Government Procurement Policy

Lord Puttnam Excerpts

Thursday 24th November 2011 Lords Chamber

[Lord Puttnam]

My Lords, I, too, thank the noble Lord, Lord Sugar, for making this important debate possible. He managed to set out the principal issues in an honest and typically pugnacious way. The thrust of his speech that particularly impressed me was his insistence that we stop pretending that we are goody two-shoes and start to play the procurement game in the way that it is successfully practised in France, Germany, the Netherlands, Canada and, by the most sophisticated and unyielding protectionist of them all, the United States.

He also made what I believe to be a crucial point in stressing that the most economically advantageous deal may not always be the cheapest price and that there are wider social impacts to consider. To put it another way, I suggest that the overriding aim of successful procurement should always be driving costs down while driving value up. It is this concept of where true value lies that turns procurement from a job or a task into an art, or certainly a craft—one that is able to look right across the value chain and understand the full implications of its remit.

Perhaps I may put a little flesh on that assertion by offering your Lordships an example of what I mean from not all that many years ago. Here, like the noble Lord, Lord Sugar, I must declare an interest, but it is one of those interests that in my judgment adds rather than detracts from the experience that I bring to this House. I am very proud to be the senior non-executive director of Promethean, a British company, founded in Blackburn, and one of the two global leaders in interactive classroom technology.

About eight years ago the then Government sensibly took the view that advances in education were very likely to be technology-driven and that a window of opportunity existed for the UK to become a world leader in the provision of educational hardware and software. Significant government resources were found and a serious procurement programme, amounting to well over £500 million, was put in place. As usual, no particular favours were shown to UK suppliers, that being the ideological stance of the then Labour Government. I should stress that the commitment to procurement from global markets was at that time both fashionable and ideologically driven—wrongheaded in my view but, to its credit, entirely genuine.

In respect of Promethean—and this was long before I joined the board—what was being offered was a very advanced piece of technology together with a pretty comprehensive training package, sufficient to allow the teacher to familiarise him or herself with the full educational potential of the product. As the government procurement process began to bite and the price was squeezed, something had to go. It could have been the R&D commitment to future innovation. Happily, the company decided to protect that. What went instead was the training package. And with what result? For the next few years, white boards, from a variety of manufacturers, were being purchased and shipped to schools, colleges and other institutions in which nobody had the skills to use them. I would guess that hundreds, maybe even a few thousand, found their way into cupboards or were simply never taken out of the wrapping paper for fear of embarrassing staff who were simply never offered the training, and the resulting confidence, adequately to use them.

Procurement in its crudest and most unimaginative form had done its job, but far from creating real value—certainly, value as any one of us would understand it—or helping to build a successful UK-based business, let alone improving the education of an entire cohort of children, it had managed, in effect, to defeat the entire purpose of the exercise. Happily, much of that damage has since been rectified by a generation of enthusiastic and digitally literate heads and teachers, but several vital years and myriad opportunities were lost through the practice of what the noble Lord, Lord Sugar, rightly describes as ill thought-through procurement policies.

I have a dream, and it is a dream that has recurred time and again since my arrival in your Lordships’ House some 14 years ago. That dream is to read a government response to a thoughtful, well argued and thoroughly constructive report by a committee of this House which is similarly thoughtful, similarly well argued and, most important of all, equally constructive. On this occasion the report in question is that of the Science and Technology Committee, entitled Public Procurement as a Tool to Stimulate Innovation.

As I see it, intelligent procurement is all about asking the right questions and understanding what might be the ultimate, long-term national objective. That will not necessarily be the same objective as that of the Treasury, which is invariably tied to a far more short-term view. The report of the committee to which I refer asks all the right questions in a polite and reasoned way. The Government’s response is equally polite, but by my reading falls well short of the degree of urgency and commitment that the committee seeks. The committee makes it clear that it intends to return to this subject next year. I seriously welcome that assurance. But when it does, and assuming that it is as disappointed with progress as I rather expect it to be, I hope that it will follow the example of the noble Lord, Lord Sugar, and be prepared seriously to take the gloves off.

The committee’s hand was strengthened earlier this week by Vince Cable’s welcome announcement of the appointment of Phil Smith, the chief executive of the technology company Cisco, as the new chair of the Government’s Technology Strategy Board. As the committee’s report makes clear, the TSB is ideally placed to influence and maybe even drive through many of its recommendations. In my judgment, the board could not have a better ally in whom to entrust the change of culture that both the committee and the noble Lord, Lord Sugar, are pressing for. I would suggest that this House should commit itself to offering Mr Smith every possible scrap of support in delivering the improvements in policy and practice that are being argued for in this extremely well-timed debate.

Perhaps I may finish with this observation. I find it very strange that for a debate on an economic subject which all but obsesses, and has obsessed over the years, the Conservatives in opposition and in government, they have not put forward a single spokesperson. I am sure that the noble Lord, Lord Wallace, will more than adequately reply for the coalition, but it seems odd that a subject of such enormous importance and which is so central to many elements of Conservative philosophy is not seen to be important enough for them to put up a speaker.