 2020 are part of the recently created GB type approval scheme. These regulations were made under Section 2(2) of the European Communities Act and therefore fall within the scope of the sunset as EU-derived subordinate legislation; they are essential to ensure that the GB type approval scheme can be enforced. The Department for Transport is committed to ensuring that our vehicle type approval scheme creates high standards of safety for vehicles and road users, is robust and will remain fit for purpose alongside future developments in road vehicles. We are developing an ambitious plan supported by evidence and engagement with our stakeholders to reform the way in which vehicles are regulated, creating an agile system that keeps pace with technological developments and innovation in a dynamic and rapidly evolving landscape.

I hope this provides some reassurance. We do recognise the importance of many of these regulations.

[Lord Fox (LD)]

I do not think the Minister was coming on to this point; if she was, I apologise. I asked a specific question about regulatory divergence. The Lord Privy Seal was clear that, going forward, the Government will put in place steps to avoid regulatory divergence with respect to the Windsor Framework. What steps are being put in place in this Bill to avoid regulatory divergence?

[Baroness Neville-Rolfe (Con)]

I thank the noble Lord. His was a general question; I was not going to seek to reply to it. Obviously, the extent of divergence that we might or might not have depends on different areas.

Retained EU Law (Revocation and Reform) Bill

Debate between Lord Fox and Baroness Neville-Rolfe

Committee stage
Thursday 23rd February 2023 Lords Chamber

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

My Lords, it is actually a great pleasure to join this debate on this important Bill. There are four of us on the Front Bench to listen to concerns expressed today—weighty Front-Benchers. I very much believe in the rights of this House and our work to review legislation, which I have done with many noble Lords over the last 10 years.

I will not repeat everything that my noble friend Lord Callanan has said. But I would say that the sunset was introduced to incentivise departments to think boldly and constructively about their regulations and to remove unnecessary regulatory burdens. We should not forget this, while, of course, maintaining necessary protections. That includes food safety, as the noble Lord, Lord Kerr of Kinlochard, explained so clearly. The noble Lord, Lord Whitty, rightly pointed out that food moves across frontiers, which need to be taken into account, of course, in any review.

Of course, all protections will not disappear. That is not what we are debating. As the noble Baroness said, the Government are here to improve the law of the land and we need to avoid error.

[Lord Fox (LD)]

I thank the Minister for giving way. She said that not all protections will fall away. Can she tell us which protections will fall away?

[Baroness Neville-Rolfe (Con)]

I said we would be maintaining the necessary protections. I was debating. People were saying that all protections would disappear; I wanted to make it clear that that was not the case. I am going to talk in a minute about the two or three areas raised by the noble Lord, Lord Fox.

The sunset clause, as we have said already, is not intended to restrict or influence decision-making. It will be for Ministers and devolved Governments to decide what action to take in their specific policy areas.

Even those of us who were remainers and who participated in discussions in the making of European regulations over many years were very frustrated by the bureaucracy and duplication of some regulations, and some of the compromises that we had to make were unwelcome. That was true for Governments over a long period; it was not only a matter of this Government’ concerns.

It is only right, in my view, that retained EU law is reviewed equally across all sectors of the economy and then, if necessary, reformed or preserved. To respond to one of the points made about carve-outs, we do not want to leave any area unreviewed. That includes financial services, but they are being reviewed in the context of another Bill that is going through the House at this time.

We think it is right to review all the areas, including health—

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

What I meant is that, when Bills are going through and noble Lords raise points, it is my experience, having done many Bills both as a civil servant and as a Minister, that these points are picked up and considered. Specific points were made, and I can certainly give an assurance that those points will be passed on to the departmental teams looking at the matters on food safety.

[Lord Fox (LD)]

My Lords, coming in on that point—I thank the noble Baroness, Lady Chapman, for starting the process—and bearing in mind that the number of regulations and laws we are discussing today with respect to Clause 1 is a very small percentage of the 4,700 that the Government have on their list, how does the Minister suggest we raise some of the others that we have not put before your Lordships’ House as amendments? I am happy to come up with some more amendments if that is the best way of doing it. If it is not the best way, perhaps a forum—we could call it “Parliament”—could discuss it.

