Schools Bill [HL]

Lord Mendelsohn Excerpts

Report stage & Lords Hansard - Part 1
Monday 18th July 2022 Lords Chamber

I hope the Minister will reply supportively to my Amendment 100, and also take on board some of these very important amendments to make school attendance orders reflective of the situation that people find themselves in.

[Lord Mendelsohn (Lab)]

My Lords, I will speak to Amendments 97A, 118J and 118K.

We have to remind ourselves that the issue of unregistered school settings and the claim that some people are home schooling in order to send children to such settings is a problem that we have long had. Many people here will remember that Section 96 of the Education and Skills Act 2008 was established specifically to make sure that such settings were deemed unlawful. Unfortunately, we found that the law was so difficult to enforce that we have had a massive increase in the number of unregistered school settings, creating much more of the problem that we have had to deal with. Indeed, there have been only three prosecutions, and the first one took 10 years to take place. The number of schools that have been reported to Ofsted exceeds, I believe, a thousand. Hundreds have been identified by Ofsted but have been very difficult to deal with. Enforcement has been so poor that many schools deregistered to unregistered schools to avoid any form of regulation because they felt that they could operate in that way.

The position has been very clear. Departmental advice for collaborative working between the Department for Education, Ofsted and local authorities in March 2018 stated:

“Over recent times, we have seen a rise in the number of institutions operating outside the regulatory regime as unregistered independent schools; this involves a criminal offence and conduct that may be putting children at risk of harm, denying them a suitable education, and limiting their life chances. Tackling unregistered independent schools is a priority—and one that involves joint working and collaboration.”


Unfortunately, even in those times it was very clear that the provisions available to Ofsted, local authorities and the Government were very weak. That is why these measures in the Bill have been so warmly welcomed.

However, there are issues on which I am still trying to probe the Government and encourage them to think of creative ways in which to draft measures. It would be a tragedy that, 15 years after we thought we had solved a problem that had existed for decades beforehand, we were in the same position, in that the provisions were insufficiently flexible and strong to make sure that the law is properly enforced and that that which is meant to be outlawed is so done; and that if it were seen to be unable to be enforced effectively, we would have to wait another 15 years in order to do that.

Amendment 97A tries to deal with those who are enablers of the use of unregistered educational settings and who do not take a formal role in the structure of that educational setting. Such people may provide a facility or other forms of support, be that a location or funding that goes towards individuals who are providing these skills, but they structure it in a way that does not make them culpable in any way as an educational institution. I believe that the Government are missing a trick if they do not deal with those people who help these things continue.

Amendment 118J seeks to give Ofsted a more general, anti-avoidance power. This would allow it to join the dots in situations where its intelligence and information, in matters raised by a parent or parents in this situation, make it clear that it can take a broader view of how these institutions may well be operating or trying to operate once their structure has been changed to try to find loopholes in the law.

Lastly, Amendment 118K would establish a process to review the Act and its operation and to encourage reporting to the House, particularly on this measure—I suspect there may well be a clumsy error in the drafting, for which I apologise in advance. The intent is to try to focus on this area so that the expertise and views of local authorities and others involved in education, especially Ofsted, can be collated by the department so that we can review whether or not these measures are being successfully enforced and we are achieving the outcomes that we so desperately want for the safeguarding of children.

Obviously, I will not push these amendments to a vote. They are there to try to encourage the Government to think again as the Bill goes through its passage in another place on how additional measures could be introduced to make sure that we make this the final time we have to legislate on these issues.

[Baroness Wilcox of Newport (Lab)]

The amendments in this group have attendance at their core, and nothing is more important. In addition to being directly related to physical health, the attendance of learners in school is affected by well-being and mental health, and by attitudes towards learning and schooling. My noble friend Lord Hunt and the noble Lord, Lord Storey, made some important points regarding children with medical conditions. The interrelationship between attendance and general well-being is considered so strong that attendance has often been taken as a measure for well-being in previous data collection. We know that attendance has a strong impact on learner outcomes, standards and progression. I can tell you from first-hand experience that examination outcomes strongly correlate to attendance rates.

Amendments 118J and 118K, proposed by my noble friend Lord Mendelsohn, seek to deal with the current gaps in legislation, addressing important issues surrounding attendance and its promotion by educational institutions, and would require a review of any avoidance of the legislation as it develops, which we support.

Schools Bill [HL]

Lord Mendelsohn Excerpts

Committee stage
Wednesday 22nd June 2022 Lords Chamber

[Baroness Whitaker (Lab)]

I should like briefly to add my support to these two very sensible amendments, which would stop unscrupulous unregistered schools circumventing the law and speed up the inspection process.

[Lord Mendelsohn (Lab)]

My Lords, I rise to speak to Amendments 171C and 171D. I strongly support the amendments from the noble Baroness, Lady Meacher, as well. I think she has a very correct estimate of the challenges and has presented some situations that are rather familiar in how they will be used to try to circumvent the Bill. I express my thanks to the Minister for her courtesy and for the time with her and her officials to discuss the matters raised in these amendments.

Schools Bill [HL]

Lord Mendelsohn Excerpts

2nd reading & Lords Hansard - Part one
Monday 23rd May 2022 Lords Chamber

[Lord Mendelsohn (Lab)]

My Lords, we have had some excellent speeches from the former Education Ministers present in the House, as well as from the Front-Bench spokesperson for the Liberal Democrats, the noble Lord, Lord Storey, and my noble friend Lady Chapman. They focused on tissues around governance and some of the practical issues in Part 1, which are significant. I hope the Government are willing to engage in discussion on these matters.

Like many others, I am concerned at the overwhelming lack of evidence that the Government are a better allocator, that MATs are inherently good or are governed in the right way, or that contractual arrangements will be highly beneficial. Like many in this House, I have been a governor and trustee of schools, and I find it hard to believe that the recruitment of even more trustees will be hugely beneficial, when the real challenge has been finding quality head teachers. I am also concerned by the idea that the enforcing of a contract by the Secretary of State is an attractive recruiting sergeant for those in governance for MATs. There are a lot of practical issues that we need to address in this Bill, and I hope the Government will be open to looking at these as we go through Committee.

I will now address Part 3 and Part 4. I was pleased to see the provisions to establish a register of children not in school and on new regulations for unregulated settings or unregistered independent educational establishments. I congratulate the Government on addressing this long-overlooked area, and I offer them my strong support. I admire those who home-educate, and I know that they will be able to continue to do so even if the provisions in this Bill become law; many of their concerns are simply unfounded. These provisions are utterly necessary, and they need to be fit for purpose at the beginning. We have to deal with one of the realities: the organised denial of the rights of children by groups and intuitions, whether from closed or other communities, is the challenge the Government have to meet here.

The powers needed to remedy these measures need to be extensive and Ofsted needs to be supported, as the perpetrators have become very used to using the existing legal framework—and lawyers—to protect themselves from scrutiny and any remedial action to protect children who, for example, may not even be taught English. We should have no truck with the notion that human rights are being infringed when parents decide not to equip their children to have opportunity in the society in which they live. My concern is whether the definitions and provisions in the legislation are fully effective against a deliberate and determined attempt to evade them, and whether sufficient thought has been given to enforcement measures that can be effective in discouraging disobedience and ensuring appropriate sanctions.

