Digital Economy Act 2017 Debt and Fraud Powers: Consultation on Effectiveness
Alex Burghart Excerpts(1 year, 8 months ago)
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The Parliamentary Secretary, Cabinet Office (Alex Burghart)
The Minister of State, Baroness Neville-Rolfe DBE CMG, has today made the following statement:
Minister Burghart and I are pleased to announce the launch of a consultation on the effectiveness of the Digital Economy Act 2017 Debt and Fraud Powers.
The Debt and Fraud Powers, as contained in Chapter 3 and Chapter 4 of the Digital Economy Act 2017 respectively, allow specified public authorities to disclose information for the purpose of managing and reducing debt owed to a public authority or to the Crown and combating fraud against the Public Sector.
These Powers must be reviewed, three years after their operation, for the purpose of deciding whether they should be retained, amended or repealed. As part of this review, I am required to consult certain persons and publish a report on the review’s outcomes.
As part of this consultation, I shall engage with:
the Information Commissioner,
the Scottish Ministers,
the Welsh Ministers,
the Department of Finance in Northern Ireland,
members of the Home Affairs Committee,
bodies which have used the Debt and Fraud Powers of the Digital Economy Act 2017 and members of the Digital Economy Act Debt and Fraud Information Sharing Review Board.
The Consultation is now open and will last for a period of six weeks, ending on 27 April 2023.
[HCWS661]
Oral Answers to Questions
Alex Burghart Excerpts(1 year, 8 months ago)
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Sir Christopher Chope (Christchurch) (Con)
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
The rapid response unit was created in 2018 and disbanded in August 2022. It was formed as a central resource in the Government Communication Service that used publicly available information to improve Government’s ability to identify where certain narratives about our work were gaining traction online and to understand public sentiment about Government policies. On disbandment, the information collected was archived and it will be retained in line with the Cabinet Office information retention policy, which is available online.
Sir Christopher Chope
But why has my hon. Friend refused to admit in answer to parliamentary questions that the rapid response unit collected and stored information on sitting MPs? As my subject access request has confirmed that I was one of those MPs, can he explain why the unit was using taxpayers’ money to snoop on me, who authorised this and why?
Alex Burghart
My hon. Friend is welcome to come and have a meeting with me and officials in the Cabinet Office to discuss any concerns that he has about the rapid response unit. I have asked them this morning whether there were any monitoring emails that contained his name. I have been given assurances that there were not, but I am very happy for him to come to the Department and talk through all the possible implications. The truth is that the Government have a number of media monitoring services that check what is going on. They monitor not just what MPs and peers say, but what journalists say and anything that is reported in the mainstream media. As my hon. Friend’s name has appeared in newspaper articles in connection with various stories, it is natural that it would be picked up by those monitoring services.
Mr Speaker
I do have concerns about what has been mentioned. If there are dossiers on MPs, we need to know. If someone put in for an urgent question to get to the bottom of this, I would be very tempted, because I do think it needs clarification. A Government Department holding records on MPs may be fine, but it may not be, so I do have great worries.
Alex Burghart
As I said, Mr Speaker, we have media monitoring units so that when people’s names appear in the media, be they MPs, peers or people who are not Members of either House, they will be recorded on those systems. There is nothing untoward about this, I can assure you.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
I am delighted to tell the House that the Government are absolutely committed to supporting SMEs in a variety of ways, from transparently publishing contract pipelines to simplifying bidding processes. The Procurement Bill currently making its way through Parliament will create a simpler and more transparent procurement regime that will open up further business to SMEs.
Gerald Jones
Analysis by Spend Network found that big corporations were still winning 90% of contracts deemed suitable for smaller businesses. These are worth £30 billion per annum. Will the Minister outline what the Government are doing to ensure that SMEs win procurement contracts that they are suited for?
Alex Burghart
The hon. Gentleman will be delighted to hear about the Procurement Bill currently making its way through Parliament. It will come to Report stage after the Easter break. It will help SMEs across the country, including in his constituency and mine, because we have worked hand in glove with the Welsh Government to make sure that the new procurement rules are available in England, Wales and Northern Ireland. I am pleased to say that that is possible only because we left the EU.
Andrew Jones (Harrogate and Knaresborough) (Con)
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
There is no Ministry of Truth; there is the Cabinet Office. The rapid response unit was disbanded in August last year, and I am happy to meet my hon. Friend to talk about any of his concerns, particularly any parliamentary questions that he feels have not been answered properly.
Christine Jardine (Edinburgh West) (LD)
Alex Burghart
The hon. Lady will be pleased to hear that there is a major communications programme to address just that issue.
Selaine Saxby (North Devon) (Con)
I thank the Minister for Veterans’ Affairs, my right hon. Friend the Member for Plymouth, Moor View (Johnny Mercer) for coming to visit the Veterans Charity in Barnstaple earlier this year. Does he agree that such charities run by veterans often play an excellent complementary role to the excellent work his Department is doing?
Daniel Zeichner (Cambridge) (Lab)
It has recently been revealed that the Crown Commercial Service in the Cabinet Office is planning to replace local buying and distribution agreements for food and catering services with what it calls a single national prime supplier. That will have a profound effect on many local and regional wholesalers in Cambridge and across the country. Can the Minister tell us what assessment he has made of that impact, and will he meet me and representatives of those wholesalers to assess the situation?
Alex Burghart
The Crown Commercial Service is always looking at ways in which it can save taxpayers’ money, but it is also mindful to protect small and medium-sized enterprises, which remain a priority for this Administration.
Andrew Jones (Harrogate and Knaresborough) (Con)
The global expansion of cyber-space is changing the way we live and work. Can my right hon. Friend outline what steps he is taking to advance our national cyber-security strategy and to bolster our defences against malign actors around the world?
Future of the UK Constitution and Devolution
Alex Burghart Excerpts(1 year, 8 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
James Grundy
I am not arguing at this stage for the abolition of the mayoralty, although I know that some do. Some feel it has not worked in the way it should. In Greater Manchester—this is the view of Greater Manchester Conservative colleagues—the mayoral model is distinct from the one in London because it has no Assembly to hold the Mayor to account, so there is no scrutiny, accountability or responsibility. Equally, I welcome the fact that there are slightly different models around the country, because different models take account of the different needs of different areas. That is a benefit of the system and not necessarily a downside, whether it means different mayoralties having different powers, some areas not having a mayor, some using the combined authority model or similar, or collaboration between existing local authorities.
Where everyone agrees that certain powers should be devolved further, that absolutely should happen, but where there is discord and dissent or where people feel it is not appropriate, it should not happen. Where there is cross-party support, which there probably is on what they are trying to do in Cheshire, clearly that model should be adopted. I agree with Opposition Members that a mayor would not be appropriate for Cheshire, given that it does not have a major metropolitan centre.
On the point that my hon. Friend the Member for Hitchin and Harpenden made—you will, no doubt, be amused by this, Ms Fovargue—the creation of large unitary authorities can sometimes be controversial. There was great distress in 1973 when my own seat of Leigh was merged with the neighbouring rival town of Wigan, which my hon. Friend may have heard me speak about on a previous occasion when he served in a previous role. At the time there was a great phrase illustrating the problem with devolution if done the wrong way. In 1973 the campaign against the creation of huge metropolitan authorities saw the process as one that took power away from local communities and gave it to a larger, more remote one, and its slogan was, “Don’t vote for Mr R. E. Mote”. That did cause problems for Conservative candidate Roger Moate during the following election. But that is how people sometimes feel—that power is being taken further away.
To finish, because I realise we are pressed for time and others may wish to speak, devolution down to regions does not always work. I will give my hon. Friend a good example of this. On transport, he is 100% right in principle. In the mid-1960s, one of the predecessor local authorities to Wigan—Golborne Urban District Council—wrote to the Government on the desperate need for a bypass for the town of Leigh and the villages of Lowton and Golborne, which were mining communities at that time. About 60 years on, we are still waiting for that bypass to be finished, because the problem is that it would run all the way from Bolton down through Leigh and then down to Warrington.
In 1984, when I was a small boy, the middle bit of that bypass was finished—the bit that runs from virtually the border with Bolton down to the border with Warrington —but neither end has been finished. That is because it runs across three different local authorities and two counties—Cheshire and Greater Manchester. The question whether Greater Manchester is a county is a point of debate for many. Certainly, people in Saddleworth would get angry if someone said they were not in Yorkshire. Devolving powers down to the mayor would not work because we would still have to deal with the problem of Cheshire—
James Grundy
That is perhaps a blunt way of describing it.
In some cases, it would be better if these powers and the fragmented responsibility for delivering local infrastructure were taken up to the departmental level, as we do with national schemes, and other powers were devolved down.
By and large, this has been a non-partisan debate, and I fundamentally welcome that. We must listen to what local representatives say about the model of devolution and the suite of powers they want, and not be too prescriptive about the model and powers. Standardisation is the wrong way, although I understand what my hon. Friend the Member for Hitchin and Harpenden was trying to argue. If we listen to local representatives, we will get the best version of devolution with proper scrutiny and accountability, and a system that actually works and that local people believe in. The worst thing we could do is impose a uniform model of devolution on everyone whether they want it or not. The Government would lose the good will of a goodly number of Back Benchers if they tried to do that, and would face considerable opposition from the other side of the House.
I am a great champion of localism; it must be the founding principle of devolution. As I said, one size does not fit all.
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
It is as pleasure to respond to this wide-ranging debate. I congratulate my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) on securing it. He was kind enough to say at the outset that I used to be a history teacher; I could not help remembering marking bright undergraduates’ essays. I would sometimes write, “This is a very good essay, but I can’t help but think you might have got the title wrong.” We have four overlapping debates. One is on history, which I shall indulge in; one is on the nature of English devolution; one is on UK devolution; and another is on the structures of the constitution. Those things obviously interlink.
The hon. Member for Strangford (Jim Shannon) was right to mention where we were, in Westminster Hall. Central Lobby is the embodiment of our four nations and the four physical parts of our constitution: the Lords, the Commons, the ancient Westminster Hall and the Committee Rooms all coming together, along with England, Wales, Scotland and Northern Ireland.
The hon. Member for Aberdeen North (Kirsty Blackman) mentioned that William Wallace was tried in Westminster Hall. She did not mention that it was also where James VI was greeted when he came to be both King of England and King of Scotland. The evolution of those two ancient kingdoms tells us a lot about where the debates on localism come from, because they are very old indeed. In several cases, the shires of England are older than England itself; indeed, Kent probably dates to the pre-Roman period.
When we hear debates about whether Wigan should be allowed to switch over, I am reminded of the passionate arguments against Humberside. I also thought my hon. Friend the Member for Leigh (James Grundy) was very brave—in this company—to refer to the problem of Cheshire, because we have heard powerful advocacy on behalf of the people of Cheshire for the sort of local representation they would like.
It was from the shires of England that Parliament was formed in the 13th century. In the pre-conquest period, the leaders of the shires were represented in the Witan. These are very old structures and identities, and that history still infuses the debates we have today about where boundaries should lie and about where power should derive from. Obviously, the answer is in the interaction between the centre and the locality and in the adequate balance of the two.
On English devolution, I respect the remarks from the hon. Member for Nottingham North (Alex Norris) about these issues crossing party lines, and that has contributed to the open and good-natured debate we have had. The reason this issue cuts across party lines is that it is not easy, and there is variation in how people see things in different parts of the country, based on their geography, history and recent experiences.
Pity me somewhat, for I am merely a Parliamentary Secretary in the Cabinet Office, not a Minister in the Department for Levelling Up, Housing and Communities, but I have heard the representations made by Members from Cheshire, and I will be certain to put them to colleagues in DLUHC. I am sure they will thoughtfully consider what has been said and the request for a meeting.
The Government have been a powerful advocate for devolution, and we have practised what we preach. I have seen the results in my time in Government. I was lucky enough to be the Minister for Apprenticeships in my last job but one. In Teesside, I saw the new Tory Mayor working with central Government and with local communities and business to create staggering new opportunities. It was the first time that I had seen all these things come together. The Government created the freeport—a place where there could be opportunity. The Mayor got in touch with BP, and said, “Here is a place we can do business. Come and put your hydrogen plant here.” BP went to the local colleges and said, “We want the people who are coming through your colleges to get the jobs in our plant.” Opportunities were created for local people by negotiation between central and local government, and that, I strongly believe, is levelling up.
In answer to the point that my hon. Friend the Member for Hitchin and Harpenden made on standardisation versus variation, and to the fears my hon. Friend the Member for Aberconwy (Robin Millar) expressed about a cookie-cutter approach, we have cookie cutters of several different shapes. We think those are the best way of delivering effective devolution, with the opportunity for there to be combined county authorities or individual unitary authorities, based on the needs and experience of local communities.
Let me turn to devolution across the UK. The hon. Member for Aberdeen North—I have debated this point with her before—said that the use of section 35 should only be exceptional. Well, it has been used only once. There is no greater illustration of how it is used only in exceptional circumstances than the fact that, in national devolution’s 25-year history, it has been used only once, and even then only in very particular circumstances and on sound legal advice to maintain the balance of laws across the United kingdom. I hope the hon. Member will see—although I know she will not—that that shows that the mechanisms of devolution are, to a certain extent, working and being respected.
I acknowledge what my hon. Friend the Member for Aberconwy and the hon. Member for Strangford said about the need for there to be respect between nations. That is absolutely right. We are all in this together. In respecting those relationships, we must also understand that this building is one of the places in which the nations come together and that there remains a role for the UK Parliament in the structures of the United Kingdom.
That whistlestop tour does not necessarily answer every individual question, but I am happy to come back to any hon. Member who feels I have not covered their points.
Robin Millar
The debate has been commendable for the tone in which it has been conducted on both sides of the Chamber. However, I must observe that, when the Labour Government introduced the devolved Assembly, it had an unintended consequence. The anecdote at the time was that doing that would deal with nationalism but, with great respect, we have a strong nationalist presence in this House under this Administration. Has the Minister given thought to the factor of unintended consequences?
To cite one example, tax-raising powers have been devolved, but in the case of Wales they have not been taken up. I use that example as a further illustration of the unevenness and the natural response—the phrase I used was “desire lines”. Will the Minister comment on that in the minute he has left?
Alex Burghart
Few people have thought about this issue more than my hon. Friend. He is certainly right to say that the Labour party was wrong in its assessment that devolution would kill nationalism, although these were cross-cutting issues even at the time. I remember Charles Clarke arguing openly that the Government were mistaken and that the nationalists would be empowered. That goes to show that parties can hold different views.
I disagree with the hon. Member for Nottingham North on one thing. I think that the constitution of the United Kingdom remains incredibly strong. Indeed, it seems capable of coping with everything we throw at it. One of its great strengths over the centuries has been its ability to adapt, evolve and grow, and when it comes to the agenda this Government are pursuing on devolution in England, it is doing just that.
Security and Intelligence Agencies: Contingencies Fund Advance
Alex Burghart Excerpts(1 year, 8 months ago)
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The Parliamentary Secretary, Cabinet Office (Alex Burghart)
The security and intelligence agencies have presented a supplementary estimate for approval to Parliament in the central Government supply estimates booklet—HC 1133, published on 21 February). Full details can be found on www.gov.uk. As it will be some time before the associated legislation receives Royal Assent, the agencies are seeking an advance from the Contingencies Fund in order to meet contractual commitments.
Parliamentary approval for additional resource of £140,017,000 has been sought in a supplementary estimate for the security and intelligence agencies. Pending that approval, urgent expenditure estimated at £140,017,000 will be met by repayable cash advances from the Contingencies Fund.
As the security and intelligence agencies are non-ministerial departments, I am making this statement on behalf of their accounting officer to ensure that Parliament is informed of this advance from the Contingencies Fund.
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Civil Service Pay
Alex Burghart Excerpts(1 year, 8 months ago)
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This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
It is an honour to serve under your chairmanship, Mr Pritchard. I start by congratulating the hon. Member for Cynon Valley (Beth Winter) on securing the debate, as I welcome the opportunity to discuss these issues. I am sure the Chancellor will have heard her remarks. The Government are obviously in the process of preparing for the Budget in the very near future.
At the outset, I want to join all Members in recognising the extraordinary hard work and dedication of the civil service. I cannot accept the remarks made—admittedly, as an aside—by the hon. Members for Aberdeen North (Kirsty Blackman) and for Vauxhall (Florence Eshalomi) about how the Government are in some way scapegoating civil servants. That is absolutely not the case. It was not the case in the urgent question in the House yesterday. Obviously, a lot of people in the Cabinet Office are sad about what has happened over the past few days, but that in no way detracts from our huge respect for our exceptional civil servants, on whom we rely every single day. It is important for me to put that on the record.
As right hon. and hon. Members will undoubtedly be aware, civil service pay is determined by separate processes for delegated grades—typically grade 6 and below—and the senior civil service. For delegated grades, the Cabinet Office publishes the pay remit guidance annually. The guidance is a cost control document setting out the parameters of average awards in a pay remit year for Departments. For the senior civil service, the Senior Salaries Review Body makes independent recommendations to the Government based on evidence provided by the Government and data from recognised trade unions and the labour market.
In the 2021 spending review, the then Chancellor of the Exchequer announced the end of the temporary pay pause in the public sector, including the civil service, starting from the year 2022-23, throughout the duration of the spending review period to 2024-25. The strong recovery in the economy and labour market at that time allowed us to return to a normal pay setting process. Again, right hon. and hon. Members will be aware that new challenges then emerged. We are operating now in a very different economic environment. Higher than expected global energy and goods prices have already led to unavoidable increases in the cost of living in the UK, and the repercussions of Putin’s illegal invasion of Ukraine have added considerably to those pressures.
Last year, the civil service pay remit guidance allowed Departments to make awards of up to 3%, which we absolutely recognise is below inflation. The Government of course recognise the significant strain that cost of living pressures are putting on everyone, including civil servants, and this Government have been helping with energy support and other cost of living payments for the most vulnerable.
Chris Stephens
The Minister mentioned the pay remit guidance. For clarity, can he confirm that the pay remit guidance is one document—that there is only one piece of pay remit guidance? If so, why are there 200 sets of negotiations across Westminster Government Departments?
Alex Burghart
The hon. Gentleman will be glad to hear that I will come to that point very soon.
As everyone will, I hope, appreciate, the Government put fiscal responsibility at the very centre of our policy, and we are taking appropriate steps to manage inflation. Obviously, at the moment, it is not public sector wages that are driving inflation. Many factors are driving inflation. Inflation is besetting our closest friends and competitors around the world; it is an international problem. However, if we were to take the advice of the right hon. Member for Hayes and Harlington (John McDonnell), the hon. Member for Liverpool, West Derby (Ian Byrne) and others, we would find ourselves in trouble.
The Governor of the Bank of England and its chief economist have both said that inflation-matching pay rises in the public sector can spill over into higher pay across the economy, and that would make the fight against inflation even more challenging. That is why halving inflation is the top of the Prime Minister’s five immediate priorities, alongside growing the economy, reducing national debt, getting the NHS backlog down and stopping small boats crossing the channel. Our focus is on pay for 2023-24.
John McDonnell
It is difficult to see how a reasonable settlement below the rate of inflation—for example, the fire brigade settlement of 7%, with backdating and 5% for next year—could in any way offend against the Bank of England Governor’s comments. Have the Government even considered an offer of that sort to the civil service?
Alex Burghart
The right hon. Gentleman is a former shadow Chancellor. He will appreciate that the higher the pay settlement, the slower the rate of decline in inflation is likely to be. [Laughter.] He laughs; I hope he has realised how the numbers work.
John McDonnell
This is unique in economic history in this country. We are arguing that a pay award below the rate of inflation is still inflationary. I have never heard that one before, and I think we should record it for posterity.
Alex Burghart
I know the right hon. Gentleman is new to this House, and I am delighted to be able to tell him that the minutes of this debate will indeed be recorded for posterity. He will understand that the sooner the speed of inflation comes down to a manageable level, the sooner we can return to growth in the economy. The sooner the whole economy benefits, the sooner public services will benefit. He proposed an inflation-matching pay rise, but that would certainly not help bring down inflation, and he knows that. It is very easy to propose things from the Labour Back Benches that sound good, but that are impractical and damaging. The Government have to take fiscally responsible decisions.
The Chancellor of the Duchy of Lancaster and Secretary of State, my right hon. Friend the Member for Hertsmere (Oliver Dowden), said in a recent PACAC evidence session that considerations for the pay settlement this year will, of course, be done in the context of higher inflation, but that
“we have to be cognisant of wider pressures on the public finances, which ultimately can be paid for only by higher taxes, by increased borrowing or by savings elsewhere in the Government…Ministers have to take difficult decisions.”
Geraint Davies
The Minister is making the case for a balanced approach. The Chancellor’s objective is to halve inflation this year, from 10% to 5%, so prices will have risen 15% over two years. Given that, what would be a reasonable and balanced pay award to civil servants over those two years, in the Minister’s view?
Alex Burghart
Those conversations are ongoing, as the hon. Gentleman will be aware. It is not within my remit to speculate on that.
Alex Burghart
I will come back to the hon. Gentleman’s point.
Salaries for junior grades in the civil service remain comparable with private or public sector equivalents. Many civil servants also benefit from defined benefit schemes, where employers contribute around 27% of earnings. In contrast, most private sector employees receive defined contribution pensions, which are dependent on investment performance, and where employer contributions are typically around half those in the public sector.
As I mentioned at the beginning of my speech, pay arrangements for civil servants below the senior civil service are delegated to Departments as separate employers. That has been the case since 1996, and was not a position overturned by the previous Labour Government. The annual pay remit guidance sets out the financial parameters within which civil service Departments can determine pay awards for their staff. Negotiations take place between organisations and trade unions. The Cabinet Office does not negotiate or consult on pay or changes to terms and conditions outside the civil service management code. Ultimately, it is for Departments to decide on their pay awards and how they are structured, in the light of their own budgets and priorities, and to negotiate with their trade unions.
There are many merits to the delegated model, as the last Labour Government recognised. Civil service Departments deal with many different, complex issues. That means it is really important that Departments continue to have the flexibility to tailor their own pay and grading arrangements to enable them to recruit, retain and reward the hard-working civil servants who deliver for them.
Pay remit guidance also allows Departments to seek further flexibility for a pay award above the headline range for pay awards. That has enabled some Departments to make higher awards to their staff in return for productivity and efficiency gains, or to reform terms and conditions of employment, in order to deliver transformational reform. That has been demonstrated in pay deals at His Majesty’s Revenue and Customs and the Ministry of Justice in recent years.
We continue to explore opportunities for greater coherence for reward in future years in support of civil service challenges and priorities, which is where the work of cross-Government professions and functions have a particularly valuable role to play. The Minister for the Cabinet Office met with some of the main civil service unions on 12 January to listen to their representations on pay, as part of an exchange of information to inform pay for 2023-24. That is supported by continuing dialogue at official level.
The Government remain committed to holding discussions about pay for 2023-24. We want to work constructively with the civil service trade unions as the Government consider the pay remit guidance, the delegated grades and the evidence to the Senior Salaries Review Body on senior civil service pay. I am confident that when we announce the 2023-24 civil service pay remit guidance, we will continue to strike the balance between appropriate reward and the need to live within our means as a nation.
Chris Stephens
The Minister has confirmed that there is one pay remit guidance. Do the Government have any plans to cut the numbers of negotiations? There are currently more than 200 across Westminster Government Departments.
Alex Burghart
The hon. Gentleman will have heard me say that we consider there to be many advantages to this model.
The purpose of Westminster Hall debates is for the Minister to come and listen to what colleagues in the House have to say. It was interesting, listening to the hon. Member for Vauxhall, to hear that a lot of the positions from the Labour Back Benches do not necessarily accord with the position of the Labour Front Bench. I wonder whether one of the things that is happening in this Westminster Hall debate is an internal debate within the Labour party being aired in public. There was no position from the Labour Front-Bench spokesperson on collective bargaining, on the pay offer, or on PCS strike actions.
Florence Eshalomi
On this side of the House, we will make sure that we negotiate—sit around the table and address the concerns. It is not for me to say, “This is what we will offer.” It is about sitting down with the unions, outlining the concerns and then coming to a decision.
Alex Burghart
I respect the hon. Lady’s position. However, that is not the position that many of her colleagues have taken here today. It is important that the Labour party comes to an agreed position before the next election. If it does not, we will be sure to remind the public that the Labour party does not have a position on this, whereas the Government do.
Mark Pritchard (in the Chair)
Order. I remind the hon. Lady to address her remarks through the Chair, rather than using “you”. The Minister is responding on behalf of the Government.
Mark Pritchard (in the Chair)
I am neutral. I remind the hon. Member to address her remarks through the Chair. The Minister is here representing the Government rather than as an individual.
John McDonnell
There was a flippant remark from the Minister with regard to meeting PCS members. I just remind him that PCS members in my constituency—two Border Control staff—died during the pandemic because of covid. They sacrificed their lives keeping this country safe.
Alex Burghart
On a point of order, Mr Pritchard. The right hon. Gentleman knows full well that there was no flippant remark about PCS whatsoever. [Interruption.] There was no flippant remark whatsoever. The record will state that all I said was that you had been invited to join the picket line, Mr Pritchard. That is not a flippant remark about PCS.
Alex Burghart
It was not a flippant remark about PCS. The right hon. Gentleman knows that it was not.
Mark Pritchard (in the Chair)
Order. The Minister is entitled to put his point of order—although it is not a point of order. However, it has been put on the record by our excellent Hansard colleagues here. We go back to Beth Winter for the last three minutes of the debate.
MPs and Second Jobs
Alex Burghart Excerpts(1 year, 9 months ago)
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Richard Burgon (Leeds East) (Lab)
I have secured this debate to consider the urgent need to put an end to the ongoing scandal of MPs using their positions to enrich themselves through second jobs.
Being a Member of Parliament is a privilege. It is a well-paid job, and it is also a full-time job, so when MPs chase corporate cash, they are actually short-changing the public who pay them. That is why I introduced the Members of Parliament (Prohibition of Second Jobs) (Motion) Bill, which would ban MPs from having second jobs. I introduced that Bill soon after the issue of MPs’ second jobs shot to prominence through the Owen Paterson lobbying scandal. That case became a lightning rod for public anger not just about corporate lobbying, but about the wider dodgy deals and crony contracts that the Government were mired in.
That scandal should have been the moment when the Government cleaned the stables and took real action to prevent the corrosive influence of MPs’ second jobs. Has the problem gone away more than a year since that scandal came to light? No. In fact, it has only got worse. There has been the illusion of action so that the Government could draw a line under the issue, but an investigation by The Observer found that, one year after the Owen Paterson scandal, MPs were earning more than ever from second jobs. When scandals happen and real action is promised, what message does it send to the public if the problem is instead allowed to get worse?
The latest figures, from January, show that MPs have earned more than £17 million on top of their salaries since the last general election, and that Conservative MPs have taken nearly 90% of it. Around two thirds of that money went to just 20 MPs, of whom 17 were Conservative Members. I invited the top 10 highest outside earners to intervene in the debate because I wanted to give them the chance to defend the right of MPs to continue raking it in from outside earnings. It appears none of them has taken me up on my offer, which is a shame.