Public Service Ombudsman for England

Debate between Lord Fox and Baroness Neville-Rolfe

Tuesday 10th January 2023 Lords Chamber

[Baroness Neville-Rolfe (Con)]

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

[Lord Fox (LD)]

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

[Baroness Neville-Rolfe (Con)]

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

Boardman Report

Debate between Lord Fox and Baroness Neville-Rolfe

Tuesday 20th December 2022 Lords Chamber

[Baroness Neville-Rolfe (Con)]

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

[Lord Fox (LD)]

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

[Baroness Neville-Rolfe (Con)]

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

Procurement Bill [HL]

Debate between Lord Fox and Baroness Neville-Rolfe

3rd reading
Tuesday 13th December 2022 Lords Chamber

[Baroness Neville-Rolfe (Con)]

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

[Lord Fox (LD)]

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

Procurement Bill [HL]

Debate between Lord Fox and Baroness Neville-Rolfe

Report stage
Wednesday 30th November 2022 Lords Chamber

[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.

Procurement Bill [HL]

Debate between Lord Fox and Baroness Neville-Rolfe

Report stage
Monday 28th November 2022 Lords Chamber

[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.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

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

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

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

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

[Lord Fox (LD)]

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

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

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

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

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

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

Procurement Bill [HL]

Debate between Lord Fox and Baroness Neville-Rolfe

Committee stage
Wednesday 26th October 2022 Grand Committee

[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.

Procurement Bill [HL]

Debate between Lord Fox and Baroness Neville-Rolfe

Committee stage
Monday 24th October 2022 Grand Committee

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

United Kingdom Internal Market Bill

Debate between Lord Fox and Baroness Neville-Rolfe

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Monday 23rd November 2020 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I thank my noble friend Lord Callanan for his amendments, which, as many have said, represent a real readiness to listen. The changes all seem very sensible, especially the proposal for the CMA to lay an annual plan before Parliament and before the devolved legislatures. Perhaps a similar procedure could be derived in relation to the common frameworks, over which there has been so much grief and debate. In my experience, when things go well, such reports become routine and are not even debated, but they are a good way of keeping the Executive —public servants, any boards involved and the Ministers they serve—objective, efficient and thoughtful.

However, I am afraid that I do not support Amendment 54. Board members of the CMA should not be “representative” of a territorial interest in the way this would inevitably turn out. The interests of the four nations should be taken into account in coming up with a balanced, objective board, but this is not the right way to do it. My noble friend Lady Noakes summarised the balance issues very well from her own wide experience. The amendment would also jeopardise the very objectivity and pursuit of the public interest which is vital to a better CMA.

By the way, Tesco’s head office is not in London; that was a bad example for the noble Baroness, Lady Randerson, to choose. At least in my time, we had a very high degree of sensitivity to Welsh issues, sold more Welsh food elsewhere in the UK than anybody else, and indeed from time to time had Welsh individuals of great independence sitting on the board.

[Lord Fox (LD)]

That is just proof that you can take the Peer out of Tesco but not Tesco out of the Peer.

My noble friend Lady Randerson hinted that she thought the Minister might be developing emotional intelligence—or perhaps we will see signs of that later. However, I think that most of your Lordships have welcomed the government amendments in this group. They are showing movement in the right direction and are an improvement on what you would expect those of us on these Benches to condemn as a deeply flawed Bill.

My noble friends Lady Bowles and Lord Bruce both made the point about where the OIM is and its presence in the CMA. We are not debating that in this group, although we will be some other time. However, Amendment 54 and consequential Amendment 59 should be seen as the safety belt in the event that the OIM remains within the CMA.

The noble Lord, Lord Naseby, made a powerful speech against Amendment 54. I did not see him in his seat when the noble and learned Lord, Lord Thomas of Cwmgiedd, was giving his strong endorsement of his amendment. He may have been oscillating somewhere between virtual and physical; if he was, I apologise. In his speech, the noble and learned Lord, Lord Thomas, put forward a very important point. The CMA is getting considerably more powers as a result of the Bill. The point he did not make but inferred is that those powers move from being reserved powers to those that step into the realm of devolved powers—there can be no doubt about that.

There is therefore a significant change in the nature of the task that the CMA is overseeing. The Government may say it is too much trouble to change the nature of the governance of the CMA, but its focus is changing from reserved issues to those which cover devolved matters, so that change should be reflected in its governance.

My noble friend Lord Bruce talked about unintended rather than intended consequences. The Government need to create a board that can reduce the number of unknown unknowns that it encounters. Amendment 54 is a perfectly reasonable amendment, which would make sure that there are people on the board who understand the nature of the markets in the devolved countries.

To take the point made by the noble Baroness, Lady Noakes, one would hope that the careful construction of a board would understand the need for that. I have to tell your Lordships—and perhaps the principles of my noble friend Lady Bowles could be passed to some Cabinet members—that the construction of boards and organisations over the course of the last 12 months has been nothing like a careful assembly of the right people. It has been a gathering of friends and known people to do the bidding of the Secretary of State. Therefore, it is right for the opposition to be very suspicious about the future board of the CMA, which will have this extraordinarily bumped-up role. That is the reason for Amendment 54 and also for consequential Amendment 59.

