Procurement Bill [HL]

Lord Wigley Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

[Lord Moylan (Con)]

My Lords, I rise to speak to Amendment 11 only. It carries over into our new domestic legislation what is referred to in the European Union legal context as the Teckal exemption. To that extent, it illustrates and gives force to the point made by my noble friend Lady Noakes that we are very much replicating European Union law here. The reason I rise to address it is that I wish to seek a point of clarification from my noble friend the Minister. It arises from my experience—this is an interest that I once declared but I think has now expired—of chairing Urban Design London, a body that benefited from the Teckal exemption. So I have some experience of how it works.

Urban Design London was—I mean “is”; it still exists and operates—an unincorporated association established between Transport for London, the Greater London Authority and London Councils, representing the London boroughs. Its purpose is to generate training for the benefit of local government officers, Transport for London officers and others in good practice in planning, urban design and transport design. I am very proud of it—it is a successful little body—but it was set up as an unincorporated association, meaning that it is not incorporated and not a company.

I am anxious because there are two versions of the legislation that I can look at: the one that was originally circulated and the one that has replaced it. I might say that the one that has replaced it is a great deal better than the original; it clearly shows the influence of the Local Government Association and people who understand these things. The version in the amendment is generally much better. However, I am concerned about the references to the Companies Act in sub-paragraph (2B), to be inserted by Amendment 11. The clarification I seek is that this is sufficiently broadly drawn that the controlled body that benefits from the Teckal exemption does not have to be incorporated and read in a Companies Act structure. I see my noble friend looking round; I will understand entirely if he is not able to give a firm direction to me on that point today. I simply reserve the right, depending on what he says, to bring something back on Report. I am not pressing him too far on that, but it is something that I would like to know.

I have one other point, which is that I am delighted to see that what was a provision in the originally circulated version of the Bill—whereby an appropriate authority may by regulation make provision about how to calculate the percentage of activities of the controlled body—has been dropped. The percentage of activities is relevant, because one of the qualifiers under the Teckal exemption is that 80% of your activities have to be carried out for the controlling party or parties, but “activities” is not defined. In the case of UDL, which was largely a body which employed staff who did things, we took the view as a board that the appropriate measure was staff time, but there might be bodies where “activities” should be measured by turnover, size of contracts or income and expenditure. I want my noble friend to confirm that the clause enabling an appropriate authority to make regulations on this topic has been dropped in the new amendment.

It should be, because these bodies need to be left to make their own responsible decisions about the best and appropriate means of deciding how to measure their own activities. I see no reason for the Secretary of State to be involved in making regulations about it, and if they behave perversely, they will of course be subject to potentially being sued by a contractor who had failed to achieve business that they might otherwise reasonably have thought they would have obtained.

At the risk of being a little tedious, I seek clarification from my noble friend on those two points, and if he is able to provide it not today but after the Committee, that would be more than welcome.

[Lord Wigley (PC)]

My Lords, I want to address the change in relation to Scottish law. Before doing that, I will pick up the point made a moment ago by the noble Baroness, Lady Noakes, with regard to the influence of European terminology. She will not be surprised to know that I have no problem with the influence of European terminology; if we are to hunt all European influences out of our legislation, it will take a very long time and leave quite a lot of uncertainty around the place. None the less, I take the point she makes with regard to the substance of the implications, and the question of a capacity to influence is a very important consideration. If a capacity to influence exists, that may have an ongoing impact without it being written in black and white. That has to be taken on board.

I want to ask the Minister about the change to get in line with Scottish law. If there is in future a change in Scottish law or a change in the ruling in the courts in Scotland, presumably that could have an implication for the way in which the Bill, when enacted, works out. Does that mean there will have to be a review every time there is a change in Scotland that might impact on this, because we are working within one market and we need to make sure there is consistency running through this? Perhaps I can park that question with the Minister, as it is a relevant one that arises from what he said.

[Lord Fox (LD)]

My Lords, at the beginning of the Committee the Minister had a teaser with his announcement. It is very clear that he is not going to resign, because no Minister would put himself through this process and then resign. We can be clear about his intentions.

The noble Baroness, Lady Noakes, said that she was interested in this and that perhaps some of us might not be. I am interested. Both the noble Baroness, Lady Noakes, and the noble Lord, Lord Moylan, have made important contributions to this group of amendments.

Since Monday, much industry has proceeded. We have new groups of amendments and, as the noble Baroness, Lady Noakes, pointed out, we have explanations for those amendments and what they seek to achieve. We thank the Bill team and the Government Whips’ Office for that hard work, which cannot have been easy. We also had a meeting with the Bill team this morning, which has helped us somewhat.

This is progress, although I always like to spoil praise by saying that we really should not have been starting from here in the first place. This is vital legislation that will set the scene for procurement right across our country, and the details need to be correct. We have started to hear that, in just one area, the details remain very much open to question.