I am disappointed that the former Prime Minister, the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), is not here today. Under his Government, the Tories repeatedly blocked my Bill banning second jobs. Time after time, his Government blocked any meaningful action against second jobs, and no wonder—the former Prime Minister is now the highest earning MP, having made nearly £5 million in outside earnings since leaving Downing Street last September. It would take the average nurse around 150 years to make what the former Prime Minister has made in just six months, and it is 50 times more than his MP’s salary.
Those who earn more from their outside earnings than they do as MPs all too often seem to view being an MP as their second job. Over the last year, as I have pushed my Bill in this House, I have heard some truly laughable attempts to justify MPs chasing corporate cash. Government Members used to tell me that my Bill would deprive our Parliament of the real world experience provided by second jobs, which bring us closer to people out there. Isn’t it funny how the Government Members who justify the racket of second jobs never choose to work for low wages in supermarkets, as bus drivers or in care homes—jobs done by millions of people who we are here to represent?
Instead, we have examples such as the former Chancellor and Health Secretary, the right hon. Member for Bromsgrove (Sajid Javid), who earned £1,500 an hour advising a US investment bank. These are not the jobs or experiences of most people. Big money second jobs like that do not make MPs more in touch with the real world. They do the exact opposite, adding to the sense of an out-of-touch political class that, I am afraid, is increasingly held in contempt by the public. We have even had Conservative MPs claiming:
“There’s no way I could be an MP without my outside interests. My wife works full time, I’ve got kids and need the money for childcare.”
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
I am enjoying the hon. Gentleman’s speech. He has ascribed a quotation to a Conservative MP. Would he mind saying who it came from, so that we know it is not just a vague assertion or a hypothetical Conservative MP?
Richard Burgon
I believe that it was provided anonymously to the press when this Conservative MP was pleading poverty on £84,000 a year but did not want their constituents to know they were doing so. The Minister is mistaken if he thinks that that quote is somehow unrepresentative of an attitude.
How on earth do these people think that the rest of the population, who are earning way below £84,000 a year, cope? These are the same MPs, by the way, who are all too happy to vote through swingeing cuts to benefits and to suppress the wages of workers who earn far less than they do.
Richard Burgon
My hon. Friend is correct. It is even worse that this racket is taking place during a cost of living crisis, when we have seen a proliferation of food banks—we see Tory MPs raking it in while some Tory MPs even deny the need for food banks.
Many MPs seem to fail to understand that they already earn more than 95% of the public. If they do not get how well paid they are compared with the rest of the public, or if they are not happy with their salary, perhaps they are in the wrong job. Given that our job is to represent the people, perhaps our democracy would be better served by MPs who better reflect 95% of people in this country. Having MPs who are seen to be using their position not to serve the public, but to fill their own pockets is fuelling a lack of trust in our political system. People raise important questions about who MPs are there to serve: they rightly ask whether, if an MP is getting paid tens of thousands of pounds, that MP can really claim to be representing the public and not their other employer.
Despite what many may tell themselves, the truth is that MPs are being paid not for what they know, but for who they know. They would not get those vast sums from big corporations if they were not MPs with political connections, which creates obvious conflicts of interests. MPs’ second jobs are an especial danger to our democracy, given that trust in politicians is already at the lowest level on record. Two in three people now see politicians as merely out for themselves, while just one in 20 people think that politicians are in the job primarily to serve the public good. More than 60% of the public think that if an MP is being paid to do another job, that prevents them from being independent and able to make the right decisions as an MP. Banning second jobs is one way in which the Government can prove to the public that MPs are not just in it for themselves, and that they really are making decisions based only on what they believe is best for the people of this country. The majority of people in this country want a ban on MPs earning money from second jobs, and only a tiny minority—just 19%—support MPs’ second jobs. MPs need to wake up to the reality of that public feeling and public opinion.
So what is the way forward? My Bill to ban MPs’ second jobs could be an important first step in the long road towards a more transparent and healthy democracy. My Bill is clear and bold: no paid second jobs for MPs at all, except in very limited circumstances.
Alex Burghart
Could the hon. Gentleman set out what those exceptions would be? I am afraid that I cannot remember from his Bill.
Richard Burgon
I will set out the exceptions that my Bill outlines. I am disappointed that the Minister does not know the detail of my Bill, since his Government repeatedly blocked it. I thought they must have read it very carefully in order to repeatedly block its passage through Parliament.
My Bill adds a new punishment for breaking second jobs rules: a fine at least equal to the amount paid to the offending Member for their second job, removing any financial gain from breaking the rules. That is in addition to existing sanctions that the Standards Committee can recommend, which include suspension. Some will argue that my Bill is very tough—indeed it is, because it has to be. We need to cut the rot out of our politics. The very limited exemptions I have included are when a second job is about maintaining professional qualifications, such as in nursing, or when a Member is working on the frontline in our NHS—as a doctor, for example—or in another emergency service. Those roles are about genuine public service and public interest, and have nothing to do with the scandal that has been shaking Parliament and sowing such distrust in politicians.
Some MPs have asked me how my Bill would impact on ministerial or Select Committee roles. Of course, it would not do so, because those additional roles are a key part of our democratic functioning in which we are trying to rebuild trust. My Bill would also allow MPs to carry out certain paid work, such as media appearances or speeches, if that entire outside earning is donated to charity. That way, we can be sure that those activities are about public service, not private enrichment.
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
I congratulate the hon. Member for Leeds East (Richard Burgon) on securing the debate. It is a pleasure to be in an Adjournment debate with him again; I sometimes think that only he and I care about these issues—and the hon. Member for Jarrow (Kate Osborne), of course. I enjoyed listening to his speech and I know that his views come from a well thought out and sincere position; I reassure him that the Government’s do too. We recently considered many of the issues that have been raised—he will have been present in those debates.
We firmly believe, as the hon. Gentleman does, that an MP’s primary job is to serve their constituents. It is at the will of our constituents that we all sit here and without their support, we are nothing. We on the Conservative Benches also appreciate that the issue of outside or additional earnings is complex, and it has been considered by the Standards Committee, as he will be aware. That is why we have continued to support the clarification and improvement of the rules in the code of conduct to ensure that Members’ interests are properly declared and that the ban on paid advocacy and lobbying is strengthened, as was decided by the House in December 2022.
At that time, the question was raised about whether work undertaken outside should be limited. We believe that the responsibility for considering what constitutes a reasonable limit is a matter for individual Members; or to put it another way, it is a matter for their constituents. As I have said, ultimately, it is our constituents to whom we must answer—not to the hon. Gentleman, the Leader of the Opposition, the Government or even the House of Commons. That is why the Government came to the view that we would support the work that has been undertaken to introduce robust new measures to strengthen the standards system in Parliament and to ensure that the rules prohibit Members from using their parliamentary role to benefit private interests rather than their constituents’ interests.
We remain of the view that, as the Committee on Standards in Public Life recommended in 2018, Members should be banned from accepting any paid work to provide services as a parliamentary strategist, adviser or consultant. That is why the Government brought forward an amendment, which the House approved on 17 November 2021, to support the introduction of limits on Members undertaking outside work. These were that MPs should be prohibited from any paid work to provide services, as I have said, as a parliamentary strategist, adviser or consultant, and that outside work should be undertaken only within reasonable limits. The Government believe that an outright ban on second jobs is unnecessary as a consequence, as the rules in the code of conduct effectively address concerns about paid advocacy and emphasise the duty of MPs to properly serve their constituents and represent their interests in Parliament.
The hon. Gentleman made a number of good points, and he made a valid argument which, if he will forgive me, I will paraphrase. It was that it is a privilege to be here, and Members should not be spending their time on issues that are not associated with their constituents’ needs and should not be allowed to earn large sums of money by doing other things. One day, there might be a Labour Government—God help us—and when that happens, there is a chance that he might be sitting on this Front Bench, and at that point he will have a second job. Even though he would not ban that under his Bill, if his argument is about time, I point out that there is no second job or outside interest that could possibly compete with the amount of time that a Minister is expected to spend on their job, as he will see if ever he sits on the Treasury Bench. I confess that being a Minister reduces the amount of time Members have to spend on the needs of our constituents; it really does. We do it—it is an honour, a privilege and a pleasure—but it would be a lie to say that Members have as much time to spend on their constituency work when they are a Minister as they do when they are a Back Bencher. So the argument on time does not stand up on its own.
On the argument about money, the hon. Gentleman made it clear that he finds the fact that some Members of this House earn a great deal of money unpalatable and unsavoury, and he is entitled to those views. However, it is not for him to decide whether that should rule out such a person from being an MP. The people who get to decide that are not him or even the Government; those who should have the final say on whether such a person is an MP are their voters. Deep down, he knows that too, because I know that he is a democrat at heart, and he believes that sovereignty rests with the people. I do too, and I do not want to see a Government passing legislation that starts to make decisions for voters. Voters should have the final say: let them make their decisions.
Richard Burgon
I thank the Minister for responding in such a serious and considered way on this issue. I get the impression that he will not be supporting my Bill to ban MPs’ second jobs. He refers to constituents and the public as sovereign, and I agree. What about this for an idea, then? If the Government are not prepared to ban second jobs, as I think they should, what about passing legislation to ensure that the outside earnings of every MP are listed under their name on the ballot paper at a general election? Constituents could then have a look and decide whether they want to vote for a person to carry on being their MP.
Alex Burghart
The hon. Gentleman might find, if he did that, that people would be asking for a lot of other information to be published about Members at the ballot box. The public are perfectly capable and willing to find out about people they vote for, as he will know from knocking on doors. In my experience, voters are often very well informed and do not vote blindly. Consequently, although he says that the public support the thrust of his Bill, I put it to him that the public have also voted repeatedly over many years for Members with outside interests, when they have often had a choice not to do so. We should all respect their decision, because it is their decision.
The hon. Gentleman says that changing the law in this way would make this House more representative of people in the country. Often when I voted before I was a Member of this House, I did not vote for people like me. I made a choice to vote for the best candidate regardless of their background. Again, there are some things that are right for us to debate, but that are not right for us to decide. We must leave these decisions in the hands of the voters. Of course, such a system can only work when we have transparency, and it is transparency that this Government have supported and will continue to support.
I thank the hon. Gentleman for his thoughts, and I hope he will forgive me for not being able to recall the particular exemptions that he set out in his Bill. I thank him for his interest in this subject, but I am afraid that we will have to agree to disagree.
Mr Deputy Speaker (Mr Nigel Evans)
Before I put the question, I want to intrude a little on the debate to say that this weekend is WorldPride in Sydney, Australia. Hundreds of thousands of people from all over the world will be gathering to celebrate the festivities there, including mardi gras. [Interruption.] The Minister asks whether I will be one of them—I went to WorldPride in New York just before covid, and it was glorious and fantastic. The hon. Members for Jarrow (Kate Osborne) and for Redcar (Jacob Young) and I have all agreed that we would love to be there this weekend, but someone has to keep the show on the road, particularly on Friday. We want to send a clear message to all those celebrating. I have seen the Sydney opera house lit up with all the flags encompassed in the pride movement, and it looks fantastic. It will be superb weather, because it is Australia. They will have a fantastic time and we want to say from the House of Commons in the United Kingdom that we share your pride.
Question put and agreed to.
Procurement Bill [ Lords ] (Ninth sitting)
Alex Burghart ExcerptsTuesday 21st February 2023
(1 year, 9 months ago)
Public Bill CommitteesRead Full debate Procurement Act 2023 View all Procurement Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 21 February 2023 - (21 Feb 2023)
Florence Eshalomi
I thank my hon. Friend for that really valid point. It is important that we look at what has happened. Over the years, there have been many examples of outsourced services in which staff working conditions have been eroded and staff pay has not kept in line with inflation. The situation that we are seeing now is that staff are walking—they are voting with their feet and choosing to lose a day’s pay by going on strike. That is a result of some areas of outsourcing. From catering to social care, from cleaning to IT and HR services, almost no area of public services has been left untouched.
Too often, outsourcing is accompanied by deterioration in the pay, pensions and terms and conditions of the staff delivering the service. That almost creates a two-tier workforce of directly employed staff working alongside contractor staff, as well as a two-tier workforce within the contractor. The Transfer of Undertakings (Protection of Employment) Regulations can offer some limited protection for staff who are transferred to an outsourced contract, but staff recruited by the contractor after transfer have no such protection. Those inferior conditions can translate to lower costs for contractors, which can play a crucial role in their offering a cheaper tender and winning contracts.
A major flaw of this model is that it creates a false economy. The cost of the service is superficially low, but over time, staff have to claim universal credit. People retire without enough to live on and have to claim pension credit. Lower pay and insecure work have a negative impact on mental health. The decline in the number of decent public sector jobs in the community has a chilling effect on the local economy. The dots are not joined and the wider economic costs not considered.
In some regards, the supposed benefits of outsourcing have been eroded by the reality of contracting out services in recent years. There has been a notable turn towards insourcing—the process by which a public authority takes a service that has been contracted out and brings it in-house to be delivered by directly employed staff. However, we are still a very long way from the presumption that services should be outsourced only if it can be shown that the work cannot be delivered just as effectively in-house. Hundreds of thousands of carers, cleaners, porters, security staff and catering staff in our public services workforce are among the worst-off and most insecure workers in the UK.
Creating a check on such practices should be an objective of the Bill. That could be achieved through a public interest test to require contracting authorities to think holistically and outsource public services only when it is demonstrably in the public interest and when a robust assessment provides clear evidence that the services could not be better delivered in-house.
If a contracting authority is considering outsourcing public services that are currently delivered in-house, or where contracts are due for renewal, it should ensure that outsourcing or re-contracting passes a pre-procurement test and provides greater public value than direct service provision. The new clause would require the contracting authority to
“demonstrate to the public, service users and its employees that it has thoroughly assessed the potential benefits and impact of outsourcing the service in question against a public sector comparator with assessments being based on criteria to be set by the Secretary of State from time to time, including taking a five year consideration of—
(a) service quality and accessibility;
(b) value for money of the expenditure;
(c) implications for other public services and public sector budgets;
(d) resilience of the service being provided;
(e) implications for the local economy and availability of good work in relevant sub-national labour markets;
(f) implications for public accountability and transparency;
(g) effect on employment conditions, terms and standards within the provision of the service to be outsourced and when outsourced;
(h) implications for public sector contributions to climate change targets;
(i) implications for the equalities policies of the contracting authority and compliance with the public sector equality duty.”
Importantly, the public interest test would take place pre-procurement, and not all services subject to the test would eventually go to market. To increase transparency around those services that enter into the procurement process, the Bill should mandate information about outcomes of the associated public interest test to be published.
Under the new clause, the contracting authority and the provider of the outsourced service would also be required to
“monitor the performance of any contracted service against the public interest test and the stated objectives set by the contracting authority pre-procurement to demonstrate that outsourcing the service in question has not resulted in a negative impact on any of the matters mentioned in subsection (2)(a) to (i).”
Labour is clear that we would run the biggest programme of insourcing for a generation. We recognise the value offered by those delivering outsourced services, but we have concerns about the current scale of outsourcing. New clause 3 would lay out a clear test for outsourcing, ensuring it is done only when it is in the interests of the public, and that we do not hand out public services on the cheap.
We must create a culture of value for money throughout the public sector and avoid waste wherever we can. We believe that the new clause would help to create that culture. I hope that the Minister will give it due consideration and support it.
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
It is a pleasure to serve under your chairmanship once again, Mr Mundell. I can feel an air of excited sadness in the room because there is a possibility that the Committee may finish its consideration of the Bill today.
May I begin with a small correction relating to remarks that I made on 2 February when discussing dynamic markets? I stated that the current regime for dynamic markets does not remain open for new suppliers to join at any time. I was confused when I was talking about that; I was talking about the new provisions that we are making for open frameworks, where it is now possible for people to jump on. I just wanted to put that on the record.
New clause 3 would require contracting authorities always to undertake a public interest test when considering whether to outsource or continue to outsource a public sector service. Following the collapse of Carillion in January 2018 and the ongoing difficulties of some companies in the outsourcing sector, the Government’s commercial function undertook a review of what we outsource, why we outsource and how we outsource. It concluded that
“when done well, the private sector can bring efficiency, scale and fresh thinking to the delivery of public services.”
In February 2019, we published the first sourcing playbook, which captured key policy reforms for better outsourcing that contracting authorities should follow when considering how best to deliver Government services. This applies whether the contracting authority decides to outsource and deliver a service in partnership with the private and third sector, insource and use in-house resources, or do a mixture of both. That includes carrying out a make-versus-buy assessment, now referred to as a delivery model assessment, which is mandatory for central Government services in certain situations, such as the introduction of new public services or where there is a need to re-evaluate an existing service, for example because of a deterioration in the quality of delivery. It is important to emphasise that the playbook supports a range of delivery models that should be carefully considered as part of a mixed-economy approach to service delivery.
As well as in-house delivery and outsourcing, different models, such as grant making, may also be available. Hon. Members will recall that when I spoke on clause 3, I referred to the types of contracts regulated by the Bill. In particular, contracts must be for pecuniary interest, which can encompass monetary and non-monetary consideration. Contracts merely for the reimbursement of costs and without further remuneration or other direct benefit to the supplier are not covered. We do not, for example, intend the regime to capture contracts for the deployment of grants.
The sourcing playbook, which is now in its third iteration, builds on policies set out in the first sourcing playbook and is a more agile and appropriate place for this type of provision. I recently met the Business Services Association, which was extremely supportive of the playbook approach.
The tests set out in the new clause would be hugely burdensome for any contracting authority every time it is considering outsourcing or re-letting an already outsourced service. For that reason, I ask that the new clause be withdrawn.
Florence Eshalomi
I understand the Minister’s hesitancy about supporting the new clause, which he claims is because of bureaucracy. Does he recognise that many local authorities and others are conducting a big wave of insourcing, including my local authority, Lambeth Council, which decided last year to bring back its cleaning and maintenance service? The feedback from residents was that the contractors providing the outsourced service were not delivering, so the council has now brought it back in-house.
A number of local authorities under different political parties are following in the same vein. The new clause would help us to help them to look at the key issue of value for money and ensure that every pound spent on contracts delivers value for money. The new clause is not about extra bureaucracy, but about taxpayers’ money being spent on the right contracts. Does the Minister agree that the new clause would help those organisations to do that?
Alex Burghart
The hon. Lady gives a very good example of how the existing regime allows for outsourcing. We are building on that: the playbook that I described is there to help all contracting authorities to make better decisions about whether they want to outsource or to keep things in-house. She is quite right that there are circumstances in which keeping things in-house is a very good thing, but we feel strongly that the new clause would create a series of unnecessary requirements when the tools to insource are already at the disposal of authorities.
Question put and negatived.
New Clause 5
Carbon reduction plans
“(1) Subject to subsection (4), contracting authorities must obtain, assess and publish a carbon reduction plan from all suppliers under consideration for qualifying contracts before entering into a public contract with any supplier.
(2) In this section, ‘qualifying contract’ means—
(a) a public contract with an average value of more than £5 million per annum (excluding VAT) over the duration of the contract,
(b) any contract to be awarded under a framework agreement anticipated to be greater than £5 million per annum (excluding VAT) in value, or
(c) any contract to be awarded by reference to a dynamic market which is anticipated to be greater than £5 million per annum (excluding VAT) in value.
(3) For a qualifying contract of the type referred to in subsection (2)(a), a ‘carbon reduction plan’ must contain—
(a) the supplier’s current greenhouse gas emissions,
(b) confirmation of the supplier’s commitment to achieving net zero greenhouse gas emissions by 2050 for their UK supply chain, operations, products and services,
(c) intermediate targets for reductions in their greenhouse gas emissions at no more than 5 year intervals, beginning with the date of award of the contract,
(d) as far as they are able, the greenhouse gas emissions attributable to performance of the contract,
(e) as far as they are able, targets for reductions in those greenhouse gas emissions, and
(f) other environmental management measures in effect which will be applied when performing the contract.
(4) For the qualifying contracts of the type described in subsection (2)(b) and (2)(c), a carbon reduction plan should contain the matters specified in subsection (3)(a), (b) and (c) only.
(5) In complying with requirements imposed by the regulations, a contracting authority must have regard to guidance prepared from time to time by an appropriate authority.
(6) ‘Greenhouse gas’ has the meaning given in section 92 of the Climate Change Act 2008, and ‘emissions’ has the meaning given in section 97 of that Act.”—(Florence Eshalomi.)
This new clause would require company-level carbon reduction plans for bidders for certain larger contracts, including information and targets from suppliers on the emissions attributable to the performance of the contract. It also specifies that the Carbon Reduction Plan must be a key performance indicator for certain contracts.
Brought up, and read the First time.
Florence Eshalomi
New clause 5 would introduce carbon reduction targets for certain large contracts, in general those worth £5 million or more. The new clause is inspired by the Government’s own procurement policy note 06/21, which outlines their intention to take into account suppliers’ plans to reduce carbon emissions when considering large contracts.
Climate change is the biggest threat we face as the human race. Everyone in this room must recognise and agree that we need to reduce emissions urgently if we are to avoid this crisis. We must not ignore or under-appreciate the impact that reforms to our procurement system will have on our carbon emissions. However, I fear that the Bill is a missed opportunity to deliver real change in environmental standards in the procurement system.
That is particularly true considering what the Government have already chosen to remove from the Bill. Removing amendments on social value and the procurement policy statement, for example, that would have incorporated emissions will do nothing to tackle climate change in our procurement system, and there is hardly anything else in the Bill to drive real progress on carbon emissions.
Alex Burghart
New clause 5 would require contracting authorities to obtain carbon reduction plans from suppliers for contracts above £5 million per annum. In 2021, the Government implemented a procurement policy that required suppliers to provide carbon reduction plans when bidding for major Government contracts. The new clause would limit opportunities to amend and improve the policy as our ambition to achieve net zero progresses.
I assure the Committee that contracting authorities will continue to be able to take account of suppliers’ net zero commitments and carbon reduction plans, environmental targets, and climate change where they are relevant to the subject of the contract. The Bill and our existing policies already allow that in individual procurements, which is absolutely in line with the Government’s commitment to achieving net zero by 2050.
A key Government commitment is to encourage small and medium-sized enterprises into the Government supply chain. We are of course mindful of the impact that policy and legislation have on suppliers. The purpose of the Bill is to reduce unnecessary regulatory burdens in the procurement regime to support SME suppliers in winning Government contracts. In our view, contracting authorities are able to deal with these matters as it stands, and we will not be supporting the new clause.
Question put, That the clause be read a Second time.
Florence Eshalomi
I beg to move, That the clause be read a Second time.
The new clause would disapply section 31(2A) of the Senior Courts Act 1981 where a breach of non-discrimination occurs under clause 89 and is caused by a representation to the contracting authority by a Member of Parliament, a Member of the House of Lords or a senior civil servant. In practice, this would ensure that relief is granted in the case of a court finding that there has been unequal treatment between traders as a result of the type of lobbying seen in the VIP lane scandal during the covid-19 pandemic.
In the debate on amendment 103, tabled by the hon. Member for Aberdeen North, the Minister said:
“We understand—indeed, we agree with—the intent behind the amendment, but the Bill already covers such a scenario via robust requirements for contracting authorities to ensure equal treatment and address conflicts of interest. The bottom line is that if a conflict of interest puts a supplier at an unfair advantage, they must be treated as an excluded supplier and cannot be given a direct award.”––[Official Report, Procurement Public Bill Committee, 7 February 2023; c. 139.]
I do not doubt that VIP lanes would breach provisions relating to equal treatment of suppliers, and I do not doubt that those provisions were broken during the VIP lane scandal. In fact, that was at the heart of Mrs Justice O’Farrell’s ruling in the PestFix case last year, in which she stated that the operation of a high-priority VIP lane was
“in breach of the obligation of equal treatment”.
Despite that finding, the plaintiffs in the case were not awarded remedy, and it is unclear what checks and balances are in place to ensure that a future Government will not rely on VIP lanes, even when they know that their application will fall foul of the law. That is summed up by Mrs Justice O’Farrell’s closing remarks:
“In these proceedings, the Claimants have established that operation of the High Priority Lane was in breach of the obligation of equal treatment under the PCR. However, the court has found that, even if PestFix and Ayanda had not been allocated to the High Priority Lane, nevertheless they would have been treated as priority offers because of the substantial volumes of PPE they could supply that were urgently needed. Although there is public interest in the outcome of this challenge, the contracts in question have been performed (or expired) and it is sufficient that the illegality is marked by this judgment. Therefore the granting of relief does not meet the test in section 31(2B). In those circumstances, the court must refuse to grant the relief sought.”
I believe that, at its heart, that ruling shows the flaws in the current system. In debates on other amendments and clauses, I have argued for more transparency in the Bill in relation to conflicts of interest. The Minister knows that the Opposition believe that shining a light on proceedings as early as possible helps to limit the time in which illegal activities can occur. Surely, however, as the Government rejected our earlier amendments, they must see the need to tighten up the consequences of acting against the law. We know that the use of the VIP lane was illegal, and we know that companies that got into the VIP lane were 10 times more likely to win a contract, but the fact is that we do not know whether there have been any real consequences associated with the use of the illegal VIP lane.
I hope the Minister will agree that the public are rightly angry about the use of the VIP lane. They are angry that billions of pounds were wasted on personal protective equipment that was not up to standard. They expect to see justice when illegal activities are carried out. What is the point of putting laws in place if there are no consequences? New clause 6 would tighten up action against activity that breaches rules on conflicts of interest by ensuring that the courts are able to grant relief when lobbying by MPs, peers or senior civil servants results in unfair treatment. I hope the Committee will support the new clause.
Alex Burghart
New clause 6 would, in circumstances where a breach of the non-discrimination principle in clause 89 was caused by a representation to the contracting authority by an MP, lord or senior civil servant, disapply section 31(2A) of the Senior Courts Act 1981 in the context of any judicial review.
Section 31(2A) essentially prohibits a court from granting relief, including awarding damages, where it is highly likely that the conduct complained of did not make a significant difference to the contracting authority’s decision. In other words, the intention of the new clause is to enable a court to grant relief when lobbying for a contract to be awarded to a particular supplier has led to alleged unequal treatment, even where the contracting authority can demonstrate that it would have selected the chosen supplier regardless of any lobbying.
While I understand that the new clause is motivated by a desire to ensure consequences if an MP, lord or senior civil servant lobbies a contracting authority to award a contract to a certain bidder, resulting in the unequal treatment of other suppliers, the Bill is crystal clear with respect to conflicts of interest, and there are consequences if those statutory duties are breached. Clause 81(3) states that if
“a conflict of interest puts a supplier at an unfair advantage”
and if steps to mitigate cannot avoid that advantage, the supplier must be excluded.
Under part 9, suppliers may seek legal remedies, including relief, if they have suffered or are at risk of suffering loss or damages as a result of a breach of statutory duties. Suppliers that have lost out on contracts as a result of such unlawful behaviour are best placed to hold contracting authorities to account.
Additionally, in respect of suspected non-compliances with the Bill, including conflicts of interest that put a supplier at an unfair advantage, an appropriate authority can investigate upon the request of any party, using part 10 of the Bill or other powers, and issue recommendations if commercial practices do not comply with the Bill’s provisions. There is simply no need for the Bill, which has additional remedies for breach of statutory duty, to start interfering with the rule of law applicable to judicial review claims. As a result, we respectfully ask that the new clause be withdrawn.
