Spending Review 2020

Lord Shipley Excerpts

Thursday 3rd December 2020 Grand Committee

[Lord Shipley (LD) [V]]

My Lords, I first remind the Grand Committee that I am a vice-president of the Local Government Association. I want to talk about council tax and the deliberate government policy over the past five years to force it up well above the rate of inflation. These increases have been caused in part by the introduction of the adult social care precept in 2016, because central government decided to divest itself of carrying all the responsibility for rising social care costs. At the general election last year, the Conservative Party manifesto guaranteed not to increase income tax, national insurance or VAT across the next Parliament. It was a bold and, undoubtedly, a popular step. This was intended to,

“protect the incomes of hard-working families across the next Parliament.”

These three taxes bring in almost two-thirds of UK tax revenue. The decision not to increase them means that the Government intend other taxes to bear the burden through this Parliament. Council tax is one of them, and in the spending review last week, the Chancellor continued government policy towards council tax for a sixth year: that is, increasing council tax well above the rate of inflation. An increase of up to 5% is permitted next year, of which a maximum 3% increase is for the adult social care precept and 2% is for general service provision. This constant rise in council tax forced on councils impacts most of all on poorer families.

The pandemic is impacting most on poorer families. The freeze on public sector pay will impact most on poorer people. The failure to increase the living wage by more will impact most on poorer people. I understand the reason for wanting to avoid tax rises at a national level, to enable the economy to grow again, but why does this policy not apply to council tax?

Finance Bill

Lord Shipley Excerpts

2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Friday 17th July 2020 Lords Chamber

[Lord Shipley (LD) [V]]

My Lords, I will speak about stamp duty and the temporary change in policy being introduced. It is estimated that there could be 100,000 extra house sales in the next nine months. I accept the importance of that in reviving the housing market. When people move homes, they generate sales of fittings and materials for those new homes, which is an additional benefit. But I hope the scheme will not be extended in its current form after 31 March next year and that the opportunity is taken to learn from the experience of the next few months. There are two reasons for saying this.

First, it will not solve the housing crisis, which is primarily about a lack of supply, particularly of low-cost housing for those on lower incomes. There is a real risk that this change will just lead to more competitive bidding and sale prices higher than they would have been. I ask the Minister specifically why the Government have included second homes in this policy change. It seems a very strange subsidy, albeit a temporary one, even though the 3% additional homes levy still applies. Why have the Government included second homes, when buying a second home reduces opportunities for local first-time buyers?

This new policy will not help those who cannot afford to buy a house in the first place, nor will it help many first-time buyers get a mortgage, since banks and building societies want a 15% deposit. There is an additional danger that buy-to-let landlords will outbid first-time buyers and push up prices. There are 9 million people on furlough, who could find it hard to move anyway. What assessment have the Government made of the fact that many households will not be able to take advantage of the reduction in stamp duty anyway? The supply of low-cost homes for sale and rent to low-income earners really matters, and I see nothing in this proposal that will address that.

Might the Government look again at two related issues? The first is the question of who benefits from increasing land values, which can result from planning permission, and how that financial gain could be used differently for the support of more low-cost housing. Secondly, will they look again at why 70% of new housing supply lies with 10 developers, and what might be done to broaden the number of builders and thereby increase supply?

Covid-19: Economy

Lord Shipley Excerpts

Thursday 4th June 2020 Lords Chamber

[Lord Shipley (LD)]

My Lords, it was reported yesterday that the US economy will take 10 years to recover from the pandemic—that is according to US government analysts. We know that something similar is likely for the UK. Our economy is in a state of shock, and it is estimated that Covid-19 could reduce GDP by well over 10%. To make matters worse, the Government seem intent on risking a no-deal Brexit, which could result in a further 5% long-term reduction in the UK’s GDP.

We are suffering from an acute lack of leadership as the Government pretend that they can solve both problems at the same time. They cannot. It is dangerous to expect British companies trying to save and restore their businesses in the wake of the pandemic, which is not over, to cope with the additional complexities of a new trade agreement—or no agreement at all—which would need to be implemented at very short notice. The Government should request an extension to the 31 December transition period deadline.

