Public Procurement Processes

Debate between Alistair Carmichael and Mick Whitley

Wednesday 25th January 2023 Westminster Hall

[Mick Whitley]

I thank my hon. Friend for that intervention; I am just about to cover that point.

Only by including a social value calculation can we ensure that every contract is transparent, and that its impact on local communities, job creation, the standard of jobs and the local economy is taken into account and plays a key part in shaping the final decision. Its absence from the Bill is even more surprising given the noise the Cabinet Office made in response to the consultation on the original Green Paper, “Transforming Public Procurement”. The Cabinet Office wrote last December that social value

“can play a big role in contributing to the Government’s levelling-up goals.”

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

Social value is not restricted to these shores. The hon. Gentleman will be aware that China has a very prescriptive regime, particularly in relation to people in Xinjiang province. In this country, Hikvision produces CCTV equipment for councils. Does he agree that the Government need to be much more careful about allowing such companies into the UK market?

[Mick Whitley]

Yes, I do agree with the right hon. Gentleman.

In December 2020, the Cabinet Office published a social value model that said there should be a requirement on Government Departments to evaluate social value when awarding contracts, and not, as previously, just to consider it. Yet when it came to publishing the Procurement Bill, there were no explicit references to social value, so Labour MPs and peers have raised it as something that should be integral to the Bill and the public procurement process.

Another problem with the Procurement Bill as it stands is that it contains no provisions to ensure that bad employers are prevented from winning contracts. Far too many bad employers exist and far too many of them profit from public procurement contracts. A decent Procurement Bill can address that with construction projects nationally and by legislating to tie local government contracts to a clear and fair employment charter of the kind that already exists in the Liverpool city region.

Contracting authorities should be obliged to build into every contract that involves even a penny of public money a cast-iron guarantee that fair employment practices and the right to trade union recognition will be respected. There are other aspects of public procurement, such as strict conditions regarding the need to meet our climate targets and helping to regenerate our country through a green industrial revolution, but I wish to finish on a very important principle that must be embedded into the reform of public procurement: a watertight mechanism to put an end to cronyism.

The Bill hands more powers to Ministers without any meaningful safeguards to ensure that decisions will not be determined by favouritism at best and cronyism at worst. This is not an abstract issue: it is, sadly, a real problem that has led to major scandals. While the country was rocked by the curse of covid, a VIP lane was opened to enrich friends of Conservative Ministers and donors to their party coffers. Taxpayers’ money was doled out without any proper scrutiny. As a result, orders of personal protective equipment were handed out to companies that had no track record of producing or providing medical equipment. More than half the £1.7 billion paid by the Government to politically connected VIP companies to supply PPE in the pandemic was spent on equipment that has not been used, according to new figures.

UK Shipbuilding

Debate between Alistair Carmichael and Mick Whitley

Thursday 3rd March 2022 Commons Chamber

[Mick Whitley (Birkenhead) (Lab)]

It is great to speak to a packed House.

It is a great honour to be able to open this important debate about the future of UK shipbuilding. I am very glad to see the Minister in his place. I know from our previous encounters the depth of expertise and passion that he brings to this debate, and I look forward to hearing his contribution later. I also declare an interest. I am a long-standing member and former north-west regional secretary of Unite the union, which organises workers in the shipbuilding sector, including in my own constituency.

With the national shipbuilding strategy refresh expected shortly, the timing of this debate could not be more appropriate. It is a document that is keenly anticipated across the entirety of the sector and has the potential to define the landscape of British shipbuilding for decades to come. I am sure the Minister knows just how important it is that the Government’s plans live up to the lofty rhetoric of the Defence Secretary and the Prime Minister.

Only yesterday, I had the pleasure of taking my hon. Friend the Member for Islwyn (Chris Evans), the shadow Minister for defence procurement, on a tour of the historic Cammell Laird shipyards in my constituency. It was clear to see the immense pride which every member of the team took in their work, from the stagers to the shipwrights and the senior management. They have much to be proud of. After a challenging few decades for the whole of the industry, Cammell Laird enters the 2020s with a reputation for being at the forefront of innovation in British shipbuilding and for having delivered some of the most technologically advanced vessels afloat. From its slipways sailed the RRS Sir David Attenborough —commonly known as Boaty McBoat or whatever—one of the most sophisticated research vessels ever built. As we speak, that ship is battling perilous Antarctic waters, following in the wake of the Erebus and Endurance, and gathering vital data about the impact of climate breakdown on the polar regions. Capable of operating in temperatures as low as minus 40° and equipped with state-of-the-art equipment to study the deepest depths of the ocean, the SDA is a marvel of British engineering in which all of Birkenhead can take pride.

Cammell Laird also continues to play an enormously important role in the local economy. It is easily the largest employer in our town, employing 650 well-paid and unionised workers, with a further 1,500 subcontractors active on the site. Its Marine Engineering College continues to offer high-quality apprenticeships to around 50 people each year across every discipline, with a commitment to doubling that number in years to come. These apprenticeships are so highly valued that last year 880 applications were made for just 25 positions. The shipyard’s success is being felt far beyond the shipyard walls, with £400 million spent in the wider supply chain in the last five years alone, including £130 million in the immediate locality, supporting over 300 local businesses. But for all the passion, enthusiasm, and commitment that I witnessed yesterday, there is still a sense that the glory days are, at least for now, behind us.