I hope also that the Government will look at where other decisions that they have made may impact on these; for example, they have recently changed the planning arrangements so that now, under the class F classification, a community-use classification can be used for a church as well as a school, which means that any religious establishment, for example, can transfer to a school immediately. This opens up a huge lacuna in the law and the implementation of it to address the issues with which we are concerned.

I am particularly pleased that the balance has been struck by focusing on the role of education providers, not just on fining the parents—many of whom will never have declarable or visible means to pay. However, we should be live to wilful attempts to evade these measures, including organised efforts such as those undertaken by a few communities and groups during the periods of high restrictions during Covid. I hope that the Minister will consider helpful amendments that could assist in this effort, such as a more general anti-avoidance provision, or even, for example, a specific provision that allows for Ofsted to make a determination as to whether an attempt was made by organisers to increase or create a tapestry of providers to make it appear that the amount of hours taught would not require any of the institutions to qualify as the providers of the majority of time of educational provision.

Consideration should also be given to whether measures to deal with inappropriate classifications of institutions as informal educational settings can be used, which may include after-school clubs. Will the Government also consider more stringent measures to enforce fit and proper tests for trustees and institutions, which could include that those who are found to be organising should by default be no longer able to serve as directors or trustees in companies or charities? Further, organisations involved in this process should face swift action from the Charity Commission, by appointing managers, the revocation of charity status and significant investigations to ensure that charity status is not accorded to those involved in helping, assisting or facilitating disobedience.

I am very happy to support the Government on these measures and I hope that they are sufficiently robust to deal with any and all attempts to deny children the education that they deserve.

Higher Education and Research Bill

Lord Mendelsohn Excerpts

Report: 1st sitting: House of Lords
Monday 6th March 2017 Lords Chamber

[Baroness Rock (Con)]

My Lords, I, too, support these amendments. Thankfully—and, I hope, auspiciously—the creation of UK Research and Innovation, UKRI, has proved relatively uncontroversial during the passage of the Bill. It is, though, vital. As noble Lords will know, whatever Article 50 and Brexit finally bring, we can be sure that we will need to be at the top of our game when it comes to commercialising research and creating innovative business ideas for the future. UKRI is a key part of making sure that we do this. It is about building critical mass in our research and innovation delivery. So, from research funding to commercialisation and capital raising through Innovate UK, we have the capability to bring these together, to identify strategic priorities for our future economy and to ensure we have a joined-up approach to develop and realise them.

I spoke at Second Reading about the importance of including the business community in the decision-making of UKRI and I am confident that the voice of business will be heard. These amendments concern the working relationship between UKRI and the other body created by the Bill, the Office for Students. In particular, it mandates co-operation in the form of a report explaining how the two have worked together during that year. I support the amendments because such co-operation is important for a number of reasons. First and foremost, the partnership should ensure a strategic, joined-up approach to the funding of teaching and research in higher education. Neither can exist without the knowledge of the other.

Secondly, much has been said about monitoring the financial stability of higher education. Provided that UKRI and the OfS do co-operate, as these amendments call for, UKRI can use its funding decisions to safeguard the financial viability of research. Thirdly, UKRI can play an appropriate role in the assessment process for research degree-awarding powers.

Lastly, UKRI and the OfS can share data to inform research and evaluation studies and provide mutual reassurance that their respective accountability functions are being taken care of. I say “lastly” but, given the significance of the creation of the two bodies and their new powers and authority, there are myriad more ways in which the two can—and must—work together.

UKRI puts all our innovation eggs into one basket. The Office for Students brings together all the regulation and regulators of higher education providers under one roof. Therefore, at a time of significant change in higher education, it is vital that the new regulator and the research and innovation body are working in lock-step. This is not something we must leave to simple chance or the whims of the leadership teams of these two organisations. That is why I support these amendments.

[Lord Mendelsohn (Lab)]

My Lords, I welcome these amendments. Amendment 3 has been signed by my noble friend Lord Stevenson of Balmacara. Of course, we will return to this subject when we discuss the research parts of the Bill next week, with a much more substantial amendment which talks about some of the elements of co-operation.

We welcome the amendment but share the view that it does not go far enough. Reporting on how these organisations co-operate is not about whether they should co-operate or even the nature of that relationship—how strong or firm a relationship they would want to forge. The amendments cause some degree of limited expectations and even an expectations mismatch. One of the briefings that I received for this seemed to believe that this would be subject to an annual report in and of itself. That is not the case. This is within the context of the existing annual reports.

Given that the reforms are about both policy design and a high level of operational change, delivery is a very important factor. It is noticeable that the Nurse review, which considered the operational elements of the creation of UKRI and the importance of weaving it into the right tapestry of partners, had a clearer and more prescriptive approach. Notwithstanding these concerns, which we will debate later, we support the amendment and hope to make further improvements later on.

[Viscount Younger of Leckie]

My Lords, I am pleased that we have found general common ground on this matter, although I picked up from this short debate that my noble and learned friend Lord Mackay, the noble Baroness, Lady Brown, and the noble Lord, Lord Mendelsohn, feel that perhaps we should go a little further.

I thought that my noble friend Lady Rock put it rather eloquently: an emphasis on working together will be expected to run through the leadership and management of both organisations, supported by a legal framework that will be sufficiently flexible to deal effectively with areas of shared interest. Additionally, the government amendments will require the organisations to state in their annual reports how they have co-operated with each other over the reporting period. We consider that this an efficient way of ensuring transparency without the creation of additional reporting bureaucracy.

Brexit: Impact on Universities and Scientific Research

Lord Mendelsohn Excerpts

Thursday 3rd November 2016 Lords Chamber

[Lord Mendelsohn (Lab)]

My Lords, I thank my noble friend Lord Soley for introducing this debate. It has been substantial, with a high degree of consensus across the House. We have heard many distinguished contributions from leaders in the fields of academia and research and in the administration of universities.

I have two interests to declare. The first is that I have a daughter at Leeds University and three other children yet to apply to universities because of their age. I have to confess that my eldest son, who is about to go through this process, recently needed and still needs some persuading to choose a UK-based institution, given the nature of where we are. That is not a situation that I thought I would be in, but to me that is quite alarming in showing how he sees the future of Britain, its connection with other people and as an open home.

The second—this speaks more to where I am—is that I am an investor in our science and research base. I believe very strongly in the strength that we have in this country, and I have put money to work in the great genius of people developing great businesses out of great scientific insights. I recently enjoyed visiting some of these facilities, particularly Harwell in Oxford. Harwell is a leading science and innovation campus in Europe. Some 5,000 people work there in more than 200 organisations on what is a 710-acre site. Organisations currently based there include: the Science and Technology Facilities Council, with £1 billion-worth of infrastructure; the Diamond Light Source’s synchrotron; the ISIS neutron and muon investigations facility; the Central Laser Facility; computer data storage; RAL Space; and the European Space Agency.