On the impact of no deal, the Government should heed the warnings of Nissan, which is keen to continue car production in Sunderland. Its global chief operating officer said yesterday morning that if the company is

“not getting the current tariffs, the business will not be sustainable.”

That is what everybody has to understand. Can the Minister say whether the Government understand that?

We have learned a lot from the impact of the pandemic, not least that we are too reliant on global supply chains and need to be more self-sufficient. I am thinking of more local food production to reduce dependency on imports; the supply of energy, where major investment in renewables would boost the economy; and more local manufacturing in areas that have been traditionally been manufacturing centres. Achieving all this needs the Government to think in terms of places and how they can be helped to produce more.

Income Equality and Sustainability

Lord Shipley Excerpts

Wednesday 6th May 2020 Lords Chamber

[Lord Shipley (LD)]

My Lords, I congratulate the right reverend Prelate the Bishop of Derby on her excellent maiden speech, and thank the most reverend Primate for all his work in support of this House, but particularly for his tireless campaigning on issues of financial inequality, debt, poverty and homelessness over many years.

Recent data from the Office for National Statistics has shown that people living in more deprived areas have experienced Covid-19 mortality rates of more than double those for people living in less deprived areas. A postcode lottery of morbidity is unacceptable, and the Government simply must tackle the fundamental inequalities that have put some people at greater risk.

A briefing I received from Citizens Advice in Newcastle earlier this week made several proposals that I hope the Government will adopt to assist households as temporary financial interventions are reduced. It suggests that there should be no sudden cut off to the job retention scheme or the income support scheme, and that there should be long-term increases in the safety net provided by universal credit because many people will find it hard to get back to work when lockdown ends. There should also be a recognition that further extensions may be needed for existing mortgage and debt holidays, and it proposes a coronavirus financial hardship fund, which would be different from universal credit in that it would help people facing sudden essential costs, through a grant or a loan. These proposals seem wise. We should remember that furloughed workers on low pay have had a 20% cut to their incomes.

I was a signatory to the recent call to prevent disadvantaged children falling behind in their learning by means of extra tuition through a catch-up premium for their schools. I hope the Government will understand the vital importance of this, to reduce educational inequalities.

Budget: Economic and Fiscal Outlook

Lord Shipley Excerpts

Tuesday 5th May 2020 Lords Chamber

[Lord Shipley (LD)]

My Lords, eight weeks ago, several important announcements were made in the Budget about infrastructure investment. There was to be a significant rise in borrowing to fund this, to be paid for by future growth. That Budget was said to represent an end to austerity.

Just eight weeks later, the Government are paying the wages of 6 million people, with one in four employees in furlough. The Chancellor has said there is “no limit” to the funds available in the face of the OBR forecast that the economy could shrink by 35% in the second quarter and by 12.8% for 2020 as a whole. We now know that the Government might borrow £273 billion this year—the largest annual deficit since 1945. How do they plan to pay for this underpinning of our economy in the face of declining tax revenues? Will it be simply through anticipated growth?

I would like to ask the Minister three further questions. First, he referred to the Prime Minister’s promise of a levelling-up agenda for the whole country. I would like to suggest that this should mean investment in our domestic manufacturing base in the face of a likely decline in global supply chains, as well as the need for greater security of supply. Will the Government confirm that they will still rewrite the Green Book rules to help those places where growth and productivity are lower?

Secondly, we seem to be witnessing the closest working between the private and the public sectors since 1945. Does the Minister accept that government support must carry on after lockdown ends? Enabling the economy to recover will inevitably be a gradual process and, crucially, the Government must protect the job retention scheme beyond the end of June, otherwise it will become in effect become a scheme that just delays redundancies.

Thirdly, I should like to ask about Britain’s future debt levels, which will shortly stand at 95% of GDP. Coronavirus could well cause a reduction of 10% in our GDP and there is evidence that a no-deal Brexit could add an extra long-term loss of a further 5%. How will the Minister respond to this and does he accept that a no-deal Brexit is not in this country’s economic interests.

In conclusion, I have two further points. Will the Minister undertake to look at the merits of municipal bonds, which could help in the current situation, and might the Government consider allowing the state to take a bigger share of land value uplift when planning permission for housing is granted? If they did, I think that would help the public finances.

