Procurement Bill [ Lords ] (Fifth sitting)

Alex Burghart Excerpts

Committee stage
Tuesday 7th February 2023 Public Bill Committees

[Florence Eshalomi]

I thank my hon. Friend for that point, and I hope that the Minister responds to it. It shows the many different angles from which, inadvertently, we could see national security threats coming into the country. We must make sure that we avoid that. We need to look at the issue of national security threats when we are directly awarding procurements.

There is very little in the clause in legal terms preventing the use of national security threats in direct awards; as my hon. Friend highlights, there is no guarantee that they will not be used. Our amendments 13 and 14 would prevent threats from entering the system via direct awards. I hope that the Minister will support them.

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

It is a pleasure to serve under your chairmanship again, Mr Efford, as we enter the third day in Committee. We are making good progress through the Bill, and we hope to make even better progress today.

Amendments 13 and 14, tabled by the hon. Member for Vauxhall, seek to prevent contracts from being directly awarded to suppliers that pose a risk to national security. As we have discussed, national security is of the utmost importance, which is why we have chosen to strengthen the protections in our rules by introducing a new discretionary exclusion ground for suppliers that pose a risk. As I have already explained, the provision has to be discretionary, because there will be situations where a supplier poses a threat in one context but not in another.

The amendment envisions circumstances where a direct award justification applies, meaning a competitive award is not feasible. That would include where there are no other suitable suppliers, or where there is an extreme and unavoidable urgency. It is in precisely those situations that it is vital for contracting authorities to retain an element of discretion in the national security exclusion ground; that element of discretion does not in any way lessen the obligation on authorities to consider whether exclusion is appropriate for the particular contract given the risk posed by the supplier.

Those considerations will of course be informed by the publication of guidance produced in partnership with national technical authorities such as the Centre for the Protection of National Infrastructure and the National Cyber Security Centre. I have complete confidence that contracting authorities will use the discretion appropriately. I respectfully ask that the amendment be withdrawn.

Question put, That the amendment be made.

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[Florence Eshalomi]

We fully support amendments 103 and 104, tabled by the hon. Member for Aberdeen North, which consider how we embed transparency into the system of direct awards. The two amendments highlight why we need additional layers of scrutiny to address glaring areas of conflict of interest in respect of Members of both the Commons and the Lords. It is vital to have additional checks in place.

Throughout the proceedings on the Bill the Minister has talked about the principle of impartiality, and said that the Bill will make VIP lanes, such as those we have seen, illegal and that it is all going to be fine. But that is just not the case. We need only to look at the pandemic to see why we desperately need to make sure that our procurement system is more agile and more transparent. The Tory VIP lane exposed a weakness in the system.

We must remember that we are talking about taxpayers’ money. We are at a time when so many people are feeling real difficulty in their choices and are seeing their household incomes reduce. Council and social housing tenants dread their rents going up. A number of councils have already highlighted how they are going to increase their council tax, including a borough in south London that is proposing to increase council tax by 15%.

Taxpayers’ money was wasted on contracts that were not fit for purpose and wasted as profits for unqualified providers. Worryingly, the Government have written off £10 billion of public funds that were spent on PPE that was either unusable, overpriced or undelivered, and it is worth bearing in mind that we are still spending £700,000 of taxpayers’ money a day on storing unused gloves, goggles and gowns. That money could pay for spaces in after-school clubs. It could pay for 19,000 full-time nursery places. It is public money.

The Bill does not pass the Mone or Paterson test; that waste could still be allowed to happen, over and over again. Handing more power to Ministers in respect of direct awards is not the way we want to go. We support the two amendments, because it is important that we empower local authorities to be able to ask the necessary questions when it comes to conflicts of interest. The current procurement system is not working, and we need to include new checks.

The amendments could be further strengthened by placing the onus on individual Ministers, civil servants and special advisers to make the necessary declarations but, as we have seen, when the onus is on them, they still do not make those declarations. Essentially, they have to be dragged kicking and screaming. We are in a situation in which we will not see the declarations of Ministers’ financial interests updated until May, if we are lucky. Anything could happen before May.

I draw the Committee’s attention to amendment 111, which we think further addresses the aims of amendments 103 and 104. We have an opportunity to learn from past mistakes and to tighten the freedom of Ministers to award direct contracts. It is about hardwiring transparency into our system. That should be a good thing and something we should all support. Instead, it seems the Minister wants to continue to have a back door and a VIP entrance. We must be clear that the Bill offers us a chance to clear that up.

The facts and figures speak for themselves. Some £3.4 billion of taxpayers’ money, in the form of contracts, went to Conservative donors and friends. A former Conservative Minister lobbied for Randox, which then provided 750,000 defective tests that had to be recalled, all while he was being paid £100,000 on top of his salary. Globus (Shetland), a business that has donated £400,000 to the Conservative Party since 2016, received £94 million-worth of PPE contracts.

Millions of people struggled during covid-19. The Government did some good things—including the furlough scheme to help people not to lose their jobs and the support for businesses—but a large group of people missed out on any money, including the 3 million people who form ExcludedUK. For those people who paid their taxes, submitted their returns and did not receive any money to have seen contracts dished out to friends, when those contracts were not even viable, was a slap in the face. When millions of people struggled during covid-19, it was not fair for them to have seen friends and donors of the Tory party prosper. As it stands, the Bill would continue to allow that to happen.

Our amendment 111 takes an important step, with amendments 103 and 104, towards addressing the situation, by asking Ministers to act, ensure genuine transparency in the system and restore trust in public money. This is about trust in the system. A number of members of the public do not trust our system; this is about restoring some of that trust and ensuring that, after years of waste and mismanagement, we do not find ourselves in this situation again.

Our amendment is based on a proposal by the independent National Audit Office and would mandate that:

“Any Minister, peer or senior civil servant involved in recommending a supplier for a contract under section 41 or 43 must make a public declaration to the Cabinet Office of any private interest”.

I hope we all agree that that is a straightforward, pragmatic proposal. It is not about layers of bureaucracy for business; it is about layers of additional scrutiny on Ministers to help to give the public confidence that another PPE Medpro scandal will be stopped and that we will not see a situation in which handfuls of millions of pounds of public money are redundantly spent on equipment that we cannot use.

The three amendments would outlaw VIP lanes once and for all, ensuring that we stop corruption. They would introduce a timeframe for transparency around declarations so that we can have information about conflicts of interests, instead of it being drip fed through the media or journalists. They would ensure that these scandals are not allowed to build up gradually over months and continue the erosion of trust. I hope the Minister agrees that Members of Parliament and the Government should have nothing to hide. If there is nothing to hide, they should support these reasonable amendments, which will help us to clean up our procurement system.

[Alex Burghart]

Conflict of interest in direct award contracts is clearly an extremely important topic. Amendment 103 would require a contracting authority to satisfy itself, before making a direct award, that no preferential treatment has been conferred on the supplier by virtue of any recommendation made by a Member of this House or the House of Lords. 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.

Amendments 104 and 111 relate to the highlighting of political connections to political parties, Ministers of the Crown, Members of the House of Commons or House of Lords, or senior civil servants. As Members will have already heard, the Bill includes significantly greater transparency around direct awards than we have had in the past, via the new transparency notice in clause 44 and elsewhere. The conflicts provisions have been strengthened against the current procurement rules. A key change is the requirement in clause 82(5), which I will address in a future sitting, for contracting authorities to confirm that a conflicts assessment has been prepared, reviewed and revised as necessary when publishing a relevant procurement notice, which will include the transparency notice for direct awards.

The assessment must include details of any actual or potential conflict of interest identified in the procurement, and steps must be taken to mitigate such conflicts. That would include any political party affiliations the supplier has to any person acting for or on behalf of a contracting authority, and to anyone who influences a decision in relation to a covered procurement. In addition, in accordance with clause 84(4), if a contracting authority is aware that there may be even the appearance of a conflict, it must address that.

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[The Chair]

With this it will be convenient to discuss that schedule 5 be the Fifth schedule to the Bill.

[Alex Burghart]

Clause 41 permits a contracting authority to award a contract without first running a full competitive procedure when a justification in schedule 5 is met. The World Trade Organisation agreement on Government procurement contains grounds for limited tendering, on which the justifications are based. They will be familiar to those who use the current regime, and include justifications such as intellectual property, exclusive rights or technical reasons that mean that only a single supplier can deliver the contract.

Direct award may also be permitted where practicalities in the market make competition unfeasible—for instance, when buying commodities such as oil, where demand dictates the price, or when the contracting authority can obtain advantageous terms due to insolvency. There are also defence-specific provisions, and a new ground for light-touch contracts—for example, in adult and children’s social care—which allow for direct award due to “user choice” where the beneficiary of the contract or their carer has a legal right under other legislation to choose the supplier.

Overall, the Bill is clearly designed to support fair and open competition in order to secure the best outcome for the public interest. However, sometimes competition is not possible. For example, a supplier may own intellectual property rights that mean that only it can supply a particular good. Alternatively, competition may not be possible for technical reasons when the application of a particular legislative regime means that a contract can be awarded only to one specific provider. For example, the Children and Families Act 2014 may require special educational needs provision to be delivered by a particular supplier; or extreme and unavoidable urgency, such as the procurement of short-term recovery services following an unexpected flood, may render competition unviable. In such cases, limited exceptions to the requirement for competition are justified to ensure the effective and prompt delivery of critical services.

In respect of cases in which a contracting authority relies on one of the specified grounds, the Bill introduces a requirement for a transparency notice other than the very specific user choice exemption. That important new safeguard brings welcome transparency and accountability, and facilitates pre-contractual challenges if anyone fears foul play. Additionally, before publishing a transparency notice, the contracting authority must undertake a conflicts assessment in accordance with clause 82.

[Florence Eshalomi]

As the Minister outlined, these clauses relate to the provision of direct awards. Sadly, their abuse under the Government has done untold damage to the public interest, as I highlighted earlier. The current system does not work, and it is disappointing that the Government have failed to take this opportunity to learn from those mistakes. The Minister just said that competition is sometimes not possible, but taxpayers’ money must be treated with respect, not handed out in backroom deals or as a passport to profiteering.

I highlighted the case of PPE Medpro, but it is just the tip of the iceberg of the scandals we have seen unfolding over the past few years. We know that the companies that got into the VIP lane were 10 times more likely to win a contract, and that they did not go through the so-called eight-stage process of due diligence, as Ministers have now admitted. We also know that businesses that had the expertise to procure PPE and ventilators were not awarded contracts. That is worrying.

It is also worrying that no company was referred to the VIP lane by a politician of any party other than the Conservative party. It did not have to be that way. There could have been more transparency and faith in the system. At that time, Governments across the world were dealing with the covid emergency without wasting billions of pounds of taxpayers’ money and relying on backroom deals.

According to the watchdog, the Welsh Labour Government managed to prevent health and care bodies from running out of PPE. It said:

“In contrast to the position described by the…National Audit Office in England, we saw no evidence of a priority being given to potential suppliers depending on who referred them.”

The Welsh Government were able to create an open and transparent PPE supply chain—why were we not able to do that in England? The question that the Committee needs to ask is how we act to prevent a repeat of the waste that we saw during the pandemic.

This is about faith in politics. At a time when people are questioning politicians and Ministers, we have to restore that faith. This Bill gives us an opportunity to fix that. It is disappointing that the Minister has dismissed some of that and has failed to engage properly on the issue of VIP lanes. I hope he will respond constructively to ensure we fix the current system, which is not working.

Question put and agreed to.

Clause 41 accordingly ordered to stand part of the Bill.

Schedule 5 agreed to.

Clause 42

Direct award to protect life, etc

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The amendment does not put onerous obligations on the Government, but it ensures that Parliament has proportional oversight over the powers it grants the Government via the affirmative procedure. I hope Members will agree that it is right that Parliament does not hand over power indefinitely, and I hope the Minister will consider supporting this amendment.

[Alex Burghart]

Amendment 108 seeks to include a sunset clause on the face of the Bill in relation to any regulations made under clause 42, plus a prohibition on multiple uses of this power.

The fact that the regulations are subject to the made affirmative procedure gives the House a great deal of power. If the House does not wish to accept open-ended regulations, it will not have to. The scope of clause 42 is already suitably confined and restricted to prevent any abuse. The power can be used only in extremely rare scenarios. The regulations will have to be tailored to respond to the situation and their duration kept to the minimum. Further, any regulations made will have to be in compliance with our international agreements, which in practice will help ensure the scope is not too broad.

Any regulations made under this clause must be kept under review, and if the Minister considers that direct award is no longer necessary, the regulations must be revoked. For the avoidance of doubt, the use of the made affirmative procedure means that if regulations are not approved by Parliament, they will lapse after 28 days. Any regulations would likely be time limited through a sunset provision or subject to parliamentary review after a duration deemed appropriate in the context of the emergency event. If they were not, it would be open to Parliament not to approve them. We cannot see that Parliament will be satisfied with open-ended regulations permitting the procurement of goods or services beyond what is necessary to protect life in an extreme emergency event. As such, we respectfully suggest that the amendment is not required.

Clause 42 introduces a new power for a Minister of the Crown via statutory instrument to allow contracting authorities to award contracts directly within specific parameters. The power is crafted deliberately narrowly so that regulations can be made only where it is considered necessary to protect human, animal or plant life or health, or to protect public order or safety. The “extreme urgency” ground in regulation 32 of the public contracts regulations reflected in schedule 5 will be suitable for nearly all situations. But in rare cases, this may need to be overridden via Government direction to rapidly procure what is necessary for the protection of life.

The first Boardman review of covid-19 procurement suggested giving relevant Ministers the power to designate situations as a “crisis”, provided certain criteria were met, naturally with appropriate safeguards. The clause looks to implement these recommendations and aid emergency contracting. The current ground relies on individual contracting authority assessments and cannot be used if the need for urgency is caused by the authority itself or is foreseen. Regulations made in these circumstances would allow contracting authorities to procure with confidence, quickly and within specific parameters to deliver the essential goods or services.

In the extremely rare event that regulations under clause 42 are needed, there are already significant safeguards in the Bill. As I mentioned, the making of any secondary legislation will be subject to the scrutiny of the made affirmative procedure. The regulations will come into force immediately but will require approval from both Houses within 28 days. Without this approval, the regulations will cease to have effect. There is no limit on the regulations’ duration, allowing them to be tailored to the situation. Parliamentary scrutiny will ensure that the scope of the regulations is appropriate.

The obligation to publish a transparency notice prior to awarding a direct award contract remains even when relying on any such regulations. These new mandated notices demonstrate our intent—seen throughout the Bill—to drive further transparency into the procurement regime. We hope that clause 42 will never need to be used, but if direct awards are necessary to protect life or public safety in an ongoing emergency situation, the mechanism under the clause will significantly improve the situation by allowing contracting authorities to procure in confined circumstances, speeding up decisions and ensuring consistency across the public sector. I respectfully ask that the hon. Member for Vauxhall withdraw her amendment, and I recommend that the clause stand part of the Bill.

Question put, That the amendment be made.

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Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Sometimes, competitive tendering procedures do not go to plan. Clause 43 allows the contracting authority to switch from a competitive procedure to direct award where no suitable tenders are submitted and it becomes clear competition is not possible. There are only limited circumstances to determine that a tender is unsuitable, which are detailed in subsection (2)—for example, where the price is abnormally low, as we discussed the other day, if there is evidence of corruption or collusion, or if a procedural requirement has been materially breached in a manner that may put the tender at an unfair advantage.

[Florence Eshalomi]

The clause relates to the switching of contracts under very limited circumstances. The use of the clause is not ideal, but we understand that it may be necessary in certain circumstances. We therefore do not object to the clause.

Question put and agreed to.

Clause 43 accordingly ordered to stand part of the Bill.

Clause 44

Transparency notices

Amendment proposed: 104, in clause 44, page 30, line 23, at end insert—

“(c) any connections between the supplier and any—

(i) registered political party,

(ii) Ministers of the Crown, or

(iii) Members of the House of Commons or House of Lords

where such connections are of a nature likely to be relevant to the direct award of the contract.”—(Kirsty Blackman.)

Question put, That the amendment be made.

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Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Our approach in the Bill is clear: transparency is not optional. Clause 44 introduces a mandated requirement to publish a transparency notice when a direct award ground is going to be used. That goes further than the current voluntary notice. Direct award should, of course, be the exception and will be allowed only on the basis of specific and limited grounds set out in legislation. When direct award is relied on, the obligation will mean visibility, further demonstrating our drive to ensure transparency in public procurement.

[Florence Eshalomi]

As the Minister outlined, the clause covers transparency notices. Although we welcome the limited measures that the Bill takes to move towards transparency—for example, by obligating authorities to issue a transparency notice before awarding a contract—those are small baby steps that barely scratch the surface of what is required. Transparency should be a must; it is not a “nice to have”. It is about restoring public trust and it ultimately saves money. Lack of transparency in the procurement system reduces competition and increases costs, leaving the taxpayer to shoulder the burden. The adoption of open and transparent contracting makes good financial sense and will help to lead to a more competitive procurement system, ultimately, as I mentioned, saving on costs.

Transparency needs to be extended to Ministers. I have spoken at length about what we saw during the pandemic and the lack of transparency. Amendment 111 would go a long way to truly ensuring that Ministers, Lords and civil servants take transparency seriously.

[Alex Burghart]

The hon. Lady will have heard me say that we are mandating transparency like never before, and that all her concerns are already dealt with in the Bill.

Question put and agreed to.

Clause 44 accordingly ordered to stand part of the Bill.

Clause 45

Frameworks

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to debate clauses 46 to 49 stand part.

[Alex Burghart]

This considerable group covers award under frameworks. Clause 45 sets out that a framework is a public contract designed for the future award of contracts to a supplier or suppliers. Frameworks are not the answer for every purchasing need, but they have their place and can result in significant savings, both financially and in time. As a framework is a public contract, it must be awarded in accordance with the procedures set out in the Bill. Once a framework is awarded, subsection (1) allows contracting authorities to award future public contracts in accordance with the framework.

Subsection (3) states that contracts can be awarded under a framework only following a competitive selection process, unless subsection (4) applies. Subsection (4) sets out the circumstances in which a framework can provide for the award of contracts directly to suppliers who are party to the framework, without any further competition. These are where the framework is with only one supplier, or if the framework sets out the core terms of the future contract and an objective mechanism for supplier selection.

Subsection (5) requires that each framework must state the goods, works or services that can be procured under it, the mechanism for defining the price, the estimated value of the business that will be procured through the framework, and the process to award further contracts. Subsection (5) also requires that the framework must state the duration of the framework, the contracting authorities that are able to use the framework, and whether the framework is an open framework. Currently, all frameworks lock suppliers out for their duration as there is no mechanism to open them up, and we are changing that under the Bill.

The provisions ensure that all frameworks will contain basic information about the scope and estimated value of the framework to clearly set out the parameters in which the framework can be used, and to avoid frameworks being used in a manner that unduly or unfairly closes off markets to competition.

Subsection (6) prohibits the award of a contract under a framework to an excluded supplier. Subsection (7) allows for fees to be charged under a framework when a supplier is awarded a contract under a framework. Subsection (8) means that a framework may not be used to award a concession contract, nor may a framework be used to set up another framework. Subsection (9) disapplies certain parts of clause 45 to frameworks that are light-touch contracts.

Clause 46 sets out the process by which contracts can be awarded under a framework through a competitive selection process. Subsection (1) allows for a competitive selection process to include conditions that suppliers have to satisfy to participate. Subsection (3) prohibits conditions that require the submission of annual audited accounts by suppliers who are not already required by law to have their annual accounts audited. It also ensures that alternative evidence can be used when assessing the supplier’s financial capability and that insurances need to be in place only at the point of contract award. That is a major win for small and medium-sized enterprises, removing a substantial barrier that has often held them back from entering into procurement.

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[Florence Eshalomi]

Clauses 45 to 49 cover the framework arrangements that are in place and widely used across the public sector, helping to provide efficiency savings in procurement contracts. We feel it is important that there are powers in the Bill to allow for their existence, but we have concerns about the nature of the frameworks. We should make sure that we include strong terms to prevent any detrimental effects that they can have on procurement.

A big problem with the frameworks is that they can lock out suppliers and prevent the breakthrough of innovative and efficient suppliers in our system. That is outlined and emphasised in the Government’s impact assessment:

“The use of frameworks is established in the public sector, however stakeholders raised concerns around lengthy frameworks essentially locking suppliers out of a market for a number of years, without the opportunity to re-bid. This is particularly of concern for SMEs who may benefit from a place on a framework to assist business growth and gain experience in delivering contracts for the public sector.”

The Minister touched on some of that, but the Bill should look to reduce those concerns.

We also have concerns about some of the changes in language in relation to the term limit, which the Minister outlined. Currently, most frameworks have a term limit of four years. It is good to see that carried through in the Bill, even if there is an increase to eight years for defence, security and utilities. However, there seems to be a change to the contracts, whereby some of the terms can be extended. In the Public Contracts Regulations 2015, the time limit exception states:

“The term of a framework agreement shall not exceed 4 years, save in exceptional cases duly justified, in particular by the subject-matter of the framework agreement.”

However, clause 47 states:

“Subsection (1) does not apply if the contracting authority considers the nature of the goods, services or works to be supplied under contracts awarded in accordance with the framework means that a longer term is required…If a contracting authority relies on subsection (2) in awarding a framework with a term exceeding four or eight years, the contracting authority must set out its reasons in the tender or transparency notice for the framework.”

I would be grateful if the Minister confirmed what the difference is between those two terms. Will the clause make it easier or harder for contracts to be extended? If it makes it easier, as he suggested, will he tell us the justification behind the change? As we mentioned, there have been concerns about locking out suppliers through the frameworks, so we should be cautious about why the Government would seek to weaken provisions that prevent locking out. Clarity from the Minister on that point would be helpful.

I welcome the Minister’s comments on the new open frameworks procedure in clause 49, which has the potential to reduce time limits by unburdening contracting authorities from running the tender for a framework from scratch, but will he outline how often he would expect a typical framework to reopen? The legislation sets out a maximum of three years in the first instance, and then five years in the second. However, the explanatory notes state:

“This allows for the open framework to be re-opened on a more frequent basis—for example, annually”.

Again, the Minister touched on some of that, but does he expect the reopening of frameworks on an annual basis, and will there be any incentives in the system to encourage annual reopening?

[Alex Burghart]

As the hon. Lady heard me say, the great new initiative in the Bill—open frameworks—means that we will not see companies being shut out for long periods of time, which is good. We have seen SMEs being locked out from accessing public sector markets for up to four years at a time, so we have introduced the new open framework and the utilities dynamic market tools to bring down the barriers. I think we can all agree that that is much to the good.

The hon. Lady will also have heard me say that if a contracting authority is to go for a longer term than the four and eight-year maximum, it must be because of the goods, services or works that it will supply. Contracting authorities have to be clear and open about that, but we would expect them to do so only where there are specific reasons—for example, where it will take longer than eight years to recoup investment under the framework, or where contracts have a long lead time and therefore cannot be awarded within the requisite time period. Contracting authorities must have a rationale for that, and they have to be open. We think that the clauses cover that.

The hon. Lady will have seen that the maximum term provisions in clause 47 do not apply to open frameworks, which have a maximum duration of eight years. However, clause 49 requires open frameworks to be reopened for new suppliers to join at regular intervals—first, within the first three years of the framework, and not less than every five years thereafter.

Question put and agreed to.

Clause 45 accordingly ordered to stand part of the Bill.

Clauses 46 to 49 ordered to stand part of the Bill.

Clause 50

Contract award notices and assessment summaries

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 50 requires contracting authorities to publish a contract award notice before entering into a public contract. The notice will publish details about the outcome of the procurement process, alert the market to the fact that a contract is about to be signed and start the standstill period where it applies, which is a mandated or voluntary pause before the contracting authority can sign the contract. I will explain that further under clause 51.

Prior to the publication of a contract award notice issued under a competitive procurement, contracting authorities will be required to provide each supplier whose bid was assessed against the award criteria with an assessment summary containing information about the outcome of the assessment for the supplier’s own tender, to enable suppliers to understand why they did or did not win the contract. Unsuccessful suppliers will also be provided with a copy of the winning supplier’s assessment summary so that they can also see how their tender compared to the winning bid.

Clause 50 does not apply to contracts awarded under a defence and security framework, or to direct awards where the justification is that the contract is a user choice contract.

[Florence Eshalomi]

This is a simple clause relating to contract award notices and assessment summaries. We welcome these provisions and see it as a good step forward for suppliers and for transparency that each supplier that is not disregarded receives information about why their bid failed and why another bid was successful. That will help suppliers to improve their bids and to understand what a contracting authority desires.

We have spoken a lot about SMEs, and I think they will welcome the clause, because they often struggle to navigate the market and they may feel that the cost of failed bids is part of the reason. We await information on what will come from clause 93, but we will discuss that when we get to it. We are happy to support this clause.

Question put and agreed to.

Clause 50 accordingly ordered to stand part of the Bill.

Clause 51

Standstill periods on the award of contracts

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 51 covers the standstill period, which is a minimum eight-working-day pause following publication of the contract award notice before the contracting authority can enter into the contract. It gives unsuccessful suppliers, in particular, the opportunity to understand the feedback provided and raise legal challenges to the procurement process prior to the contract being signed, where they believe the procurement has been conducted unlawfully.

A claim notified during the standstill period triggers an automatic suspension of the procurement under clause 99, which preserves the potential for the challenging supplier to obtain the contract and protects the contracting authority from entering into an unlawful public contract. That mitigates the risk of a contracting authority paying twice—that is, paying the price of the contract plus compensation for a losing bidder with a successful claim—as after contract signature, the contracting authority is subject to post-contractual remedies under clause 101. That includes damages and the possibility of the contract being set aside—being declared void by the court.

If the standstill period passes without legal challenge, the contracting authority avoids the risk of a set aside claim under clause 101. A standstill period is not mandatory in all cases. Subsection (3) lists the types of contract where the contracting authority can elect to apply a standstill on a voluntary basis. Contracting authorities complying with a voluntary standstill period, which is also envisaged for contract modifications under clause 75, will receive the same protections as that obtained for a mandatory standstill.

[Florence Eshalomi]

Clause 51 is almost identical to similar provisions in the Public Contracts Regulations. As the Minister outlined, the standstill period will be welcomed and beneficial. The Opposition feel that the clause is necessary and that there is nothing controversial in it.

Question put and agreed to.

Clause 51 accordingly ordered to stand part of the Bill.

Clause 52

Key performance indicators

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[Chris Evans]

I outlined the importance of transparency and accountability in a previous debate on procurement. Our amendment 4 is an attempt to strengthen that further and to reinstate at £2 million the threshold for publishing contracts in major projects. I noted previously that the financial threshold was raised in the other place and that the Minister could not explain why £5 million was decided on. If the Bill is an attempt to make procurement more transparent, we have failed at the first hurdle.

On Second Reading, my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner), the deputy leader of the Labour party, said:

“Being granted taxpayers’ money is a privilege.”—[Official Report, 9 January 2023; Vol. 725, c. 353.]

I remind Government Members that their long-departed leader, Lady Thatcher, once said that it is not the Government’s money, but taxpayers’ money, and that every penny should be accounted for. I am looking at the Minister and hoping that I got that quote absolutely right—I am sure he will correct me if I did not. I believe that is true no matter the sum of money. Every pound represents the work of hard-working people across the country, and we—particularly those of us who serve on the Public Accounts Committee—should be mindful of that.

That is why contracts awarded at £2 million should have the same scrutiny as those worth more. Figures such as £2 million are often bandied about—we hear the value of transfers in sport—but that is still a considerable amount of money. If we are truly committed to reducing waste in procurement, we need more transparency throughout. Introducing key performance indicators at a lower threshold would signal to businesses that the UK requires value for money, and efficiency, from every procurement contract.

While I appreciate that the Government have stated that the changes to the threshold are to reduce any administration requirements, and to address concerns raised by the Local Government Association, the lack of transparency around how the threshold was decided has made me understandably cautious. Transparency and value for money must be priorities when spending taxpayers’ money. Increasing the number of contracts that are scrutinised by requiring key performance indicators would allow for transparency at all stages of a contract’s lifecycle and hold businesses to account on issues of social value.

When we are in the midst of a climate crisis, it is necessary to ensure that suppliers are actively working towards the UK’s net zero commitments. When industries across the country are facing a skills gap, it is necessary to ensure that businesses are committed to apprenticeships and training new generations. And while the country continues to face a cost of living crisis, it is necessary to ensure that jobs across the supply chain are protected.

[Alex Burghart]

There are few rarer treats than hearing an Opposition Member quote Baroness Thatcher. I am sure the hon. Gentleman will have reflected on, and enjoyed, the fact that she also said, “The problem with socialism is that you quickly run out of other people’s money.”

However, the hon. Member’s probing amendment is fair enough, and it is important that we discuss this issue. Hon. Members will recall that the Bill as introduced had a threshold of £2 million for the publication of KPIs on public contracts, but that the threshold was increased to £5 million in the House of Lords as part of a package of measures designed to reduce the administrative burden placed on contracting authorities, while still providing increased transparency in respect of larger public procurements.

The current financial threshold balances the need for transparency on KPIs with the costs and burdens of implementing the rules at a lower spend value. To reassure the hon. Gentleman, £5 million, which we have now fixed on, aligns with the thresholds that are used by central Government in the playbook for procurement. It is generally seen as the point where things become more complex. We thrashed out the number based on a lot of engagement with industry, and it was felt that that was an appropriate threshold to ensure that we were not including a lot of contracts with lower complexity.

Turning to amendments 75, 78 and 80, there are a number of places in the Bill where we apply financial thresholds that trigger obligations on a contracting authority. The Delegated Powers and Regulatory Reform Committee recommended that the affirmative procedure for secondary legislation should be applied for a number of those, and we made those amendments in the other place. That ensures greater scrutiny where there is a change in transparency requirements. We also indicated in our response to the DPRRC that we considered that the justifications for that applied equally to the amendment of the financial threshold for the setting and publication of key performance indicators. Amendments 75, 78 and 80 achieve this.

Clause 52 describes a requirement for contracting authorities to

“publish at least three key performance indicators”

for public contracts worth more than £5 million. That is a new requirement and it will ensure that we have visibility of how well individual suppliers are delivering in the public sector.

The clause is intended to bring transparency to the management of significant public sector contracts, allowing citizens and others to see how suppliers are performing. It should also ensure that companies that repeatedly fail to deliver do not win additional business—something that is not possible under the present procurement rules. The requirement does not apply if the contracting authority considers that KPIs are not an appropriate measure of contract performance in a given case. The example we give is of a contract for the one-off supply of goods. That is a one-time action and cannot be measured over time or by varying metrics.

The clause does not apply to the establishment of framework contracts—but it will apply to contracts awarded through the framework—utilities contracts awarded by a private utility company, concession contracts or light-touch contracts. A power is given for an appropriate authority to amend the financial threshold above which KPIs must be published. We have tabled an amendment to make the power to change the threshold subject to the affirmative procedure, so that if this Government or future Governments wish to adjust the threshold, they can easily do so, provided that they have Parliament’s consent.

The overall picture is enhanced by the spend data reporting obligation in clause 70. I respectfully request that amendment 4 be withdrawn.

[Chris Evans]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 52 ordered to stand part of the Bill.

