Procurement Bill [HL]

Lord Stevens of Birmingham Excerpts

2nd reading
Wednesday 25th May 2022 Lords Chamber

[Lord Stevens of Birmingham (CB)]

My Lords, I may be a relatively new Member of your Lordships’ House, but I suspect that the Second Reading of the Procurement Bill may not capture the public’s imagination today in quite the way that certain other events and reports taking place in Westminster will. But that should not in any way detract from the importance of the measures before us, because the Bill represents an important advance on a number of the predecessor EU procurement regimes that we have been subject to and generally moves us in the right direction. As the Minister said, it has the potential to simplify and accelerate public procurement and to deal with some of the lessons, both positive and negative, that have arisen during the coronavirus pandemic.

I will briefly mention three avenues that may be worth considering further as the Bill progresses through your Lordships’ House. The first is the connection between the procurement regime and supply chain resilience for the UK. No doubt we will discuss multiple times this afternoon the experience that arose as the UK Government and the Department of Health and Social Care sought to procure PPE and testing for the National Health Service during the pandemic and, as was the case with many other European countries, faced a supply crunch as Chinese factories closed down. The problem has been sustained as China pursues its zero Covid policy, now overlaid with Ukrainian disruptions as a result of the war.

The question is not simply: what are the procurement mechanisms that the Government use in spot markets at times of crisis? It is: what strategic assessment have the Government made of which aspects of our supply chains need onshoring? The orthodoxy for many years has been that just-in-time logistics are the most efficient way—until you get a shock such as the pandemic, in which case it becomes blatantly obvious that they are not. At that point you wish you had stockpiles or onshore capability. In the same way that, for example, Sir John Parker’s national shipbuilding review looked at what the supply chain might look like for naval vessel procurement, I wonder whether the Minister can tell us how he thinks a similar approach will be taken to supply chain resilience for other aspects of what the public service will need in the future.

Secondly, I suspect that your Lordships will be looking for greater clarity, as this Bill proceeds, on aspects of these proposals which at the moment are remitted to regulation or guidance. Only a few short weeks ago, Royal Assent was given to the Health and Care Act 2022. Many noble Lords participated in the extensive discussions around what the procurement regime that was set out in that Act should be as it applies to the National Health Service. On the Health and Care Act 2022, the Cabinet Office memo of 11 May to the Delegated Powers and Regulatory Reform Committee says:

“It has not been possible to set out on the face of that Act the scope of procurement Regulations made under it, so this Bill”—


the Procurement Bill—

“needs to be able to make provision to manage the overlap.”

Therefore, Clause 108 would grant Ministers the power to “disapply” provisions in relation to

“services or goods to which health procurement rules apply”.

I suspect that your Lordships will want much greater clarity on the circumstances under which those will or will not be disapplied.

Frankly, that will go in both directions: there will be some services where, having had the debate as part of the Health and Care Act, we will be clear that they should not be subject to competitive market principles; and there will be other areas where they must be, even where industry partners will sometimes try to exclude them from that scope. An example of this is the importance of using competitive procurement mechanisms for the purchase of medicines, where in some cases, I am afraid, some of our life sciences partners would rather that market mechanisms were not used to drive value for taxpayers and for patients. Indeed, when the National Health Service was seeking to procure medicines for hepatitis C so that we could eliminate that virus and save hundreds of millions of pounds in the process, it was sued for daring to use procurement mechanisms in those circumstances.

So we must be quite precise as to the circumstances under which we will and will not do this. Simply leaving it to regulatory guidance is not good enough, because some of us—I say this gently—have buyer’s remorse about some aspects of the Health and Care Act, including aspects which were left to regulation or ministerial discretion. I am thinking particularly of the debate we had around childhood obesity just a few short weeks ago, where we were promised that we would indeed be cutting out junk food advertising on TV aimed at kids. Days later, however, that commitment was ditched—actually, the noble Lord, Lord Kamall, said that it was not a backtrack but a delay. I read elsewhere that this is part of scraping the barnacles off the boat. Most of us do not regard children’s health as a barnacle to be scraped off the broadcasting boat. Therefore, we will want more clarity on some of these distinctions, rather than leaving them purely to regulation and future ministerial fiat.

Thirdly and finally, as we think about the application of these new procurement rules to infrastructure and big capital projects, we should have the humility to recognise that, by themselves, the rules will not speed up delivery. To will the end is to will the means. Frankly, the root cause of stalled and delayed infra- structure—be it energy, defence or health—is more often not the procurement rulebook per se but the absence of multiyear capital allocations funded at the correct level, the result of delayed business case approval and the result of a lack of constancy in political direction on the results we seek to achieve.

We have seen that in the defence sector: the House of Commons Defence Committee made the point in respect of naval procurement in its memorably named report published before Christmas, We’re Going to Need a Bigger Navy. I am afraid that we are seeing that right now in connection with the proposed building of 40 new hospitals. This is going to be a major piece of procurement for the Government and the National Health Service. It was a very welcome commitment that the Prime Minister made in the run-up to the 2019 general election on a visit to North Manchester General Hospital. As I pointed out at the time, that hospital was opened in 1876 when the then Prime Minister was Benjamin Disraeli. So there is a need to get on with it, but the fact is that we have only a three- year capital allocation—£3.7 billion—and that does not buy you 40 hospitals. Matt Hancock, the then Secretary of State, said back in 2019 that the first eight of them hospitals were “ready to go”, but we now see in the latest Department of Health and Social Care publication that their planned start date is “TBC”.

So the fact is that the procurement processes will help but by themselves they will not get us the result. We need greater clarity on how the totality of the Government’s effort can help advance these important goals, we need greater clarity on the circumstances under which these rules will or will not apply in the health sector and elsewhere, and—that is not my phone, by the way—we need greater clarity in respect of the way in which other social goals will be advanced.

Finally, no doubt we will hear a certain amount this afternoon about the net-zero agenda and how that could be incorporated. A friendly suggestion would be that the Government could follow their own precedent in very wisely incorporating a set of amendments in the Health and Care Act. All we really need is for the amendments the Government accepted there to be incorporated in this Bill and perhaps we will be 9/10ths of the way home and dry.