Question put, That the clause be read a Second time.
Alex Burghart
It is a pleasure to respond to the debate on new clause 7, which mandates a review of the procurement of the fleet solid support ships programme and requires findings to be published by the end of the year. Replying to my friend the hon. Member for Islwyn on this subject is sadly reminiscent of the second Anthony Joshua versus Usyk fight, where Joshua bravely, but unfortunately, deployed similar tactics to the ones he had used previously and met the same conclusion. The hon. Gentleman will be delighted to hear that monitoring is already part of the MOD’s approach to the programme. The MOD will track the process of the overall FSS programme, as well as social value and recapitalisation activities, through regular governance forums such as the project delivery board and the recapitalisation and social value committee.
In support of the forums, Team Resolute is obliged to produce regular reports demonstrating the progress achieved. Examples include reports detailing execution against Harland & Wolff’s shipyard infrastructure works commitments, and earned value progress in terms of design development and the ship build. Additionally, regular site visits will be undertaken by expert personnel in the Department.
I assure the hon. Gentleman that the contract will bring hundreds of jobs to the UK. The majority of the contract spend will take place in the UK, with most manufacture activities taking place in UK shipyards in Belfast and Appledore. All three ships will be integrated at Belfast, along with all testing and commissioning. As he knows, these are large ships, second only in length to the carriers. The use of a world-class auxiliary shipbuilder allows for technology and skills transfer to the UK, and for UK capability and employment to sustainably step up to deliver this contract. Team Resolute also said that it intends to use UK-sourced steel wherever it is practical to do so, and steel will be procured in accordance with Cabinet Office guidelines. It is sad to hear the hon. Gentleman talking this great programme down.
All this work will enable early identification and mitigation action against the risk of non-delivery. Key performance indicators for the programme will be reported against, with several relating to UK labour and the UK supply chain. MOD Ministers will receive regular updates throughout the programme, particularly in relation to UK skills development and ramp-up in the initial stages of the contract. That will supplement other regular reporting on FSS that the MOD has committed to providing to His Majesty’s Treasury.
The Bill sets out the framework for public procurement for contracting authorities generally across England, Wales and Northern Ireland. It is therefore not appropriate to set out requirements for one specific project, the timescale for which is finite. For those reasons, I respectfully request that the amendment be withdrawn.
Question put, That the clause be read a Second time.
Alex Burghart
I am very happy to play Ray Robinson to the hon. Gentleman’s LaMotta. He will remember fondly, as I do, that Jake LaMotta said, “I fought Sugar Ray Robinson so many times, it is a wonder I don’t have diabetes.” I will cease the boxing chat there, Mr Mundell, lest you get up and bite off my ear, as Mike Tyson did to Evander Holyfield in their second fight.
I am pleased to hear the hon. Member for Islwyn say that value for money and transparency lie at the heart of the Bill, because they do, and it is because of those principles that we feel the new clause is unnecessary. However, it is also unnecessary because the National Audit Office already conducts a yearly audit of the defence equipment plan and undertakes regular audits on defence programmes. Further scrutiny of the performance of defence programmes is undertaken by the Infrastructure and Projects Authority, which tracks the progress of projects currently in the Government major projects portfolio, the details of which are published in its annual review. As an independent statutory body, the NAO decides independently of Government where to focus its resources, and determines what projects and public bodies it audits at what point in time. The new clause would interfere with its statutory independence.
At the heart of the proposal is a desire to see defence procurement improve—an objective the Government share—but I encourage the Committee to follow closely the implementation of the Government’s defence and security industrial strategy, published in March 2021, which will increase the pace, agility and management of the Ministry of Defence’s acquisition process. We respectfully request that the new clause be withdrawn.
The Chair
I do not know much about boxing, but I know that when there is no knockout, the judges decide.
Question put, That the clause be read a Second time.
Florence Eshalomi
I beg to move, That the clause be read a Second time.
The new clause would enable a future procurement system to mandate that procurement transactions be carried out in a specific way. It would build on the powers in clause 95 relating to procurement transactions, but take those powers further to ensure that everyone undertaking procurement under this regime uses a well-designed, specified system that is common throughout.
It is rare in a Bill Committee for the Opposition to propose giving unrestrained and optional power to the Government via an amendment or new clause, so I hope the Minister is delighted by our new clause. It is almost a knockout clause, I would say. We understand, and indeed welcome, the measures to introduce some degree of commonality across procurement through methods such as a single online system. Commonality within the procurement system brings many advantages. It can save contracting authorities the time, effort and money of running individual systems; boost the public’s understanding of procurement data and mechanisms, indirectly boosting transparency; and make our procurement system easier to navigate for suppliers, helping SMEs to bid for contracts efficiently, rather than having to shape-shift around the application process.
Around the world, increased commonality has been seen to increase efficiency and create a system that is the envy of the world. The Minister need only speak to one of his own party’s MPs, the hon. Member for West Worcestershire (Harriett Baldwin), about Ukraine’s ProZorro procurement system. Systems such as ProZorro and the Republic of Korea’s procurement system bring in a specified system that is used by everyone and that uses cutting edge digital technology to reduce bureaucracy. That was referenced in the Government’s Green Paper on procurement, which said:
“This lack of standardisation, transparency and interoperability is preventing the UK from harnessing the opportunities that open, common and shared data could bring. The ability to analyse spend, manage suppliers, counter fraud and corruption and see inside the supply chain to ensure compliance with government policies. The experience of other nations (e.g. Ukraine and South Korea) is that driving forward with a clear digital procurement strategy focused on transparency results in greater participation and increased value for money driven by competition.”
There is already international precedent for the introduction of a specified procurement system, and the Government have stated these lofty aims, so why should the Bill not make provision to go further?
Our new clause would not mandate immediate action, because we know that this would be complex and take time to set up. However, should this Government or a future one want to introduce a Ukraine-style system, it would be a shame if they found that difficult under the Bill. I therefore hope that the Minister will agree with us and support the new clause.
Alex Burghart
The hon. Lady’s new clause is on the procurement transaction system. We are absolutely delighted with the Opposition’s enthusiasm for our online system.
The Bill already contains provisions for the establishment of the online system for the purpose of publishing notices, documents and other information under clause 93. It also requires the online system to be free of charge and accessible for people with disabilities. Furthermore, as the Committee will remember, clause 95 requires certain information to be shared in a particular way, including through a specified online system, and requires contracting authorities to keep records of any communication between the authority and a supplier that is made for the purposes of, or in connection with, a covered procurement.
The online system will enable everyone to have better access to public procurement data, in particular because the detailed input received during the early design of the Bill from countries such as Ukraine and South Korea, which have specialist knowledge of designing procurement transparency systems. I am honoured to be able to say that my next meeting after this sitting is with the Deputy Prime Minister of Ukraine, at which we will discuss this very issue. I will thank him for his country’s input to our work going forward in the Cabinet Office.
Florence Eshalomi
Does the Minister not feel that the meeting would be even more beneficial and fantastic if he were to tell the Deputy Prime Minister that he had accepted the new clause?
Alex Burghart
I will be delighted to tell our friends in Ukraine that, because of the advice they gave us earlier, there is no need for the new clause. We have a great partnership with Ukraine, which straddles many areas, and a growing number of them. We have benefited from the Ukrainians’ expertise, and from that of colleagues in South Korea, which has very advanced digital government and economy.
As a result of the work we have done and are doing, citizens will be able to scrutinise spending decisions, suppliers will be able to identify new opportunities to bid and collaborate, and buyers will be able to analyse the market and benchmark their performance against others on spending with SMEs. The Government have already committed to sharing procurement information through the online system, and the new clause would simply replicate requirements that are in the Bill already.
The hon. Member for Vauxhall asked how we know whether future Governments will be bound, but the proposal will happen within the lifetime of this Government. The Government are committed to it, to delivering on it and to learning from the experiences of colleagues abroad. We therefore respectfully ask that the new clause be withdrawn.
Question put, That the clause be read a Second time.
Lloyd Russell-Moyle
Quite right. This housing association had no footprint at all in Brighton and Hove and a very limited footprint in East Sussex. The women who were in that organisation’s housing might find it more difficult to go to them, because it is not a truly independent service.
Whether that is the case or not, what then happened was that the refuges and some of the counselling services that are provided in the city were sub-contracted out to some of the RISE people. So RISE picked up some bits of work, but not all of it. It could not offer the women wraparound support, just support in some very specific areas, so the service potentially became worse for women. A top-slice of the money has been taken out of the area for management and bid-writing fees and costs, which such organisations all take, and given to an organisation that is based nowhere near Sussex and does not have that specialism.
When women then complained and protested during covid, through covid-compliant protests, they were threatened by the police and told their protest was wrong and that they should not be protesting. Interestingly, the police allowed my hon. Friend the Member for Hove (Peter Kyle), the hon. Member for Brighton, Pavilion (Caroline Lucas) and me to address the covid-compliant demonstration. There was no problem with that; it was only as we left that the police pounced on the women organisers, in front of their children, and tried to fine them. That was particularly egregious. I represented those women and said that I would give statements to support them, and in the end the police dropped the case.
Even when women tried to speak up, they were abused and harassed by the police—they were women who have come through domestic violence and who have been RISE service-users. It was important to commission RISE, but it was also important that women themselves had their voices heard. At all stages—in the commissioning and the outcome—women’s voices were removed and shut down. New clause 16 would give that protection.
Even if the Minister does not support the new clause—I would like him to, but I assume he might not—I hope he will reassure us that he will strengthen the section in the guidelines on women-specific services, such as those who have suffered domestic abuse, and place additional emphasis put on ensuring that local women’s voices are heard, while also allowing some of the competitive tendering to be waived. That is already possible, but we need stronger guidelines, particularly for multi-authority procurement. We will push the new clause to a vote, but I hope the Minister provides those reassurances, as I suspect we all broadly agree on the issue.
Alex Burghart
New clause 16 seeks to ensure that authorities have regard to social value when carrying out procurement for services to support victims of violence against women and girls. Before I discuss the specifics, I should say that the Committee has debated over several days the centrality to this legislation of the fact that we are moving from a world of most economically advantageous tender to most advantageous tender—from MEAT to MAT. That gives contracting authorities the opportunity to make decisions that are not based solely on economic advantage. That will cover all areas, not just the specific area outlined in the new clause.
There is already a legal requirement in this area. Contracting authorities are already required to consider how social value might be improved for all types of service contracts under the Public Services (Social Value) Act 2012. That Act requires the authority to consider when placing a public service contract
“how what is proposed to be procured might improve the economic, social and environmental well-being of the area where the authority primarily exercises its functions, and how, in conducting the process of procurement, it might act with a view to securing that improvement.”
Florence Eshalomi
I thank the Minister for his remarks, but does he understand the concerns raised by local and national women’s charities? They say that the current guidance does not go far enough and, in their experience, they feel the guidance is ignored in many cases or given very little weighting in the contracts that are then awarded. Does the Minister agree that those organisations have valid concerns?
Alex Burghart
I understand what the hon. Lady is saying. Obviously, the 2012 Act will continue to apply to procurement of services to support victims of violence against women and girls. Moreover, the public benefit objective in clause 12(1)(b) requires contracting authorities to consider the extent to which public money spent on their contracts can deliver greater social value than it otherwise would, for example by encouraging local specialist service providers that understand the particular needs of the communities they serve.
With the combination of existing legislation and this new legislation, with its emphasis on MAT rather than MEAT, we feel that the duty in new clause 16 already exists in law. I therefore respectfully ask that the new clause be withdrawn.
Question put, That the clause be read a Second time.
Alex Burghart
New clause 18, which was tabled by the hon. Member for Nottingham North (Alex Norris), would allow public authorities to apply their own policies, under which they would not procure from certain countries because of those countries’ human rights conduct.
It is obviously right and good that human rights abuses have no place in public supply chains, but the new clause is unnecessary and would give authorities too broad a discretion to apply blanket boycotts. Although the new clause would not allow for the singling-out of individual countries, it would allow authorities to exclude suppliers from entire nations without any consideration of whether a supplier itself has had any involvement in abuses or of the steps a supplier has taken to self-clean, both of which are important features of the new exclusions regime to manage risk appropriately and fairly.
Excluding suppliers based on where they are located would be disproportionate and in some cases would be contrary to the UK’s international obligations. The Bill already contains a robust regime for the exclusion of suppliers that are unfit to hold public contracts. Schedules 6 and 7 set out a wide range of exclusion grounds that target the most serious risks to public procurement, including modern slavery and human trafficking. We have taken action to strengthen the way in which those terms are defined, so that suppliers may be excluded where there is sufficient evidence that they are responsible for human rights abuses anywhere in the world, whether or not they have been convicted of an offence.
Guidance already exists to help contracting authorities to address human rights risks and there is well-established practice during procurements. The guidance is detailed, at over 40 pages long, and includes sections on managing risk from new procurements to assessing existing contracts, taking action when victims of modern slavery are identified, supply chain mapping, useful tools, training, and questions to ask.
I will also highlight the new debarment regime provided for in the Bill, which allows Ministers to consider whether any supplier meets one of the grounds for exclusion and whether the issues in question are likely to recur. Suppliers on the debarment list face exclusion across the public sector. This is a significant step forward in our approach to supplier misconduct.
We respectfully request that the new clause be withdrawn.
Question put, That the clause be read a Second time.
Alex Burghart
Thank you, Mr Mundell, for chairing so ably and excellently. I thank the Clerks for their fantastic work. I thank my tireless officials, without whose expertise I would not know what to do. I thank Committee members on both sides of the divide. It is only fair to record in Hansard that the Committee has been good-natured, intelligent and at times almost enjoyable. I thank His Majesty’s loyal Opposition for supporting the overall thrust of the Bill, although they do not agree with every detail. We left it in better shape than when it arrived, and I look forward to working with everyone to take it through Report and to Royal Assent.
Florence Eshalomi
I echo the Minister’s comments. I formally thank the Clerks—Sarah, Chris and Huw—for their endless emails and helping me to understand the groupings and procedure. I will be honest and let hon. Members know that this is my first time leading on a Bill Committee. Many years ago, trying to tell a girl from a council estate in Brixton that she would be leading for the Opposition on such a technical Bill would have been out of the question.
The issues that we have discussed are so important. I hope the Minister will see from some of the points that we have made and the amendments that we have tabled that we have an opportunity to ensure that procurement works for everybody, including those from council estates, who may not understand it but will see the impact on their everyday lives. I look forward to discussing the Bill robustly with the Minister again as it goes through its next phases.
Procurement Bill [ Lords ] (Eighth sitting)
Alex Burghart ExcerptsThursday 9th February 2023
(1 year, 9 months ago)
Public Bill CommitteesRead Full debate Procurement Act 2023 View all Procurement Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 9 February 2023 - (9 Feb 2023)
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
I beg to move amendment 66, in clause 107, page 70, line 3, leave out “only” and insert “wholly or mainly”.
This amendment would mean that a public undertaking or private utility that operates “wholly or mainly in relation to Wales” will be treated as a devolved Welsh authority.
The Chair
With this it will be convenient to discuss the following:
Government amendment 67.
Clause stand part.
Clause 108 stand part.
Government amendment 68.
Clauses 109 and 110 stand part.
Government amendments 70 to 73.
Clause 111 stand part.
Alex Burghart
It is a pleasure to open this afternoon’s proceedings with this substantial grouping. I will begin with amendments 66 and 67. The Bill provides Welsh Ministers with various powers, and clause 107 sets out the parameters for their exercise by specifying the bodies that Welsh Ministers may regulate. Welsh Ministers may exercise powers under the Bill only in relation to devolved Welsh authorities and procurements covered
“under a devolved Welsh procurement arrangement.”
The Bill adopts the definition of a “devolved Welsh authority” found in section 157A of the Government of Wales Act 2006 and extends it, for the purposes of the Bill, to include certain public undertakings and private utilities, and other contracting authorities that ought reasonably to be regulated by Welsh Ministers for pragmatic reasons.
As the Bill was introduced, we recognised that the competence was ill-defined with respect to Welsh contracting authorities, and that it would have the effect of requiring devolved contracting authorities that operate principally in Wales but have some operations in England to follow two sets of rules. We have been working closely with the Welsh Government to include a pragmatic approach to the definition in the Bill. As such, we have agreed with the Welsh Government to include in their competence, for the purposes of the Bill, any contracting authority that is a private entity or utility that operates
“wholly or mainly in relation to Wales”
and whose activities
“do not relate to reserved matters”.
For example, Welsh Water, a not-for-profit private company providing water services in Wales, would fall into that category.
Finally, we have also agreed to extend Welsh Ministers’ competence in relation to a contracting authority that is not a devolved body for the purposes of the 2006 Act, but the functions of which are exercisable “wholly or mainly” in Wales and, wholly or mainly,
“do not relate to reserved matters”.
I am pleased to introduce the amendments and recognise that this is a pragmatic solution for many public bodies who operate, for example, in Herefordshire and across the border in Powys.
Turning to amendment 68, clause 109, which we will cover in a moment, establishes that
“A Minister of the Crown may exercise a power under this Act for the purpose of regulating a contracting authority that is a devolved Welsh authority only in relation”
to certain areas. The Welsh Government raised concerns that, as drafted, clause 121 would give an appropriate authority—in this instance defined as a Minister of the Crown—the power to
“by regulations make supplementary, incidental or consequential provision in connection with any provision of this Act.”
The provision set out in clause 121 is used to amend other legislation, where necessary, to ensure the functioning of the Bill, and it is right that Welsh Ministers should be able to agree to any subsequent amendment to legislation within their competence. I am pleased to change this so that any power for Ministers of the Crown to make consequential provision requires consent. That respects the devolved competence of procurement and makes practical sense for the Bill. I thank Welsh Government officials and Ministers for working closely to agree these important amendments.
As we have discussed, clause 107 sets out the parameters for the exercise of powers provided to Welsh Ministers by specifying the bodies that they may regulate. The Bill provides a Northern Ireland Department with various powers, and clause 108 sets out the parameters for their exercise by specifying the bodies that a Northern Ireland Department may regulate. A Northern Ireland Department may exercise powers under the Bill only in relation to “transferred Northern Ireland authorities”, as defined in the Bill, and any
“procurement under a transferred Northern Ireland procurement arrangement.”
For example, the Northern Ireland Department sets up a framework for services that could be used by UK or Welsh contracting authorities.
The starting point of the competence of Northern Ireland Departments is that conferred on them by the Northern Ireland Act 1998, which is that they are competent in respect of a public authority whose functions are exercisable only
“in or as regards Northern Ireland”
and are wholly or mainly transferred functions—that is, neither reserved nor excepted.
In addition, we have agreed with the Northern Irish Government to include within their competence, for the purposes of the Bill, any public or private utility that operates only in, or as regards, Northern Ireland and whose activities do not relate to reserved matters. For example, Northern Ireland Water Ltd, a company providing water services in Northern Ireland, would fall within that category.
Clause 109 sets out certain restrictions on how a Minister of the Crown may exercise powers created by the Bill, taking into account that public procurement is largely a devolved matter in Wales and Northern Ireland and that, as such, certain functions fall within the regulatory ambit of Welsh Ministers or a Northern Ireland Department. The clause sets out how, where two bodies can both exercise powers, those concurrent powers are to be exercised.
The clause establishes that a Minister of the Crown may exercise a power under the Bill for the purpose of regulating a devolved Welsh authority only in relation to procurement under a reserved procurement arrangement or transferred Northern Ireland procurement arrangement. In respect of Wales, this means that if a Welsh devolved authority uses a framework or dynamic market established by a reserved body such as the Crown Commercial Service, it must do so in accordance with reserved rules. That means, for example, that they must have regard to any national procurement policy statement issued by a Minister of the Crown, rather than a policy statement issued by Welsh Ministers.
That restriction, however, does not extend to clause 66 on electronic invoicing or to clause 106 on the issuing of guidance following a procurement investigation. Instead, these powers, and the powers in clause 121 on consequential provision, can be exercised in respect of devolved Welsh procurement only with the consent of Welsh Ministers. No such consent is required if the regulations or guidance relate to a devolved Welsh authority’s participation in a reserved or a Northern Ireland procurement arrangement.
Clause 109 also establishes that a Minister of the Crown may exercise a power under the Bill for the purpose of regulating a transferred Northern Ireland authority only with the consent of a Northern Ireland Department, unless the regulations relate to procurement under a reserved or a devolved Welsh procurement arrangement authority. As in the Welsh example, this means that, if a transferred Northern Ireland authority procures via a reserved framework or dynamic market, for example, it must follow regulations made by a Minister of the Crown. Similarly to the position on devolved Welsh procurement, a Minister of the Crown may not publish guidance under clause 106 that would regulate a Northern Ireland Department without consent, unless the guidance relates to reserved procurement or devolved Welsh procurement.
Finally, clause 109 provides that the restrictions on the powers of a Minister of the Crown in respect of devolved Welsh procurement and transferred Northern Ireland procurement do not apply in relation to certain named powers, including the powers to update schedule 9 to the Bill to ensure the application of new or amended free trade agreements and to ensure their implementation in respect of devolved Scottish procurement, and the power to make provision to allow the UK to respond to trade disputes.
Clause 110 defines the different types of “procurement arrangement” referred to in the Bill. The term is used primarily in clause 111, which provides powers to ensure that all UK bodies, devolved and reserved, can continue to work with one another and across the UK’s internal borders when undertaking procurements under one another’s procurement arrangements.
I turn to amendments 70 to 73. As the Committee is aware, procurement is a devolved matter, and Scotland already has its own procurement rules. Hon. Members may not be aware that Scottish devolved bodies are presently able to access commercial deals set up in the rest of the UK, and vice versa. Therefore, to enable devolved Scottish bodies to continue to use commercial tools such as frameworks established under the new regime, and to provide access for reserved contracting authorities to Scottish frameworks, the Scottish procurement regulations will need to be amended. As the Bill is drafted, a Minister of the Crown, as well as Scottish Ministers, can amend Scottish regulations for that purpose.
For context, having the power for a Minister of the Crown to amend Scottish regulation was a contingency power, should we be unable to agree with the Scottish Government on how the Bill would be implemented. I am pleased to say that we have an agreement in principle on how to proceed, subject to the normal parliamentary arrangements in both Parliaments, and there is therefore no requirement for the UK Government to be able to amend the Scottish procurement regulations. We are therefore amending the Bill to remove that power for Ministers of the Crown.
At the same time, the UK Government will lay regulations to ensure that devolved Scottish contracting authorities can access frameworks and other commercial tools established under the new regime. When that happens, it will be necessary for Scottish Ministers to disapply their regulations, as they have agreed to do. We propose amending clause 111 to ensure that they can do so and expanding it slightly to ensure that the power covers all Scottish procurement rules.
Clause 111 therefore sets out a series of regulation-making powers that will be used to ensure that procurement bodies across the UK can continue to work with one another and across the UK’s internal borders when undertaking procurements. First, the clause provides powers for a Minister of the Crown to regulate procurements by devolved Scottish authorities under purchasing arrangements set up by reserved authorities or by devolved Welsh or Northern Ireland authorities. That will ensure that devolved Scottish authorities can make use of frameworks and dynamic markets established by other UK authorities, benefit from procurements undertaken by centralised procurement authorities, and jointly procure with other UK authorities acting as the lead authority. In those circumstances, devolved Scottish authorities will be required to follow certain rules in the Bill, details of which will be set out in secondary legislation.
The clause also provides powers for a Minister of the Crown to disapply the Bill’s provisions for reserved authorities, devolved Welsh authorities and devolved Northern Ireland authorities when they are procuring under purchasing arrangements established by devolved Scottish authorities. That will allow those authorities to benefit from arrangements put in place under the Scottish regulations and to undertake joint procurement with devolved Scottish authorities acting as the lead authority.
The clause also creates new powers giving Scottish Ministers the competence to amend Scottish procurement legislation to apply it to reserved authorities subject to the Bill when procuring under purchasing arrangements established by devolved Scottish authorities. Scottish Ministers are also given a power to disapply devolved procurement regulations where a devolved Scottish contracting authority procures using commercial tools set up under the Bill. That arrangement was reached after lengthy consultation with the Scottish Government, and I am delighted to say that they are pleased with the results.
Florence Eshalomi (Vauxhall) (Lab/Co-op)
I thank the Minister for outlining the discussions with Scottish and Welsh colleagues. As he said, clauses 107 to 110 set out the devolutionary roles and responsibilities of the Welsh, Northern Irish and UK Ministers. Although Wales and Northern Ireland have opted to be part of this procurement system, they will still keep the appropriate regulatory powers within the Bill.
I will not repeat the excellent speech from my Front-Bench colleague, my hon. Friend the Member for Islwyn, on clause 14—it is fair to say that he has had more exposure to Welsh procurement than I have. However, we Labour Members are very proud of our colleagues in Wales and their strong record on procurement.
We are pleased that the Welsh and Northern Irish Governments are adopting the Bill. As my hon. Friend mentioned on clause 14, this is about respect for devolution and for the will of the people of Wales and Northern Ireland. These clauses are about enshrining that respect into law, ensuring that all authorities under the Bill discharge their powers in the right and appropriate manner, and giving everyone involved the flexibility to set the system that their people want. As such, and following the Minister’s remarks, we do not find the clauses disagreeable and will not oppose them.
Lastly, amendments 66 to 68 and 70 to 73 make minor tweaks to the balance of this part of the Bill. Again, we feel that the amendments are fine and are not disagreeable, so we will not oppose them.
Amendment 66 agreed to.
Amendment made: 67, in clause 107, page 70, line 12, leave out paragraph (b)—(Alex Burghart.)
This amendment would mean that a contracting authority whose functions are exercisable “wholly or mainly in relation to Wales” will be treated as a devolved Welsh authority regardless of the subject-matter of a particular procurement.
Alex Burghart
I beg to move amendment 113, in clause 107, page 70, line 14, after “section” insert “and section 123 (commencement)”.
This amendment is consequential on Amendment 115.
Alex Burghart
Amendment 115, on commencement powers, will amend clause 123 and require consequential amendments to clause 107. The amendment will make the commencement of devolved Welsh aspects of the Bill subject to the consent of the Welsh Ministers, and allow UK Ministers to amend the Act resulting from the Bill so that it no longer applies in respect of devolved Welsh procurement and could be commenced without consent in respect of procurement in England and Northern Ireland, and all reserved procurement, including that in Wales.
Amendments 113 and 114 are consequential amendments that amend clause 107, which we have discussed already.
Florence Eshalomi
It is reassuring to hear the Minister’s additional update from the Welsh Government and that they support the arrangements. The amendments mandate the consent of Welsh Ministers while making procurement, and allow for the exclusion of Welsh procurement from the provisions of the Act. In essence, they mean that Welsh Ministers have to consent to the Act, but that UK Ministers can exclude Welsh procurement from the regime. In practice, I assume that the proposals will ensure that Wales consents to the Act but that, should it not, a UK Minister can remove it from the system and then commence the Act without the consent of Welsh Ministers.
This is a sensible amendment that underlines the respect for the Welsh Government, and we are right to expect that from the Bill. As the Minister outlined, it is good that there is support. We are content with the amendments and will not oppose them.