Clause 53

Contract details notices and publication of contracts

[Chris Evans]

I beg to move amendment 26, in clause 53, page 36, line 9, leave out “£5 million” and insert “£2 million”.

This amendment would reinstate the threshold for publishing the contracts in major projects at £2m.

As noted in the explanatory statement, the amendment would reinstate the threshold for publishing the contracts in major projects at £2 million. As I have pointed out, the Government seem to have chosen £5 million as an arbitrary figure. I will not repeat the points I have already made. We do not want to place an undue burden on small and medium-sized enterprises to have to employ costly legal advice to redact sensitive company information. However, I believe that, with sums of more than £2 million, it is completely reasonable to expect transparency.

Trust in Government spending is important to overall trust in Government, especially when they are spending sums of public money in the millions. It is not unreasonable for the public to expect transparency about where their money is being spent, and that the information is readily available and easily accessible. Although I understand the need not to make the process too arduous for smaller businesses, the proper balance must be found.

[Alex Burghart]

The revised threshold of £5 million seeks to ensure that a disproportionate administrative burden is not placed on contracting authorities and, as I have said, it reflects what we have in the playbook. The figure came out of a large amount of engagement with industry. There was recognition that it is around the £5 million threshold that we see additional complexity in contracts. That is why we think that the current financial threshold balances the need for transparency in these important matters with the costs and burdens of implementing the rules at a lower spend value.

It is important to stress, however, that contracting authorities will still be bound by a transparency obligation to publish contract detail notices for contracts above the agreement on Government procurement thresholds, which will contain information on which supplier has won the contract and other information about the contract award. I respectfully request that the hon. Gentleman withdraws his amendment.

[Chris Evans]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 53 requires contracting authorities that enter into a public contract to publish a contract details notice. This is a significant extension of transparency, which will allow interested parties to see details of public sector contracts. The contract must be published within 90 days of the contract being entered into or, in the case of a light-touch contract, within 180 days. The contract details notice will contain information on the goods and services procured, the value of the successful tender and the procurement method used.

The Welsh Government and the Northern Ireland Executive have decided to include a derogation from publication of a contract, which is their right.

[Chris Evans]

Clause 53 sets out the need for the publication of contract details for all contracts over £5 million. According to the Government’s own figures, one in every three pounds of public money—some £300 billion a year—is spent on public procurement. Ultimately, the taxpayer deserves to know that money from the public purse is being well spent.

I know from my time on the Public Accounts Committee—sooner or later, we will start doing PAC bingo, as every time I stand up I seem to mention how long I was on that Committee. I was there for five years. I promise that I am not going to speak for five years, Mr Efford—

[Chris Evans]

Fidel Castro was the master—I think 18 hours was his minimum. If you want me to do that, Mr Efford, I can. With lunch coming up, I think I would be the most popular member of the Committee.

I know from my time on the Public Accounts Committee that transparency leads to improved Government spending. There should be no place to hide poor contract decisions or, in the worst cases, possible cronyism. Unfortunately, there have been several scandals relating to procurement and Government spending. We have already heard this morning about the questions surrounding the procurement of PPE during the pandemic, which led, unfortunately, to the huge sum of £10 billion of public funds being spent on unusable, overpriced and even undelivered PPE.

At a time when so many families are struggling with the cost of living crisis, we cannot allow the public to feel that their hard-earned tax money is not being spent properly, and we all must work to restore public trust in Government procurement. The Government’s own “transparency ambition” document outlines a concerning failure to provide transparency in our procurement system. These reforms are long overdue and I am pleased that we are able to talk about them today. I think we can all agree that it is important that we increase trust in Government, and one of the key ways we can do that is through transparency. Labour would go further in government than the present Conservative Government. We would introduce a Ukraine-style publicly accessible dashboard of Government contracts tracking delivery and performance.

I am pleased that the Government have made some commitments to increasing transparency on large projects. The reforms—particularly the introduction of a number of new procurement notices covering the entire procurement lifecycle from planning through to contract expiry—are a welcome step forward. However, there are a few areas where we need clarity on implementation.

For example, at clause 53(2), the Bill states:

“A ‘contract details notice’ means a notice setting out—

(a) that the contracting authority has entered into a contract, and

(b) any other information specified in regulations under section 93.”

The Minister said on Second Reading that the Government

“will deliver world-leading standards of transparency in public procurement”—[Official Report, 9 January 2023; Vol. 725, c. 343.]

and that there is a

“statutory obligation on the Government to deliver a single digital platform to host this data.”—[Official Report, 9 January 2023; Vol. 725, c. 348.]

However, it is unclear what a contract details notice will look like in practice, and how much detail will be required—in other words, how much transparency will actually be provided. It seems strange that there is no outline of how much data will be provided and what form it will take. I worry that will allow for only the very basic details of public contracts to be provided. Could the Minister explain his understanding of what transparency notices will look like and what information they will be required to contain?

A concern raised by the Local Government Association is that the clause risks contradicting other pieces of legislation, which, in turn, risks the ability to achieve one single digital platform for procurement. The LGA has suggested that the Transport Act 1985, the Service Subsidy Agreements (Tendering) (England) Regulations 2002 and the best value transparency code may have an impact on the implementation of the Bill. Could the Minister tell us whether that has been resolved, or what plans the Government have to ensure that other legislation does not interfere with the implementation of the single digital platform?

Overall, I welcome the goals of the clause, but I feel that it requires closer attention to ensure that it is properly implemented.

11 am

[Alex Burghart]

I am happy to play bingo with the hon. Gentleman any time. One particular game that we might play is to call “Bingo!” every time the Ukrainian digital platform is mentioned, because it has been mentioned several times. And well might it be mentioned, because it is a model of good practice. The hon. Gentleman will have heard me say on several occasions that we were grateful to the Ukrainian Government for coming and advising us on the creation of our own digital platform, which he will also have heard me mention. That platform will be the harbour of transparency, enabling suppliers, contracting authorities, central Government, voters and the press to see what is going on and to hold people to account. It will be a great asset.

The precise details of what needs to be published are not fit to be put in the Bill and the requirements may change over time. However, we will set those details out in due course, and what will drive our considerations when we do so is the ability to hold suppliers and contracting authorities to account.

Question put and agreed to.

Clause 53 accordingly ordered to stand part of the Bill.

Clause 54

Time limits

[Alex Burghart]

I beg to move amendment 34, in clause 54, page 37, line 14, at end insert—

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 35 and 36.

Clause stand part.

[Alex Burghart]

Government amendments 34 to 36 are technical amendments to allow shorter time periods to be set by utilities and contracting authorities that are not classed as central Government authorities, which will be defined in regulations made under the Bill, for procurements where there has been a prior selection round.

Following completion of that prior selection round, utilities and non-central Government authorities will invite identified suppliers to submit their tenders. The amendments will mean that they can negotiate a suitable time limit with all suppliers or, in the absence of agreement, a minimum of 10 days will apply. This flexibility exists in the current regime and, in common with all minimum time limits in the clause, is GPA-compliant. It was not included in the Bill previously because certain trade agreements did not permit such flexibility. However, following very positive progress in negotiations, we are now confident that we can make the change.

We know from our engagement with industry groups that utilities and sub-central bodies such as local authorities are hugely supportive of the change, because they will benefit from reduced timeframes and faster procurements. This will ultimately result in quicker delivery to the public of goods and services from those entities, benefiting us all.

Clause 54 as a whole deals with time limits during competitive procurements. It is important that suppliers are allowed adequate time during the awarding of public contracts, for example to prepare and submit tenders or requests to participate in a procurement.

The clause sets out minimum time periods that must be met in different circumstances, in line with the requirements of the GPA. These are minimum time limits. Consequently, contracting authorities are also directed to wider considerations for setting time periods, such as the nature and complexity of the contract, the need for site visits, and avoiding unnecessary delays.

[Florence Eshalomi]

These amendments set out the minimum timescales that apply when a contract is only between authorities and pre-selected suppliers. As these suppliers are verified to be compliant with the conditions of participation, it is logical that they would need less time to prepare a bid and would not be caught off guard by the 10-day minimum period, or the negotiated tendering period if one can be agreed. I thank the Minister for his explanation about why this is necessary, which was helpful. However, I also share the desire to reduce some of the unnecessary bureaucracy on both the authorities and the companies involved.

We do not seek to oppose these amendments. However, in relation to clause 54 there are considerable concerns about the minimum time limits that contracting authorities must abide by within certain circumstances. It is right to strike the balance between bureaucratic obligations on contracting authorities and the need for suppliers to have sufficient notice to compile a tender. As we have already outlined, this is really important for SMEs, which may sometimes lack the necessary staff or may require greater time to consider the consequences of bidding for contracts and to assess the ability of their company to do so.

We must also bear in mind the article 11 time periods of the World Trade Organisation’s general procurement agreement, which sets out minimum deadlines in line with the deadlines in the Bill. That is a step forward. We recognise that the Government’s hands are somewhat tied on this issue, but we should not wish to breach any international agreements. We therefore feel that the current amounts strike the right balance between bureaucracy and providing everyone with a fair chance to bid, so we do not intend to oppose them. As I have highlighted, we welcome the provisions in clause 15, which also interact with this part of the Bill. Trading off time limits in this part of the Bill for a pre-engagement notice is a sensible choice that benefits everyone, and we are happy to support the second part of this provision in the clause.

Amendment 34 agreed to.

Amendments made: 35, in clause 54, page 37, line 35, at end insert—

“‘central government authority’ has the meaning given in paragraph 5 of Schedule 1 (threshold amounts);

‘negotiated tendering period’ means a tendering period agreed between a contracting authority and pre-selected suppliers in circumstances where tenders may be submitted only by those pre-selected suppliers;”.

This amendment would define terms used in Amendment 34.

Amendment 36, in clause 54, page 38, line 2, at end insert—

“‘pre-selected supplier’ means a supplier that—

(a) has been assessed as satisfying conditions of participation before being invited to submit a tender as part of a competitive tendering procedure, or

(b) in the case of a contract that is being awarded by reference to suppliers’ membership of a dynamic market, is a member of that market;”.—(Alex Burghart.)

This amendment would define a term used in Amendment 34.

Clause 54, as amended, ordered to stand part of the Bill.

Clause 55

Procurement termination notices

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 55 requires contracting authorities, except private utilities, to publish a procurement termination notice as soon as reasonably practicable after making a decision to terminate a procurement. Each time a tender or transparency notice, which initiates a procurement, is published it creates a data record of the lifetime of that procurement and any resulting contract. Failure to confirm that a procurement has been terminated will result in the suppliers not being aware of a cancellation and in permanently incomplete data records and inaccurate records on our central platform, because the number of ongoing procurements will incorrectly include terminated procurements, which is unhelpful for anyone monitoring and using that data. A procurement termination notice is required to ensure that the data record and the full story of the procurement are concluded.

[Florence Eshalomi]

I thank the Minister for outlining that. The clause is simple. It ensures that when a tender or transparency notice is published, there must be a notice if the contracting authority does not award the contract. The clause is necessary, and we are happy for it to stand part of the Bill.

Question put and agreed to.

Clause 55 accordingly ordered to stand part of the Bill.

Clause 56

Technical specifications

[Alex Burghart]

I beg to move amendment 37, in clause 56, page 38, line 24, at end insert—

“(za) the standard adopts an internationally-recognised equivalent, or”.

This amendment would allow procurement documents to refer to a UK standard if the standard adopts an internationally-recognised equivalent.

[The Chair]

With this it will be convenient to discuss Government amendments 38 to 41.

[Alex Burghart]

The Committee will be delighted to hear that Government amendments 37 to 41 to clause 56, which concerns technical specifications, are very technical amendments. They will help to ensure that the Bill’s requirements in relation to standards, certification and accreditation are clear and fully align with how standards work in practice and the Government’s policies in those areas.

We are committed to openness and international trade, so contracting authorities must use international standards, or international standards that the British Standards Institution has adopted via a British standard, before using specific UK standards. We need to ensure that standards are appropriate, and we have strengthened the onus on the supplier to demonstrate that when claiming that it possesses an equivalent to standards requested by contracting authorities. In addition, the amendments make clear that contracting authorities can request evidence to verify that a standard has been met. That may include conformity assessments from certification bodies accredited by organisations such as the United Kingdom Accreditation Service, or UKAS.

[Florence Eshalomi]

The amendments help to clarify some of the technical provisions relating to the presentation and meeting of United Kingdom standards, as referred to in subsection (5). The Minister said that they are technical amendments. It is fine that we have technical provisions that have reached this stage without amendment, but we will be happy to hear clarification from the Minister this morning. We do not intend to oppose the amendments.

Amendment 37 agreed to.

Amendments made: 38, in clause 56, page 38, line 26, leave out paragraph (b).

This amendment is consequential on equivalent provision being made by the new subsections inserted by Amendment 39.

Amendment 39, in clause 56, page 38, line 29, at end insert—

“(3A) If the procurement documents refer to a United Kingdom standard, they must provide that tenders, proposals or applications that the contracting authority considers satisfy an equivalent standard from another state, territory or organisation of states or territories will be treated as having satisfied the United Kingdom standard.

(3B) In considering whether a standard is equivalent to a United Kingdom standard for the purposes of subsection (3A), a contracting authority may have regard to the authority’s purpose in referring to the standard.

(3C) A contracting authority may require certification, or other evidence, for the purpose of satisfying itself that a standard is satisfied or equivalent.”

This amendment would clarify how a contracting authority is to assess whether tenders, proposals or applications satisfy equivalent standards to United Kingdom standards (including that it may require evidence).

Amendment 40, in clause 56, page 38, line 36, leave out “such matters” and insert

“the matters mentioned in subsection (4)”.—(Alex Burghart.)

This amendment would clarify that the requirement in subsection (5) only applies where the matters mentioned in subsection (4) are referred to in the procurement documents.

[Florence Eshalomi]

I beg to move amendment 8, in clause 56, page 38, line 38, at end insert—

“(5A) For all procurement which is intended for use by natural persons, whether the general public or staff of the contracting authority, the technical specifications in the procurement documents must, except in duly justified cases, be drawn up so as to take into account accessibility criteria for disabled persons or design for all users.”

This amendment would reproduce on the face of the Bill requirements for accessibility criteria for disabled persons which are included in the Public Contacts Regulations 2015, which this Bill will replace.

Amendment 8, in the name of my hon. Friend and neighbour the Member for Battersea (Marsha De Cordova), addresses the fact that the Bill overwrites requirements that ensure publicly procured goods and services are accessible to everyone and has no clauses specifically relating to accessibility for disabled people or replacing the current regulatory framework for accessibility. Accessibility is included only in clause 94, with regard to electronic communication and in the recommendation. While the reference to accessibility in clause 94(2), which states that any electronic communications utilised as part of the public procurement exercise must be

“accessible to people with disabilities”,

is a welcome addition, it does not address concerns to ensure that public funds are used to drive improved outcomes for disabled people. The Bill does not include any reference to the need for public procurement exercises to take account of accessibility.

Amendment 8 would create a new provision in the Bill to ensure that publicly procured goods and services meet a minimum standard of accessibility. Currently, regulation 42 of the Public Contracts Regulations 2015 states that the specifications for procurement must be

“drawn up so as to take into account accessibility criteria for disabled persons or design for all users.”

The amendment would simply reproduce that existing requirement in the Bill, ensuring that the current regulatory framework for accessibility is maintained.

Legal experts do not believe that the public sector equality duty under the Equality Act 2010 is sufficient. That is recognised by the current system, which incorporates both the public sector equality duty and regulation 42 of the Public Contracts Regulations to ensure that goods and services are accessible to everyone. Even with regulation 42, contracting authorities continually fail to consider their obligations and procure inaccessible products. Accessibility for disabled people must be maintained at the heart of any new public procurement legislation.

In early 2020, the then Prime Minister wrote to every Government Department calling on his Cabinet to increase opportunities and improve access to services for disabled people. From publicly procured ticketing machines to online consultation software, the Bill offers a great opportunity to meet that expectation and ensure that Government services are accessible to all. I hope the Minister will agree that this amendment would help to ensure we do not go backwards on disability rights in procurement.

[Alex Burghart]

Amendment 8, tabled by the hon. Member for Battersea, with whom I had the pleasure of serving on the Work and Pensions Committee a few years ago, seeks to ensure that in procurements where the end product is intended to be used by people, the technical specifications account for the needs of people with disabilities. I very much want to reassure the Committee that the UK already has legal obligations that dictate how technical specifications are drawn up in these circumstances, with disability accessibility and even broader considerations covered by the public sector equality duty under section 149 of the Equality Act 2010.

The existing procurement regulations are derived from EU procurement directives, which were designed to be applied to member states where domestic laws do not adequately provide for accessibility requirements, as the Equality Act does. When applied to procurement, the Equality Act requirements are more pervasive than regulation 42 of the Public Contract Regulations 2015, and there is no need unnecessarily to replicate EU provisions when our domestic law is fit for purpose. Indeed, the Equality Act goes further than regulation 42, covering other protected characteristics and applying to the whole commercial lifecycle more broadly than just technical specifications.

Although we do not think this amendment is necessary, the Government remain committed to ensuring public procurement drives better outcomes for people with disabilities, and I recognise that implementation is currently patchy. We welcome engagement with charities and organisations supporting people with disabilities, to help ensure that disability accessibility is improved and effectively considered by contracting authorities in public procurement. As a consequence, I respectfully request that this amendment be withdrawn.

[Florence Eshalomi]

I understand the Minister’s concern and his admission that the Government will consult those disability charities, but does he agree with me that, as it stands, there are currently no requirements for goods and services to meet that standard of accessibility?

[Alex Burghart]

The hon. Lady will have heard me say that the legal duty that exists within Equality Act 2010 goes further than the EU procurement rules that we are getting rid of. It goes further than the EU procurement directives, so there is no loss of obligation in the creation of the Bill.

I am very happy to meet the hon. Member for Battersea, who is an expert in these issues, in order to reassure her. As far as we are concerned, the Equality Act 2010 goes further than the EU procurement directives, so this amendment is not necessary.

Question put, That the amendment be made.

--- Later in debate ---

Question proposed, That the clause, as amended, stand part of the Bill.

[Alex Burghart]

Clause 56 sets technical specifications that contain the required characteristics of the goods, services or works that a supplier has to provide. They are included within procurement documents to present suppliers with a full description of the contracting authority’s needs, to enable suppliers to propose a solution to meet those needs via a tender response.

In line with the broader goal of a simpler regulatory framework and increased flexibility to design efficient, commercial and market-focused competition, the Bill does not dictate how technical specifications are to be drawn up by contracting authorities, or mandate what exactly should be included.

As such, clause 56 simply requires contracting authorities to refer to performance or functional requirements over descriptive characteristics, to focus on the desired outcomes of a contract rather than being overly prescriptive on the method by which this is achieved. Clause 56 also prevents contracting authorities from referring to things like specific trademarks or producers—in essence prohibiting an arbitrary favouring of national or specific products—to avoid narrowing the competitive pool.

Contracting authorities must also use international standards where they exist, or national standards allowing for equivalents. This provision, required by the UK and other parties to the World Trade Organisation’s Government procurement agreement is helpful, as the UK advocates for high standards in the supply of goods and services and was a founding member of standards organisations, such as the International Organisation for Standardisation and the International Electrotechnical Commission.

Question put and agreed to.

Clause 56, as amended, accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned.—(Julie Marson.)

Procurement Bill [ Lords ] (Fourth sitting)

Alex Burghart Excerpts

Committee stage
Thursday 2nd February 2023 Public Bill Committees

[Chris Evans (Islwyn) (Lab/Co-op)]

I beg to move amendment 12, in clause 23, page 18, line 4, at end insert—

“(3A) Where—

(a) the contracting authority is the Ministry of Defence, and

(b) the contract concerns defence or security,

the award criteria must be weighted so as to advantage United Kingdom suppliers.”

This amendment would give advantage to UK based suppliers in the case of defence or security contracts under the Ministry of Defence.

As has been said during the Committee’s proceedings, when done well, defence procurement strengthens our UK economy and UK sovereignty. Labour in government would make it fundamental to direct British defence investment first to British businesses, with a higher bar set for any decisions to buy abroad. That is the objective behind the amendment.

The Government really have missed an opportunity in the Bill to put British businesses first. We should be using it to ensure that we buy, make and sell more in Britain. Across the country, we have amazing British businesses, with the capability to support all the country’s defence and security procurement needs. Our steel, shipbuilding, aerospace and material industries are national assets and treasures. We need to support them.

If we want to use legislation to empower British business, we need to ensure that British business has the first bite of the cherry of the investment on offer. For the good of our country, we should want to see as much as possible of our equipment designed and built here in the United Kingdom. There are those who think that putting that in the Bill is not necessary, and that being a British business that supports jobs and industry in the UK should speak for itself. Sadly, as we have seen, that is not true.

I draw attention to the recent signing of the contract for fleet solid support ships, which was awarded to a Spanish-led consortium. The Government claim that the contract will support 1,200 jobs across the UK and 800 at Harland & Wolff in Belfast, but it is worth noting that the Government have included no guarantees of those jobs in the contract itself. Under the terms of the contract, the Spanish company will do the majority of the complex manufacturing of the ships, which requires most of the expertise and technology transfers that underpin the project. Instead of investing in the UK’s own abilities in design and technology, we are paying Spain to strengthen its abilities.

To return to my point, the Government chose that Spanish state-subsidised bid over a bid that would have sustained more than 2,000 jobs directly in the design and building of the FSS ships and about 1,500 jobs in the wider UK supply chain, and supported about another 2,500 in local communities around the UK—not insubstantial figures. The award of that contract comes at a critical time for the UK shipbuilding industry. Today, we have already had a statement on the Floor of the House about British Steel. The GMB union has released research to show that shipbuilding and ship repair employment in Great Britain has fallen by 80,000 jobs since the early 1980s. Not only is that a massive decline in skills in the UK industry, but it poses a threat to the UK sovereign defence manufacturing capability at a time of international uncertainty.

I do not need to tell the Committee that this country has a skills gap that desperately needs to be fixed. According to the National Audit Office report on the digital strategy for defence published in October 2022, the Ministry of Defence is having difficulties recruiting and retaining the necessary workforce, because its pay rate cannot compete with the private sector. Some defence companies are actively trying to resolve the issue by recruiting through apprenticeship programmes, such as that at Rolls-Royce, which announced 200 new apprenticeships at its new nuclear skills academy in Derby, and the apprenticeship scheme at Leonardo, where I went last year to speak with the apprentices in Yeovil about their hard work.

Apprenticeships, however, cannot exist without the work to do. One of the main issues that defence companies come to me with is the sustainability of workflow. That makes employers reluctant to take on apprentices for fear that they will not have enough work or money to support them. For apprentices themselves it does not make the defence industry look like a stable place to grow their career. We need long-term investment in apprenticeships and skills development in the UK. There needs to be a culture change in Government to put the growth of local industries first and to review the pipeline of all major infrastructure projects to explore how to increase the materials made in Britain and to upskill the workers to get the jobs of the future.

Such concerns are spread across the whole United Kingdom. The Scottish Affairs Committee has raised those concerns regarding Scottish shipyards. In its report, “Defence in Scotland: military shipbuilding,” which was published on 23 January, the Committee said:

“Recent developments have introduced uncertainty about some orders in the pipeline and whether it sets out a clear ‘drumbeat’ of orders needed to sustain Scottish shipyards.”

UK workers deserve better than that uncertainty.

When discussing the UK defence industry, we must not forget the importance of small and medium-sized enterprises in the supply chain. We know that shipbuilding contracts can help to deliver benefits for the wider economy and in shipbuilding communities. If contracts keep going abroad, work for SMEs will also go abroad, and the skills will go with them.

Public money should be spent for the public good. We should always consider the wider value to society. Our smaller local businesses are at the heart of that. The amendment would advantage British businesses in bidding for defence and security contracts. As a result, it would also advantage UK businesses in the supply chain.

If we are serious about defence procurement, we must commit to buy, sell and make more in Britain. It is crucial, now more than ever, that we have a procurement system that supports our sovereign capabilities, ensuring that UK businesses have the advantage when it comes to securing defence and security contracts.

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

It is a pleasure to serve under you this afternoon, Mr Mundell. Before I turn to amendment 12, I would like to refer back to our previous sitting. I said that I would get back to the hon. Member for Brighton, Kemptown, who is not in his place at the moment but will have the advantage of being able to read Hansard later. His question was whether a procuring authority can reject a bid if it requires a supplier to pay the real living wage. The short answer is yes. That option is very much open to procuring authorities. I am sorry that I could not provide him with that information earlier, because I know that he would have been happy to hear it.

Amendment 12, tabled by the Opposition, seeks to ensure advantage to UK-based suppliers for defence or security contracts. Defence contracting authorities will determine the right procurement approach on a case-by-case basis. That ensures the delivery of the most effective solution for the armed forces while ensuring value for money, taking into consideration factors including the markets concerned, the technology we are seeking, our national security requirements and the opportunities to work with international partners, before deciding the correct approach to through-life acquisition of a given capability.

The defence and security industrial strategy sets out a strong commitment to maintaining onshore industrial capability in key capability segments, such as those that are fundamental to the UK’s national security. That commitment does not always preclude the involvement of foreign-based firms, as long as they conduct the work in the UK and comply with certain security conditions.

I understand that the Labour party wishes to burnish its patriotic credentials—that is all for the good, I am sure—but to listen to the speech by the hon. Member for Islwyn, one could be forgiven for not understanding that 90% of defence spend is already within the UK. Indeed, the fleet support ships that he referred to will be built to a British design, with the majority of the construction at the Harland & Wolff shipyards in Belfast and Appledore and all the final assembly being completed at the Harland & Wolff shipyard in Belfast, bringing shipbuilding back to Northern Ireland. In our Westminster Hall debate the other day, it was good to hear the hon. Member for Strangford (Jim Shannon) praising that, and saying what a difference it would make to people and businesses in his community.

We must understand that there is already a good tradition of this approach. The Bill, though stipulations elsewhere, will actually make it easier for British small and medium-sized enterprises to bid for these contracts. We will also have better publication of pipelines, which will help them too.

While I appreciate what the hon. Member for Islwyn is trying to do with his amendment, there is a real risk that, if it was passed, we would see some defence authorities occasionally being forced to accept much more expensive contracts, perhaps with lower capability, and that would be to the detriment of both taxpayers’ money and, more significantly, the capability of our armed forces. I therefore respectfully ask, on those practical grounds, that the amendment be withdrawn.

[Chris Evans]

The Minister mentioned the hon. Member for Strangford, whose nickname is the hon. Member for Westminster Hall, he speaks in so many Westminster Hall debates—I think he lives there. I listened to what the Minister said, and I appreciate that 90% of contracts are in this country. However, the amendment would be a shot in the arm not only for our defence industries, but for our steelmaking capabilities, so I will press it to a vote.

Question put, That the amendment be made.

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[The Chair]

With this it will be convenient to discuss clause 24 stand part.

[Alex Burghart]

The clause explains what we mean by “award criteria”. They are the criteria against which contracting authorities assess tenders under a competitive tendering procedure, and the clause sets out the rules that apply to them.

The clause requires that award criteria are clear, measurable and specific, comply with the rules on technical specifications, are a proportionate means of assessing tenders, and relate to the subject of the procurement. The clause requires that the way in which tenders are evaluated is transparent and set out in the assessment methodology, and that contracting authorities set out the relative importance of the criteria.

The clause makes it clear that award criteria can cover a wide range of things, from price to how things are produced to what happens at the end of the solution’s lifecycle, provided criteria relate to the subject matter of the contract. The rules allow a contracting authority to limit the number of lots that it wishes to award to a single supplier, when it has broken down a larger procurement into smaller lots or components. Where the contract is for light-touch services, which are person-centred services, reference is made to additional matters that can be considered to be relevant to the subject matter of the contract.

We want contracting authorities to be confident when designing and running procurement procedures. An area that often causes confusion is how far award criteria can be iterated during the process. Given the flexibility afforded to contracting authorities under the new regime, clause 24 makes it clear that award criteria may be added to through greater detail, or tweaked to add clarity during a procurement procedure, but any such refinements to award criteria should be made at specified points. The clause does not allow for wholesale changes to award criteria. For example, during a procurement procedure that allows for a research phase, a design phase and a development phase, the overarching criteria will remain constant, but the specifics may evolve. That is what the clause seeks to achieve.

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Mr Mundell.

Clauses 23 and 24, as the Minister highlighted, relate to the award criteria and their refinement before the invitation of tenders. Award criteria for procurement need to be finely balanced to achieve the best deal for the public. If they are too narrow, we risk missing out on innovative processes, and the potential to save the taxpayer money and deliver those services efficiently; if they are too broad, we risk delivering substandard and inappropriate services.

In the lead-up to our consideration of the Bill, I spoke to different groups and charities. They said that broad contract terms often mean that contracting authorities end up awarding the contract to the cheapest bidder. That is despite the charities offering more bespoke and important services that address the needs of procurement far more substantially.

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Will the Government issue guidance and provide a template for what they expect a set of award criteria for a certain service to look like to other contracting authorities? Will the Government ensure that good practice is developed across the country, and allow for the easy sharing of information on award criteria? Again, I highlight the fact that procurement officers are often stretched, and information on what has worked well in other areas could be vital to producing the greatest value for money. Information on things that have created headaches in other areas can be useful to avoid the same pitfalls happening across the country. I hope that the Minister will consider issuing such guidance and will ensure that different authorities talk to each other to establish best practice in the new system.

[Alex Burghart]

I am glad to be able to give the hon. Lady that assurance.

Question put and agreed to.

Clause 23 accordingly ordered to stand part of the Bill.

Clause 24 ordered to stand part of the Bill.

Clause 25

Sub-contracting specifications

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

The clause sets out a specific and somewhat technical provision, whereby a contracting authority can either permit or direct a supplier to subcontract the supply of goods, services or works to another supplier.

In certain procurements, circumstances exist where part of the contract needs to be subcontracted to a specified supplier. That could be due to economic or technical reasons relating to requirements of interchangeability or interoperability with existing equipment, services or installations. It could also be due to the protection of exclusive rights.

For example, a contracting authority might require the use of certain technical software that is owned by a single supplier. Therefore, in such procurements, a contracting authority may need to nominate a particular subcontractor that must be used. For direct award under clause 41, however, a contracting authority may only require a supplier to subcontract the supply of goods, works or services to a particular supplier where the justifications for a direct award set out in schedule 5 also apply to the subcontractor.

[Florence Eshalomi]

The clause states that where a contract could be supplied to a supplier under a direct award, the contracting authority can mandate that a supplier that wins a competitive tender process must subcontract the supply of those works, goods and services to the supplier that could have supplied the contract via a direct award. We have discussed the issues of subcontracting and of direct awards, and we will discuss them further under clauses 71 and 41 respectively. This clause is relatively uncontroversial, in that it seeks to ensure that the mechanisms for direct awards can apply via a subcontract. We therefore do not wish to oppose the clause and are happy for it to stand part of the Bill.

Question put and agreed to.

Clause 25 accordingly ordered to stand part of the Bill.

Clause 26

Excluding suppliers from a competitive award

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clauses 27 and 28 stand part.

[Alex Burghart]

We come to the clauses concerning the exclusion of suppliers. I appreciate that there is considerable interest in these clauses, and rightly so; they are an important part of the Bill.

