Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Committee stage
Monday 18th July 2022 Grand Committee

[Lord True (Con)]

My Lords, here I pay the penalty for the discussion we had before the Committee started: there are more government amendments that I must move in this group. I will beg to move a range of amendments today.

Government Amendments 90 and 91 make improvements to preliminary market engagement notices. Together they ensure that, where a contracting authority chooses not to publish a preliminary market engagement notice, a justification must be set out in any subsequent tender notice. I know this will be welcomed, particularly by small businesses, which often rely on early market engagement.

Government Amendment 277 makes provision for contract details notices. It removes a superfluous reference to contracts awarded under this part, which is unnecessary as the definition of a public contract in Clause 2 covers that which needs to be covered.

Government Amendments 278 to 281 correct a timing error in relation to the publication of a contract details notice for a light-touch contract. This will ensure that the contract details notice is published first, within 120 days of entering into the contract. The publication of the contract is required within 180 days of entering into it, allowing time for the contracting authority to make any necessary redactions before publication.

Government Amendments 282 to 286 are at the request of Northern Ireland and exclude transferred Northern Ireland authorities from the obligation to publish contracts above £2 million.

Government Amendment 287 is a minor drafting change, which better reflects the operation of the provisions.

Amendments 355, 356, 357 and 359 make changes to the requirements in Clauses 64 and 65 for contracting authorities to publish information about, respectively, compliance with the prompt payment obligation in Clause 63 and payments made under public contracts. Northern Ireland has chosen to derogate from both those requirements, so these amendments reflect that policy.

Government Amendment 358 makes it clear that the exemption for utilities in Clause 65(4)(a) applies to private utilities only. Government Amendment 403 clarifies that user-choice contracts which are directly awarded are not subject to the requirement to publish a contract termination notice.

Government Amendments 429 and 430 are technical amendments to Clause 79 to reflect consistent drafting practice and the fact that Northern Ireland has chosen to derogate from the below-threshold rules in Part 6 and so does not require the threshold-altering power in subsection (7).

Government Amendments 446 and 447 to Clause 84 also relate to Northern Ireland. Northern Ireland has chosen to derogate from the requirement for its contracting authorities to publish pipeline notices.

Government Amendment 457 inserts a new clause entitled “Data protection” after Clause 88. This is a now standard legislative provision that reiterates the need for those processing personal data under this Bill to comply with existing data protection legislation. As we discussed on an earlier group, I look forward to engagement with noble Lords opposite on issues of particular concern relating to processing and holding data. I beg to move.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have Amendment 445 in this group. This amendment is concerned with the challenge facing charities seeking to obtain contracts from public authorities. The Bill is ambitious in its aim to simplify procurement rules, which is very welcome, but it is important that it is done in a way which does not make it more difficult for small businesses and particularly charities successfully to bid for contracts.

We know from past experience with current contracting rules and law that charities experience some barriers here. I hope that in our discussions on the Procurement Bill it will be recognised that a large proportion of the voluntary sector is pretty fundamental to the delivery of public services—indeed, in some cases the voluntary sector is the leading provider of such services. For example, according to research commissioned by DCMS, voluntary and charitable organisations and social enterprises won 69% of the total value of contracts awarded for homeless services between April 2016 and March 2020, and 66% of the total value of contracts to support victims of domestic violence and sexual abuse.

We know that the voluntary sector can produce outstanding results; we know about its ability to build trusting and long-term relationships with communities that are often excluded, its focus on prevention, its versatility and its agility. So I welcome the requirement for contracting authorities to publish pipeline notices—the Minister referred to this in relation to one of his amendments today—but, given the utility of such notices for smaller providers and the market diversity and improved services that could be cultivated by giving smaller providers a chance to prepare the bid, we want transparency to be prioritised in the requirements to publish pipeline notices; hence my amendment.

My Amendment 449 is slightly different but it none the less raises issues in relation to the way in which public authorities engage with the private sector—or the independent sector, depending on how you look at it. This amendment arises from concerns that public bodies are failing to act within the spirit if not the letter of the freedom of information legislation in relation to procurement contracts.

I just want to refer the Minister to an openDemocracy report, published last year, which looked at the operation of the Freedom of Information Act in 2020. It found that

“2020 was the worst year on record for Freedom of Information Act transparency … Official statistics published by the Cabinet Office show that just 41% of FOI requests to central government departments and agencies were granted in full in 2020—the lowest proportion since records began in 2005 … The Cabinet Office is blocking requests from MPs about its use of public money to conduct political research … Stonewalling, a brutally effective tactic for evading FOI, is increasingly prevalent … Government departments are cynically exploiting a legal loophole to deny timely access to information in the name of the ‘public interest’ … Government departments are failing to comply with a legal requirement to work constructively with requesters”.

The FoI Act was meant to be a safety net for members of the public so that there would be as much openness as possible. However, there are two obstacles to that happening. The first is the operational aspect of policing the Act through the Information Commissioner. The commissioner has been seriously affected by huge cost-cutting. Last November, Elizabeth Denham, the former commissioner, told the House of Commons Public Administration and Constitutional Affairs Committee that the ICO’s resources were “40% less” than in 2010 while, at the same time, the number of requests had increased by one-third. In its most recent annual report, published in July 2021, the ICO noted that there had been a build-up of the caseload over the financial year.

The other obstacle to the public being able to find out what is going on is the subject of my amendment. One exemption in FoI legislation relates to commercial interests in Section 43(2). This is a qualified exemption subject to the public interest test. Its application ought to be straightforward but, unfortunately, it is used regularly to refuse information in often the most absurd situations. The outgoing commissioner said:

“The reality of the delivery of Government services involves so much of the private sector now. The scope of the Act does not … cover private sector businesses that are delivering public services. I think that is a huge challenge. I have seen statistics that say up to 30% of public services are delivered under private sector contracts, but those bodies are not subject to”


FoI legislation.

I am afraid that the NHS is a frequent offender when it comes to this. We know that, over the years, the Government and the NHS have looked to expand private sector involvement. There is a long-established trend of trying to outsource some NHS functions to private contractors and a recent trend to set up what I can only describe as tax-dodging subcos, as they are called, to avoid VAT payments and reduce staff’s terms and conditions. This is where public health bodies set up their own subsidiary companies and transfer staff over. Basically, they do it to get around VAT payments, but we have also seen them use it to reduce the terms and conditions of the staff who are so employed.

What is so objectionable is that trusts frequently refuse to disclose information about what they are doing. Decisions are made in secret. In one example, an FoI request went in for the business case. In the decision-making record, the request was turned down on the basis of commercial confidentiality. This happens up and down the country. Section 42(2) is also used to refuse to disclose information long after any commercial considerations have gone.

This is a serious issue. As members of the public, we have a right to know when the NHS outsources services. The FoI legislation was never envisaged as getting in the way of transparency in those cases. When you combine it with the enforcement problem that we have, in essence we are seeing the FoI legislation not being effective. I am not sure how hopeful I am, but I am ever hopeful that the Government will see the error of their ways in relation to FoI. It was set up with the best of intentions and its principles still stand today in terms of transparency, but the more we see the public sector using the private sector, the more FoI considerations ought to come into play.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

[The Minister of State, Cabinet Office (Lord True) (Con)]

I thank the noble Baroness and all those who spoke on this group on our previous day in Committee. It was obviously unfortunate that we could not finish this group then, but I am grateful to all noble Lords, including those who were here on Monday who are not able to be here today. It has been an interesting debate and I think that we will wrestle with the philosophy of this as we go forward. I have been interested in the contributions made.

I am constantly asked to define “public benefit”. One of the reasons why we have different political parties in this country and why politics has evolved is that, at different times, different people define it in different ways. The search for a total, accurate, 100% agreed definition that covers every possible eventuality may be an illusion. However, I understand that noble Lords are saying that they feel that there needs to be more clarity. No doubt we will continue this conversation on other amendments to come.

I was interested in this debate. As he knows, I have very considerable affection and enormous respect for the noble Lord, Lord Hunt of Kings Heath—it is very easy to say in this House that you have very considerable affection for somebody, because we are such a nice lot; I think generally we do mean it—and his experience. He said something very interesting. Having argued for his amendment, he said that this Bill would finish with something akin to what he wanted in it and that it would do that because it was a Lords starter.