Amendment 113 agreed to.
Clause 107, as amended, ordered to stand part of the Bill.
Clause 108 ordered to stand part of the Bill.
Clause 109
Minister of the Crown: restrictions on the exercise of powers
Amendments made: 68, in clause 109, page 71, line 12, after “section 66” insert “or section 121”.
This amendment would mean that a Minister of the Crown could not make consequential provision for the purpose of regulating a devolved Welsh authority without the consent of Welsh Ministers.
Amendment 69, in clause 109, page 71, line 32, at end insert—
“(ba) section (Trade disputes) (trade disputes);”.—(Alex Burghart.)
This amendment would allow a Minister of the Crown to exercise the trade dispute power under NC11 in relation to devolved Welsh authorities and transferred Northern Ireland authorities.
Clause 109, as amended, ordered to stand part of the Bill.
Clause 110 ordered to stand part of the Bill.
Clause 111
Powers relating to procurement arrangements
Amendments made: 70, in clause 111, page 73, line 4, leave out—
“A Minister of the Crown or”.
This amendment would remove the power of a Minister of the Crown to amend Scottish procurement legislation to apply it to procurement under devolved Scottish procurement arrangements by contracting authorities.
Amendment 71, in clause 111, page 73, line 5, leave out from “of” to end of line 7 and insert—
“(a) applying it in relation to procurement carried out by contracting authorities under devolved Scottish procurement arrangements;
(a) disapplying it in relation to procurement carried out by devolved Scottish authorities under—
(i) reserved procurement arrangements,
(ii) devolved Welsh procurement arrangements, or
(iii) transferred Northern Ireland procurement arrangements.”
This amendment would give the Scottish Ministers power to amend Scottish procurement legislation to disapply that legislation where procurement by devolved Scottish authorities may be regulated by provision made by a Minister of the Crown under subsection (1).
Amendment 72, in clause 111, page 73, line 8, at end insert—
“(za) the Procurement Reform (Scotland) Act 2014 (asp 12),”.
This amendment would extend the definition of “Scottish procurement legislation” to include the Procurement Reform (Scotland) Act 2014.
Amendment 73, in clause 111, page 73, line 13, leave out “those regulations” and insert “that legislation”.—(Alex Burghart.)
This amendment is consequential on Amendment 72.
Clause 111, as amended, ordered to stand part of the Bill.
Clause 112
Disapplication of duty in section 17 of the Local Government Act 1988
Question proposed, That the clause stand part of the Bill.
Alex Burghart
The clause ensures that authorities to which section 17 of the Local Government Act 1988 applies are not prevented by that section from complying with their obligations under the Procurement Bill. It also enables a Minister of the Crown or Welsh Ministers to make regulations to disapply, when required, a duty under section 17 of the Act.
The clause ensures that authorities covered by the 1988 Act can take advantage of domestic procurement policies. As stated in the other place, we intend to use clause 112 for the first time, once enacted, to make regulations so that local authorities may take advantage of the policy of December 2020 so that below-threshold procurements may be reserved to UK suppliers only, or to UK small and medium-sized enterprises or voluntary, community and social enterprises in a particular region or county of the UK.
As section 17 of the Act precludes local authorities from awarding public supply or works contracts by supplier location, tabling regulations under the clause will ensure that local authorities can take advantage of that permitted flexibility, already available to central Government Departments, in respect of lower value contracts.
Florence Eshalomi
The clause interacts with section 17 of the Local Government Act, which placed a duty on certain authorities not to consider non-commercial elements when awarding or managing certain contracts. The amendment to the section is necessary for the new procurement regime, in particular given the move from most economically advantageous tender to most advantageous tender. The clause will also give Ministers the power to disapply the Act via regulations. That could be used, to give an example from the explanatory notes, to allow relevant authorities to reserve below-threshold procurements by location and/or small and medium business size status. We support and welcome the measures and will not oppose clause stand part.
Question put and agreed to.
Clause 112 accordingly ordered to stand part of the Bill.
Clause 113
Single source defence contracts
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss that schedule 10 be the Tenth schedule to the Bill.
Alex Burghart
The clause introduces schedule 10, which amends the Defence Reform Act 2014 to enable reforms to the Single Source Contract Regulations 2014. The regulations continue to work well to deliver their objectives of ensuring value for money for the taxpayer and a fair price for industry. However, delivering the defence and security industrial strategy and building on experience since 2014 means some reforms are needed. They will ensure that the single source procurement regime can continue to deliver in traditional defence contracts and be applied effectively across the breadth of single source defence work in the future.
In paragraph 2(2) and 2(4) of schedule 10, we are taking a power to clarify that some cross-Government single source contracts with a substantial defence element will come under the Defence Reform Act regime. That will provide assurance on value for money on a greater proportion of single source defence expenditure.
We are increasing the flexibility of the regime by taking a power in paragraphs 3(2) and 3(8) of schedule 10 to enable contracts to be considered in distinct components with different profit rates being applied to different parts of a contract, where that makes sense. Further flexibility in the regime will be provided by a power in paragraph 3(3) to specify circumstances under which a fair price for all or part of a contract can be demonstrated in ways other than by reference to the pricing formula in the Defence Reform Act. Circumstances for using such an approach will be set out in regulations and will include, for example when an item has previously been sold in an open market or where a price is regulated by another regime.
We are simplifying the contract negotiation process by amendments in paragraph 9(3)(a) of schedule 10, which will ensure that the contract better reflects the financial risks involved, and in paragraph 8(3)(e), by taking a power that will clarify how the incentive adjustment should be applied. We are also removing two steps from the current six-step profit setting process. The amendment in paragraph 9(3)(b) will abolish the funding adjustment for the Single Source Regulations Office or SSRO. The same paragraph will also remove the adjustment that ensures that profit can be taken on a contract only once. That issue is dealt with through allowable costs by virtue of paragraph 12(3) of schedule 10.
We are simplifying some reporting requirements by way of amendments in paragraph 13 of schedule 10 to reflect concerns expressed by suppliers and to make compliance with the regulations more straightforward. We are making better use of the expertise of the SSRO by way of the amendments in paragraphs 18 and 19 by enhancing its power to issue guidance, and clarifying and expanding the range of issues on which it can adjudicate. That will empower the SSRO to play a greater role in speeding up the contract negotiation process.
Chris Evans (Islwyn) (Lab/Co-op)
I thank the Minister for his explanation of the clause, which is related to the Defence Reform Act 2014, which created the Single Source Regulations Office. I have only a question or two about the clause: is there any effect on that office? How does he envisage the regulations he mentioned developing over time? He has already said the regulations will be laid in due course, but can he give the Committee any idea of what they will look like in the new regime proposed in the clause?
Alex Burghart
With reference to the SSCR, where we procure in the absence of competition it remains vital that we strike the right balance between, on the one hand, paying contractors fair prices for the goods and services we buy and, on the other, providing assurance that the taxpayer is getting value for money. Experience from before 2014 showed that a non-legislative approach was insufficient to achieve that balance. The amendment in schedule 10 will apply only to contracts that are substantially for defence purposes. The criteria for including a contract will be set out in secondary legislation. To the hon. Gentleman’s point, that is necessary because it is not generally possible to price the defence elements of such contracts separately in primary legislation, so we need the flexibility in secondary legislation.
Chris Evans
I hear what the Minister says about regulations. Will that have any effect on the profit margins set by the SSRO?
Alex Burghart
That will depend on what the regulations were, which is for discussion at a future point.
Question put and agreed to.
Clause 113 accordingly ordered to stand part of the Bill.
Schedule 10 agreed to.
Clause 114
Concurrent powers and the Government of Wales Act 2006
Question proposed, That the clause stand part of the Bill.
Alex Burghart
The clause makes it clear that certain restrictions on the legislative competence of the Senedd do not apply in relation to powers granted to Welsh Ministers under the Bill. That ensures that Welsh Ministers can exercise the legislative powers granted to them under the Bill, and amendments to the Government of Wales Act 2006 are not uncommon in Westminster legislation that grants powers to Welsh Ministers.
Florence Eshalomi
As the Minister said, the clause contains provisions about the Welsh Government and actions that they can and cannot take on procurement. The clause makes a short and technical amendment that removes the prohibitions on the Senedd to legislate on qualified devolved functions in this area. We see no reason to oppose the removal of the prohibition, so we are happy for the clause to stand part.
Question put and agreed to.
Clause 114 accordingly ordered to stand part of the Bill.
Clause 115
Repeals etc
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss that schedule 11 be the Eleventh schedule to the Bill.
Alex Burghart
The clause and schedule 11 between them set out the legislation that will be repealed, revoked and disapplied once the Bill comes into effect. That includes the Public Contracts Regulations 2015, the Concession Contracts Regulations 2016, the Utilities Contracts Regulations 2016 and the Defence and Security Public Contracts Regulations 2011, which make up the existing procurement regime for England and Wales, and for Northern Ireland.
Florence Eshalomi
The clause repeals a number of pieces of primary and secondary legislation, as outlined in schedule 11. In practice, the clause and schedule will repeal the current procurement system under the likes of the Public Contracts Regulations 2015.
It is a little unusual that, under schedule 11, we will repeal part of a Bill that is matching this Bill stage for stage in its passage through this House. In fact, I believe that the Trade (Australia and New Zealand) Bill had its Second Reading in the other place just hours before we had Second Reading of this Bill. I know from the Minister’s references that he is fond of boxing, and I wonder which one of those two titanic pieces of legislation will win the bout against the rigmarole of getting a Bill through Parliament? We need to get the Bill through, but perhaps the trade Bill will be one of the fastest enacted pieces of legislation to pass through the House. Labour Members understand why the measure is necessary, however, to ensure that there are no gaps should this Bill take longer to pass through Parliament.
We also understand why we cannot have two procurement systems in place at the same time. As previously stated, we feel that the Bill is a step forward in addressing some of the issues in our procurement system that were introduced by the likes of the public contracts regulations. Many provisions that are part of those regulations have been brought into the Bill, and others have been improved on. We feel that the Bill could have gone further in many ways, and we will continue to argue for amendments in those areas for the rest of our proceedings in Committee and on Report, but we share the view that it will bring benefits to our procurement system as a whole. We will therefore not oppose the repeals alongside the enactment of the Bill.
Question put and agreed to.
Clause 115 accordingly ordered to stand part of the Bill.
Schedule 11 agreed to.
Clause 116 disagreed to.
Clause 117
Power to amend this Act in relation to private utilities
Question proposed, That the clause stand part of the Bill.
Alex Burghart
The clause provides a power for an appropriate authority to make regulations to reduce the regulation of private utilities under the Bill. That power may be used, for example, to disapply particular provisions or to modify them to reduce the regulatory burden, such as to reduce financial costs or administrative burdens.
In the UK, regulators such as Ofgem and Ofwat have promoted competition in many utility markets and provided a proxy for competition, with protection of consumers’ interests at its heart where that is not feasible. That oversight of private utilities justifies minimising the regulatory burden on them to avoid passing costs to customers.
As the Bill provides in clauses 89 and 97 that contracting authorities owe a duty to “treaty state suppliers”—that is, suppliers entitled to the benefit of international trade agreements—to comply with a substantial part of the Bill, the power can be exercised to make amendments only where they do not put the UK in breach of its obligations to those suppliers. The Bill already includes a number of measures that reduce the regulatory burden for private utilities, such as the transparency requirements being pared back to the minimum required by international trade agreements.
Parliament and interested parties will have ample opportunity to scrutinise any amendments proposed to be made under the power, as clause 117 requires consultation prior to making regulations. Parliament will rightly be able to scrutinise the regulations under the affirmative procedure.
Florence Eshalomi
The clause pertains to the ability to reduce regulations in relation to private utilities. It is important that the Bill does not create regulatory burdens where they are not necessary. The clause gives powers to ensure that the Bill can be amended to disapply parts of it in relation to private utilities.
Several exceptions for private utilities already exist throughout the Bill: for example, on the policy statements, the publication of certain information and assessing contract performance. Of course, that does not mean that private utilities do not go unregulated. It is important that groups such as Ofgem regulate the gas and electricity market, but it would be burdensome to have several different frameworks of regulation applying to bodies where they are not needed. That can end up duplicating regulation and creating unnecessary bureaucracy, and simplifying frameworks is one of the main reasons that the Bill is before us.
We believe that our private utilities should be regulated, particularly at a time when we see so many people up and down the country feeling the pain of skyrocketing energy bills this winter, but it must be done via the appropriate channels. For that reason, we are minded not to oppose the clause. However, I hope the Minister can briefly justify when the clause will be necessary and say that the powers will not be used overzealously.
In its report on the Bill, the Delegated Powers and Regulatory Reform Committee said:
“The Committee considered that there was inadequate justification for taking a power to make regulations for the deregulation of private utilities under the Bill. They considered that Ministers should explain more fully the proposed use of the power and unless the Government can fully justify it, the breadth of the power should be narrowed.”
In their response, the Government said:
“The power is limited by our international obligations. This means that we must retain some regulation of private utilities in order to comply with our trade agreements such as notice requirements and rules on conditions for participation and award criteria.”
How does that limitation play out in practice? What parts of regulation will be hard-locked into the system by it, and what parts will be open to amendment by the clause? In addition, does a mechanism exist to reapply regulation where it has been disapplied by the clause? It seems wrong for it to be the case that we could disapply bits of the Bill quickly but, should we realise that it was a mistake or maybe want to disapply the provisions only temporarily, the bar to reapply an existing regulation under the Bill would be a lot higher. Can the Minister inform me how that can be done, and what can be done in those cases?
As I mentioned, we are minded not to oppose the clause, but I would be grateful if the Minister could address some of those points.
Alex Burghart
Under the Bill, we have already reduced the regulatory burden for all types of contracting authorities, not just private utilities. Because the four sets of regulations will be streamlined into a single regime, it will be clearer for public authorities, which may currently need to use two or three of these sets of regulations, what rules they need to follow. All contracting authorities will benefit from a simpler, more flexible and commercial system that better meets our country’s needs while remaining compliant with our international obligations. We think it is right to go further for private utilities, as they operate in markets that are regulated in other ways—for example, by regulators such as Ofgem—and are more competitive and commercial.
As the hon. Member for Vauxhall said, the UK is party to trade agreements—for example, the UK-Switzerland trade agreement and the UK-EU trade and co-operation agreement—that require us to ensure that private utilities allow suppliers from those countries to participate in procurements covered by the relevant agreement. Under those agreements, suppliers from those countries have access to procurements by private utilities operating in sectors such as gas and heat, electricity, water, transport services and ports and airports. It is right that we are deregulating utilities, because they operate in different markets and we must have a pragmatic approach.
Question put and agreed to.
Clause 117 accordingly ordered to stand part of the Bill.
Clause 118
Regulations
Amendments made: 75, in clause 118, page 75, line 21, at end insert—
“(da) section 52 (key performance indicators);”.
This amendment would apply the affirmative procedure to an exercise of powers by a Minister of the Crown under clause 52.
Amendment 76, in clause 118, page 75, line 23, leave out paragraph (f).
This amendment is consequential on the Government‘s intention to replace the power in clause 64 with the substantive provision in NC15.
Amendment 77, in clause 118, page 75, line 29, at end insert—
“(la) section (Trade disputes) (trade disputes);”.
This amendment would apply the affirmative procedure to an exercise of powers by a Minister of the Crown under the new trade disputes clause in NC11.
Amendment 114, in clause 118, page 75, line 39, at end insert—
“(ua) section 123(6) (exclusion of devolved Welsh authorities);”.
This amendment would subject the power added by Amendment 115 to the affirmative procedure.
Amendment 78, in clause 118, page 76, line 21, at end insert—
“(ca) section 52 (key performance indicators);”.
This amendment would apply the affirmative procedure to an exercise of powers by the Welsh Ministers under clause 52.
Amendment 79, in clause 118, page 76, line 26, at end insert—
“(ha) section (Trade disputes) (trade disputes);”.
This amendment would apply the affirmative procedure to an exercise of powers by the Welsh Ministers under the new trade disputes clause in NC11.
Amendment 80, in clause 118, page 76, line 47, at end insert—
“(ca) section 52 (key performance indicators);”.
This amendment would apply the affirmative procedure to an exercise of powers by a Northern Ireland department under clause 52.
Amendment 81, in clause 118, page 77, line 1, at end insert—
“(da) section (Trade disputes) (trade disputes);”.
This amendment would apply the affirmative procedure to an exercise of powers by a Northern Ireland department under the new trade disputes clause in NC11.
Amendment 82, in clause 118, page 77, line 15, leave out from “under” to end of line 16 and insert “any of the following provisions”.
This amendment is preliminary to Amendment 83.
Amendment 83, in clause 118, page 77, line 18, at end insert—
“(a) section 90 (treaty state suppliers: non-discrimination);
(b) section (Trade disputes) (trade disputes);
(c) section 111 (powers relating to procurement arrangements).”—(Alex Burghart.)
This amendment would apply the affirmative procedure to an exercise of powers by Scottish Ministers under the new trade disputes clause in NC11.
Question proposed, That the clause, as amended, stand part of the Bill.
Alex Burghart
Clause 118 sets out the relevant procedures associated with the making of regulations under the Bill. They must be exercised by statutory instrument or equivalent powers in relation to Scotland and Northern Ireland.
Where a power is exercised by a Minister of the Crown, the powers listed in subsection (4) are subject to the affirmative procedure, those made under clause 42 are subject to the made affirmative procedure and, with the exception of commencement regulations, the rest are subject to the negative procedure.
Where powers are exercised by Welsh Ministers, those set out in clause 118(10) are subject to the affirmative procedure and all other powers are subject to the negative procedure. Similarly, where powers are exercised by a Northern Ireland Department, those set out in subsection (12) are subject to the affirmative procedure, and all others to the negative. Regulations made by Scottish Ministers under clauses 90 and 111 are subject to the affirmative procedure applicable in proceedings of the Scottish Parliament.
Florence Eshalomi
Clause 118 outlines the powers and restrictions related to regulations that can be passed under the Bill. We all understand the point of secondary legislation. We do not oppose its use in this Bill, nor do we oppose the clause. However, we share the concern of the Delegated Powers and Regulatory Reform Committee about the scale of the use of delegated powers. Its report states:
“This report identifies multiple failures in the Memorandum to adequately explain and justify very broad delegations of power which enable implementation of significant policy change by delegated legislation. This would give us cause for concern at any time but is particularly disappointing as it comes so soon after the publication of our report, Democracy Denied? The urgent need to rebalance power between Parliament and the Executive, in November 2021, and of revised guidance for departments on the role and requirements of this Committee.”
The DPRRC’s concern was shared by Chris Smith, e-procurement and procurement consultant at CA Procurement Consulting Ltd. In his written evidence to this Committee, he said:
“The latest version of the Bill relies heavily on secondary legislation, which has not yet been published, and I am concerned that the level of compliance of Contracting Authorities with transparency regulations and policies will not be improved by this Bill as it is currently worded.
Currently, there remains a significant gap in transparency and the data captured in the existing online systems that not only undermine accountability and scrutiny of the use of public funds but also means that the government cannot rely on obtaining accurate data from these systems, for example, on SME participation. The same goes for the private sector.”
I think it is fair to say that I have made my feelings clear to the Minister throughout the Committee’s proceedings about the use of secondary legislation. I will not go through all those points again—I am sure he can refer back to them—but I still have concerns about how heavily the Bill relies on secondary legislation.
It is not that we object to the use of secondary legislation, nor do object strongly to an instance of its use throughout the Bill. At the end of the day, it is an option that the Government can use to legislate. However, as the Minister knows, it was well within the Government’s gift to set out more information in the Bill so that we could scrutinise further what some of the powers will mean in practice. They could have either set out the scope of what regulations should do, or scrapped the need for regulations entirely and spelled out the provisions in the Bill. Instead, we have had hypothetical debates—some powers may be granted, and some may not; they may transform our procurement system, or they may go unused. It is a bit frustrating to produce legislation in that way.
Alex Burghart
Well, Mr Mundell, I reassure the Committee that my batteries are, if not at 100%, still perfectly green; I have many Duracell hours left in me.
We have consulted with the DPRRC. The hon. Lady will know from earlier discussions that we require a very high degree of flexibility in a lot of areas of the Bill, and that requires secondary legislation, but she can rest assured that a lot of the secondary legislation will see public consultation before it is formulated. She will also have heard me refer to the affirmative procedure, which we intend to use for a lot of the secondary legislation. That means that it will be considered in Parliament, which will give it a good level of public scrutiny. I hope that she will take that as reassurance.
Question put and agreed to.
Clause 118, as amended, accordingly ordered to stand part of the Bill.
Clause 119
Interpretation
Question proposed, That the clause stand part of the Bill.
Alex Burghart
Clause 119 defines words and phrases of general application in the Bill that are not listed elsewhere—for example, “appropriate authority” is defined as a Minister of the Crown, Welsh Minister or Northern Ireland Department. Importantly, the clause also sets out the definition of “small and medium-sized enterprises”, and provides that an appropriate authority may amend by legislation the definition of an SME. The clause includes some concepts of wider application in the Bill, setting out, for example, that value of money thresholds are inclusive of VAT.
Clause 120 sets out where in the Bill the definitions of certain concepts of wider application can be found.
Florence Eshalomi
Clauses 119 and 120 relate to interpretation and definitions. Clause 119 defines terms, such as SME, that are common in the Bill but are not defined in individual clauses where they are mentioned; clause 120 contains a useful index of defined terms and where their definition appears in the Bill. We believe that the clauses are necessary and useful for navigating the many different terms that appear in the Bill, and we do not intend to oppose them.
Question put and agreed to.
Clause 119 accordingly ordered to stand part of the Bill.
Clause 120 ordered to stand part of the Bill.
Clause 121
Power to make consequential, etc, provision
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clauses 122 and 123 stand part.
Government amendment 84.
Clause 124 stand part.
Alex Burghart
Clause 121 provides a power to make regulations that make supplementary, incidental or consequential provision. It is a standard clause that means that the Government can make regulations that ensure that the Procurement Act—as it will be—works effectively with the rest of the statute book. It includes the power to amend primary legislation.
Clause 122 explains the extent of the Bill—that is to say, the jurisdictions in which it will form part of the law. The Bill’s provisions extend to each of the jurisdictions of the UK. The majority of provisions apply to all procurement by contracting authorities in England, Wales and Northern Ireland, including matters that we agree are within the scope of devolved competence. The Bill also extends to Scotland and applies, in limited respects, to procurement by devolved Scottish contracting authorities.
Clause 123 is a standard clause setting out when the Bill’s provisions will have effect as law. Some provisions will commence when the Bill is passed and some will commence upon regulations being made by a Minister of the Crown. As we have discussed, however, and following agreement with the Welsh Government, that power can be exercised in relation to devolved Welsh procurements only with the consent of the Welsh Ministers.
We have committed to provide six months’ notice of the new regime coming into force from when the Bill is passed. We expect that to be spring 2024 at the earliest. The existing legislation will apply until the new regime goes live, and it will also continue to apply to procurements started under the old rules. Frameworks, dynamic purchasing systems and qualification systems let under the old rules can remain live for their planned lifespan.
Clause 124 is mainly for citation purposes, and does not necessarily cover all aspects of the Bill. Once the Bill receives Royal Assent, it will be cited as the Procurement Act 2022. Amendment 84 will remove the amendment made in the other place in respect of the financial privilege of the House of Commons.
Florence Eshalomi
Amendment 84 is a privilege amendment. It is added to Bills by convention to avoid the violation of the privilege that the House of Commons rightly enjoys over the ability to charge people and public funds. The amendment is a quirk of our constitution for Bills beginning in the Lords, and we are, of course, happy to affirm the privilege of this House.
Clauses 121 to 124 are standard parts of Bills in this House. Although there can sometimes be contention about when Bills should commence, it is welcome that, on this occasion, there is no such controversy and the Bill will commence on the day it passes. Of course, we do not object to that, or to the other provisions of the clauses. We are happy for them to stand part of the Bill.
Alex Burghart
I am grateful to the hon. Lady for supporting the clauses. As we are nearing the end of our debate today, I will come back on a couple of points that the hon. Lady made so that we have covered everything off.
Before the lunch break, the hon. Lady kindly supported the clauses in part 9 of the Bill. As mentioned, if suppliers are breaching contractual terms, that will be a matter to be resolved pursuant to those contractual terms. The contracting authority will actively monitor compliance of these types of matters under its usual contract management and monitoring procedures, which will be strengthened by the Bill. I hope that adequately answers the hon. Lady’s question such that there is no longer any need to confirm in writing.
Similarly, in the closing stages of Tuesday’s sittings, the hon. Lady asked whether contracts already entered into following a procurement process will be terminated automatically if a contractor subsequently becomes an excluded supplier. Termination of contracts is often covered by contractual terms, but clause 77 gives contracting authorities an implied right to terminate a contract should a contractor become an excluded or excludable supplier. Although it is not automatic, authorities are able to terminate in the circumstances set out in clause 77.
Given the range and variety of contracts that contracting authorities will enter into, they need to be able to consider individual circumstances and the fulfilment of contract deliverables. Automatic termination of contracts when a supplier becomes excluded or excludable takes no account of other contractual obligations and would have serious implications for the delivery of the essential goods, services and works on which the public rely.
There is no need to mandate automatic termination. Contracting authorities should be trusted to exercise discretion appropriately, including in relation to national security. As with excluding a supplier prior to contract award under the national security ground, a contracting authority will be required to seek approval from a Minister to terminate a contract on this ground. I hope that gives the further detail the hon. Lady was looking for.
Kirsty Blackman (Aberdeen North) (SNP)
If I can crave your indulgence, Mr Mundell, I will not be present at the Committee’s next sitting, so I want to say thank you very much to the Clerks, to Hansard and, in particular, to two staff members, Josh Simmonds-Upton and Sarah Callaghan, who have been excellent in providing me with valuable support.
Procurement Bill [ Lords ] (Seventh sitting)
Alex Burghart ExcerptsThursday 9th February 2023
(1 year, 9 months ago)
Public Bill CommitteesRead Full debate Procurement Act 2023 View all Procurement Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 9 February 2023 - (9 Feb 2023)
Florence Eshalomi
It is a pleasure to serve under your chairship again, Mr Mundell.
Clauses 80 to 82 concern cases where a conflict of interest may arise during the procurement process. In particular, the clauses place obligations on contracting authorities to identify and mitigate against conflicts of interests where they may arise. The clauses are important, and it is correct, alongside the principle of non-discrimination, to ensure that suppliers that may be able to unduly influence the decisions of contracting authorities are excluded from the procurement process.
It is critical that taxpayers’ money is spent in the right way. We cannot and must not have a repeat of the back-room deals that we saw during the covid pandemic. The public expect their money to be spent in an open and transparent way, and they expect the value for money that comes with openness and transparency.
We know what happens when that is not the case. I have referred to this figure before, but it is important to keep stating it: the Government have written off £10 billion of public money spent on personal protective equipment that was unusable, unsellable, overpriced or undelivered. With £770,000 a day being spent to store unused gloves, goggles and gowns, that is not acceptable. The companies that got into the VIP lane were 10 times more likely to win a contract, and Ministers have now admitted that many did not go through the so-called eight-stage process of due diligence.