The noble Baroness, Lady Noakes, is correct. In a sensible world, what she suggests would happen. However, we cannot trust that to go forward, and trust is going to be very important with regard to the devolved authorities and how they work with the CMA if, indeed, the office for the internal market is located within it.

The noble Lord, Lord Wigley, the noble Baroness, Lady Finlay, and my noble friend Lady Randerson gave wise advice: rather than politicise the CMA, this is helping to inoculate it from political suspicions. That is why, if the noble and learned Lord, Lord Thomas, seeks to put it to the House, we Liberal Democrats will support Amendment 54.

United Kingdom Internal Market Bill

Debate between Lord Fox and Baroness Neville-Rolfe

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Wednesday 4th November 2020 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, this Committee is nearing its end, apart from Part 5. I support the noble Baroness, Lady Bowles, in her forensic efforts to probe the purpose of Clauses 38 to 40. I welcome my noble friend Lord Tyrie to today’s debate. Although I do not agree with him on fines or general powers, he makes a very good point about digital information. I am sorry he was not here for the debate on where the OIM sits. As he says, that is something we hope to debate again on Report.

On the plus side, these clauses give a great deal of detail. I usually complain to the Minister that EU exit Bills fail to do just that and leave too much to regulations. On the minus side, these are extremely strong powers of enforcement with very high penalties—for example, fixed fines of up to £30,000 would make many a small company bankrupt. There is no due diligence defence that I can see or provision allowing a reasonable excuse. The CMA can use its own discretion to decide whether a request for information has been complied with and can impose a financial penalty if it thinks there has been obstruction or delay. Such powers are fiercer than those of the police. The Minister will be able to tell us whether the CMA has those powers in relation to competition law and perhaps explain in each case why they are justified in the internal market Bill which, as many have said, is a little different from competition law.

Moreover, we do not know to which regulations these various measures and penalties will apply. Can the Minister kindly take us through some examples of their proposed use? He may have done this elsewhere; if so, I am sorry if I missed that. Perhaps more importantly, could he lay some sample regulations for us to review before Report, as his predecessor did so helpfully on the Bill relating to nuclear issues on EU exit?

I worry that both Houses of Parliament have been distracted by unease with Part 5 of the Bill into agreeing wide-ranging, open-ended and burdensome powers in these clauses and, for the first time, on services, the beating heart of the economies in all four nations of the UK. All this has been relatively lightly scrutinised despite our efforts, and experience shows that some nasty surprises might be in store. I am keen to work with others to minimise those while generally supporting the Bill’s direction of travel.

[Lord Fox (LD)]

My Lords, once again this has been a short but important debate. I congratulate noble Lords on speaking on this. Once again, I find myself in complete agreement with the noble Baroness, Lady Neville-Rolfe, and my noble friend Lady Bowles. It was good to hear from the noble Lord, Lord Tyrie, whose experience is important.

During her speech, my noble friend Lady Bowles sought to characterise the difference between getting information from potential recalcitrants—people who are suspected of or known to have distorted the market—and getting information from people to create a picture of a market. I hope the noble Lord, Lord Tyrie, will not mind me saying that the sort of language used about needing more sanctions and similar issues is coming from the mindset of dealing with recalcitrants. That is where the experience of the CMA has lain to date. There is a real concern that in creating this new role the culture of having to fight to get what you need is transferred into this second activity, and that is not appropriate.

I was interested to hear the point of the noble Lord, Lord Tyrie, about Clause 28 and looking again at the positioning of the OIM and CMA. I would be very keen to hear what he has to say.

United Kingdom Internal Market Bill

Debate between Lord Fox and Baroness Neville-Rolfe

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 26th October 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, as I said in winding up at Second Reading, the eight hours of speeches broke the Bill down into three areas of serious concern: its illegality, its threat to the union, and its structural contradictions. As the noble Baroness, Lady Hayter, said, even if Part 5 is removed one way or another, there will still be great dangers lurking within the Bill. This amendment focuses squarely on putting the threat to devolution on ice.

The Minister was right when he said that the devolved authorities get new powers through the Bill, but these new powers are heavily constrained—more so than they were before when there was EU flexibility. We have heard some of this debate already. More importantly, both Ministers have omitted to mention that, at the same time, the Government are taking significant powers away. These losses are far more significant than any notional gains. This has already been correctly characterised by the devolved authorities as rolling back the devolution settlements.