The only way to interpret that is that the noble Lord would advocate using the power of the House of Lords to force the elected Government to include something in a Bill that they did not wish to include, in their judgment and in the judgment of the House of Commons. That is a perfectly legitimate point of view, but I was interested to see that the noble Baroness from the Labour Front Bench had signed that, as she just reminded us, and expressed her support for what the noble Lord, Lord Hunt, had said. Perhaps I should take this away and tell my friends that if ever there is a Labour Government, it would be reasonable for the unelected House to hold up Labour legislation indefinitely on a Lords starter in order to force change.

[Lord Hunt of Kings Heath (Lab)]

My Lords, he really cannot get away with that. There are huge numbers of different amendments, which all have the same intention of trying to implement the Government’s policies on climate change and sustainability, which, as the Committee on Climate Change has said, are absolutely fine. The Government’s problem is that they do not have the policies to implement their own strategy. All I am trying to do is to help them implement their strategy. I do not think that that is a great constitutional abrogation by your Lordships’ House. This is a Lords starter, the Government chose to bring it to the House of Lords, the Parliament Act does not apply and it is quite reasonable for this Committee—of course, I cannot speak for my Front Bench; I am speaking entirely as a lowly Back-Bencher—who is seeking to encourage the Government to recognise that they will lose this in this Committee and that the leverage they have to respond is less than it might be.

[Lord True (Con)]

My Lords, I think that was the noble Lord trying to wriggle off the hook but impaling himself back on it at the end of his remarks. We have to make this House work via the usual channels, and it is reasonable for an elected Government in another place to listen respectfully to the other House, which it should—it is our duty to ask the other House to think again on certain things—but there is a point where we do not say that it should be taken to the wire. However, if I am ever a Back-Bencher and there is something from a Labour Government that I do not like, perhaps I will take away the Hunt dictum—one of the advantages of continuing on Wednesday what you did on Monday is that you can read Hansard, and I read carefully what the noble Lord said—and practise what he preaches. Anyway, let us get on with the business at hand. It is an important issue on which the Front Bench opposite might wish to reflect.

Amendment 45, tabled by the noble Lord, Lord Wallace, and the noble Baroness, Lady Bennett, seeks to ensure that contracting authorities consider a number of additional requirements when carrying out procurements, including reducing net carbon budgets, supplier human rights records, data security in the platform, and transparency. In our view, as I have argued before in Committee, contracting authorities are able to deal with these matters as things stand, and in a way that is more targeted and effective than through inclusion in a broad obligation to “have regard”. In a sense, that is the difference between us. Although the noble Lord, Lord Wallace, said that his were modest demands, and deliberately did not include net zero, for example, that is brought in by the analogous amendment tabled by the noble Baroness, Lady Worthington.

Contracting authorities will be able to take account of suppliers’ carbon-reduction plans and other environmental objectives where they are relevant to the subject matter of the contract. It is unnecessary and potentially unhelpful to contracting authorities to attempt to impose on them all an obligation to have regard to a range of other factors, including net zero—as mentioned in the amendment tabled by the noble Baroness, Lady Worthington—in and throughout all of their procurement activities.

In particular, it places unnecessary burdens on them in relation to areas where this is of limited relevance and would open up smaller contractors unnecessarily to the risk of legal challenge. After all, these matters are also covered in another legislation. Contracting authorities will need—this is in the Bill—to consider the ethical and human rights record of the supplier, in some respects, when considering whether a supplier is eligible to participate in the procurement. We will discuss this issue later. The Bill contains effective provision on the exclusion and debarment of those who do not.

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[Lord Aberdare (CB)]

My Lords, I have Amendment 71 in this group, which is a simple probing amendment seeking to understand why the Bill exempts contracting authorities from having regard to the national procurement policy statement for contracts involving frameworks or dynamic markets. I can find no explanation, in the Bill’s Explanatory Notes or elsewhere, why such arrangements should not be covered by the terms of the national policy statement, but perhaps the Minister will be able to give a simple answer.

A large number of construction-related public projects will be procured through frameworks and dynamic market contracts. A framework is an agreement with suppliers to establish terms governing contracts that may be awarded during the life of the agreement. The Government themselves acknowledge in the Cabinet Office’s Construction Playbook that framework agreements, as a means of longer-term strategic collaboration in construction, can provide the best medium through which procurement and contracting can deliver transformational improvements.

Last December, the Cabinet Office also published Constructing the Gold Standard: An Independent Review of Public Sector Construction Frameworks, based on an independent and objective review commissioned from Professor David Mosey of King’s College London. To quote the then Cabinet Office Minister:

“This review recognises the potential of frameworks as a powerful engine-room for implementing Construction Playbook policies that include strategic planning, integrated teams, continuous improvement and the delivery of better, safer, faster and greener project outcomes.”


The review states that the Civil Engineering Contractors Association

“identifies over 1,660 public sector construction frameworks procured between 2015 and 2019 with an aggregate value of up to £220 billion.”

Given that the national procurement policy statement will seek to define strategic priorities and set the parameters for better public procurement in line, I hope, with the gold standard prescribed by the review, why should contracting authorities be exempt from having regard to it in agreeing the terms of frameworks?

A similar question arises in relation to dynamic markets. At Second Reading, the Minister stated:

“The new concept of dynamic markets … is intended to provide greater opportunity for SMEs to join and win work in the course of a contracting period.”—[Official Report, 25/5/22; col. 929.]


Again, it is not clear to me why the terms of the national procurement policy statement should not also apply to dynamic markets—although I am quite prepared to believe that I may be missing something.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have several amendments in this group: Amendments 69, 70, 76 and 79. It was interesting to hear the comments from the noble Baroness, Lady Boycott, about hospital food. She may not know that I am president of the Hospital Caterers Association. I must come to its rescue: it does a fantastic job, given the budget it is given. What she may not know is that in the Health and Care Act there is a section which mandates Ministers to set standards for hospital food, following the hospital food review. The issue will be whether there is enough resource with which to fund the standards that Ministers will set. As part of this Bill, the noble Baroness might like to look at amending the Health and Care Act to ensure that there is consistency of approach, because she has made a very important point indeed.

We are continuing this debate about the relationship between the Bill and sustainability and environmental outcomes, and the Minister has been responding. His first response was at Second Reading, when he accepted that the Bill does not include any specific provisions on the target to achieve net-zero carbon emissions by 2050, but he went on to say that contracting authorities will be required to have regard to national and local priorities, as set out in the national procurement policy statement.

The problem is that the existing national procurement policy statement, published in June last year, is full of ambiguity. If I were a procurement director, I would find it very difficult to find my way through all these objectives, some of which are in a tension with each other. I think the Minister’s response will be, “Ah, but that’s the flexibility we want to give to public bodies to make their decisions themselves”. The problem is that in translating that you still come back to the point that the Government are not, at the end of the day, prepared to use procurement sufficiently to ensure the implementation of their sustainability and environmental policies.

Paragraph 10 of the national procurement policy statement sets out:

“Contracting authorities should have regard to the following national priorities in exercising their functions relating to procurement. The national priorities relate to social value; commercial and procurement delivery; and skills and capability for procurement.”


Additionally:

“All contracting authorities should consider the following national priority outcomes alongside any additional local priorities in their procurement activities: creating new businesses, new jobs and new skills; tackling climate change and reducing waste, and improving supplier diversity, innovation and resilience.”


Paragraph 11states:

“Achieving value for money in public procurement remains focused on securing from contractors the best mix of quality and effectiveness to deliver the requirements of the contract, for the least outlay over the period of use of the goods or services bought. But the Government wants to send a clear message that commercial and procurement teams across the public sector do not have to select the lowest price bid, and that in setting the procurement strategy, drafting the contract terms and evaluating tenders they can and should take a broad view of value or money that includes the improvement of social welfare or wellbeing, referred to in HM Treasury’s Green Book as social value.”


Paragraph 12 states that the award criteria can be incorporated

“for comparing final bids and scoring their relative quality, to encourage ways of working and operational delivery that achieve social, economic and environmental benefits”.

This includes tackling climate change and reducing waste; contributing to the UK Government’s legally binding target to reduce greenhouse gas emissions to net zero by 2050; reducing waste, improving resource efficiency and contributing to the move towards a circular economy; and identifying and prioritising opportunities in sustainable procurement to deliver additional environmental benefits, for example enhanced biodiversity, through the delivery of the contract.

Paragraph 13 makes it clear:

“Public procurement should be leveraged to support priority national and local outcomes for the public benefit. This Statement sets out the national priorities that all contracting authorities should have regard to in their procurement where it is relevant to the subject matter of the contract and it is proportionate to do so”.