We know, therefore, that much more needs to be done to stand steadfast against conflicts of interests in procurements. We believe that clauses 80 to 82 may offer a step forward, but we also think that we could go even further to capture the wide range of influence on procurement decisions that may give rise to conflicts of interest.
Our amendments 116 and 117, taken together, would achieve that. They were suggested by Spotlight on Corruption in its written evidence to the Committee. We feel that they strike the right balance to increase scrutiny in the procurement system. In justifying the amendments, Spotlight on Corruption stated:
“As the Mone affair and the VIP lane as well as other COVID procurement scandals have shown, indirect influence over procurement decisions pose a real risk to public perceptions about the fairness and integrity of procurement. The fact that a minister, special adviser, or politician referred a company for emergency covid procurement appears to have been at least entertained as part of the decision-making process by procurement officials in awarding contracts. While this was an emergency procurement context, it has exposed the vulnerabilities in the UK procurement regime and the potential for those in political office to influence procurement decisions.
Sir Nigel Boardman’s reviews specifically recommended that conflicts of interest in procurement should be identified in relation to a broad range of actors, including: civil servants, special advisers, contractors, consultants and political appointees. The ‘VIP lane’, as well as the Owen Paterson affair, show that members of parliament, who may have private interests, can also seek to influence government procurement decisions in favour of those interests.
As it is not specified on the face of the Bill what the term ‘influences’ may include, it is not clear whether the term will be interpreted narrowly or more widely by contracting authorities. To ensure that it is interpreted widely, in our view, the Bill should contain specific language to reflect indirect influence (which might include lobbying or financial interests), and the wide range of people who may exert such influence.”
The Opposition agree with Spotlight on Corruption’s arguments and believe that it makes a strong case for the inclusion of such language in the Bill.
If we are asking the public to trust us with their money, we must never let the VIP lane scandal happen again. I hope the Minister will agree that the amendments would strengthen our defence against undue influence, and I urge him to support them.
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
It is a pleasure to serve under your chair-personship again, Mr Mundell. It is good to be back for the fourth day of deliberation in Committee.
Clause 80 is clear that a contracting authority must take all reasonable steps to identify conflicts or potential conflicts of interest on the part of those acting in relation to a procurement. Amendment 116 is impractically broad. The Bill already provides safeguards in clause 82(4), which could lead to the contracting authority taking steps in relation to a person with an indirect influence on a procurement, where the contracting authority believes that such a circumstance would be likely to cause a reasonable person to believe there to be a conflict.
Extending conflicts of interest to be identified in respect of any individual with only an indirect influence over the decisions of contracting authorities, as the amendment seeks to do, would go too far. It would add unnecessary administrative burdens on contracting authorities and potentially make it impossible for them to comply with the requirements of the Bill. It is not reasonable for a procurement officer to be expected to identify all individuals who may indirectly influence a procurement decision, let alone their potential conflicts of interest, in respect of every supplier tendering for every procurement. For example, it could lead to a school, when undertaking any public procurement, having to identify and consider the interests of all senior civil servants and Ministers in the Department for Education and the Treasury. That would be neither practical nor desirable.
Amendment 117 would add a list of certain individuals for contracting authorities to consider when identifying conflicts of interest. Such a list of individuals is better kept in guidance rather than legislation. All the persons listed in the amendment, where they have influence in respect of the relevant procurement decision, will already be caught by the current provision but may not be relevant in every single procurement by every single contracting authority. We therefore respectfully request that the amendments be withdrawn.
Clause 80 sets out the obligations on a contracting authority to take all reasonable steps to identify and keep under review potential or actual conflicts of interest. It is followed by clause 81, on duties to mitigate, and clause 82, on conflicts assessments. When conflicts of interest are not properly identified and mitigated, there can be far-reaching consequences, which can lead to accusations of fraud, bribery and corruption, legal challenges and the undermining of public confidence in the integrity of our public institutions.
Clause 80 details the individuals in respect of whom conflicts, or potential conflicts, should be identified. That includes people acting for, or on behalf of, the contracting authority in relation to the procurement; a person with influence on the decision making; and a Minister acting in relation to the procurement. The clause also defines what constitutes an interest, which can be a personal, professional or financial interest, either direct or indirect.
Clause 81 sets out obligations on a contracting authority to take all reasonable steps to mitigate conflicts of interest. As a rule, it is important that we treat all suppliers the same in our procurements. That is critical for us to ensure fair and open competition and deliver the best value for money. At the same time, a conflict of interest relating to a supplier should not automatically lead to their exclusion. We must therefore ensure that where conflicts of interest are identified, contracting authorities can first attempt to put mitigations in place to avoid a given supplier having an unfair advantage or disadvantage. A contracting authority must take all reasonable steps to do so and may require a supplier to take reasonable steps too. However, to ensure open competition and genuine fairness in the procurement, if a conflict of interest does lead to an unfair advantage that cannot be avoided, or the supplier refuses to take certain steps to avoid it, that supplier must be excluded.
Clause 82 places specific duties on contracting authorities in relation to conflicts assessments. In large part, those duties are to ensure compliance with clauses 80 and 81. A conflicts assessment is a document that includes the details of both the conflicts of interest identified and any steps taken to mitigate them. The structure or format of such a document will remain within the discretion of the contracting authority, and is likely to depend on the procurement. A contracting authority must prepare a conflicts assessment at the start of the procurement and keep it under review, revising it where necessary. When publishing a relevant procurement notice, the authority must confirm that those actions have been undertaken. This is a new duty on contracting authorities that strengthens the existing requirements relating to conflicts.
It is important to clarify that there is no duty to publish the conflicts assessment; rather, contracting authorities must publish confirmation that the assessment has been prepared or revised. Conflicts of interest can adversely impact procurements at any point of the commercial lifecycle, and the Committee will note that the definition of “relevant notice” in clause 82(8), which specifies when there should be confirmation that the conflicts assessment has been revised, reflects that fact.
I respectfully request that the amendment be withdrawn, and commend the clauses to the Committee.
Florence Eshalomi
I understand the Minister’s concern about additional bureaucracy, but we should aim to make sure that there is no interpretation regarding undue influence. There is a view that the Bill should contain specific language to reflect indirect influence. I hope the Minister agrees that the notion of transparency and making sure that no perceived conflicts arise should be fully addressed in order to ensure that we restore public trust, especially as it relates to Government money—taxpayers’ money—and large contracts. We need to stamp out some of the concerns that many people rightly highlighted about what happened during the covid-19 pandemic. Yes, there were some cases in which emergency contracts had to be procured, but as I have already mentioned, on numerous occasions, the proper procedure was not followed. I hope the Minister agrees that the Bill should contain specific language reflecting what is termed indirect influence.
Question put, That the amendment be made.
Alex Burghart
The rules on contracts that are valued below the thresholds set out in schedule 1 broadly represent a continuation of the position under the Public Contracts Regulations 2015 and have four main functions. They apply some basic procurement standards on transparency; they continue the ban on burdensome pre-qualification stages; they ensure that suppliers get paid promptly; and they ensure that small and medium-sized businesses are considered. These rules are justifiably simpler and less onerous for contracting authorities and suppliers, given the low value of the contracts concerned. Taken together with the new duty to have regard to SMEs in clause 85, the rules will help to make Government procurement more accessible to SMEs and voluntary organisations, charities or social enterprises.
Florence Eshalomi
I thank the Minister for outlining the clauses, which, as he highlighted, deal with below-threshold contracts. While such contracts do not meet the threshold for inclusion in many parts of the Bill, they will still need to follow some bits of regulation in how they are processed. In particular, a contract details notice must be published for contracts above £12,000 or £30,000 —known as notifiable below-threshold contracts—after they are entered into. Below-threshold contracts must follow the procedures relating to the 30-day payment rules.
The clauses are almost identical to current regulations, and we support their inclusion in the Bill. We feel that the extra scrutiny is welcome for groups such as SMEs, which may find that these contracts are the right size for their enterprise to deal with. It is important to strike the right balance. In general, we are happy with the clauses and will not oppose them, but I would ask the Minister what protocol will be followed when the threshold figures are altered.
Alex Burghart
It will be in secondary legislation.
Question put and agreed to.
Clause 83 accordingly ordered to stand part of the Bill.
Clause 84 ordered to stand part of the Bill.
Clause 85
Regulated below-threshold contracts: duty to consider small and medium-sized enterprises
Amendment proposed: 2, in clause 85, page 57, line 27, after “enterprises” insert “and co-operative societies”.—(Florence Eshalomi.)
See explanatory statement to Amendment 1.
Question put, That the amendment be made.
The Chair
With this it will be convenient to discuss the following:
That schedule 9 be the Ninth schedule to the Bill.
Clause 89 stand part.
Government amendment 59.
Amendment 102, in clause 90, page 60, line 32, at end insert—
“(1A) A Minister of the Crown acting under subsection (1) must acquire the consent of Scottish Ministers.”
Government amendment 60.
Clause 90 stand part.
Government amendments 69, 77, 79 and 81 to 83.
Government new clause 11—Trade disputes.
Alex Burghart
Part 7 of the Bill is concerned with the implementation of the United Kingdom’s international obligations. The UK is currently party to 24 international agreements that contain procurement obligations, with each listed in schedule 9 to the Bill. They include trade agreements signed before our exit from the EU, such as the World Trade Organisation Government procurement agreement, and the recently signed Australia and New Zealand trade agreements.
Clause 88 uses the term “treaty state suppliers” to identify suppliers from countries that are entitled to benefit from one of the international agreements listed in schedule 9. The clause ensures that treaty state suppliers have the right to no less favourable treatment than domestic suppliers under the UK procurement regime to the extent covered by their relevant agreement, including the right to seek remedies. As the UK negotiates new international agreements or is required to amend existing agreements, delegated powers under subsection (3) will allow schedule 9 to be revised accordingly. In this way, schedule 9 will continue to reflect our updated international obligations and ensure that the UK remains compliant.
It is important for the Committee to understand that the delegated power in subsection (3) does not allow for substantive changes to the rules set out in the Bill regime, even where required by an international agreement. This is partly the reason why separate primary legislation is required to implement the UK-Australia free trade agreement. It is therefore not capable of being used to implement rule changes that might affect matters such as food standards, environmental standards or control over the health service. For that, the Government would need to return to Parliament with further primary legislation. Schedule 9 to the Bill is a list of international agreements that contain substantive procurement obligations and to which the UK is party.
Clause 89 sets out that a UK contracting authority may not discriminate against a treaty state supplier; that is to say that UK procuring entities may not treat the goods, services and works of treaty state suppliers less favourably than those of UK suppliers. Clause 89 is imperative in order to meet our international obligations. The principle of non-discrimination is firmly embedded in the WTO’s Government procurement agreement and other international agreements to which we are party. Being party to these agreements will ensure that UK goods, services, works and suppliers also receive the same fair treatment from our trading partners. In doing so, the UK will continue to enjoy the benefits of existing and future trade agreements, including guaranteed access to procurement opportunities in some of the world’s largest economies.
The power set out in clause 90 allows regulations to be made in relation to devolved procurement in Scotland to ensure that treaty suppliers are not discriminated against. The power is to be exercisable concurrently by a Minister of the Crown or Scottish Ministers, meaning that in the course of implementing international obligations under the Bill, a Minister of the Crown could also implement obligations for the whole of Scotland, in respect of both reserved and devolved procurement. This recognises both that the implementation and observation of international obligations is a devolved matter, but that the UK Government are ultimately responsible for compliance with our international obligations.
Amendments 59 and 60 seek to address a concern raised by the Scottish Government that the power in clause 90 is broader than is necessary, and in particular broader than the equivalent power that allows the updating of schedule 9 to the Bill to reflect new free trade agreements.
Although I can assure the House that it is not the Government’s intention to use the powers in clause 90 to interfere with Scottish procurement rules, we have listened and added a number of factors that would limit the exercise of the power. These amendments will ensure that either a Minister of the Crown or Scottish Ministers would only be able to make provision that is equivalent to provision in part 7 and only when it is necessary in order to ratify or comply with an international agreement, such as by adding to or amending the list of international agreements in Scottish procurement legislation. It could not be used to amend Scottish procurement rules substantively. I thank colleagues in Scotland for working constructively on this point.
New clause 11 and the consequential amendments 69, 77, 79, 81, 82 and 83 are needed to give the UK the ability to take necessary retaliatory or compensatory action as a result of a procurement-related dispute under the World Trade Organisation’s Government procurement agreement, or with a country with which we have a free trade agreement on procurement.
Under the UK’s trade agreements, if a country does not comply with its international public procurement obligations, we must be able to implement practical retaliatory measures; otherwise, we may not receive the full benefits of the commitments under these agreements. These amendments would give the UK a power to amend its domestic procurement legislation to take such action, for example to remove market access to particular procurement markets for suppliers from a trading partner that is in breach. Similarly, if the UK is in breach, it may need to implement measures to bring itself back into line.
This power is clearly limited in scope to procurement-related disputes and can only be used to make provision relating to procurement. The power cannot be used to address disputes relating to other areas of the UK’s trade agreements. It will also be subject to the affirmative procedure, so that there is a sufficient level of scrutiny in Parliament when it is to be used.
Without these amendments, the UK would be at a disadvantage among its trading partners, because it would not be able to take retaliatory action to incentivise other countries to comply with their procurement commitments and, in the absence of the necessary domestic legislative mechanism to compensate its partners in case of non-compliance, the UK would not be viewed as a trusted international partner.
Chris Evans (Islwyn) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Mundell, on what is the fourth day of our deliberations in this Committee.
Mr Mundell, you, my hon. Friend the Member for Merthyr Tydfil and Rhymney, the hon. Member for Aberdeen North and I are all members of the Celtic fringe, and we have all been accused in the past, somewhat unfairly, of speaking too fast. However, the Minister put us to shame just now, so I wonder whether he has Scottish or Welsh roots somewhere. [Laughter.]
As the Minister set out, part 7 of the Bill, which includes clauses 88, 89 and 90, sets out the implementation of international obligations in relation to procurement. These clauses have a strong theme of ensuring that no discrimination takes place between contracting authorities and treaty state suppliers, which are set out in schedule 9 to the Bill. Clause 90 also reaffirms this for procurements made by devolved Scottish authorities.
What is important about this part is our commitment to meeting our international obligations. I know from my role as a shadow Defence Minister how important it is to be an active member of the international community. It is important not only for the UK’s standing in the world; I have also found that when we meet these standards, we are also doing the best for this country here at home.
I think that we were all deeply moved yesterday by President Zelensky’s speech in Parliament. The war in Ukraine is a prime example of how important it is to meet our international obligations. By donating weaponry to Ukraine, we are aiding a member of our international community in their fight against an illegal invasion. However, if we are to continue to support the international community, we need to ensure that our procurement system can keep up.
As it stands, we will have a gap in our defence capabilities. In March 2021, the Defence Committee concluded that the Army would be “hopelessly under-equipped” in “obsolete armoured vehicles” and would be “very heavily outgunned” if it was called to fight an adversary, such as Russia, in eastern Europe in the next few years.
The war in Ukraine has shown us how dangerously close we are to this reality. We need to ensure that we are capable of defending ourselves first, so that we can then help others in need. I believe that a commitment to buy, sell and make more in Britain within our procurement system would help us to achieve that. Now, more than ever, we have to ensure we continue our commitment to a fairer world. I believe the way we conduct our procurement has a huge role to play in that.
Kirsty Blackman
As I mentioned in previous speeches, we are taking decisions here for the entirety of the UK. Like it or not, I have been elected in the same way as the hon. Member has, as a UK member of Parliament. We therefore have the right in this place to take decisions on procurement in England and procurement in Wales. We do not have the right to take decisions on procurement across the UK, given the agreement that the implementation of procurement and how it works in Scotland is devolved.
In fact, this Bill does not confer any rights on Members of Parliament to make decisions for the people of Scotland. It confers the power on Ministers to make that decision, which is very different from conferring it on Parliament. I have spoken before about the Executive power creep of recent years, which continues to give more power to the Executive and less to parliamentarians and MPs in this place. It is therefore important that the Scottish Parliament gets to take these decisions. I do not think the UK Government should be allowed to override the devolution settlement whenever they feel it convenient to do so, as we saw recently when they used section 35 to stop legislation put through the Scottish Parliament on a cross-party basis.
Again, the Bill is a further overreach of the UK Government’s powers. We are not suggesting for a second that the UK does not have the right to sign up to international agreements. It absolutely does, but we have the right in Scotland, as part of the devolution settlement, to implement those rules in devolved areas. In that regard, I would like to push amendment 102 to a vote. I am not convinced that I will get terribly much support, but I will do my best anyway. Hopefully the Minister will move Government amendment 59, which is a step forward, as I have said, and I hope he will also agree to the inclusion of our amendment.
Alex Burghart
To address the most pressing issue in this group, I must confess to having a Celtic heritage. Indeed, my grandfather was from south Wales, and his grandfather was born in the workhouse, not terribly far from the constituency of the hon. Member for Islwyn, so he has found me out.
Alex Burghart
One family, one Wales.
I am pleased to hear the hon. Gentleman support NATO and the Government’s actions with regard to our allies in Ukraine. He will know that we have a trade agreement in place with Ukraine, and yesterday was a sign of the ongoing, very close relationships between President Zelensky’s Government and our own, and the necessary partnership in the face of tyranny.
Let me turn to amendment 102, in the name of the hon. Member for Aberdeen North. I must assure her at the outset that this is a power that the UK Government would only need in extremis. I completely understand that Holyrood and the Scottish Government—certainly under the SNP, I am sure—would always want to implement our international agreements. But what if another party that was not so upstanding was one day to be in power? What if another group of nationalists was to seize control from the SNP and wished to hold up our international agreements? There are other nationalist options—the former head of the hon. Lady’s party has formed a renegade bunch running under the name Alba—and perhaps they would not be as reasonable the hon. Lady’s party. Perhaps they would wish to prevent us from implementing our international trade agreements. That would not only prevent us from delivering the benefit of those agreements to the whole of the United Kingdom, but completely ruin our chances of signing future trade agreements. We understand her objections, but we believe that it is essential to ensure that in all circumstances the UK Government can make good on the promises that they sign with partners.
Kirsty Blackman
The Minister is suggesting that clause 90 will be used only in extremis. Do I read that correctly, or is that not his suggestion?
Alex Burghart
Certainly, if there was an international agreement and the Scottish Government wished to legislate or regulate to implement it, that would be our preference. As I say, it is important that we put safeguards in the Bill. On the hon. Lady’s point about burdens being placed on officials by having to keep up with procurement regulations in Scotland, I can assure her that my officials welcome the burden, and that their understanding of such regulations is so strong that they would not notice the extra weight at all. I hope that she will not move her amendment.
Question put and agreed to.
Clause 88 accordingly ordered to stand part of the Bill.
Schedule 9 agreed to.
Clause 89 ordered to stand part of the Bill.
Clause 90
Treaty state suppliers: non-discrimination in Scotland
Amendment made: 59, in clause 90, page 60, line 32, at end insert—
“(1A) Regulations under subsection (1) may only include provision that is equivalent to provision in—
(a) subsection (1), (2), (5) or (6) of section 88 (treaty state suppliers),
(b) section 89 (treaty state suppliers: non-discrimination), or
(c) Schedule 9 (specified international agreements).
(1B) Regulations under subsection (1) may not be made unless a Minister of the Crown considers, or the Scottish Ministers consider, that the regulations are necessary in order to ratify or comply with an international agreement to which the United Kingdom is a signatory.
(1C) In subsection (1B), the reference to being a signatory to an international agreement includes a reference to having—
(a) exchanged instruments, where the exchange constitutes the agreement;
(b) acceded to the agreement.”—(Alex Burghart.)
This amendment would mean that a Minister of the Crown or Scottish Ministers, in making regulations under clause 90, may only make provision equivalent to provision in Part 7 and if the Minister considers, or Scottish Ministers, consider it necessary in order to ratify or comply with an international agreement.
Amendment proposed: 102, in clause 90, page 60, line 32, at end insert—
“(1A) A Minister of the Crown acting under subsection (1) must acquire the consent of Scottish Ministers.”—(Kirsty Blackman.)
Question put, That the amendment be made.
Alex Burghart
A contracting authority is required to publish a pipeline notice if it reasonably expects that, in the coming financial year, it will pay more than £100 million under relevant contracts. The pipeline notice in clause 91 is designed to set out details of public contracts that a contracting authority proposes to enter into in the forthcoming 18 months with an estimated value of more than £2 million. It provides potential suppliers with advance notice of upcoming opportunities and allows them to plan for future work. The notice must be published within 56 days of the first day of the relevant financial year. Private utilities and transferred Northern Irish contracting authorities are not required to publish pipeline notices.
Florence Eshalomi
The clause introduces pipeline notices, which mandate large contracting authorities to publish a pipeline of contracts worth over £2 million every year for the upcoming year. We question why it is £2 million when the Government have altered the other thresholds of that value to £5 million elsewhere in the Bill. Will the Minister clarify that for us? However, we do not oppose the lower number or the pipeline notices in general, so we are happy for the clause to stand part of the Bill.
Alex Burghart
The threshold of £2 million was set following the determination that that was the best balance of realising the benefits of transparency against the efforts made by contracting authorities in providing the information.
Question put and agreed to.
Clause 91 accordingly ordered to stand part of the Bill.
Clause 92
General exemptions from duties to publish or disclose information
Question proposed, That the clause stand part of the Bill.
Alex Burghart
Clause 92 sets out when contracting authorities may withhold—for example, by way of redaction—information that they are otherwise required to publish or disclose under the Bill. The two exemptions are for national security and sensitive commercial information. “Sensitive commercial information” is defined as information that “constitutes a trade secret” or would be likely to prejudice commercial interests if published or disclosed. The exemptions are modelled on their equivalents in the Freedom of Information Act 2000 and are intended to be understood and interpreted in the same way.
However, the FOIA is a scheme for responding to requests for information, whereas the Bill is about proactive publication by contracting authorities. The sensitive commercial information exemption is subject to an overriding public interest test, while the national security exemption is absolute. If the contracting authority relies on either of the exemptions to withhold or redact information, it must notify anyone to whom the information would have been provided that information is being withheld or redacted and why. The latter requirement is suspended if it would be contrary to the interests of national security to make such a notification.
Florence Eshalomi
The clause relates to a small number of reasons why information may not be published where it would otherwise be required under the Bill. Of course, we agree that some information is particularly sensitive and should not be disclosed to the public. I welcome the Minister’s assurance on ensuring that national home security is absolute. The reasons for non-publication in the clause are proportionate and sensible. We do not feel that this is controversial, and we will not oppose its addition to the Bill.
Question put and agreed to.
Clause 92 accordingly ordered to stand part of the Bill.
Clause 93
Notices, documents and information: regulations and online system
Question proposed, That the clause stand part of the Bill.
Alex Burghart
In support of the Government’s drive towards ensuring greater transparency in procurement, there are many provisions in the Bill that place requirements on contracting authorities to publish information. Clause 93 confers a power to set out the form and content of the information to be published or provided as well as the place it is to be sent. That is a broad but necessary power. The World Trade Organisation GPA sets out the core of the detail of many of the notices that we have described in the Bill, which will give hon. Members a clear indication about the sorts of information that will be required to be published using these powers.
However, the Government wish to push further and create additional transparency to that required by the GPA. For that reason, we have created new transparency obligations and proposed the power to set out the detail in clause 93. The flexibility inherent in taking that power allows us to tailor the transparency regime over time to ensure that we can benefit from greater transparency across the procurement landscape. The power allows us to set different requirements for different types of contract or different industries, depending on the needs and benefits of different areas.
Clause 93 also puts an obligation on the Government to establish and operate an online system for the purpose of publishing notices, documents and other information under the legislation. The online system must make notices, documents and other information published under the legislation available free of charge and accessible for people with disabilities.
Florence Eshalomi
Clause 93 is perhaps the most referenced throughout the Bill; it has been mentioned about 24 times. We did not expect the legislation to be all-encompassing, but we are now at clause 93 and we are seeing a little more deflection and can kicking. We support the implementation of a new digital system, but the reality is that we do not have any idea what it will look like based on the clause.
We have high hopes for the system, and it has the potential to be transformative for procurement, which we will get to during the debate on new clause 14. We believe it can be taken even further, as was the case in Ukraine. We can take inspiration from what is happening in Ukraine, and their heroic fight against Putin’s barbarism, as we heard during President Zelensky’s address yesterday. We must also take inspiration from their procurement system, even in the midst of what is going on.
I was pleased to hear the Minister say on Second Reading that he was pleased to let the House know that Ukraine was on our advisory panel and has informed the work on our single digital platform, which takes a lot from what Ukraine has done with ProZorro. The platform will enable everyone to have better access to public procurement data. Citizens will be able to scrutinise spending decisions, suppliers will be able to identify new opportunities to bid and collaborate, and buyers will be able to analyse the market and benchmark their performance against others on spending with SMEs, for example. That will provide better transparency, which will be better for taxpayers. Those are welcome words from the Minister, but at this stage, they are just words.
On Second Reading, the Minister also said:
“The platform is based on a system that we already have. We are confident that we will be able to introduce it in line with bringing this Bill into force. Obviously, we have to pass the legislation and get Royal Assent, and then there will be a settling-in period. But it is going to be functional very soon.”—[Official Report, 9 January 2023; Vol. 725, c. 383.]
How soon will that be? When is that target? We all agree the system has huge potential, but, as we have already seen in the promised version of the Bill and the version before us today, we cannot be certain about anything until it is in the statute book. Will the Minister commit today to introduce the regulations under the clause as soon as possible? I hope that he will deliver on the promises he made on Second Reading.
Alex Burghart
The hon. Lady will have already heard in our debates in Committee, on Second Reading and in Westminster Hall the huge range of areas in which we are bringing in additional transparency. The online digital platform will be the repository of sunlight that she is understandably so interested in. It is necessary at this stage for us to keep the primary legislation broad, so that there will be flexibility for Governments over time.
We intend to bring forward the online digital platform in 2024, bringing the Bill into force and allowing us to see the benefits. It will be a major step change in how we see evidence of public procurement. I hope the Opposition will welcome that.
Question put and agreed to.
Clause 93 accordingly ordered to stand part of the Bill.
Clause 94
Electronic communications
Alex Burghart
I beg to move amendment 61, in clause 94, page 62, line 37, after first “a” insert “covered”.
This amendment would restrict the requirements in respect of electronic communications systems to covered procurements.
The Chair
With this it will be convenient to discuss the following:
Government amendments 62 to 64.
Clause stand part.
Alex Burghart
We are introducing amendments 61 to 64 to clarify the use of electronic communication systems and the application of other systems in various commercial circumstances. Clause 94 currently requires that electronic communication systems must be
“free of charge and readily accessible”.
Our intention is to allow businesses, particularly SMEs, to easily access the necessary documents and systems to bid for contracts, ensuring that access is open to all. However, the term “electronic communication systems” is broad, and concerns have been raised with us that it could inhibit certain practices that are currently commonplace, thereby making the Bill overly burdensome. For example, it could constrict the ability of utilities dynamic markets to charge for membership, and of the Ministry of Defence to make use of systems that charge to preserve secure payments.
