Government Procurement Policy

Lord Haskel Excerpts

Thursday 24th November 2011 Lords Chamber

[Lord Haskel]

My Lords, in his characteristically robust speech, my noble friend Lord Sugar told us that the Government spend about £238 billion a year on procuring goods and services. In doing so, he and other noble Lords say that the Government should be active, supporting and helping our economy and helping to shape markets. I agree.

As the noble Lord, Lord Sutherland, said, an active Government must be a skilled purchaser as well as supporting innovation and good design, not a Government who look for the cheapest, most readily available, most risk-averse purchases—a very attractive option at this time of cuts. Being a purchaser that supports innovation and new design is right because in the long run that is better and cheaper, and we are in it for the long run.

The noble Lord, Lord St John of Bletso, reminded us that this week the Government announced that they wanted to speed up the procurement process. If the Minister wants a quick fix, he should speak to his noble friend, the noble Lord, Lord Feldman. Many years ago the noble Lord started the Better Made in Britain exhibitions, where large retailers and others exhibited imported goods and invited UK suppliers to come along and bid. He organised 25 of them and, yes, I went along and won some business. Government procurement always featured because it was one way that the Government had of showing British industry whose side they were on—basic, perhaps, but certainly quick, and they probably helped cut prices.

As other noble Lords have said, though, life is more complicated than that. The right way for the Government to get good value and create jobs and for the nation to benefit is to behave as an intelligent lead customer. My noble friends Lord Kestenbaum and Lord Davies explained how in business you should always look for a good lead customer—a firm that works with you and understands the market so that it can guide the specification and design, support the development and eventually test and validate the product. This is particularly important for early-stage companies that may have a good idea and something new, but lack a route to market.

That applies not only to innovation in technology; it applies equally to innovation in design. They must go hand in hand. Earlier this month, your Lordships debated the creative industries, speaking of their excellence and how they defined the UK in the eyes of the world. So why do they not play a much larger role in the procurement process? Presumably, imaginative, sensible and continual innovation in design is equally important to the public sector as to the private sector. Design is much more than an expensive additional process for making something look good; it drives fitness for purpose and raises the quality of use. Good design is not expensive. Raising design standards improves our quality of life, and who would say no to that?

What is required is a procurement process that not only acts as an intelligent lead customer but encourages the search for innovative design, all within European Union and World Trade Organisation rules. That can be done. My noble friends Lord Bhattacharyya and Lord Kestenbaum spoke of the Small Business Research Initiative Scheme, operated by the Technology Strategy Board. My noble friend Lord Bhattacharyya told us that the scheme was unashamedly copied from the hugely successful US scheme. SBRI was relaunched in April 2009. It operates under pre-commercial procurement rules. It does not involve state aid but delivers funded research and development contracts in the form of a challenge to find an answer to a need or issue in the public sector where the solution is either unknown or not good enough. The challenges can be for the product, for the knowledge gleaned from research or simply for a better or more economical design—procuring for the outcome, as the noble Lord, Lord St John, called it.

Since April 2009 there have been 78 competitions, generating some 640 contracts to a value of more than £43 million. Many of these contracts have gone to small or even micro companies. Some noble Lords have dismissed this as being tiny. It is not so tiny when you compare it with the recent government scheme to bolster exports by small and medium-sized enterprises, which had four takers, or the Business Growth Fund, which had one project.

Often the key to these new developments are new or improved materials. I declare an interest as honorary president of the Materials Knowledge Transfer Network. We encourage all our 4,500 industry members to bid for these and other public procurement challenges. This has resulted in the development of innovative glazing for windows and walls for public buildings that varies the transparency of the glazing automatically to control light and heat transfer. As a result, the UK has a strong position in architectural glass such as e-glazing.

There are many more examples of the way this system works. I join my noble friend Lord Puttnam in regretting that there are not more speakers on the Conservative Benchers who could tell us about it. My special interest is in technical textiles. Through the scheme, the antibacterial hospital gown for the NHS that controls the spread of MRSA has been developed, as has unobtrusive monitoring of health and drug delivery.

Current competitions include DEFRA looking for a small-scale anaerobic digester. Operation research and analysis to help the MoD make better decisions— I am sure that the noble Lords, Lord Lee and Lord Palmer, and my noble friend Lord Davies would all say amen to that. A competition that concluded recently was to deliver assisted living lifestyles at scale, the benefits of which we can all look forward to.

This system works. It benefits the private sector and public procurement. It enhances our quality of life. It is a matter of political will and personal determination to get it to work. Let us see the Government get on with it.