Freedom of Information Act 2000

Lord Shipley Excerpts

Tuesday 23rd July 2019 Lords Chamber

[Lord Shipley (LD)]

My Lords, I first remind the House of my interests in the register in connection with the Local Government Association. I thank my noble friend Lord McNally for tabling this Question for Short Debate and, like my noble friend Lord Scriven, I give him my full support.

The Freedom of Information Act 2000 has proved itself by adding a direct means for scrutiny of public authorities by the general public and not just by elected politicians. The Burns report of 2016 found that transparency and openness had been enhanced since 2000 and recommended that it should be further enhanced and not restricted.

Last month marked the second anniversary of the Grenfell fire. Grenfell United, in its parliamentary briefing for that anniversary, made seven recommendations, one of which was about freedom of information. It called for,

“an extension of the Freedom of Information Act to cover TMOs”—

tenant management organisations—

“and housing associations, to give tenants the right to see critical information about their homes”.

It seems a basic right for a tenant to have that information and it puzzles me that tenants can be excluded from information that is directly relevant to them.

The context is the failure of successive Governments since 2000 to strengthen the Act. It has limitations and it has fallen behind many other countries. As we have heard, the Information Commissioner has estimated that a third of government spending is used to procure public services. The problem is that more and more services have been provided by contractors who are not accountable under FoI, as the public might expect them to be. The test is whether the contract between the contractor and the public authority gives the authority the power to get the information it wants under the contract: that is, does the contractor hold the information for the purposes of the public authority or for its own purposes? On too many occasions, unfortunately, information that the public might feel they have a right to know is being denied to them. For example, it appears that fire safety defects can be excluded. This cannot be right. Contractors should not be less accountable than the public bodies that used to provide the same services directly.

It is not just PFI or other contractors; it is tenant management organisations as well. In relation to Grenfell, the Kensington and Chelsea Tenant Management Organisation had refused FoI requests on the grounds that it was not a public authority. I find that amazing, but it is true. But worse, the Information Commissioner upheld a refusal in 2012. However, after that appeal process, the Kensington and Chelsea Tenant Management Organisation did respond to some tenant requests for information—but in July 2017 it then refused an FoI request for a report on the emergency lighting system in Grenfell Tower that had been written in 2005. Surely it cannot be right to refuse tenants information of this kind.

The Government need to amend the law. Information of important benefit to the general public should not be withheld from them when it would be available if the public authority had not contracted out the work. The Burns report of 2016 concluded that this was the right approach. The Committee on Standards in Public Life has recently concluded likewise and the Information Commissioner, as we have heard from my noble friend Lord McNally, has called for similar changes. So, the question must be: what is the hold-up? The consequence of delay is doubt and avoidance. In the case of housing associations, it is wrong that their tenants are not able to access the same information council tenants can get.

Two years ago, the housing journal Inside Housing asked more than 60 housing associations for copies of their fire risk assessments. Very few responded. Councils would have had to. I understand that this difference is in the process of being addressed in Scotland. Might we do the same in England? It does not follow that housing associations will have to be redesignated as public organisations if they fall within the FoI remit. This is, as my noble friend Lord McNally said a moment ago, a different world from 2000, but it is the case now that FoI laws are no longer fit for purpose and I hope the Government will act.

Councils: Funding

Lord Shipley Excerpts

Thursday 4th July 2019 Lords Chamber

[Lord Young of Cookham]

Local councillors and local government officials have done remarkably well to maintain, and in some cases improve, the quality of the services they provide despite, since 2010, a reduction in grant until recently, which was necessary to balance the national accounts. I recognise that they have done that without excessive rate increases. Looking forward, I have seen the report to which the noble Lord refers and welcome the Local Government Association’s attempt to quantify the pressure on resources. That information will be used by Ministers to feed into the spending review to make the case for a proper settlement for local government.