But here is the rub. Paragraph 15 states:

“Taking additional social value benefits into account effectively is a balance with delivery of the core purpose of the contract. Contracting authorities should ensure that they do not ‘gold-plate’ contracts with additional requirements which could be met more easily and for better value outside of the contract compliance process, particularly where legislation has already determined that such provisions do not apply, for example by imposing requirements in the Equality Act 2010 on the private sector that are only meant to apply to the public sector”.


Paragraph 14 says:

“There should be a clear link from the development of strategies and business cases for programmes and projects through to procurement specifications and the assessment of quality when awarding contracts. This is in line with Green Book guidance which makes it clear that the procurement specification should come from the strategic and economic dimensions of a project’s business case, and that commercial experts should be involved in the development of the business case from the start”.


The question I would ask is this: if you were a finance director or a procurement director in the public sector, what would you make of it? One has to see this in the context of having been through a decade—in fact, longer than a decade—of austerity where short-term fixes are much more common than longer-term sustainability investments.

I turn to the NHS, where I have some experience, and where I could certainly point to some really good examples of sustainability policies. In theory the intent in the Bill, as I see it, is to place greater emphasis on wider value than lowest price. But what this ignores, certainly in the NHS context, is the financial and economic reality that exists on a day-by-day basis. In an environment where savings are demanded in-year and budgets set annually, the overpowering financial incentive is to achieve cost improvement programmes. These savings filter down through the NHS financial system and become a target for finance directors and procurement directors who generally report to the finance director. While I am sure that if we had some finance directors in front of us, they would say that they strive to focus on long-term value, this requires a less tangible and measurable saving than the fact that product A costs less than product B.

In an NHS environment that is financially driven, targeted and appraised for striving to deliver savings targets in-year, and where the most measurable saving is lowest price, it is clearly going to be challenging to move away from that. This experience is probably reflected across much of the public sector; indeed, other parts of the public sector would probably say that the NHS has had it easier. Those of us in the NHS would of course say, “That’s because we need more money”, but the fact is that if the NHS is finding it difficult, other sectors are going to find it very difficult indeed.

My amendments are simply aimed at seeing sustainable development principles incorporated within the national procurement policy statement and the Wales procurement policy statement. At the end of the day, there really is an issue here, is there not? Whatever procurement policy is set out, public authorities will have challenging decisions to make. My own view is that, because of the way in which this has been put together, and potential future national procurement policy statements, public bodies are going to be left with very ambiguous statements where they do not quite know what they are expected to do. The Minister says, “Ah, but that’s flexibility”. I say that it undermines the wider goals towards which our procurement policy should be driven.

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[Lord Scriven (LD)]

My Lords, this has become a fascinating discussion, particularly when linked to the previous group on Clause 11, as my noble friend Lord Wallace of Saltaire said. I rise to support what I think is the most important amendment in this group: Amendment 60, tabled by the noble Lord, Lord Lansley. If the wording is “may” rather than “must”, all the subsequent amendments are irrelevant, because the Government do not have to produce a national procurement policy statement.

We need to press the Government further on the framework, beyond the four issues in Clause 11, that needs to be laid down in this statement because very few people, if any—particularly not the Minister—have discussed this from the perspective of business and those who will be making significant investments in contracts to try to ensure that public value is delivered. They take signals over the medium to long term about where to invest. These signals are really important in terms of business planning and those businesses being able to make long-term commitments to the public sector.

Both Ministers keep coming back to saying that things are in different parts of different legislation in different parts of government. We have been told that the whole purpose of this Bill is to make public procurement simple, particularly for small to medium-sized enterprises. I do not know many small to medium-sized enterprises that have a department that can wade through different public sector Bills to work out what the signals are and what the company needs to do to make secure, good bids for public sector procurement. If the Government are minded not to amend Clause 11, they have to write a very detailed outframe of the national procurement policy statement to make those signals so business can make the right decisions—

[Lord Hunt of Kings Heath (Lab)]

Does the noble Lord accept that you need to do that as much for procurement directors as for the businesses? With his experience of the NHS, how does he analyse what the current procurement statement actually means? I think it is very confusing.

[Lord Scriven (LD)]

I particularly did not use the prism of public sector procurement professions, because I thought that the noble Lord, Lord Hunt, had already made the case for the NHS, and others had made it for different government departments and professionals. I was trying to point out that there is a different aspect to this. This is about helping business by making it simpler for it to get involved in procurement, particularly small to medium-sized enterprises. That is the Government’s desired aim. A lack of detail in Clause 11, along with the fact that the national procurement strategy statement may not be done, makes that really difficult for business.

I come back to the view that everything here helps not just procurement professionals and government but businesses, particularly small to medium-sized enterprises, to be successful. It is really important that the Bill contains a co-ordinated and codified approach to the Government’s strategy on public sector procurement, and that it is not left to myriad different policies and Bills, for the sake of business being able to negotiate and navigate what is at the moment the very complicated field of public sector procurement. If the Government do not take up many of the amendments about the environment, food and social value, I assure the Committee that their aim to simplify public sector procurement, particularly for small and medium-sized enterprises, will not happen.

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[Lord True (Con)]

As so often, the noble Lord makes an important point. I was charmed by one aspect of his arguments on continuity, when he complained that the Conservative Party kept changing Prime Ministers. I thought he was one of the main cheerleaders for a change in Prime Minister, so he cannot, in the immortal phrase, have his cake and eat it.

There is a duty in the Bill as drafted for a Minister of the Crown to keep the national procurement policy statement under review. It is not in the Bill—noble Lords have not been particularly receptive to the argument I put forward, although the noble Lord, Lord Coaker, has shown his eagerness to get his hands on the levers of power and use them—but the Government’s intention, with great generosity, is that it should be possible for a review of the NPPS to be undertaken in each Parliament. If one made a period of eight years or whatever statutory, then a new or different Government coming in would have to task primary legislation to make that change. That is the kind of structure we have been trying to operate in. Part of the reason the Bill has been framed in the way it has is to leave flexibilities, some of which your Lordships do not like and some of which at least one of your Lordships does.

I turn to Amendment—

[Lord Hunt of Kings Heath (Lab)]

The Government have put some objectives into legislation, such as the climate change targets. What we are saying is, for goodness’ sake, where that happens, link this Bill to the other pieces of legislation. Surely it all fits together then.

[Baroness Worthington (CB)]

I remember well when we were debating the then Climate Change Bill how important it was to include a list of conditions that needed to be taken into account when setting the climate change budgets, including economic competitiveness and all sorts of other things. All we are asking for here is to have a reciprocating set of policies to ensure that the same things happen the other way around. I do not mean to be provocative, but there is a purpose for having a Government, and it sometimes feels as if the people in government do not really want to be there. If you are in government, you have levers, so use them.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Committee stage
Monday 11th July 2022 Grand Committee

[Baroness Thornton (Lab)]

My Lords, I shall speak to Amendment 47A in my name and Amendment 52. Basically, we believe that Clause 11 should include specific references to maximising social value as something that a contracting authority must have regard to in line with the social value Act and the national procurement policy strategy. The question to which I would appreciate an answer from the Minister is: why is that not included? In my previous contribution, I went through all the different policy streams—including levelling up—that lead us to the conclusion that social value and support for social enterprises and social businesses are a good, and they are good in procurement. It is therefore a mystery why this has been left out of the Bill. I hope the Minister will agree with that and, if not, explain to me why it is not the case. I hope he will support these amendments and add them in. They are modest amendments, really.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have Amendment 48, but I very much endorse my noble friend Lady Thornton’s remarks on this subject. In the group before last, it was interesting to hear the Minister talk about what I thought was a hierarchy in terms of the balance to be drawn in making judgments about procurement. He put value for money at the highest level. My major problem with that is that my experience in the public sector, mainly in the health service but in other worlds too, is that that is translated into the lowest price.

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[Lord True (Con)]

That is what the noble Lord said.

[Lord Hunt of Kings Heath (Lab)]

No, the noble Lord, Lord True, was interpreting what my noble friend said.

[Lord True (Con)]

I always like to use two words when either reduces to one.

[Lord Hunt of Kings Heath (Lab)]

I could get into trouble quoting the noble and learned Lord, Lord Judge, to himself on constitutional issues in the Schools Bill, but surely I can quote the noble Lord, Lord True, to himself. He interpreted my noble friend’s words of wisdom as a dangerous attempt by my party—the Labour Party—to constrain individual private companies that sought to provide public services to conform to the will of whatever its wishes in power might be. If only.