Located fairly close by is the Oxford Business Park—one of our largest business parks—and many businesses have been spun out of that tremendous facility. I remember going to see one business there with a group of others who were looking at investing in that business. We went into a very small but classic business park building. An American investor who was with us said that, in the United States of America, there would have been a three-hour journey into the middle of the desert for such a huge facility, with lights, for the very same thing. We much undervalue that which we have. In my area of interest, I share not just the concern expressed by the noble Lords, Lord Mair and Lord Paul, about how we energise our start-ups, but about how we effectively commercialise all the ideas and businesses that we have and make them world-leading. That has become a greater concern.

Since our Brexit decision, these issues have been thrown into sharper focus, especially the people dimension. As you walk across Harwell, you are met by people from many nations and nationalities—many different people who are researchers, technicians, engineers and people starting businesses. Some of those people, who hitherto saw their futures there in working on healthcare, medical devices, space, detector systems, security facilities and satellite enterprises, do not necessarily see themselves staying in our country any more. It is very important that we get the people dimension absolutely right.

As was pointed out early on in the debate, by the noble Lord, Lord Willetts, my noble friend Lady Blackstone and the noble Baroness, Lady Smith of Newnham, networks and internationalism are absolutely crucial to modern academic and scientific research. Since the 1980s, research has become rapidly international. In the UK, 15% of papers were co-authored in 1981; that figure is now over 50%. Of the UK’s international collaborations, 80% include an EU national. The European Union’s commitment to the development of science and technology, to become the greatest hub of excellence in the world, is an intentional policy for dealing with the consequences of having to change: to meet the needs and requirements of agriculture; to have a different ability in manufacturing; to spur innovation; and to trigger, in modern industrial economies, the right sort of economy. We have been in the driving seat of this process and that has been of great benefit to us, and therefore we have to face up to the tremendous challenges that Brexit brings.

I also agree with the point about government funding of science and technology, which has been stagnating. In many ways, we have piggybacked on the EU, and we have moved to around 0.5% of GDP, as has been raised. I share the concerns expressed by the noble Lord, Lord Kakkar, who first highlighted this issue, and those of my noble friend Lord Hunt, who agreed with him. I agree with the noble Viscount, Lord Ridley, that the private sector does not play its part in this, but I disagree that it is about EU regulation. Although that is an important consideration, it is not the fundamental issue. The noble Lord, Lord Bilimoria, put it well when he talked about our general R&D spend and HE spend compared with our peers. These have always been areas where the genius and great achievements that we have had have made us punch above our weight. We ought to be concerned, in a situation where we are facing difficulties, that we do not over-rely on those assets that we have been able to depend on hitherto.

Increasingly, we are hearing concerns expressed about the consequences of leaving. My noble friend Lord Liddle mentioned the problems faced by Lancaster University in continuing to participate, and there have been many similar reports. A famous one concerns the Department of Physics and Astronomy at the University of Sheffield, which was thrown out of an EU research consortium after the referendum. There are many of these stories that reflect the problem which we have to address.

The negotiations will be very important. We can be involved in a variety of projects. Withdrawal does not mean that we will have no form of activity, but in my view—to meet the test set by the noble Viscount, Lord Ridley—to leap ahead requires us to be more than inventive and more than just associated with these programmes, and indeed to do a lot more. The noble Baroness, Lady Garden, made a good point about the European projects that we have to remain involved in; that is tremendously important. Let us consider the sobering story of what has happened in Switzerland, which after its referendum faced a situation where was there a drop in students under the Erasmus programme, funding was withdrawn and access to initiatives was closed. Now, the Swiss pharmaceutical industry is losing its place because it is no longer able to participate in the EU’s Innovative Medicines Initiative. We have to make sure that we retain our place in these areas.

We welcome the Government’s extension of student funding for current research projects, but it is insufficient. Sticking your finger in the dam is not a long-term strategy. We have to think about what will need to be done in the future—a point made by many noble Lords. We also have to consider the European development funds which provide support for science parks, science-based initiatives and innovative businesses. Some €3.6 billion has been allocated to the UK for the period 2014 to 2020, of which very little has been spent thus far.

I welcome the decision of the High Court this morning to reaffirm the sovereignty of Parliament, and I hope that the Government think about this wisely and do not appeal it. I do not think that it is about blocking; it is about making sure that we deal with these challenges in the right way. As the noble Lord, Lord Paul, said, we need to be constructive. I hope, as many other speakers have said, that we make sure that we can see a detailed approach by the Government; they need to say more rather than less.

The huge degree of consensus and concern across this House on this merits the Minister setting out why there cannot or should not be—I hope that he will announce that there will be—a permanent or long-established framework for consultation and collaboration with those affected, as suggested by the noble Lord, Lord Willetts. We also need an approach to addressing the future of students, researchers and others. They are the people we need in our country, we want them to work here and we want students in our institutions in order to make sure that they are properly financed.

We need a clear statement of commitment to the ambition for universities and for research. That plays not just to the question of our ambition for those areas; it is also, as my noble friend Lord Liddle said, about what sort of country we want to be. My noble friend Lord Judd highlighted that it is about what sort of country we want to be not only in the south but in the north. That also accounts for the concern of the noble Lord, Lord Smith of Finsbury, about racism and xenophobia. The noble Lord, Lord Bilimoria, made an important point about how outward-looking we are and how others see us—what we say is not what they see, because what we have done is not the act of those who look outwards.

The Government should be very concerned about the Higher Education and Research Bill. We have heard many speakers, including the noble Lord, Lord Rees of Ludlow, my noble friends Lord Giddens and Lord Haskel, and the noble Baronesses, Lady Wolf and Lady Garden, comment that the Government ought to withdraw it and think about it again. I agreed with the noble Lord, Lord Broers, when he talked about the problems around putting Innovate UK into the research councils, while the right reverend Prelate made a good case for how to deal with the issue. The Government are running the risk of the Bill receiving a great deal of scrutiny and a desire for the use of the instrument of a Select Committee—used previously but only rarely—to make sure that we get the detail right.

Finally, I should like to stress the point about making sure that these matters are adequately covered in the Autumn Statement and in the industrial strategy, and how these things are linked. I turn also to the question put by the noble Lord, Lord Hannay. If the CEO of Nissan can get a meeting, why cannot the heads of our tremendously important and economically significant institutions get the same sort of access and the same sort of assurances?

Queen’s Speech

Lord Mendelsohn Excerpts

Thursday 19th May 2016 Lords Chamber

[Lord Mendelsohn (Lab)]

My Lords, first, I humbly apologise for arriving late in the Chamber. I apologise in particular to the Minister, and I extend my appreciation to my Front-Bench colleagues, who I think were experiencing various forms of nervousness and other deeper medical states. I am pleased to be here today to respond to the Queen’s Speech on our first day of debate.