Amendment 62 therefore limits the free-of-charge obligation beyond the point when the public contract is entered into and disapplies it to utilities dynamic markets. We have also tabled amendments 61, 63 and 64, which ensure that the clause only applies to covered procurement, and that the security exception in clause 94(3) extends to the whole clause.
Clause 94 sets out how communications relating to a procurement should be undertaken. Electronic communications can help reduce procurement process costs for suppliers and contracting authorities; reduce procurement timescales; encourage access to opportunities for suppliers; facilitate compliance with the rules; and promote traceability and auditability in the procurement process. As such, for covered procurements, we want contracting authorities to, so far as practicable, communicate with suppliers electronically and ensure suppliers do likewise. Electronic communication systems must be free of charge and readily accessible to suppliers, generally available and interoperable with other systems, and accessible to people with disabilities. There is an exemption from the requirement to communicate electronically if doing so would pose a particular security risk.
Florence Eshalomi
These amendments tidy up this part of the Bill by limiting requirements that relate to covered procurement, limiting the obligations on information after the awards of contract or in dynamic markets, and ensuring that all parts of the clause are excluded in the case of security risks. I am pleased to say that we do not feel the amendments are controversial, and that they sensibly fix a gap that could otherwise have caused problems, so we will not oppose them.
Clause 94 concerns electronic communications. In today’s modern world, electronic and digital communication is the norm, and we should expect all suppliers to have access to electronic communication methods. Such methods are the norm in wider society. It is right that information is freely available. We must ensure that it is accessible to everybody, so we welcome subsection (2), which puts some principles of communication in the Bill. We are happy for the clause stand part of the Bill.
Amendment 61 agreed to.
Amendments made: 62, in clause 94, page 62, line 42, at end insert—
“(2A) Subsection (2)(a) does not apply in relation to an electronic communications system used, or required to be used—
(a) after the award of the public contract, or
(b) in relation to a utilities dynamic market.”
This amendment would create an exception to the requirement for electronic communications systems to be free of charge and readily accessible to suppliers where those systems are used after award of a public contract or in relation to a utilities dynamic market.
Amendment 63, in clause 94, page 63, line 1, leave out “Subsection (1)” and insert “This section”.
This amendment and Amendment 64 would extend the exception in subsection (3) to any requirement in clause 94 the contracting authority considers poses a security risk.
Amendment 64, in clause 94, page 63, line 2, after “communication” insert “, or the use of an electronic communication system meeting the requirements of subsection (2),”.—(Alex Burghart.)
This amendment and Amendment 63 would extend the exception in subsection (3) to any requirement in clause 94 the contracting authority considers poses a security risk.
Clause 94, as amended, ordered to stand part of the Bill.
Clause 95
Information relating to a procurement
Question proposed, That the clause stand part of the Bill.
Alex Burghart
Clause 95 provides that regulations may be made requiring certain information to be shared in a particular way. The power will be used to specify that contracting authorities and suppliers must use the central online platform, to be established under clause 93, and to provide detail on the proposed register of suppliers.
As part of the central digital platform, the register of suppliers will allow suppliers to submit the common data needed for procurements, such as their full name and registered office address, date of registration, VAT number and so on, in an evidence locker, so that they can “tell us once” across the public sector. All contracting authorities will be required to use data from the register of suppliers in their procurements.
Clause 95 also requires contracting authorities to keep records of any communication between the authority and a supplier in relation to a covered procurement. All data published on the central digital platform will be aligned to the open contracting data standard, or OCDS. Adoption of the standard will significantly improve data quality and sharing.
Florence Eshalomi
The clause puts in place similar provisions to clause 93, and has huge potential to make our procurement system more efficient—for example, by standardising how information is shared. That would simplify the procurement system for SMEs, which would not have to navigate the surprising number of ways in which the information in the Bill could be presented.
I will not reiterate my points on clause 93, but I have similar concerns that these provisions are just words, before we have seen the regulations laid, but I hope the Minister will make good use of them as quickly as possible.
Question put and agreed to.
Clause 95 accordingly ordered to stand part of the Bill.
Clause 96
Data protection
Question proposed, That the clause stand part of the Bill.
Alex Burghart
Clause 96 sets out that the Bill does not authorise or require a disclosure of information that would contravene the data protection legislation. It defines the data protection legislation as being the same as the meaning set out in the Data Protection Act 2018. The effect of the provision is that there is no requirement to publish information that would otherwise be prohibited from disclosure under the Data Protection Act 2018.
Florence Eshalomi
This clause, as the Minister outlined, considers data protection and ensures that the Bill does not work contrary to the Data Protection Act 2018. It is entirely correct, and we do not object to it.
Question put and agreed to.
Clause 96 accordingly ordered to stand part of the Bill.
Clause 97
Duties under this Act enforceable in civil proceedings
Alex Burghart
I beg to move amendment 65, in clause 97, page 64, line 6, at end insert—
“(6A) A supplier may not bring proceedings under this Part on the grounds that one or more of the following decisions of a Minister of the Crown was unlawful—
(a) a decision to enter a supplier’s name on the debarment list;
(b) a decision relating to the information included in an entry on the debarment list;
(c) a decision not to remove an entry from the debarment list, or revise information included in such an entry,
(see section 64 (debarment decisions: appeals)).”
This amendment would ensure that challenges to debarment decisions are all dealt with under clause 64 (debarment decisions: appeals).
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Clauses 98 to 103 stand part.
Government new clause 12—Part 9 proceedings and closed material procedure.
Alex Burghart
Clause 97 provides that, where a UK or treaty state supplier has suffered, or risks, loss or damage in consequence of a contracting authority’s failure to comply with certain parts of the Bill, that supplier can hold the contracting authority to account through civil proceedings for breach of statutory duty.
The relevant parts of the Bill govern the award, entering into and management of public contracts—namely, parts 1 to 5, 7 and 8. Clause 97(5) lists the few exceptions, however, where any compliance failure is best challenged through judicial review. Those are a failure to have regard to barriers facing SMEs, which is required by clause 12(4), and a failure to have regard to the procurement policy statements in clauses 13(9) or 14(8). Suppliers can also raise concerns with the procurement review unit, which may engage with the contracting authority on a non-statutory basis to resolve any issues.
Further, proposed new subsection (6A), courtesy of Government amendment 65, will ensure that, where a claim is on grounds that can be challenged through the debarment appeals process—under clause 64—the supplier cannot also bring a claim under part 9 on those grounds. Debarment decisions are taken by a Minister of the Crown, and not a contracting authority, thus it is appropriate for the Minister to respond to that claim. I invite hon. Members to accept the amendment.
Clause 98 says that if a contracting authority has been notified during a standstill period that a claim has commenced in relation to the procurement, the contracting authority is prevented from proceeding with the public contract until the claim is resolved. That is called automatic suspension. However, it is important that the court has a discretion to lift the automatic suspension on application by the contracting authority, and permit the contract or modification to be entered into, where that is necessary, despite a legal challenge. The factors for the court’s consideration when deciding whether it is appropriate to lift the suspension are laid out in clause 99 on interim remedies.
Interim remedies are, by their nature, applicable before the determination of any legal claim, at whichever point it is raised in the procurement—pre or post contract signature. Types of interim remedy under clause 99 may therefore include suspending the procurement process or performance of the contract.
An important aspect of clause 99 is the new test for lifting the automatic suspension. Unlike the current test derived from the 1975 American Cyanamid patent case, the test on the face of the Bill is specific to public procurement disputes, and enables the court to consider the merits of the case with reference to factors that ensure that the interests of the contracting authority, the claimant, the successful supplier and the public are considered in a fair and balanced way. The test will also apply to injunctions made to prevent the contracting authority from entering into the public contract where there is no automatic suspension.
Clause 100 deals with pre-contractual remedies. Suppliers bringing claims to the court at this time are most often seeking a fair opportunity to bid for the public contract. Accordingly, clause 100 includes remedies such as reversing a decision made by the contracting authority, or requiring an action such as the re-evaluation of tenders. The court may also award damages or make any other order it deems appropriate in the circumstances.
Clause 101 sets out the post-contractual remedies—that is, those that apply once the contract or modification has been entered into. For the most egregious breaches, such as failing to honour a mandatory standstill period, where the supply has been denied the opportunity to seek pre-contractual remedies the contract may be set aside by the court. This is currently known as the remedy of ineffectiveness, and an order of this kind makes the contract or modification invalid. Where a set aside ground applies per clause 102, the court must set aside the contract or modification unless there is an overriding public interest in maintaining the contract, in which case the court may instead reduce the scope or duration of the contract, and award damages.
In common with the existing regime, the award of damages to a supplier following a breach of statutory duty is discretionary, and judges can continue to make an appropriate assessment on the award of damages, including quantum, taking into account all the circumstances of the case, including the nature of the breach and its consequences. As I mentioned, clause 102 sets out the conditions that, if met, may result in the contract or modification being set aside, where the supplier has been denied the opportunity to seek pre-contractual remedies.
Clause 103 sets out the timescales in which a supplier must raise a claim under the Bill for breach of statutory duty. For all claims except some for set aside under clause 102, this will be within 30 days from when the supplier knew—or ought to have known—about the breach. For set aside claims, after the contract has been entered into, the time limit is 30 days from the date of actual or deemed knowledge, unless a contract details notice was not published, in which case the 30 days applies up to a long stop date of six months from contract signature. The six month cut-off also applies to claims for set aside of contract modifications. The court may extend the 30 days up to three months, but may not extend the six month cut-off. The timescales aim to give suppliers adequate time to raise legal challenges to the procurement, while also enabling contracting authorities to manage the risk of delay and disruption to their public procurements.
The Government have proposed new clause 12 to be inserted after clause 103 to allow the Minister for the Cabinet Office to apply for a declaration permitting closed material procedure applications in procurement challenge proceedings, as we discussed the other day. Closed material procedure involves the non-Government parties leaving the courtroom while sensitive material is heard.
Florence Eshalomi
Amendment 65 shifts the responsibility for the debarment list remedy to clause 64, rather than being under this part of the Bill. New clause 12 is a simple amendment that extends the power to the Minister for the Cabinet Office, rather than just the Secretary of State. Both amendments make sense and we do not oppose them.
Clauses 97 to 103 relate to remedy against contracting authorities when duties under parts of the Bill are breached. It is right that suppliers have remedy when contracting authorities do not follow due process while carrying out procurement. I listened to the Minister’s explanatory remarks about having a fair and balanced remedy for tenders and contractors, about discretionary damages, and about legal challenges and timescales, but has he given thought as to whether employees or contracted workers, or subcontracted organisations involved in delivering public contracts, can seek a remedy if the employment terms and conditions agreed as part of a contract are not delivered?
At the point of tender or contract, a supplier may commit to providing certain employment conditions—for example, the living wage. However, if the supplier in that example, having won the contract, does not implement an annual increase in the living wage, I hope the Minister agrees that there is little recourse for workers employed under the contract. There is no clear, robust mechanism for workers or parties such as trade unions to complain, or for workers affected to receive remedy if there is a failure to comply. There may be a redress mechanism or a point of contact for them in the contracting authority, but there is no certainty that complaints will be investigated, let alone remedied. We are concerned about that, as workers may miss out on long-term remedies. I would be grateful if the Minister responded to that point, either now or later in writing.
Alex Burghart
I am happy to respond to the hon. Lady with more detail in writing. I think her example relates to where a contracting authority had written in certain terms and conditions for the employees of a supplier, which then receives the procurement deal. In those circumstances, the supplier would obviously be in breach of the contract. That would be as serious as other breaches of contract. I will check the detail and get back to the hon. Lady, but it will obviously be within the supplier’s employees’ rights to contact the contracting authority and let it know that they believe the supplier is in breach.
Amendment 65 agreed to.
Clause 97, as amended, ordered to stand part of the Bill.
Clauses 98 to 103 ordered to stand part of the Bill.
Clause 104
Procurement investigations
Question proposed, That the clause stand part of the Bill.
Alex Burghart
Clause 104 enables the appropriate authority—a Minister of the Crown, a Welsh Minister or a Northern Irish Department—to investigate relevant contracting authorities’ compliance with the requirements of the Bill. It also obliges the relevant contracting authorities to provide reasonable assistance to the investigation within notified time periods, and allows the findings of investigations to be published.
Although the legislative definition of a relevant contracting authority in clause 104(5) excludes Departments, they may be subject to investigation; it is simply that Ministers do not require statutory powers to do this. Ministers already have the authority to investigate the procurement activities of Departments and ensure that any recommendations resulting from an investigation are duly taken into consideration. The Cabinet Office has established routes for co-operation with such investigations within Government. The new procurement review unit will utilise the statutory powers afforded by clauses 104 to 106, as well as non-statutory powers, on behalf of Ministers of the Crown.
Clause 105 allows the appropriate authority to make statutory recommendations as a result of an investigation under clause 104, where the investigation has identified that a contracting authority is engaging in action giving rise, or likely to give rise, to a breach of any requirement of the Bill. Clause 106 allows the appropriate authority to issue statutory guidance to contracting authorities, following an investigation under clause 104. This guidance will share the lessons of matters considered in the procurement investigation where those lessons are relevant to a larger number of, or indeed all, contracting authorities, including Departments, not just those that were the subject of the investigation. Contracting authorities are required by clause 106 to have regard to the published guidance when carrying out their public procurements and considering how to comply with the requirements of this Bill. It is left to the discretion of the appropriate authority to determine which contracting authorities would benefit from having regard to the guidance.
Subsection (3) highlights clauses 107 to 109, which restrict a relevant authority’s ability to issue guidance to particular contracting authorities. A Minister of the Crown can, with express consent from the devolved Administrations, issue guidance to all authorities, including devolved and transferred contracting authorities.
Florence Eshalomi
Clauses 104 to 106 concern oversight of procurement. Compliance with such is critical and it runs through the Bill.
As stated previously, the success of things such as the 30-day payment will ultimately come down to compliance with the Bill at all levels. We do not oppose these clauses, but we are concerned about the lack of ambition compared with what was outlined in the Green Paper. To take the Minister back to those proposals, the Green Paper states that the Government propose
“establishing a new unit, supported by an independent panel of experts, to oversee public procurement with powers to review and, if necessary, intervene to improve the commercial capability of contracting authorities. This unit would aim to improve capability and practices for the benefit of all contracting authorities and suppliers rather than provide remedies for an individual supplier on a specific procurement. This will be facilitated through greater information about purchasing and supply markets and behaviour, allowing targeted interventions to be implemented, optimising policy delivery and driving improvements in capability, behaviour and practice.”
We understand that proposals change between Green Papers and Bills—the Minister has touched on that before—but will he explain the reason for this reduction in ambition? What is proposed now?
There is a genuine question about to who will oversee compliance, especially as, despite the promises in the Green Paper, nothing has been done to reform the remedies system. The Bill contains little information on how the system will be overseen. It does not mention a procurement review unit, and refers only to an “appropriate authority”. Worryingly, the remit of the unit does not extend to central Government, Welsh Ministers or Northern Irish Departments, among other things. That seems like a large and inexplicable gap, which means that the unit will not be able to investigate compliance by any central Government Departments.
The “appropriate authority” has power to carry out an investigation of compliance by an authority under the Bill, and to make a recommendation; but it cannot make recommendations on compliance with a multitude of matters, including compliance with the national procurement policy statement, the national objectives in clause 12, or a specific procurement. On the face of it, that is relatively toothless, leaving the unit with limited remit and no enforcement powers. It also does not seem to be independent. That replicates the existing position, which we have discussed.
The Bill offers an opportunity to go further and to deliver better procurement systems across the country. Clearly, the Government do not wish to make the PRU into an appellate body, but the court system is an expensive and random way of enforcing compliance, tilted against challengers and small and medium-sized enterprises. While reforms of the court system belong outside the Bill, there is no evidence that any such reforms are being brought forward. We will not reject clauses 104 to 106, nor have we proposed amending them, but I hope that the Minister will address my concerns. I will welcome any feedback he can offer.
Alex Burghart
The hon. Lady will have heard me refer a number of times to the procurement review unit. We considered making the PRU an independent arm’s length body, but on consideration we felt that to do so risked creating unnecessary bureaucracy and cost and would lead to confused and overlapping responsibilities, with duplications of interactions with contracting authorities. Positioning it within the Cabinet Office best aligns it with other related functions to improve commercial standards among contracting authorities that are covered by the Government’s chief commercial officer.
We did not feel the need to put the PRU in the Bill, because it will not be a non-departmental body established in statute. The approach we are using here is similar to how the current public procurement review service utilises statutory powers under section 40 of the Small Business, Enterprise and Employment Act 2015, but is not specifically mentioned in that Act.
There are great opportunities for the PRU to assist in procurement processes across the country, which have been outlined during the debate.
Question put and agreed to.
Clause 104 accordingly ordered to stand part of the Bill.
Clauses 105 and 106 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Julie Marson.)
Procurement Bill [ Lords ] (Sixth sitting)
Alex Burghart ExcerptsTuesday 7th February 2023
(1 year, 9 months ago)
Public Bill CommitteesRead Full debate Procurement Act 2023 View all Procurement Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 7 February 2023 - (7 Feb 2023)
Florence Eshalomi
It is a pleasure to serve under your chairship, Mr Mundell. Amendments 23 and 24 would ensure that everyone on the debarment list is excluded from the procurement system, except for under the provisions relating to the public interest test in clause 41.
On Thursday I listened to the Minister explain “exclusions”, “exclusionary” and the debarment list. We had hoped that the Minister would give a more substantive explanation, given the issues that we highlighted, but we remain concerned. I will not go over the debate, but I was not satisfied to hear that a contracting authority will have discretion to award, say, a paperclip contract, as the Minister said, to a company identified as a national security risk. I have my paperclips here, if the Minister would like one. I want to ask a question that most people in this country will have. Why we are giving public money to a supplier who is identified as being a threat? With all due respect to procurement officers, we cannot expect there not to be blurred lines. Something that seems innocuous might actually be an open door, not spotted by a procurement officer or even our own security experts.
I am sure we all heard last week about the issue of the spy balloon, and how that created alarm in the USA. In the end, military action was required to shoot it down. A US defence officer has revealed that other suspected spy balloons flew over the US during the Trump Administration. That shows that real threats can pop up anytime and anywhere, and they can take multiple forms. Amendments 23 and 24 reflect some of the dissatisfaction I have outlined. As the Bill stands, a supplier put on the debarment list on schedule 7 grounds would be classed as an “excludable supplier”, meaning the contracting authority could still, at its discretion, award them a contract. I understand from the Minister’s comments, and from conversations with stakeholders, why there needs to be discretion with regard to excludable grounds, but I do not believe that such discretion should extend to suppliers on the debarment list.
The Government have outlined the debarment list is reserved for the most serious cases of misconduct. On 4 August 2022, the then Minister Lord True wrote a letter to the now Minister Baroness Neville-Rolfe, in which he said:
“I should start by explaining that the debarment list is intended to focus on the most serious cases of supplier misconduct, where suppliers may pose a significant risk to contracting authorities or the public. It is not the case that every supplier which meets a ground for exclusion will be considered for inclusion on the debarment list. Rather, there will be a prioritisation policy which governs how cases are selected for investigation. It is likely that only a small number of cases will be considered each year.
It is also important to clarify that meeting a ground for exclusion is not sufficient on its own to justify the addition of a supplier to the debarment list. In addition to considering whether an exclusion ground applies, the Minister must also consider whether the circumstances that led to the application of the exclusion ground are likely to occur again. Only if the circumstances are considered likely to occur again may the supplier be added to the debarment list. This ensures that exclusion is not a punishment for past behaviour but a forward-looking measure based on the risk posed by the supplier.”
In the words of Lord True, suppliers on the list represent a significant risk to the public. It was therefore pleasing to hear the Minister say on Tuesday:
“Suppliers on the debarment list face exclusion across the public sector at all levels. That is a significant step forward in our approach to supplier misconduct.”––[Official Report, Procurement Bill Public Bill Committee, 31 January 2023; c. 63.]
I think most people would welcome the fact that suppliers on the list are automatically excluded. However, under the Bill, the contracting authority will still be able to exclude suppliers on the list on discretionary exclusion grounds. When a supplier represents such a risk that they are one of the few to be on the debarment list, why should they still be allowed access to public contracts? We do not want suppliers who commit egregious breaches near public contracts.
I refer back to the Minister’s example of a paperclip contract. Does he believe that a supplier who has been found guilty of environmental misconduct, has frequently breached contracts and performed poorly, is a national threat, or committed a breach that is grounds for discretionary exclusion, although the Government decided not to put them on the debarment list, should have access to public contracts? Will the public want their money to be spent that way, and handed to that supplier? Every supplier on the debarment list is surely one that the Minister believes should not be near our procurements. Again, we come to the question: why allow this discretion? Our amendment would ensure that those on the debarment list were excluded from all public contracts without question. I urge the Minister to think carefully about that, and to consider whether he can support the amendment.
I turn briefly to clause 58. Although every excluded or excludable supplier must be given the opportunity to prove that they are now a reputable supplier, it is important to remember that procurement rules are there to ensure that public money is spent efficiently and on delivering the public services we need. When it comes to deciding whether a supplier comes under the definitions set out in clause 57, has the Minister considered taking the US-style approach of weighing the reputational and delivery risk to the contracting authority of allowing the supplier to take the contract? There will be disadvantages and advantages to both approaches, but I would be interested to learn whether that was explored, and why the Government adopted the approach taken in the Bill.
The Parliamentary Secretary, Cabinet Office (Alex Burghart)
It is a pleasure to serve under your chairmanship once again, Mr Mundell. Amendments 23 and 24 would require contracting authorities to treat any supplier on the debarment list as being subject to mandatory exclusion, even when it is on the list because a discretionary exclusion ground applies. The concept of “excluded supplier” is by nature a blunt instrument. An excluded supplier faces exclusion from every public contract for five years unless and until a contracting authority is satisfied that the risk of the issues re-occurring has been addressed. For that reason, a supplier is an excluded supplier only when one of the grounds reserved for the most serious forms of misconduct apply—the mandatory grounds.
It is clearly right that when a Minister of the Crown places a supplier on the debarment list because a mandatory exclusion ground applies, and the issues are likely to occur again, authorities awarding contracts should treat that supplier as an excluded supplier. The inclusion of discretionary exclusion grounds in schedule 7 reflects the fact that, for offences where a range of misconduct could be involved, it might be appropriate to take into account factors such as the nature of the contract being tendered or the level of harm caused before deciding to exclude a supplier.
None the less, the Government believe that it should be possible to include a supplier that has fallen foul of a discretionary exclusion ground on the debarment list. This involves contracting authorities having to do their own due diligence on the suppliers’ misconduct and self-cleaning measures. However, given that discretionary exclusion grounds are potentially less serious, a contracting authority should retain some discretion with regard to that supplier, once they are on the list.
Clause 57 sets out the meaning of the terms “excluded supplier” and “excludable supplier”. The Bill provides elsewhere that contracting authorities are either obliged or permitted to consider whether suppliers should be excluded or excludable at various points in a procurement. In most cases, excluded suppliers must be prevented from participating in a procurement or being awarded a contract, while excludable suppliers may be excluded at the discretion of the contracting authority.
Excluded suppliers are defined in subsection (1) as those to whom a contracting authority considers that
“a mandatory exclusion ground applies”,
as set out in schedule 6. The contracting authority must also consider that
“the circumstances giving rise to the application of the exclusion ground are likely to occur again,”
or that the supplier is
“on the debarment list by virtue of a mandatory exclusion ground.”
Excludable suppliers are defined in subsection (2) as those to whom a contracting authority considers that
“a discretionary exclusion ground applies”
as set out in schedule 7. The contracting authority must also consider that
“the circumstances giving rise to the application of the exclusion ground are likely to occur again,”
or that the supplier is
“on the debarment list by virtue of a discretionary exclusion ground.”
In both cases, the supplier is excluded or excludable if they are on the debarment list. Private utilities can treat mandatory exclusion grounds as discretionary; that is set out in subsection (3).
Clause 58 sets out how contracting authorities should assess the risk of the re-occurrence of the circumstances that gave rise to the application of an exclusion ground to a supplier. Contracting authorities may have regard to the range of factors set out in subsection (1) when evaluating that risk. Subsection (2) imposes a duty on the contracting authorities applying the exclusions regime to give suppliers an opportunity to submit evidence to show that the circumstances are not likely to recur—that is, that they have “self-cleaned”. Suppliers are also entitled to make the case that they are not subject to a ground for exclusion, and to make representations more generally.
The self-cleaning evidence must be sufficient to satisfy the contracting authority that the circumstances that gave rise to potential exclusion are not likely to occur again. Importantly, subsection (3) stipulates that contracting authorities must not make disproportionate requests for information or remedial evidence. That protects suppliers by ensuring that contracting authorities focus on the most important aspects of self-cleaning relevant to the particular circumstances.
The hon. Member for Vauxhall understandably takes us back to the issue of discretionary versus mandatory exclusions, which we debated the other day. One thing we need to bear in mind—perhaps with regard to more rarefied objects than paperclips—is that there may be circumstances in which particular substances or items can be procured only from certain suppliers. That may be essential for the operation of certain processes or the response to certain emergency situations.
Florence Eshalomi
As I said, I understand why the Minister says that there should be some discretion, and that it should lie with the contracting authority. However, does he agree that such discretion should not stretch to the point at which an organisation is on the debarment list, and there is an issue of national security?
Alex Burghart
There is absolutely the issue of national security. However, it is important that we retain an element of flexibility, so that in extremis, if there is only one provider of an essential good, the public authorities that need it still have access to it, even if there are concerns about other activities performed by a certain company. Although I completely understand the hon. Lady’s desire to prevent companies whose practices we disagree with from unduly benefiting from the public purse, we have to retain a degree of flexibility so that, in extremis, public authorities can get what they need.
Question put, That the amendment be made.
Alex Burghart
Schedule 6 sets out the mandatory grounds for exclusion. They consist of criminal offences and other misconduct serious enough to merit exclusion if the circumstances in question are likely to reoccur.
Florence Eshalomi
As the Minister highlighted, the schedule covers the grounds on which a supplier can be excluded, with some general provisions on how the suppliers are treated. I have touched on our concerns about excluded suppliers and excludable systems, and we will say more about that when we come to schedule 7. However, we believe that the scope of schedule 6 could be widened to cover issues of national security, to ensure that suppliers who are a risk to national security are not included in our supply chain, even when contracting authorities want paperclips. We support the increase in the scope of the schedule, so that it excludes suppliers who have committed serious offences, and who represent a concern to the authorities in the delivery of services. We are pleased to support the schedule.
Question put and agreed to.
Schedule 6 accordingly agreed to.
Schedule 7
Discretionary exclusion grounds
Alex Burghart
I beg to move amendment 87, in page 110, line 33, schedule 7, leave out paragraph 15.
This amendment would leave out the discretionary exclusion ground relating to forced organ harvesting.
Amendment 87 removes an amendment made to schedule 7 in the other place. It created a discretionary exclusion ground for suppliers with connections to forced organ harvesting, which is, of course, an utterly abhorrent practice. However, serious unethical behaviour particular to a certain industry is already covered by the ground of professional misconduct. The Bill is not the appropriate place to address the issue.
