Procurement Bill [HL]

Debate between Lord Wallace of Saltaire and Lord Lansley

2nd reading
Wednesday 25th May 2022 Lords Chamber

[Lord Lansley (Con)]

My Lords, I am very glad to follow the noble Lord, Lord Stevens. He very helpfully reminded us that we might legislate but it is the Government’s job to execute. The ability with which the execution of policy is carried out is a fundamental part of this. I might also say that, as the noble Lord unfortunately discovered in the particular respect he mentioned, we can legislate but if we leave loopholes we allow the Government to drive coaches and horses through them from time to time. That is why we sometimes have to look very hard at Bills to make sure they very clearly express Parliament’s intentions. Important and detailed as this Bill is—the way my noble friend Lord True very clearly set out the Bill’s intentions was most helpful —as the noble Baroness, Lady Hayman, said, we want constructively now to engage with that and to seek to improve the Bill before we send it to the other place.

In terms of interests, I am a director and adviser to LOW Associates, which is a beneficiary of procurement contracts with the European Union. I have looked quite carefully: we have a number of contracts with the European Commission and we advise on European procurement. Although that gives me experience in this respect, I do not think it gives rise to any direct conflict of interest—but I make the declaration in case anybody wants to check it out.

The noble Lord, Lord Stevens, is absolutely right. Where the NHS is concerned, “light touch” should not mean without proper transparency, processes and the ability to understand what is being bought and why. Indeed, there has been some activity in the NHS that should be paralleled across government. Procurement is increasingly seen as an essential part of the quality of management. That is happening through things such as Getting It Right First Time and the benefit of the report from the noble Lord, Lord Carter of Coles, on procurement in the NHS, which included building a procurement profession inside the NHS, which hardly existed. Right across government, we need chief procurement officers to be seen as often as important as chief financial officers in getting the quality of service and value right.

Because this is Second Reading and time is necessarily short, I will mention just two things—there will be further detail on the Bill—that I want to raise in this debate and that I hope to follow up in Committee and on Report. The Chancellor the Exchequer, in his Spring Statement in March, said that

“over the last 50 years, innovation drove around half the UK’s productivity growth, but since the financial crisis, the rate of increase has slowed more than in other countries. Our lower rate of innovation explains almost all our productivity gap with the United States.”—[Official Report, Commons, 23/3/22; col. 341.]

It is clear from the research that innovation and procurement are intimately related in an economy. Procurement, as a mechanism for fostering innovation in an economy, is probably more important than the grant-led systems that we often focus on. We often operate on the supply side, saying, “We must have more scientists, start-ups and grants for innovation”, but actually we need to remember that the demand side may have at least equal impact, because demand pulls through innovation. The home market—the UK market—in particular can be of additional and significant importance to innovative suppliers, enabling them to establish and bring forward innovation in an economy. Innovation needs to be an essential part of our procurement process.

I acknowledge that the objective of procurement is not innovation but to secure quality and value in public services and to do so in a transparent and fair way. But the consequences of procurement to society are terrifically important. What the noble Baroness and the noble Lord, Lord Fox, were saying about social value is terrifically important. We should acknowledge and understand the externalities of procurement, and, through the legislation, we should tell the public contracting authorities that they should take account of them. There was an interesting exchange on this.

The Government’s national procurement policy statement, published in June 2021, acknowledged that the national priority is social value. In that context, “social value” was defined as

“new businesses, new jobs and new skills; tackling climate change and reducing waste, and improving supplier diversity, innovation and resilience.”

This relates to the point that the noble Lord, Lord Stevens, was making, and to my own point about innovation. These things are all in there, but they are not in the Bill, because the day after the Bill comes into force, the Government could write a new national procurement policy statement.

My initial submission at Second Reading is that government should be very clear that the procurement objectives include not only public benefit but social value, and the latter must be defined in the national procurement policy statement in the ways that we specify in the Bill. I hope to include all those points, including the issues relating to climate change, supply chain resilience and the importance, from my point of view, of procurement-led innovation in the economy.

I will make one other point about treaty state suppliers—this is not the point that was previously made. The International Agreements Committee, of which I am a member, is scrutinising the Australia and New Zealand free trade agreements, which are the first of their kind. The Trade (Australia and New Zealand) Bill has been introduced in the other place, and the purpose of this legislation will be to repeal that when the time comes. So, at the same moment, we have a Bill at each end, with one repealing the other—why is that the case? Looking at the Explanatory Notes to the Bill in the other place, I see that it is clearly because the Government expect that Bill to pass rapidly and this one to pass slowly. Therefore, the consequence is that they need that legislation quickly but will subsequently repeal it using this legislation. This is the way that such legislative matters proceed.

My problem is that Schedule 12 to this Bill simply repeals that legislation. So, if we were to amend the Trade (Australia and New Zealand) Bill at any point in the future, it could—or, in fact, would—be repealed by government by virtue of Schedule 12, so any debate on the Trade (Australia and New Zealand) Bill is pointless. I hope that we make sure that that does not happen. We must therefore have a serious debate about whether we are happy for future free trade agreements with procurement chapters to be implemented solely by secondary, rather than primary, legislation. We had this debate on the Trade Act, and I think that we will need to come back to it.

Overall, this is an important Bill, very well introduced by my noble friend—

[Lord Wallace of Saltaire (LD)]

There are only 11 schedules to my copy of the Bill.

[Lord Lansley (Con)]

Forgive me—it was actually added to Schedule 9. But I am referring to paragraph 3 in Schedule 11, on repeals. None the less, I welcome the Bill and look forward to our debates on it.