Clause 26 sets out the basic principles governing the exclusion of suppliers from competitive award of contracts. Subsection (1) provides that contracting authorities must disregard tenders from suppliers that are “excluded”. Excluded suppliers are defined in clause 57 as those in respect of which a mandatory ground for exclusion applies, as set out in schedule 6, and the issues in question are likely to occur again, or that are otherwise treated as excluded suppliers under the Bill.

Subsection (2) provides that contracting authorities must consider whether a supplier is an “excludable supplier” before assessing tenders, and may, at their discretion, disregard tenders from such suppliers. Excludable suppliers are those in respect of which a discretionary exclusion ground applies, as set out in schedule 7, and the issues in question are likely to occur again.

Subsection (3) requires contracting authorities to give the supplier the opportunity to replace an associated person, such as a subcontractor that the supplier is relying on, to meet any conditions of participation, if the exclusion situation pertains to such a supplier.

Clause 26 is essential to give effect to the exclusions regime set out in the Bill with regard to the assessment of tenders, which protects contracting authorities and the public from suppliers that may not be fit to compete for public contracts. However, the clause does not provide the detailed grounds for exclusion and the process for how authorities should apply them. Those are set out in clause 57 and in schedules 6 and 7, which we will come to on a future day.

Clause 27 sets out the basic principles governing the exclusion of suppliers from competitive, multi-staged procurements. Those provisions are needed in addition to clause 26 to ensure that contracting authorities consider the exclusions at the start of multi-stage procedures, as well as when considering tenders.

Subsection (1) provides that contracting authorities must apply the exclusions regime to interested parties at the outset of all multi-staged procurements. For those procurements, authorities should consider whether each interested supplier meets any of the grounds for exclusion and, if so, whether the issues in question are likely to occur again, and whether that supplier is to be treated as an excluded supplier under the Bill for other reasons.

If a supplier is an excluded supplier under subsection (2), the authority must prevent the supplier from participating in, or advancing any further in, the procurement. Where the supplier is an excludable supplier under subsection (3), the authority may, at its discretion, permit the supplier to participate. That has the effect of making exclusions a gateway into the procurement.

Subsection (4) requires contracting authorities to give the supplier the opportunity to replace an “associated person”, such as a subcontractor the supplier is relying on, to meet any conditions of participation, if the exclusion situation pertains to such a supplier.

Clause 27 is essential because it gives effect to the supplier exclusion regime set out in the Bill, which protects contracting authorities and the public from suppliers that may not be fit to compete for public contracts. However, as with clause 26, clause 27 does not provide the detailed grounds for exclusion and the process for how authorities should apply them. Those are set out in clause 57 and schedules 6 and 7.

Clause 28 deals with exclusions and subcontractors. It sets out the circumstances in which contracting authorities must, or may, consider whether the exclusion grounds apply to subcontractors that the bidder in question intends to work with, and how to apply the exclusion regimes where that is the case. Importantly, that is not limited to direct subcontractors of the bidder but includes other subcontractors further down the supply chain.

Subsection (1) requires contracting authorities to request information from suppliers about all intended subcontractors and to check that they are not on the debarment list. Subsection (2) then allows contracting authorities to request additional information about any subcontractors and consider whether they are excluded or excludable suppliers. Contracting authorities may choose to do that for particular types or categories of subcontractors, such as all first-tier subcontractors or service-critical subcontractors.

If a subcontractor is an excluded supplier under subsection (3), the contracting authority must disregard their tender and exclude them from taking part in a competitive tendering procedure. If the subcontractor is an excludable supplier under subsection (4), the contracting authority may disregard their tender or exclude them from the procedure. Before disregarding a supplier’s tender or excluding them from a procedure under this clause, under subsection (5), the contracting authority must give the supplier the opportunity to replace the subcontractor in the supply chain in order to avoid itself being excluded.

We know that some of the worst corporate misconduct and unlawful behaviour occurs deep in supply chains to Government. That is particularly true with respect to forced labour and other modern slavery abuses. This clause is essential to ensure that the same standards to which we hold bidders for contracts can be applied all the way down the supply chain.

[Florence Eshalomi]

Clauses 26 to 28 concern the exclusion of suppliers on the grounds listed in schedules 6 and 7 related to mandatory and discretionary grounds for exclusion. We support the inclusion of exclusion grounds in the Bill. In the Green Paper “Transforming Public Procurement”, the Government said:

“The current procurement regulations allow contracting authorities to take into account the past performance of a supplier on only very limited grounds and commercial teams often have to rely on bidders’ self-declarations rather than objective, evidence-based information. We can act now to raise the bar on the standards expected of all suppliers to the public sector and ensure that outstanding small suppliers are able to secure more market share, increasing productivity and boosting economic growth.”

I am sure that there is complete agreement on that in the Committee today. There can be no question but that we should not give public money to those convicted of wrongdoing or acting in a way that damages the country and our communities.

Clauses 26 to 28 put into place terms to bring the mandatory exclusion grounds from schedule 6 and schedule 7 into force by using the language of “excluded” and “excludable”, as defined in clause 57. Of course, the strength of this clause is heavily determined by the strength of the grounds for exclusion.

We are pleased to see some steps forward from the system inherited from European Union directives, which was brought into power in this country via the Public Contracts Regulations 2015. In particular, we are pleased to see environmental misconduct implemented as a discretionary exclusion ground. Our environment is a key natural asset that provides us with the building blocks for living in this country. Those who seek to damage our environment—for example, by dumping waste and causing significant damage to plant or animal life—should not be given Government contracts. We are also pleased to see national security within the system, although, as the Minister can guess from our planned amendments, we feel that this could have a stronger presence in the Bill, with some of the ambiguity removed.

When reading through the clause, we had some concerns about how it will be applied and some of the doors that it leaves open on discretionary exclusion grounds. Although the Bill is clear that those excluded on mandatory grounds must be disregarded from a tendering process, it is not clear on the fate of suppliers that fall foul of the discretionary grounds. Here, the Bill says that contracting authorities “must consider” whether a supplier is excludable on discretionary grounds but “may disregard” their tender, as the Minister said. This discussion may seem similar to ones we have already had, but this could have far more serious consequences.

For example, let us say that a supplier is decided to be a national security risk following an assessment by a contracting authority and that is confirmed by the Government via the provisions in clause 29. That supplier then applies for a tender to another contracting authority. What is stopping that contracting authority awarding this contract, should it so wish? There does not seem to be any mechanism to permanently exclude an excludable supplier in the Bill. Even when the Government consider a threat so severe that it should go on the debarment list, the Bill would still allow authorities to apply the “may” rather than the “must” exclude part.

I am sure the Minister will say that he will issue clear guidance on this and that contracting authorities should, of course, exclude a supplier in this case, but these are serious grounds for exclusion; we all agree on that. We cannot leave it to chance that a contracting authority uses the powers as they are written in the Bill, rather than as the Minister wishes. At the very least, that creates ambiguity around the whole system.

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I hope the Minister will assure me that there will be adequate and easy-to-follow training and guidance from the Government by the time that the system is in place. That would help to put our minds at ease, and the minds of all the businesses that come forward.

[Alex Burghart]

On that final point, the hon. Lady will have heard me say that we intend to introduce a major programme of training and guidance across many areas covered by the Bill, as part of breathing new life into procurement in our country.

On the hon. Lady’s previous points, this part of the Bill deals with the creation of the mechanism, the details of which are dealt with subsequently in the Bill. The mechanism is that there are some discretionary grounds for exclusion and some mandatory grounds for exclusion. When we get to the relevant clauses and schedules, we will be able to put our arguments, and she and her party can say whether they think that certain issues should be mandatory or exclusionary. I think she will see, when we get there, that sometimes there are grounds for mandatory exclusion on particular issues, but sometimes, on a different version of the same issues, there can be grounds for discretionary exclusion. As I say, we will get into the detail of that as we progress.

Question put and agreed to.

Clause 26 accordingly ordered to stand part of the Bill.

Clauses 27 and 28 ordered to stand part of the Bill.

Clause 29

Excluding a supplier that is a threat to national security

[Florence Eshalomi]

I beg to move amendment 18, in clause 29, page 20, line 42, leave out

“paragraph 14 of Schedule 7”

and insert

“paragraph 42A of Schedule 6”.

This amendment is consequential on Amendment 15.

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[Alex Burghart]

New clause 1 would legislate for the establishment of a committee to consider the threat to national security and cyber-security from suppliers in supply chains delivering public contracts. The Government take national security considerations extremely seriously, and we understand the importance of countering threats to our security throughout our supply chains. We recently demonstrated that through our action to remove Chinese surveillance equipment from sensitive sites across the Government estate. The inclusion of the national security exclusion ground in schedule 7 to the Bill will bring about a significant improvement to the existing EU-derived regime. It will allow a supplier to be excluded on national security grounds, even when the procurement does not meet the bar for exemption on those grounds.

We understand the intention behind the hon. Lady’s new clause, but it duplicates aspects of the new procurement regime underpinned by the Bill. I have already mentioned the ability to exclude a supplier on grounds of national security. The Bill requires any contracting authority that wishes to rely on those grounds when excluding a supplier or rejecting their tender to first notify a Minister of the Crown, who must be satisfied that the supplier should be excluded.

The notification not only ensures that the Minister agrees to the exclusion, but serves to alert them, if they are not already aware, that there may be security concerns about the supplier. The Minister may accordingly decide to investigate the supplier under clause 60, which could lead to the supplier being placed on the debarment list under clause 62. Furthermore, if a supplier already holds a public contract and is found to meet any exclusion ground, clause 77(2)(b) enables the contract to be terminated. Clause 77(2)(c) extends that to subcontracts. As with exclusion, any proposed termination on the grounds of national security must be brought to the attention of the Minister for a decision; again, that could trigger debarment from future procurements.

Under the new clause, the proposed committee would also consider threats to cyber-security. Existing policy in this area is detailed in procurement policy note 09/14. That mandates that where contracts have certain characteristics, suppliers must meet the technical requirements prescribed by the Cyber Essentials scheme. That applies when ICT systems and services supplied by the contract either store or process data at official level. In addition, the MOD, through the defence cyber protection partnership, has developed the cyber-security model that is to be applied to its procurements to ensure cyber-security-related risks are adequately managed throughout the life of the contract.

In short, contracting authorities are already alive to the need to consider national security, including cyber-threats, when procuring public services, and are well placed to review their contracts and supply chains for such threats, bolstered by the provisions of the Bill. However, I am mindful of the concerns raised by colleagues on Second Reading, and those concerns will continue to inform Government thinking as we move forward.

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. For instance, in a relatively innocuous procurement, the exclusion of a supplier might not be merited if the contracting authority was confident that there was no potential for harm. A company that might raise concern in the manufacture of one technical device might also produce paper clips, which would not be a threat to national security.

It is important to note that contracting authorities must consider all exclusion grounds, mandatory and discretionary, against every supplier in each procurement. Any decision not to exclude a supplier that poses a national security risk must be weighed against that risk, and I am confident that contracting authorities will do so carefully.

[Kirsty Blackman (Aberdeen North) (SNP)]

I understand what the Minister is saying, but if the contracting authority is spending public money on those paper clips, it is funding a company that can breach national security and do things that are against the national interest. The contract may not be a risk to national security, but the company is, so surely it should be a mandatory, rather than a discretionary, exclusion.

[Alex Burghart]

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 at the time.

Question put, That the amendment be made.

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Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 30 requires contracting authorities to exclude suppliers that have gained an unavoidable, unfair advantage in a procurement as a result of improper behaviour in relation to that procurement, and suppliers that have failed to provide an accurate and complete list of connected persons and associated persons when requested to by the contracting authority.

Subsections (1) and (2) are clear that exclusion as a response to improper behaviour, defined in subsection (4), is a last resort. It is to be used only where the supplier has gained an unfair advantage that cannot be remedied other than by exclusion. Subsection (3) requires contracting authorities to give suppliers the opportunity to remedy their improper behaviour. When suppliers seek to tilt the playing field in their favour via mis-representation or undue influence, and fail to remedy that, it makes fair and open competition for contracts impossible, and it is taxpayers who pay the price.

Transparency is another essential component of fair procurement, so subsections (5) and (6) are clear that suppliers that are not prepared to disclose full and accurate details of their connected persons, including beneficial owners and directors, or associated persons—for example, subcontractors that are relied on to meet conditions for participation in the procurement—are not fit to bid for public contracts. Contracting authorities must know who owns or has control over the suppliers with which they are contracting. The clause will support them in gaining that knowledge.

[Florence Eshalomi]

As the Minister has highlighted, clause 30 concerns the exclusion of suppliers who behave improperly during the procurement process. It is important that we do not tolerate improper behaviour in procurement. Many procurement contracts are public-facing and require a huge amount of trust, because the suppliers represent the contracting authority to the public. If there is evidence of misleading and improper behaviour that betrays a lack of integrity during the procurement process, it will raise doubts about whether such behaviour may flow through into how the company carries out the contract. Critical goods are procured via these processes, which are vital to the way our country functions, and we cannot let those who embellish their evidence during the tendering process have access to our supply chains.

The Opposition support the clause, but I have a few questions about how it will work. What steps will be taken to establish improper behaviour during the tendering process? What steps can be taken if information comes to light after the award of a contract? It is crucial that improper influence does not permeate into our procurement system; the measures in the Bill can prevent that, but there also needs to be transparency in the system so that we can spot things like undue influence and prevent improper behaviour from falling through the cracks. What steps is the Minister taking to ensure that undue influence, both formal and informal, is spotted during the procurement process?

I must also ask what consistent remedy is available to contracting authorities that find out about breaches following the award of a contract. Let me take hon. Members back to the covid-19 scandal, when billions of pounds-worth of unsellable personal protective equipment was written off. I know that that was not all due to fraudulent behaviour from suppliers, and that some fraudulent behaviour would not fall under the clause if a competitive tender were used. However, it is shocking that the Government admitted on 20 December 2022, in answer to a parliamentary question, that only £18 million of taxpayers’ money had been clawed back from PPE contracts.

There needs to be stronger clawback and remedies when suppliers act improperly. Perhaps that is a matter of culture more than legislation, as many contracts include such a clause, but it would still be helpful to hear what the Minister thinks needs to be done to ensure that more public money is clawed back from those who act improperly.

[Alex Burghart]

In answer to the hon. Lady’s final point, the Government are absolutely seeking to recover public money. The Department of Health and Social Care has been in a process of mediation, but obviously there will come a point at which mediation may need to lead to litigation. Contracts have been drawn up in a way that ensures that we can do the right thing by taxpayers.

On the hon. Lady’s earlier point, I can reassure her that we will publish guidance to support contracting authorities in this area, so that they can conduct due diligence on suppliers and their connected persons.

Question put and agreed to.

Clause 30 accordingly ordered to stand part of the Bill.

Clause 31

Modifying a section 19 procurement

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

There will be times when changes need to be made to the terms of a procurement. Clause 31 sets the scope for such modifications, with the intention of striking a balance between permitting changes required by contracting authorities and preventing abuse of that flexibility, for example to suit a particular supplier. Modifications are allowed in all procedures, but—with the exception of light-touch contracts, which have greater flexibility—they must be confined to non-substantial changes. In essence, that prevents a change that would be likely to impact the market response to the procurement.

Where a permitted modification is made, the contracting authorities must, in consequence, consider revising the time given to suppliers to respond to the invitation to tender or request to participate. The making of modifications will also be transparent, as the contracting authority must provide revised documentation that highlights the changes.

[Florence Eshalomi]

Clause 31 relates to the modification of a section 19 procurement prior to the deadline for submitting a request to participate in the procedure, where there has been no invitation to submit such requests. This sensible clause has proportionate provisions relating to the alteration of contracts. It is right that contracting authorities should be able to modify terms early in the process and carry out later alterations where they are not substantial, or relate to light-touch contracts.

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Mr Cram mentioned that even a simple bid can run into four figures, so if an SME sees a contract that it feels is good and offers value for money, and that it believes it can win, it may invest a significant amount of money into developing the bid prior to the deadline for submitting a request to participate in a procedure or for submitting a tender. If the terms are changed and make the contract unattractive to an SME, it would simply lose the money that it has invested, despite the increased time limits. Will the Minister ensure that there is not a culture of contract changes, so that SMEs do not lose a disproportionate amount of money during the process?

[Alex Burghart]

As the hon. Lady will know, we have included provisions throughout the Bill to make sure that bids are more accessible for SMEs and that we have a level playing field. In that respect, the clause is no different from others in the Bill.

Question put and agreed to.

Clause 31 accordingly ordered to stand part of the Bill.

Clause 32

Reserving contracts to supported employment providers

[Alex Burghart]

I beg to move amendment 32, in clause 32, page 23, line 22, after “operates” insert “wholly or partly”.

This amendment would mean that an organisation could meet the test of being a “supported employment provider” if it only partly has the purpose of providing employment or support to disabled or disadvantaged individuals.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 92, in clause 32, page 23, line 23, leave out “or disadvantaged”.

This amendment, together with Amendment 93 would ensure that provisions related to supported employers are targeted at disabled individuals, in line with the Public Contract Regulations 2006.

Government amendment 33.

Amendment 93, in clause 32, page 23, line 25, leave out “or disadvantaged”.

This amendment, together with Amendment 92 would ensure that provisions related to supported employers are targeted at disabled individuals, in line with the Public Contract Regulations 2006.

Amendment 94, in clause 32, page 23, line 25, leave out “30” and insert “50”.

This amendment would increase the threshold for an employer to be considered supported from 30% of disabled or disadvantaged staff to 50%, in line with the Public Contract Regulations 2006.

Clause stand part.

[Alex Burghart]

Amendments 32 and 33 seek to ensure that the provision is applied widely and as intended, so as to support disabled or disadvantaged people who might otherwise struggle to find employment effectively. Many of the organisations that wish to provide that assistance through the delivery of public contracts do so via arrangements commonly referred to as “employment programmes”, which can be established by one organisation or a number of organisations working together. We need to ensure that those programmes can qualify for a reserved contract. Amendments 32 and 33 therefore seek to clarify that the 30% threshold for disabled or disadvantaged workers can be applied to the programme or part of an organisation, and not just to the organisation as a whole. Where a programme is established as a result of organisations working together, each organisation can contribute to the 30% threshold.

The amendments also seek to clarify that, in order to qualify, an organisation does not necessarily need to have been set up with the sole purpose of assisting disabled or disadvantaged people in employment, but the part of the organisation interested in delivering the contract must have that purpose. This may be a subsidiary or a specific project within an organisation. Where it is applied to a programme made up of a number of organisations working together, the purpose applies to the programme.

Clause 32 allows procurements to be reserved for organisations that provide employment and/or assistance in finding and retaining employment for disabled or disadvantaged people, allowing public procurement to support organisations that assist people who might otherwise struggle to access the labour market, while delivering public services to a high standard. Such companies are often not for profit and will therefore benefit from a more level playing field when competing for a reserved procurement than might otherwise be the case. In order to qualify, the organisation, or an arrangement between organisations, must have the aim of assisting disabled or otherwise disadvantaged people in employment, and at least 30% of the workforce must be disabled or otherwise disadvantaged.

[Florence Eshalomi]

I thank the Minister for his explanation of amendments 32 and 33. We support the use of supported employers and believe that they could go even further, as I will argue in relation to our amendments 92 to 94, but I will first touch on amendments 32 and 33.

We are concerned that Government amendments 32 and 33 expand the definition of supported employment provider so that it would apply where the part of the organisation delivering the contract would meet the relevant thresholds, which could potentially allow for a further watering down of the requirements. Has the Minister considered the potential of the amendments to limit the effectiveness of supported employment by allowing more providers that are not focused on the needs of disabled people to access reserved contracts, or even the potential for larger contractors to game the system? We do not intend to push the amendments to a vote, but I would welcome clarity from the Government and I hope that the Minister’s response will satisfy me. We reserve our right on that.

On amendments 92 to 94, supported employment is a long-established practice and plays an important role in increasing employment opportunities for disabled people. The principle of reserving contracts so that only supported employment providers can bid for them is welcome. However, there are concerns that the Bill does not set a sufficiently high bar for an organisation to be a supported employer, dilutes the aims of reserving contracts and potentially opens the system to abuse.

The Public Contracts Regulations 2006 required 50% of employees to be disabled people, which provided a greater focus on the specific aim of supporting the employment of disabled people. Clause 32 instead enshrines the weaker standard defined in the Public Contracts Regulations 2015, which require only 30% of workers to be disabled or disadvantaged. That potentially limits the impact of supported employment in providing employment opportunities for disabled people.

Concerns have been raised that that approach does not fully recognise the importance of deaf and disabled people’s organisations, or DDPOs, which not only provide supported employment but have a wider role in society. There are clear links between the work of DDPOs and social value. DDPOs protect and uphold disabled people’s rights, campaign for equality and inclusion, and provide a range of peer-led accessible services. Their services support disabled people in accessing services and entitlements, challenging discrimination and exclusion, and having choice, control and independence.

Amendments 92 to 94 would return to the broad definition of a supported employment provider set out in the Public Contracts Regulations by requiring 50% of employees to be disabled and placing a greater emphasis on the role of DDPOs. Inclusion London, a membership body for DDPOs in London, defines a DDPO as an organisation the management committee or board of trustees of which has at least 75% representation from deaf and disabled people, the staff of which is made up of at least 50% deaf and disabled people at all levels of the organisation, and that works to provide services for or works on behalf of deaf and disabled people.

Amendments 92 and 93 would remove “disadvantaged” from the definition. Disability is clearly defined in the Equality Act 2010, which provides a more robust definition that would ensure that the aim of reserving contracts is effectively targeted at the right providers. Did the Government consider the merits of the 2006 definition in preparing the Bill, and did the Government assess whether that definition more effectively targeted the measure of reserving contracts? Will the Minister consider engaging with DDPOs to ensure that the benefits of those organisations are considered in implementing the Bill?

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[Alex Burghart]

Amendments 92 to 94, tabled by the hon. Lady, seek to reduce the scope of application of clause 32, which allows procurement to be reserved for supported employment providers. The clause is consistent with the requirements in regulation 20 of the Public Contracts Regulations 2015, which has functioned well since coming into force. Amendments 92 to 94 seek to revert to procurement rules from 2006, which have long since been repealed.

Amendments 92 and 93 seek to remove the support to disadvantaged people who may struggle to access the labour market. “Disadvantaged” is deliberately undefined in the Bill to enable contracting authorities, particularly local government, to address challenges in the employment landscape at any point in time. The underlying objectives could be to assist those who traditionally struggle to access the labour market, such as the long-term unemployed, prison leavers or care leavers. It is our intention that this clause be capable of broad application, at the discretion of the contracting authority. Amendment 94 would result in fewer organisations, including not-for-profit organisations, being able to qualify for a place in a reserved procurement.

Increasing the percentage of the workforce who must be disabled—or disadvantaged, as the clause is currently drafted—from 30% to 50% may at first appear as an incentive for organisations to have more disabled employees, and therefore appear laudable. However, in reality, it will reduce the competitive market. A threshold of 50% will be a very high target for most organisations looking to bid on their own. Similarly, employment programmes are often the result of collaboration between commercial and not-for-profit organisations, which contribute to meeting the threshold. We have taken steps to ensure those sorts of arrangements can qualify. Significantly increasing the threshold may put those collaborations at risk—we would not want to see that.

Suppliers might feel obliged to establish more complex supply chains to meet the threshold, which could hinder the quality of delivery and could drive up costs. Alternatively, suppliers might simply choose not to bid for Government contracts.

Ultimately, if a reserved procurement is to be successful, it requires competition. The smaller the pool of qualifying organisations, the less likely a reserved competition will be viable, meaning contracting authorities will not be able to use the provision, and the direct support to the people and organisations the clause aims to benefit will be lost.

Amendment 32 agreed to.

Amendment made: 33, in clause 32, page 23, line 24, leave out from “individuals” to end of line 26 and insert “where—

(a) disabled or disadvantaged individuals represent at least 30 per cent of the workforce of the organisation,

(b) if a particular part of the organisation is to perform the contract, disabled or disadvantaged individuals represent at least 30 per cent of the workforce of that part of the organisation, or

(c) if more than one organisation is to perform the contract, disabled or disadvantaged individuals represent at least 30 per cent of the combined workforce of—

(i) those organisations,

(ii) where a particular part of each organisation is to perform the contract, those parts, or

(iii) where a combination of organisations and parts is to perform the contract, those organisations and parts.”—(Alex Burghart.)

This amendment would mean that an organisation could meet the test of being a “supported employment provider” if part of the organisation meets that test and that part is to perform the contract, or the test is met by the combined workforce of organisations or parts of organisations that will together perform the contract.

Clause 32, as amended, ordered to stand part of the Bill.

Clause 33

Reserving contracts to public service mutuals

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 33 operates similarly to clause 32, but allows only specific procurements to be reserved for organisations that have spun out of the public sector to provide social services, with company decisions managed by company employees. Those companies are known as public service mutuals.

Public service mutuals play a vital role in supporting communities at a local level, delivering essential services and contributing to economic growth. However, they may struggle to compete with larger or more well-established suppliers, and it is therefore appropriate that we encourage these public service mutuals by enabling competition in certain limited circumstances among only those organisations that meet the requirements of this clause.

Subsection (6) provides a full definition of a public service mutual body for the purposes of applying this clause. For example, in order to qualify, the company must be run on a not-for-profit basis or restrict the distribution of profits to its members. The exact list of services that can be reserved under clause 33 will be provided in secondary legislation under subsection (8). All reservable services are also light-touch services; examples include adult educational services and rehabilitation services.

[Florence Eshalomi]

As the Minister has mentioned, clause 33 gives contract authorities the ability to reserve certain light-touch contracts for public service mutuals. I am pleased to discuss this matter; as a very proud Labour and Co-operative MP, I am happy to have another opportunity to talk about how fabulous co-operatives are and how they can benefit the public sector. It is fair to say that the Minister and I agree that public service mutuals have so much to offer in terms of innovation and how they can help the wider public sector. The running of services by people rooted in their community helps to bring an understanding of local needs to the heart of public service mutuals, and they can also improve both employee morale and the quality of services for users.

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I am going back to the concerns that I raised the other day about the light-touch regime, which the Minister did not fully respond to. I hope that he can explain the light-touch regime a bit further today and say how it will apply to this clause specifically and to the rest of the Bill in general.

[Alex Burghart]

The hon. Lady will have heard me say on Tuesday about the light-touch provisions that the Government are heavily hemmed in by our international obligations in this area. The codes to which she referred are very specific and they are not included in the Bill because they are extremely numerous. I think there are about 500 of them, so it would have been very difficult for us to put them all in the Bill. However, I am grateful that she supports the general thrust of the clause.

Question put and agreed to.

Clause 33 accordingly ordered to stand part of the Bill.

Clause 34

Competitive award by reference to dynamic markets

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this, it will be convenient to discuss clauses 35 to 40 stand part.

[Alex Burghart]

This substantial grouping of clauses is of considerable importance to the Bill.

Clause 34 relates to the awarding of contracts under the new concept of a dynamic market. This is a highly flexible commercial tool. Dynamic markets are established by contracting authorities and essentially are “live” lists of suppliers that are pre-qualified to deliver certain types of contracts.

Dynamic markets are similar to existing dynamic purchasing systems, in that they will allow for suppliers to be admitted to the market if they meet the conditions of membership. To maximise the benefits of this flexible purchasing tool, we have significantly broadened the type of contracts that can be awarded in dynamic markets. Dynamic markets will be available for all types of procurement and not just for commonly used goods and services, as was the case for dynamic purchasing systems.

Clause 34 is the first in a series of clauses relating to dynamic markets. It allows a contracting authority that has established a dynamic market to award contracts under the market by undertaking a competitive flexible procedure. The use of a dynamic market does not avoid the need to comply with the usual rules for a competitive flexible procedure under clause 20.

Subsection (1) allows contracting authorities to restrict procurements to suppliers that are members of a dynamic market or a part of the market, for example if the dynamic market comprises categories of works or services. A supplier will be a member of a dynamic market if the market allows for the award of the contract in question by that contracting authority and the supplier has been admitted to the market. Subsection (3) requires contracting authorities to disregard tenders from suppliers that are not members of the dynamic market.

Dynamic markets are open to new suppliers to join at any time, as long as they meet the conditions for membership, which is a substantial improvement on the way things have been done up to this point. For that reason, subsection (4) requires contracting authorities to consider membership applications from non-member suppliers before excluding them from the procedure or disregarding their tenders. Subsection (5) says that the only exception to that is where, due to the complexity of the procurement, the application for membership cannot be considered in the timescales set out by the contracting authority for requests to participate or tenders.

Clause 35 sets out how dynamic markets, including utilities dynamic markets, may be established. It allows contracting authorities to establish arrangements known as dynamic markets, which are essentially live lists of suppliers that are pre-qualified to deliver certain types of contracts for the purpose of contracting authorities awarding contracts to suppliers that are members of the dynamic market.

Subsection (2) defines a utilities dynamic market, which is a particular type of dynamic market for the award of utilities contracts by utilities. Subsection (3) allows utilities to award utilities contracts under a utilities dynamic market established by any person, as long as the market has been established in accordance with the rules applicable to utilities dynamic markets as established by private utilities.

Subsection (4) defines a utility as a public authority or public undertaking that carries out a utility activity or a private utility. Utility activities are set out in schedule 4; private utilities are defined in clause 2. Subsection (5) states that the establishment or modification of a dynamic market is not a contract for the purpose of the Bill, making it clear that all the rules on the award of contracts do not apply.

Clause 36 sets out the rules on how suppliers can become members of dynamic markets, including utilities dynamic markets. Subsection (1) allows contracting authorities to set conditions of membership that suppliers must meet in order to be admitted to a dynamic market. The conditions of membership must be a proportionate way of assessing suppliers’ legal and financial capacity and technical ability to deliver contracts that might be awarded as part of the arrangement.

Subsection (2) prohibits conditions of membership that require the submission of annual audited accounts by suppliers that are not already required by law to have their annual accounts audited. It also prohibits conditions of membership that require insurances to be in place before the contract is awarded. As hon. Members will be aware, this is a major boon to SMEs that are seeking to get involved.

The restrictions on the conditions of membership of a dynamic market, set out in subsection (3), are similar to those applicable to conditions of participation in a competitive tendering procedure under clause 22. They include limiting conditions to those that are a proportionate means of ensuring suppliers have the relevant qualifications, experience and technical ability to perform the contract, ensuring that the conditions do not break the rules on technical specifications, and requiring that equivalents must be allowed where particular qualifications are required.

Subsection (4) says that when deciding on what is proportionate, the contracting authority must have regard to the types, complexity and cost of contracts that will be awarded through the dynamic market. Subsection (5) ensures that contracting authorities can require evidence that a condition of membership is met to be independently verifiable by a person that is not the supplier.

Subsection (6) ensures that dynamic markets remain open to new suppliers as long as the dynamic market is in operation. Applications for membership must be considered within a reasonable period and suppliers must be informed of the outcome of their application, with reasons. Suppliers that meet the conditions of membership must be admitted to the market in a timely manner. This measure is another great innovation. Where these systems have been in place previously, once the list is set up, it has been closed to new entrants. Now, new entrants will be permitted throughout the operation of the market.

Subsection (7) says that the membership of a dynamic market cannot be limited to specific numbers of suppliers and the conditions of membership cannot be amended during the lifetime of the arrangement.