[Lord Shipley (LD)]

My Lords, I also remind the House of my vice-presidency of the Local Government Association. Local government will be pleased that the Minister thinks that the sector is doing “remarkably well”. Indeed it is, but does he accept that local government is facing ever-rising costs in service provision at the same time as increasing pressure on income, not least from business rates in the retail sector? Do the Government accept that this situation is turning into a crisis and would benefit from urgent cross-party discussions across national and local government, looking forward to the spending review but also examining fair funding, assumptions about council tax levels and the future of business rates?

[Lord Young of Cookham]

I say to the noble Lord that I was a vice-president of the Local Government Association—until I was expelled for introducing rate-capping in the 1980s. On the serious issue he raises, extra funding announced in last year’s Budget means that the Government will have given councils access to £10 billion of dedicated funding that can be used for adult social care, which is the real pressure point, in the three-year period to 2019-20. That is a combination of the adult social care precept and the better care fund. As for his invitation to cross-party discussions, those are always welcome: it is always helpful to have consensus on how local government is funded. Announcements on fair funding and the business rates retention scheme will be made alongside the decisions of the spending review.

Affordable Housing

Lord Shipley Excerpts

Wednesday 3rd July 2019 Lords Chamber

[Lord Young of Cookham]

I agree with the thrust of my noble friend’s question. The other thing that we have done is that when surplus land becomes available from any government department it is put on a website, and the homes agency has the opportunity to acquire it before anybody else. It can put in a bid and do what he and the noble Lord suggested: to make the land available for housing. We are seeing more such transactions where the land is made available to local authorities or housing associations, and the Government are committed to providing 160,000 homes, I think, by March next year on land that was in government ownership in 2015.

[Lord Shipley (LD)]

My Lords, I refer the House to my interests in the register. A few days ago, at the Housing 2019 conference, the Prime Minister said that,

“we are delivering a whole new approach to social housing … Because this is a Government with a bold vision for housing and a willingness to act on it”.

Can the Minister can tell the House what that bold vision is for social housing?

[Lord Young of Cookham]

Yes, indeed. We announced that we would abolish the cap on the housing revenue account, to enable local authorities to build up to £4 billion- worth of new homes and introduce a new generation of council housing.

Public Procurement and the Civil Society Strategy

Lord Shipley Excerpts

Thursday 23rd May 2019 Lords Chamber

[Lord Shipley (LD)]

My Lords, I should remind the House that I am a vice-president of the Local Government Association. I thank the noble Baroness, Lady McGregor-Smith, for enabling us to have this debate. She made a large number of important points in her speech. I was struck by her observation that the government consultation is too narrow and that far more could be achieved, and particularly by her view that up to 50% of a contract could be related to social value. I was going to say one-third, but if we can reach 50% I would be very happy with that figure.

I also thank the noble Lord, Lord Maude of Horsham, for reminding us about public service mutuals, which seem very important, and the three stages of the procurement process: the pre-tender process; the actual procurement assessment; and then contract management. As he rightly said, all the effort—certainly from Whitehall—seems to go into the middle of those three. In response, I observe that it is very difficult to do the first and the third from Whitehall.

In the debate yesterday on 20 years of devolution to Scotland and Wales in particular—but also to Northern Ireland, of course—I was struck that it has enabled a piloting of ideas in those nations. On procurement policy, the noble Baroness, Lady McGregor-Smith, reminded us that they have much greater pre-market engagement, which means that tenders can be talked about, can be more detailed and can avoid confusion between contractor and provider, with an agreed understanding of the specific outcomes that must be delivered.

It is important that we pause for a moment to consider the context of this debate. The context is that a lot of people in many parts of the country feel left behind. They have low pay and insecure contracts, and many have few opportunities to improve their lives—not least in housing and discretionary spending. Applying the principles of social value should help to reduce inequalities for those people, and for that reason the Government’s current consultation is welcome. It will help to encourage charities—particularly smaller ones— and social enterprises in the delivery of services and will reduce the Government’s dependence on a small number of large companies such as Carillion, with its 420 contracts from central government. It is clearly not in the public interest for such a concentration of contracting to occur.

The Government need to include goods and other works, as well as services, in their procurement policies. Social value should cover all public spending, not just central government spending; I will come back to that in a moment. Also, the consultation that is being undertaken is poor on the potential for procurement to reduce deprivation in specific localities. It is about not just consulting with deprived communities but finding ways of working with them to reduce disadvantage.