Every exclusion ground, whether mandatory or discretionary, must be considered for each and every supplier for each procurement. I am sure the Committee can appreciate how burdensome that would be when there are thousands of contracts every year. We want to make public procurement simpler and less burdensome for suppliers, particularly those that are small and medium-sized enterprises, and to drive value for money for the public. Adding additional exclusion grounds costs contracting authorities time and money. It is therefore crucial that we limit exclusion grounds to those that pose a major risk to public procurement. No supplier to the UK public sector has been involved in forced organ harvesting, as far as I am aware.
I am, however, pleased to say that the Government have already taken significant steps to make it explicit that the overseas organ trade, or complicity in it, will not be tolerated. Under the Health and Care Act 2022, it is already an offence to travel outside the UK to purchase an organ. That is why I believe that the amendment is necessary to overturn a well-meaning but, in practice, very challenging change to the Bill.
Florence Eshalomi
As the Minister highlighted, amendment 87 would sadly overturn Lords amendment 91, made on Report, in relation to forced organ harvesting. I agree with the Minister that there can be no doubt that organ harvesting is an abhorrent practice, but we should be careful when saying that this measure would just result in additional bureaucracy and time in contracts and procurement.
The practice of forced organ harvesting involves the removal of organs from a living prisoner, which results in their death or near death. It is something that none of us should stand by and watch. Linking this back to taxpayers’ money, no taxpayer would expect a single penny of their public money to go to a company explicitly linked to this practice. Tragically, there is evidence that forced organ harvesting may not be a particularly niche issue.
The Minister highlighted that the measure, although well intended, would add more time and another layer of bureaucracy. I want to go back to the debates in the other place, and some of the powerful words from Lord Alton of Liverpool and Lord Hunt of Kings Heath, who moved the amendment that led to our discussion today. Both made moving and compelling arguments for the inclusion of the measure against forced organ harvesting, providing examples of evidence that the practice is taking place on an extremely depressing scale in China.
The excellent speeches made by Lord Alton and Lord Hunt have been backed up by the Office of the UN High Commissioner for Human Rights, which stated that serious human rights violations have been committed in the Xinjiang Uyghur Autonomous Region,
“in the context of the Government’s application of counter-terrorism and counter-‘extremism’ strategies. The implementation of these strategies, and associated policies in XUAR has led to interlocking patterns of severe and undue restrictions on a wide range of human rights. These patterns of restrictions are characterized by a discriminatory component, as the underlying acts often directly or indirectly affect Uyghur and other predominantly Muslim communities.”
The OHCHR also stated that the treatment of persons held in the system of so-called vocational education and training centres—VETC facilities—is,
“of equal concern. Allegations of patterns of torture or ill-treatment, including forced medical treatment and adverse conditions of detention, are credible, as are allegations of individual incidents of sexual and gender-based violence. While the available information at this stage does not allow OHCHR to draw firm conclusions regarding the exact extent of such abuses, it is clear that the highly securitised and discriminatory nature of the VETC facilities, coupled with limited access to effective remedies or oversight by the authorities, provide fertile ground for such violations to take place on a broad scale.”
That is damning. It shows there is evidence of this already happening. In an April 2022 paper published in the American Journal of Transplantation, Matthew P. Robertson and Jacob Lavee stated:
“We find evidence in 71 of these reports, spread nationwide, that brain death could not have properly been declared. In these cases, the removal of the heart during organ procurement must have been the proximate cause of the donor’s death. Because these organ donors could only have been prisoners, our findings strongly suggest that physicians in the People’s Republic of China have participated in executions by organ removal.”
As a country, we must stand steadfast against these practices and ensure that any supplier with ties to forced organ harvesting is not allowed anywhere near our procurement system. I do not think taxpayers would expect anything less. No one wants to be linked to these horrific practices.
I fully understand and appreciate that the Minister may have covered these and other concerns in his remarks, but we may want to consider that there is no doubt this practice is an exclusion ground. In Committee in the Lords, the Minister, Baroness Neville-Rolfe, said it was almost certain that it would be covered by paragraph 12, but I think we have to ask ourselves, how many times have we heard that something is almost certain, only for it not to be covered when the Bill passes? We cannot and should not take chances on this issue. It is a fundamental and critical issue of human rights. If the Committee is to do its job, we cannot support the attempts to remove forced organ harvesting as a discretionary exclusion ground. For those powerful and valid reasons, I will not be supporting the amendment.
Kirsty Blackman (Aberdeen North) (SNP)
It is tempting to think that forced organ harvesting is so far removed from anything that we consider human, or a normal occurrence, that it does not happen—but it does. As the shadow Minister laid out, the issue was discussed in significant detail in the other place. We know it occurs.
The Minister has given some level of assurance that other parts of the Bill cover this practice. Could he be explicit that he does not believe that any supplier involved in forced organ harvesting would be eligible to receive a public contract through the procurement framework set out in the Bill? If he can give that explicit assurance that he believes the practice is covered elsewhere in the Bill, and that provisions elsewhere in the Bill adequately do the job of this provision, I would be happy not to oppose the amendment. That assurance from the Minister would give us a measure of reassurance and comfort that the Bill covers everything that he intends and expects.
Alex Burghart
We are assured that the absolutely abhorrent practice of forced organ harvesting would qualify as serious unethical behaviour. Consequently, that would mean that, in the Bill, it would be covered by the grounds of professional misconduct. Within the Bill, we have that provision; outwith the Bill, we have the Health and Social Care Act, to which I referred in my remarks. I hope that no one will take away anything other than the fact that the Government are strongly opposed to this practice and to the people who conduct this practice and that we wish public procurement to have no part in it.
Question put, That the amendment be made.
Alex Burghart
The amendment would introduce a new discretionary exclusion ground in relation to sanctions violations. The Government of course expect all businesses to comply with their obligations under the UK sanctions regime.
In 2016, the Office of Financial Sanctions Implementation was established to ensure that sanctions are properly understood, implemented and enforced. A range of tools are available to encourage compliance, including monetary penalties. However, we do not consider that sanctions violations pose a sufficient risk to public procurement to justify a ground for exclusion.
I am not aware of any evidence that public contracts have been awarded to suppliers that have violated sanctions. It is important that the exclusions regime focuses on the most pertinent risks, because each additional exclusion ground will increase burdens on contracting authorities and suppliers. That is why we have taken a targeted, risk-based approach, informed by extensive consultation across the public sector and with those who are most impacted by the exclusions regime, such as small and medium-sized enterprises. I respectfully request that the amendment be withdrawn.
Question put, That the amendment be made.
Alex Burghart
Amendment 112 would introduce a new discretionary ground for exclusion in relation to labour law infringements. There are already robust grounds for exclusion for the most egregious violations of the rights of workers. These are based on the serious labour offences within the purview of the director of labour market enforcement. Compared with the mandatory grounds in existing legislation—the Public Contracts Regulations 2015—they represent an expansion in the scope of the grounds on which suppliers can be excluded from procurements for labour violations, with new grounds including failure to pay the national minimum wage and offences relating to employment agencies.
It is right that exclusion is reserved for the most serious circumstances or behaviour that could, if not addressed, raise a sufficient risk to contracting authorities or the public as to make the supplier unfit to bid for public contracts. Nevertheless, where the treatment of workers and the protection of their rights is relevant to the contract being procured, contracting authorities are entitled to set conditions of participation in these areas and to evaluate treatment of workers as part of the award criteria in assessing tenders. This may be the case, for example, for the procurement of contracts for labour-intensive services. I respectfully urge the hon. Member to withdraw the amendment.
Question put, That the amendment be made.
Alex Burghart
I beg to move amendment 88, in schedule 7, page 111, line 44, at end insert—
“‘event’ means a conviction, decision, ruling, failure or other event by virtue of which a discretionary exclusion ground would apply to a supplier;”
This amendment would insert a definition of “event” for the purposes of paragraph 16 of Schedule 7.
The Chair
With this it will be convenient to discuss that schedule 7 be the Seventh schedule to the Bill.
Alex Burghart
Amendment 88 is a technical amendment that inserts a definition of “event” for the purpose of the five-year look-back period in schedule 7. It mirrors the same definition already included in schedule 6, but refers to an event by virtue of which a discretionary exclusion ground applies to a supplier.
Schedule 7 sets out the discretionary grounds for exclusion. Discretionary grounds involve a range of circumstances, some of which are potentially less serious and might not merit exclusion. It might depend on the circumstances relating to the exclusion ground, the type of contract being procured such as its urgency or criticality, or facts specific to the procurement—the number of bidders, for example.
Similar to the mandatory exclusion grounds, the discretionary grounds are subject to a five-year, look-back period, as set out in paragraph 16, whereby only convictions or other events that the decision maker was aware of within the past five years count when assessing whether grounds apply. Again, that is subject to a transitional regime to avoid the unfair retrospective effect of new exclusion grounds for events that would not have given rise to exclusion prior to the coming into force of the Bill.
The discretionary grounds generally apply to misconduct or circumstances involving either the supplier or a connected person of the supplier. Connected persons are defined in paragraph 44 of schedule 6, as I explained earlier. As with schedule 6, I hope that we have achieved our objective of making the exclusion grounds both clearer and more consistent.
Florence Eshalomi
As the Minister outlined, the amendment seeks to define the events, with reference to the relevant paragraph of the schedule on determining temporal cut-off points for events that may make a supplier excludable. We believe that it is a tidying-up amendment to ensure that the event is defined in the schedule, so we do not wish to oppose it.
More widely, there are some faults with the schedule and its implementation, but the Opposition view it as a step forward in procurement versus the Public Contracts Regulations 2015. We recognise the importance of clauses on matters such as labour markets and environmental misconduct, but the appropriateness of the scope of schedule 7 will depend on how stringent the rules on excludable suppliers are applied by contracting authorities. We should consider that when assessing how well the terms of the schedule will work in a few years’ time.
I would be grateful if the Minister explained why different timescales have been used in different parts of the Bill, as set out in paragraph 16. How were the decisions made for different grounds? We do not seek further amendments to the schedule, which we are happy to support.
Alex Burghart
I thank the hon. Lady for her comments and support of the schedule. She asked about the look-back periods in paragraph 16 and why they differ—perhaps she could intervene to clarify her question.
Florence Eshalomi
I asked about the different timescales outlined in paragraph 16. I would like a better understanding of how those decisions were reached.
Alex Burghart
I am embarrassed to say that my memory is failing me, but I will let the hon. Lady know later in the afternoon.
Florence Eshalomi
Thank you.
Amendment 88 agreed to.
Schedule 7, as amended, agreed to.
Clause 58 ordered to stand part of the Bill.
Clause 59
Notification of exclusion of supplier
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clauses 60 and 61 stand part.
Government amendments 42 to 44.
Clause 62 stand part.
Government amendments 45 to 47.
Clauses 63 and 64 stand part.
Government amendment 76.
Government new clause 9—Debarment decisions: interim relief.
Government new clause 10—Debarment proceedings and closed material procedure.
Government new clause 15—Debarment decisions: appeals (No. 2).
Alex Burghart
We move on to a monster grouping. The clauses, which concern the debarment list, are important, ground-breaking provisions that will support contracting authorities to reject bids from suppliers that pose the most serious risk.
Clause 59 requires contracting authorities to notify either a UK, Welsh or Northern Irish Minister—depending on the status of the contracting authority—whenever action is taken under the exclusions regime against a supplier or subcontractor. Subsection (1) sets out the relevant actions, which include exclusion from a procurement, rejection of a tender, rejection of an application to join a dynamic market or removal from a dynamic market, or the replacement of an associated person or intended subcontractor.
The obligation to notify a relevant appropriate authority is in subsection (2), and must be made within 30 days of the relevant action. Subsection (3) sets out the information that must be in the notification. There is also an obligation in subsections (4) and (5) to notify within 30 days where a challenge is brought under part 9 of the Bill against a contracting authority with regard to any exclusion, and also on conclusion of any such proceedings.
Florence Eshalomi
This group of amendments and new clauses pertains to the debarment regime and a new interim relief scheme that suppliers can use when they wish a decision to be put on the debarment list. We support the addition of a debarment list to the Bill. It is right that suppliers that represent a significant risk to contracting authorities and the public are identified. Clearly, this is a strong step and represents a higher bar than simply excluding a supplier from a procurement tender process.
That high-bar intention for the list has been made clear by the Government and in the Minister’s remarks. I refer back to the letter of the then Minister Lord True to Minister Baroness Neville-Rolfe:
“I should start by explaining that the debarment list is intended to focus on the most serious cases of supplier misconduct, where suppliers may pose a significant risk to contracting authorities or the public.”
Ministers must also consider whether the circumstances that led to the application of the exclusion ground are likely to occur again. However, the Government might have changed their mind since then. Will the Minister confirm whether that is still the intention in that case?
Clarity is needed. The need for clarity highlights a potential flaw in the existing clauses: there is still some ambiguity about what the bar actually is to be placed on the debarment list. As drafted, any supplier deemed to be an excluded or excludable supplier can, in theory, be added to the list. It is also possible that no suppliers, even those with egregious cases, are added to the list.
The only other issue that I will raise is that of the threshold. Will there be additional guidance for suppliers and contracting authorities? The list can involve severe reputational and financial damage, so it is right to have safeguards. We will support the measure if the Minister can outline the additional safeguards.
Alex Burghart
The hon. Lady is right that Lord True wrote to a Member of the House of Lords about this, and we do not believe that the Government’s position has changed since then. I am afraid I cannot remember her second point—if she is happy to intervene on me, that will refresh my memory.
Alex Burghart
I look forward to receiving the hon. Lady’s letter.
Question put and agreed to.
Clause 59 accordingly ordered to stand part of the Bill.
Clauses 60 and 61 ordered to stand part of the Bill.
Clause 62
Debarment list
Amendments made: 42, in clause 62, page 43, line 30, leave out from “section” to end of line 39 and insert
“and, as part of that entry, must—
(a) state the exclusion ground to which the entry relates, and whether it is a mandatory exclusion ground or a discretionary exclusion ground, and
(b) indicate the date on which the Minister expects the supplier to cease to be an excluded or excludable supplier by virtue of the stated exclusion ground (and, accordingly, expects the entry to be removed from the list).
(4) A list kept for the purposes of this section is the ‘debarment list’.”
This amendment would make it clearer that each entry will relate to one exclusion ground and, as such, could be challenged individually.
Amendment 43, in clause 62, page 43, line 44, at end insert—
“(5A) The Minister may not enter a supplier’s name on the debarment list before the end of the period of eight working days beginning with the day on which the Minister gives notice to the supplier in accordance with subsection (5) (the ‘debarment standstill period’).
(5B) The Minister may not enter a supplier’s name on the debarment list if—
(a) during the debarment standstill period—
(i) proceedings under section (Debarment decisions: interim relief)(1) (interim relief) are commenced, and
(ii) the Minister is notified of that fact, and
(b) the proceedings have not been determined, discontinued or otherwise disposed of.”
This amendment would ensure that an application for interim relief under the new clause inserted by NC9 would suspend the Minister’s decision to add a supplier’s name to the debarment list.
Amendment 44, in clause 62, page 44, line 1, leave out from “review” to end of line 5 and insert—
“(b) may remove an entry from the debarment list at any time, and
(c) may revise a date indicated under subsection (3)(b).
(7) If a Minister of the Crown voluntarily removes an entry from the debarment list in connection with proceedings under section 64 (debarment decisions: appeals), a Minister of the Crown may reinstate the entry only after the proceedings have been determined, discontinued or otherwise disposed of.
(7A) A Minister of the Crown must remove an entry from the debarment list if the Minister is satisfied that the supplier is not an excluded or excludable supplier by virtue of the ground stated in the entry.”—(Alex Burghart.)
This amendment would restrict modifications that could be made to the debarment list, provide for the Minister to voluntarily suspend a decision to add an entry to the debarment list in connection with proceedings, and clarify that the Minister must remove an entry where a particular ground no longer applies.
Clause 62, as amended, ordered to stand part of the Bill.
Clause 63
Debarment list: application for removal
Amendments made: 45, in clause 63, page 44, line 16, leave out from “for” to end of line 17 and insert—
“(a) the removal of an entry in respect of the supplier from the debarment list, or
(b) the revision of the date indicated as part of such an entry under section 62(3)(b).”
This amendment would ensure that a supplier can apply to change the date indicating when it will cease to be an excluded or excludable supplier.
Amendment 46, in clause 63, page 44, line 21, leave out from “since” to “, or” and insert
“the entry was made or, where relevant, revised”.
This amendment would allow for the fact that a supplier may make different applications in respect of the same or different entries.
Amendment 47, in clause 63, page 44, line 23, after “subsection (1)” insert
“in relation to the entry or, where relevant, revision”.—(Alex Burghart.)
This amendment is consequential on Amendment 45.
Clause 63, as amended, ordered to stand part of the Bill.
Clause 64 disagreed to.
Clause 65
Timeline for removal of suppliers
Question proposed, That the clause stand part of the Bill.
Alex Burghart
Clause 65, which was added to the Bill in the other place, requires the Government to publish a timetable for the removal of Government surveillance equipment where there is evidence that a provider has been involved in modern slavery, genocide or crimes against humanity. That would require the Government to undertake a review of evidence that existing surveillance suppliers or subcontractors have been involved in those matters. Given the size and complexity of technology supply chains, any review of that nature would be costly and resource-intensive; it would need to cover hundreds, if not thousands, of companies.
The measure is intended to target Chinese suppliers, but it is not guaranteed to lead to action against them. The evidence surrounding the complicity of surveillance suppliers in the oppression of Uyghurs in Xinjiang is highly contested, and it would likely be difficult to show that any supplier had been involved in the matters set out in the clause. Although it is unclear what precisely is meant by “established evidence” that a provider has been “involved” in the specified abuses, proving that those suppliers knowingly provided technology for use in human rights abuses would be especially difficult. Even if there were sufficient evidence to do so, the cost and disruption of removing such surveillance equipment from across the entire Government estate would be significant. For that reason, public procurement policy has tended to focus on preventing unfit suppliers from participating in future procurements, rather than requiring the termination of existing contracts.
However, the Government are deeply concerned by both the accusations of modern slavery and the national security implications posed by such equipment, and they are taking action. In November, they announced that all Government Departments will be expected to remove such equipment from sensitive sites and to avoid procuring it in the future. We are also strengthening our powers in the Bill by introducing an exclusion ground for suppliers considered to pose a threat to the national security of the United Kingdom. Combined with the new powers for a centralised debarment list, that will mean that where the risk is sufficiently serious, Ministers can act quickly to ensure suppliers that threaten national security face exclusion from all contracts across the public sector.
I believe that we have taken decisive action in this area, both in the written ministerial statement and in the Bill. However, we are mindful of the concerns raised in both Houses, and we will continue to reflect carefully on those views as we move forward with the legislation and its implementation.
Florence Eshalomi
I thank the Minister for his closing remarks on that and the need to address some of the concerns. The clauses mandate the eventual removal of physical technology or surveillance equipment from the Government’s procurement system supply chain, where there is substantiated evidence of modern slavery, genocide or crimes against humanity.
Kirsty Blackman
Throughout the discussion of Hikvision and other companies in relation to human rights abuses, genocide and crimes against humanity, the Minister has missed the point. The shadow Minister has absolutely got the point.
For a start, the US has already blacklisted Hikvision. If the US believes that there is enough evidence to do that, and the Scottish Government are getting rid of the Hikvision cameras we have in Scotland, I do not see why the UK Government are unable to act in that regard. Two other jurisdictions have found enough evidence to debar Hikvision from providing cameras involved in our public life, yet the UK Government feel that there is still not enough evidence. They are somehow suggesting that perhaps the situation is over-egged, but it appears that the Foreign Affairs Committee does not think the situation is an over-exaggeration, and that it thinks that there is actually a risk and danger.
This is not just about the threat to our national security, although that is obviously incredibly important, and the Labour Front Benchers have been clear about national security throughout our discussion of the Bill. This is also about supporting a company that is committing human rights abuses. It does not matter whether a company is committing them here or elsewhere; the reality is that through public procurement, we are funding a company using facial recognition in mosques and committing atrocities against Uyghur Muslims in the Xinjiang region. How is that okay just because it is not causing any problems here?
Even if the company were not causing any threat to national security, this is about the direction of travel. On modern slavery, for example, the Government are pretty clear that no matter where that is happening, we do not want to be entangled with suppliers involved in modern slavery and enslaving people. We should not want to be involved with, and companies and suppliers should not be giving public money to, the people committing these crimes. Just because this is not modern slavery, it does not mean that they are not creating significant problems and putting people in severe danger as part of the extreme regimes that they are working for.
I do not see the justification in allowing public money to be given to any of these organisations. As I said last week, it is not as though this is a high bar; it is a low bar. We are saying that modern slavery and genocide are crimes against humanity. Those are pretty much the most serious things we can think of. Any organisation involved in those should not get public money, whether or not it is a threat to national security.
I am slightly pleased that the Government and the Minister seem a bit more willing to look at the possibilities regarding Hikvision. I appreciate that removing it from secure and sensitive sites, particularly, is a priority for the Government—they have agreed that they will do that—but that is not enough; we should not fund these organisations at all. Asking the UK Government to make a move in that regard in order to remove this technology and ensure that Hikvision does not get any more of our money is incredibly important, and not too much to ask.
I stress again the point made by the hon. Member for Vauxhall: the clause does not ask for immediate removal. It gives the Government six months to publish a timeline for removal—it is not giving them six months to remove the stuff, but to produce a timeline. They are not being asked for something entirely unreasonable. There are other camera providers and technologies out there that could be used instead to provide safety and security for places that we want to be safe and secure, without our supporting a company propping up a regime that is profiling and committing crimes against humans just because they happen to be Muslim. That is completely unacceptable, no matter where in the world it is doing that. Whether or not this is being done in the UK, the Government should take action on that.
I will therefore strenuously resist any attempt to remove clause 65 from the Bill. I used this phrase earlier, but it should not be too much to ask for the Government to take action on this issue. I am pleased that the Minister seems to have moved his language slightly since our previous debate, but it is not good enough and we are not there yet. We need a firm commitment from the Government to remove this technology that is causing so much harm to the lives of so many and to remove the support for the people causing such harm.
Alex Burghart
I thank hon. Members for their remarks. As I said, we think that the clause as drafted would be unworkable. On what the hon. Members for Vauxhall and for Aberdeen North said, we are moving to a new debarment regime, and I am not able to prejudge who will be covered by that regime. Suppliers will be considered for addition to the debarment list based on a rigorous and fair prioritisation policy. That policy is under development, and it is too early to say which suppliers will or will not be added to the debarment list.
We should remember that the new regime will give broader exclusion powers to authorities that have primary responsibility for applying the exclusions regime. The sorts of crimes we have touched on this afternoon, such as organ harvesting, modern slavery and the like, are very serious crimes against people and humanity, and no doubt that will have a bearing on future judgments. I appreciate where the amendment in the Lords came from, but we do not think the clause is workable. As a Government, however, we continue to consider the issue carefully.
Question put, That the clause stand part of the Bill.
Alex Burghart
I beg to move amendment 50, in clause 66, page 45, line 30, at end insert—
“(5A) The implied term does not prevent a contracting authority—
(a) requiring the use of a particular system in relation to electronic invoices;
(b) in the case of a defence authority (as defined in section 7(5)), requiring the use of a system that requires the payment of fees by the supplier.”
This amendment would ensure that a contracting authority can require the use of a particular system in relation to electronic invoices, and that a contracting authority that is a defence authority can require that the system is one that requires the payment of fees by the supplier.
Alex Burghart
Before I discuss Government amendment 50, I will take this opportunity to go back to the question that the hon. Member for Vauxhall asked me about timescales for exclusion. Generally, the look-back is five years, but for some offences, we have transitional provisions to avoid creating retrospective offences in the early years of implementation. I am happy to write to her with a more detailed explanation if that will be useful.
Amendment 50 will ensure that the clause, which governs electronic invoicing, does not inadvertently prevent contracting authorities from requiring suppliers to submit electronic invoices via invoice processing systems. Invoice processing systems are used by many contracting authorities and we want to make it clear that their use is permitted under the clause.
The amendment will also ensure that defence authorities are allowed to charge suppliers for using such systems. For security reasons, the Ministry of Defence does not permit suppliers to have direct access to their internal system to submit invoices and track payments in relation to its contracts. Suppliers are thus required to use and register with a third-party system in order to carry out invoicing and payments with the MOD. They are charged a fee for use of that system. Amendments 51 and 52, and 61 to 64 are all related to that, and we will return to them later in Committee.
More broadly, the clause applies a term to every public contract to ensure that invoice processing is done electronically. That is essential for swifter payments to suppliers, proper audit trails and increased visibility on public contract spend. It retains the principles of the existing regime with regard to e-invoicing. Nothing in a contract may restrict or override the implied term.
Florence Eshalomi
I beg to move amendment 110, in clause 67, page 46, line 32, at end insert—
“(10A) Within six months of the passage of this Act, the Secretary of State must prepare, publish and lay before Parliament a report on the effectiveness of this section in ensuring prompt payment of small and medium-sized enterprises.
(10B) Not later than 6 months after the report has been laid before Parliament, a Minister of the Crown must make a motion in the House of Commons in relation to the report.”
This amendment would require the Government to report to Parliament on the effectiveness of this section in ensuring prompt payment of SMEs.
The amendment would add provisions to mandate that, within six months of passing this Act, the Government produce and publish a report on the effectiveness of implied payment terms in public contracts in ensuring the prompt payment of small and medium-sized enterprises.
One of the problems we see in procurement is the failure to promptly pay suppliers down the supply chain. Many of those suppliers are small and medium-sized enterprises, which require prompt payments to pay wages and bills, and, in some cases, to keep their company going. Failure to pay SMEs the money that they are owed can lead to serious repercussions.
The Government talk about improving the chances of SMEs when it comes to procurement, but for far too long, this has just been a lot of talk and no action. The statistics for SMEs and procurement are truly shocking. Analysis by the Spend Network found that big corporations still win the lion’s share—more than 90%—of contracts worth £30 billion a year that are deemed to be suitable for bids from smaller businesses.
Research from the British Chambers of Commerce and Tussell found that just over one in every five pounds, or 21%, spent by the Government on public sector procurement in 2021 was awarded to SMEs. They also found that SMEs now receive a relatively smaller amount of reported direct Government procurement spending than they did five years ago.
As a proportion of the overall procurement budget, direct spend with SMEs by local government bodies was the highest at 38%. NHS bodies across England spent 22% of their procurement budget with SMEs, while central Government was significantly lower than the average, awarding only 11% of contracts to SMEs.
We have touched on the issue of subcontractors and why they should be paid on time by those contracting out their services, whether that is a contracting authority, a prime supplier or a supplier three or four rungs down the supply chain. We are pleased to see terms to protect the 30-day payment standard between contracting authorities and prime suppliers, but, as the Bill stands, we have concerns about its ability to properly protect subcontractors down the supply chain.