I think my noble friend was really saying—no doubt he will come back if he thinks I have got it wrong—that this Bill presents us with a unique opportunity to influence a huge public spend in the direction of policies that we wish to see implemented. In today’s environment, climate change and sustainability are essential. One way or another, this Bill will leave this House with some form of words on that in it, and I doubt very much whether the Government will be able to take them out, bearing in mind that this is a Lords starter.

[Baroness Worthington (CB)]

My Lords, I rise to speak to Amendments 49 and 58 in this group referring to Clause 11 on procurement objectives. I am very grateful for the support of the noble Baronesses, Lady Verma, Lady Young of Old Scone and Lady Parminter, on these amendments.

We have just had a very interesting debate about the need to support small and medium-sized businesses as a more explicit goal within the Bill. I am here on this group of amendments to make the case for more explicit support for future generations. We have a climate crisis on our hands. We are potentially facing temperatures of 43 degrees this weekend. This is not a pleasant situation to be in; it is going to cause people to die. This is not something we should turn away from, and we must future-proof every single piece of legislation that passes through the House during our watch. This Bill offers an opportunity for us to do just that. The Government have not introduced anything in the Bill that goes beyond guidance other than simply the words “public benefit”. This needs to be given much more clarity, and my amendments seek to do that.

It was stated at Second Reading, and I apologise for being unable to attend it, that we need to improve the existing drafting. Therefore, I am looking forward to hearing from the Minister and, I hope, to meeting the Minister as I have to echo the words of the noble Lord, Lord Hunt. It feels that there is a huge amount of cross-party support for being clearer in this Bill about our intentions and that somehow or other we need to see something more explicit in the Bill, so a meeting on this topic would be most welcome.

Amendment 49 seeks to add more specific targets and a list of matters that the contracting authority must have to regard to including the importance of contributing to targets on our carbon budgets, the natural environment, air quality and other matters. I do not think anybody here is wedded to precise wording, and a number of noble Lords have come forward with different wordings in this group. Obviously, this is not an amendment I would seek to make final, but there must be a form of wording we could all agree on.

We have talked at length about the opportunity the £300 billion per year spent on government procurement offers in terms of driving forward the agenda we wish to see and increasing Britain’s productivity, innovation and the diversity of the companies able to engage in the transition we need to see. Business as usual is no longer tenable. We need to drive change, and we know that procurement is a hugely important lever for doing that.

I asked some questions about precisely how much procurement is responsible for driving global carbon emissions, but I am told that that information cannot be given, so we have no way of knowing how well aligned government policy is to the achievement of these broader goal, which is regrettable. We want to see more clarity in the Bill so that we can, over time, know whether procurement is delivering on these multiple goals.

I am sure there will be responses from the Minister that call into question the sense of these amendments and suggest that somehow it would distort the hierarchy. I reassure the Minister that that is not what we are seeking to do. We are not trying to tie the hands but are simply trying to provide the clarity and direction for such an important lever. I am sure we will be told that the next clause on the national procurement policy statement should be relied upon to deliver this clarity. Yet—and we will debate this—there is not a requirement on the Government to produce a statement; it is simply a “may”. Also, there is no fixed timetable I can see about when that will be produced so, really, we have nothing. There are no reassurances at all that this very poorly defined concept of public benefit will be given more flesh and more detail.

There is a precedent for putting something in the Bill. I highlight Section 9 of the Health and Care Act 2022, on which this amendment is modelled, which amended the National Health Service Act 2006 to give similar duties to the NHS to have regard to climate change including in relation to procurement, so it is not incoherent or without precedent to put this in the Bill. It would be more consistent to have it in legislation. If we do not do it, people will say that it was done in the NHS Act and ask why it was not done in the broader framework Bill that came subsequently. There is well-established similar terminology in the Financial Services Act 2001 and the Skills and Post-16 Education Act 2022, so we must be consistent about the future-proofing of Bills to ensure that we are sending the right signals and bringing about this transition.

I hope I have explained why I think this approach should be taken. I highlight that public benefit being undefined is a problem, which brings me to Amendment 58. Of course it is legitimate for a Government not to seek to define every word in legislation, and some legislation can be unambiguously understood when the words have the ordinary meaning that you would find in a dictionary. The trouble with not defining a term that needs to be understood by all and for that meaning to be as consistently understood as it can be is that it will introduce a level of subjectivity and a lack of clarity. In a search through existing legislation, I have found no use or definition of public benefit, except in relation to charities law, but that cannot easily be read across into procurement decisions. Amendment 58 seeks to remedy that and to define it more clearly. It would include local priority outcomes as well as national ones.

I am sure the Minister will say that the understanding of public benefit will evolve over time and therefore a degree of a flexibility is required, but that is why we have selected only the issues which are enduring and which will be playing out of the long term. We have chosen three national and local priorities. Of course, that does not limit other priorities, but these will be enduring outcomes that will be with us for the long haul and will not change. The need to address the issues that we have highlighted here will get only greater. I think this amendment should be supported; I am not particularly wedded to this way of doing it, but there needs to be something in the Bill to provide the clarity that enables us to future-proof it. We need to take the current crisis and the responsibility we carry for future generations seriously in all legislation we consider, and I therefore look forward to the Minister’s response.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

This amendment would put into the Bill, as an essential stage in the preliminary steps to contracting for public services, consideration of the whole-life cost of procurement—in-house, outsourced or some form of mixed-economy model. I hope the Minister will accept it as something that would guide a future Government, of any complexion, and which should be included in the Bill.

[Lord Hunt of Kings Heath (Lab)]

My Lords, as this is my first intervention, I remind the Committee of my presidency of the Health Care Supply Association. I have Amendments 82, 92 and 141 in this group, none of which have much to do with each other, but that is part of the mysteries and delights of grouping.

Amendment 82 is particularly concerned with the challenges facing charities seeking to obtain contracts from public authorities. I am very grateful to NCVO and Lloyds Bank for their briefing on this matter. While all types and sizes of charities experience challenges relating to the commissioning and procurement of public service contracts, smaller organisations often face considerable barriers. Yet a large proportion of the voluntary sector is actually fundamental to the delivery of public services. There are many examples, but we know, for instance, that the voluntary sector is the leading provider of services—according to research commissioned by DCMS—in relation to homelessness, and there are many other services where we are absolutely reliant on the voluntary sector.

However, there is a real problem in the huge amount of work that needs to be done to assemble information and make bids. Advance notice of tender opportunities is important for charities. We know that many of them have far fewer resources than private companies to support bid-writing, so they need time to plan. They also want to take time to work with service users or other charities to develop an offer, and that cannot be rushed. When commissioning services for people, especially those experiencing a range of intersecting challenges, a market does not often exist, so preliminary market engagement is critical for understanding what people need and how those needs could be met.

All my amendment seeks to do is create a presumption that contracting authorities should have ample notice through a planned procurement notice, unless there is a very good reason not to do so. This would allow the necessary time, particularly for smaller charities, to prepare bids.

My Amendment 92 is about the need for rigour and accountability in procurement. It starts from the requirement set by Her Majesty’s Treasury to ensure that the investment of public money, especially large sums, is done objectively and in a way that those who have to authorise the investment can rely on. It also deals with the principle of transparency and would ensure that business cases are routinely published.

My understanding is that it is already required under Green Book guidance from Her Majesty’s Treasury, particularly for major projects managed in the government portfolio, that at least a summary of the business case has to be published within four months of contract award. The Green Book, which has been regularly updated by the Treasury as circumstances require, describes in great detail the rigorous process that needs to be followed. The principle is that if you do not abide by this, you will not get approval for the expenditure of resources. Much in the Green Book is based on the need for a proper business case and I believe it was also envisaged that the business case would be published.

The problem is that regulation and good practice are too often ignored in the public sector. I think athere is less appetite for proper enforcement of that guidance. All campaigners can do to raise concerns about a particular tender process is go for judicial review, which, as we all know, can be very expensive.

My particular interest is the NHS. When I was a Health Minister, which seems a very long time ago, there were very strict rules about spending and investment by trusts. If public money was sought for a major procurement or programme then a strong authorisation path led from region to department, and often to the Treasury itself. Some of that remains, but what is missing is that the former strategic health authorities ensured that the required processes were followed properly and intervened when they were not. They also ensured that the public were consulted, but much of that has foolishly been thrown away. That means that it has become much harder for the public to hold decision-makers to account.

