Procurement Bill [HL]

Baroness Hayman of Ullock Excerpts

2nd reading
Wednesday 25th May 2022 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the Minister for his comprehensive introduction to the Bill, which is quite complex in some areas. I begin by saying that we welcome this Bill. Changes to the procurement regime are long overdue, not least as a procurement Bill was promised in the last Session, so it is good that we finally have it before us today. I know from my experience of navigating OJEU just how complicated the EU procurement regime can be, so we support the Government’s stated ambition of speeding up and simplifying the processes. We welcome particularly the move from awarding contracts based on most advantageous tender, or MAT, rather than MEAT, the most economically advantageous tender, which will allow more flexibility around procurement, and the duty to consider breaking contracts into lots will also help social enterprises and SMEs.

The first part of the Bill, which replaces definitions that came about from long negotiations between EU member states with clearer definitions, has been welcomed across the board, as has the ambition to simplify rules and bring a range of existing rules together into one place. Having said that, recent events and investigations have shone a light on the clear failures of the current procurement regime and government practices during the Covid pandemic, with huge concerns raised in a time of great sacrifice for many people.

I heard what the Minister said on this matter in his introduction, but taxpayers’ money was wasted— £9 billion spent on PPE was written off, with £2.6 billion spent on items that were “not suitable” for the NHS. That is one in 10 of all items. There is also £800 million of additional stock that has not been used. We also know that there were major issues with direct awards. We appreciate that Governments have to act quickly during a crisis, but contracts worth tens of millions that were given out through the VIP fast lane, totalling almost £2 billion, lacked scrutiny or transparency. This Bill gives us the opportunity to fix that—to put in place a rigorous procurement regime which would prevent these practices happening again.

We are concerned that transparency seems to have slipped down the agenda when compared to the original proposals in the Green Paper. The Public Contracts Regulations 2015 have more on transparency than the Bill before us, so why are the Government taking a step backwards? Since the Government did not comply with the current transparency rules during the pandemic, can the Minister reassure noble Lords that this is not because they are finding transparency rules a little bit tricky to comply with? While we welcome the Bill, we do have concerns that many of the positive changes proposed in the 2020 Green Paper and the Government’s response to the consultation appear to be either missing or watered down, despite being welcomed by business, industry, trade unions and other stakeholders.

What we need from this Bill is a genuine commitment to reshape procurement to the very highest standards—from the integrity of the process to the delivery of real social and economic value. While we will no doubt explore these issues in more detail in Committee, I would like to raise some of my key concerns with the Minister at this stage. I look forward to clarification in his response today and further discussion on how improvements can be made as the Bill progresses through your Lordships’ House.

Turning first to the principles, the majority of the more than 600 respondents to the Green Paper consultation supported legal principles for procurement. In their response, the Government stated that they would

“introduce the proposed principles of public procurement into legislation as described”.

The proposed principles are

“public good, value for money, transparency, integrity, fair treatment of suppliers and non-discrimination”,

and we absolutely support them.

However, disappointingly, Part 2—“Principles and objectives”—does not have the principles laid out clearly in a clause on the face of the Bill, despite doing so for the objectives. The principles are an integral part of procurement. They are a vital tool for setting out what legislation is designed to achieve and by what its success will be judged. The rest of the world knows this; almost every other piece of procurement legislation in the world starts with clear principles, so it is surprising that this is not in the Bill, and we believe that this needs to be revised. Furthermore,

“acting, and being seen to act, with integrity”,

as set out in the objectives, could also include a wider duty of transparency. Even in the midst of a crisis, integrity and transparency should be non-negotiable.

Looking at the objectives, we believe that the Government are wasting a huge opportunity to put the environment and tackling climate change right at the centre of how public money is spent. Why is there no mention of this in the objectives, no commitment to sustainable procurement, and no duty for all government departments to comply with the carbon reduction plan and demonstrate sustainable procurement performance? If the Government are to achieve their goal of net zero, climate and nature goals must be an integral part of any new legislation that will have an impact on its delivery. Does the Minister not agree that sustainable procurement will help avoid damage to the environment while at the same time generating benefits for business, society and the economy?