Once the shipyards towered over the skyline of our town, as iconic and powerful a symbol of Birkenhead as the Three Graces are still for neighbouring Liverpool. No more. The time when a young person could reasonably expect to walk out of the school gates and into secure, lifelong work at Cammell Laird is long gone. My mother, father and three of my brothers all learned their trades in the yards. Like so many others of my generation, my future and that of my family’s was entwined with the future of British industry. There is probably not a single young person living in our country today who can say the same.

The story of Cammell Laird has been replicated time and again not only in shipbuilders up and down our country but in our foundries, forges and factories. Government Members have told us that the destruction of British industry was inevitable and that we had no choice but to bow to the inexorable tides of history, but, as the UK was cutting its shipyards adrift, Governments in Spain, South Korea and Italy were investing in their shipbuilders, and today they are unrivalled anywhere else in the world.

After many years of decline and industrial neglect, the Government’s recognition that change is needed was warmly welcome. So, too was the decision to expand the scope of the national shipbuilding strategy with the upcoming refresh, but if the Defence Secretary is to earn his title of shipbuilding tsar, it is time for him to prove his commitment to revitalising UK shipyards and building a brighter future for this critical industry. I fear that the cracks in his resolve are already beginning to show.

In December 2020, I held a Westminster Hall debate on defence procurement and was glad to hear the Minister agree that the historic increases in defence spending announced in that year’s spending review should be used to support domestic manufacturers and British jobs and skills. On that day, I also sought a commitment from him that the Royal Fleet Auxiliary’s new fleet solid support ships would be designed and built in their entirety in Britain. That is a fundamental test of the Government’s commitment to British shipbuilding, and the signs so far are not promising.

Leading figures in the defence sector, including Sir John Parker, have repeatedly called for the need to recognise social value when commissioning new defence projects such as the fleet solid support ships, but despite classifying these new vessels as warships, the Secretary of State has failed to provide a cast-iron guarantee that they will be built in their entirety in Britain.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The hon. Gentleman is making a compelling case. Indeed, we have never constructed sovereign warships outside the United Kingdom and it would be a retrograde step for so many different reasons if we were to do so. We must, however, have a shipbuilding industry that goes beyond the construction of warships, where different procurement rules apply. Does he share my frustration at the way in which the Scottish Government’s mismanagement of Ferguson shipyard in Greenock has so fundamentally undermined confidence in the prospect of a non-warship shipbuilding industry in this country?

[Mick Whitley]

The right hon. Member makes a good point. As well as building for defence procurement, we should be building commercial vessels.

The terms of the competition dictate that the FSS need only be “integrated” in the UK, which means that the lion’s share of the work could be offshored, with British shipbuilders losing out on vital work at a critical time. That would be a tragic betrayal of British shipyards and the thousands of workers that they support.

The Minister will no doubt be aware of my enthusiasm for the bid put forward by Team UK, a consortium of British firms including Cammell Laird, Rolls-Royce, Babcock and BAE Systems. In fact, in the last two years I have inundated his Department with correspondence demanding that the contract be awarded to the consortium, which would truly represent the very best of British engineering, and I repeat my call today. If the Government are serious about supporting shipbuilding, Team UK must be awarded the bid. The benefits are obvious. Instead of allowing non-domestic firms to benefit from billions of pounds of taxpayers’ money, we could create or secure at least 6,700 jobs in British industry, including 2,000 in the shipyards, while seeing £285 million of the total spend returned to Treasury coffers through income tax, national insurance contributions and lower welfare payments.

It is also imperative that the revised shipbuilding strategy looks at the wider issue of procurement. For years, Ministers have waxed lyrical about the extraordinary economic benefits that Brexit would bring, but, instead of the Government taking advantage of our departure from the European Union to throw their full weight behind British shipbuilders, they continue needlessly to follow procurement rules that force businesses such as Cammell Laird to compete with state-owned giants including Spain’s Navantia. It is a David-versus-Goliath struggle. Even when British shipbuilders are in the running for lucrative defence projects, Ministers too often expect them to shoulder enormous financial risks, including 100% refund guarantees that many British shipyards can ill afford.

Let me be clear. UK shipbuilders are not looking for handouts, nor are they asking for taxpayers’ money to be wasted. They know all too well the importance of delivering value for money; they just want a level playing field. They are absolutely right to say that a more benign contracting environment is badly needed if we are to achieve the shipbuilding renaissance that Ministers have repeatedly promised. I hope that when the NSS refresh is published, it will include a recognition that the Ministry of Defence must begin to accept more responsibility for the financial risks inherent in commissioning the top-end vessels that the Select Committee on Defence has identified as so vital to guaranteeing our national security in the deeply uncertain years ahead.

As I said, the shipbuilding strategy has the potential to define the future of British shipbuilding for decades to come, but if shipyards across the country are to make the investment in recruitment and training that they so desperately want to make, they will need guarantees of work in the short term as well. It is not good enough to tell firms that things will get better in 10 years’ time, when so many yards are confronting enormous challenges here and now. We need action now to stem the exodus of jobs and skills from the sector and lay the solid foundations that will be essential if the shipbuilding strategy is to be delivered in full. I hope that the Minister will speak about that issue today.