Many people have been slightly unkind to the Queen’s Speech. There have been suggestions that this is the product of a Government with no real governing strategy and no consistent economic policy, a divided party, a weakened Prime Minister, and a self-inflicted moment of political paralysis. Some have drawn the conclusion that it is no surprise that we have such a limited Queen’s Speech and with so little ambition, designed to cause no turbulence to the European vote and to reunite a party that awaits with bated breath the outcome of the referendum.

There are, of course, well-known virtues in doing nothing, or in doing very little. Limited ambition can sometimes be very powerful, and some systems of government are designed to do almost nothing. Incrementalism can always be a very effective way of governing, and there can, of course, be some amusement in making small things appear big. There is an oft-quoted maxim that it is not just the size that matters. Some of the Bills, especially in relation to transport and science, seem to be very small measures, but they underline some very big changes in our country and where we play most strongly.

There are three particular points to make about the overall context of the Queen’s Speech. First—this is especially relevant today—some measures appear to be the start of a legacy for the current Prime Minister and are in areas on which we can praise the Government for deciding to look at them. It may be a little late to establish a firm legacy, but tackling prison reform has been much delayed and is certainly very worthy.

As regards today’s debate, the Children and Social Work Bill, which is designed to get children out of the care system and permanently adopted and to ensure that those who leave care are properly supported, addresses these people’s huge diminution in life chances and is especially welcome. Both these measures have our broad support; there will be challenges in implementation, but they are none the less extremely important. There will be issues such as costs for providers, but certainly the House will take these matters very seriously.

Secondly, there will always be problems with a package of Bills such as this—with the objectives, the evidence, the ability of the proposed remedies to deliver, and managing their consequences. Delivery is of huge importance to a lot of these measures. It is true to say that the best plan is not as good as the plan that can be delivered best. Within these measures there is scope for further ambition from Ministers and civil servants as regards their drafting, and in their response to the debates that will take place in this House and the other place. The value of scrutiny and the role of this House are extremely important in this regard. Certainly, the Strathclyde review and the proposed increase in the membership of this House may not assist those debates. As evidenced in not just the performance of this House but the Minister’s systematic unravelling of the entire work of his predecessor, greater care and attention in listening to the deliberations of this House would have been useful.

I worry that the Government seem to be set again on looking to the private sector for solutions and massively overplaying its benefits and the public sector’s failures. Governments have frequently miscalculated the benefits of the private sector and should look at other forms of provision, allowing the private and public sectors greater flexibility to work together in other ways, and certainly investing more in public sector capability, particularly management capability. We have to reform the way the Civil Service looks at the delivery of these measures. We cannot go on with a system that was designed for a previous era. The asymmetry of responsibility and authority in the public sector ensure chronic delivery problems.

Academic research on public sector management emphasises the importance of managing people over adherence to systems, whereas in the private sector, systems are much more implementable due to money being the central measurable focus, and the competitive advantage of human relations. It seems remarkable that we have not learned how to move on from the maxim, “If you can’t measure it, you can’t manage it”. Especially with regard to some of these Bills, we need to use more effective business intelligence and better understand economic behaviour. Putting that into impact assessments would be extremely useful.

Thirdly, this Queen’s Speech does not meet the requirements of the time, although one should not underplay the potential of some of the measures, especially those on business and the economy and on productivity. We do need this—our productivity crisis is worsening. The latest data show the worst productivity slowdown since the financial crisis, the UK’s performance is the worst among our peers, and our workers are now 14% less productive than they were pre-crisis. We have huge weaknesses in professional services, telecoms and communications, and banking and finance, and due to the slowdown in investment caused by the financial crisis and in recent times by the possibility of Brexit, there are also problems in manufacturing.

We strongly support the plan to deal with this by promoting competition across the economy, and in this context we welcome the better markets Bill, which represents a huge opportunity to address some of these issues, and which can be applied more widely. The European Union referendum is crucial to this. It is an economic fact that our productivity gains, modest though they have been, are largely a result of our entry into Europe in 1973. Those who advocate withdrawal are not coming clean about the scope of the impact, and the centrally planned economic and skills transformation that will be necessary if we leave.

More generally, the department for Business, Innovation and Skills needs to step up to the challenge. There is certainly a case for promoting the Minister, or at least for providing additional support to deal with the large number of Bills she is responsible for. We are conscious of her Herculean efforts in the last Session. It is important that the department grasps the nettle of having an active industrial policy; much more energy is needed. Even decisions such as on the location and functions of staff seem to have very little utility or sound evaluation, apart from the most London-centric and simplistic cost-cutting functions.

The crisis is not just in the private sector. The public sector too has acute productivity problems. Take the health service. Recent figures demonstrate that productivity has fallen in NHS hospitals for the third year running. I pay tribute to the excellent report by my noble friend Lord Carter, but a strong cadre of managers is needed to deliver any real changes. Certainly, the Secretary of State needs to address what is now a clear funding gap. After his most recent agreement with the NHS, there was a definable figure of what money was needed but it depended on productivity benefits. The current productivity decline probably means that the funding requirement is moving nearer to £30 billion than £20 billion. However, even the attempt to develop a seven-day health service seems to be challenging. The changes to junior doctors’ contracts are there but no other staff have had any changes. Therefore, an effective operational plan still seems immensely elusive, as my discussions with health professionals have made clear. Much more attention needs to be paid to public sector management and strategic skills, especially given the nature of this Queen’s Speech.

We are strongly supportive of some of the measures and look forward to engaging very constructively with the Government on them. The better markets Bill is a very important step towards establishing stronger responsiveness to consumer demands. It is true that this also has an impact on a number of smaller businesses and microbusinesses, which we should consider. We should ensure that the entrenched advantages and anti-competitive processes that many of our industries have developed are opened up. We should increase transparency and we can even address further measures, such as late payments, by using much more effective mechanisms. That could certainly be covered in this Bill. We look forward to seeing the detail of the Bill and establishing how we can take it forward to address the challenges and transform the prospects for the different sectors in our economy. For example, the service sector, which makes up between 75% and 80% of our economy, still requires massive opening up to competition.

On the digital economy Bill, we support many of the Government’s measures, such as on nuisance calls. However, we have to get serious about our objectives, a feeling that I know is shared by many on the other side of the House. Currently, we do not have as good a rollout of broadband across our country as we need. The speeds are limited and our targets are from yester- year: they should not be anywhere near as low as they are; we should be looking at much more significant targets. I have to make one confession. I possess in my house broadband from three separate providers. Not one of them achieves the advertised speeds and not one of them provides an uninterrupted service. Even by having three providers—the main three players in the market—we have had interrupted service in a relatively straightforward part of London. I cannot imagine the stresses and challenges that people in other parts of the country face. Enough is enough: this has gone on for far too long. This Bill will also, I hope, address some of the weaknesses in Ofcom’s approach to this issue, which I believe has been utterly inadequate—I am sure that many in this House will have a similar view.

On the Higher Education and Research Bill, we have many challenges. We have a fantastic science base and I have spent a lot of time recently, as a private investor, looking at some of the achievements of our research and science base. It is utterly outstanding, world-class and world-leading. We should do much more to encourage that and I wish that the department was much more active in that regard.