Clause 37 outlines the rules on removing suppliers from a dynamic market. Any supplier that is on the debarment list for a mandatory exclusion ground must be removed from a dynamic market under subsection (1). It would be entirely inappropriate for suppliers subject to debarment on that basis to remain on a dynamic market.

Subsection (2) allows contracting authorities to remove a supplier from a dynamic market if it is an excluded supplier or has become an excludable supplier, or it is discovered to have been an excludable supplier when it applied for membership. Additionally, if the conditions of membership are no longer met, the supplier may be removed from the dynamic market. That provides contracting authorities with flexibility to manage their dynamic markets as they best see fit. Subsection (4) states that, before being removed from a dynamic market, a supplier must be told in writing of the decision and the reasons why.

Clause 38 sets out when fees can be charged to suppliers that participate in dynamic markets, including utilities dynamic markets. Subsection (1) allows for fees to be charged when a supplier is awarded a contract under a dynamic market—other than a utilities dynamic market, which is addressed separately. That avoids “pay to play” arrangements and ensures that fees are only chargeable if the supplier is awarded work. The fees must be calculated as a fixed percentage of the estimated value of the contract awarded. For utilities dynamic markets, subsection (2) states that fees may be charged in connection with obtaining and maintaining membership of the market.

Clause 39 sets out the transparency requirements for the creation and management of dynamic markets. Subsection (1) states that the notices are referred to as dynamic market notices. Subsection (2) requires contracting authorities to publish a notice before they set up a dynamic market. The notice must detail the authority’s intention to establish the market. A notice is also required, under subsections (3), (4) and (5), once the dynamic market has been established or modified, or when the market ceases to operate. Additional content requirements for the various notices will be set out in secondary legislation under clause 93. Clause 39(6) states that private utilities are not required to issue a notice when a utilities dynamic market ceases to operate.

Clause 40 speeds up procurements and reduces the burden for utilities using a utilities dynamic market, or UDM, by only requiring utilities to provide tender notices for upcoming procurements to suppliers already on a UDM, or appropriate part of a UDM, instead of having to publish the notices. In practice, that means utilities can, for example, provide the tender notice to suppliers on the UDM as part of the associated tender documents as each procurement under the UDM is commenced.

In order to take advantage of that flexibility, the notice setting up the UDM must meet minimum information requirements, which will be set out in regulations under clause 88. Utilities must specify in the UDM notice that only members of the UDM will be provided with tender notices. The notice setting up the UDM will be published continuously and will remain open so that new members may join at any time. If accepted, they would then be entitled to receive future tender notices.

[Florence Eshalomi]

Clauses 34 to 40 relate to dynamic markets. Dynamic markets expand on the existing dynamic purchasing system scheme by allowing such markets to be used for all procurements. That means that a reliable and ready pool of bidders can be gathered, which the contracting authority has verified meets the conditions of participation for the contract. When used correctly, such market innovations help save contracting authorities significant amounts of money and time by requiring early scrutiny only once for similar contracts.

Labour does not oppose the proportionate use of that mechanism. However, we note that those who supplied written evidence to the Committee picked up on some concerns. The Local Government Association, in its submission, outlined concerns about terms that are present in the current system but missing in the Bill:

“Councils use dynamic purchasing systems to effectively deliver a range of services that need to be procured quickly, for example, adult’s and children’s residential social care, apprenticeship training, asbestos removal, cleaning services, home-based care services etc.

In particular, local authorities heavily rely on DPS for school transport procurement, where a significant number of contracts must be let quickly each summer as children are allocated school places. These contracts are straightforward, with pre-approved suppliers typically competing on price. These contracts have no cross-border implications so don’t disadvantage operators in other countries as no operator without a local base is likely to bid.

Regulation 34(12) of the Public Contracts Regulations 2015 states: ‘Sub-central contracting authorities may set the time limit for the receipt of tenders by mutual agreement between the contracting authority and all selected candidates, provided that all selected candidates have the same time to prepare and submit their tenders.’

The Bill no longer allows this, and should therefore be amended to reinstate this important flexibility, to ensure that everything from school transport to social care services can be delivered on time for the individuals who rely upon…them”.

--- Later in debate ---

Finally, some of those who provided written evidence—the Civil Engineering Contractors Association, for example—also expressed concerns about the expansion of the scheme to cover all procurements, as they were not familiar with it in their sectors. I hope that the Minister will ensure that all sectors are fully consulted and are made aware of the mechanisms involved, and that the use of these markets will be proportional per sector.

[Alex Burghart]

As I have said, we think that dynamic markets are a fantastic opportunity to speed up procurement and to bring SMEs into procurement opportunities that they have not previously had. Obviously, dynamic markets are themselves a dynamic new development and, as I mentioned, a lot of training and guidance will flow from the Bill. However, obviously, we will be working with partners throughout the system to ensure that this new way of working works.

Question put and agreed to.

Clause 34 accordingly ordered to stand part of the Bill.

Clauses 35 to 40 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Julie Marson.)

Procurement Bill [ Lords ] (Third sitting)

Alex Burghart Excerpts

Committee stage
Thursday 2nd February 2023 Public Bill Committees

[Florence Eshalomi]

I thank the hon. Member for her support.

At the moment it is clear that SMEs find the process frustrating and time-consuming. In his written evidence to the Committee, Colin Cram, who set up the conference company Open Forum Events Ltd to run conferences to support the delivery of improved public services, outlined his experience of the procurement system for SMEs. He stated:

“Tendering is expensive and time consuming. The way the UK’s public sector operates all too frequently inadvertently discriminates against SMEs, which will include the most innovative of suppliers on which the UK’s economy and future global competitiveness will depend. Many SMEs—which means most businesses in the UK—do not know how to tender properly and they don’t have the time to do so. According to the Federation of Small Businesses, at the end of 2021 there were 5.5 million SMEs employing fewer than 50 people each. Their average turnover was £1.25 million. However, only half were registered for VAT, so most will have a turnover well below that. Many of these will be capable of delivering contracts greater than the thresholds”.

He continued:

“Having to tender for every contract that might interest a small business would prove prohibitively expensive. To illustrate the point, a mid-cap business sought my advice. It was winning just 1 tender in 20 and was thinking of withdrawing from the public sector. I suggested that it should employ 2 full time tenderers. It took my advice, and its win rate went up to 1 in 4—without changing either the products or services that it was providing...To put together the simplest of tenders will cost not less than £1000 if properly costed. So, 4 attempts at tendering for the simplest of contracts would cost £4000 and 20 in order to win at least 1 contract would cost £20,000.”

I am pleased that we have made progress on SMEs, but Labour Members fear that, without more clarity and market engagement, SMEs will still be put off by the cost of applying for contracts that they think they have little chance of getting.

SMEs should not have to employ two full-time tenderers to improve their chances of winning contracts that they know they can do. Pre-tender marketing engagement can help to establish contracts that are more easily digested through the bidding process. We understand that some contracts will not be suitable for SMEs, but early engagement can help in figuring out where that is the case and hopefully open up more contracts to a variety of companies. I thank the hon. Member for Aberdeen North for supporting our amendment, and I hope other Members and the Government will support our amendments 20 and 21.

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

It is a pleasure to serve under your chairmanship, Mr Efford. Amendments 20 and 21 seek to ensure that preliminary market engagement explicitly refers to SMEs.

I thank the hon. Member for Vauxhall for her support of the changes that Baroness Neville-Rolfe made in the House of Lords. We are all committed to improving options and opportunities for small and medium-sized enterprises to take advantage of the substantial amount of public procurement that exists in this country. We fully agree that preliminary engagement is an important part of that. That is why we have included the new duty to have regard to SME participation in the procurement objectives.

The duty will apply in relation to pre-market engagement just as it will cover the whole of the procurement life cycle. Consequently, we do not consider it necessary to clarify in the pre-market engagement clause that the word “suppliers” captures SMEs. It clearly does, and in view of the broad application of the general duty to support SMEs, there is no need for any drafting changes to be made.

To be clear, the new SME duty will lead contracting authorities to consider not only whether they have engaged with SMEs in their preliminary market engagement, but whether their procurement process and timelines are accessible to smaller businesses, supporting them to win and deliver more public contracts. It is nice to hear the hon. Member for Aberdeen North support small and medium-sized enterprises in England—would that the SNP in Scotland had supported the Bill, giving those same opportunities to SMEs in Scotland. I once again extend my invitation to her and the Government at Holyrood to join us on this journey.

[Kirsty Blackman]

The Minister keeps talking as if Scotland does not have procurement legislation, and will not have procurement legislation going forward. It is absolutely the case that we will continue to have procurement regulations and rules, and a fairer procurement system—one in which we do things such as mandate the real living wage, for example.

[Alex Burghart]

The hon. Lady has previously given some good examples of things that are going wrong with current procurement. The SNP has not tabled any reform to procurement in Scotland, and I am afraid that, without reform, Scotland will be stuck with the old regime, whereas from spring next year, small and medium-sized enterprises in England, Wales and Northern Ireland will be taking advantage of the regime set out in the Bill.

[Kirsty Blackman]

I hope the Minister is not suggesting that when the Scottish Parliament passes procurement legislation, the UK Government will again levy a section 35 order to stop us changing our procurement legislation.

[Alex Burghart]

Certainly not, because I am sure that there would be no need, whereas it was very clear that there was a need in the case to which the hon. Lady refers. She will know that the Government used that constitutional power reluctantly, but very well advisedly.

Amendment 25 would require contracting authorities that have stated in the tender notice that a contract is suitable for small and medium-sized enterprises to, in the event that no SMEs submit a tender, withdraw that tender notice and engage with small and medium-sized enterprises prior to republishing it, unless they can show that such engagement took place prior to the original publication. The Bill supports—indeed, it actively encourages—buyers to conduct preliminary market engagement. We have gone further than existing regulations: clause 17 requires the publication of a preliminary market engagement notice, and clause 12 contains a duty to have regard to reducing barriers facing SMEs. That should lead to increased openness and greater inclusion of SMEs in preliminary market engagement.

However, amendment 25 would add an extra layer of bureaucracy and delay for procurers to manage, and could well frustrate suppliers who have prepared a tender, only for it to be withdrawn if no qualifying bids are received. It is far better for us to increase SME participation in procurement by reducing barriers and highlighting the many benefits they bring to the public sector. I respectfully request that the amendment not be moved.

[Florence Eshalomi]

The Minister has said that there is no need for amendment 25, but it would cover similar grounds to those that we are discussing and would go further, ensuring that SMEs are given access to suitable tenders. When a contracting authority tags a tender as suitable for SMEs, it is only right that due diligence is carried out to ensure that SMEs have the opportunity to come forward. Unfortunately, tagging a contract as suitable for SMEs does not make it particularly accessible to them: it bears repeating that analysis by the Spend Network found that big corporations still win 90% of contracts, which we know are worth over £30 billion.

“Suitable for SMEs” cannot be another buzzword like “affordable housing”—one that does not mean anything to those SMEs that already say they are struggling to win these tenders. Amendment 25 would help to address that. If a contracting authority thinks that a contract is suitable for SMEs, it should be doing the work to engage those SMEs, ensuring that that contract is truly suitable. Under our amendment, contracting authorities would not have to go through that unnecessary bureaucracy. They will have had to engage with SMEs prior to offering the contract, but if none came forward, that would not hinder the contracting authority’s ability to award it. The purpose of the amendment is to help small businesses. Again, I hope the Minister will consider it carefully and support it.

[The Chair]

Minister, I realise you have given your response, but do you have anything to add?

[Alex Burghart]

I will just repeat what I said, very briefly. I understand the desire behind the amendment, but we believe that there are sufficient measures for preliminary market engagement for SMEs already in the Bill. In the case described by the hon. Member for Vauxhall, there is a danger that, if no SME came forward, we would be adding unnecessary process and cost to a procuring authority.

--- Later in debate ---

[The Chair]

With this it will be convenient to consider clause 17 stand part.

[Alex Burghart]

Clause 16 covers preliminary market engagement and is followed by clause 17, which includes provisions on related notice requirements. We want to promote and encourage contracting authorities to conduct preliminary market engagement. The information gathered during this stage can be invaluable for the authority as it clarifies its requirements, assesses the market’s capacity and develops its procurement strategy. This is even more important in the new regime, within which contracting authorities are given more flexibility to design their own competitions that are tailored and fit for purpose.

Clause 17 makes provision for contracting authorities to publish a preliminary market engagement notice prior to publishing a tender notice. The purpose of this preliminary market engagement notice is to advertise the fact that the contracting authority intends to conduct or has conducted preliminary market engagement. It is another great example of there being greater transparency and greater opportunities both for suppliers and authorities as a result of this Bill.

[Florence Eshalomi]

As the Minister outlined, clause 16 gives local authorities the power to undertake pre-market engagement. Although it may be expedient for there not to be pre-market engagement in relation to a number of contracts, particularly small contracts or contracts that are pretty standard for the market, it is entirely sensible for there to be such engagement when an authority is dealing with novel markets or markets where there is innovation. Pre-market engagement can be a powerful tool to help contracting authorities to understand the nature of their contract, what terms are fair in a contract and the nature of the market in relation to a particular piece of work. When it is done correctly, it can also help businesses to get a sense of whether they should put in for particular tenders.

Of course, it is right that any company that receives an unfair advantage in preliminary market engagement is not included in the contract, and we support this addition to the clause. However, I will ask the Minister a couple of questions about this clause that are in a similar vein to the questions I asked during the stand part debate on clause 15.

How often can we expect contracting authorities to undergo preliminary market engagement? As I have said previously, I understand why it is impractical to carry out such engagement on every above-threshold contract. However, it is important that there is some level of consistent practice in the system. In addition, although I also understand the need for flexibility among contracting authorities, I know that businesses want certainty and some certainty can come from knowing that different authorities will follow a similar level of preliminary market engagement as standard.

However, I also have concerns about the burden that this process may place on already stretched procurement departments, a concern I have already raised in earlier debates. The written evidence this Committee received from John Lichnerowicz is telling. He says:

“In my experience Procurement Departments particularly those containing CIPS qualified professionals are extremely overstretched and a bottleneck to public sector organisations being able to deliver their services.”

So it is easy to envision that this clause, as well as lacking clear mandates for local authorities to carry out pre-market engagement, will also mean that stretched procurement departments will not have the resources to carry out such engagement.

If pre-market engagement is done proportionally, it could save the taxpayer a small fortune. Will the Minister be issuing clear instructions as to when he intends such engagement to take place?

Many forms of pre-market engagement will involve consideration of contracts that are already being carried out for other contracting authorities. Although every contract will have some bespoke elements, this does not mean that what we learn from one engagement round in one place has no relevance to similar engagement rounds or similar contracts in other places. Will the Minister confirm that information from pre-market engagement will be shareable across contracting authorities and indeed that sharing such data should be relatively common where it is possible to share it?

Regarding subsections (3), (4) and (5) of clause 16, can the Minister say what the threshold for an unfair advantage would be? Of course we cannot have suppliers writing contracts, but engagement will necessarily expose suppliers to some level of information about the planned tender. At what level will such activity be considered to constitute an unfair advantage? Will guidance be issued to decision makers about this matter?

Finally, on clause 17 will the Minister confirm that efforts will be taken to ensure that such notices are received as widely as possible? Again, we all know it is important that small and medium-sized enterprises, charities and social enterprises are made aware of these notices and can then take part in preliminary market engagement if we are to have a true picture of the market. What steps will be taken to ensure that it is not just those who have keen eyes on contracting authorities who engage with them?

[Alex Burghart]

Let me take the hon. Lady’s questions in turn. Effective preliminary market engagement is a great tool to improve procurement. It will improve contracting authorities’ ability to act as an intelligent customer—that very much came out in the engagement work we did in the construction of the Bill—because it benefits suppliers, as the potential customer understands the market’s capability, is exposed to industry best practice and learns of potential innovative solutions being designed or tested. That will lead to more effective and efficient procurement by reducing the burdens on suppliers during the competition, avoiding the customer considering an unrealistic bid and improving the drafting of contract terms. We will not dictate to authorities when to undertake preliminary market engagement—we think it is better that that is their decision—but we are obviously encouraging them to do so. Of course, as the hon. Lady will know from other discussions we have had, transparency runs throughout the Bill. Sharing the outputs from such engagements will be possible and essentially a great thing.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

Clause 17 ordered to stand part of the Bill.

Clause 18

Duty to consider lots

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

The clause requires the contracting authority, before advertising the opportunity, to consider whether the contract can be split into smaller chunks, or lots. That may be the right thing to do for a number of reasons. It could reduce supply risk by having numerous suppliers, or encourage smaller organisations to bid by making the opportunity more accessible and manageable—for example, breaking a large facilities management contract into regional contracts that local companies can deliver. Because that is important to provide opportunity, particularly for SMEs, clause 18(2) requires contracting authorities to either

“arrange for the award of…contracts by reference to lots”

or

“provide reasons for not doing so.”

[Florence Eshalomi]

As the Minister outlines, the clause obliges authorities to divide larger contracts into smaller lots where that is appropriate for the contract. That is a useful and necessary power, and it is one that we hope SMEs will welcome. Breaking down contracts is a good way of making them more accessible for smaller companies. I mentioned the evidence from John Lichnerowicz, who said that it can be difficult for all but larger suppliers to take on bigger contracts that are not broken down. His written submission states that

“overstretched Procurement Departments would lump requirements into a single large procurement which would go to only the biggest companies in their field who would then have the freedom to pick their favourite sub-contractors effectively eliminating the contribution of equally capable sub-contractors and adding a main contractor’s margin into the sub-contractor’s costs for little benefit”.

--- Later in debate ---

[Alex Burghart]

As the hon. Lady will see in clause 18(2), contracting authorities will be required either to arrange by lots or to report on that; they will be required to give a reason, so there will be transparency.

The hon. Member for Brighton, Kemptown characterised money from public contracts as going into shareholders pockets. Obviously, larger contracts are also going to very successful charities. I can think of lots of examples of that in areas where I have lived and areas where I work and live now, so I do not wish to give the impression that is always the case.

[Lloyd Russell-Moyle]

Even if it were going to these mega-charities, which are huge international organisations and firms, it surely is not right for them to come in and take a contract, and take the top slice off it if the work is still done by small, local organisations. Whether they be for profit or not, local, small organisations should have a chance of just getting the smaller elements of the contract directly, should they not?

[Alex Burghart]

It is wonderful to hear the hon. Gentleman supporting our Bill once more. Making contracts more accessible to small and medium-sized enterprises is a major purpose of the Bill. It is not always mega, international charities that are getting local contracts. In Essex, I see that is not the case.

[Nick Fletcher (Don Valley) (Con)]

I refer Members to my entry in the Register of Members’ Financial Interests, which states that I am an owner-shareholder of an SME. There are other benefits of working for a main contractor, and that should go on the record. The Bill should make it easier for small enterprises to gain that work, but if a contractor works directly for the client, it becomes the main contractor. When it becomes the main contractor, it becomes responsible for the health and safety and everything that goes with it, so there is an awful lot of cover for smaller contractors to work for a main contractor so that the main contractor takes some of those responsibilities away. I know what we are trying to do here and it is a good thing to do. If small and medium-sized enterprises work for the main authority, they become responsible, so there is a cover that main contractors provide. They are not just taking the top slice for nothing; they are actually taking on responsibility for the entire project.

[Alex Burghart]

My hon. Friend makes an excellent point.

Question put and agreed to.

Clause 18 accordingly ordered to stand part of the Bill.

Clause 19

Award of public contracts following a competitive tendering procedure

[Lloyd Russell-Moyle]

I beg to move amendment 95, in clause 19, page 14, line 16, at end insert—

“(aa) must disregard any tender from a supplier that does not guarantee the payment of at least the Real Living Wage to all its own employees and contracted staff and those of any sub-contractors;”

This amendment, together with amendments 96 to 99, is designed to ensure that no public contract can be let unless the supplier guarantees the payment of the Real Living Wage to all those involved in the delivery of the contract.

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[Florence Eshalomi]

I thank my hon. Friend the Member for Brighton, Kemptown and the hon. Member for Aberdeen North for their remarks. The amendments are important because so many people are having to take the difficult decision to take strike action as their wages cannot sustain them. We are seeing situations where people are unable to feed their children and heat their properties. People who work in our core public services are relying on food banks. Instead of demonising those people, we as politicians, and the Government, should be looking at how we can help them.

I am proud to be a member of GMB and Unison. We should remember that trade union members are ordinary people. They pay their union subs, yet they are losing a day’s pay by going on strike to show the Government that their wages cannot sustain them. People are effectively on poverty wages. During this cost of living crisis, it is important that we listen to their valid concerns.

We see a number of employers still not doing the right thing by recognising the issues that their employees are going through, while still making millions of pounds in profits. As I said in my remarks on amendment 107, Labour is committed to delivering fair treatment for all workers, and that must include fair pay and conditions, workplace wellbeing and the development of workers’ skills. We believe that procurement offers a great opportunity to increase social value. Our later amendments will make it clear that we do not want to see those who are breaching the rights of their workers awarded public contracts.

Our ambitions on the minimum wage should not be limited to workers in procurement. Instead, Labour believes we should increase the minimum wage for everyone across the economy. An incoming Labour Government would want to ensure that everyone across the economy is paid a fair day’s wage. We would instruct the Low Pay Commission to factor in living costs when it sets the minimum wage, ensuring that it covers the cost of living.

The cost of living continues to increase for many people and, as inflation continues to rise, their salaries are not keeping pace. These measures would put hundreds of pounds into the pockets of the lowest-paid workers. We would also scrap the low pay category for workers aged 18 and 19.

[Alex Burghart]

Amendments 95 to 99, tabled by the hon. Member for Leeds East, would place legal requirements on contracting authorities in respect of the Resolution Foundation’s real living wage in their procurements. That would ensure that no public contract could be awarded unless the supplier guaranteed the payment of the real living wage to all those involved in the delivery of the contract, including subcontractors.

While the principle behind the amendments is admirable, the Government cannot support them. It is imperative that all contracts are awarded on the basis of the best value for money for the taxpayer and that staff employed on the delivery of public contracts are paid fairly, in line with existing legal requirements. But using procurement rules to compel private sector employers to pay their workers beyond minimum legal requirements would be disproportionate.

The hon. Member for Brighton, Kemptown talked about a floor. There is a floor: for this Government, it is the national minimum wage, or the national living wage for workers over 23. He also mentioned insourcing. Obviously, procuring authorities are completely at liberty to insource if they so wish, and the Bill does nothing to prevent that. If procuring authorities feel that they can get better services, a better deal or better conditions by insourcing, they are entirely at liberty to do so.

I should also let hon. Members know that when constructing a contract, a procuring authority can stipulate pay and conditions as part of that contract. Procuring authorities have big levers at their disposal.

[Lloyd Russell-Moyle]

Can the Minister give me an assurance that the terms and conditions that procuring authorities can issue can be the sole reason for not awarding a contract, if a supplier does not fulfil that sole clause?

[Alex Burghart]

I cannot give the hon. Gentleman an absolutely categorical answer, but I can tell him that procuring authorities have it within their power to use that as part of a suite of conditions.

[Lloyd Russell-Moyle]

I am not quite clear whether the Minister is unable to give me an assurance from his position, or because procuring authorities cannot do so. If he just cannot give me an assurance from his position, I would appreciate his writing to me to confirm whether procuring authorities have the ability to put in a clause that says, “We can disregard contracts that do not fulfil our wages and conditions requirements.”

[Alex Burghart]

I will certainly let the hon. Gentleman know.

The hon. Member for Aberdeen North raised a number of general points; I encourage her to go back and read Hansard. I am delighted that she is here; I am delighted that Scottish MPs are in the UK Parliament, and that the Scottish people voted to keep them here at the last referendum. I am very pleased that she is on the Committee and bringing her experience to it.

The hon. Lady will have heard me say in the Westminster Hall debate the other day that I wish the SNP was more involved in the running of the constitution of the United Kingdom. I wish, for example, that it was prepared to take up its seats in the House of Lords, in order to engage with debate there and further the interests of the people of Scotland. Alas, it would seem that the SNP has better things to do.

The hon. Lady said that I have said that she should not be talking about these matters. I really do not mind at all if she talks about these matters, but obviously, some amendments have Barnett consequentials and others do not. As long as she is happy for me to discuss what goes on in Holyrood and in Scotland, I am very happy for her to discuss what goes on in Westminster and in English authorities. I have no problem with that at all.

Returning to the issue at hand, as I say, it remains open to contracting authorities to include conditions or criteria around pay and remuneration in their tenders. Should they feel it is appropriate in the individual circumstances, they can design a procurement around those criteria. I respectfully ask that the amendment be withdrawn.

[Lloyd Russell-Moyle]

I would have been willing to withdraw the amendment if the Minister had been able to give me a cast-iron guarantee that procuring authorities could reject a contract solely on the basis of a failure to meet a wage level. He has not been able to give me that guarantee—although I welcome that he will be writing to me to confirm the position—so I do want to test the water on amendment 95. I will not move the other amendments.

Question put, That the amendment be made.

Division 14

Ayes: 2

Noes: 8

[Alex Burghart]

I beg to move amendment 30, in clause 19, page 14, line 21, at end insert—

“(ba) may disregard any tender that offers a price that the contracting authority considers to be abnormally low for performance of the contract;”.

This amendment would allow contracting authorities to disregard tenders offering an abnormally low price.

[The Chair]

With this it will be convenient to discuss Government amendment 31.

[Alex Burghart]

We tabled amendments 30 and 31 to ensure that contracting authorities can assess and disregard abnormally low tenders where the supplier cannot demonstrate to the buyer’s satisfaction that it will be able to perform the contract for the proposed price. We are committed to delivering value for money and the amendments will provide helpful safeguards against suppliers that seek to undercut the competition with unrealistic tenders.

[Florence Eshalomi]

While our response to amendments 30 and 31 is lukewarm, we think that they are important. We want all contracting authorities to consider value for money for the taxpayer when making procurement decisions, but there is a substantial risk of accepting below-value tenders for bids. Procurement has to be sustainable, and we know too well the risks when we get that wrong.

When considering the Bill, we must all remember 15 January 2018 and the collapse of Carillion. When it went into liquidation, it employed 42,000 people, including nearly 20,000 people in the UK. It also had a liability of £2 billion to some 30,000 suppliers and subcontractors, some of which sadly fell into insolvency themselves as a result of the collapse. While there are excludable grounds relating to poor procurement practices set out in later clauses of the Bill, I do feel that these amendments provide another check against the reckless behaviour of companies such as Carillion.

In 2018, following the collapse of Carillion, the then Chair of the Public Administration and Constitutional Affairs Committee, the hon. Member for Harwich and North Essex (Sir Bernard Jenkin), said:

“It is staggering that the Government has attempted to push risks that it does not understand onto contractors, and has so misunderstood its costs. It has accepted bids below what it costs to provide the service, so that the contract has had to be renegotiated. The Carillion crisis itself was well-managed, but it could happen again unless lessons are learned about risk and contract management and the strengths and weaknesses of the sector.”

--- Later in debate ---

[The Chair]

Minister, do you wish to respond?

[Alex Burghart]

I will respond as part of the clause stand part debate.

Amendment 30 agreed to.

Amendment made: 31, in clause 19, page 14, line 23, at end insert—

“(3A) Before disregarding a tender under subsection (3)(ba) (abnormally low price), a contracting authority must—

(a) notify the supplier that the authority considers the price to be abnormally low, and

(b) give the supplier reasonable opportunity to demonstrate that it will be able to perform the contract for the price offered.

(3B) If the supplier demonstrates to the contracting authority’s satisfaction that it will be able to perform the contract for the price offered, the authority may not disregard the tender under subsection (3)(ba) (abnormally low price).”—(Alex Burghart.)

This amendment would require contracting authorities to notify suppliers of the fact that the contracting authority considers the price to be abnormally low and give suppliers reasonable opportunity to demonstrate that it is workable before disregarding their tender.

Question proposed, That the clause, as amended, stand part of the Bill.

[Alex Burghart]

Clause 19 describes the rules that apply to the award of a public contract following the conclusion of a competitive tendering procedure. Contracting authorities are able to award a contract only to the supplier that submits the “most advantageous tender”, which is the tender that satisfies the authority’s requirements and best meets the award criteria when assessed in reference to the assessment methodology and the relative importance of the criteria. The clause describes the circumstances that would either require a contracting authority to exclude a supplier or disregard a tender, or give the authority the discretion to do so.

Contracting authorities are required to disregard tenders when the supplier does not satisfy the conditions for participation, and may disregard a tender that materially breaches a procedural requirement. Contracting authorities are also permitted to disregard tenders from suppliers that are not treaty-state suppliers, or when the supplier intends to subcontract the performance of all or part of the contract to a subcontractor that is not from such a country.

The clause also refers to provisions elsewhere in the Bill that allow for contracts to be reserved for supported employment providers, for contracts for particular services to be reserved for public-service mutuals, and for tenders from suppliers that are not members of a dynamic market to be disregarded. It also deals with when suppliers must or may be excluded. I will come to those specific provisions later.

The Government have a moral obligation to spend taxpayers money efficiently. These rules, which provide better flexibility for procurers, will help to ensure that every pound goes further for our communities and our public services.

[Florence Eshalomi]

The clause contains a small change, which could have significant ramifications, but it is one that we support. Moving from “most economically advantageous tender” to “most advantageous tender” can make a significant difference to the reality of how contracts are awarded. Throughout this process, we have heard of many people who apply for contracts, and have a lot to offer, but fail the most economically advantageous tender test. The new wording gives them a fighting chance at winning contracts.

Charities may also benefit from that. However, the National Council for Voluntary Organisations is cautious about the power of the new term. I hope the Minister is aware of some of the concerns that it raised. It says, in its submission that

“this alone will not have the desired effect. This was already possible under current regulations and guidance, as contracting authorities are meant to account for the wider benefits of any bid, but in reality, it has rarely been applied, with decisions continuing to be dominated by lowest unit costs.

The change in language to assessing for the MAT will not be sufficient to change practice and culture. Further clarity and expectations are needed so that assessing the MAT includes placing more emphasis on the importance of social value and recognising the different ways this can be delivered.”

I think it is important to get clarity on how this will be applied. With the right instruction, this new rule can open up how authorities judge applications, but if the Government get it wrong, it could lead to confusion and be little better than the status quo.

It is worth considering the advice from Colin Cram, which I mentioned earlier. He said that it costs £1,000 for all the effort that goes into that tender, so SMEs need to know how much things such as the social value will matter in this new test, and whether it is worth them tendering for contracts. Everyone needs clarity to help them to understand that, and to make economic decisions about how to bid. I would therefore welcome a firm commitment from the Minister and the Government on how we could plan for clarity on that term, and a timetable on how that will be published widely to SMEs.

[Alex Burghart]

I am very pleased to hear the Opposition’s support for this clause and for our significant shift from MEAT to MAT—from most economically advantageous tender to most advantageous tender. That framing sends a very clear signal to contracting authorities to take a broader view, beyond price, of what can be included in the evaluation of tenders—wider social and environmental considerations, for example. We think that the clause will make a significant difference and that, partnered with the national procurement policy statement—NPPS—it will open the way for new thinking about public procurement. I commend it to the Committee.

Question put and agreed to.

Clause 19, as amended, accordingly ordered to stand part of the Bill.