The Governments of Wales and Scotland need only look over their respective borders to see how the UK Gossvernment are treating their regions and cities—where there is only piecemeal devolution—to conclude that taking power back to the centre is not an accident; it is a pattern of behaviour. As an aside, this is not a unique pattern of behaviour. My Scottish friends tell me that the Scottish Government are very enthusiastic about centralising power away from their local councils.

Returning to the Bill, we should not worry when it comes to Westminster’s reputation in Scotland. I read in the press that Michael Gove is heading up a new unit to tackle the secessionist movement in Scotland. What could go wrong there? Perhaps a better way of dealing with the unpopularity of Westminster is to deal with the central devolution issue in the Bill.

There are many later amendments concerning parts of the problem with the Bill. This amendment seeks to deal with it all in one go, taking it head on. It is driven by a central principle which we on these Benches share. We do not believe that it is only the UK Government or this Parliament that should dictate how the future internal market should work. It has to be a collaborative effort between Westminster, Edinburgh, Cardiff and Belfast. To achieve this, Parts 1 to 4 of the Bill need to be rewritten by consensus, not imposed, which is why this amendment seeks to halt the progress of Parts 1 to 4 until a joint process has created the future market structure. In essence, it will put on ice the Bill’s implementation until agreement is reached on the operation of the internal market frameworks.

In order to do this, the amendment rewrites the purpose of the Bill. What stays is the promotion of the continued functioning of the internal market for goods, in Part 1, and services, in Part 2. It includes the recognition of professional and other qualifications in the UK—in Part 3—by establishing the UK market access principles, including, as now, the mutual recognition and non-discrimination principles for goods and services. It adds the important rider that those principles have to be agreed in a memorandum by the Secretary of State, the Welsh and Scottish Ministers and a Northern Ireland department. This memorandum would cover how the agreed policy frameworks on the functioning of the internal market in the United Kingdom would operate and any agreed exclusions from market access principles. It would establish a council or councils, comprising representatives of the Secretary of State, the Welsh and Scottish Ministers and a Northern Ireland department to oversee the operation of the agreed policy frameworks and the functioning of the internal market in the United Kingdom. The current Joint Ministerial Council would need to be strengthened to achieve this objective.

The amendment would also establish an agreed dispute resolution mechanism, relating to the internal market of the United Kingdom. It requires the Secretary of State to lay this memorandum before Parliament. In short, this amendment makes the Government do what it should already have done. Amendment 4 requires them to consult and reach agreement with the devolved nations of the United Kingdom. By pausing and putting this on ice, Her Majesty’s Government can then create the consensus that is needed. It can also address the holes in the Bill, including the role of the common frameworks, which will be discussed in much more detail later, and it can put in place a process of dispute resolution. The deliberate absence of detail around dispute resolution can be viewed with great suspicion by those who are so minded. It seems that in the end, the Westminster-based UK Minister will decide disputes if the Bill remains unamended.

Why should the Government agree to this amendment? The first reason is due process. I met the noble Lord, Lord Callanan, on Friday. His key anxiety was about discipline and time in order to get through all this. If he were to accept this amendment, he would, at a stroke, remove large portions of the subsequent debate up to, but not including, Part 5 of this Bill. He would then meet his time objectives. Much more seriously, by accepting this amendment, the Government could step back from a truly appalling act of political vandalism. To say that this Bill drives a coach and horses through devolution is not hyperbole. This cynical approach to the balance of powers established between Westminster and Scotland, Wales and Northern Ireland, is calling down issues that, once started, will not easily be halted. This amendment seeks to avert this disaster, creating a role for the devolved authorities, including the operation of the internal market frameworks, robust dispute resolution, agreed exclusions from market access principles and representation for all four nations on oversight councils. I beg to move.

[Baroness Neville-Rolfe (Con) [V]]

My Lords, I refer to my interests in the register as this is the first time I have had the honour of speaking in Committee. Amendment 4 introduces an expanded purpose for the Bill. The noble Lord, Lord Fox, has explained the rationale for his wide-ranging proposal. I can understand his wish to refer to services at this introductory point in the Bill, given that they comprise over 80% of GDP, and to professional and other qualifications, harmony on which is so important to the UK’s single market.

I accept that the changes to subsections (1) and (2) merit consideration. However, I am very uneasy about the proposed new subsections (3) and (4). I fear that they make this a wrecking clause. They give the devolved Administrations a veto over the way internal market arrangements will work, in addition to the substantial powers and money that they have already been given in the various devolution settlements and EU exit Bills. This is a recipe for the politics of national resentment, chaos and delay, at a time when we need rapid agreement on the new order so that the country can move forward and make the EU exit work, difficult though this may be.