Some of the amendments in this group are relatively small changes, including Amendments 10, 12, 16 and 17; others are trying to do a bit more. As we heard from the Minister, Amendment 11 rights a problem that was identified by both my noble friend Lord Wallace and the noble Lord, Lord Coaker, of groups of local authorities working in tandem.

I welcome that the Government have taken the advice of the LGA, but it seems slightly strange that it was sought or delivered after Second Reading rather than some time before it. One of the problems we sometimes have with the Government is that they forget the central role of local authorities, particularly in something like this. Local authorities should have been front and centre in the process of writing this legislation, but, far from it, it seems that they are something of an afterthought. That is where some difficulties are emerging, because, in a sense, we are trying to bend things back to fit local authorities when they should have been framed for local authorities in the first place. This amendment is welcome, with the caveat that we need clarity.

The noble Baroness, Lady Noakes, brought up the issue of clarity and the lack of definition. We heard the result of one of the legal cases that went to the European Union, the Teckal exemption, set out by the noble Lord. Most of the controversy of the European legislation has been hammered out in courts. As I said on Monday, we are spoiling for lots of legal fights in this legislation because of the loose definitions, absence of definitions and cross-definitions. I completely take the point made by the noble Baroness, Lady Noakes, that if we try to write across something using terms which do not appear in the UK lexicon of company law, we will be starting from first principles in the court in order to define them. That will not be in the interests of any government business or of local authorities. We need a clear and legally binding understanding of what all these terms mean. The Minister must use either the Dispatch Box or the legislation—preferably the latter—to clear up that ambiguity.

The second part of Amendment 13 is an example of what the Government giveth the Lords taketh away. Having cut across the public contracts regulation and removed exemptions for public undertaking and private utilities, as I understand it the Government are, with this amendment, replacing those exemptions and focusing this vertical exemption only on public utilities. As far as we are concerned, that is perfectly fine, but again, this is an example where the Bill has had to be corrected because of missing points that cut across. There are so many cross-cuts in this legislation.

Amendments 15 and 16 are another example. Here, as the Minister set out and as the noble Lord, Lord Wigley, requested, “legal activity” has meaning in Scotland and not the meaning that the Government intended for this Bill. We now have to choose something that has no meaning at all, which is “legal services”. In the words of the Government, there is a flexible definition for this. We are being asked to put a flexible definition into the centre of a Bill. I am not keen on this sort of flexibility of language, and this is another example of flexible or misunderstandable language being put into legislation. We are looking for clarity from the Minister. If it is not Pepper v Hart clarity, we need clarity written into what we have. On some of the issues mentioned by the noble Baroness, Lady Noakes, the noble Lord, Lord Wigley, and others, we need to remove that “flexibility” from our language in the Bill.

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[Lord Wigley (PC)]

My Lords, I want to raise one narrow aspect; that of Dŵr Cymru, Welsh Water. The position of Welsh Water is somewhat different from that of the other water providers within England and Wales; I think the situation in Scotland is different again. Dŵr Cymru is a not-for-profit company, and the assumption and understanding is that nothing in the Bill undermines the capability of the Welsh Government to award the contract within the service area of Dŵr Cymru to a not-for-profit company of this sort. Quite clearly, that has a different impact than if that market was open for competition on a profit-making basis.

The performance of Dŵr Cymru is generally in most areas regarded as having been very satisfactory. There are ongoing arguments about quality of river water, et cetera, and noble Lords will be aware of those, but with regard to the provision of water, there is no wish—certainly at present, and I cannot foresee one in the near future—for there to be anything that disturbs that apple cart. I hope that the noble Baroness will be able to give an assurance on the record in this Committee that nothing in the Bill can, in any circumstances, undermine the ability of the Welsh Government to award the franchise for providing water in Wales to a not-for-profit company such as Dŵr Cymru.

[Lord Fox (LD)]

My Lords, very briefly, I thank the Minister for her clear statement. The subject of utilities has come up both on Monday and today, and we are beginning to get some clarity around how the whole utility story fits together, but anything more she can give us on that would be helpful. This is probably not helpful, but it seems to me to be an analysis of the issue. The majority of the trade deals to date are essentially rollover trade deals, and to paraphrase the noble Baroness, Lady Noakes, this legislation is essentially rollover legislation. However, trade deals such as the Australia deal are not rollover trade deals. We are in danger of trying to pour new wine into old skins here.

The issue that my noble friend highlighted here is an example where the new-style trade deal is not easily catered for in the old-style legislation, which is essentially rollover legislation. I am not sure what the solution to that is, other than “more work needed”, but I think—and this is a dispassionate and hopefully helpful observation —we are looking at a new trading position. The Government talk about that all the time, but we are essentially looking at legislation that was dealing with an existing set of trade deals which are, by their nature, different from the new ones. This is what is being thrown up, and we will start to see problems thrown up increasingly.