Clause 20

Competitive tendering procedures

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

A key proposal in the Green Paper was simplification of the existing procurement procedures in the public contracts regulations, and clause 20 is the enactment of that proposal. It sets out how competitive tendering procedures should be run. The first option is an “open procedure”. That is a single-stage procedure whereby any supplier can submit a tender in response to the tender notice. The second option is a “competitive flexible procedure”. That will allow contracting authorities to design the procedure that works best for their procurement, allowing them to engage with suppliers, negotiate, and undertake numerous phases such as for research and development and prototype delivery. Once determined, that procedure will be set out in the tender notice and associated documents.

[Florence Eshalomi]

This clause is an important one. Again, it relates to the competitive tendering process. Although the mechanisms of these procedures are an incredibly important element of the Bill, many aspects of the procedure are addressed later in the Bill. Those are also referenced in the latter part of this clause. I will cover that later, but I do want to address some aspects of the clause now.

It is welcome that we are seeing a two-stranded procedure system in the Bill. We are aware that some contracts will attract very few bids and are suited to a single-stage tendering process. We are also aware that some tenders will attract many bidders and it is necessary to have a multi-round process to come to a conclusion as to who the best bidder is. Although this provision is welcome, there is discontent from some stakeholders about how the bidding processes will work in practice.

In written evidence, which we all received the other day, Zurich Insurance stated:

“As currently set out, it appears the ‘Competitive Flexible Procedure’ could be the most suitable approach for the Risk and Insurance services. However, it would be useful if more detail on how each of these procedures will operate could be provided within the Bill.”

I therefore have some questions regarding the nature of the multi-round process and how it will work in practice. First, how much effort will be required from contractors at an early stage of the competitive flexible procedure, before putting in a bid? Earlier I referenced and highlighted the evidence from Colin Cram, and we have also heard from him that the cost of putting in a tender can, for some small businesses, be in four figures. For contracts that could attract a large number of bidders—for example, a relatively small contract that can be carried out anywhere—that would mean that many bidders would in effect be entering a really expensive lottery with little chance of winning with their bid. That is particularly off-putting for SMEs, which do not want to spend a significant amount of their budget bidding for these contracts. Mr Cram, who supports the current system of restricted procedure, says that although that system is not perfect, it is much better than what is proposed. He says that the current system

“has a formal and very simple, easily understood and low cost approach to shortlisting businesses/organisations before asking them to tender. Typically, this might result in just 4 being invited to tender. That gives each one a decent, though still expensive, chance of winning.”

We all know that the new system will have advantages over the old, restricted procedure, but I hope that the Minister can address some of the concerns and outline how the new system will not be expensive for SMEs.

--- Later in debate ---

[Alex Burghart]

In answer to the hon. Lady’s question, the new competitive flexible procedure will allow procurers to design the procurement best to deliver their outcome , rather than being constrained by a rigid and bureaucratic process, which is often the case at the moment. That is good commercial practice.

We plan to provide templates and guidance for contracting authorities to use, so that there is consistency of application without stifling their ability to innovate. That flexibility will benefit suppliers, who will be able to negotiate and offer more innovative solutions. Additionally, when a contracting authority publishes an initial advert, it will have to set out the procedure it intends to run. The contracting authority, in setting out the procedure, will have to ensure that it is proportionate and takes into account the nature, complexity and cost of the contract. The procedure set out will then have to be followed. There is scope to modify the procedure, but that must be in a transparent way and only in so far as it would not have changed the market response.

I feel that we have planning and precautions in place to deal with the concerns expressed by the hon. Lady.

Question put and agreed to.

Clause 20 accordingly ordered to stand part of the Bill.

Clause 21

Tender notices and associated tender documents

Amendment proposed: 25, in clause 21, page 16, line 29, at end insert—

“(6A) Subject to subsection (6D), subsection (6B) applies where a tender notice or associated tender document indicates that a public contract is suitable for small and medium-sized enterprises.

(6B) If no small or medium-sized enterprise submits a tender, the contracting authority must withdraw the tender notice, and may not republish the tender notice until it has fulfilled the condition in subsection (6C).

(6C) The condition is that the contracting authority has conducted preliminary market engagement (see section 16) with a view to engaging with suppliers who are small and medium-sized enterprises.

(6D) Subsection (6B) does not apply if the contracting authority can demonstrate that it fulfilled the condition in subsection (6C) before the tender notice was published.”—(Florence Eshalomi.)

This amendment would require contracting authorities to engage with small and medium-sized enterprises before describing a contract as suitable for SMEs. The requirement would only apply if no SME submits a tender.

Question put, That the amendment be made.

--- Later in debate ---

[Alex Burghart]

The clause describes the requirement for contracting authorities to publish a tender notice in order to advertise and commence a competitive procedure. A tender notice may act as an invitation to submit a tender for the contract under the open procedure, or an invitation to suppliers to submit a request to participate in a multi-stage tender process under the competitive flexible procedure. In either case it must be published on the central platform, the publishing location for all notices required throughout the procurement cycle.

The central digital platform will contain public sector procurement information, allowing the citizen to understand the authorities’ procurement policies and decisions and to see how much money the Government, local authorities and the NHS spend on purchasing essential goods and services, and who is really benefiting from the public purse. Contracting authorities will also be required to provide any relevant associated tender documents, which will provide further details of the procurement. Transparency runs through the Bill like sunlight.

The Bill gives contracting authorities significant freedom to choose a procedure that will best deliver their requirement, but they must set out the process to be followed at the outset. While there is some limited ability to modify those—as we will see in clause 31 —contracting authorities must follow the processes set out in their tender notices or associated tender documents, and failure to do so will leave them at risk of challenge. Further details on the contents of the tender notice and associated tender documents await us in clause 93.

[Florence Eshalomi]

As the Minister said, the clause pertains to tender notices and all the associated documents. It is crucial to get this right. We cannot just expect measures to be in the Bill—they have to be in there.

The existing Contracts Finder function is the central functioning database for companies to find public contracts that are open for tender. With the Bill, the Government have talked about a new digital platform that will go much further than Contracts Finder, making the finding of contracts even easier. I wish the Government well in that goal, and it is important for a number of reasons.

--- Later in debate ---

I hope the Minister will accept that that is not acceptable. The Government must ensure that the new system is backed by strong standards to ensure that the publication of contracts on the new digital database is carried out to a good standard. I hope the Minister will outline how that will be done in his response.

[Alex Burghart]

One of the real advantages of having our online digital platform is that everyone, particularly the very small businesses that do not have much capacity, as the hon. Lady mentioned, will know where to go. Everyone will know where to look, and that will be an enormous convenience for all involved. It will help us to fulfil one of the major functions of the Bill, which is to help new entrants into the system and help fresh suppliers take advantage of the £300 billion pot of public procurement money.

Question put and agreed to.

Clause 21 accordingly ordered to stand part of the Bill.

Clause 22

Conditions of participation

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 22 enables contracting authorities to set conditions on suppliers’ participation in a procurement process. They are the conditions that a supplier must satisfy to be awarded a public contract. The current regime has often described these as the selection criteria. Conditions of participation must relate only to the legal and financial capacity and the technical ability to fulfil the requirements of the contract. Any conditions of participation set for those purposes must also be proportionate to the nature, complexity and cost of the public contract. That means the conditions should not be unnecessarily onerous for the supplier. A contracting authority can include qualifications, experience or technical ability but, to ensure fair treatment of suppliers and equality of opportunity, they cannot relate to a particular prior award of a public contract or contravene the rules on technical specifications in clause 56.

[Florence Eshalomi]

Clause 22 gives contracting authorities the power to set conditions of participation for contracts where necessary to get the suppliers to fulfil their full terms of contract. This is an important clause because it allows contracting authorities to put checks and balances in place to ensure that suppliers are fit to carry out the contract. That gives contracting authorities the confidence to engage with novel suppliers, providing a certifiable window into procurement. It ensure that checks can be carried out against the kind of collapse we saw with Carillion. This is a proportionate and necessary measure, so I would welcome assurances from the Minister that the guidance will be provided to contracting authorities on how to impose conditions of participation.

[Alex Burghart]

I thank the Opposition for their support of the clause. Obviously, we will set out a whole range of guidance around the Bill, but the conditions of participation set out in the clause speak for themselves.

Question put and agreed to.

Clause 22 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Julie Marson.)

Oral Answers to Questions

Alex Burghart Excerpts

Thursday 2nd February 2023 Commons Chamber

[Duncan Baker (North Norfolk) (Con)]

2. What recent discussions he has had with relevant stakeholders on the potential impact of the Procurement Bill on (a) economic growth and (b) innovation.

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

The Procurement Bill is being considered in Committee in the House of Commons. The Bill will create a new public procurement regime that will make it simpler, quicker and cheaper for suppliers, including small and medium-sized enterprises and social enterprises, to win public sector contracts. In developing the proposals for the new procurement regime, the Cabinet Office has worked with hundreds of organisations, and economic growth and innovation have been at the forefront of our minds.

[Stephen Hammond]

I thank my hon. Friend for that answer. He will know that UK major projects have had, at best, a mixed history of both procurement and contract management over a long period. How will this Bill embed external expertise in the procurement process and IT productivity systems in the contract management process?

[Alex Burghart]

My hon. Friend is right to raise that question. The Cabinet Office is producing comprehensive guidance and a programme of training for contracting authorities, with support for sharing best practice. This will complement efforts that the Cabinet Office is already making to support commercial best practice, including through the contract management capability programme and the provision of a suite of playbooks that provide advice on sourcing and contracting.

[Duncan Baker]

My residents in North Norfolk often think that Westminster is a long way away from them. Can my hon. Friend tell me how the Procurement Bill will enable businesses in my constituency—there is an incredible range of talent and innovation there—to bid for the £300 billion-worth of services that the Government procure every year?

[Alex Burghart]

I am pleased to be able to tell my hon. Friend that the Bill includes a specific duty on contracting authorities to recognise the particular barriers that SMEs face. Other measures will also benefit SMEs, such as the strengthening of prompt payment requirements, with 30-day payment terms applying contractually throughout the public sector supply chain; a single digital platform, so that bidders only have to submit their core credentials once; and new transparency requirements.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his positive answers to the question. Wrightbus in Northern Ireland is an example of where we could contract domestic companies and expand our economy, as opposed to going international. What steps will the Cabinet Office take to ensure that we prioritise domestic contracts within the United Kingdom of Great Britain and Northern Ireland and the devolved Assemblies?

[Alex Burghart]

I cannot comment on the specific contract that the hon. Gentleman raises, but he will know from the debate we had in Westminster Hall the other day that the Bill introduces provisions that will mean that contracting authorities publish their pipeline and can publish advance notices of procurement, which will enable businesses and suppliers to get ready for local contracts.

[Mr Speaker]

I call the shadow Minister.

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

Unfortunately, the Procurement Bill in its current form does very little to prevent a repeat of the VIP scandal that, sadly, contributed to almost £10 billion-worth of personal protective equipment being written off by the Government. We know that sunlight is often the best disinfectant, so will the Minister support our amendment to ensure that any Minister, peer or senior civil servant involved in recommending suppliers under direct award must publicly declare any private interest in that supplier’s success?

[Alex Burghart]

The hon. Lady will know from the many debates we are having on this subject that transparency is a key element of our new regime, which replaces the old, outdated EU regulations and will ensure that there is sunlight throughout the procurement process, from start to finish.

[Kerry McCarthy (Bristol East) (Lab)]

3. What recent assessment he has made of the level of compliance with the ministerial code.

--- Later in debate ---

[Patrick Grady (Glasgow North) (SNP)]

4. What recent discussions he has had with Cabinet colleagues on the potential impact of the use of section 35 of the Scotland Act 1998 on the constitution.

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

Alas, I am a mere junior Minister and I rarely get to talk to my illustrious Cabinet colleagues, but I can assure the hon. Gentleman that the Government used section 35 very carefully and very reluctantly, in order to preserve the balance of powers between our countries.

[Patrick Grady]

If the Government were so determined to resolve their dispute with the Scottish Government, they would publish the amendments that they say would make the Gender Recognition Reform (Scotland) Bill acceptable to them. Is not the reality that the Tories are prepared to veto and undermine the elected Scottish Parliament because they never really wanted devolution in the first place?

[Alex Burghart]

As the hon. Gentleman knows, section 35 of the Scotland Act is part of our constitution. He will also know that it is now for the Scottish Government to bring forward a Bill that addresses the adverse effects set out in the statement of reasons. Once again, the nationalists do not wish to take responsibility.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

5. What steps he is taking with Cabinet colleagues to support veterans and their families with the cost of living crisis.

--- Later in debate ---

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

The Government are ensuring a competitive future for the UK steel industry, and the reported value of UK-produced steel procured by the Government was up last year by £160 million, from £108 million to £268 million.

[Jessica Morden]

In last week’s Westminster Hall debate, the steel Minister, the hon. Member for Wealden (Ms Ghani), said

“there is huge scope for more procurement to take place in the UK.”—[Official Report, 25 January 2023; Vol. 726, c. 331WH.]

Will the Cabinet Office commit to publishing up-to-date data on the Government’s record in using UK steel, because it has not been good enough so far, and to adopting ambitious targets across Departments on the use of domestic steel in public projects?

[Alex Burghart]

I am pleased to tell the hon. Lady right now that 67% of the steel required for High Speed 2 is UK-produced, 94% of the steel used to maintain our rail track is produced in the UK and 90% of the steel used to build schools is produced in the UK. I understand there will be an urgent question after Question Time, which will give her the opportunity to ask a Minister from the Department for Business, Energy and Industrial Strategy about this.

[James Morris (Halesowen and Rowley Regis) (Con)]

11. What steps he is taking with Cabinet colleagues to help improve mental health support for veterans.

--- Later in debate ---

[Wendy Chamberlain (North East Fife) (LD)]

12. What recent assessment he has made of the strength of the constitution.

[Alex Burghart]

The British constitution is a summation of our conventions, practices and laws. The Government constantly assess their function and fitness for purpose. We currently consider the British constitution to remain strong.

[Wendy Chamberlain]

The thing about political constitutions is that they need to be underpinned by good relationships based on trust and respect. I do not think it would be an overstatement to say that some of those relationships have been a little strained of late. Will the Minister be proactive and support my private Member’s Bill next month, which will ensure the representation of devolved nations on public bodies? That would be a small step toward improving things.

[Alex Burghart]

I am pleased to say that from where I sit I have seen some very good relations recently. We have been working in lockstep on the Procurement Bill with colleagues from Northern Ireland and Wales to devise a new procurement regime. I am obviously happy to consider her Bill.

[Ian Levy (Blyth Valley) (Con)]

14. What steps his Department is taking to ensure Government services meet the needs of veterans.

--- Later in debate ---

[Andrew Gwynne (Denton and Reddish) (Lab)]

Public procurement rules are the responsibility of the Cabinet Office. With the Procurement Bill, the Government are seeking to extend the scope of Government contracts to small and medium-sized enterprises, but I have always firmly believed that we also need to extend the number of advanced and higher-level apprenticeships as part of public procurement, so what more are the Government doing to get those high-level apprenticeships linked to contracts?

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

As a former Minister for apprenticeships, I share the hon. Gentleman’s enthusiasm. If he wishes to find out more about the Procurement Bill, he can join me and the hon. Member for Vauxhall (Florence Eshalomi) in Committee Room 10 on Tuesdays and Thursdays for the foreseeable future. He will hear us talk about social benefit and the social value embedded within it, and I hope apprentices will be part of that.

[Jonathan Gullis (Stoke-on-Trent North) (Con)]

Stoke-on-Trent is proud to still be the largest recipient of the levelling-up funding announced to date, and the second-largest recipient of the Places for Growth programme, through which we now have 500 Home Office jobs coming to our great city, with 100 jobs recruited, another 160 being advertised and the office due to open in March at Two Smithfield, a regeneration site led by Councillor Abi Brown and her fantastic Conservative councillors on Stoke-on-Trent City Council. Will my right hon. Friend congratulate Councillor Brown and the Home Office on securing those important jobs for our local area and place on record my thanks to the Cabinet Office for all its hard work in making this achievement come true?

Procurement Bill [ Lords ] (Second sitting)

Alex Burghart Excerpts

Committee stage
Tuesday 31st January 2023 Public Bill Committees

Question proposed, That the clause stand part of the Bill.

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

Colleagues will be sad to hear that we have only 117 clauses to go as we enter this second sitting. Clause 8 defines the concept of a concession contract. It is a type of public contract, and its award is regulated by the Bill. Subsection (1) sets out the key concepts specific to a concession contract. There are two main features. First, under a concession contract, at least part of the consideration received must lie in the right to exploit the works or services. A good example might be a concession contract to operate a canteen where the supplier receives income from customers.

Secondly, in exploiting that right, the supplier or concessionaire must be exposed to a real operating risk. Subsection (2) defines an operating risk, which is a risk that the supplier will be unable to recover its costs through the concession—for example, the risk of fluctuating vehicle numbers and income under a contract for the construction and operation of a toll bridge where the supplier has the right to receive the toll income.

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

Apologies for my lateness, Mr Efford. Clause 8 refers to concessionary contracts—contracts through which the authority contracts out work on the basis that the contracted company may be able to exploit or charge for extracted resources. Examples include the channel tunnel, which was paid for by private finance, with the financiers picking up the benefits. We support these contracts in principle—they can help us to build things without much cost to the taxpayer, and can help to expand the state—but there needs to be a balance. There needs to be guidance on what the right cost is. We could lose millions if the cost is wrong and the concession is given away too cheaply. Also, when deals regarding important infrastructure are signed, there needs to be caution to ensure that the long-term running of the system is up to standard. It is important that performance-based targets are included, as well as provisions for infrastructure building.

The Green Paper highlights that proposals for integrating the regulations for concession contracts into the core regime will be taken forward. However, there will be specific provisions covering the definition of a concession, how a concession contract is to be valued, and the duration of that concession. Those specific provisions address the key points raised by stakeholders in the consultation. The Government also propose to retain the higher financial threshold for concession contracts, greater discretion with regard to the method of calculating the estimated value of a concession contract, and an exemption for lottery-operating services, as well as other exemptions that come under the current regime; in all other respects, procurements for concession contracts will be subject to the new regime. We support the clause.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9

Light touch contracts

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Light-touch provisions reflect the fact that certain public contracts, including those for social, healthcare and legal services, can warrant special treatment and greater flexibility. Flexibility is permitted by the scope of our international agreements. Clause 9 introduces the term “light-touch contract”, and provides for regulations to define which exact services should be subject to the lighter rules. As in the existing regime, common procurement vocabulary codes will be used to specify services.

The special features of the contracts are identified in subsection (4), which helps to prevent any inappropriate use of the power, as does compliance with our international agreements, which would prevent us from expanding the scope of what is included in the light-touch regime.

Light-touch contracts will be openly advertised unless a direct award ground applies. Contracting authorities will have to apply the exclusions and consider conflicts of interest. Transparency will be maintained through publication requirements, including requirements for an award notice, a contract detail notice and, when the contract is over £5 million, publication of the contract. By integrating these light-touch contracts into the broader regime, and having carve-outs where greater flexibility is justified, we have made it much clearer how such procurement should be run, and have ensured that probity and transparency are built into the process, while respecting these contracts’ unique characteristics.

[Florence Eshalomi]

I understand the need for a light-touch contracts regime, but I share the concerns expressed in the other place about the scale of the changes. Lady Noakes tabled a probing amendment that pressed the Government on why such contracts are not more narrowly or widely defined. Her amendment 30 sought to confine light-touch contracts to those concerning health or social care services provided to individuals, on the basis that that is how they are used at the moment—that is my understanding. However, if the Government believe that the definition should be wider, they should put that in the Bill. Open-ended regulation-making powers should not be necessary and are not desirable.

As the Minister is aware, the Cabinet Office delegated powers memorandum justifies the power by saying:

“While the scope of what is to be included in regulations made under this power is known, it is not practical for the Bill to include a long list of detailed…CPV codes to indicate which categories of contracts may benefit”

from the light-touch regime. It goes on to say that

“CPV codes may evolve over time, which would…require amendment to the Bill.”

However, the report of the Delegated Powers and Regulatory Reform Committee found that explanation to be inadequate, as

“it does not explain why it is considered appropriate for the power to be so broad that the issue of which kinds of contracts are to be subject to the ‘light touch contract’ regime is left entirely to regulations. There is nothing of substance on the face of the Bill to limit the discretion afforded to Ministers to allow less rigorous regulation for contracts of a kind that they choose to specify in regulations. Clause 8(4) lists three factors which Ministers must consider but without saying what effect these factors are to have. The Memorandum suggests that the provision made in exercise of the power will simply be a list of CPV codes but the power need not be exercised in that way.”

In its conclusion, the Committee said that

“the reasons given by the Government for leaving entirely to regulations the question of which contracts should be subject only to the ‘light touch’ regulatory regime are inadequate”,

and recommended that

“unless the Government can fully justify doing otherwise, the Bill should include criteria for determining which contracts should be subject to that regime.”

I understand the Government’s response to the consultation—that it might be tricky to tie down a definition and put it in the Bill—and Labour therefore does not seek to amend clause 9 today. However, I share the concerns aired in the other place about the scope of this part of the Bill. I am also concerned that the Government have not justified their stance beyond pointing to the existence of the common procurement vocabulary codes. Many feel that that does not answer the question posed by the Delegated Powers and Regulatory Reform Committee. I would like clarity from the Government on whether they are working closely with the likes of Lady Noakes to put their minds at rest. In particular, I would welcome a clear definition of what the powers in clause 8 mean in practice and how the Government intend to use them.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Clause 10

Mixed procurement: special regime contracts

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 10 concerns mixed contracts that involve an element to be procured under the general rules regime and an element to be procured under one of the special rules regimes. We discussed the objective of clause 5, which is in a similar vein. It is important to provide for such mixed contracts—a need for them will inevitability arise—while safeguarding against exploitation of exemptions and the lighter-touch rules. That will be achieved through the introduction of a test of separability, a safeguard similar to that in clause 5.

If separation of the general rules regime and special rules regime elements are possible, but a contracting authority chooses not to separate out the contract, then that mixed contract must be awarded in accordance with the general rules. It will not qualify for the special rules regime if the elements could reasonably be procured separately, having regard to the practical and financial consequences of splitting the requirement out.

[Florence Eshalomi]

As the Minister outlined, clause 10 is similar to clause 5. It is uncontroversial, as we see it, and it closes a loophole where one part of a contract could come under the special rules regime.

Question put and agreed to.

Clause 10 accordingly ordered to stand part of the Bill.

Clause 11

Covered procurement only in accordance with this Act

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 11 requires contracting authorities to carry out covered procurement solely in accordance with the Bill. Specifically, they must use the procedures in the Bill for competitive award, direct award and framework agreements. That will ensure that contracting authorities properly engage with the market and achieve value for money.

The duty that clause 11 creates will allow a supplier to hold a contracting authority to account. Remedies are available under part 9 when it can be demonstrated that a contracting authority has materially failed to have regard to one or more of the requirements in the Bill— for example, where there is direct award without proper justification, or discriminatory technical specifications —and the supplier consequently suffers, or is at risk of suffering, loss or damage.

[Florence Eshalomi]

We support this uncontroversial clause. It underpins many parts of the Bill, and mandates that procurement must be carried out under the terms of the Bill. The clause also points to different parts of the Bill for different forms of procurement—to clause 19 on competitive award, clause 41 on direct award in special cases, clause 43 on direct award after switching procedures, and clause 45 on award under frameworks.

Question put and agreed to.

Clause 11 accordingly ordered to stand part of the Bill.

Clause 12

Covered procurement: objectives

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Procurement should be used to grow our economy locally, to build our country up and to provide greater resilience for future generations. I am pleased that the hon. Member for Aberdeen North mentioned the fantastic work of the Labour Welsh Government on the Wellbeing of Future Generations Bill, and that is what needs to be in procurement—that is the aim. The aim is not a quick buck and just to procure everything out. I shall rise to speak to other clauses looking at in-sourcing—something else that would be allowed more easily if social value was on the face of the Bill. I urge support for all the amendments in the group.

[Alex Burghart]

I will try to treat all the amendments in this large group in order. Amendment 9 seeks to replace the well-understood concept of value for money with a new duty, by importing into the procurement objectives the meaning of “social value” under the Public Services (Social Value) Act 2012. There are difficulties with that approach, I am afraid, in particular that there is no definition of “social value” in that Act. Contracting authorities are also likely to struggle to understand the concept of equity in the context of procurement.

Amendment 10 is unnecessary, as “public benefit” already allows for “public value” and for contributing to socioeconomic development to be considered where appropriate and relevant. This amendment also undermines the concept of what is in the public benefit by overlaying a similar but different concept of public value. That suggests that benefit and value are different things, and narrows the former term in a way that is not legally helpful.

Amendments 9 and 10 are also not necessary to ensure that social value is considered in the procurement objectives. The public benefit objective in subsection (1)(b) requires contracting authorities to think about the extent to which public money spent on their contracts can deliver greater benefit than it otherwise would—for example, broader social value or equitable outcomes for groups such as armed forces veterans, local employment and such like.

Amendment 101, tabled by the hon. Member for Aberdeen North, seeks to add transparency and anti-corruption efforts to the list of procurement objectives in the Bill. The Bill, however, will establish a world-leading transparency regime. It will see more commercial information published in three nations of the UK than ever before, including information on upcoming procurements prior to opportunities being advertised, and data against key performance indicators on major contracts, so that taxpayers can see how well contracts are being performed. Transparency is therefore already a mandatory requirement.

[Florence Eshalomi]

Is the Minister aware that the Government’s own “transparency ambition” document outlines a failure to provide for transparency in our procurement system? Some of the measures he has outlined are a step forward, but they still lack substantiveness to give providers and the public access to the full transparency that we need. Should we not look to follow in the steps of Ukraine in publishing an accessible digital dashboard, which would help the Government?

[Alex Burghart]

As the hon. Lady knows, transparency sits throughout the Bill. As I have just said, there are far greater requirements to publish than ever before, on an online platform that the Government will provide. She gave the important example of Ukraine. She will remember that we talked about this on Second Reading: the Ukrainians were advisers to the UK Government when we were putting our ideas together, so we are very much building on what they did in Ukraine. This will be an extraordinary step forward for transparency in the nations that are taking it up.

The Bill also requires contracting authorities to have regard to acting, and being seen to act, with integrity. That will oblige them to consider how to prevent fraud and corruption through good management, prevention of misconduct, and control. Failure to take anti-corruption steps or measures will be an indication that the contracting authority did not have a regard to the importance of acting and being seen to act with integrity.

Contracting authorities will also be required to comply with the provisions in the Bill on conflicts of interests and the exclusion of suppliers, preventing contracts from being awarded to inappropriate suppliers. That provides further opportunities to directly address transparency and anti-corruption issues within the context of a procurement. I hope that we all agree that it is essential that the procurement regime commands the trust of suppliers, the public and our international trading partners. In our view, the Bill already provides for those matters as it stands.

Amendment 89 seeks to define value for money. Clause 12 specifically does not define value for money to leave a degree of flexibility for different types of contracting authorities to adapt the concept for their own procurements. Contracting authorities should be able to select the most advantageous tender that prioritises things that deliver value for money for them. There are many precedents on the statute book where the term is left undefined, and that allows for a degree of flexibility. I could point to the Communications Act 2003, the Energy Act 2004, the Defence Reform Act 2014, the Bus Services Act 2017, and so on.

[Kirsty Blackman]

The Minister has answered the question in relation to value for money not being defined in this Bill because it is mentioned in other measures without that kind of definition. Regarding the term “public benefit”, is it also the case that it is widely used in other legislation without being defined? If the Minister does not have an answer now, I would be happy to hear something afterwards.

[Alex Burghart]

No, I am happy to say that it is already set out in the social value Act, I think, which I mentioned at the start of my remarks. Similarly to amendment 9, we feel that amendment 89 is unnecessary, as “public benefit” already allows for those factors to be considered, where appropriate and relevant to the contract being awarded.

New clause 2, also tabled by the hon. Member for Vauxhall, seeks to oblige contracting authorities to follow the six principles that the Government consulted on in the Green Paper. Now, the Green Paper was just that; it was a Green Paper and it formed the basis of what came subsequently. The six principles in the Green Paper were subsequently refined and then translated into the objectives and specific obligations that now exist in the Bill in the light of the responses to the Green Paper.

The language of a Green Paper is not the language of legislation, and one of the main lessons from the Green Paper and the consultation was the need to reflect the principles in a way that helps contracting authorities understand how they will implement them. That is what we have done. However, I assure the Committee that each of those principles remains within the Bill in an appropriate form. “Value for money” remains a fundamental tenet of the procurement regime. It is well understood by contracting authorities so does not need to be elaborated on.

“Public good” was focused on the delivery of strategic national priorities, so we revised it to the objective of “public benefit” to address the concerns raised in the public response to the Green Paper that it was solely about national, and not local, priorities. The revised principle supports wider consideration of social value benefits.

As we have discussed, “transparency” remains as an objective to encourage information sharing with suppliers, and “integrity” also remains an objective. The public response to the Green Paper indicated that “fair treatment” was too subjective for contracting authorities to determine by objective standards, so we introduced the concept of “treating suppliers the same”, which hon. Members will find in clause 12(2). Finally, “non-discrimination” has been converted from an objective to a hard-edged obligation in clauses 88 to 90.

The combination of the objectives and specific legal obligations in the Bill deals with procurement principles more effectively than the broad principles that the Government consulted on in the Green Paper. I therefore respectfully request that the amendments be withdrawn.

[Florence Eshalomi]

I heard the Minister’s response, and I think, again, that it is disappointing that there is a total shift between what was introduced by the Government in the Green Paper and what we now see in front of us. That was also noted in the other place.

I welcome the aim of the amendments tabled by the hon. Member for Aberdeen North. That is something that we do support, and I know that she highlighted it in a Westminster Hall debate just last week. Climate change is something that we are very much concerned about.

On ensuring that we think about the next generation, we can only do that if we protect the environment and the Earth that we are on now. We only have one opportunity. We cannot do it later, because there will be nothing left. That is a key issue that our young people are concerned about, and it must be front and centre in this Bill.

The climate elements of the Bill are really important. They touch on social value and on public value. There is an interwoven link showing why that is important, and that should receive due consideration, so it is a shame to hear the Minister not wanting to take those measures forward.

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We know that there are potential benefits for our local communities from enabling companies to keep IP and manufacturing at home, where it belongs. This is a small but important way in which the Government could make it clear that this is a realistic, sensible and reasonable way for a company to choose to go forward if it wants to. That would help jobs and organisations in our local communities. As I said, I support the amendments.

[Alex Burghart]

Amendments 90 and 91, tabled by the hon. Member for Vauxhall, seek to amend clauses 12 and 16 so that contracting authorities have to have regard to potential barriers to the participation of charities, particularly when carrying out pre-market engagement.

Charities provide important services and may well offer the best value for money in a procurement, particularly in the social and education services. That was in the forefront of our minds when allowing greater flexibility for light-touch contracts, which means that those procurements often facilitate the participation of charitable and not-for-profit organisations.

Before I go on, I must correct my remarks to the hon. Member for Aberdeen North at the end of our debate on the previous group of amendments. I foolishly leapt to my feet and said that it was the social value Act that was relevant. It is actually section 4 of the Charities Act 2011. I am grateful to have officials who do not err.