We have to be very careful that we do not end up saddling our students with greater debt by allowing huge freedom to increase fees without any consideration. We have to be absolutely clear about what we are measuring. Universities are one thing, but university departments may be another. I have a daughter who has just started a course at a university that I will not name, to spare its blushes. She did international history and politics in her first year and believes that she has spent £9,000 to be self-taught. In some university departments, that is the case. However, she shares a flat with a number of people who have had outstanding teaching support. It is wrong to say that that is a factor of the university; it could be more to do with departments. We must first consider the particular context, and we look forward to hearing the detail. While opening up the market to private providers is not inherently wrong, it would be wrong to do it in a way that is hugely detrimental to our overall university reputation. I do not like the idea that we will castigate a series of universities. The most recent figures on university approval worldwide show a huge rise for universities in the Far East, and a lowering of the position of some of the main UK universities.

Across this Queen’s Speech, in measures such as private pensions and the criminal finances Bill, business has an important role that should not be underplayed. On health, there are many measures that do not address the principal crisis but are important in their own right, and we would do well to scrutinise those here. This Queen’s Speech is limited in scope and nature, but that does not mean that our deliberations here cannot achieve more and cannot, in tandem with the Government’s objectives and values, which are broadly supported across this House, find ways to enhance the passage of these Bills and the other measures available to the people of our country.

Small Business, Enterprise and Employment Bill

Lord Mendelsohn Excerpts

Wednesday 14th January 2015 Grand Committee

Moved by

[Lord Mendelsohn]

35F: Clause 38, page 35, line 40, at end insert—
“( ) duties to establish the past payment performance of potential parties to a contract, before contracts are entered into;( ) duties to ensure contracts entered into include the contractors’ obligations for prompt payment of their suppliers.”

[Lord Mendelsohn (Lab)]

I thank the Minister for her comments at the beginning of the Committee. I think we will have a very constructive debate, as we have done so far, on these issues; there is a great deal of common ground. I feel somewhat optimistic that some of our helpful suggestions might even find a receptive ear. I hope that the Government see this amendment as a useful and timely addition to the Bill. I say “timely” advisedly. Last week, we had the benefit of the National Audit Office report Paying Government Suppliers on Time, which made the case for this amendment.

First, let me acknowledge that this is an area in which the Government can rightly take some credit. The Cabinet Office Minister, Francis Maude, has set out an objective and some initiatives and policies to address the weakness of the position of small businesses in procurement and in how they are treated by larger suppliers. I also acknowledge the very impressive work of the noble Lord, Lord Young, and congratulate him on his recent award in the New Year Honours List.

However, as we can see from the report, it is implementation that is the problem. The Government’s desire to pay promptly has not benefited small businesses sufficiently. The National Audit Office concluded that the attempt to pay increasing numbers of undisputed invoices early was boosting the working capital of only the main contractors and not benefiting small businesses down the chain in the way the policy intended. We therefore want to be very supportive of the Government and suggest that a bit of steel be put into the Bill.

The amendment aims to make sure that the payment performance of potential contractors is known before contracts are entered into, and that contracts entered into require companies providing goods and services to public sector contracting authorities to pay their own suppliers promptly. We would like contracting authorities to score the suitability of contractors based on how they pay suppliers in general and to know that not operating in keeping with the contract objectives of government support for small businesses when it provides its cash will affect their ability to contract with the public sector in the future. I would welcome the Minister’s assurance that the Government are doing what they can to address this problem, and that Ministers and their departments will now act swiftly by writing to their main contractors to seek assurances, today and in the short term, that they are adhering to the prompt payment commitment.

The National Audit Office report was disappointing reading for another reason—again, not for the want of willing. The report uncovered continuing and deep problems in the public sector over late payment. A third of small businesses were not paid on time. I do not want to draw a comprehensive conclusion, but what should one draw from the finding in the report that even the most basic and elementary accounting function of logging the date on which a paper invoice is received was not a common standard across the departments reviewed?

We did not feel it appropriate to add an amendment on this at this stage, but I give notice that it is something we intend to do when we return to late payments on Report. In the mean time, I would be grateful if the Minister could at least reassure us by providing some details on the further thoughts her department and the Cabinet Office have on the measurement and reporting of prompt payment performance. What measures and management processes will be put in place to ensure that accounting departments are both trained to deal with this and held to account for their performance? Can the Government provide stronger incentives, even now, to encourage the use of e-invoicing?

I would be happy if the Minister wanted to reply in more detail in writing, but it would be helpful to receive an understanding of the Government’s determination to take further measures to get their intentions, policies and decisions implemented. I beg to move.

[Lord Cotter (LD)]

My Lords, I strongly support the amendment. As the noble Lord, Lord Mendelsohn, said, implementation is vital to put steel into this requirement. We know from our many contacts in the construction industry that many areas of business have a real concern to ensure that people given contracts are monitored. I hope that the Minister will at least take this away to consider it and respond promptly in due course. In particular, I have in my mind a lot of evidence that has come forward from the construction industry to say that people implementing the main contract do not always—frequently do not—pay the small business sector promptly.

I will say no more, because the noble Lord has made these points, but—to be brief and to the point— we must ensure implementation. I hope that the Minister will take this away and assure us that this implementation point will be considered, because I have heard this issue raised time and again over the years, as have many colleagues, particularly giving a contract to a main contractor and finding that suppliers to that main contractor do not get payment. Those suppliers are often small businesses, so I welcome the amendment.

[Baroness Neville-Rolfe]

I thank the noble Lord for this amendment. As we discussed on previous days in Committee, prompt payment is an extremely important agenda and we wish to encourage both contracting authorities and businesses to pay their suppliers on time, so I shall say a little more, as noble Lords requested, about what we are planning to do in this area.

The Government are committed to leading by example on prompt payment. When we consulted on proposals to tackle prompt payment in autumn 2013, there was widespread support across industry and with procurers. This resulted, rightly, in a commitment to legislate. The new public contract regulations, which the Government plan to bring into force shortly, will place a duty on contracting authorities to pay their immediate suppliers in 30 days, and include terms in their contracts to pass these 30-day payment terms all the way down the public sector supply chain.

The regulations were consulted on last autumn and we intend to bring these into force early this year. That should provide reassurance to smaller businesses further down the supply chain that they will be paid expeditiously, and will address some of the findings of the National Audit Office report published last week, to which the noble Lord referred. I was about to cite the same figure that he cited: in a third of cases, public sector clients have taken more than 30 days to settle payment. That is completely unacceptable and that report helps to make the case for these regulations, which I hope will attract cross-party support. Our determination in this area cannot be doubted.

As part of these same public contract regulations, contracting authorities would also be required to publish the number of invoices paid late to their first-tier suppliers on an annual basis to show how they have performed in this area. The Government are committed to developing guidance to ensure that the reporting on late payment is understood and aids transparency.

Our mystery shopper service is strangely named, but it enables SMEs and other suppliers to raise concerns about public sector procurement with the Government and have it investigated. It is a Cabinet Office service and assists in ensuring that the contracting authorities comply with these new measures and will name and shame poor payers through the fortnightly publication of mystery shopper cases on GOV.UK. In future, the service will be able to ensure proactively that the 30-day payment policy is being embedded by carrying out spot checks on contracting authorities.