I wonder if the Minister will look closely at the 10% minimum weighting the Government propose for assessing the social value component of a contract. That low level could mean that contracts are let with poor social value outcomes. I am not clear why the financial value is set at 30%, when the social value is set at 10%. There are three factors in commissioning: the cost; the quality of what happens as a consequence of that commissioning; and the social value generated. I would like to think the proportions would be a third each, but I guess we could look further than that.

There is a problem of centralised decision-making in England. I mentioned a moment ago the 420 contracts awarded to Carillion basically following a value-for-money exercise. The Government’s procurement decisions have been too dominated by narrow value-for-money policies that seek simply to reduce costs. I remind your Lordships that one Whitehall department’s concentration only on value for money can be another Whitehall department’s extra cost, such as through the benefit system. Too often the silo management of Whitehall does not serve the public interest as well as it might.

There is research showing that up to 20% added value can be obtained from maximising social value in a procurement process. I think that the abolition of government offices in the English regions was a major mistake; those government offices could have led the development of social value in procurement policies at a local and regional level and kept a watching eye on them to ensure that commitments on social value were actually delivered. At present that is difficult to do, because contracting is run from Whitehall—often many hundreds of miles from where the contracts are implemented.

I emphasise that what matters with social value procurement is achieving social outcomes. It is not just about cutting costs, dressed up as value for money. Government at all levels should procure outcomes, not just services for services’ sake. This is a fundamental issue that the Government will need to get to grips with. It is vital that those who commission contracts should have the skills and knowledge to do it properly.

I shall ask the Minister a specific question, which I hope he will be able to reply to. Is local government part of this? The Government have said they want local government to support the use of social value criteria, but it is not clear whether it will be compulsory. I think it should, so I hope the Minister may be able to respond to that.

The Government’s civil society strategy is most certainly a start, not least in defining some key principles. The strategy requires government departments to account for, rather than to consider, social value. So far, so good—but it needs to be a local as well as national strategy. It should enable smaller charities to deliver at a very local level. I submit that only local government can achieve that; Whitehall simply cannot.

Why has statutory guidance not been published for the 2012 Act? There is some guidance but, as I understand it, no statutory guidance. I wonder whether that is wise, because there would be benefits from statutory guidance. I hope that once the consultation is complete, the Government might be willing to produce a guide for voluntary organisations and charities on how to bid effectively for contracts. Many lack the required expertise to pitch a bid at the right level. Of course, if we had government offices, they would be able to help here.

Might the Minister also explain why large construction contracts are out of the scope of the current consultation? There is huge potential here, not least for local apprenticeships, because building takes place in most areas. Creating a trained local labour force can be done all over the country, but it needs to be done in part through improving the social value element of contracting. Otherwise, labour forces can be brought in and do not derive from that local area.

In conclusion, I want to see the scope and strength of the social value Act expanded. I would like to see it applied to all goods, works and services and oblige all public bodies to account for social value when negotiating contracts. The Minister might want to look at whether the Government can do more to audit social value outcomes. I have read in briefings about the possibility of social value budgeting and about local social value champions. I have also read about social value auditing locally. These ideas merit further consideration by the Government.

It may well be that the Government should produce an annual report to Parliament on what they have achieved in terms of the 2012 Act. It is one thing to have independent reports, as we had in 2015 on the functioning of the Act, but maybe there should be an annual report to Parliament. I hope that the Minister might be willing to give some thought to that, because there is a huge opportunity for social value to be expanded across the country and to make a difference to the lives of many people.

--- Later in debate ---

[Lord Young of Cookham (Con)]

My Lords, I begin by thanking my noble friend Lady McGregor-Smith for initiating and introducing this important and timely debate, and thank all noble Lords who have taken part. It is has been a well-informed, consensual and thoughtful debate on a subject that, as many noble Lords have said, is not often discussed. It has been particularly helpful to the Government, since our policy is, as I shall explain, in the process of development.