There are a broad range of charities involved in public procurement, including some very large, well-established organisations capable of effectively competing in a public procurement market. Charities that need extra support for public procurement will often meet the definition of SME in clause 119, and will therefore already benefit from the duty in clause 12(4) to support SMEs, which applies to pre-market engagement and the whole procurement lifecycle. I say as someone who has worked with and for both large and small charities that asking for charities of all sizes to be treated the same way is perhaps not appropriate. In addition, the provisions on reserving contracts for certain suppliers in clauses 32 and 33 will help those charities that qualify as a supported employment provider or public sector mutuals.

The Government are fully committed to supporting charities, hence the sector will often be the beneficiary of grants that sit outside the public procurement regime. However, the Bill already functions to give appropriate support to charities’ participation in public procurement. It is undesirable to include other types of organisations in clause 12(4) and risk diluting the separate requirement for contracting authorities to have particular regard to barriers that smaller suppliers face because of their size. I respectfully request that the Committee does not support amendments 90 and 91.

In the other place, my colleague Baroness Neville-Rolfe admirably championed small and medium-sized enterprises, and tabled amendments to complement the Bill’s existing provisions that support smaller businesses. Those include explicit duties to have regard to the participation of SMEs. Amendments 1 to 3, tabled by the hon. Member for Vauxhall, would amend those duties to include a specific reference to co-operative societies. I share her deep admiration for co-operative societies. They play a very important role in our economy and our society as a whole. I am happy to confirm to the Committee that the SME obligation will include co-operative organisations where they meet the tests for being an SME.

Many co-operatives will meet our definition of SME in clause 119. Where they do not, for example because they employ more than 250 staff, they should not benefit from the duty to support SMEs. We think it would be wrong to treat a large co-operative bank, for example, in the same way that we are proposing to treat SMEs. If we included other types of organisations, we would risk diluting the Bill’s particular regard to the barriers that SMEs face—the clauses would lose their impact, which would be a shame for the SMEs that the Bill seeks to support. I therefore respectfully urge the hon. Lady to withdraw her amendments.

Question put, That the amendment be made.

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Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 12 sets out the procurement principles that establish what the Bill is designed to achieve, and how its success will be judged. The clause splits the procurement principles into objectives and other rules to help contracting authorities to understand what they are obliged to do.

The objectives in clause 12(1) set out the values of public procurement, the furthering of which contracting authorities must give proper consideration to in the course of making procurement decisions. Public procurement needs to be focused on achieving value for money, which is rightly at the top of the list of objectives set out in clause 12(1). However, each of those objectives has its own merit, and each must be considered independently. It is not the intention of the Bill that value for money, however important, disapplies or overrides the obligation on contracting authorities to have due regard for the objectives of public benefit, information sharing and integrity.

The rules on equal treatment in subsections (2) and (3) are obligations that set minimum standards that contracting authorities must follow. The Bill will also accelerate spending with SMEs through the creation of new duties that will require contracting authorities to have regard to SME participation. We want to level the playing field for smaller businesses and for buyers, not only to avoid putting up, but to remove barriers to their participation.

Question put and agreed to.

Clause 12 accordingly ordered to stand part of the Bill.

Clause 13

The national procurement policy statement

[Florence Eshalomi]

I beg to move amendment 22, in clause 13, page 10, line 2, leave out “may” and insert “must”.

This amendment would require a Minister to publish a National Procurement Policy Statement.

The amendment seeks to mandate that the Government “must” publish a national procurement policy statement, instead of just “may”. I am sure the Minister will tell me that the amendment is unnecessary as, of course, the Government will seek to publish a national procurement policy statement. However, as has been stated, the change that we have seen in the Bill from the Green Paper to today means that we can take nothing for granted when it comes to the Government’s word on procurement.

The amendment is identical to the one tabled in the other place by Lord Lansley. When Baroness Noakes introduced it, she said that the clause’s current wording leaves the door open for a statement not to be published. Given the importance of the policy statement in setting rules for covered procurement, it would be deeply damaging for it not to be published. I urge the Minister to ensure that that cannot happen by supporting our amendment.

[Kirsty Blackman]

It seems to me that this is probably the easiest amendment for the Government to accept. They have made it clear how important the national procurement policy statement will be, and how a significant proportion of the decision-making processes in the Bill will flow from that statement.

I support the amendment, and I would suggest going even further in saying that every Government should publish a national procurement policy statement. We have had quite a lot of Governments recently, but after every general election and every first King’s Speech of a new parliamentary Session, the Government should be clear in a number of areas. They should set out their policy direction of travel, not just in procurement but in general. That is a key moment when the Government could refresh their national procurement policy statement.

I do not have a significant issue with the Government updating the statement based on priorities. We have seen what has happened in the last few years with covid, and in the past decade or so, we have developed a better public understanding of the impacts of climate change. Science has changed, and not only have priorities changed, but the social system has changed as a result of covid. It therefore seems that updating the statement would be a sensible thing to do. If the Minister is not willing to accept the amendment, I urge him to make it clear that the Government intend to publish the national procurement policy statement, no matter whether the clause says “may” or not.

We will come to the clause stand part debate, but the clause states that there is an intention to keep the statement “under review”. Does the Minister expect that if Government priorities were to change significantly, a new or a tweaked statement would be published? For example, if something major happened, as with covid or the war in Ukraine, priorities may change as a result. Does he expect Government Ministers to at least consider updating the national procurement policy statement in the light of drastic changes that may or may not come to us in future?

[Alex Burghart]

Amendment 22 would require the Government to publish a national procurement policy statement rather than just allowing them to do so. We have had a lot of debate about the nature of procurement policy and the associated important elements of procurement, such as driving social change.

As has been demonstrated by the sheer number of topics that we have touched on, procurement is often used to transact wider policies. That is correct, but we have to be realistic about the fact that those policies shift over time. The hon. Member for Aberdeen North gave a couple of examples of that. Indeed, the Government demonstrated how quickly we can change our procurement policies in the light of Russia’s illegal invasion of Ukraine. It is therefore both preferable and necessary that procurement policy is aligned with wider Government objectives. As such, the publication of an NPPS is a decision based on the strategic policy priorities relevant to the Government at that time. It needs to be as flexible as possible, and mandating a Minister to publish one takes away some of that possibility.

However, I assure the hon. Lady that the Government absolutely intend to publish an NPPS. They are working on it at the moment, and I look forward to bringing it to the House and discussing it when the time comes. She is right that it will be possible for Administrations to update their national procurement policy statement, but it will also be possible for them to withdraw it. One reason for not mandating is that there may be times when the Government are working on a new one, and there is a hiatus between the two. I therefore do not see that changing the drafting of the clause and mandating the statement is necessary. I respectfully request that the hon. Member for Vauxhall withdraw her amendment.

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Division 7

Ayes: 6

Noes: 9

[Alex Burghart]

I beg to move amendment 28, in clause 13, page 10, line 9, leave out paragraph (b).

This amendment would remove the requirement for a Minister of the Crown to give due regard to certain principles before publishing the national procurement policy statement.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 7, in clause 13, page 10, line 12, after “environmental” insert “, cyber security”.

This amendment would make cyber security one of the strategic national priorities for procurement.

Amendment 11, in clause 13, page 10, line 12, after “environmental” insert “, national security”.

This amendment would add national security as part of procurement principles.

Amendment 107, in clause 13, page 10, line 25, at end insert—

“(vii) fair treatment of workers, by ensuring fair pay and conditions, workplace wellbeing, development of skills and progression and diversity in recruitment.”

This amendment would add a procurement principle based on the fair treatment of workers.

Government amendment 29.

Amendment 105, in clause 13, page 10, line 36, at end insert—

“(4A) The national procurement policy statement must include measures to ensure that no supplier may be granted a procurement contract with a contracting authority where the Secretary of State is satisfied there is established evidence that a provider has been involved in—

(a) modern slavery,

(b) genocide, or

(c) crimes against humanity.”

[Alex Burghart]

The purpose of amendments 28 and 29 is to overturn amendments added to the Bill in the other place, which require that prior to publishing a national procurement policy statement, the Minister must give due regard to a number of specified principles and mandate the inclusion of a number of priorities in the NPPS.

I reiterate that the Government recognise that those principles are important to procurement, which is why most of them are already core elements of the procurement regime and are reflected throughout the Bill. That is evident in the Bill’s drafting overall. For example, value for money, integrity and maximising public benefit are set out in clause 12 as procurement objectives that contracting authorities must have regard to directly when carrying out procurements. As discussed, transparency is also a requirement running through the Bill. Furthermore, specific requirements in the Bill place obligations on contracting authorities regarding fair treatment of suppliers and non-discrimination in decision making—for example, the conflicts of interest provisions in part 5. Therefore, although the principles are important, to incorporate them as part of the national procurement policy statement process when they are already applicable to procurements on the face of the Bill is unnecessary.

Similarly, the other place added a subsection that requires the inclusion of specific priorities in the national procurement policy statement. Those relate to achieving targets set under the Climate Change Act 2008, the Environment Act 2021 and the Public Services (Social Value) Act 2012, as well as to promoting innovation among potential suppliers and minimising the incidence of fraud.

We carefully considered which policy priorities should and should not be included within the regime, in order to maximise productivity and ensure that the Bill is as streamlined as it can be to deliver for all contracting authorities and maximise the benefits from all procurements. It is, I believe, more than adequate that the Public Services (Social Value) Act requires contracting authorities to consider the economic, social and environmental wellbeing of an area when undertaking specified procurement. Restating that in a policy statement would be unnecessary, as that Act is already binding on contracting authorities.

The amendment introduced in the other place looks to increase innovation and minimise fraud, but that is already at the core of the Bill. With our new approach to small businesses, we are unleashing innovation in the supply chain, and by embedding transparency throughout the procurement lifecycle, alongside our plans for oversight, tackling fraud will be easier than ever before. It would be counterproductive to restrict the flexibility of the national procurement policy statement by placing specific priorities in primary legislation.

We have made it clear that the NPPS will be used to set out strategic policy priorities, over and above those enshrined in the Bill, that are relevant at the time that the NPPS is to take effect.

[Florence Eshalomi]

I oppose amendment 28; it would remove Lords amendment 46, which was added on Report. Clause 13 currently mandates the Government to give due regard to a number of important principles before publication of their national procurement policy statement. Those principles follow on from the procurement principles promised in the Bill— namely, promoting the public good, value for money, transparency, integrity, fair treatment of suppliers and non-discrimination.

Those principles are important. We know that public good allows us to put what we believe is best for the country at the heart of procurement. When we also consider the huge amount of money spent on procurement —ultimately, it is the public’s money going towards delivering goods and services—it is right that the Government expect the money to be spent in the public’s interest. Procurement must always have that idea in mind, and it cannot be driven by any other aim of individuals in Government or other private individuals.

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The Government could start by following the Scottish Government’s lead in getting rid of Hikvision cameras. That is what is happening in Scotland; they are leaving our public authorities. As far as I am aware, the UK Government have unfortunately not yet made a statement that they will be doing the same, and it would be good if they were to do so. It would be good if they ensured that we started from the principle that no supplier involved in any of these atrocious crimes can be given a contract or public money that they can use to continue to commit such crimes.

[Alex Burghart]

Amendment 7 would require “cyber security” to be added to the list of principles to which Ministers should have regard when drafting a national procurement policy statement, and amendment 107 would require fair treatment of workers. Similarly, amendment 11 seeks to broaden the list of principles to which Ministers should have regard when drafting a national procurement policy statement by adding “national security”.

National security is, of course, of paramount importance. The Bill makes substantial provision for the protection of the UK’s national security through the national security exemption in schedule 2(21) and the discretionary exclusion grounds for suppliers in schedule 7(14). Where national security considerations are relevant, the Government have established policy and guidance that procurers must take strict account of.

Amendment 105 seeks to prevent the award of contracts to suppliers involved in modern slavery, genocide or crimes against humanity through measures to be included in the national procurement policy statement. The hon. Member for Aberdeen North mentioned her enjoyment of reading Bills. As she will see later on, 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, and that explicitly includes modern slavery. We have also taken action to strengthen the way that modern slavery is defined, so that suppliers may be excluded where there is sufficient evidence that they are responsible for modern slavery anywhere in the world, whether or not they have been convicted of an offence.

I also draw the hon. Member’s attention to the debarment regime in clauses 59 to 64, which allows for Ministers to consider whether any supplier meets one of the grounds for exclusion and whether the issues in question are likely to reoccur. 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.

As I made clear in my initial remarks, the principles in clause 13(3)(b) are duplicative and do not serve a strong purpose. I therefore still propose to overturn them.

The hon. Lady remarked on failures in the existing regime. I gently extend the invitation to her, once again, to leave the existing regime behind and join the new regime; but alas, Scotland has declined to do so and will be stuck with the existing regime.

Question put, That the amendment be made.

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[The Chair]

With this it will be convenient to consider clause 14 stand part.

[Alex Burghart]

I hope the clauses can stand part of the Bill.

[Chris Evans (Islwyn) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Efford. The clause states that Welsh Ministers may publish a statement setting out

“the Welsh Government’s strategic priorities in relation to procurement.”

I am pleased that the Welsh Government are adopting the Bill, subject to the legislative consent of the Senedd, of course. To put it simply, the clause comes down to respect. Devolution was originally introduced in the UK in 1998 through the Scotland Act 1998, the Government of Wales Act 1998 and the Northern Ireland Act 1998. It has since become embedded in our society and our national identities; a whole generation has not known anything different, which is a good thing. Protecting the voices of our devolved nations in UK legislation is crucial not only for maintaining the relationships between the UK Government and the devolved nations, but for our democracy as a whole. The Wales procurement policy statement is the voice of the Welsh Government on procurement and, by extension, the voice of the Welsh people, and that deserves a place in the Bill.

The Bill has arisen from our exit from the European Union. Our exit has given us opportunities to ensure that our legislation works best for the UK and the devolved powers. We need a procurement system that works for all communities across the UK and all the devolved nations.

Clause 14 also outlines the steps that Welsh Ministers will need to take before publishing the policy statement. They include carrying out a consultation and, after receiving the responses, making any necessary changes to the statement, which must then be laid before the Senedd. The Bill is a good example of how the two Governments can work together in consultation on legislation in a devolved setting.

I note the views of the Welsh Government on fair value and social partnership, which they have outlined in their Social Partnership and Public Procurement (Wales) Bill. It focuses on the wellbeing of Wales and a “prosperous Wales” as an outcome of procurement, and provides a framework for improving socially responsible public procurement. Ensuring that our public procurement system supports the whole UK’s prosperity is vital.

The social partnership between Government, employers and workers is also a strong focus of the Welsh Government’s Bill. It is valuable to include everyone who is at the table. A major component of the legislation is the requirement on certain public bodies to take into account socially responsible procurement by establishing wellbeing goals that they must meet when procuring, and to publish a procurement strategy. Under the Welsh Government’s framework, those public bodies will be required to seek to improve economic, environmental, social, and cultural wellbeing when carrying out procurement.

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The Welsh Minister also noted that it would not be appropriate to recommend consent until this matter of concern had been resolved. To reinforce my earlier point, devolution is embedded in our society, and respect for the Welsh Government should be best practice. Until those concerns are resolved, I am worried about the potential impact on the foundation of devolution; this may affect the relationship between the two Governments. I hope that the Bill is used as an opportunity to retain a Welsh voice in procurement, and to ensure continued co-operation between the UK and Welsh Governments.

[Alex Burghart]

I am delighted to follow the hon. Gentleman’s comments about Wales. I must say that work on this Bill has been an absolute model of co-operation between us in Westminster and colleagues in Cardiff. The Bill is very much a result of joint working, and it is stronger for it, and for the support it enjoys from colleagues from Northern Ireland, from Belfast. We hope that one day colleagues in Holyrood will see fit to join us in creating a new procurement landscape that takes advantage of the opportunities that leaving the EU has made available to us. I praise the joint working that we have seen so far, and look forward to joint working in the future.

Question put and agreed to.

Clause 13, as amended, accordingly ordered to stand part of the Bill.

Clause 14 ordered to stand part of the Bill.

Clause 15

Planned procurement notices

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 15 concerns the planned procurement notice. It is designed to give as much advance information to the market as possible, so that interested suppliers can determine whether they wish to bid in the procurement covered by the notice, and so that they have the maximum time for preparation. It also gives contracting authorities the option of reducing tendering periods by publishing a planned procurement notice. Publication of that notice may take place at any time before publication of the tender notice, but if its publication occurs at least 40 days and no longer than one year before publication of the notice, the contracting authority may, if it wishes, benefit from reduced tender periods of a minimum of 10 days.

[Florence Eshalomi]

As the Minister has outlined, clause 15 relates to planned procurement notices. When used well, such notices allow for significant benefits, both for the contracting authority and for the companies wanting to bid. For the contracting authority, they reduce the time limits associated with procurement notices by significant amounts; in many cases, that reduction may be from 25 days to 10 days, which represents a significant decrease in the time limit and reduces bureaucracy for contracting authorities. The clause will mean that suppliers get 40 days to plan for a bid before the official bidding time limit opens. We welcome that; it is a sensible mechanism that will benefit a number of SMEs, which often do not have legions of administrative staff. They will welcome that extra notice to prepare a bid for a contract.

As the Minister may be aware, Lord Hunt of Kings Heath and Lord Aberdare supported an amendment in the other place that attempted to make those notices mandatory. Lord Aberdare said:

“The existing wording in Clause 14(1) allows for better practice, confirming that contracting authorities are able to publish a planned procurement notice. But your Lordships will know that being able to do something within legislation does not mean that it actually happens…My preference might be simply to replace ‘may publish’ with ‘must publish’.”—[Official Report, House of Lords, 6 July 2022; Vol. 823, c. GC279.]

I do not think I need to push that point particularly hard with the Minister, but I hope that as we progress, he will explore in more detail what support can be given through the Bill to help SMEs.

How does the Minister expect the notices to be used by contracting authorities? When it comes to small contracts, the amendment tabled in the Lords may be too onerous on contracting authorities, but I think we can all agree that the notices are used by contracting authorities. As Lord True said in response to the amendments in the name of Lord Hunt of Kings Heath and Lord Aberdare,

“I agree that it is vital that the market—particularly certain aspects of it to which the noble Lord and others referred—is given sufficiently early warning of what contracting authorities intend to buy so that suppliers can gear up to deliver. This is particularly important for SMEs and charities, which were referred to by the noble Lord and others.”—[Official Report, House of Lords, 6 July 2022; Vol. 823, c. GC290.]

Will the Minister outline to contracting authorities how often they should use those notices, and will he take a proactive approach to investigating how they are used by contracting authorities, and whether their use can be expanded?

Also, how can groups such as SMEs and charities find out about the notices? Perhaps the Minister is leaving much of this to the Government’s planned digital platform, but I hope he can confirm that the notices will be on the platform, and that SMEs will be able to find them efficiently.

[Alex Burghart]

Absolutely. This is all part of our enhanced transparency regime, which will make it much easier for everyone—authorities, suppliers, the public, the press, and hon. Members of this House—to see what is going on in public procurement. Planned procurement notices are a very good thing; they give authorities the option of making clear what they are about to do, thereby giving themselves the chance to speed up that process slightly later on. We have every expectation and hope that they will be widely used, and as the hon. Member for Vauxhall has said, it is often small and medium-sized enterprises that will particularly benefit. When this initiative is considered alongside our plans to encourage authorities to publish their pipelines, we can really start to see the benefits of enhanced transparency in this area.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Julie Marson.)

Procurement Bill [ Lords ] (First sitting)

Alex Burghart Excerpts

Committee stage
Tuesday 31st January 2023 Public Bill Committees

[The Chair]

Copies of written evidence that the Committee receives will be circulated to Members by email and published on the Bill website.

Clause 1

Procurement and covered procurement

Question proposed, That the clause stand part of the Bill.

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

It is a pleasure to serve under your chairmanship, Mr Mundell, and with all hon. Members on both sides of the Committee. This is a significant piece of legislation in this Parliament, and a substantial one. We have 124 clauses in 13 parts with 11 schedules to discuss in 12 sessions, and I look forward to sharing them all with hon. Members present.

Clause 1(1) sets out the technical definitions of “procurement” and “covered procurement”. Covered procurement means those procurements that are covered by the majority of the provisions in the Bill. They are mostly procurements by contracting authorities above the relevant thresholds for goods, services and works that are not exempted from the Bill.

However, the Bill does cover some aspects of procurements that go beyond that. That is why we have a wider definition of procurement, which means any procurement. That allows the Bill to make some limited provision in relation to matters such as below-threshold procurements, and procurements in accordance with certain international rules or certain treaties. For example, the provisions in part 6 of the Bill regulate certain procurements that are of a lower value than the thresholds set in schedule 1 but are none the less subject to some regulation under the Bill.

Subsection (2) makes it clear that the term “procurement” —and, by extension, “covered procurement”—includes all steps taken in the contract award, as well as the management of a contract, up to and including termination. Subsections (3) and (4) make it clear that references to procurement and covered procurement also apply where contracting authorities conduct joint procurement and procurement by a centralised procurement authority for the benefit of other contracting authorities.

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Mundell. I start by paying tribute to Sarah, Christopher and Huw in the Public Bill Office for all their hard work in going through over 100 amendments tabled for Committee stage. I also thank the Minister for his opening remarks.

We have been clear that we want to work constructively with the Government to get the Bill into as good a state as possible. We all want procurement to work for British people, inspire confidence in the system and offer genuine value for money. I hope that the Minister will consider our amendments on their merits, as genuine attempts to get the Bill into as good a place as possible.

As we know, the Bill began its life in the Lords and underwent significant changes before reaching this place. While we expected the Government to table amendments to their own Bill—especially given that, sadly, we have seen four Chancellors of the Duchy of Lancaster since the Bill’s introduction in the Lords on 11 May 2022—I have to say that the scale of change between the Bill as drafted and the Bill before us today does not inspire confidence that what we end up with will be without significant loopholes. Even as we start Committee stage today, the Minister has put his name to 71 amendments. That is a noticeable number, following on from the hundreds we had in the other place. Of course, we welcome changes that bring the Bill into a more workable state, but if we are having to amend it on such a scale with just one stage of parliamentary scrutiny left, we cannot have much confidence that the end product will not be riddled with errors and inconsistencies that have gone unfixed.

When we are talking about a third of public spending and the livelihoods of countless workers rely on us getting this right, it is disappointing that the Government introduced a Bill that still clearly needs significant work in Committee and on Report. I know that several of the amendments have come as a result of the ministerial merry-go-round that the Government have subjected us to over the past year. We broadly welcome those changes, particularly in relation to the increased consideration of small and medium-sized enterprises within the Bill.

[Florence Eshalomi]

I thank the hon. Lady for that point. It is so important, because we have seen what can happen when we do not get procurement right. We all know the impact it has on our local communities; we all have small businesses and organisations in our communities that are good at handling and dealing with public contracts but never get a look in. The fact that so many really good amendments were tabled in the other place but not taken up by the Government is quite disappointing.

What businesses ask us for is certainty, especially during these difficult economic times, but the mess the Government have made of the Bill does nothing but offer more confusion to the many businesses who rely on procurement. The Bill today is vastly different from the Bill introduced in the Lords, but it is also different from the Bill promised in the Government’s Green and White Papers and—who knows?—it may be vastly different from the Bill that ends up on the statute book. That does not scream strong and stable from this Government, and it is unacceptable when public services and livelihoods are on the line.

I am sure we will hear warm words from the Government that many of the amendments we discuss in Committee are unnecessary as they plan to address them in the national procurement policy statement. But how can the Government ask us, businesses and the people who rely on procurement for the day-to-day running of the country to trust them on their word after the year of chaos and uncertainty they have subjected us to, not least in the state of the Bill?

Even this first clause had to be forced in by the Government in the other place due to confusion in the Bill originally introduced to the Lords. Labour did not oppose the introduction of clause 1, which narrows down the definition of procurement to cover public contracts, and we will not oppose it today. We understand why the definition has been included—to distinguish between the specified procurements and other general procurements, particularly as we know that certain procurements that are not meant to be caught by the full framework of this legislation are no longer automatically included. We also agree with the need to familiarise our language in respect of the World Trade Organisation’s agreement on Government procurement, which the United Kingdom became a part of on 1 January 2021.

However, I share some of the concerns expressed by Lord Coaker in the other place about the use of the term “procurement” in the Bill. In particular, amendment 34 moved in the other place took non-covered procurement outside the remit of procurement objectives. I understand why that is necessary for the purpose of the Bill, but I would like to think that all procurement, covered or not, is carried out along the principles of value for money, integrity and maximising public benefit. However, I read carefully the explanation from Baroness Neville-Rolfe in the other place and found her explanation convincing enough to not table an amendment on the issue.

[Alex Burghart]

I thank the Opposition for their support for the clause.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Contracting authorities

[Alex Burghart]

I beg to move amendment 27, in clause 2, page 2, line 13, leave out “including the NHS”.

This amendment would remove the specific reference to the NHS because the NHS falls within the definition of “public authority” regardless.

[The Chair]

With this it will be convenient to discuss the following:

Clause 116 stand part.

Government new clause 13—Power to disapply this Act in relation to procurement by NHS in England.

[Alex Burghart]

Amendment 27 and new clause 13 are necessary to address amendments made in the other place that would, if left, be problematic to the proper functioning of the Bill and to healthcare procurements.

First, it is necessary to remove from the definition of a public authority in clause 2(2)(a) the words “including the NHS”. We fully sympathise with the desire to mention that NHS bodies are contracting authorities—they absolutely are—but it is neither necessary nor helpful to make this addition, for a number of reasons. The NHS is not a single legal entity and does not have a clear meaning in law, so the inclusion of those words would create uncertainty and may have the effect of excluding bodies that are intended to be within it or unintentionally including bodies.

[Kirsty Blackman]

Will the Minister give us some examples of bodies that could be included or excluded by the continued inclusion of those words?

[Alex Burghart]

I am delighted by the hon. Lady’s enthusiasm to hear my next paragraph.

The relevant NHS bodies that are covered by the Bill will be specifically identified in regulations made under the power in schedule 1(5). This is exactly the same approach as under our existing procurement regulations, which is appropriate and helpful as it enables the list of central Government authorities to be updated from time to time as organisations change. There is absolutely no doubt that NHS trusts and various other NHS bodies are contracting authorities. This is because they clearly meet the test for a public authority set out in clause 2(2)(a), which is that they are publicly funded. That test is how we determine whether an entity is a public authority.

Clause 116, which was inserted in the other place, needs to be removed and replaced with the original clause. As it stands, the clause would delete the power agreed by Parliament in the Health and Care Act 2022 for the Department of Health and Social Care to make healthcare procurement regulations that are appropriate for patient care—otherwise known as the provider selection regime. NHS England and the Government have consulted extensively on proposals for the provider selection regime since 2021, and it has received strong support from health and care stakeholders.

The 2022 Act and the powers within it were approved by Parliament and received Royal Assent as recently as April 2022. Parliament recognised then that the procurement of healthcare services provided to patients is a special case and would benefit from procurement rules that would allow for the further integration of services and more joined-up care for patients. The provider selection regime is designed to support the reforms made by the 2022 Act by having flexible and robust procurement rules to support greater collaboration and integration in the NHS.

If clause 116 remains unamended, DHSC will be unable to proceed with its plans to foster the greater integration of healthcare services that better serve patients. If this power is not reinstated, procurement for NHS healthcare services will end up with a confusing scheme of double regulation under the Department of Health and Social Care’s healthcare procurement regulations and under this Bill. It is also likely to lead to greater competition and less collaboration for those healthcare services. I am working closely with colleagues in DHSC to ensure that the provider selection regime is compatible with, and not used to circumvent, the procurement obligations in the Bill, which properly apply to much of the NHS procurement landscape. Parliament will have the opportunity to scrutinise the provider selection regime regulations through the affirmative procedure when they are laid by DHSC in due course.

New clause 13 provides a power for a Minister of the Crown to make regulations disapplying the Bill in relation to areas covered by healthcare procurement regulations made under section 12ZB of the National Health Service Act 2006, as inserted by section 79 of the Health and Care Act 2022. Hon. Members will recall from the debate on the Health and Care Act that a separate but interrelated process of reforms is under way for the procurement of certain healthcare services. Using the powers in that Act, DHSC is currently preparing regulations to govern its proposed provider selection regime, with the aim of improving collaboration in the sector and removing barriers to integrating care. The Bill, following enactment, will therefore need to be disapplied to the relevant extent to enable that scheme of regulations to exist and achieve its intended purpose.

[Florence Eshalomi]

Labour does not intend to oppose amendment 27, nor the Government’s changes through clause 116 and new clause 13. Although we of course want the NHS included in clause 2 and the scope of the Bill, I am satisfied by the Minister’s response and do not intend to vote against the Government’s amendments.

I wish to touch on some issues relating to clause 2, which I will raise now to avoid the need for a separate clause stand part debate. In some ways, the issues relate to the intentions behind the amendment in the other place. The term “public authority” by necessity covers a wide range of organisations, from central Government bodies to local councils to arm’s length bodies and NHS contracting authorities. The number of organisations that fall under the definition of

“(a) wholly or mainly funded out of public funds including the NHS, or

(b) subject to public authority oversight,”

is exceptionally broad. With such a broad definition, there are always likely to be organisations that function on the edge of being a public body. Therefore, doubt still exists over some organisations’ status as public bodies and whether they come under the scrutiny that the Bill hands down to public bodies. There are two important examples of a vast number of bodies where such ambiguity lies: in our housing and education systems.

There is consistent ambiguity about whether housing authorities are public bodies, and the definition has a significant impact on millions of households. The latest English housing survey statistics, released in December 2022, show that approximately 2.4 million dwellings in England were managed by housing associations in 2021. The Minister will be aware that previous questions about the status of housing associations have gone to court. In Weaver v. L&Q in 2009, the Court of Appeal said that, for the purpose of the Human Rights Act, housing associations are public bodies and susceptible to claims. The Office for National Statistics has also found it difficult to put its finger on the status of housing associations, and their classification moved from private to public in 2015 and then public to private in 2017 following the passage of Government legislation.

Obviously, the status of housing authorities and their management goes far beyond the intentions of this Bill. We did not table an amendment on the issue because we understand the greater implications that tabling an amendment of that nature would have created, but I urge the Minister to address the point and give clarity on the issue, so that public bodies and housing associations have a clearer picture of what to expect from the legislation.

--- Later in debate ---

[Kirsty Blackman]

Thank you for chairing this sitting, Mr Mundell, and I thank your fellow Chair, who will be responsible for overseeing us and ensuring that we behave ourselves, which I am sure we will. I appreciate the opportunity to take part in the Committee and look forward to positive discussions about improving the Bill. I am not terribly hopeful that the Government will listen to much of what we say, but I hope they will listen even if they do not necessarily take it on board. In previous Bills, the Government tabled amendments that we had tabled. I hope the Minister will listen to some of what we say and that we can get clarity on some matters in response to our questions.

I want to make a couple of comments on the NHS. I am glad to hear the Minister’s confirmation that NHS trusts will definitely be included in the definition. It is good to have him say that in Committee, and it is helpful to the wider understanding of how the Government intend the Bill to work.

Let me comment on how procurement rules are intended to apply, and how the NHS and NHS trusts in England are moving. We need NHS reforms and NHS procurement reforms to result in two things: the best outcomes for patients and the best outcomes for people working in the NHS. Those two things are not mutually exclusive; they go hand in hand. If people have good terms and conditions, and pay that they can afford to live on, they will do a better job than if they are struggling to make ends meet and therefore worrying.