Resources are already massively redistributed out of London and the south-east to other parts of the UK, with Scotland alone having a fiscal deficit of £15 billion—namely, a subsidy from richer England—according to a recent article by David Gauke, who served in the Treasury for seven years. We do not want yet another stand-off at this moment in time with the devolved nations, able to hold things up. There has been quite enough of such delay in the exit negotiation process, now more than four years long, I remind noble Lords.

Where I have more sympathy with the noble Lords, Lord Fox and Lord Purvis of Tweed, is on the fact that we need clarity now, before the Bill takes effect. Perhaps I can explain why by way of analogy.

When I was at Tesco, one of the key reasons for success was a clear understanding of who had responsibility for what and a readiness to accept the rules for the greater good. Procurement was done centrally by buyers, who could work with the supply chain, such as British food producers, understand their needs, strengths and innovations, agree a reasonable deal and ship goods to the stores in line with customer demand. When it came to other areas, such as who to hire as employees and how to schedule their hours, that was locally determined. The key was that everyone knew and accepted the division of labour because it contributed to the success of the whole. There was no council where everyone could waste hour after hour arguing the toss, as appears to be proposed in this amendment.

Let us have clear divisions and let us decide them now, not leave them for a great fight over a memorandum of understanding or yet more devolved government bodies backed up by dispute resolution. That is just an invitation to politically motivated folk to stop the country adjusting to the new norms and getting ahead with economic recovery and international ambition.

The proposals in the Bill are a good start, and, as noble Lords can see, I am uneasy about this particular amendment. I served for nearly three years as the single market Minister in the EU and for years as a British official negotiating in Brussels and Luxembourg, and the truth is that, subject to some minor subsidiarity, internal market rules for goods were set at the EU level in the interests of the efficient functioning of the market. By analogy, rules for the UK single market should be set at the UK level. EU services were less streamlined, but we all recognised that and wanted to bring about improvement, which was one of the main objectives of the UK presidency in 2017, but that never happened. I look forward to hearing from my noble friend the Minister, but I will take a lot of convincing that subsections (3) and (4) make sense.

Corporate Insolvency and Governance Bill

Debate between Lord Fox and Baroness Neville-Rolfe

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 23rd June 2020 Lords Chamber

[Baroness Neville-Rolfe (Con) [V]]

My Lords, I thank my noble friend the Deputy Leader for his many amendments, designed to moderate the overuse of delegated powers in this important legislation. The legislation is vital to easing the burden of events on businesses, especially smaller or less well-capitalised businesses, of which sadly there are more every day.

I was particularly concerned about the lack of an end date for the use of the emergency powers, but government Amendment 49 appears to meet my concern. I also thank my noble friend Lady Fookes, the noble Baroness, Lady Taylor, and others for their effective scrutiny.

[Lord Fox]

My Lords, this will be something of a novelty but I am going to be gracious. As is appropriate, I congratulate the Government on bringing forth Amendment 49, as did the noble Baroness, Lady Neville-Rolfe, and on sweeping away as many as possible of the Henry VIII clauses, as they are known. My noble friend Lady Barker set out the challenge for this Bill and the reasons for retaining some powers to change and mutate it as it goes forward. Because of the haste and scale of the Bill, there is a great challenge from non-conventional businesses, so to speak.

The point about museums is a very good example of where it is a question not just of the future of the museum but the future integrity of a collection, which suddenly becomes an asset. While it may not be possible to save a museum, it should be possible to save a collection—but, when very many collections are going up for sale at the same time, clearly the capacity to deal with that is eliminated; that is just one very niche example of the challenge for the Government. In this set of amendments, the Government have shown an ear to the debate and have reacted accordingly.

Corporate Insolvency and Governance Bill

Debate between Lord Fox and Baroness Neville-Rolfe

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 16th June 2020 Lords Chamber

[Lord Fox]

My Lords, I rise with some trepidation following four experts on pensions. I shall speak to Amendment 118, which bears my name alongside those of the noble Baroness, Lady Altmann, and my noble friend Lady Bowles. Before that, I want to pick up on the point just made by the noble Baroness, Lady Altmann, on asset pledges in her Amendment 27.

That is important for two reasons. First, if the asset pledge falls in the case of an insolvency, pensioners will of course miss out, but, secondly, it is a challenging time for pension trustees even if they are operating within solvent companies today. Asset pledges have been used so that companies do not have to funnel direct cash flow into their pension funds, leaving that cash flow available for them to invest in the expansion of the business. If the Bill stays as it is and I was a pension fund trustee, I would go back to the company funding the pension and say, “That asset pledge is no longer worth the paper upon which it is written. I need more cash”. It is not in the interests of that business and, frankly, nor of this country for that cash to be siphoned off and taken out of investment for growth. That is an important point and the noble Baroness was wise to have raised it.