To sum up the debate, the view is that what we have done is good, but we need to do more, and do it better and faster; that is the message I shall take away. My noble friend Lady McGregor-Smith produced an ambitious menu of reforms, which we take seriously. If I do not address them all, I shall write to her. I know that this subject has been one of her special interests for some time and I very much welcome her input.

My noble friend Lord Maude should be answering this debate as he knows much more about it than almost anyone else. I would like to say how much I welcomed his input when I was working with him. He secured very real changes, reforms and savings in public procurement when he was in office. He reminded me of how things have changed since I was first a Minister some 40 years ago. I remember the narrowly focused, time-consuming, bureaucratic tendering. What a contrast that is with the changes he has introduced: the more flexible, market-oriented approach, which enables the taking account of social value. As he said, he has put this into the DNA and the genes are doing well as they flow around the system. He identified the barriers to entry: the performance bonds, the tender documents and the three-year requirement to produce accounts that have historically stopped some of the SMEs getting involved. I will say a word about that in a moment.

My noble friend mentioned public service mutuals. I remember him championing these in the health service when he was in office. They have an important role to play in delivering high-quality public services. At the moment there are 115 mutuals operating in diverse sectors from health to libraries, delivering approximately £1.6 billion of public services. In January last year, the DCMS launched a package of support worth £1.7 million to help new mutuals to emerge and existing ones to grow and flourish.

My noble friend also asked about the Commissioning Academy, a development programme for senior decision-makers across the public sector. It supports participants to learn from best practice across the country and is a key component in the culture change that many noble Lords have been advocating. We continue to provide leadership through the Commissioning Academy, working with the social enterprise PSTA—the Public Service Transformation Academy. The DDCMS has worked with the PSTA to ensure good commercial practice, promoting early engagement with the market, contract management, and social value.

I was interested in what my noble friend and the noble Lord, Lord Wallace, said about local commissioning and a cross-government approach. Again, perhaps I have been in government too long, but I remember the Property Services Agency, which owned the government estate and the Government Car Service. That was able to look at a town such as Horsham, then look at the totality of the government estate—the DHSS and all the other departments—and engage local contractors. After a time, government departments thought this was a remote, bureaucratic and expensive organisation and demanded autonomy, because we charged them quite a lot to change a lightbulb. It was devolved to local departments, which then discovered that they were all having to replicate particular skills and were losing the ability for local commissioning. We now seem to be moving back towards the PSA model, on which I have an enormous wealth of experience.

My noble friend and one or two other noble Lords mentioned the liquidation of Carillion. That has been used by some, although not in this debate, as a case for stopping the outsourcing of the delivery of public services to the private sector. The Government’s view, and that of previous Governments, is that the private sector has a vital role to play in delivering public services in this country, bringing a range of specialist skills, world-class expertise and deeper knowledge to bear. As we have heard, the public sector is the largest purchaser of goods and services in the UK, spending over £250 billion on procurement. Central government alone accounts for £49 billion of that figure.

As we have heard, there is so much more that the Government could do to create and nurture a vibrant, healthy, innovative, competitive and diverse marketplace of public service suppliers, with values at its heart, where wider social benefits matter and are recognised. This is reflected in the Civil Society Strategy, mentioned by my noble friend, which was published last year. It commits the Government to use their huge buying power to drive social change by championing social value through their commercial activities and levelling the playing field for all types of businesses, including small businesses, voluntary and community-sector organisations and social enterprises—a theme mentioned by many noble Lords in this debate. In turn, that would encourage employment opportunities, develop skills and improve environmental sustainability.

The Public Services (Social Value) Act 2012 already places a requirement on relevant contracting authorities to consider in respect of procurement for services: first, how the economic, environmental and social well-being of the relevant area may be improved by what is being procured; and secondly, how, in conducting the procurement, they might act with a view to securing that improvement. Contracting authorities must also consider whether to consult the market on these issues before the procurement process starts. There have been a number of suggestions during our debate about how that Act might be amended.