If decisions around NHS procurement are best for businesses—putting businesses’ interests first—those decisions will directly conflict with those other two aims. It may be that having some private-sector input is the best option in some situations, but it should never be the first port of call. We should run and manage the NHS so that we have fair pay and terms and conditions for people working in it, and the best possible outcomes for patients. We should outsource as a last resort. It will be interesting to see the further guidelines and the statutory instruments put forward by the Department of Health and Social Care in that regard.

It may seem odd that I am commenting on this issue, as an MP from Scotland whose NHS is entirely separate, but it has a significant impact on Scotland’s budget. How the NHS is funded in England gives rise to Barnett consequentials that allow the Scottish Government to fund the NHS in Scotland, so the less the Government are willing to spend on the NHS in England, the less the Scottish Government have to spend on our priorities, particularly in the NHS but also in other areas. I look forward to seeing the future statutory instruments and I will not oppose any of the suggestions under consideration.

[Alex Burghart]

Again, I thank the Opposition for their support for the amendments.

The hon. Member for Vauxhall asked an important question about housing associations. On the question of whether the definition of contracting authority includes housing associations, the proposed definition, as with its predecessor, does not address all individual bodies or categories of bodies explicitly. It is the same for multi-academy trusts. There are simply too many bodies that exist and that change over the course of time to address it that way. Rather, the definition uses a number of tests that determine whether a particular body is covered or not. As we go through the Bill line by line, we will come across those tests over and over again. Registered providers of social housing are included in our coverage schedules to the WTO Government procurement agreement under the indicative list of bodies that may be covered. The new definition aims to ensure consistency with those international commitments.

It is the case that under normal circumstances, simple oversight would not meet the test for management and control. However, in the case of registered providers of social housing, it is well understood and documented that the Regulator of Social Housing has more than simple oversight, carrying out regulatory activity that does meet this threshold—as under the existing regime as a body governed by public law. I reassure the hon. Lady that the Bill does not change that position.

I thank the hon. Member for Aberdeen North for her interest in the English NHS. We are also committed to having an excellent NHS that both supports the people who work in it and is free at point of use for all citizens.

Amendment 27 agreed to.

Clause 2, as amended, ordered to stand part of the Bill.

Clause 3

Public contracts

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to consider the following:

That schedule 1 be the First schedule to the Bill.

Government amendments 85 and 86.

Government motion to transfer paragraph 25 of schedule 2.

Government motion to transfer paragraphs 31 and 32 of schedule 2.

That schedule 2 be the Second schedule to the Bill.

[Alex Burghart]

We have already discussed how the majority of the Bill’s provisions cover the processes and procedures required of contracting authorities in relation to covered procurement. As that concept is based on the award, entry into and management of public contracts, it is necessary to be clear about what is meant by “public contracts”.

Clause 3 classifies three types of contracts that are public contracts and covered by the legislation. The first category is contracts for the supply of goods, services and works—provided those contracts are not subject to an exemption—that have an estimated value above an applicable threshold. The second category is frameworks—that is, contracts providing for the future award of other contracts, as defined more fully in clause 45—again provided that they are not exempt and have an estimated value above an applicable threshold. The third category is concession contracts—that is, contracts where part of the consideration lies in the rights to exploit the works or services as defined more fully in clause 8—again provided they are not exempt and have an estimated value above an applicable threshold.

Schedule 2 sets out the types of contracts for which the contracting authority does not need to apply the rules in the Bill for the contract award procedure because it is exempted from the procurement rules. Where exemptions apply only to part of a public contract—that is, the contract contains both exempt and non-exempt elements—the reasonableness test in paragraph 1(2) of the schedule will prevent the contract from being exempted if the main purpose of the contract could reasonably be separated and supplied under a different contract, and that main-purpose contract would not fall under one of the exemptions in schedule 2.

We have tabled an amendment to split schedule 2 into two parts, following consultation with bodies including the Local Government Association, which was very supportive of doing so. Part 1 will be for exemptions based on the relationship with the other party, where the contract will always be exempt if the relationship conditions are met, and part 2 will be for exemptions for specific goods and services. The reasonableness test will apply only to part 2. The Bill broadly maintains the exemptions available in current domestic procurement law, but simplifies how those exemptions are framed and ensures that the terminology used reflects domestic law.

The exemptions ensure that contracting authorities have the freedom to carry out the most appropriate procurement where the rules in the Bill would otherwise be unsuitable. Contracting authorities can also exempt a procurement from the Bill where the contracting authority determines that doing so is in the interests of national security—that power is available to all contracting authorities. National security interests can include where a procurement is too sensitive to advertise, or where the UK’s national security requires a UK capability. As is usual in legislation, national security is not defined in the Bill, in order to ensure that it is sufficiently flexible to protect the UK’s national security interests.

Defence and security contracts are exempt where local contracting is required where the armed forces are deployed or maintain a military presence in another state. Operational requirements mean that contracts need to be placed with local suppliers for speed of acquisition. That often makes it impractical and inefficient to place contracts with suppliers outside of the state in which the armed forces are deployed. Sometimes, the state requires local contracting as part of the conditions for the presence of the armed forces.

Schedule 2 also exempts defence and security contracts under international agreements. That covers Government-to-Government contracts; contracts awarded under a procedure of an international organisation of which the UK is a member, such as NATO; and cases in which the UK and another country jointly develop a product. In all those situations, the application of the domestic procurement law of one party to such an arrangement is not viable. All the exemptions are compatible with our international obligations, particularly those in the WTO Government procurement agreement.

Schedule 1 sets out the various thresholds applicable to the different categories of contract. Whether the estimated value of a contract is above or below the relevant threshold determines whether it is subject to the main regime for public contracts set out in the Bill, or to the below-threshold regime in part 6. The core thresholds in the schedule are derived from the WTO Government procurement agreement, to which the UK is a party. The threshold values in the GPA are set in special drawing rights, or SDRs. The UK is required to provide an update to the sterling equivalent of the SDR thresholds every two years—the next one will be in January 2024. For that reason, paragraph 2 of schedule 1 contains powers for an appropriate authority to update the threshold values, so that the UK remains compliant with its international obligations.

Separately, paragraph 3 provides a power to update the light-touch thresholds in rows 5, 7 and 8 of the table. Those thresholds are not determined by international obligations, and as such will be updated for different purposes—for example, to allow for inflation or reflect changing priorities for that category of contract. The defence and security thresholds in rows 1 to 3 of the table can be updated using either power, depending on whether the current policy is continued whereby they track the GPA thresholds for utilities, though that is not required by the GPA.

On amendments 85 and 86, on Report in the Lords my noble Friend Baroness Neville-Rolfe asked officials to engage with the LGA, which I previously mentioned. The LGA was concerned that the reasonableness test in paragraph 1(2) of schedule 2 would prevent public service collaborations facilitated by the exemptions in paragraphs 2 and 3 if the contract could reasonably be alternatively awarded through competitive procurement.

Paragraph 1(2) deals with contracts where exemptions apply only to part of a public contract—that is, the contract contains both exempt and non-exempt elements. It says that a contract is not exempted if its main purpose could reasonably be separated and supplied under a different contract, and that main-purpose contract would not fall within one of the two exemptions in schedule 2. However, unlike most other exemptions in the schedule, which are conditional on the subject matter of the contract, the vertical and horizontal exemptions are conditional on the relationship between the contracting parties. Provided that those strict relationship conditions are met, it is irrelevant what the activity of the contract is.

--- Later in debate ---

[Florence Eshalomi]

I have a few points to raise regarding both schedules, so will take them in turn.

Schedule 1 pertains to the threshold agreements that govern the levels above which many of the terms in the Bill become applicable to contracts. We want all contracts—whether they are for £50 or £50 million—to follow some level of basic principle in procurement: we have to ensure there is value for money for the taxpayer. However, we recognise the burden that the management of those contracts places on both the contracting authorities’ procurement managers and the companies that bid for the contracts themselves. We therefore understand the purpose of threshold levels within the system as a fair way to balance the need for scrutiny with the need to ensure the system is not over-burdensome. We also understand that the threshold levels are set by the agreement between the World Trade Organisation and the United Kingdom, and we do not wish to put an important trade agreement into jeopardy by attempting to meddle with them.

However, I have a couple of questions regarding the functioning of the schedule and the bureaucratic process that goes with amending the hard numbers in the Bill, as their real-terms value shifts in the dynamic world before us. First, does the Minister consider the mechanisms in place with the World Trade Organisation and in the Bill are sufficient to account for the current high inflation levels? The World Trade Organisation’s revised agreement on Government procurement, published in 2012, defines the current mechanism to deal with currency shifts. It states:

“The conversion rates will be the average of the daily values of the respective national currency in terms of the SDR over the two-year period preceding 1 October or 1 November of the year prior to the thresholds in national currency becoming effective which will be from 1 January...Thresholds expressed in national currencies will be fixed for two years, i.e. calendar years for all Parties except Israel and Japan”.

Having joined the GPA on 1 January 2022, we will have our threshold set at the value measured at that time until 1 January 2024. Does the Minister not see significant problems arising from having threshold levels based on the value of the pound at that time?

In December 2022, the Office for National Statistics found that inflation rose by 9.2%. If that trend is followed when the data from 2023 is released, the threshold values will be nearly 10% lower in real terms than the thresholds agreed when we joined the GPA. That is a significant amount of money, and it could draw in many contracts over the next year that have simply been the victim of weak economic management by the Conservative party.

Although there may be benefits to having extra scrutiny of more contracts, it should not happen by accident as a result of high inflation. Nor should it mean that a significant amount of contracts will be flung into scrutiny this year, then out of scrutiny on 1 January next year. I hope the Minister recognises that that creates inconsistency for businesses and procurement managers alike. Will the Minister inform the House whether steps are being taken at the WTO to assess the impact of inflation on the thresholds? What is his assessment of the impact of inflation on the rollercoaster workload of those responsible for near-threshold contracts?

Schedule 2 sets out contracts that are excluded from the definition of a “public contract” and the provisions that apply to public contracts. I understand the need for excluded contracts and do not object to any of the listed justifications for excluding contracts from the Bill. We cannot expect areas such as the intelligence services and particularly sensitive national security matters to follow all parts of an Act relating to public services. It is right for sensible and proportionate exemptions to help make procurement efficient, save people millions and run the services that we desperately need.

One such exemption is the horizontal and vertical arrangements that form paragraphs 2 and 3 of schedule 2. Those paragraphs carry over provisions from regulation 12 of the Public Contracts Regulations 2015. Vertical and horizontal arrangements are often used by local authorities to save public money. The vertical arrangements exemption, also known as the Teckal exemption, enables the award of contracts to entities that, although separate entities, are de facto in-house to the contracting authorities. The horizontal arrangements exemption, known as the Hamburg exemption, allows public authorities to co-operate to deliver services collectively.

Taken together, such arrangements give local authorities the tools to enter agreements to share services and achieve savings through economies of scale, and those savings are significant. The Minister highlighted the LGA, whose research shows that such agreements saved the public nearly £200 million in 2018-19. When we face a cost of living crisis and families are choosing between eating and putting on the heating, it is critical that we are as efficient as possible in how we run procurement. It is critical that we do not hinder innovative agreements that help councils, which have had their budgets slashed over the past decade, in saving the money they need to deliver services such as social care.

As the Bill stands, however, there is real concern that it will hinder the use of horizontal and vertical agreements within local authorities. Paragraph 1(2) of schedule 2 stipulates that

“a contract is not an exempted contract if…the goods, services or works representing the main purpose of the contract could reasonably be supplied under a separate contract”.

Groups such as the LGA have highlighted the fact that many contracts that fall under the vertical or horizontal arrangements can be supplied by a separate contract:

“It will often be the case that public services, whether front-line or back-office, could ‘reasonably be supplied’ by a provider that is not a public entity. As a result, the legislation can be interpreted as requiring the public sector to have to engage the market, even for arrangements wholly within the public sector”.

If enacted, the new wording could therefore close down models of collaboration and efficient service delivery that save public money.

Sub-paragraph 1(2)(a) of schedule 2 also opens up a new avenue of legal challenge against the public sector. From the words of Baroness Neville-Rolfe on Report in the other place, I understand that the provision is necessary to avoid a loophole when mixed contracts are inappropriately excluded. I am therefore pleased that the Government have tabled amendments 85 and 86, and I know that the LGA has worked hard with the Government to try to fix this loophole. However, I hope the Minister keeps up engagement with the LGA to ensure that the amendments fix the problem and do not create unintended threats to the existence of horizontal and vertical agreements.

[Alex Burghart]

On the hon. Lady’s two points, she is absolutely right that the mechanism that exists in our WTO arrangement is biennial. As I said, the next upgrade, relative to inflation, is in January 2024. There is nothing we can do about the fact that the updates are biennial—it is part of the agreement, and we have obligations internationally.

The hon. Lady is right that the high rate of inflation—which we are experiencing as a result of Putin’s dreadful war in Ukraine and the end of covid, and which is common to many western democracies at the moment—will make some previously below-threshold contracts into above-threshold contracts. There are pros and cons to that. It means that we will have a degree of extra competition that we would not have had before, but we will see a re-correction in what will now be less than 12 months.

[Florence Eshalomi]

Does the Minister agree on the inconsistency that this will bring for procurement managers, especially when we are proposing this legislation to cut some of the red tape and burden on those same procurement managers?

[Alex Burghart]

Obviously, some contracts will, as I said, be brought above threshold, and those contracts will need to be conducted in accordance with the law. However, as I said to the hon. Lady, that is something that all countries that are signatories to the WTO and that are experiencing inflation will find is happening. In some instances, it will also mean that there is better competition for contracts, which could result in lower costs to the public purse, so it is not all bad.

On mixed contracts, the hon. Lady is absolutely right. The work that my hon. Friend Baroness Neville-Rolfe did in the Lords with the LGA means that we have closed the loophole, and that is to the strength of the Bill.

Question put and agreed to. 

Clause 3 accordingly ordered to stand part of the Bill. 

Schedule 1 agreed to. 

Schedule 2

Exempted contracts

Amendments made: 85, in schedule 2, page 84, line 11, leave out from “in” to end of line 17 and insert—

“this Part of this Schedule.”

This amendment would ensure that contracts within the new Part 1 of Schedule 2 (which will comprise paragraphs 2, 3, 25, 31 and 32) are always exempted from being public contracts.

Amendment 86, in schedule 2, page 85, line 39, at end insert—

“Part 2

Subject-matter exempted contracts

General

3A (1) A contract is an exempted contract if it is—

(a) a contract of a kind listed in this Part of this Schedule;

(b) a framework for the future award of contracts only of a kind listed in this Part of this Schedule.

(2) But a Part 2-only contract is not an exempted contract if, on award of the contract, a contracting authority considers that—

(a) the goods, services or works representing the main purpose of the contract could reasonably be supplied under a separate contract, and

(b) that contract would not be a contract of a kind listed in this Part of this Schedule.

(3) In considering whether goods, services or works could reasonably be supplied under a separate contract, a contracting authority may, for example, have regard to the practical and financial consequences of awarding more than one contract.

(4) In this paragraph ‘Part 2-only contract’ means a contract of a kind listed in this Part of this Schedule that is not of a kind listed in Part 1 of this Schedule.”—(Alex Burghart.)

This amendment would apply the exception previously applied to all contracts listed in Schedule 2 to those listed only in Part 2 of Schedule 2, ensure it operates by reference to the opinion of a contracting authority, and clarify that the authority may have regard to practical and financial consequences.

Ordered,

That paragraph 25 of Schedule 2 be transferred to the end of line 39 on page 85.—(Alex Burghart.)

This is a motion to move paragraph 25 of Schedule 2 (defence and security contracts with governments) to the new Part 1 of Schedule 2 to ensure such contracts are always exempted from being public contracts.

Ordered,

That paragraphs 31 and 32 of Schedule 2 be transferred to the end of line 39 on page 85.—(Alex Burghart.)

This is a motion to move paragraphs 31 and 32 of Schedule 2 (utilities contracts with affiliates and joint ventures) to the new Part 1 of Schedule 2 to ensure such contracts are always exempted from being public contracts.

Schedule 2, as amended, agreed to.

Clause 4

Valuation of contracts

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to consider the following:

That schedule 3 be the Third schedule to the Bill.

Clause 5 stand part.

[Alex Burghart]

Clause 4 and schedule 3 are fundamentally interrelated. Clause 4 requires contracting authorities to estimate the value of contracts in accordance with a simple methodology set out in schedule 3, in order to determine whether the contract is above or below threshold and consequently what relevant rules need to be followed. It also includes an anti-avoidance mechanism that makes it unlawful to exercise any discretion in valuing a contract with a view to avoiding the effects of this legislation.

Schedule 3 contains the methodology that clause 3 requires contracting authorities to follow when they estimate the value of contracts. As well as the general rules in paragraph 1 of schedule 3, there are also special rules for frameworks in paragraph 2 and concessions in paragraph 3. The anti-avoidance provision in paragraph 4 is designed to ensure that contracting authorities do not artificially subdivide procurements to evade the rules. There is also a new rule for how to proceed when an estimate is not possible; in such circumstances, contracting authorities must treat the contract as above threshold.

In general terms, the long-standing mechanism in existing regulations works well, so the Bill proposes a similar mechanism, albeit with some adjustments to take advantage of opportunities for simplification and reduction of regulation and some inevitable structural differences as we move from one style of drafting to another.

In clause 5, as there are different thresholds for different types of contract, it is important that the rules adequately address the inevitable situations our contracting authorities will face, such as where a contract contains multiple elements that are subject to different thresholds—that is, a mixed contract. The existing regulatory environment provides a mechanism, across four different regulatory schemes, that allows authorities the flexibility to separate elements into separate contracts, or to mix the elements into a single contract, subject to certain safeguards to prevent rule avoidance.

However, those rules comprise around 14 pages of legislation, are somewhat complicated and can appear repetitive due to their need to address the multifarious combinations of elements within and spanning each regime. Thankfully, the harmonisation approach taken in the Bill means these complicated and seemingly repetitive provisions can be streamlined and simplified, while continuing to provide the necessary flexibility and safeguards against rule avoidance.

Clause 5 provides a safeguard to ensure that authorities do not mix above-threshold and below-threshold contracts purely for the purposes of avoiding the rules. Of course, separate elements can always be procured separately, and mixed contracts with elements that are properly inseparable should be allowed. But the basic safeguard remains that if separation is reasonably possible, but a contracting authority chooses not to separate, a mixed contract containing both above and below-threshold elements must be treated as above-threshold and therefore in scope of the legislation. When determining whether separation is reasonably possible, the practical and financial consequences of awarding more than one contract can be taken into consideration.

[Florence Eshalomi]

I thank the Minister for his explanation of clause 4 and schedule 3, which relate to the estimated value of the contracts, and are both relatively short and simple parts of the Bill. However, the importance of a value estimation is critical to the Bill and the management of procurement. That particularly relates to above-threshold contracts, regulated below-threshold contracts and the application of key performance indicators, as well as the publication of high-value contracts. Given the importance of that estimation, it is critical that contracting authorities get it right and that similar contracts do not end up with widely different values as a result of the calculation values. I would like the Minister to outline the support the Government are giving to those managing procurement within contracting authorities, so that the figures are correct. I have no doubt that such work has been done, but I would welcome an outlining of it.

I welcome the clarity of paragraph 4 of schedule 3 on anti-avoidance. It is critical that all contracts should be scrutinised under this legislation and that there should be no attempt through inventive accounting to avoid them coming under the provisions of the legislation.

I would like clarity on paragraph 5 of schedule 3, which states:

“If a contracting authority is unable to estimate the value of a contract in accordance with this Schedule (for example because the duration of the contract is unknown), the authority is to be treated as having estimated the value of the contract as an amount of more than the threshold amount for the type of contract.”

While it makes sense for contracts with uncertain value to be treated as having above the threshold amount, I have a question on how that applies to the cut-off value of £5 million for key performance indicators and the publication of contracts. Obviously, we do not want every contract without an estimated value to be covered by measures designed for larger contracts. But, similarly, there will be contracts where the value will likely exceed the £5 million currently set as the limit, even when their value cannot be estimated by the clause. Can the Minister inform me whether the clause covers the higher £5 million cut-off and what steps are being taken to ensure that the right level of scrutiny is applied when the value of contracts cannot be estimated?

[Alex Burghart]

As I said a few moments ago, the group we are discussing is in part about making sure that we do not create another loophole where, in a mixed contract, it is possible for a contracting authority to go for a below-threshold requirement because one part of the contract is covered by that. As we discussed in the previous group, the measure is intended to make sure that we are not creating an opportunity for people to play the system.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Schedule 3 agreed to.

Clause 5 ordered to stand part of the Bill.

Clause 6

Utilities Contracts

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to consider that schedule 4 be the Fourth schedule to the Bill.

[Alex Burghart]

Clause 6 explains that a utilities contract is a contract for the supply of goods, services or works wholly or mainly for the purpose of a utility activity. Utility activities are set out in schedule 4, but do not include activities that are carried out wholly outside the UK. In the case of private utilities, they include only activities carried out where a private utility has been granted a special or exclusive right.

A special or exclusive right exists where a private utility has been granted a right under a statutory, regulatory or administrative provision that has the effect of substantially creating a monopoly situation that would limit competition. A right is not special or exclusive if it is granted following a competitive tendering procedure under the Bill or otherwise on the basis of a transparent procedure and non-discriminatory criteria.

The utility activities set out in part 1 of schedule 4 cover the water, energy and transport sectors. Part 2 of schedule 4 lists specific activities that are not utility activities. An appropriate authority may make regulations to add or remove activities from part 2 of schedule 4. However, activities can be added to part 2 only where there is fair and effective competition in the relevant market and entry to that market is unrestricted.

Schedule 4 sets out the scope of utilities activities. This largely mirrors the coverage of the existing domestic regime and reflects our commitments in trade agreements such as the WTO Government procurement agreement.

[Florence Eshalomi]

Clause 6 and schedule 4 relate to the procurement of utilities, covering the scope of the Utilities Contracts Regulations 2016. Historically, the procurement of utilities as defined in schedule 4 has run slightly differently from general procurement. For example, the value at which a contract passes the thresholds in schedule 1 is £426,955 for general utilities contracts, as opposed to £138,760 for central Government authorities and £213,477 for sub-central Government authorities.

I thank the Minister for explaining the mechanisms in place specifically for utilities contracts. I do not disagree with the rationale behind the systematic differences between how utilities contracts are awarded and managed and how general contracts are awarded. Following the publication of the Green Paper, the Government have responded to the sector’s concerns that the proposed system would be too onerous compared with the Utilities Contracts Regulations 2016. However, I do not believe that the measures in the Bill should subtract from the significant problems that need to be addressed in the utilities sector.

In particular, we have seen the rail sector have deeply troubling issues among some contracted-out services in the past months, and it is vital that we manage contracts in a way that will help to mitigate those risks. For those of us who come from an Italian background, the word “avanti” means “to come in”, but I think it is fair to say that the word “Avanti” will see my hon. Friend the Member for Birkenhead and many others roll their eyes in despair. The fact is that too many of Avanti’s trains have not, in fact, been coming into stations, with many cancellations and packed trains becoming a sad norm for huge swathes of the country.

Those on Avanti are not the only ones struggling. TransPennine Express, which connects places such as Grimsby, Doncaster, Sheffield and Liverpool, has also seen its performance struggle significantly. That is despite reports in The Telegraph that shareholders are due to earn a share of £75 million. For customers who turn up for their trains, day in and day out—many of whom have annual season tickets costing thousands of pounds—to see shareholders due to earn a share of that £75 million is a slap in the face. That also happened during the pandemic, when a number of trains up and down the country were cancelled, yet shareholders were again in line to pocket big payouts.

We have also seen franchises such as the east coast main line and Northern fall to the operator of last resort following the termination of the previous operator’s contract. The fact is that the operation of train contracts in this country is simply not fit for purpose. Even the Prime Minister cannot deny the problems, saying at Prime Minister’s Question Time on 30 November 2022:

“My right hon. Friend is absolutely right about the unacceptable deterioration in the quality of Avanti’s service.”—[Official Report, 30 November 2022; Vol. 723, c. 898.]

Despite the criticism from the Prime Minister, the Government went on to award Avanti with a contract extension until 1 April 2023. That beggars belief.

My hon. Friend the Member for Lancaster and Fleetwood (Cat Smith) put it best when she said:

“By giving Avanti this six-month contract extension, after months of failure and rail chaos, this Government are frankly rewarding that failure. Avanti promised to improve services back in September, and instead it has gone and cut services, introduced this emergency timetable and almost entirely stopped selling tickets online.”

I remember trying to book tickets for annual conference last year; I kept going online and refreshing the page. I stopped using the laptop and went on to the iPad, thinking it was maybe the laptop that had problems. I stopped using the iPad and went on to my phone, thinking it was the iPad that had problems. But the tickets were not for sale; they came on sale a day before we were all due to travel to Liverpool. That mad rush at the whim of the train operators, effectively holding people to ransom, is frankly unacceptable.

My hon. Friend continued:

“The provision of reliable train services is essential for the economic growth and prosperity of more than half the UK’s population.”—[Official Report, 25 October 2022; Vol. 721, c. 160.]

At this time, we are hoping to see more people leave their cars at home and use public transport so that we tackle the really serious climate emergency. However, the fact that these companies are being awarded contracts yet are failing to deliver is another way in which the Government are not taking the climate emergency seriously.

Will the Minister provide clarification on the metrics that he will use to assess improvements or, indeed, failure, given that the bar is currently set so low? It is clear that the west coast franchise has been fundamentally mismanaged by Avanti. It may be beyond the Bill’s scope to completely fix the franchising mess in this country, but it is critical that we create a culture of procurement that is carried out in a way that restores public trust and offers fair treatment to everybody across the country.

--- Later in debate ---

[Florence Eshalomi]

Thank you, Mr Mundell, for your guidance. I agree with the hon. Lady that if we want to ensure that all sectors of our economy recover after the pandemic, it is important that people can get to those places.

I hope the Minister will work with the Department for Transport in implementing these regulations to ensure that proper levels of security and resources are in the Bill. Hopefully, that will restore trust in our rail sector.

[Alex Burghart]

Thank you for your guidance on digressions, Mr Mundell. As the hon. Member for Vauxhall is aware, rail is not dealt with in the Bill. Schedule 2(17) states that public passenger transport services are exempt and will continue to be regulated by other means, but I believe that Transport questions are coming up shortly, so she will have the opportunity to raise her concerns with the Secretary of State.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Schedule 4 agreed to.

Clause 7

Defence and security contracts

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 7 defines “defence and security contract”, which is used in certain clauses and schedules to make specific provision for such contracts. The definition primarily covers contracts currently within the scope of the Defence and Security Public Contracts Regulations 2011, but it also includes other contracts set out in subsection(1)(g), where the defence and security provisions in the Bill are to apply.

The clause also defines a defence authority contract, which is a defence and security contract entered into by a defence authority. A defence authority will be specified in regulations. It is a contracting authority that exercises its functions wholly and mainly for the purposes of defence or national security. The clause also sets out additional definitions for terms used in the definition of “defence and security contract”.

[Chris Evans (Islwyn) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Mundell. I look forward to working with the members of the Committee and the Clerks as we work our way through this important Bill.

It is also a pleasure to serve opposite the Minister, whom I count as a personal friend. We often exchange text messages in the early hours of a Sunday morning or late on a Saturday night—I do not want anybody reading anything into that, but we are both huge boxing fans, and we are usually debating the merits of the latest big fight. The last time we faced each other, we debated the merits of Lennox Lewis, the greatest British fighter of all time. I think I won that one, but let us see how we go today.

Clause 7 sets out definitions for defence and security contracts—in particular, for the supply of a range of contracts on military equipment, sensitive equipment, logistics services, goods, services or works necessary for the development, production, maintenance or decommissioning of equipment and work that is relevant to the country’s readiness for action and the security of the armed forces. Those definitions are crucial, because defence procurement is one of the most important activities undertaken by the Government.

The Ministry of Defence is the fifth largest spender on procurement in central Government. In 2019-20, it spent £15.9 billion on procurement, and since the pandemic, that has inevitably increased. One of the key functions of a state is to defend itself, and for it to do that, we must ensure that our armed forces have the equipment they need. Our national security, our ability to defend ourselves as a nation and the lives and safety of our troops rely in part on procuring the best equipment. As a country, we have always taken that duty to our armed forces seriously, but at times, tragically, we have not reached the level they deserve. I hope that in this Committee we can work together to improve the procurement system with the shared goal of ensuring that our forces get the equipment they deserve.

Promoting public safety should be the priority of any Government, and defence and security contracts are at the centre of that principle. It is therefore crucial that we get it right. The clause speaks to the procurement of not just the supply of military equipment, but the goods, services or works necessary for the development, production, maintenance or decommissioning of such equipment.

For my sins, between 2015 and 2019, I served on the Public Accounts Committee, and I remember some very uncomfortable hearings with some—shall we say—reticent Ministers who had to explain a lot of mistakes. If there is one thing I learned, it is this: if we do not get contracts absolutely right, it is not just a waste of taxpayers’ money; it puts our safety at risk.

I know you said we should not digress from the clause, Mr Mundell, but I want to use as an example the contract for the decommissioning of the Magnox nuclear reactors. The Nuclear Decommissioning Authority failed to understand the scale and complexity of the work needed, and by the time the contract was terminated, the cost to the taxpayer, according to the National Audit Office, was £122 million. I am sad to say that that is not an isolated case—I could be here all day talking about all sorts of examples. I raise this because it is so important that procurement is undertaken with proper care and consideration, and unfortunately there are too many examples of that just not happening.

--- Later in debate ---

[Kirsty Blackman]

I am happy to have a conversation with the hon. Gentleman afterwards and ensure he has the contact details for the supplier development programme, so that it can lay out some of its concerns to him. Hopefully, he can similarly provide a gentle push in the background to ensure that everybody—both the people looking to contract and the contracting authorities looking to have the best possible contract and tender applications made—is getting the best possible outcome from this scenario.

[Alex Burghart]

It is a pleasure to be opposite my friend on the Opposition Front Bench, the hon. Member for Islwyn. I am sorry to say that such was the scale of his knockout defeat in that debate that it appears to have blurred his memory—we established without controversy that, as I defended, Lennox Lewis was the greatest British fighter of all time.

To the hon. Gentleman’s point, we certainly agree that it is absolutely important to get these contracts right. The spirit running through the Bill is to have a streamlined process that makes it easier for everybody to understand their opportunities and responsibilities. On the point made by both the hon. Gentleman and the hon. Member for Aberdeen North, we will see as we go through the Bill that there are many opportunities through transparency and clauses put in to support SMEs to enable British businesses of different sizes to be able to avail themselves of opportunities in procurement, generally, but also in defence. In that spirit, I look forward to having specific conversations with the hon. Gentleman on those clauses as we progress.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Julie Marson.)

Public Procurement Processes

Alex Burghart Excerpts

Wednesday 25th January 2023 Westminster Hall

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

It is a pleasure to serve under your chairwomanship for the first time, Ms McVey.