The noble Lord, Lord Mendelsohn, asked whether the Minister could commit to write to the main suppliers to ensure prompt payment. Yes, we would be happy for the Government to arrange for an appropriate Minister to write to the strategic suppliers about this before the end of the Parliament. We are talking about 100 or so suppliers. Those are the strategic suppliers to whom the noble Lord referred.

On monitoring and implementation, in view of the time I agree to write to the noble Lord to set out the arrangements. However, we believe that these reforms are the right way to address the prompt payment of suppliers in the public sector supply chain. I know that the position is a little curious—we have met the same issue in other legislation that the noble Lord, Lord Stevenson, and I have debated—to have one set of regulations coming in under EU powers and then a domestic Act, but I am afraid that sometimes that has to be the way that we bring things forward, not least to make them happen in time. I hope that, if the noble Lord takes the two together, he will feel that we are approaching this in a sensible way and feel able to withdraw this amendment.

[Lord Mendelsohn]

I thank the Minister for that reply. I also thank the noble Lord, Lord Cotter, for his support. I reinforce the point that we both made that while all the measures that we have talked about have our support and we do not oppose this area, we raised the matter to make sure that the policy is strongly and fully implemented. While some of the measures that were outlined concern talking to the first-tier suppliers, the sheer notion of being able to challenge people, hold them to account and ensure that they understand they will never escape questioning on this issue is the power that we are keen for the Government to consider further. We remain strongly supportive of the measure and I beg leave to withdraw the amendment.

Amendment 35F withdrawn.

Moved by

[Lord Mendelsohn]

35G: Clause 38, page 36, line 2, at end insert—
“( ) duties to provide details of any costs related to undertaking provisions outlined in paragraph (c)(ii);”

[Lord Mendelsohn]

My Lords, this group of amendments builds on the good base that already exists in the Bill, and I will set out our thinking behind them.

Small businesses often find public sector procurement processes unfairly opaque. Enabling small businesses to fairly compete and win public sector contracts requires commissioning and pre-procurement planning, as well as structured market engagement. This will require new guidance and skills development at the commissioning/procurement level within public sector organisations.

Experience—in many cases, painful experience—has shown that better commissioning, aligned to outcomes, is at the heart of driving an increase in the participation of small businesses in procurement processes. There is a strong benefit in early market engagement, asking questions of the market before procurement processes are initiated.

Small businesses need to be engaged as part of the commissioning process. Unless and until commissioners understand what localised small businesses can or cannot bring to the table, they will be selling themselves short in terms of what their local market can deliver. This early market engagement needs to be fed into the procurement process itself—from the specification through to the rationale for the procurement route taken and all the documentation required to be completed.

Skills in commissioning and procurement need to be addressed. There is an industry in the process itself, which tends to be input driven rather than concentrating on where the value can really be derived—that is, aligning the processes to the outcomes required. Commissioners and procurement officers have little support, training and guidance that will serve to facilitate a material difference in small business uptake. Therefore, the processes will tend to be biased towards larger, established organisations.

Small businesses that have been through the process claim that it is weighted heavily in favour of larger companies, with no consideration given to the fact that smaller enterprises have fewer resources to complete lengthy tendering documents. The smaller the business, the greater the proportion of its time, resources and effort will be required to submit a competitive tender.

Therefore, our amendments seek to provide the capability to government to effectively devise procurement processes, appropriate duties and considerations, as well as measurements and reports, to ensure an increase—more than just levelling the position—in small business success in winning public contracts.

Under Amendment 35G, the Secretary of State may impose duties on contracting authorities to provide details of any costs related to participating in the procurement process, helping to illuminate and navigate a key barrier to small businesses.

Amendment 35H establishes baselines which will be critical to determining the success or otherwise of public sector bodies both in participating in procurement processes and in increasing the awarding of contracts to small businesses. It proposes tracking key performance indicators, asking contracting authorities to report on the number of small businesses participating in the procurement process, the number of contracts, the value of the contracts and the value of subcontracts awarded to small businesses.

Amendment 35J would impose a duty on contracting authorities to deliver fair and equal procurement contracting, as well as a duty to have regard to region, diversity and the value of the contract and subcontract awarded.

Amendment 35P provides that contracting authorities have a duty to publish reports about the amount and proportion of expenditure within procurement undertaken by a contracting authority in relation to small businesses and the area local to the contracting authority, as well as duties to disclose and explain any reasons why specified businesses or companies, or a specified category of business or company, may be excluded from consideration by a contracting authority.

In Amendment 35U, the mystery shopper, when conducting an investigation, must give,

“due consideration to the fair and equal delivery of a procurement contract”,

having regard to region, diversity and the value of the contract and subcontract awarded.

In short, we are asking public sector bodies to take greater care in designing processes that do not disadvantage small businesses, and we are trying to give them the tools to measure these effectively. They need to consider what are we asking for in procurement processes—the range of checks and balances with respect to the amount of time and cost that they are expecting bidders to invest. Are the questions being asked really relevant to the contract size and type of the contract?

--- Later in debate ---

I have gone through each of the amendments in turn and I apologise for the length of my reply, but I hope that that has helped the noble Lord to understand why I would like him to withdraw the amendment.

[Lord Mendelsohn]

I thank the Minister for her comprehensive reply. I sometimes feel that she does not realise that we are trying to be helpful. I also thank the noble Lord, Lord Young, for his comments on mystery shopper. If he can wait until Amendment 35V, we will probably have an interesting discussion on that as well.

I am encouraged by the Contracts Finder website. This service is currently available and has a huge number of suppliers with different costs and different costs supplied to it. The benefit of having a site championed by government would be the ability to have not just the front end, whether on a pc or other device, but what can be done with the back end to make sure there is some consistency. I know that the noble Lord, Lord Young, is a dab hand at technology, having just received an invitation from him to go on a technology visit somewhere. I hope that he has that in mind, and it is not just on the front end but the deeper work on the back end.

I am very grateful to the noble Lord, Lord Deben; we have agreed on an awful lot during consideration of the Bill. What he said is exactly what our intentions have been throughout with these amendments. The genius of these amendments, if I may say so, was the attempt to try to create not just a process for measurement but a way in which to enforce a duty to consider carefully how the procurement process is designed. Having to report on the diversity of the people in that procurement process assists in the obligation to ensure that the tendering organisation designs a sensible process—one that meets the ability to report that it has gone through the right range of people and is appropriate to the needs of small business.

It sometimes feels rather as if being on the shadow ministerial team is like operating a small business. We have somewhat modest resources and I felt that our amendments were drafted with the finest legal advice that our sparse resources were able to get. I was disappointed to hear that the Government feel that these measures do not meet the test of equal treatment and I would be grateful if they could share with us the legal advice suggesting that. I would consider that another government action in support of small business.

