Procurement Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Report stage
Monday 28th November 2022 Lords Chamber

Moved by

[Baroness Bloomfield of Hinton Waldrist]

10: Schedule 2, page 84, line 2, leave out from “contract” to end of line 3 and insert “that is required to be awarded in accordance with the public service obligations regulations.
(2) In this paragraph, “the public service obligations regulations” has the meaning given by section 136(11) of the Railways Act 1993.”Member’s explanatory statement
This amendment would specify what public passenger transport services are within scope of this exemption.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, the next group covers a number of government amendments concerning our agreeing to implement the recommendations made by the Delegated Powers and Regulatory Reform Committee in its report on the Bill, published on 14 June 2022. This report was gratefully received, and the Government wish to thank the committee for its contributions. The Government have also tabled amendments to implement other recommendations from the DPRRC, which we will discuss when we debate amendments relating to utilities.

There are a number of places in the Bill where we apply financial thresholds which trigger obligations on a contracting authority. Amendments 175 to 178, 181 and 182 relate to the publication of contracts, the publication of information about payments, the requirement for pipeline notices and obligations relating to notices to be published in relation to below-threshold contracts. As drafted, these thresholds are to be amended by way of secondary legislation subject to the negative procedure.

However, the Delegated Powers and Regulatory Reform Committee recommended that where these thresholds are increased above inflation, they should be subject to the affirmative procedure. This is to ensure greater scrutiny where there is a change in transparency. This amendment actually goes further than the report’s recommendation. It ensures that where these thresholds need to be changed for any reason, the affirmative procedure should apply. We consider that the same rationale applies in relation to the threshold for publication of KPIs, which was not mentioned in the report, and will bring forward an amendment to achieve this as soon as parliamentary time allows.

The one exception is Clause 80, which, in relation to below-threshold contracts, prohibits the prior exclusion of suppliers on the basis of suitability. In this case, it is reasonable to maintain the use of the negative procedure, given that the thresholds applicable to this clause are aligned to the government procurement agreement thresholds which are also amended by the negative procedure.

Amendment 10 addresses the DPRRC’s concern that the power to define public passenger transport services as exempt under Schedule 2(17) gives a wide discretion to Ministers. This amendment removes the power entirely and defines the services to be exempt by reference to the “public service obligations regulations”, which are defined by reference to Section 136(11) of the Railways Act 1993.

--- Later in debate ---

[Lord Coaker (Lab)]

My Lords, I agree with much of what the noble Lord, Lord Fox, has just said. The Delegated Powers and Regulatory Reform Committee’s report was particularly damning and some of the language that it used about the Procurement Bill was, frankly, very surprising. It would be churlish now not to thank the Government for listening to what that committee said and for bringing forward the amendments that the Minister outlined for us. We welcome the change of heart on the part of the Government and hope that they will learn from what has taken place and make sure that we do not have a blanket change, which was what happened here. Normally, there would be two or three arguments about negative to affirmative; this is like a blanket change of heart on the part of the Government, but it is very much to be welcomed.

I wish to highlight government Amendment 165. The Delegated Powers and Regulatory Reform Committee was particularly exercised by the fact that the Government were seeking to change primary legislation in the Defence Reform Act through the negative resolution procedure. It was particularly concerned that the Government were seeking to do that, notwithstanding its other concerns. The Government have re-established an important principle that primary legislation should be treated with the respect that it deserves. I am pleased that the Government have put forward Amendment 165 to ensure that, at the very least, primary legislation in that respect is changed through the affirmative resolution procedure. We welcome the changes the Government have made and think they will be helpful as we make progress, not only in this Chamber but in the other place.

[Baroness Bloomfield of Hinton Waldrist (Con)]

It remains for me to thank both noble Lords for their support for these government amendments and their helpful comments. I take on board the comments of the noble Lord, Lord Coaker, about the Defence Reform Act and the comments of the DPRRC in that regard. We will, obviously, be saying more on defence procurement on Wednesday.

[Lord Coaker (Lab)]

I am sorry to interrupt. I want to say that the noble Baroness, Lady Goldie, was particularly helpful when I met her and said that she would look to bring about this change. I apologise for not mentioning her.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

I will make sure that those thanks are passed on.

Amendment 10 agreed.

Moved by

[Baroness Bloomfield of Hinton Waldrist]

11: Schedule 2, page 86, line 35, at end insert—
“32A_ A contract for the supply of goods, services or works wholly or mainly for the purpose of an activity that would be a utility activity if it were not specified in Part 2 of Schedule 4.”Member’s explanatory statement
This amendment would ensure that exemptions to the scope of utilities contracts under Part 2 of Schedule 4 apply to exempt those contracts from the Bill where entered into by public authorities.