I congratulate the hon. Member for Birkenhead (Mick Whitley) on securing the debate. As the Opposition spokesperson, the hon. Member for Vauxhall (Florence Eshalomi), has already said, it is nice to have the opportunity to debate the issues with the hon. Gentleman again. I am looking forward to the next three weeks in Committee, discussing the Procurement Bill with colleagues from all parties, and to the Report stage that will follow. It is right that we debate these issues thoroughly. The Bill is a landmark piece of legislation that the Government believe will bring real benefits to public authorities, public services and ultimately to the taxpayer. These are things to celebrate.

The hon. Member for Birkenhead’s constituents voted, like mine, to leave the European Union in 2016, and the Bill is one of the landmark pieces of legislation that enables us to take advantage of freedoms that we simply did not have when we were in the EU. The response to the public consultation on the Bill showed the strength of feeling among public authorities and suppliers for change. I am pleased to say that we have developed a sophisticated piece of legislation that is rising up to meet the asks of us made by those who responded to the consultation.

We have about £300 billion of public procurement in this country. That represents a huge amount of taxpayers’ money—public money—that we think can be spent better for people at all levels. We see a chance to reduce paperwork, streamline processes, improve opportunities for SMEs, which I know is close to the hon. Member for Birkenhead’s heart and is close to mine because it is the backbone of the economy in my part of the world, and to introduce new ways of viewing procurement.

As Members will have heard me say on Second Reading, it is a shift from MEAT to MAT—from the most economically advantageous tender to the most advantageous tender. That gives public authorities a freer hand to make an assessment about whether procurement decisions will create jobs in their area, benefit the environment or create any other forms of social good that are not purely economically measured. We think this is a major step forward, and I hope he agrees.

I am afraid I cannot speak in detail about the ferry contract in the hon. Gentleman’s area, but the work we are doing on the Procurement Bill is intended to make it easier for procuring authorities to make decisions that are not based purely on money. It will enable them to look at local need and things such as jobs.

Shipbuilding is covered by our World Trade Organisation commitments, so we would struggle to confine shipbuilding contracts to British-only suppliers unless we left the WTO. That would, of course, deprive British companies of the opportunity to take advantage of the procurement agreements within that framework, which are worth about £1.2 trillion. I cannot comment on the exact specifics of the hon. Gentleman’s case in Merseyside, but there are limits to what we can do within the WTO.

[Mick Whitley]

I think it was three Prime Ministers ago when the Prime Minister came to Birkenhead and announced the 50-year plan for shipping. The Ministry of Defence awarded a contract to build fleet supply boats, and colleagues from Northern Ireland and Devon won it, but as soon as they did that there was a debate in the House about what kind of company Navantia was. It was registered in the UK earlier this year and its two directors come from Spain, and the majority of the work on the fleet supply boats will get done in Cadiz. That is public money; that is what we are talking about. We are talking about levelling up the left-behind towns, but that has been totally ignored.

[Alex Burghart]

If the hon. Gentleman is talking about fleet solid support ships, they are built to a British design. There is a huge amount of construction in Belfast and Appledore—the final assembly is completed in Belfast—bringing shipbuilding back to Northern Ireland. This is an enormous opportunity for levelling up and bringing jobs into exactly the sort of shipyards around the country that I am sure the hon. Gentleman wants to see benefit, so I do not quite recognise all the allegations he has made.

[Peter Dowd]

Will the Minister give way?

[Alex Burghart]

I am happy to give way to my old adversary from Bootle.

[Peter Dowd]

One of the issues that I am trying to tease out is that even when we were in the European Union—I know this, the Minister knows this, and so does everybody in this Chamber—those countries had an imaginative approach to public procurement, and we did not. Even under those rules, we had a less imaginative approach. Even under the provisions that the Government are bringing forward, they cannot move away from the anal retention and enable us to take a much more imaginative approach to procurement. What in the Bill is more imaginative and will enable us to do what we want and we were promised when we were coming out of Europe?

[Alex Burghart]

I blush to quote the hon. Gentleman back at him, but there is a lot less of the form of retention that he describes in this Bill than he would have found in the existing European rules. As he heard me say to the hon. Member for Birkenhead, the system is moving from MEAT to MAT. This is a broader understanding of what public authorities can choose to do when they procure goods and services, and that is a really good thing.

The hon. Members for Bootle (Peter Dowd) and for Birkenhead talked about buying British. This Bill will help, but we start from a strong position: between 2016 and 2019, 98% of contracts given out by public authorities in the UK went to British firms. In the Bill, we are making it easier for small and medium-sized enterprises, the majority of which are likely to be in the vicinity of public body procuring, to access contracts from public authorities. We are making it much more likely that there will be more jobs and more opportunities for growing businesses. That is very exciting and one of the most appealing things about the Bill. My noble Friend Baroness Neville-Rolfe wrote a good piece for The Times showing how we are removing barriers to engagement for SMEs in a meaningful way. She has vast experience in business and was able to shine a light on that.

Let me turn to the hon. Member for Hemsworth (Jon Trickett), who talked about insourcing and outsourcing, and the need for an ideological shift. I hope he will not mind me reminding the House that he entered the Commons in 1996 and supported one of the great outsourcing Governments—that of Tony Blair and Gordon Brown. It is so interesting to see the hon. Gentleman’s ideological shift since that time.

I gently remind the hon. Gentleman that public authorities absolutely have the freedom to insource if they think that is the best thing to do. The important thing is that they have the choice, and I hope he would not want to deprive local authorities and local councils of that choice. Maybe he would.

[Florence Eshalomi]

On that particular point, does the Minister recognise the issue highlighted by my hon. Friend the Member for Hemsworth (Jon Trickett), which is that a number of our local councils and public bodies have seen their funding cut over the past 13 years? The procurement teams that would be looking at bringing contracts back in house have shrunk, and a number of councils face difficult decisions—do they fund social workers or fund procurement officers? It is not as simple as saying councils have the freedom to insource.

[Alex Burghart]

I hesitate to remind the hon. Lady why funding for local authorities was reduced, but it had something to do with the behaviour of the Labour Government up to 2010. We all remember the letter that Labour’s Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), left for his Lib Dem successor.

The fact of the matter is that we have highly capable local authorities across the country that manage public contracts very well and which have worked with us in the construction of the Bill to ensure they have a legal framework that helps them make the decisions they want. I have no desire at all to talk them down. I have seen their capabilities up close, and I know that they are looking forward to taking advantage of the powers they will get from the Bill.

I would also very, very gently say this to the hon. Member for Hemsworth. I know that this is political knockabout, but the statements he made about PPE procurement could have been taken to insinuate that Ministers made the awarding decisions. That is absolutely not the case. Those decisions—

[Jon Trickett]

Says you.

[Alex Burghart]

The hon. Gentleman heckles me with a smile on his face, but the fact is that those decisions were made by highly capable and competent civil servants whose decisions have been upheld in court. It is wrong to suggest that they were in any way corrupt when they were trying to serve the country at a time of utter crisis in order to get, as every Member of the House wanted, as much PPE as possible when the NHS needed it most. I have listened on a number of occasions to Opposition Members speaking in such a way that suggests that Ministers handed out the contracts. That is not the case, and it would be much better for the public discourse if Opposition Members did not suggest to members of the public that that had been so.

Let me move on to the remarks made by the hon. Member for Strangford (Jim Shannon). It has been a pleasure to be able to work on the Bill with people in Northern Ireland, and the Bill is stronger as a result. We look forward to businesses of all sizes in England and Northern Ireland, and in Wales, benefiting from the new procurement legislation.

The hon. Member for Arfon (Hywel Williams) chastised the Welsh Government for allowing Westminster to legislate for them. Me and my officials have had the most productive working with the Welsh Government and these mischaracterisations imply that this is Westminster telling Wales what to do. This has been a partnership between Westminster and Cardiff and between Westminster and Belfast. It is a wonderful example of nations working together.

[Hywel Williams]

The Minister will know better than I that the Welsh Government are yet to recommend that the Senedd grants consent to the Procurement Bill due to two outstanding issues. The first is the presence of concurrent, rather than concurrent-plus powers. Concurrent- plus powers mean that both legislatures give their consent. The second is the lack of commencement powers for Welsh Ministers. Will the Minister give me an update on any progress on those two points?

[Alex Burghart]

The hon. Gentleman will get a final answer in Committee, but I can tell him that we have had nothing but productive and courteous conversations with our counterparts. I believe that we are going to end up in a mutually beneficial place, which is great news for people in Wales, England and Northern Ireland. The hon. Gentleman can join us in Committee if he wishes to hear the final read out on that. I look forward to seeing him there.

The hon. Member for Strangford is right: Northern Ireland must be included in these important opportunities. We are sad that our colleagues in Scotland have, unlike counterparts in Wales and Northern Ireland, not chosen to be part of the Procurement Bill. They are entitled to make that decision, but it is a shame. It adds a layer of complexity within the British Isles that need not be there, but c’est la vie.

The hon. Member for Aberdeen North (Kirsty Blackman) asked about trade deals and implementation. Trade deals are a reserved area. It is important that they are able to be implemented because otherwise we might find that the UK was in breach of an international agreement and that would be wrong. Yesterday, we made an amendment following discussions with the Scottish Government to narrow powers in this area and we will continue to work closely with them on implementation and, likewise, I look forward to discussing it with her in Committee; I do believe it will be her in Committee.

[Kirsty Blackman]

It will indeed.

[Alex Burghart]

Hooray.

[Kirsty Blackman]

I thank the Minister. I have not seen that amendment, so I will have a good look at it. I appreciate that he has taken some action.

[Alex Burghart]

Super. I look forward to debating that further in the weeks ahead.

The Opposition spokesperson, the hon. Member for Vauxhall, rightly highlighted that debarment is a crucial area of the Bill. In the past few days, we have tabled new amendments on debarment, which strengthen the regime. I am not going to go into all the details now because there is ample opportunity in the days ahead, but she is right to draw attention to it. On subcontractors and 30-day payments, there are implied payment terms within the Bill. Even if it is not a subcontract, the SME can demand this and raise it. Again, we could go into further details, but we have thought through the point she raised.

In conclusion, this is a great opportunity. We have come a long way from the starting point that we found ourselves in when we were in the EU. We are starting to make British procurement rules that will benefit British taxpayers, British employees, British public authorities and British suppliers. That is a good thing for all of us.

[Esther McVey (in the Chair)]

I call Mick Whitley to wind up.

House of Lords Reform

Alex Burghart Excerpts

Tuesday 10th January 2023 Westminster Hall

[Patrick Grady]

That is the point; the pattern continues. We keep talking about but never actually implementing any meaningful or wholesale reform. The report does at least recognise that we cannot tackle one part of the system without tackling all of it. For all the fuss and media fanfare, it will just sit on the shelf and gather dust, as my hon. Friend suggests. Reform of the Lords and of the wider constitution becomes a second-order or a second-term issue, and the Executive can get on quietly putting to use the accumulated powers that they enjoy under the status quo.

That probably helps to explain, at least in part, the current Government’s position. They have said in various contexts that reform of the Lords is “not a priority”, despite the Conservative manifesto saying that the role of the House of Lords should be “looked at”. But now, even the modest suggestion of a cap on numbers, endorsed, as I have said, by the House of Lords itself, is too radical. The Minister who is in his place told me on 8 December at Cabinet Office questions:

“The Government do not have a view on the upper limit of the House of Lords.”—[Official Report, 8 December 2022; Vol. 724, c. 510.]

So there we go. It is quite remarkable—to infinity and beyond, the House of Lords filled with Tory donors, cronies and time servers. I have maybe saved the Minister his entire summing-up because the position appears to be that constitutional perfection in the UK has been achieved, and nothing needs to change again. Indeed, his colleague, the leader of the Scottish Conservatives, seems to have said that he does not believe there should be any further devolution of power to the Scottish Parliament, either—now or in the future. Fortunately, it is not up to them to decide.

Those of us who support independence for Scotland are often accused of obsessing about the constitution. We are told that we should focus on the priorities of our constituents—the cost of living crisis, improving public services. I agree—

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

Now you are doing my summing-up speech.

[Patrick Grady]

The Minister might be interested to hear this, then. I certainly do agree that those are the key priorities for people, families, businesses and communities in Glasgow North and beyond, but to really address those priorities, we need to address the fundamental systems underneath. One way of putting it would be to say:

“While many of our immediate economic problems can be fixed by pursuing better policies, by stopping the race to the bottom in our economy, Britain needs change that runs much deeper—giving the people of Britain more power and control over our lives and the decisions that matter to us. Changing not just who governs us, but how we are governed, will address a system of government that the British people perceive is broken.”

Those are not my words. Those are the words of Gordon Brown in the introduction to his report on the UK’s future. They make the case that constitutional change is needed if we are to drive radical, social and economic change. The difficulty for the Labour party, as my hon. Friend the Member for Glasgow East (David Linden) has said, is that it has been promising that for 113 years, and for 13 of those years, starting in 1997, it had a chance to change it.

At the end of those 13 years, there was a certain amount of devolution across the UK, but there was still a first-past-the-post system that stoked division rather than built consensus, and a system that allowed an individual Prime Minister to appoint whoever they wanted to a seat in Parliament—and there were 92 legislators who still had a seat in Parliament because of who their parents were.

--- Later in debate ---

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

It is a pleasure to speak under your chairmanship today, Sir Gary.

I join others in congratulating the hon. Member for Glasgow North (Patrick Grady) on securing this very interesting debate. I often think that we do not spend enough time in the Commons debating our constitution in the broadest sense, although I know that the hon. Gentleman is more interested in the constitution in a narrower sense. If a party is a single-issue party, it is important for it to adhere to that single issue; otherwise, what is it? Nevertheless, it is genuinely interesting to hear what the SNP thinks about the House of Lords because, notwithstanding the fact that the party has a shadow Minister for the House of Lords, as I discovered today, we do not often hear its views on such broader constitutional issues.

That said, it is atheists musing on the divine, in that, like some sort of mystic panda, the SNP intends, as my hon. Friend the Member for Totnes (Anthony Mangnall) put it in his truly excellent speech, to “eat, shoot and leave”. Were SNP Members proposing long-standing major constitutional reform with the intention of living in that new constitutional structure, I would probably have slightly more time for their arguments, but alas it is not to be. We heard today a range of complaints and grievances about the House of Lords without any alternative proposal other than that there should be an independent Scotland. The SNP is entitled to hold that view, just as it is entitled not to engage with the House of Lords by having SNP Members of it.

I cannot help but think that after the 2014 referendum which, as the SNP acknowledged at the time, was a vote for a generation, it was somewhat churlish of the SNP not to join the current House of Lords, even if it disagreed with the structure and wished to see it reformed. That would have been a way of representing Scottish views in the United Kingdom, which people in that country voted to remain part of. Because the Union continues, I am proud to say, I encourage the SNP to rethink its position of—I was about to say “abstinence”, but that is the wrong word entirely—abstaining, or staying out of, the House of Lords.

Much as I disagree with the SNP’s views, I think that the Lords Chamber would be richer for the presence of SNP Members. I would like to see more people from more parts of the United Kingdom represented there. Would that it were not so, but a lot of people vote for the SNP, and it would be good if there were SNP expertise in the House of Lords to seek to influence legislation that would have a bearing on people in Scotland. But that is a decision for the SNP. I did not come into the House of Commons to give advice to the SNP.

My own experience of the House of Lords is rather different from that of the hon. Member for Glasgow North, who is grudgingly prepared to acknowledge that maybe one or two Lords have some expertise and something to say. As a Back Bencher and as a Minister, I have attended a large number of debates in the Lords, and I am always struck by how well informed they are and their courteous nature. It is acknowledged that people on the other side of the argument are worthy of respect, even if one disagrees with their views. I have also been struck by the fact that in that forum there is a great deal of highly positive soft diplomacy on legislation. As a Minister I have seen that. You hear and absorb the views of learned folk in the upper House and you start to wonder how and whether they should be reflected in policy.

When I was first elected to the Commons, I had a conversation with—I hope he does not mind my mentioning his name—Lord Young of Cookham. I asked how he was getting on as a Minister in the Lords and he said, “Well, it is a bit of a change from being a Minister in the Commons. In the Commons you get your briefing pack from your officials, you stand up and you can feel fairly confident that you’re on firm ground. When you stand up at the Dispatch Box in the Lords, five former Secretaries of State, three former heads of the civil service and a whole bunch of expertise from the wider world are all waiting to hold you to account.” That is a level of scrutiny of which we should be proud and that we should think twice about before seeking to remove. This is a good-natured debate, but we cannot just chuck away the life experience and professional experience of people we all know are making a positive contribution to legislation in our country.

[Kirsty Blackman]

The Minister is making a good case for a culture change in the House of Commons. There should be more listening to experts. When we consider the Procurement Bill, will he and his colleagues listen to the words of those giving evidence? Will he listen to their expertise and consider making changes? Or will the Bill come out with no amendment that any expert has put forward other than in the House of Lords?

[Alex Burghart]

We have already listened very closely to arguments made in the Lords, and we have already started to make policy improvements based on some of their recommendations. That does not mean that the Government will agree to all of the amendments that the Lords have made. The important thing is the debate, because iron sharpens iron. We can pretend that we will get similar expertise—as the Opposition spokesperson, the hon. Member for Putney (Fleur Anderson), said—from a democratically elected second House, but that simply is not true, for the reasons that my hon. Friend the Member for Totnes made clear.

There are a great many people in the Lords with huge experience, perhaps towards the end of their careers, who will not want to stand for democratic election. They will not want to put themselves through that and on the doorstep, and I have sympathy with them. I understand. It would be terribly sad if we lost those people from our legislature and if we did not have their expertise. Also, alongside that expertise, there is space for people in our legislature who are of no party affiliation. I know that the hon. Member for Glasgow North has a passionate, political viewpoint. He is a passionate member of his political party, but not everyone in the country is; not everyone in the world is. There are a great many sensible, intelligent people who have a lot to give our democracy, but who do not wish to stand for election under the flag of a particular party. If we were to move to a system of proportional representation, they would have to. There would be no independence in the Commons or the Lords. That, too, would make our Houses poorer and, I think, weaker.

The Government accept, as I think everybody here accepts, that our constitution evolves. It has been in a constant state of evolution for centuries. We are alive to the fact that we will always need to consider changes. The hon. Member for Ellesmere Port and Neston (Justin Madders) and the Opposition spokesperson spoke in favour of radical reform. Were a future Government to undertake that radical reform, it would bring major risks with it. There would not just be the loss of expertise, but a conflict of mandates, as described by the hon. Member for Blackley and Broughton (Graham Stringer), who is no longer in his place. It is very easy to brush that aside and pretend that we will deal with it later or that it does not matter. I can guarantee that in the event that we had a fully elected upper House, it would start to use its mandate against the mandate of the Commons from day one, and voters would not know how long the mandate in one House would last over the other. We would very likely find ourselves in a constant cycle of elections, rather than being in a position where one party or a coalition of parties could be elected for a term and deliver based on their mandate. Those are all risks that we as parliamentarians must be alive to and aware of.

I have greatly enjoyed the debate today. It is important that from time to time we engage in debate on these major issues.

[Patrick Grady]

rose—

[Alex Burghart]

The hon. Member for Glasgow North is about to sum up, but I will let him intervene.

[Patrick Grady]

The Minister said the constitution evolves. As a bare minimum, do the Government agree with the findings of the Lord Speaker’s Committee on the size of the House of Lords, which said in 2017 that there should be a cap on the total number and efforts to reduce from the current number?

[Alex Burghart]

I refer the hon. Gentleman to the answer I gave him just before Christmas. If people do not turn up, they do not get paid. If people turn up and are involved, why not have their expertise? The Government depend on a majority in the Commons on an elected mandate. If there are more people in the upper Chamber who are capable of bringing decent scrutiny to bear on Government legislation, I have no problem with that. As I was saying, I think it is very good that we get to debate these issues, but it is also important that we do not come at debates such as these pretending that there is a perfect system out there—that we pretend that what we are doing here is laughable, and that, in other countries, they have got it absolutely right. What I do know is that, in this country, we have a fine set-up in which there is one House with a democratically elected mandate, and another House whose job it is to scrutinise and which can advise, refine and, if necessary, delay. It is a system that I think has served us well, and I believe can serve us well in the future. That said, the Government are aware that there is always room for evolution and improvement.

[Sir Gary Streeter (in the Chair)]

Thank you. Patrick Grady will have the final word.

Procurement Bill [Lords]

Alex Burghart Excerpts

2nd reading
Monday 9th January 2023 Commons Chamber

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

I warmly welcome the new hon. Member for City of Chester (Samantha Dixon). I could not help but notice that the Chamber filled up slightly when she was speaking—almost as though she was more popular than the subject under debate today. I genuinely enjoyed her speech; as a former history teacher, the only thing I was disappointed not to hear mentioned was a beautiful silver penny from the early 10th century, which seems to show the walls of Chester. It was issued, we think, by Alfred the Great’s daughter—another great woman who represented her city.

The Bill before us is a major and exciting piece of post-Brexit legislation. It is an opportunity for this country to take back control of its procurement regime to the advantage of our businesses, our authorities, our public services and our country. I must at the outset say some words of thanks to Lord Agnew, who was instrumental in seeing this legislation drafted in the first place, to my right hon. Friend the Member for North East Somerset (Mr Rees-Mogg), who played a fundamental role in ensuring it was prepared for the statute books, and to Baroness Neville-Rolfe and Lord True, who took the Bill through in the other place.

Despite some of the remarks made by Opposition Members, I also thank the Opposition for their constructive stance towards this legislation. It is important that we get this right. Enormous opportunities are there to be taken from this £300 billion-worth of public procurement. We on the Government side of the House can very much see how those advantages will be made.

As I have said, the Bill will replace the current bureaucratic and process-driven EU regime for public procurement by creating a simpler and more flexible commercial system that better meets our country’s needs while remaining compliant with our international obligations.

[John Spellar]

Will the Minister give way?

[Alex Burghart]

Oh, I would be delighted to.

[John Spellar]

I know that the Minister has to talk about Brexit and all the rest of it to please those on his Back Benches, but surely the real problem is not in Brussels but in Whitehall, with Ministers who will not get a grip of Whitehall and behave like every other European country by backing our own industry.

[Alex Burghart]

If the right hon. Gentleman had witnessed the consultation that was held on the legislation, he would see that the problem very much was in Brussels. For a very long time now, authorities and businesses of all sizes in this country have been aware of the enormous limitations in the way in which EU procurement rules are set out. The Bill cuts through that.

[John Spellar]

No, it does not.

[Alex Burghart]

The right hon. Gentleman says that it does not, but the shadow spokeswoman, the right hon. Member for Ashton-under-Lyne (Angela Rayner), said at the start that it did and praised the fact that it was creating a single rulebook. This will make it easier for our authorities to procure decent services from people who will be able to provide better value for money and will be held to account better. I am very pleased that it is this Government who are bringing it forward.

Opening up public procurement to new entrants such as small businesses and social enterprises so that they can compete for public contracts is a major part of this work, as is embedding transparency throughout the commercial lifecycle so that the spending of taxpayers’ money can be properly scrutinised. The main benefits of the Bill have been reflected by hon. Members on both sides of the House, including my hon. Friend the Member for West Worcestershire (Harriett Baldwin). By delivering better value for money, supported by greater transparency and a bespoke approach to procurement, the Bill will provide greater flexibility for buyers to design their procurement process and create more opportunities to negotiate with suppliers. As my right hon. Friend the Member for North East Somerset said, that will drive better value for money.

As we slash red tape and drive innovation, more than 350 complicated and bureaucratic rules governing public spending in the EU will be removed. We are creating better and more sensible rules that will not only reduce costs for businesses in the public sector, but drive innovation. That will be at the heart of our work as we encourage authorities to publish pipelines that allow businesses of all sizes to prepare for contracts in new and interesting ways.

We will make it easier for people to do business with the public sector. The Bill will accelerate spending with small businesses. A new duty will require contracting authorities to consider SMEs, and will ensure that 30-day payment terms are made on a broader range of contracts.

We also intend to take tough action on underperforming suppliers. The Bill will put in place a new exclusions framework that will make it easier to exclude suppliers who have underperformed on other contracts. As has been mentioned a number of times, it will also create a new debarment register—accessible to all public sector organisations—that will list suppliers who must or may be excluded from contracts.

A number of hon. Members on both sides of the House have referred to the excellent work that has been done on the ProZorro service in Ukraine. I am pleased to be able to let the House know that Ukraine was on our advisory panel and has actually informed our work, and our single digital platform 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—better transparency; better for taxpayers.

[Nick Smith]

Will the Minister please tell us when his single digital platform will be ready for use by industry across our country?

[Alex Burghart]

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.

We are also strengthening exclusion grounds. The Bill toughens the rules to combat modern slavery by allowing suppliers to be excluded when there is evidence of that, accepting that in some jurisdictions it is unlikely that a supplier would ever face conviction. My hon. Friend the Member for Totnes (Anthony Mangnall) made some important points on that score. It is absolutely right that we should be able to debar suppliers who have engaged in such dastardly crimes. It is too soon, however, to say exactly which suppliers are going to be debarred, but he has read the legislation and can see what the potential is. We will consider suppliers according to a prioritisation policy. Once on the list, suppliers will stay on it for up to five years unless they can show that they no longer pose a risk—these are the self-cleaning clauses. Any contracts awarded during an investigation can be terminated if the supplier is debarred. Safeguards are built into the grounds to stop suppliers from renaming themselves. I am happy to talk about those.

[Alicia Kearns]

I thank my hon. Friend for meeting me earlier today. It was enormously appreciated and I thank him for his time. How does he plan to overcome the risk of playing whack-a-mole—business after business being involved and MPs and others being relied on to flag them up? Will the procurement unit be proactive or will we instead focus on components and vulnerable sectors to ensure that we have the protections we need?

[Alex Burghart]

My hon. Friend raises an excellent point, which I was happy to discuss with her earlier. Obviously, the issue is under active consideration. In her speech, she also referenced debarment. I reassure her that the debarment provisions allow for proactive investigations into any supplier or subcontractor and that cases will be selected by the Minister for the Cabinet Office. Selections of cases will be governed by a robust prioritisation policy, which we will set out in due course. The debarment list will be publicly available for all contracting authorities to consult, demonstrating how transparency is at the heart of the Bill.

Value for money is a core component of what we are seeking to achieve. I assure the hon. Member for Birkenhead (Mick Whitley) that buyers will be able to give weight to bids that create jobs and opportunities for communities in the delivery of a contract, supporting and levelling up our objectives. Now that we have left the EU, central Government buyers can reserve competitions for contracts below certain thresholds for suppliers in the UK and/or SMEs and social enterprises only.

I am pushed for time, Madam Deputy Speaker, so allow me to draw my remarks to a close. This key legislation has been made possible only through our having left the European Union. It comes at a time when we have a need for a new procurement policy in this country. I say to the right hon. Member for Ashton-under-Lyne, who made a number of claims about PPE and VIP lanes, that the Bill provides strong safeguards to preserve the integrity of procurement. Equal treatment obligations require that all suppliers participating in the procurement must be treated the same. Additionally, any conflicts of interest should be identified for anyone acting for, or who has an influence on a decision made by or on behalf of, the contracting authority in relation to the procurement. If a conflict of interest puts a supplier at an unfair advantage and if steps to mitigate that cannot prevent that advantage, the supplier must be excluded. Furthermore, the direct award provisions have clear and narrow parameters for use. They include a new obligation to publish a transparency notice before making a direct award and maintain obligations to publish contract details once awarded.

This Government are absolutely committed to integrity, transparency, value for money and delivering for the British people. This Bill will make a difference to our procuring authorities, to our public services and to our taxpayers. It is good for our authorities, our taxpayers and our local communities, and it is good for our country. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

PROCUREMENT BILL [LORDS] (PROGRAMME)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Procurement Bill [Lords]:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 23 February 2023.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming Committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

(7) Any other proceedings on the Bill may be programmed.—(Andrew Stephenson.)

Question agreed to.

PROCUREMENT BILL [LORDS] (MONEY)

King’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Procurement Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of:

(a) any expenditure incurred under or by virtue of the Act by a person holding office under His Majesty or by a government department; and

(b) any increase attributable to the Act in the sums payable under or by virtue of any other Act out of money so provided.—(Andrew Stephenson.)

Question agreed to.

SUPPORTED HOUSING (REGULATORY OVERSIGHT) BILL (MONEY)

King’s recommendation signified.

Resolved,

That, for the purposes of any Act resulting from the Supported Housing (Regulatory Oversight) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Andrew Stephenson.)

Government Transparency and Accountability

Alex Burghart Excerpts

Thursday 15th December 2022 Written Statements

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

My noble Friend the Minister of State (Baroness Neville-Rolfe) has today made the following written statement:

Since 2010, the Government have been at the forefront of opening up data to allow Parliament, the public and the media to hold public bodies to account. Such online transparency is crucial to delivering value for money, cutting waste and inefficiency, and ensuring every pound of taxpayers’ money is spent in the best possible way.

The Government will continue to look at how the range of information published by the Government can be improved and made as useful as possible to the public, press and Parliament. The following subject areas include documents and information that the Government are due to publish.

Routine transparency data on Ministers, special advisers and senior officials

Departments will today be publishing routine transparency data on Ministers’, special advisers’ and senior officials’ gifts, hospitality, travel and external meetings, for the period of July to September 2022. This data covers the returns for the Prime Minister, Government Chief Whip and Leaders of the House of Commons and the Lords, as well as the Cabinet Office.

Departments will also be publishing the business appointment rules advice summary for the same period.

List of ministerial responsibilities

The Government will today be publishing the list of ministerial responsibilities on gov.uk. Copies will also be deposited in the Libraries of both Houses. The list includes details of ministerial Departments, the Ministers within each Department, their portfolio responsibilities and private offices and the executive agencies within each Department.

Salaries of Members of His Majesty’s Government

The Government will today be updating the salaries of Members of His Majesty’s Government with information for the financial year 2022-2023 on gov.uk. This indicates the salaries to which Ministers are entitled and the actual salaries that they claim, along with supplementary information on ministerial salaries, allowances and payments on leaving office.

Cabinet Office annual report and accounts 2021-22

This annual report and accounts will also be laid before Parliament today. The publication includes the Cabinet Office’s audited financial statements for the year ended 31 March 2022 and a review of performance and governance arrangements. The annual report will be published on gov.uk.

Cabinet Office accounting officer system statement 2022

This publication is a single statement setting out all of the accountability relationships and processes within the Department. This update takes into account change since the previous version was published in 2020.1 have requested that a copy of the accounting officer system statement be deposited in the Libraries of both Houses. The publication will also be published on gov.uk.

Cabinet Office: Spend control data for July to September2022

Along with all Government Departments, in 2010 the Cabinet Office committed to publish quarterly data on its planned spending that has been subject to the Cabinet Office spend controls. The spend controls covered are digital and technology, commercial, property, advertising, marketing and communications, and contingent labour (as for equivalent figures published by other Departments). For the quarter covered, 12 separate items of the Cabinet Office’s own spending (with a total value of £734 million) were approved under the cross-Government Cabinet Office spending control.

Monthly workforce management information (September and October2022)

As standard, the Government are today publishing our monthly breakdown of workforce headcount and pay costs. This is a routine publication and will be published on gov.uk.

Public procurement review service—progress report 2021-22

The Government will today publish their annual progress report, detailing trends in issues raised to the public procurement review service. In this publication, we look to consider such trends and make recommendations on how to improve the service moving forwards. The report will be published, as usual, on gov.uk.

[HCWS449]