As the Minister knows, if a business goes bust with an underfunded DB scheme, the pension debt ranks alongside other unsecured creditors such as banks. This Bill dramatically changes that.

We all received an email late yesterday that seems to indicate movement on the Government’s part, and about that we should be very pleased, but it is difficult to tell how far and to what level that movement is going without the relevant amendments. Today, a second rabbit was pulled from the Minister’s hat and we were told that there will movement around banks and financial institutions. It is difficult to see what is going up and what is going down in terms of the movement, so we shall have to wait to see what the amendments say. The Minister could probably say today whether the Government intend to restore the level of access that the PPF and therefore pensioners had as creditors, at the very least to what it was before the Bill was drafted, or whether we are going to be somewhere between that and where we are now.

The email that we received yesterday uses fairly passive words. We are told that under a moratorium the PPF will be given rights to “information”; we are told that, under restructuring, it will receive “copies of”—it sounds like they are added to the “cc” list of the email going round—subject to appropriate constraints. I concede that, under a moratorium, the PPF is given the right to challenge the actions. I have the right to challenge actions, but will it have any powers to make that challenge stick? There is an awful lot of haze in this. It is clear that there has been some movement in the Government’s position. The sooner the Minister can table the relevant amendments, and the sooner he can clarify whether pensioners will be as well off as they are now or better off or worse, the better.

[Baroness Neville-Rolfe [V]]

My Lords, I have not yet seen the email or of course the amendments, so I have nothing to add at this stage but look forward to studying them.

Trade Bill

Debate between Lord Fox and Baroness Neville-Rolfe

Committee: 2nd sitting (Hansard - continued): House of Lords
Wednesday 23rd January 2019 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the noble Lords, Lord Stevenson and Lord Lansley, for bringing this issue to your Lordships’ House. We support greatly the spirit on these Benches. The noble Lord, Lord Lansley, used a contemporary example of rice. In another life a long time ago, I worked in the sugar industry for seven years. Of course, sugar is wrapped into this so deep that it is still embedded in there. On his point about the transition from us being part of a European scheme to going into a wholly United Kingdom scheme, I know that the pressure on that commodity alone would be huge, given the past relationships and previous problems that some sugar-producing countries have had within the European regime. That is just one commodity. His point is clear: that this is not a simple issue but one that requires a great deal of thought, but that thought must be had and is worth having. We support this process and will involve ourselves if necessary in how this gets taken forward. Clearly, we want to be part of a future regime that has these objectives, but the means with which to produce that are not necessarily as simple as they might look on first appearance.

[Baroness Neville-Rolfe (Con)]

With the GSP, the key thing is who benefits. In the past, some quite surprising people have benefited who perhaps do not benefit any longer, such as Mexico, Chile, South Korea and so on, which are now very rich countries. India was in there for a long time. It is important who is on the list.

I have some sympathy with the points made by my noble friend Lord Lansley. If we leave the EU, I believe that we should have more choice in which countries we help with tariff preferences. We should be able to take a more independent view, with an eye to our own history—for example, of the Commonwealth—and not necessarily just copy out the EU list. Obviously it depends on where we finally end up in our relationship with the EU, and I do not want to go into that, but if we end up having a certain amount of independence, that should apply to GSPs. I am not sure that this amendment should be in the Bill, but it is very good that we are taking this opportunity to talk about this useful vehicle for helpful the poorest developing countries that we all want to see develop.

Nuclear Safeguards Bill

Debate between Lord Fox and Baroness Neville-Rolfe

Committee: 1st sitting (Hansard - continued): House of Lords
Thursday 22nd February 2018 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, the points made by the noble Lord, Lord Teverson, underline the desirability of an implementation period in this area as in other Brexit areas. For clarity, I want to ask a question arising from what the noble Lord, Lord Carlile, said. Are energy officials and Energy Ministers able to get on with this? The assumption that I have been working on is that the timetable is tight in this nuclear area and that discussions therefore need to go ahead with the IAEA, Euratom and the other nuclear states. Is that work in hand? Is there a plan for it? It would be helpful if the Minister were able to respond on that.