[Baroness Bloomfield of Hinton Waldrist]

My Lords, this next group refers to utilities. Amendments 11, 13, 14, 17, 20, 21, 22, 169, 174, 180 and 184 relate to an exemption for utility activities exposed to competition. The amendments to Clause 5 and Schedule 4, and a consequential amendment to Schedule 2, are again in response to the concern of the DPRRC that the power to establish a procedure to exempt utilities subject to competition from the Bill amounted to a skeleton clause. The Government will replace this power with one that requires the exemptions to be made by secondary legislation under an affirmative procedure. This will afford Parliament greater scrutiny to review each exemption. The test to be satisfied for an exemption remains that there is fair and effective competition in the relevant utility market, and that entry to that market is unrestricted.

Noble Lords should note that Amendment 22 adds Part 2 to Schedule 4, which sets out the utility activities which are exempt from procurement regulations. These reflect exemptions that exist under the current regime, which are preserved by Amendment 169 in order that they are available under the Scottish procurement regulations.

Amendments 174, 180 and 184 ensure that the affirmative procedure applies to an exercise of the power.

Amendments 15 and 16 ensure that the definition of private utilities and contracting authority interact as intended and that a private utility is only a contracting authority in respect of the utility activities for which the utility has a special or exclusive right.

Amendments 18 and 19 revise the description of a utility activity in the transport sector in paragraph 4 of Schedule 4.

Amendments 56, 71 and 200 speed up procurements and reduce the burden for utilities using a utilities dynamic market—a UDM—by only requiring utilities to provide tender notices of upcoming procurements to suppliers on a UDM or appropriate part of a UDM, instead of having to publish notices. In practice, this 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 this 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 new members can join at any time. If accepted, they would then be entitled to receive tender notices.

Amendment 77 to Clause 48 will allow private utilities to adopt a voluntary standstill period to direct award contracts instead of a mandatory one. This means private utilities will take a risk-based decision on whether to apply a standstill period to a direct award procurement. It is in keeping with only regulating private utilities’ procurement to the extent necessary under our international obligations. I will turn to the amendment in the name of my noble friend Lord Lansley in my closing speech, having heard the points he raises. I beg to move.

[Lord Lansley (Con)]

My Lords, I am most grateful to my noble friend, not least because she referred to Amendment 169 in her helpful introduction to these amendments on utilities. Happily, we have reached the end of the Bill quite early on; that amendment relates to the very last page—page 118—where, in the present draft of the Bill, Commission decisions relating to public contract regulations, utilities and so on were to be repealed. Her explanation is interesting, in that it retains these European Commission decisions as retained EU law for the benefit of the Scottish regime. I am slightly perplexed as to why they were to be repealed in the first place since, presumably, the Scottish regime would have required them for this purpose regardless. However, that is just a question and it is only a matter of curiosity that I ask it.

My Amendment 23 is an amendment to government Amendment 22. As my noble friend made clear, the DPRRC said that this was a skeleton clause and was particularly unhelpful because it disguised the fact that policy had not been developed. I do not know whether that is the case or not; the point is that Ministers have come forward with a proposal for how these exemption decisions should work in relation to utility activities. I remind noble Lords that there are activities, and there are utility activities. The effect of Schedule 2 is to make it clear that certain activities should not be regarded as utility activities because they are in fair and effective competition and there are no restrictions on entry to that market. The decisions that were made were about electricity, gas and oil extraction, production and generation.

That being the case, the policy decisions in government Amendments 17 and 22, which my noble friend has explained, have the effect in Amendment 22 of saying, “These are the existing exemption decisions”. Government Amendment 17 says that, in future, Ministers can add to them or subtract from them by regulation. The point of my Amendment 23 is to ask, “When Ministers were reaching a view as to how these exemption decisions should be made in future, why did they not look at the Competition and Markets Authority, which we have as our own creature for the making of competition-related decisions, and put to it the job of determining whether a given activity in the utilities sector—actually, it would also be true in other sectors if exemption decisions were sought—is in fair and effective competition and there are no restrictions to the market?”

If my noble friend says, “Ah, but when Ministers make regulations, they will of course take advice from the Competition and Markets Authority”, I will be very happy. If she does not say that, however, I will be nervous, because what is the point of having the Competition and Markets Authority able to make such decisions in lieu of what used to be the European Commission’s responsibility if Ministers are going to pre-empt it themselves? I hope that she will be able to give me that reassurance about the use of the CMA for making competition-related decisions.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I have indeed listened carefully throughout the passage of the Bill and in our discussions with many noble Lords, including my noble friend Lord Lansley—as has my noble friend Lady Neville-Rolfe.