Another gap in the Bill is a commitment to social value, which does not appear at all. There should be specific reference to social value being part of the public benefit in order to provide clarity to public bodies, companies and social enterprises. Social value should be embedded in the procurement system through appropriate guidance and reporting requirements for public bodies, as seemed to be the case in the Green Paper proposals. In fact, the Government’s response to the consultation stated:

“A procurement regime that is simple, flexible and takes greater account of social value can play a big role in contributing to the Government’s levelling-up goals.”


I absolutely agree. As a matter of principle, social value will improve circumstances for residents by bringing money and jobs to local areas, which should in turn go some way towards helping to level up the country.

This is especially true in more disadvantaged areas. A more responsive, community-focused supply chain spreads the social value net further, helping to maximise environmental and social well-being at every level, and would contribute positively to the Government’s levelling-up ambitions. So why is it no longer in the Bill? Have the Government already given up on their levelling-up goals, or does the Minister recognise that this is an oversight in the drafting that needs to be corrected?

The Government’s 2019 manifesto asserted that the public sector should

“‘Buy British’ to support our farmers and reduce environmental costs.”

Public procurement has the potential to create thousands of jobs for UK farmers and food producers and to help deliver the Government’s climate and nature emergency commitments. Can the Minister outline how the Bill before us will achieve those commitments? We need to do what we can to ensure that far more public contracts are awarded to British businesses—something that will have a positive effect on our economy but also support those who are struggling to get through the current cost of living crisis.

Moving on to the fair treatment of suppliers, we have concerns that the language on requiring contracting authorities to make impartial decisions without conflict of interest has been weakened, as too has the important principle of non-discrimination. I hope that the Government will therefore commit to tightening up these areas of the Bill as we move into Committee.

The Green Paper included a positive commitment to the digital single suppliers portal, operating on a “tell us once” principle. This would not quite level the playing field between supersized corporate bidders such as Serco and SMEs from across the country, but it would certainly be a step in the right direction, removing an unnecessary obstacle for smaller, less well-resourced options. My understanding is that this is still the Government’s intention, but I can see nothing in the Bill to ensure that it will actually happen. Do the Government remain committed to putting this on a statutory footing, or will further regulation and guidance be published? If this is linked to other digital systems such as Contracts Finder—again, I hope the Minister can confirm that this is still happening—it could also help to level the playing field when contracting authorities are making decisions.

There are also several areas of exemption in the Bill. Part 13 includes powers

“to disapply this Act in relation to procurement by NHS in England”

and

“to amend this Act in relation to private utilities”.

Schedule 2, “Exempted contracts”, includes defence and security contracts, which my noble friend Lord Coaker will consider further in his winding-up speech. What criteria were used to draw up this group of exemptions? Following the Minister’s introduction, can he clarify exactly how ministerial discretion for NHS procurement will apply? For example, what services is this intended to cover? Will it apply just to clinical services? I am sure your Lordships’ House will agree that we do not want to see a repeat of what happened during the pandemic.

The Minister mentioned—and we are aware—that there is going to be a six-month lead-in for the implementation of the Act’s provisions once it is passed. Even so, there will be significant challenges to meet the timescales, considering the number of changes proposed in the Bill. Does the Minister agree that the Government will need to provide substantial support; for example, for staff training, for communicating the many changes to the system to prospective suppliers, and to cash-strapped local authorities? If so, will he outline what that support will look like?

This really is an opportunity for the Government to be bold, to address these concerns, and to help rebuild public confidence in how taxpayers’ money is spent. There is much in the Bill that I have not had the time to cover today, and we will, of course, be tabling amendments to try to improve it. I offer the Minister our constructive support to work closely with him and his department officials so that, by the time it leaves this place, it will be truly fit for purpose.