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[Baroness Boycott (CB)]

My Lords, I am happy to support Amendments 85 and 87 in the name of the noble Baroness, Lady Worthington. As we have heard, procurement is an incredibly powerful tool and, if we do not use it in the right way, we will never get to our net-zero targets.

I thoroughly support the aim to shift the ambition of any new procurement regime to positively reward and incentivise suppliers who are innovating and providing climate-positive, sustainable products. As well as helping to achieve our climate and environmental goals, it will bring economic benefits. I would go further and say that we should not award any contracts to people who do not fulfil these categories from now on.

I note that the Government’s response to the consultation on the procurement Green Paper commented that many respondents had

“provided details of aspects that they would like contracting authorities to take greater account of, for example more focus on social and environmental impact.”

This amendment would help to ensure that contracting authorities always take this goal forward. The net-zero strategy, which many of us have referred to, clearly establishes the strategic importance of net zero at the project design stage. This amendment would make it much easier to draw this golden thread right through the procurement process to the end product.

With that in mind, I conclude that this amendment to incorporate the climate, environment and wider public benefits of procurement at preliminary market engagement when the authority’s procurement exercise is at the design stage is fully in line with policy. It needs only to be reflected in the Bill in the permissive way in which it is expressed in this amendment. I very much hope that the Minister will welcome it.

Before I sit down, I support Amendment 82 from the noble Lord, Lord Hunt of Kings Heath. As someone who has chaired many charities and tried to work with local authorities about picking up contracts that have lapsed, such as meals on wheels, I can say that you really need to know in advance what money might be available. No one should take the charities sector for granted in this respect.

[Lord Wigley (PC)]

My Lords, I am delighted to follow the noble Baroness. This group of amendments brings together three different but equally important threads that are material to this Bill, each of which deserves a place in these debates on the Bill in its own right.

First, there are the environmental points, which were mentioned a moment ago by the noble Baroness, Lady Worthington, and noble Lords subsequently added to them. They are fundamental. If it is government policy to aim at challenging targets to save our environment, that must be written into every aspect of public policy. It must be written into this aspect of public policy and others. We should not leave any opportunity going begging. This is an opportunity to have that in a Bill and to make sure that it is clearly understood by all those involved in the various diverse aspects of the procurement system.

Equally important is the question of how we regenerate the economy. Central to that must be the role of SMEs. They are a vital cog in the economy. They are the acorns from which the future will grow. They can also be very compatible with the environmental arguments to which we have referred. The points made by the noble Lord, Lord Lansley, the noble Baroness, Lady Verma, and my noble friend Lord Aberdare are important. I know that we will return to them on subsequent amendments, but we must not lose sight of them because these elements are vital to regenerating the economy in a sustainable way.

The third aspect, which I want to concentrate on for a moment, is disability. That agenda has been close to my heart for the past 40 or 50 years. The speech made by the noble Baroness, Lady Brinton, brought it home to us. As long ago as 1981, I had brought to my attention the social definition of disability: that a handicap is a relationship between a disabled person and his or her environment, be that the social environment, the physical environment or the psychological environment, and that we may or may not be able to do anything about the basic disability but we can almost always do something about the environment, be that the physical environment, the social environment or the psychological environment. Therefore, the extent to which a disability leads to a handicap rests with us in society in controlling those three elements. Clearly, that responsibility must run into all aspects of economic life and is therefore relevant to the Procurement Bill before us.

I very much hope that the amendments we have heard about—in particular, Amendment 141 in the name of the noble Lord, Lord Hunt, but others as well—are passed to ensure that this matter is written into the Bill and that we have no misunderstanding. These three elements—the environmental element, the small business and economic regeneration element and the disability element—are central to the procurement system.

[Baroness Parminter (LD)]

My Lords, it is a great privilege to follow the noble Lord, Lord Wigley. I echo all the comments he made. I want to make a brief remark in support of Amendments 85 and 87 in the name of the noble Baroness, Lady Worthington, which I and my colleagues have co-signed, and in support of the point made so powerfully by the noble Lord, Lord Wigley, about ensuring that there a commitment in the Bill to deliver the net-zero and environmental goals through a commitment to ensuring that “public goods” includes sustainability goals. That is fundamental.

I will add only one point that has not been covered by colleagues. It is that this is not happening at the moment. The National Audit Office and the Environmental Audit Committee in the House of Commons have looked into public procurement by government departments and found there to be a woeful lack of connection with consideration of net zero and our environmental goals, and that is when government departments already have a statement from the Cabinet Office that is meant to guide them towards it. It is not happening, but that is completely separate from the far wider issue of where it is absolutely not happening, which is in public services procurement, where there is no guidance. If we do not have a national public policy statement on that, it will not happen, so it is absolutely fundamental that we get this in the Bill.