On Second Reading, the Paymaster General said:
“On the prime, that is easy: we will be paying the prime contractor within the 30-day period. People in the supply chain will be aware of the contract under which they are supplying to the prime, and we expect that 30-day payment to trickle all the way down the chain. It is the first time that such a measure has been incorporated. It really will be for primes to be held to account. I say to hon. Members of this House that if partners to a contract are not being paid without good cause, it will call into doubt the contract with the prime supplier, so it will be very much in the interest of the prime supplier to deliver. Every effort the Government have made to improve the payment terms through the supply chains has so far been adhered to pretty well by industry. Across Government, we have seen a significant improvement in payments out to industry, and we are expecting a ripple-down effect as a result of the Bill.”—[Official Report, 9 January 2023; Vol. 725, c. 347.]
Although we recognise what the Paymaster General was saying, we are left with some concerns, especially for the SMEs that are waiting for that vital payment. I do not think we can expect these terms to ripple down the supply chain, and it may take a while for a ripple-up effect to take place if a subcontractor down the line misses payments to another subcontractor in the supply chain, which could be serious. The Government say that that would reflect badly on the prime contractor, but what methods will the Minister use to track this? How will he be able to tell whether it is effective?
Our amendment would add a requirement to assess the effectiveness of the Government’s claims about the ripple-down effect within six months of the Bill passing. As the Paymaster General highlighted on Second Reading,
“This is the first time that such a measure has been incorporated.”—[Official Report, 9 January 2023; Vol. 725, c. 347.]
Surely the Minister owes it to suppliers across the supply chain to check whether this method is effective. This should not be an arduous report to comply with, but it could provide a crucial stress test for the new system and feed into tweaks that go even further to ensure that all suppliers are paid on time. I hope that the Minister will agree with us about bringing SMEs into the procurement system and that those SMEs need to be paid in a timely manner. I urge him to support our amendment.
Alex Burghart
Amendment 110 would require Ministers to report to Parliament within six months of the Bill’s passage, detailing how effective the implied payment terms in clause 67 have been in ensuring prompt payment of small and medium-sized enterprises. The new regime will not come into force immediately on passage of the Bill; secondary legislation will be needed prior to the go-live, as will the comprehensive programme of learning and development and the digital platform to support the increased transparency obligations. I am afraid, therefore, that the time period in the amendment is impractical.
In addition, there is already a requirement for contracting authorities to publish payment information, set out in clause 68 on payments compliance notices, which requires reports to be published on the speed of invoice payments one month after the end of each successive six-month period. Those reports will enable interested parties, including taxpayers and suppliers, to see for themselves how prompt payment performance has changed as a result of the new regime without the need for additional reporting. The reports will address payments to all suppliers of a contracting authority, rather than just SMEs, and will be publicly available for all to inspect. I therefore respectfully request that the amendment be withdrawn.
Question put, That the amendment be made.
Alex Burghart
I beg to move amendment 51, in clause 67, page 46, line 33, at end insert—
“(za) ‘electronic invoice’ and ‘required electronic form’ have the meanings given in section 66(3);”
This amendment would clarify that “electronic invoice” and “required electronic form” in clause 67(8) have the same meanings as in clause 66(3).
Alex Burghart
Amendments 51 and 52 are technical amendments. Amendment 51 clarifies that clauses 67 and 66 mean the same thing when they refer to “electronic invoice” and “required electronic form”. Amendment 52, similar to amendment 50, ensures that contracting authorities can require the use of a particular system in relation to the processing of electronic invoices.
Florence Eshalomi
The two amendments are uncontroversial and clarify points covering the terms of use. We will not oppose them.
Amendment 51 agreed to.
Amendment made: 52, in clause 67, page 46, line 36, after “address” insert
“, or through an electronic invoicing system,”.—(Alex Burghart.)
This amendment would clarify that a reference to a contracting authority receiving an invoice for the purposes of clause 67 includes receiving an electronic invoice through a system specified in the contract.
Question proposed, That the clause, as amended, stand part of the Bill.
Alex Burghart
Briefly, clause 67 will set the standard by which all contracting authorities will be expected to pay their suppliers. The clause will imply 30-day terms into public contracts. Any attempts to override those payment terms will be without effect, unless the arrangements are to pay quicker than 30 days. Ministers may, by regulations, vary the number of days, provided that the number of days to pay suppliers does not exceed 30 days. SMEs will benefit from 30-day payment terms on a much broader range of public sector contracts, including those previously covered by public utilities and defence. The clause does not apply to concession contracts, utilities contracts awarded by a private utility or contracts awarded by a school.
Question put and agreed to.
Clause 67, as amended, accordingly ordered to stand part of the Bill.
Clause 68
Payments compliance notices
Alex Burghart
I beg to move amendment 53, in clause 68, page 47, line 18, at end insert “, or
(d) in relation to a concession contract.”
This amendment would exempt contracting authorities from the requirement to publish a payments compliance notice in relation to a concession contract.
Alex Burghart
Amendment 53 will exempt concession contracts, and payments made under them, from the scope of payments compliance notices. This minor technical amendment aligns with the scope of clause 67 on implied payment terms in public contracts, from which concession contracts are excluded, and brings consistency across the payment clauses. It will also save contracting authorities from additional bureaucracy, as they will no longer have to produce a payments compliance notice where concessions are the only payments they are making.
Clause 68 will require contracting authorities to publish a payments compliance notice—specified information detailing how quickly they have paid suppliers—every six months. We are strengthening payment legislation to ensure that the public sector is held to account on its own performance. We are aligning how the public and private sectors report on their payment performance, and we will report against the same set of metrics. By creating a central repository of Government payment information, we will increase transparency of public sector payment performance and make external scrutiny of that performance easier. The clause does not apply to private utilities, contracts awarded by schools or Northern Ireland contracting authorities.
Florence Eshalomi
The amendment will exclude concession contracts from the provisions of the clause. Given that the nature of these contracts is to give the right to exploit a developed resource, it makes sense to exclude them from this part of the Bill. We will not be voting against the amendment and we welcome the provisions in clause 68. Contracting authorities should report on their compliance with the 30-day payment term. As we have touched on previously, sunlight is the best disinfectant, and the clause shines a light on whether contracting authorities are complying with payment terms.
As I highlighted in the debate on clause 67, however, I have concerns as to whether this will lead to a ripple-down effect, although benefits may arise from suppliers feeling some level of scrutiny when they are responsible for paying subcontractors, many of which, as I mentioned, will be SMEs—the same SMEs that are currently struggling in the procurement system. I have touched on the value of those contracts and the fact that the big corporations continue to win the lion’s share of them, as shown by research from the British Chambers of Commerce. That research also found that direct spend is still quite a small proportion of the overall procurement budget.
I am disappointed that the Government did not see the sense of our amendment 110. I hope that will take action to ensure that suppliers are acting in the spirit of the clause.
Alex Burghart
We intend to issue guidance separately to contracting authorities, setting out how to include spot checks on the payment performance of supply chain members through terms and conditions. We do not think that needs to be done in legislation; it can be addressed through guidance. Furthermore, contracting authorities are often better placed to use civil remedies and can have a significant influence over suppliers, so they should hold suppliers to account and ensure that payment terms are passed down the supply chain to subcontractors, enforcing such terms through contractual remedies if necessary.
Amendment 53 agreed to.
Clause 68, as amended, ordered to stand part of the Bill.
Clause 69
Information about payments under public contracts
Question proposed, That the clause stand part of the Bill.
Alex Burghart
Clause 69 requires contracting authorities to publish specified information about any payment of more than £30,000 made by the authority under a public contract. That information must be published before the end of the period of 30 days beginning with the last day of the quarter in which the payment was made. The financial threshold and time limit for publication may be amended by regulations.
The clause does not apply to public contracts awarded by private utilities or schools, or to concession contracts. Its purpose is to bring transparency to the expenditure of public money, and to allow interested parties to ascertain the value that was specified in the tender, the value of the contract at the point of award, and how the contract spend is progressing. The Northern Ireland Executive have decided to include a derogation from this publication obligation.
Florence Eshalomi
As the Minister outlined, the clause relates to the publication of information on payments of over £30,000 by contracting authorities. Its impact will be heavily affected by the ultimate state of the online system, as specified in clause 93. It is frustrating that many aspects of the Bill are to be set out in secondary legislation: we will not know whether this is a sensible and proportionate measure until we know how the online system promised by the Government will work. However, we believe that this is an important provision of the Bill, and as such we do not intend to oppose it.
Question put and agreed to.
Clause 69 accordingly ordered to stand part of the Bill.
Clause 70
Assessment of contract performance
Question proposed, That the clause stand part of the Bill.
Alex Burghart
Clause 70 has two main functions. First, it requires contracting authorities that have set key performance indicators in their public contracts under clause 52 to assess performance against each KPI, and to publish the results at least once every 12 months. The exact nature of the information required in each case will be set out in regulations made under clause 90. The purpose of this provision is to bring greater transparency to the performance and management of public contracts.
Secondly, the clause requires contracting authorities to publish a notification in certain circumstances relating to breach of contract or poor performance by a supplier. The circumstances are equivalent to those that constitute the discretionary exclusion ground for breach of contract and poor performance in paragraph 13 of schedule 7. The purpose of the provision is to provide verifiable information for contracting authorities on suppliers that meet the exclusion ground for breach of contract or poor performance. Clause 70 does not apply to private utilities, and the subsections relating to poor performance do not apply to light-touch contracts.
Florence Eshalomi
As the Minister outlined, the clause relates to key performance indicators and lays out how they will be assessed in the system. Subsection (2) mandates an annual assessment of the key performance indicators and the publication of information in this area. Again, this subsection makes reference to clause 93 in terms of how information relating to the key performance indicators is to be published. It might be useful to consider what information should be part of that system.
There could be merit in having an obligation to publish information on performance workflows and the relationships between contracting authorities and suppliers. The obligation could mean that contracting public bodies must publish the following on a six-monthly basis in respect of service contracts: operational performance against contracts; changes to staff terms and conditions; financial performance and payments made to contractors; costs of client contract management; any financial penalties or service credits; and details of meetings between decision makers. They could also publish the contracts within three months of them being let.
Subsection (5) relates to information that must be published within 30 days where a contracting authority believes a supplier has breached a contract to the point of termination or remedy. It also covers instances where suppliers provide an unsatisfactory service following a proper opportunity to improve performance. The powers are important to ensure that the process is properly followed when a supplier is not delivering for the public. It is right for the supplier involved and for the public that the information is published. We therefore support the inclusion of the clause in the Bill.
Question put and agreed to.
Clause 70 accordingly ordered to stand part of the Bill.
Clause 71
Sub-contracting: directions
Question proposed, That the clause stand part of the Bill.
Alex Burghart
Clause 71 covers subcontracting, which is an important part of the delivery of public contracts. It enables businesses to use specialist suppliers to increase their overall effectiveness and efficiency. It also encourages SMEs to participate in public sector procurement, which helps to encourage innovation and deliver value for money for the public. The clause applies when a contracting authority either requires or permits a supplier to subcontract, and also where that subcontractor has been relied on to pass conditions of participation. In such circumstances, a contracting authority may direct a supplier to enter into a legally binding agreement with the proposed subcontractor, failing which the contracting authority can refuse to enter into the public contract, require an alternative subcontractor, or terminate the contract if already commenced.
Clause 72 will ensure that the 30-day payment terms set out in clause 67 will apply throughout the public sector supply chain, regardless of whether they are written into the contract. That will ensure that businesses in the supply chain that substantially contribute to the performance of a public contract benefit from the prompt payment and the liquidity benefits it brings. Unlike the equivalent provisions in the Public Contracts Regulations 2015, clause 72 includes defence and public utility contracts, benefiting SMEs in the supply chain across a much broader range of public sector contracts. Those rules do not apply to utilities contracts awarded by a private utility, concession contracts and contracts awarded by a school.
Florence Eshalomi
Clauses 71 and 72 relate to the treatment of subcontractors in the system. We welcome the clauses as a step forward in the attempt to ensure the prompt payment of subcontractors. The Bill makes a slight alteration from the current system by making a 30-day payment an automatic term for subcontractors rather than requiring the contracting authority to include an obligation on its suppliers to flow down. We have spoken at great length about the issue of subcontractors being paid on time, and the fact that many smaller businesses rely on prompt payment. We do not see any issue with the clauses, which we are happy to support.
Question put and agreed to.
Clause 71 accordingly ordered to stand part of the Bill.
Clause 72 ordered to stand part of the Bill.
Clause 73
Modifying a public contract
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
That schedule 8 be the Eighth schedule to the Bill.
Government amendment 54.
Clauses 74 and 75 stand part.
Government amendments 55 to 58.
Clause 76 stand part.
Alex Burghart
I will take a deep breath. Clause 73 sets out when a contracting authority may modify a public contract or when a contract, as a result of a modification, will become a public contract—that is to say, a convertible contract. It provides that a contract may be modified in one of the following circumstances: where the modification falls within one of the grounds permitted under schedule 8; where the modification itself is not a “substantial modification”; or where the modification itself is below a threshold that makes it de minimis in effect. Certain contracts, such as below-threshold contracts and light-touch contracts, are exempt from the constraints on modifications.
A “substantial” modification in this context is one that increases or decreases the duration of the contract by more than 10%, or materially changes the supply of the deliverables under the contract, or makes the contract materially more economically beneficial to the supplier.
Clause 73(4) clearly defines what constitutes a “below-threshold modification”. Those low-value modifications, to be properly considered as such, must not materially change the contract in either value or scope. A cap is placed on successive modifications permitted under this ground, as the aggregated value of below-threshold modifications made during the lifetime of a contract should be less than the Government procurement agreement threshold amount for the type of contract. Overall, these provisions give contracting authorities more usable grounds to make modifications that are not sufficiently material to justify requiring contracting authorities to run a new competition.
Schedule 8 sets out seven grounds, in addition to the two provided in clause 73, on which contract modifications are permitted. Four of those grounds are based on policy retained from existing legislation, as consultation established that contracting authorities wished to retain those commonly relied on “safe harbours”. Those four grounds are where the modification is provided for in the contract; where the modification has arisen due to unforeseeable circumstances; where the modification is for additional goods, services or works in specific limited circumstances; and where the modification is to effect a transfer of the contract following a corporate restructuring. I would like to be clear that that concise ground on corporate restructuring is intended to cover all the circumstances, such as insolvency, detailed in the Public Contracts Regulations 2015.
We have also introduced three new grounds, to provide for greater flexibility that stakeholders have indicated is needed, and to give greater legal certainty to contracting authorities than the existing grounds currently afford. The new ground of
“Urgency and the protection of life, etc”
will enable contracting authorities to act swiftly and efficiently in extraordinary circumstances and modify existing contracts to adapt to those urgent requirements.
The new ground permitting modifications on materialisation of a known risk will give contracting authorities legal certainty that they can modify contracts to adapt to a risk that, although identified as such at the outset, could not be addressed in the initial contract document in clear and unequivocal terms. The risk must have materialised through no fault of the contracting authority or supplier and must have been identified in the tender or transparency notice.
For example, if, due to quickly emerging cyber-threats, a requirement for a new software system to hold personal information needs to be adapted in order for it to operate safely and adequately protect that information, the contracting authority can adjust the requirement accordingly, provided that the risk of the new cyber-threat was identified up front in the required notices.
Florence Eshalomi
I thank the Minister for the points he has outlined. Amendment 54 is largely uncontroversial, removing an unnecessary provision from clause 74.
Amendments 55 to 58, taken together, would reduce the burdens on contracting authorities to publish contract modifications, requiring them to do so only where they are required to under clause 74, which does not cover changes that only change the value or length of the contract to a relatively small degree. Without the amendments, even minuscule contract amendments would be required to be published. Although these measures cover the larger contracts affected by the Bill—in particular, those valued over £5 million—it would be a disproportionate burden on contracting authorities to be required to publish every change to a contract. We understand the rationale for the amendments and we do not intend to oppose them.
On clauses 73 to 76 more widely, we understand that it is necessary, on occasion, to alter public contracts. It is important that the circumstances are justified, and we are pleased to see schedule 8 set out proportionate reasons to modify contracts. However, it is important to ensure that contracts are drawn up in a way that does not open this part of the Bill up to abuse.
As noted in paragraph 1 of schedule 8, modifications can be made if they are agreed in the contract and do not
“change the overall nature of the contract.”
However, there must not be a free-for-all. Contracting authorities must draw up contracts that provide the right flexibility for change. We should not expect service levels to vary massively because contracts are written in a way that would allow modification under this part of the Bill. For example, our engagement with stakeholders has revealed concerns that modifications are seen as an alternative to remedy and clawback, and that expensive legal fees put authorities off using clawback clauses, with those authorities instead opting to renegotiate terms with suppliers. That should not be the case.
We do not believe the best way to tackle that is necessarily through the Bill, but it is an important point. In an answer to a parliamentary question dated 20 December 2022, the Government admitted that money was wasted and that only £18 million had been clawed back from PPE contracts. That was only highlighted after the National Audit Office revealed that the Government had effectively written off quite a lot of that money, and auditors had rebuked the Department of Health and Social Care for its management of taxpayers’ cash during the pandemic.
It is a shame that the Government are still locked in legal battles with companies that failed to deliver on their contractual obligations. The public expect their money to be clawed back when contracts are broken, but if even the Government find it difficult to claw back money from contracts, it is little wonder that smaller contracting authorities apparently rely on contract alterations to seek remedy. The result is that suppliers that have not delivered for the public keep winning contracts to deliver services.
I understand why people may look at a supplier and say, “This supplier has failed to deliver services to an acceptable standard. Why are they still delivering our services? Why has this supplier not had this contract taken off them? Why have we not got our money back?” They are all valid questions. I hope that the Minister will outline his understanding of the use of contract modification as a substitute for clawbacks, and what steps he is taking to ensure we get our money back from suppliers.
We feel it is right that contract changes are published. Clauses 74 and 76 allow for the publication of a notice of change and, for larger contracts, publication of the changes and the altered contract. Those measures are proportional to the provisions of clause 53, relating to publication when a contract starts.
Clause 74 refers to the terms of clause 93. We agree with the introduction of a new online programme, but it is disappointing that we do not have the detail of what will be expected as part of that system. We should not leave future Governments with their hands tied, unable to go beyond what we can achieve today, but we do think that the Government could show some base level of ambition and outline the basic level of transparency that we think the system should allow. I hope the Minister will touch, even just briefly, on how the system will work and what information will be expected under clause 74, via the provisions of clause 93.
Alex Burghart
To the hon. Lady’s first point, we all accept that, in exceptional circumstances, contracting authorities may have to move very quickly to procure essential goods, services and works with minimal delay. Launching a new procurement procedure can take time. When time is of the essence and when a supplier has proven in-contract its ability to deliver to time, cost and the expected standard, it makes sense to take the modification route. To be clear, these are areas where the urgency and protection-of-life grounds must exist in the first place.
With the new transparency rules in clauses 74 and 76, taxpayers will be able to see exactly where we propose to spend their money, including where there is additional expenditure through use of modification grounds. The transparency rules will require contract change notices to be published in circumstances where the urgency ground is used and, where such modifications are made to contracts over the £5 million threshold, the modifications themselves will need to be published.
On the hon. Member for Vauxhall’s general point about what happened during the pandemic, she will have heard me say on a number of occasions that the Department of Health and Social Care, despite the circumstances in which it was working, had robust contracts in place. That means it is capable now, where it was given defective goods, to enter mediation. If that proves insufficient, it will be able to enter into litigation. The whole purpose of the exercise in which we are currently engaged—at length—is to ensure that we have better procurement processes in this country. That is what the Bill is going to deliver.
Question put and agreed to.
Clause 73 accordingly ordered to stand part of the Bill.
Schedule 8 agreed to.
Clause 74
Contract change notices
Amendment made: 54, in clause 74, page 51, line 5, leave out paragraph (c).—(Alex Burghart.)
This amendment would remove unnecessary provision, as light touch contracts are excluded from the whole clause under subsection (6)(b).
Clause 74, as amended, ordered to stand part of the Bill.
Clause 75 ordered to stand part of the Bill.
Clause 76
Publication of modifications
Amendments made: 55, in clause 76, page 51, line 40, after “modification” insert “—
(a) in respect of which the contracting authority is required to publish a contract change notice under section 74, and”.
This amendment would limit the requirement to publish a copy of a contract as modified or a modification to those modifications in respect of which the contracting authority was required to publish a contract change notice.
Amendment 56, in clause 76, page 51, line 43, leave out paragraphs (a) to (c).
This amendment is consequential on Amendment 55.
Amendment 57, in clause 76, page 52, line 3, leave out
“or a transferred Northern Ireland authority”.
This amendment is consequential on Amendment 55.
Amendment 58, in clause 76, page 52, line 7, leave out
“or a transferred Northern Ireland procurement arrangement”.—(Alex Burghart.)
This amendment is consequential on Amendment 55.
Clause 76, as amended, ordered to stand part of the Bill.
Clause 77
Implied right to terminate public contracts
Question proposed, That the clause stand part of the Bill.
Alex Burghart
Clause 77 sets out that it is an implied term of public contracts that a contracting authority can terminate a contract if one of a number of termination grounds apply. These are where a contracting authority considers that the contract was awarded or modified in breach of the Bill and regulations made under it, where a supplier has become an excluded or excludable supplier, or where a subcontractor is an excluded or excludable supplier.
These last two grounds considerably expand the implied right to terminate on exclusion grounds and are a good example of how we are tightening the rules on poor suppliers. Contracting authorities must still give suppliers that subcontract to an excluded or excludable supplier the opportunity to cease their arrangements. Contracting authorities must also communicate any intention to terminate the contract on these grounds before proceeding to terminate.
Clause 78 requires contracting authorities to obtain approval from a Minister before terminating a contract in reliance on the discretionary exclusion ground for suppliers that pose a threat to national security. Subsection (1) states that this requirement applies when contracting authorities are seeking to rely on the implied termination right in clause 77 where a supplier or subcontractor is excludable in respect of the national security exclusion ground. Subsection (2) says that this requirement applies to all contracting authorities other than a Minister, a Department or a corporate officer of the House of Commons or House of Lords.
The clause is essential to ensure that contract terminations on the basis of national security are not made without ministerial consideration of the risk posed by the supplier and the impact of the decision. The requirement to seek ministerial approval will allow for the views of those tasked with protecting national security, including the security services, to be taken into account.
Clause 79 sets out the mandatory transparency requirement that all contracting authorities must publish a contract termination notice on termination of all public contracts, with the exception of private utilities contracts and user choice contracts that have been directly awarded. It specifies the time period by which it must be published, which is 30 days after a public contract has terminated. It also sets out that contract termination notices will contain information that will be specified in the regulations made under clause 93.
Clause 79(3) makes it clear that a reference to termination includes: discharge, expiry, termination by a party, rescission, or set aside by court order, whether or not under part 9 remedies. That list does not exclude other references to termination, and a contract termination notice should be issued at the conclusion of a contract, however that contract has ended.
Florence Eshalomi
Clauses 77 to 79 relate to provisions that allow for the termination of contracts in specific circumstances. The implied circumstances include the contract being awarded or modified in a material way in opposition to this Bill, or a supplier becoming an excluded or excludable supplier. They also provide for termination when a supplier is subcontracting all or part of the contract to an excluded or excludable supplier.
The Opposition understand and support the need for these provisions, but we have some concerns about the meaning of the clauses. When a contractor becomes an excluded supplier, will the contract be terminated automatically? It would seem strange that, although a contract cannot be awarded to a supplier under those terms, an excluded supplier is not automatically stripped of a contract when they become excluded.
Some of the provisions included under the excluded schedule are extremely severe. They include human trafficking offences, slavery offences, corporate homicide and even terrorism. We must make it clear that, when suppliers are convicted of such crimes, they must not provide contracts for public services. I hope we all agree on that. Does the clause allow for contracts with excluded suppliers to be automatically terminated, or is that at the discretion of the contracting authority? That is a really important point, and I hope the Minister will be able to clarify it. The public would not expect a supplier that has been convicted of terrorism to still be carrying out public contracts, even if the contracting authority decides it is right.
We also have concerns about how discretionary exclusion grounds are treated in this part of the Bill. As I have previously said, we want consistency in the Bill on when these grounds are applied. We do not believe that it makes sense for a company to have its contract terminated by one contracting authority for, say, environmental misconduct, but in the same breath keep a similar contract with similar risk with another contracting authority based simply on the decision of the authority. A lot of that is inconsistent and confusing, which has been highlighted, and it means suppliers that fall foul of discretionary exclusion grounds to the degree that a contract can be stripped from them may still be providing services to the public in other areas. The Minister has highlighted the need for discretion, which we understand, but surely there should be some level of consistency.
I also raise the inconsistency between national security in clause 78 and how the Minister laid it out previously. We do not wish to vote against clause 78, and we believe that it is the right way to carry out public procurement when considering national security. As the name suggests, national security is a national issue. However, during the Minister’s remarks on our amendments 15 to 19, he said:
“Amendments 15 to 19 seek to make exclusion on national security grounds mandatory, rather than discretionary. Any risk to national security should of course be taken very seriously indeed, but it is right that we leave some scope for nuance and flexibility in the application of the exclusion ground. Suppliers may pose a risk in some contexts, but not in others.”
The Minister went on to say:
“It is important to note that contracting authorities must consider all exclusion grounds, mandatory and discretionary, against every supplier in each procurement.”
He also said:
“There would be a balance of risks. Not all security threats are proven. Of course, it is up to the authority to assess the concerns”.––[Official Report, Procurement Public Bill Committee, 2 February 2023; c. 113.]
Based on what the Minister said in response to our amendments, there is some inconsistency in this approach. We need verification to identify a national security threat on a national scale and to disregard a contract on that basis, but to say that awarding or terminating a contract for a national security threat is at the discretion of authorities is a little contradictory.
For example, let us take what happens when a contracting authority identifies a threat. If the authority decides not to terminate the contract regardless, the contract is awarded with no follow-up from the Government and no check that it is a threat. If the authority decides to terminate the contract, it needs to go through a check with the Minister and confirm whether it is a threat. We think that is the right course of action, but why should the decision effectively be taken at different levels? Surely there should be an obligation to check with the Government regardless of whether the contract is terminated or not. At the very least, the Government can advise on the decision not to terminate the contract based on the threat.
As I and those who submitted evidence have highlighted, we can see procurement departments in many organisations being overstretched. We cannot expect those very same contracting authorities we want to come forward to bid for public contracts to act as MI5 or national security experts.
The Chair
I call the Minister, mindful that there will be a vote in the House at 4.12 pm.
Alex Burghart
I will try to contain my remarks to the next few minutes. Before I get to the specifics, I should for the sake of posterity record that, by working so hard today, hon. Members have reached the end of the selection list. Had more groupings been available, they would no doubt have wished to go further—[Interruption.] Cries of “More, more!” were heard from the Opposition Benches.
I will return to some of our previous conversations. As I said earlier to the hon. Member for Vauxhall, there will be times when a supplier may have made errors and got itself into trouble. It may be the case that there are times when a company has suppliers over which there are national security concerns, but they supply goods that cannot be found anywhere else and do not in themselves present a risk to national security. That is the role of the difference. The Division bell is ringing, but I am happy to pick up on this when we meet again on Thursday.
Question put and agreed to.
Clause 77 accordingly ordered to stand part of the Bill.
Clauses 78 and 79 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Julie Marson.)