[Lord Fox (LD)]

I want briefly to speak in support of Amendment 14, which bears my name. While avoiding repeating what the noble Lord, Lord Carlile, has said, I want to pick out subsection (2)(c) of the proposed new clause, which refers to, “relevant research projects”. The noble Lord, Lord Broers, spoke eloquently in a previous debate about the importance of research in this area. As your Lordships and, I am sure, the Minister know, the UK benefits enormously from the long-term research funding and its membership of the Fusion for Energy programme, which flow through the Euratom relationship. I think the supply chain has been awarded some £0.5 billion to date and expects more, and the UK Atomic Energy Authority receives significant sums—around £50 million. On a broader level, as a leading participant in Euratom and the research element of it, the United Kingdom has been able authoritatively to drive research priorities. What does the Minister envisage our authority being following this process? Will it have risen or sunk as a result of our ability to drive and influence research in the nuclear field?

My noble friend Lord Teverson illustrated how hard and tough the Table Office has been on the wording of the amendments. In many cases—certainly, in other conversations—the Minister has ruled out of order a lot of what we have talked about. However, on Amendment 14, which covers some of these areas, the Table Office has been clear that this is in spec with the Bill and our debate today.

Space Industry Bill [HL]

Debate between Lord Fox and Baroness Neville-Rolfe

Committee: 1st sitting (Hansard): House of Lords
Monday 16th October 2017 Lords Chamber

[Lord Fox (LD)]

My Lords, at this stage, I declare my financial interest in GKN and Smiths Group, both of which probably have some activity in the space industry, although I am not currently aware of it. I associate these Benches with the amendments and the overall thrust, which I am sure that the Minister is beginning to get, that there is considerable concern about the exercise of delegated powers. As the previous speaker mentioned, that will come up in a series of later amendments.

I defer in my knowledge to the noble Lord, Lord Moynihan, who is expert in these matters, but it is clear that we want to get the balance of affirmative and subsequent negative delegation right, and the excuse or otherwise that parliamentary time may not be available for the return of legislation is probably insufficient. Again, I hesitate to say this in front of the noble Lord, but safety is often dealt with by safety cases rather than a line by line, “You should do this, you should do that”, style of legislation. It does not require line-by-line scrutiny by government or Parliament.

With those points in mind, we associate ourselves with the amendments. We ask the Minister to review the Government’s position on delegated powers and are interested to hear how he stands on the amendments.

[Baroness Neville-Rolfe (Con)]

My Lords, I am sorry that I was unable to speak at Second Reading on this important Bill, but I have had a helpful exchange with the Minister on the powers in it and his plans for consultation in future.

Following on from the comments made by my noble friend Lord Moynihan, I have a question and a comment. First, he argued for parliamentary procedure in relation to guidance. I would find it helpful to have a little more detail as to what sort of guidance is envisaged, so that we can look critically at whether any parliamentary procedure is appropriate. Secondly, I share his concern at the double barrel—having an affirmative resolution for the first regulation and a negative resolution for subsequent provisions—because it could be open to abuse and give too much power to the Executive on important matters. I would welcome further study of this provision, as has been suggested, before Report.

I am worried about the powers in the round—in this Bill and the Data Protection Bill—and I think that delegated legislative provisions will also become an issue when we come to the plethora of Brexit Bills later in the Session. It would be very useful, in this less contentious Bill, to make sure that we have the right provisions.

National Minimum Wage (Amendment) (No. 2) Regulations 2016

Debate between Lord Fox and Baroness Neville-Rolfe

Thursday 8th September 2016 Lords Chamber

[The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)]

My Lords, the purpose of these regulations is to increase the hourly rate of the national minimum wage and increase the maximum amount for living accommodation that counts towards minimum wage pay to ensure the provision of higher-quality accommodation by employers, in line with the recommendations from the Low Pay Commission.

The national minimum wage is designed to protect low-income workers and provides an incentive to work by ensuring that all workers receive at least the hourly minimum rates set. It helps to deter unscrupulous employers from competing on very low pay.

Following advice from the Low Pay Commission, the Government are uprating the minimum wage from 1 October, so that the main rate for 21 to 24 year-olds will be £6.95 per hour. This represents an increase of 3.7%, despite CPI inflation currently being 0.6%.

Younger people aged between 18 and 20 years-old will be entitled to a minimum of £5.55, a 4.7% increase on the rate currently in force, and those between 16 and 17 years old will have a minimum wage rate of £4 an hour. For apprentices aged under 19, or those aged 19 and over in the first year of their apprenticeship, we are increasing the minimum wage by 3% to £3.40. This follows the 57% increase to the apprenticeship minimum wage last year, the largest increase to date.

For 21 to 24 year-olds, this is the largest increase in the main rate of the national minimum wage since 2008. It will mean that someone working full time on the national minimum wage will see their earnings increase by around £450 per year. The new main rate of the national minimum wage is expected to be at its highest level ever when accounting for the general increases in prices, surpassing its pre-recession peak. In all, we estimate that around 500,000 workers are expected to benefit from the national minimum wage increases being debated today.