I confess to noble Lords something that may already be apparent: that this is a subject with which I was less than familiar before my noble friend tabled the Motion and it fell to me to reply to it. I am a lot wiser after this debate. To get my mind around what was going on, I asked officials for an example of how incorporating social value in the tendering process would lead to a different outcome. They came up with a Ministry of Defence contract with Future Biogas and the energy company EDF to develop an electricity supply for RAF Marham in Norfolk. The MoD could have taken the conventional lowest-price approach, without considering the social, economic and environmental benefits that could flow to the local area, but did not. Instead, it engaged up front with the supply market and developed an ambitious social value plan.

The airbase will now get 95% of its electricity from biogas generated by fermenting crops grown by local farmers, an option which did not exist before the engagement. This will directly save £300,000 a year on electricity costs, but there is more to it than that, which is what struck me. The fuel is a green and sustainable solution, helping to tackle climate change. Locally grown crops will power the plant, supporting the local rural economy and ensuring continued business and employment in the area. Building, running and maintaining the anaerobic digestion plant supports skilled, long-term employment opportunities in Norfolk. Future Biogas employs five highly skilled engineers on site and an apprentice who started a four-year apprenticeship at the end of 2018, and an agricultural contracting business supporting the plant has increased its full-time employees by five and seasonal staff by a further 10. As part of an improved crop-rotation regime, soil quality is boosted and the weed and pest burden lessened, and the digestate output from the plant is a sought-after organic fertiliser, improving yields of food crops and locking up carbon in the soil.

I found that a very helpful illustration of the case for social value and it is that sort of lateral thinking that we want to promote. Other cases were included in the helpful briefings sent to noble Lords for this debate. My noble friend Lady McGregor-Smith mentioned Crossrail, as did my noble friend Lord Pickles. The important thing about RAF Marham is that it is in the Chief Secretary’s constituency. There have been one or two comments about the potential inflexibility of the Treasury in taking social value on board. Perhaps she has now been persuaded by that local example.

In June last year, the Chancellor of the Duchy of Lancaster announced the Government’s intention to extend the application of the 2012 social value Act in central government. While the Act currently requires commissioners to only “consider” social value while awarding contracts, the new proposals will strengthen this further by making it an explicit requirement in central government contracts with the private and third sectors. This work to extend the application of the Act across all central government procurement represents one of the most significant changes in public procurement in recent years. It will ensure that contracts are awarded on the basis of more than just price, looking, as all noble Lords have suggested, at a contract’s social impact too, and giving firms much-deserved recognition for their positive actions in society.

The objective for the Government’s commercial activities will always remain achieving good commercial outcomes for the taxpayer. However, it is right that commissioning and procurement should support social outcomes as well, providing that these outcomes are relevant and proportionate to what is being procured.

A number of noble Lords, including my noble friend Lady McGregor-Smith and the noble Lords, Lord Shipley and Lord Stevenson, wanted the Government to increase the minimum weighting for social value in central government procurement awards from 10% to 20%—or up to 50%, in her case. As mentioned, we launched a consultation paper in March. One of the areas on which we are seeking feedback is whether a minimum 10% weighting is appropriate. The 10% weighting was developed with input from supplier representatives; we are genuinely consulting on this and have an open mind. It is important that we change at a rate that suits each sector. In particular, we want to prevent barriers to entry for SMEs.

The noble Lord, Lord Haskel, and my noble friend Lady McGregor-Smith were worried that public procurement favours large companies. I will say a word about that in a moment. The expanded use of the social value Act is widely recognised as a measure that will encourage greater diversity in public sector supply chains.

The noble Lord, Lord Haskel, warned me that he would raise BSI 95009. The standard is aimed at public and private sector buyers, and proposes a framework for those in procurement to demonstrate or assess trustworthiness, transparency and ethical practice. The Cabinet Office is in discussions with the BSI. We have not yet endorsed the standard, but will consider it most important to ensure that we do not burden suppliers unnecessarily—a point I made earlier—and create barriers to entry for SMEs.

The noble Lord, Lord Shipley, asked if we would show leadership on social value by committing to producing an annual social value budget, showing how much social value has been created by central government procurement each year. On 25 January last year, the Chancellor of the Duchy announced the Government’s intention to extend the application of the social value Act in central government departments. This included a requirement to report on social value.