It is very noticeable that, last month, the Public Accounts Committee published a report on the Department of Health’s 2020-21 annual report. It commented that the department

“has regularly failed to follow public spending rules and across the Departmental Group there is a track record of failing to comply with the requirements of Managing Public Money. The Department is required to obtain approval from the Treasury before committing to expenditure where such authority is needed. The Treasury has confirmed that £1.3 billion of the Department’s spending in 2020–21 did not have HM Treasury consent and was therefore ‘irregular’. The Treasury has stated that ‘in the vast majority of cases’ this was because either the Department and/or the NHS had spent funds without approval or in express breach of conditions.”

If the noble Baroness, Lady Noakes, was still in the position she held on financial management in the Department of Health, that would not be happening.

My amendment would ensure that there is a proper business case and that it should be publicly available before crucial decisions are taken. If the Minister says that it is already required, the fact is that parts of the public sector are not listening. I hope that this debate will be helpful in ensuring that the Treasury and government departments look at this very closely in the future.

My third amendment follows a briefing from the RNIB and concerns the fact that, in replacing the existing legislation, the Bill overwrites requirements that are of particular significance to 14 million disabled people in the UK because they ensure that publicly procured goods and services are accessible to everyone. It is pretty unclear at the moment how the current Bill will replace that regulatory framework, and my Amendment 141 seeks to re-establish a requirement that contracting authorities have due regard to accessibility criteria for disabled people.

In June last year several organisations, including the RNIB, wrote to the Cabinet Office seeking assurances that accessibility for disabled people would be maintained in public procurement legislation. Responding, the then Minister, the noble Lord, Lord Agnew—who has certainly shown how you should resign, in style and with full transparency and visibility to your Lordships’ House, although I do not think he quite managed the grace of the noble Lord, Lord True, in his very perceptive remarks yesterday—said that the Government are committed to ensuring that accessibility for disabled people is maintained as part of public procurement legislation, and that the new regime will ensure that specifications take into account accessibility criteria and design for all users. Despite that, the only reference we can find to accessibility is in Clause 87(2), which states that any electronic communications utilised as part of the public procurement exercise must be

“accessible to people with disabilities.”

This is partly probing—finding out the government response to it. If the Minister argues that the public sector equality duty under the Equality Act is sufficient, we will argue that it is not sufficient because we have seen contracting authorities failing to consider their obligations and procuring inaccessible products. This amendment is only a start, but I hope the Minister will be sympathetic to the issue.

[Lord Lansley (Con)]

My Lords, before I speak to my Amendments 84 and 88, I will just say that, while I do not think it is a registrable interest or a conflict of interests, my experience in these things is largely derived from my work, over a number of years now, advising LOW Associates SRL in Brussels, which has a number of contracts with the European Commission and other European agencies. We have participated in procurements on a number of occasions each year in the European context. That gives one quite a lot of experience of the system we are moving from and some of the ways it can be improved. I put that on the record.

My noble friend and other noble Lords may recall that at Second Reading the most important point I made—it is one I will return to on a number of occasions, including when we talk about the procurement objectives and the national procurement policy statement —is that procurement by the public sector is a very large element of economic activity. The way in which it is conducted can have a significant and beneficial impact on productivity in the economy if the issues of innovation are properly incorporated into the consideration of how procurement is undertaken and who the suppliers to public authorities are.

In a sense, the noble Baroness, Lady Worthington, is trying to do the same kinds of things in Amendments 85 and 87. We are maybe trying to approach it in slightly different ways. The same will be true in relation to the procurement objectives.

I hope that in responding to this debate my noble friend can at least give us a sense that we can work together to try to ensure that the promotion of innovation is one of the central aspects of how contracting authorities go about their process of delivering best value, and that the broader externalities of procurement, through promoting innovation in the economy, are realised. They are significant.

--- Later in debate ---

Amendment 92 from the noble Lord, Lord Hunt of Kings Heath, seeks to insert a new clause to ensure that for any contract in excess of £1 million a business case is published at least 42 days in advance of a tender notice being published. Again, while we share the noble Lord’s drive towards greater transparency and have worked hard to deliver that, in our view this would create disproportionate burdens for contracting authorities that would outweigh the real-terms transparency benefits. While we would hope and expect that for contracts of that size, contracting authorities would have a clear business case, that is not the same as saying they should be published. Such documents may contain confidential commercial information that the contracting authority might need to keep private, or they might need a public interest test and redaction, which would add to the burden on the contracting authority. In our view, once the burden of publication is balanced against the benefits of the transparency of the data, there is no overall advantage to requiring publication, but I will reflect very carefully on what the noble Lord has said because in seeking to protect legitimate commercial interests, it may create work as well as opportunity: there is a balance there.

[Lord Hunt of Kings Heath (Lab)]

I am grateful to the noble Lord for considering my amendment. Does he accept part of my premise, which is that some public authorities are really not doing the right thing at the moment, despite Treasury rules and guidelines? In fact, the qualification the PAC made to the DH report is some evidence of that in relation to the NHS.

[Lord True (Con)]

My Lords, I could not possibly be tempted, particularly at 8.04 pm when the Committee needs to finish shortly and I already have a very long response to a large number of amendments. The Bill does have pipeline notices, which I have discussed: I will engage with the noble Lord on that before Report and I welcome that.

Amendment 141 is about a hugely important issue to which so many noble Lords spoke. The noble Baroness seeks to amend Clause 24 to require contracting authorities to take account of accessibility and design for all principles when drawing up their terms of procurement, except in duly justified circumstances. This is an issue of fundamental importance. It is of concern for disabled people, and I know that your Lordships hold concerns about accessibility very close to their hearts; it comes up in every piece of legislation.

As part of our broader goal of a simpler regulatory framework and increased flexibility to design efficient, commercial and market-focused competitions, the Bill does not dictate how terms of procurement including technical specifications are to be drawn up, which is the issue around Clause 24. It simply contains what is prohibited by international agreements and applies to all “terms of a procurement” as defined in Clause 24(5). We believe that this approach is better than the existing approach, as buyers are forced to truly analyse and develop the content of their specifications to address the needs of all those the public contract should support.

The UK has legal obligations, which we readily own and which will dictate how terms of procurement are drawn up, with accessibility covered by Section 149 of the Equality Act 2010, as mentioned by the noble Lord opposite. We consider that helps deliver the intended outcomes of both the current duties in this area contained in Regulation 42 of the Public Contracts Regulations 2015 and of this amendment.

I have heard the very strong speeches made by noble Lords on all sides, and I have seen the submissions from the RNIB and others. It is very important that we should have constructive discussion to test whether the Bill delivers the accessibility that your Lordships hope for. The Government remain absolutely committed to ensuring that public procurement drives better outcomes for disabled people. In our contention, there is no dilution of the commitment to accessibility under the Bill. The Government are clear that accessibility criteria should always be taken into account in every procurement, and the existing legislation ensures that that is the case.

However, we will engage further on this and on the other themes and points put forward by so many noble Lords in this wide-ranging debate. In those circumstances, I respectfully request that the amendments are withdrawn and not pressed.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

2nd reading
Wednesday 25th May 2022 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is a great pleasure to follow the noble and learned Lord, who showed how much more interesting a debate on a procurement Bill can be than we thought when we started out on this journey. I declare an interest as president of GS1 and of the Health Care Supply Association, and I pay tribute to NHS procurement officials for the fantastic work that they did during Covid.

Like most other noble Lords,I support the intent of the Bill to make public procurement quicker, simpler and more transparent. However, there is a balance to be struck. I take on board the comments of the noble Lord, Lord Maude, that outcome is more important than process, particularly in relation to the public sector’s poor record in supporting innovation and the perennial UK problem that we are a country great at innovation but very slow to adopt it, particularly in the public sector.

We must, however, have some process and tracking of what happens. We saw with Covid what happens when you do not have it. The PAC’s report readily acknowledged the challenge faced by the Government, but the failure to be transparent about decisions, publish contracts in a timely manner and maintain proper records left them open to accusations of cronyism and waste. Somehow, the Minister, through the passage of this Bill, must convince us that in moving to a quicker and more efficient system, proper process will continue while also allowing SMEs and innovative companies to take part and win tenders. The state of our economy suggests that unless we invest in innovation, we will be in very challenging times in the years ahead.