Amendment 23 from my noble friend Lord Lansley has been tabled to reintroduce the test on whether a utility activity is operating under competitive conditions. I reassure Peers that this competition test has not been removed from the Bill but would be moved from Schedule 4 to the main body of the Bill by government Amendment 17. This amendment would insert after Clause 5(5) a provision that allows an appropriate authority to make changes to the list of exempted utilities by regulations, provided that it is satisfied that the activity is subject to fair and effective competition and entry to the relevant market is unrestricted. Any changes to the list in paragraph 2 of Schedule 4 will be brought about by this power; Amendment 23 is therefore not needed. Similarly, we have addressed the first part of my noble friend’s amendment with government Amendments 13 and 14 to Clause 5.

With regard to my noble friend’s point about the Competition and Markets Authority, we have engaged with the CMA in preparation for our provisions in this area; we will continue to engage with it and other relevant government and regulatory bodies. However, the important thing is that Parliament is able to scrutinise the exemptions. It is not necessary to prescribe the internal processes leading up to making an exemption. Parliament will have the opportunity to ask what process and engagement has taken place for each exemption when regulations are introduced; that is why we changed the nature of the power so that regulations under the affirmative procedure are required any time an appropriate authority wishes to make or amend an exemption.

I therefore hope that my noble friend Lord Lansley will feel able not to move his amendment and that noble Lords will support the government amendments.

Amendment 11 agreed.

Moved by

[Baroness Bloomfield of Hinton Waldrist]

12: Schedule 2, page 86, line 40, leave out from “contract” to end of line 45 and insert “that—
(a) confers an exclusive right to operate a relevant scheduled air service for a period of four years or a series of periods falling within a period of four years, and(b) imposes minimum service requirements in respect of that service during those periods.(2) In this paragraph—“air service” means a flight, or a series of flights, carrying passengers or cargo (including mail);“airport” means any area especially adapted for air services;“relevant scheduled air service” means an air service that—(a) operates between two airports within the United Kingdom or within the United Kingdom and Gibraltar, and(b) the Secretary of State considers to be necessary in order to maintain sufficient transport links between the areas served by the airports.”Member’s explanatory statement
This amendment would more precisely define the concession contracts subject to this exemption.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

13: Clause 5, page 4, line 2, leave out “of a kind specified in” and insert “specified in Part 1 of”
Member’s explanatory statement
This amendment is consequential on the Government amendment to paragraphs 7 and 8 of Schedule 4 and the insertion of a new Part of Schedule 4.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

18: Schedule 4, page 90, line 24, after second “the” insert “general”
Member’s explanatory statement
This amendment would clarify that networks are to be available to the general public to fall within this utility activity.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

22: Schedule 4, page 92, line 3, at end insert—
“PART 2ACTIVITIES THAT ARE NOT UTILITY ACTIVITIES10_ Generation of electricity in England, Scotland or Wales.11_ Production of electricity in England, Scotland or Wales.12_ Wholesale or retail sale of electricity in England, Scotland or Wales. 13_ Wholesale or retail sale of gas in England, Scotland or Wales.14_ Exploration for oil in England, Scotland or Wales.15_ Exploration for natural gas in England, Scotland or Wales.16_ Production of oil in England, Scotland or Wales.17_ Production of natural gas in England, Scotland or Wales.18_ Development of infrastructure for production of oil in England, Scotland or Wales.19_ Development of infrastructure for production of natural gas in England, Scotland or Wales.”Member’s explanatory statement
This amendment would expressly set out the activities that are not to be utility activities under the Bill.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

24: Clause 9, page 7, line 10, after “contract” insert “of the same kind (or at all)”
Member’s explanatory statement
This amendment and the other Government amendments to this clause would ensure that one contract cannot benefit from the exceptions applicable to more than one special regime in circumstances where the contract could reasonably be split into more than one contract falling within different regimes.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

29: Clause 10, page 8, line 4, after second “a” insert “covered”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

--- Later in debate ---

[Lord Maude of Horsham (Con)]

My Lords—

[Baroness Bloomfield of Hinton Waldrist (Con)]

I remind the House that noble Lords may speak only once on Report.

[Baroness Parminter (LD)]

I will be very brief, as I do not want to prolong the discussion. In Committee, the Government made it clear that they would seriously consider the use of the national procurement policy statement as a vehicle to deliver the value-driven approach and support environmental and climate goals. The noble Lord, Lord True, said that they would reflect on that. Well, there has been no reflection. That is why it is so important—vital—that both the Labour Front Bench and the noble Baroness, Lady Worthington, have come forward with two amendments today that will raise the importance and central role of the environment and climate change in the national procurement policy statement. I hope they test the opinion of the House on that, given that there is clearly a disagreement.

I support the point from the noble Lord, Lord Lansley, about Parliament having a say on this and a draft procurement policy statement being put forward. If the Government will not accept that, they need to explain to the House tonight why, if it was good enough for the Environment Act and the environmental principles policy statement, it is not good enough on this occasion.

I strongly believe that we should support the amendments, which make sure that procurement delivers values as well as good value.