I accept that there is a huge difficulty in all this. Again, I am trying to be very helpful here but the tone of some of the Minister’s response was a lot of after-the-event, post hoc assessments and rationalisation. We are trying to stop the situation being that within the process, it is just too far rigged against small businesses. I have experience of looking at public contracts in a variety of countries and, at times, we put in a series of information hurdles that are impossible to achieve. Occasionally in our processes, even on contracts, we have a “take it or leave it” approach—something that a big organisation can absorb as a risk, while a smaller business cannot.

I urge the Minister to consider carefully what we have tried to design. It is about telling people to have some consistency. Even our provisions about the mystery shopper are about creating a consistency in reporting and operating, and the establishment of a permanent mindset. We should not just design these procurement processes to be risk-averse and end up with the same old suppliers. We should make great effort to open them up as much as possible and design them for that purpose. If she will consider that we will be very grateful but, in the current circumstances, since we wish to be very helpful, I beg leave to withdraw the amendment.

Amendment 35G withdrawn.

--- Later in debate ---

Moved by

[Lord Mendelsohn]

35Q: Clause 38, page 36, line 11, leave out “may” and insert “shall”

--- Later in debate ---

[Lord Mendelsohn]

My Lords, I shall speak also to Amendment 35R. I will be mercifully brief on this group. In trying to express our support for the Government, saying less may be more.

The Bill says that the Minister,

“may issue guidance relating to regulations under this section”.

Proposing a change from “may” to “shall” enables us to debate the wider issue of guidance relating to small businesses and public procurement, and what should be included in the guidance.

Amendment 35R is in keeping with the recommendation from the Delegated Powers and Regulatory Reform Committee that regulations about procurement be subject to the affirmative procedure. We agree that in these matters delegation is appropriate as the powers are so wide and there is great potential for significant consequences, both negatively and positively. We also agree that on procurement matters in general it is entirely sensible to make regulations under Clause 38 subject to the affirmative procedure. The approach of not just this Committee and this House but the other place suggests that there is a great deal to be gained through the positive engagement of both Houses. I beg to move.

[Viscount Eccles (Con)]

My Lords, it is the very width of the potential of these two enabling clauses that worries me. In a way, bringing in “shall” in the amendment and accepting the recommendation that the resolution procedure should be affirmative gives Parliament a certain leverage to debate whatever the Government are intending to do. However, I am reminded that sometimes when people put up very sensible amendments Ministers do very well in arguing that they are not necessary. They say that things are all right as they are and that the matter is already being dealt with. We have heard a certain amount of that this afternoon.

I have been listening to this debate—I hope, carefully—thinking about the comments on existing legislation, thinking about all that is going on in this area in a period of financial stringency, when you would expect a lot to be going on, listening to my noble friend Lord Young, for example, and thinking about my noble friend on the Front Bench and the impending transposition of European directives on the subject. We have had a very interesting debate but I ask whether the case for these two enabling clauses has really been made. Is it not perhaps true that there is not an impelling need for them? Many good things are going on.

Therefore, my challenge to my noble friend is the question: what is the reality of the added value that will accrue from these enabling clauses, always remembering that enabling legislation is inherently not very satisfactory? I think that I revert to the position adopted very early in the afternoon by the noble Lord, Lord Whitty, who is no longer in his place. He said that he was not entirely sure that these two clauses were necessary. However, I will read the draft regulations with great care. I am sorry that I did not realise that they were already available a few days before this debate. That is remiss of me. I will read them very carefully, and it may well be that before Report I will conclude that there is some added value, although at the moment I have my doubts.

--- Later in debate ---

[Baroness Neville-Rolfe]

My Lords, I am grateful to the noble Lords for their amendments. I shall start by commenting on the wisdom of my noble friend Lord Eccles, who often causes us to pause in our legislative discussions. I am not sure whether he was present when we started this afternoon and I took the Committee through the rationale and explained how we plan to use the regulations. I am glad that he is planning to look at the draft regulations and I would be very happy to discuss them further with him if need be. The clause will provide the Government with the powers to make regulations that help small businesses bid for public sector contract opportunities that are currently worth £230 billion per annum. That is at the heart of our problem: as many noble Lords have asked this afternoon, how do we get the share of that cake up for small business? That is our common wish.

As for these amendments, I want to reassure the noble Lord that the Government are considering carefully the recommendation of the Delegated Powers and Regulatory Reform Committee, but we also need to consider the implications for timely delivery. The Government are not yet convinced that it is necessary for the affirmative procedure to be used every time the power in this clause is used. Regulations about procurement have in the past been made under the negative procedure and some of the matters dealt with in regulations in this area are very technical and need to be adjusted over time.

Taking an example, the illustrative regulations we have recently published list a number of practical steps that could be taken; for example, on pre-procurement marketing. It may be necessary in the future to amend that list to describe new recommended forms of pre-market engagement. Is the affirmative procedure necessary or appropriate for every such change? Similarly, as the recently published Cabinet Office policy statement makes clear, regulations could be used in the future to prescribe minimum and maximum timescales. Would a modest change to one of those require the affirmative procedure?

We are actively considering these issues and what we can do to increase the level of parliamentary scrutiny attaching to this clause, which is the purpose of this amendment. One option would be to have an affirmative resolution on the first occasion to set the strategy for the regulations, and negative thereafter. It would be good to understand how noble Lords feel about that.

Turning to Amendment 35Q, as we have debated in relation to previous provisions, the use of “may” instead of “shall” is standard practice in relation to drafting of this sort. Our intention is to issue guidance about the regulations and to publish it in a way that makes it accessible to contracting authorities and suppliers. I can reassure the Committee that, if the Government consider that guidance would help contracting authorities or others to understand the regulations, we are committed to issuing it. We will also implement—I think that this is called for, from the conversations we have had today—an extensive communications strategy prior to the implementation of the regulations in order to ensure that key messages are understood and embedded. That will appear on GOV.UK and be very accessible. I hope that, in the circumstances, the noble Lord will agree to withdraw these amendments and, clearly, I would be interested to discuss the issue of parliamentary scrutiny.

[Lord Mendelsohn]

My Lords, I thank the noble Viscount, Lord Eccles, for his observations and I apologise if I was not clear. The issue here, as was pointed out by the Delegated Powers and Regulatory Reform Committee, is that there are no limits in the Bill on the kinds of duties relating to the exercise or procurement functions that can be imposed and it does not derogate the generality of that power. So there is a question about the breadth of that power and that is why there is great benefit in debating these things.

The committee, whose view we share, was also unconvinced by the arguments of the Government. If there is an issue about some of the technical aspects as described to the committee—the economic circumstances or elements where speed is of the essence—we would be more convinced if the Government were able to give more detail on the circumstances in which those would be applied. Given everything, it does not sound particularly compelling and we are in deep sympathy with the Delegated Powers and Regulatory Reform Committee on that. In the circumstances, since it may be possible for the Minister to write to give us more details, I will use this opportunity to beg leave to withdraw the amendment.

Amendment 35Q withdrawn.