On defence, the noble Baroness, Lady Smith, made very trenchant points. Reading the PAC’s report this month on the MoD’s worrying inability to control costs was sobering. The report said that the MoD’s reliance on billions of pounds of future cost reductions to keep within its budget looks like a lot of trouble to come. It currently has no plans to support how these might be delivered and rising inflation will make pressure on affordability worse. The Government, however, are saying that they have done sufficient to ensure that our Armed Forces are in a state of preparedness for many of the challenges to come. That does not add up. The MoD has rejected the PAC’s general point, but I know who I would trust more in relation to defence contracts.

I principally wanted to mention the NHS, which the Minister kindly mentioned in his opening speech. We have just had the passage of what is now the Health and Care Act. There was quite a debate about procurement because that Act takes out the enforced tendering of clinical services from the Health and Social Care Act 2012. There is concern that in the Act there is now an all-catching clause which effectively gives the Secretary of State power, through regulations, to change the whole NHS procurement process. This was in anticipation of this Bill.

The noble Lord was very clear in his opening speech that this Bill is not going to be used to turn the clock back and allow for the tendering out of clinical services where it is not required to do so. It would be good to get his confirmation, and also for him to spell out what Clause 108 of this Bill means, which gives the power to Ministers, through regulations, to disapply provisions of this Bill in relation to procurement by the NHS in England. I hope that the two things go together, but it would be good to get some clarification.

I support what the noble Lord, Lord Alton, said very strongly. The noble Lord, Lord Stevens of Birmingham, has also mentioned this. In the Health and Care Act, there was an insertion of Section 81, which provides that:

“The Secretary of State must … make such provision … with a view to eradicating the use in the health service in England of goods or services that are tainted by slavery and human trafficking.”


Will this be replicated in this Bill? Does the Minister further accept—this was raised in the Answer on Xinjiang today—that this Bill should be amended to include at least a discretionary exclusion ground for companies closely associated with serious human rights abuses? I am sure there will be a number of amendments in this field, and past history would suggest that the Government would be advised to accept them, or at least accept the principle.

My final point, which a number of noble Lords have also made, is on the post-award contract management that the noble Lord, Lord Maude, talked about. The monitoring of public procurement contracts has been very poor. Many PFI deals were poorly procured. Many recent deals involving the use of private providers through centrally awarded contracts or frameworks have not proven to be good value for money. We seem to have in the public sector a bureaucratic edifice where huge energy goes into the agreement of a contract, but once that is done, people move on to looking at a new contract. Monitoring and managing the contract is simply not done effectively. In our meeting with the noble Lord, Lord True, a week ago, which was very helpful, he talked about his department, or the Government, engaging in development and training support programmes for procurement professionals, with a particular focus on contract management. That is very welcome. I ask the noble Lord, Lord True, whether that will be extended throughout the public sector. Although we are much concerned here with central government contracts, the principles must be enunciated throughout the public sector. In terms of value for money and for our future confidence in public procurement, it is essential that we up our game in relation to contract management.

Civil Servants: Reduction of Numbers

Lord Hunt of Kings Heath Excerpts

Thursday 24th March 2022 Lords Chamber

[Lord True (Con)]

I am delighted that I am not in a department where I have to defend the DVLA. I take note of what my noble friend says, and I think people will have heard the sentiment on that subject across the House.

[Lord Hunt of Kings Heath (Lab)]

My Lords, has the Minister noted reports that the number of Russian speakers in the Foreign Office staff has been reduced quite drastically over the past few years? Is he satisfied that the reductions in funding and staff for the Foreign Office, particularly in eastern Europe, have prepared it for the huge challenges that it now faces?

[Lord True (Con)]

My Lords, I cannot claim to be an expert on the linguistic training policies of the foreign service. I would say that we wish to have a Civil Service that is adaptable, nimble and responds to challenge, and that should involve a better awareness of future as well as present challenges, and that is certainly one of the things that the efficiency programme will look at.

Health and Social Care Levy Bill

Lord Hunt of Kings Heath Excerpts

2nd reading & Order of Commitment discharged & 3rd reading
Monday 11th October 2021 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, for decades, social care has proved to be an intractable problem. After numerous reviews and failed reforms, the level of unmet need rises, the pressure on unpaid carers grows, the supply of care providers diminishes and the strain on the undervalued care workforce ever increases. So, it is welcome that at last we have a proposal before us and, as the noble Lord, Lord Macpherson, has said, a recognition that taxes will have to rise to pay for it.

The problem is that these are the wrong proposals. What the Minister has brought to us today, is essentially a tax increase on younger and low-paid workers so the wealthy can retain more of the value of their properties to pass on to their children. As we have heard, it is a tax on employment that will hit businesses. It will not, as yet, solve the underlying pressures in social care.

What a flimsy Bill it is. It is treated—remarkably—as emergency legislation, despite the fact that the Government have had 11 years to bring forward proposals to Parliament. There have been no cross-party talks about this and no consultation, and no Select Committee was allowed to scrutinise the Bill before it was brought before Parliament. Clause 4, as my noble friend Lord Eatwell said, is remarkable in the power it gives to the Treasury to make any change it seems to want to in relation to the proposals before us. If this Bill were to receive proper parliamentary scrutiny, it would be torn to bits. No wonder the Minister spoke for less than five minutes.

My noble friend Lord Eatwell has already referred to the remarkable commentary from HMRC on this tax rise. I will repeat one comment that he made. HMRC said:

“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”


As my noble friend said, how can the Minister justify that? What does he say to the CBI, which commented that a national insurance increase

“will directly hurt a business’s ability to hire staff, at a time when businesses have faced a torrid 18 months and are now fighting crippling labour shortages”?

Indeed, having listened to the Prime Minister and Ministers last week, I might ask whether the Government have any interest at all in the future health of our business sector. It seems not.

Unfair as it is, will this levy be sufficient? In his opening remarks the Minister remarkably claimed, without any evidence whatever, that this will put social care on a long-term sustainable footing. But we have already heard that the levy is projected to raise £36 billion over the next three years, that all the money raised in 2022 will go to the NHS and that for the remaining two years £5.4 billion will be invested in social care. This money is not designed to alleviate existing funding pressures on the system, yet these are immense. The committee chaired by the noble Lord, Lord Forsyth, published an excellent report which estimated that an £8 billion yearly increase would be needed to restore care provision to 2010 levels—he has already referred to that. But the £5.4 billion, one assumes, is to be allocated primarily to implementing the cap.

The Health Foundation, following up on the Select Committee report, set out at the beginning of this month what it may cost the Government to fund the NHS and social care system in England, along with workforce requirements, over the next 10 years. It looked at two projections, stabilisation and recovery, and stated that both of them would need much higher growth than in recent years. It said that

“an additional £8.9bn and £14.4bn is needed in 2030/31 over 2019/20 for the stabilisation and recovery scenarios respectively.”

Does the Minister really think that the levy is the answer to that, when most commentators reckon that, in the end, the NHS is going to need almost all of the levy and is likely to get it?

The claim that no one will be forced to sell their own home is surely questionable. My estimate is that on average a person will have to spend at least £160,000 before they get to the £86,000 cap. This takes account of a modest calculation of living costs at about £12,000 per annum, and the fact that the £86,000 cap, as the noble Lord, Lord Forsyth, who is surely right, said, will be calculated on local authority rates—despite the fact that the self-funders subsidise those local authority rates. Even when a person reaches the cap, they will still have to find living costs on an annual basis, and it is quite likely that the local authority will still pay only at the local authority rate, so many people will have to pay top-ups as well. Melissa Lawford in the Sunday Telegraph put the estimate much higher. She thought a self-funder would receive government support only after five years, having spent £296,000. The puzzle to me is that no effort at all has been made to encourage and incentivise the insurance market to provide a more effective way of support for self-funders.

The ABI, in a commentary it set out over the weekend, said that the cap should be viewed as a solution to avoid catastrophic care costs and not as a way to enable a private market to develop. A cap, in itself, would not prompt a market to develop. Why on earth are the Government not seeking to incentivise a private market to develop to help self-funders, allowing the Government to concentrate on the proper provision of social care for those who cannot afford to pay above any insurance prospect?

Why have the Government spent so long dithering about implementing Dilnot when they should have been thinking about a much more concerted approach to dealing with these issues, to encourage as many people as possible to support themselves while shoring up the pitiful state of our social care system at the moment? There is no plan. We are promised a White Paper in December. Does any noble Lord think that this is going to be well thought through in a way that will deliver a good social care system for us going forward?

