Small Business, Enterprise and Employment Bill

Debate between Lord Young of Graffham and Lord Deben

Wednesday 14th January 2015 Grand Committee

[Lord Young of Graffham]

Perhaps I can assist the noble Lord over some of the difficulties that he sees in this particular clause, in three areas that he raised. First, the mystery shopper—it is a bizarre name, but people understand what it means—has been operated by the Cabinet Office on central government contracts for the past few years. It had a great defect; it was reactive—somebody had to complain—and there were very few small firms in this world that would willingly make a complaint against a big customer. So we have made it proactive, so that the Government will, on a random basis, go and question people. That covers the possibility that any small firm can now complain without having the finger of blame put on them.

Secondly, we have now substantially modified PQQs. For example, there is now a standard PQQ for every contract worth more than €200,000. The small firm or the large firm does it once and the public sector reads it many times.

One element of our reform that we have not referred to this afternoon may well satisfy some of the noble Lord’s concerns. Next month we are launching a site, provisionally titled Contract Finder, that will record on it every public sector contract—worth £250 million a year—whether it be fire, ambulance, education, health, central government or local government. These will be postcoded, so that firms around the country can see what is coming up. More than that, we will expect local authorities, the health service and others to give notice of impending contracts, to enable firms to prepare for them. If a subcontractor sees that a new school is being contemplated in its area, it can go to the contractors that normally do it.

Thirdly, after each contract is won, the results will be placed on the site, so that people can see how near they were to winning. This is the first time in the world that this has been done. It is getting a great deal of interest overseas. It is a substantial undertaking, but its whole purpose is to create a level playing field for small firms and large firms. I hope that, if we see it through as intended, we will be looking at a very different small firms sector in a few years’ time.

[Lord Deben (Con)]

My Lords, I would first like to say how pleased many of us are at the changes that the noble Lord, Lord Young, has just described. They will make a big difference for small firms around the country.

However, there is another part to this on which I hope that the Minister will be able to help. There are reasons to disagree with the specifics put before us, but the noble Lord, Lord Mendelsohn, has made it clear that he is seeking a response from the Minister that shows that she understands the real problem that is being adumbrated, which is that small firms often find that they are not competing fairly simply because what is asked of them is a much bigger ask than the same thing asked of a big firm. That is the fundamental issue.

There is a second part to that, which is the reaction of those who place the contracts. I am increasingly worried that, in the public sector, there is a safety culture that means that people would prefer to have a firm whose name they know and which they feel no one can blame them for taking on, even if that firm does not in the end do the job properly. It is much easier if it is a national company with a national name—when you have taken it on, nobody can make the complaints that they might make if you were taking on a smaller firm.

Even if the Minister is not able to accept these aspects, I wonder whether she would help us by saying what the Government intend to do to try to make it easier for the public sector to take on companies that might be less assured because they are smaller and because they have not had a contract of that kind before. Are there not serious institutional ways in which we could make that easier? I have not yet seen any indication that, in their plans, the Government have sought to make it less dangerous for a public servant to take on a firm that has perhaps not previously worked with the public sector or perhaps does not have such a long history of doing so. Where there is a risk involved, I think that it is a risk that the public sector ought increasingly to be willing to take if we are to have entrepreneurial innovation in Britain.