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Moved by

[Lord Mendelsohn]

35V: Clause 39, page 37, line 19, at end insert—
“(9) A Minister, in carrying out the functions outlined in this section, shall publish details of the investigation including the—
(a) focus of the investigation,(b) findings of the investigation,(c) evidence considered.(10) Evidence classed as commercially confidential is excluded from the provisions of subsection (9).”

[Lord Mendelsohn]

This is a probing amendment, which seeks to ask the Government to set out more clearly how this clause will improve the current position and is intended to operate. This is indeed an amendment which covers the mystery shopper. In February 2011, the Cabinet Office supplier feedback service was extended to allow small businesses to ask about procurement processes when they were unsuccessful or felt that the procedures or systems, or how they were being treated, were unfair. This was later renamed the mystery shopper scheme, which I have enjoyed reading about.

Looking through the document headed Mystery Shopper Publication Table October to December 2014, I came across a fascinating story about the UK Shared Business Services. The description says that:

“A Mystery Shopper raised concerns about a procurement by UK Shared Business Services … for ‘the Small Business Campaign’. The supplier read in a media article that they had been unsuccessful prior to receiving any response from”,

those services. The response from the investigation by the mystery shopper service said:

“We investigated this case and UKSBS have confirmed that unfortunately information was made publically available prior to the official notification letters being sent”.

Its conclusion was that the United Kingdom’s Shared Business Services,

“are looking into their internal processes to ensure that this situation does not re occur (including ensuring training is put in place for users of the procurement process)”.

I have never seen a leak more extensively reported in a government document and I found it very amusing. However, we commend the mystery shopper, which performs an exceptionally valuable service and shows tremendous potential for development. One of the things which we commend is that it is evolving and not a static instrument. It has some direct attention and modifications come as a result of that.

I would like to probe what is in the Bill. Clause 39 provides the Minister for the Cabinet Office and the Secretary of State with a power to investigate the exercise by a contracting authority of relevant functions relating to public procurement. This essentially puts the existing mystery shopper service on a statutory footing. On the face of it, it seems strange that the clause makes provision for the Minister to carry out the investigations and does not allocate any powers to the Minister to delegate. I am sure that there are some very interesting drafting answers in the Minister’s file. How is this intended to operate? I am sure that while a number of Ministers could fit in the time to spearhead public procurement investigations, some may have less time and, possibly, not even have the skills.

The main purpose is to move an informal process and the Explanatory Notes state that the Bill,

“will make contracting authorities legally obliged to provide information on request”.

I would be grateful if the Minister could provide us with further details on this problem. I think that I have read through all the published mystery shopper documents and none has stated this to be a problem, so I wonder why it has emerged as one of the foundations in the Explanatory Notes. I would guess there have been some difficulties and I would be grateful if the Minister could tell us what they have been and whether particular departments, agencies or authorities have been at fault.

The Explanatory Notes state:

“Ministers and Government departments will continue to comply with the current Mystery Shopper scheme as a matter of interdepartmental co-operation”.

Does this mean that there will be an exclusion when they look into each other’s departments and, therefore, this will be done without the statutory obligation to provide information in a timely fashion?

As this seems to relate to matters about how the investigations are conducted, our amendment seems eminently sensible. It simply asks for more transparency around the investigation process and asks for details to be published including the focus, findings and evidence of the investigation. Naturally, an exception is made for commercially confidential information and is a means to probe the entire clause and some of the details that we think are missing about how these investigations will be carried out in an effective and timely manner.

Finally, in Amendment 35V, we consider the exercise of Ministers’ time to be so valuable and their insights to be so useful that we suggest that details of the investigation should be published including the focus, findings and evidence considered. Commercially confidential evidence is, naturally, excluded from this. I beg to move.

[Lord Popat (Con)]

I am pleased that the noble Lord, Lord Mendelsohn, welcomes the mystery shopper service. It plays a very important role, and I am glad for his support for publishing the results of investigations in the interests of transparency. I am sure that noble Lords will be reassured to know that the Crown Commercial Service already regularly publishes results of these investigations. Our published results normally cover the focus of the investigations, the findings and, critically, the action agreed by the contracting authority to rectify the issues found. We also highlight where a contracting authority has refused to accept our recommendations.

Publication of results is an important feature of the service, as it enables the Government to highlight poor practice and the advice given to rectify it, from which other authorities can learn. It also provides a way of naming and shaming public bodies which do not accept recommendations. When appropriate, it can also be used to name large suppliers who do not pay their small business subcontractors promptly in public sector supply chains. In addition, annual reports are published which highlight key themes and advice, including the results of proactive public procurement spot checks. These findings have concluded that there remain issues relating to excessive qualification requirements being demanded by authorities in assessing financial strength, poor use of pre-qualification questionnaires and poor payment practices. These publications are broadcast by Twitter and potentially reach up to 4 million people.

Publishing more information does not fit with our aim of publishing brief, user-friendly reports, appropriate to the issue being investigated. Also, very often the documents we look at, such as tender documents and pre-qualification questionnaires, are already publicly available on authorities’ websites. Increasingly, this type of information will be available through links from Contracts Finder. Additionally, a key element of mystery shopper is its agility. The team can act speedily to raise concerns and resolve issues. It would be wasteful to bog them down by obliging them to publish the evidence considered and to discuss with authorities whether certain documents or information are commercially sensitive.

The proposed amendment would restrict the Minister to publishing specific details of each case. As the clause stands, the Minister can continue to publish reports of investigations in a flexible and user-friendly way, while respecting commercial confidentiality.

The noble Lord, Lord Mendelsohn, also asked how often authorities failed to comply with a mystery shopper investigation. In the last six months alone there have been 15 instances during investigations of referrals and spot checks where we have been unable to obtain any responses or get hold of documents. These new powers would have helped us get answers in all of these cases. Co-operation between departments is no reassurance to the public. Ministers are not to be legally bound by mystery shopper powers, just like other authorities.

The point of the clause is to enable the Minister for the Cabinet Office operating through the mystery shopper service to enforce demands for information and assistance for the courts. It would not be feasible or realistic for the Minister to bring legal proceedings against another Minister or government department. I hope that I have explained to my noble friend—the noble Lord—why we feel this amendment is not feasible. I will be happy to write to him. I hope that he will withdraw the amendment if he has found my explanation reasonably acceptable.

[Lord Mendelsohn]

My Lords, I am grateful to the Minister for describing me as his friend—perhaps mistakenly. I hope that my charm offensive has at least achieved some results in this Grand Committee.

I am also grateful for his explanation and for the clarification. I wish to stress that we believe that the scheme—the initiative—is good and we are pleased to see added strength given to it. I am also very pleased to see the noble Lord, Lord Young of Graffham, nodding vociferously in the background as this is something on his radar and I am sure will continue to be a lever that he will pull and push with great force to try to ensure that it is delivering for small business.

I have one observation on the mystery shopper issue. I noted that the Crown Commercial Service always responds quickly to these measures on the outcome of a case and recommendations. I hope that that sense of speed will be carried across government to make sure of that. In light of the Minister giving more detail in writing so that our support can be further enhanced, I beg leave to withdraw the amendment.

Amendment 35V withdrawn.