What about carers? The right reverend Prelate asked what this would mean for carers. I would just say to him, as Carers UK has said, that carers have been propping up a chronically underfunded healthcare system at huge cost to their own personal health, finances and ability to stay in work. It is very telling that nothing, in all the claims the Government have made, has been said about how carers will be helped.

Paul Johnson of the IFS recently described our social care system as the unfinished business of the National Assistance Act 1948. It enshrined, he said, a Poor Law philosophy of both needs-tested and then means-tested moving into the social care system, to be run in parallel with the free at point of use NHS.

This Bill is not the answer to that. It will not transform social care; it will not help care workers get the pay, terms and conditions they deserve; it will not help unpaid family carers. Instead, we have a huge, missed opportunity and a tax on the youngest and lowest-paid workers for the benefit of the better off. This Bill will not do.

--- Later in debate ---

[Lord Agnew of Oulton (Con)]

My Lords, this has been an interesting debate. The quality of speakers has been very high, and I am aware that most of them know far more about these issues than I do—so it is with a certain humility that I attempt to reply. Also, as someone who does not appear that often, even I have noticed that I do not necessarily have the mood of the House with me on this Bill. However, I will spend longer in summing up than I spent in opening, to try to address some of the concerns and at least put the Government’s point of view on the many challenges that have been raised.

I will start with my noble friend Lord Forsyth, the noble Lords, Lord Eatwell and Lord Shipley, and the noble Baronesses, Lady Tyler and Lady Kramer, on the fundamental issue of the use of national insurance as the linchpin for this tax raising. We need a broad-based tax, such as income tax, VAT or national insurance, to raise the sums needed for such a significant investment. There is a precedent here. In 2003, the Labour Government increased the same NIC rates by 1%, specifically to increase funding for the NHS. There is an existing NIC ring-fence for the NHS. The NIC system already directs a ring-fenced proportion of receipts to the NHS. This ring-fence was established in 1948 and expanded by the Labour Government in 2003. I cannot provide the noble Lord, Lord Eatwell, with a cast-iron guarantee that the hypothecation will remain in perpetuity, but we see the principles here and, as my noble friend Lord Hannan said earlier, rarely do these taxes, once created, go away—so I hope to give some reassurance on that.

This also ensures that businesses contribute to the NHS. That is fair and reasonable, because they need a workforce that benefits from the NHS. Lastly, NICs apply on a UK-wide basis.

The noble Lords, Lord Macpherson and Lord Sikka, asked why we have not included rental income in the widening of the net. We have included dividends while excluding modest amounts of dividend, up to £2,000 a year. With regard to income from property, tax is currently levied at the same rates as income tax on earned income. Divergence in these rates would add complexity and create opportunities for avoidance. Those who earn their income from property have made a contribution to public finances. The property allowance has been frozen, as have the personal allowance higher rate and additional rate thresholds.

The Government are making sure that landlords continue to make a contribution. For example, we have restricted tax reliefs available to landlords. Over the past four years we have restricted relief for finance costs: it can now be claimed only at the basic rate, not at 40% or 45%. That has raised more than £1 billion. The higher rate of stamp duty for additional residential dwellings means that landlords now pay between 3% and 15% extra tax on those properties.

The noble Baroness, Lady Tyler, raised the issue of people over the state pension age, and noble Lords asked about the whole issue of intergenerational fairness. If we were to raise the sums required just for those over 40, the levy would need to be 60% higher, at around 2%. This would be a much larger burden on working people. Furthermore, around half of all the funding raised by the levy will go towards health and social care services that benefit working-age people, such as general NHS funding and vaccines. Working-age people will also benefit from limits on what they would need to pay if they themselves needed care in later life, and they will gain the peace of mind that comes from protecting their family members from substantial costs.

The noble Lords, Lord Eatwell and Lord Sikka, my noble friend Lord Forsyth and the noble Baroness, Lady Tyler, asked about the impact on the lowest paid. In relation to individuals, NICs are a progressive way to raise money: the highest-earning 14% will pay about half the revenues raised, while 6.2 million people who earn less than the NIC threshold of £9,500 will be kept out of the levy. I accept the points raised by two noble Lords about the cliff-edge nature of NIC contributions for higher earners, but the brutal reality is that, in the round, that top 14% will be paying around half of the total. That goes to the crux of this whole debate: we have tried very hard to ensure that this is a broad-based tax—as broad as possible.

Lower-income households will be large net beneficiaries from the package, with the poorest households gaining the most as a proportion of income. As was noted by one noble Lord, the highest 20% of households by income will contribute 40 times as much as the poorest 20%. One can make arguments about how much the bottom and top earn; nevertheless this is a highly redistributive approach to a difficult tax and an issue that all parties have dodged for 20 years. It is a genuinely progressive policy, and the distributional analysis published by the Treasury makes that clear.

Going beyond that, since 2010, Conservative Governments have consistently kept lower-paid people out of tax and kept the cost of living down. The income tax personal allowance threshold has increased by over 90%, meaning that a typical basic rate taxpayer now pays £1,200 a year less than they would have done otherwise. We also increased the NIC primary threshold by over £800, in April of last year, with a typical employee saving just over £100. In April of this year, we increased the national living wage to £8.91—an annual pay rise of £350 for someone working full time on the national living wage. Taken together, our changes to national insurance mean that someone working full-time on the minimum wage is currently £5,400 better off than in 2010.

The noble Lords, Lord Eatwell and Lord Macpherson, asked about the impact on employers. Some 70% of the money raised from businesses will come from the largest 1% of employers, and some 640,000 employers are excluded through the assistance at the bottom end. Again, as a Conservative Minister myself, I do not like raising taxes for anybody, but we have tried to broaden this tax as much as possible. Around 40% of businesses will not be affected by the levy. The noble Lord, Lord Macpherson, and my noble friend Lord Hannan, are not happy about a tax on jobs. The OBR will consider the economic effects of the levy in the light of its updated economic and fiscal forecasts, which will be published in the next couple of weeks alongside the Budget.

The noble Lord, Lord Eatwell, asked about the tax bill on the UK. We have had to take these difficult decisions because, as I said in my opening comments, this is a permanent increase in taxation for a permanent challenge that we face in a country with aging demographics. Our tax system remains competitive, with our tax take as a share of GDP lower than major international competitors, and broadly in the middle of the G7.

My noble friend Lord Forsyth asked about anti-avoidance rules, which is a very important question. I suspect, pragmatically, that there will be some fiddling around at the edges in the March/April threshold, but this whole piece of legislation will be subject to the full anti-avoidance rules that apply to NICs. Indeed, the recent work on IR35 would probably have been the biggest area of weakness had we not engaged in those reforms. The noble Lord might be interested to hear that even government departments are being threatened with fines by HMRC for non-compliance with IR35, so HMRC is out there already.

The noble Lord, Lord Eatwell, and the noble Baronesses, Lady Brinton and Lady Kramer, asked about hypothecation. I touched on this earlier. In 2022-23, all revenue from the health and social care levy will be directed to NHS England and equivalent bodies in Scotland, Wales and Northern Ireland through the existing NHS allocation. From 2023-24 onwards, levy revenue will be ring-fenced in law for health and social care. HMRC will pay the proceeds to those responsible for health and social care in all four parts of the UK, including NHS Scotland, NHS Wales and the equivalent in Northern Ireland.

The noble Baroness, Lady Fraser, asked about devolution and our way of handling that. This is absolutely a UK-wide problem. We have taken the decision to act on a UK-wide basis for the benefit of citizens across the UK. Scotland, Wales and Northern Ireland will receive Barnett consequentials on the additional health and social care funding in the usual way, with exact totals to be confirmed in the SR. Early indications are that, pro rata, the populations of the devolved authorities will receive more money from this approach.

The noble Baroness, Lady Brinton, asked about the funding specifically for social care. The Government are committed to spending £5.4 billion across three years on adult social care from this levy. This funding will end unpredictable care costs and include over £0.5 billion to support the adult social care workforce, in recognition of their efforts over this terrible pandemic. It includes funding to enable all local authorities to move towards paying providers a fair rate for care, which should drive up the quality of adult social care services, improve workforce conditions and increase investments.

Several noble Lords asked about funding for local authorities. We are committed to ensuring that local authorities have access to sustainable funding for core budgets at the spending review. We will ensure that every council has the resources they need to deliver these reforms.