The accommodation offset was introduced in 1999. It limits the amount that employers can recoup through accommodation charges. This year we followed advice from the Low Pay Commission and increased it significantly by 12% to £6 a day from October 2016. This is intended to ensure the provision of higher-quality accommodation by employers.

Since its introduction in 1999, the national minimum wage has been a success in supporting the lowest-paid UK workers. Over that period it has increased faster than average wages and inflation without an adverse effect on employment. It has continued to rise each year during the worst recession in living memory and the new main rate is expected to be at its highest-ever real value.

These increases to minimum wage rates are of course in addition to the national living wage for those aged 25 and over, which we implemented in April. It is the Government’s ambition for the national living wage to reach 60% of median earnings by 2020. In addition, the national minimum wage cycle will be aligned with the national living wage cycle from April 2017. This will reduce the burden on businesses that have to update their workforce’s pay more than once a year and will mean that the statutory pay floor for all ages is uprated simultaneously.

I note the findings of the recent research conducted by the Federation of Small Businesses and understand that some concerns have been raised about the impact on businesses’ profitability. Let me address this point specifically. The Government are committed to ensuring that the new rates work for businesses of all sizes and we continue to work closely with the LPC to consider the wider economic and business impact when recommending and setting national minimum wage rates. We have already introduced measures to mitigate the cost to business of our ambition to move to a higher-wage economy, including increasing the employment allowance from £2,000 to £3,000 this year. This measure will benefit up to 500,000 employers and take 90,000 employers out of NIC payments altogether.

For smaller businesses we have extended the doubling of the small business rate relief for a further year until April 2017. Around 600,000 small businesses benefit from the small business rate relief and about 405,000 businesses will pay no rates at all as a result of the extension.

The most recent employment statistics show that the employment rate is at a record high, with almost 32 million people in work and the unemployment rate at its lowest level in more than 10 years, with fewer than 1.7 million people unemployed and wages up 2.4% on a year earlier, while inflation has, of course, remained low. While the referendum result may have introduced uncertainty over forecasts and assessments made before June, we should remember that the UK labour market was remarkably resilient during the worst recession in living memory.

The new rates are recommended by the independent Low Pay Commission, which consulted extensively with stakeholders representing both business and workers, as well as conducting comprehensive research and analysis. Crucially, the Low Pay Commission has proven that a rising minimum wage can go hand in hand with rising employment. The carefully considered independent advice from the Low Pay Commission is central to maintaining this balance. In particular, its remit is clear that, when considering the pace of increased minimum wage rates, the state of the economy should be taken into account. The LPC has stated that the labour market has continued to perform well, with robust employment growth in low-paying sectors.

[Lord Fox (LD)]

My Lords, the Minister is right to suggest that we have high or record high employment levels. We are also at record levels of zero-hour contracts. The minimum wage is not actually a wage; it is a minimum hourly rate and people fight to get sufficient hours to get that minimum wage. Can the Minister comment on the way in which the Government will approach the zero-hour part, which is diminishing the minimum wage for many people across the country?

[Baroness Neville-Rolfe]

We have debated zero-hours contracts in this House a number of times. I continue to believe that they have a part to play in the modern flexible market. There were some abuses to those contracts, which we discussed last year, and we have banned the use of exclusivity clauses so that people have the freedom to look for and take other work opportunities and have more control over their work hours and income. However, I believe that a strong minimum wage framework with good enforcement, which I am going to talk about, is the right way forward. The effectiveness of this system—I think that this is true in every regulatory area that I deal with—relies on proper enforcement.

We are clear that anyone entitled to be paid the national minimum wage or the national living wage should receive it, whether they are on a zero-hours contract or not. The enforcement of a minimum wage is therefore essential to its success and we are committed to cracking down on employers who break the minimum wage law. That is across all sectors of the economy. That is why we have increased the enforcement budget for HMRC, which enforces the minimum wage on behalf of our department. That is £20 million in 2016-17, up from £13 million last year. That bolsters its resources and ensures that it can respond to every worker complaint. We will continue to take a tough approach to employers who break minimum wage law. As of April this year, the Government have also doubled the national minimum wage penalty paid by employers, so it is up from 100% to 200% of the arrears owed to the worker, up to a maximum of £20,000 per worker—penalties that really hit those who do not comply with the law. Finally, HMRC will continue to refer the most serious cases of wilful non-compliance for criminal investigation.

The Government believe that the rates set out in the regulations before the House today will increase the wages of the lowest paid while being affordable for business. I commend the regulations to the House.