A number of noble Lords, including the noble Lord, Lord Shipley, asked if we would expand the social value Act to cover goods and works as well as services, so that the value of every penny of public money is maximised. As part of the joint Cabinet Office and DCMS programme of work, central government departments should apply the terms of the social value Act to goods and works, as well as services. There will be markets common to both central government and the wider public sector so it will have a broader impact.

The noble Lord, Lord Shipley, asked whether the social value criteria were compulsory and whether the Government will be using them. The new social value framework will be mandatory for central government departments, their executive agencies and non-departmental bodies for procurements subject to Part 2 of the Public Contracts Regulations.

[Lord Shipley]

My query specifically related to whether it was simply advisory for local government or whether local government should be required to do what central government departments do.

[Lord Young of Cookham]

My understanding is that it is advisory, because it was not included in the mandated list I just read out. If I am wrong I will write to the noble Lord.

The noble Lord asked why the strategy guidance has not been issued and whether we will produce a quick guide on it. We actually published guidance on how to work with central government, including social value, working with the VCSE Crown representative Claire Dove. The DCMS and the Cabinet Office are working with the advisory panel to understand the needs of the sectors and to prepare for the changes to social value. We will work with the sector representative bodies to produce the guidance the noble Lord just asked for.

The noble Lord asked for an annual report on social value procurement. Again, in his announcement in June last year the Chancellor of the Duchy of Lancaster included a requirement for central government departments to report on social value.

I was asked why large government contracts are out of scope for social value procurement. The answer is that the balanced scorecard is already in place to cover procurement of over £10 million. That already covers socioeconomic factors. The new social value framework covers everything below £10 million and above the Public Contracts Regulations threshold.

Non-Domestic Rating (Rates Retention and Levy and Safety Net) (Amendment) and (Levy Account Basis of Distribution) Regulations 2019

Lord Shipley Excerpts

Monday 18th March 2019 Lords Chamber

These are highly technical but important regulations. They will ensure that the business rates retention scheme operates in 2019-20 as was intended and as local authorities expect. I beg to move.

[Lord Shipley (LD)]

The Minister will be grateful for paragraph 8.1 in the Explanatory Memorandum, which states:

“This instrument does not relate to withdrawal from the European Union”.


It is the first statutory instrument today that does not have that status. However, as the Minister said, it is technical but important.

I remind the House that I am a vice-president of the Local Government Association.

I understand that this statutory instrument has to be brought forward every year to enable the rolling 75% business rates retention pilots to take place, which are now being extended to new areas for 2019-20. In that respect the SI is fine. As the Minister stated, it also allows for the new authorities being created out of reorganisation, such as Dorset, to levy business rates. Obviously that is essential. It allows for the return to councils of money which had previously been levied by central government through the business rates account. The total sum amounts to £180 million, which means that the Government will make themselves popular with those receiving it.

Although this is a technical SI, we should reflect that the basis of business rates is under question and under stress, not least because of the pressures on the retail sector. No doubt we shall have opportunities in the future to discuss that issue in greater depth. However, as the Minister said, this is a technical but important statutory instrument and it has our support.

[Lord Beecham (Lab)]

My Lords, I declare my local government interests as vice-president of the LGA and as a councillor in Newcastle.

The noble Lord, Lord Shipley, referred to the present situation in respect of business rates. There is a bland assumption by the Government that there is a uniform approach to what can be raised locally, either by domestic rates or business rates, but that is not the position. The amounts that can be generated vary considerably between authorities and the Government have paid little attention to that disparity, in terms of either council tax or business rates.

The Government are making much of the £180 million they are going to restore to authorities. That is £100 million less than the loss that Newcastle City Council alone has sustained in grants from central government since 2010. It is a pitifully small amount and will make little difference to the efforts of local councils—of all political characters—to maintain local services. This is not a substantial change in favour of local government and the Government have to look again at the wider issues of funding a sector of the economy which has been substantially underfunded for the last eight years.

--- Later in debate ---

[Lord Shipley]

My Lords, I am not sure whether I declared my interest as a vice-president of the Local Government Association. I feel I should do so and remind the House of it.

[Lord Kennedy of Southwark]

I, too, forgot to remind the House that I am a vice-president of the Local Government Association.