The noble Lord, Lord Griffiths, spoke movingly and clearly understands this sector very well. I would like to reassure him that substantial support has been provided to the social care sector through the pandemic—for example, billions of items of free PPE prioritised to care workers, residents and unpaid carers for vaccination. We have made available £2.4 billion in specific funding for adult social care. This is made up of £1.75 billion for infection prevention and control, £522 million for testing, and £120 million to support workforce capacity. This funding is additional to the £6.1 billion for local authorities to deal with the impact of the pandemic on their services, including adult social care.

I turn to some specific questions on social care spending. First, on the size of the cap, the new £86,000 cap will end unpredictable care costs so that more people can preserve their savings and assets. Andrew Dilnot’s report was published 10 years ago and reflected the circumstances in 2011. Clearly, levels of wealth and asset prices have increased since then. We think that we have set the cap broadly at the right balance of achieving personal responsibility for planning for old age but putting in place a safety net where exceptional costs or periods of care are needed.

On domiciliary care, I think my noble friend—

[Lord Hunt of Kings Heath (Lab)]

Would the noble Lord give the House an estimate of how much a person would really have to spend before they reach the £86,000 cap? Does he agree that it will be at least double?

Standards in Public Life

Lord Hunt of Kings Heath Excerpts

Thursday 9th September 2021 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to my noble friend Lord Blunkett for instituting this debate and for the measured terms in which he introduced it. I agree with the noble Baroness, Lady Stowell, about the collective and individual responsibility for leadership in standards. Of course, one has to reflect that standards at Westminster can permeate the whole of public life. Therefore, we need to be very cautious about how we conduct ourselves here as well as in government as a whole.

We know that concern about public standards is not new. Lord Nolan’s committee was a response in part to the cash for questions affair, and we know that party funding and expenses were a major concern in the 2000s. However, I have to say that, since 2010, the litany of poor behaviour by Ministers and ex-Ministers seems to be have been off the scale. Rather like the noble Lord, Lord Kerr, I have deplored the near-contempt that many Ministers have shown towards their officials in failing to understand that constructive criticism is partly what they are there to do to enhance the quality of decision-making.

I pay tribute to all those members of the various regulatory bodies that have been established over the past 30 years, but I am afraid that they have proved flimsy in the face of the behaviour of some Ministers and former Ministers. My noble friend Lord Blunkett referred to the “good chap and chapess” theory. The problem is, what happens if the Prime Minister is not a good chap? How far can we have confidence in a system where the Prime Minister himself, who has overall responsibility for standards in public life, is clearly a man who over the years has had a default position of carelessness with the truth and no concern whatever about upholding standards? This is the problem we have with all the recommendations that I have seen so far for improving the situation.

I pay tribute to the noble Lord, Lord Evans, and his committee and to the other committees. I think the recommendations that have been put forward should be implemented, beefing up the current system, with the independent adviser being able to initiate investigations and publish the outcome of those investigations. The Institute for Government has suggested that the Ministerial Code should set out the sanctions that might be applied for different breaches. We are going to hear from the Committee on Standards in Public Life shortly, but there are other very useful recommendations on business appointments, transparency, and lobbying and public appointments where it said that the commissioner ought to be given more powers to uphold the integrity of the process. The scandal of the Government’s determination to put one person into Ofcom to do over the BBC and completely traduce the system of appointments is one of the most disgraceful acts I have ever seen any Government do.

Next week we have another debate, in the name of the noble Lord, Lord Norton, on the training of Ministers, which I think will be interesting. He wants it to be training in decision-making; I am afraid I think it has to be training in integrity, ethics and understanding what the Ministerial Code means and how they ought to behave, including their attitude towards officials. Will this do in the face of a Prime Minister who has no concern whatever about those standards? I doubt it.

I am afraid that, in the end, I reach the conclusion that, while it may be against our political tradition, if it goes on like this, it will have to be outsourced to the courts or an independent body. We cannot trust the person who is responsible for the Ministerial Code to oversee it properly and effectively, and our democratic institutions and public life generally suffer hugely because of it.

Covid-19 (Public Services Committee Report)

Lord Hunt of Kings Heath Excerpts

Thursday 22nd July 2021 Lords Chamber

[Lord Hunt of Kings Heath (Lab) [V]]

My Lords, I am delighted to take part in this debate. I too congratulate my noble friend Lady Armstrong on her skilled chairing of the Select Committee and the clerk and his staff for their excellent work.

As the report says, the pandemic represented an unprecedented challenge to the United Kingdom’s public services. I take the positives from it: many of them rose to that challenge. Many public service providers developed remarkable innovations, as the noble Baroness, Lady Fox, just referred to. Decisions which before the pandemic took months were made in minutes. Good personal and organisational relationships broke down long-standing barriers between the statutory and voluntary sectors. New ways to deliver services flourished. I agree with the noble Baroness, Lady Fox, that we do not want to lock in certain behaviours, and we need to tackle the issue of the difficulty of face-to-face interventions. Yes, the NHS does have its challenges. I agree about the issues around “do not resuscitate” and the transfer of patients with Covid into care homes. But I would say to the noble Baroness that, when you look at the comparative statistics, the NHS has fewer beds, doctors and nurses than any comparable healthcare system, and we have to consider that in terms of funding decisions for the future.

Of course, it is not all good. We heard as a committee that the overall public health response was at times hampered by overcentralised, poorly co-ordinated and poorly communicated policies that were designed and delivered by central government, even though local-level providers were often better equipped. One of the key questions the committee poses is: how do we hold on to the positive behaviours we saw during the pandemic? I want to concentrate on just one issue: the over- centralisation of public services.

My noble friend Lord Liddle asked if our politics is up to the challenge of tackling this centralisation. The Government’s response was pretty wet, although the Prime Minister’s recent speech on levelling up did at least cover some of the ground. He spoke about the country being the most centralised of all the developed countries. He acknowledged that the big metro mayors were championing their hometowns, and that in the rest of the country, including the counties, local leaders needed to be given the tools to make things happen. Does this suggest a possible big move to decentralisation or even devolution? Well, up to a point, because I wonder whether the Government have themselves taken note. Last week in the Commons, the Health and Care Bill had its Second Reading. It did not show much commitment to devolving or decentralising power. Indeed, it faces the other way, with a power grab by Ministers and an imposition of powers of direction for the Secretary of State on the NHS. This suggests that there is a little way to go before government and Whitehall understand that devolution requires a huge shift in thinking.

In a really interesting paper about this, the Institute for Government has pointed out that, in recent decades, UK parties of all political persuasions have made commitments to decentralise power but in reality, coming into government, have found it very hard to do so. The institute’s analysis suggests that decentralisation requires at least three main groups to either support or acquiesce to reforms: national politicians, local politicians and, of course, the public. These groups often have different interests, are not internally cohesive and have different priorities and values—all factors which make securing sufficient support difficult. As important, all these groups have considerable, and not to be underestimated, power to block or undermine reforms they dislike.

Each of the obstacles the institute identifies is linked to one of these groups: national government lacks trust in regional or local government competence; those leading decentralising reforms are often unsuccessful at persuading other departments or Ministers to give away powers; taking powers from existing local politicians to give to a new sub-national government layer creates opposition; and the public generally lack interest in regional and local government reform and are sceptical of the value of more politicians. This goes perhaps some way to explaining why the bold talk of decentralisation is not always matched by deeds—and yet you come back to the conclusions of our report and to the argument that decentralisation could boost economic growth, better reflect differences in local identities and preferences and allow more variation and innovation in public services.

This, in the end, is the challenge for the noble Lord, Lord True, and the Government. Are they really serious about levelling up? If they believe that decentralisation and devolvement of powers is the way forward, if they want to build on the fantastic local innovation in evidence over the last 16 months, their forthcoming White Paper must be ambitious. I hope it will be.

Size of the House of Lords

Lord Hunt of Kings Heath Excerpts

Tuesday 18th May 2021 Lords Chamber

[Lord True (Con)]

The Government always seek to engage positively with the House; the House does not necessarily always engage positively with the Government. The Government did not accept the cap when it was proposed to come in by 2027 in the first report, and they do not accept it in the latest report, when it is due by 2024.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I think the House has been freshened up rather enough, and we hope that the Government might pause for a little time. Have the Government now set themselves against substantive reform of the House? If they have, why not at least engage with your Lordships’ House to see what incremental change could be agreed?

[Lord True (Con)]

My Lords, as the noble Lord knows, there have been a number of changes in your Lordships’ House over recent years. The Government have made their position clear: we are committed to looking at the role of the House of Lords, but we do not want to do so in a piecemeal way.