Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

Committee stage
Monday 4th July 2022 Grand Committee

Moved by

[Baroness Neville-Rolfe]

2: Clause 1, page 1, line 10, leave out sub-paragraph (iii)
Member’s explanatory statement
These amendments would remove private utilities from the ambit of the Bill which at present allows the government and devolved authorities by order to regulate industry and its procurement practices.

[Baroness Neville-Rolfe (Con)]

My Lords, I am glad that we have been able to move on to this group of amendments, all of which were tabled in good time. I thank my noble friend the Minister for his apology, tone and constructive response on the last group. I have some sympathy with him since, when I was on the Front Bench, I used to do Lords starters and they can be difficult because you have less stakeholder involvement and input than in the Commons. However, there is more scope to change a Bill that starts in the Lords, and that can be a good thing. I thank the Bill team for passing me its copy of the Keeling schedule, and I look forward to the child’s guide to procurement.

I apologise for not having spoken at Second Reading. If I had been able to, I would have brought my experience of procurement in government and in the EU, and in buying and selling everything from services to beans at Tesco. We were even stopped from selling cars alongside groceries by EU rules. I am a former director of Capita, and I register a current interest as chair of Crown Agents, the not-for-profit international development company with considerable expertise in procurement.

First, I am particularly interested in delegated powers and in supporting the noble Lord, Lord Wallace of Saltaire, on that issue. Secondly, I am keen to find a way of helping small businesses to better access procurement opportunities and encourage productivity and growth. Thirdly, as ever, I am concerned about costs to businesses and citizens—I know the noble Lord, Lord Purvis of Tweed, is too.

I also want to understand and test the reach of this legislation, which is the subject of my 12 amendments on private utilities, starting with Amendment 2. It is kindly supported by my noble friend Lord Moylan and the noble Lord, Lord Berkeley. We all sit on the Built Environment Committee together and are steeped in the problems of public transport in towns and cities at present.

In his Second Reading speech, my noble friend Lord Moylan questioned whether we needed this Bill at all, certainly on its current scale, and he bemoaned the bureaucratisation of procurement. I also worry about this, because of its enormous cost both to the state and to bidders and deliverers of contracts. When I was in retail, we always tried to reduce red tape and cut costs, and pass on the benefits in lower prices, which helped to attract customers. There is less sign of that here than I had hoped. There are fewer regulations, but I fear that the burdens imposed are in fact greater than those being removed, particularly in this area of public utilities. In my direct experience, it is not only the number of rules that matters but their impact.

It seems wrong for a Bill about public procurement to cover private utilities. I appreciate that there is an EU directive and UK implementing regulations that the Government want to replace, but I am not entirely sure that this should be done here. Indeed, the Government seem a little hesitant themselves, as they have taken a power to remove private utilities from the scope of the Bill or alter the rules as and when they legislate elsewhere. This is wrong and novel. As the excellent report by the Delegated Powers and Regulatory Reform Committee says, this appears to be the use of

“a tool to cover imperfect policy development.”

I compare the situation to my time as a civil servant heading a Bill team—imagine it—when we were generally obliged to have the subordinate legislation in draft to accompany a Bill and, as a result, we avoided a lot of errors that would have required corrective Bills or regulations later. In the EU, many utilities are in public hands, as some are here, which I am sure explained the need for the original utilities directive. In the UK, many transport, water and telecoms utilities are in private hands and make a huge contribution to the economy as a result. I see that electricity has already been taken out in Schedule 4, at least in some respects.

Some might say, “Why not cover private utilities and force them to embrace transparency and comply with the many cross-compliance measures set out in this Bill?” “Government knows best” seems to be the modern approach. Because they are in private industry, not government or local government, we should be extremely careful about regulating private utilities. If I worked in a private utility, my advice to my shareholders on reading the Bill would have been to get out of the sector. It is proposed that they should embrace public sector bureaucracy—which is still very substantial, despite all the good efforts of the Cabinet Office in putting the Bill together—but they continue to have a private sector degree of risk.

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[Lord Moylan (Con)]

My Lords, I hesitate to appear to disagree with the noble Lord, Lord Berkely, but I shall humiliate myself by doing so. I venture to suggest that there is a definition of a “private utility” in Clause 5. It is only to be understood in its fullness if read with Schedule 4, at page 84, which specifies what “utility activities” are. If one looks at Clause 5 and Schedule 4, one can see what the Government are trying to do. However, I am not sure that what the Government are trying to do is worth while or appropriate. To that extent, I support the comments of my noble friend Lady Neville-Rolfe.

The background is that we are starting from an EU procurement directive that applied to the whole single market of 27 states, and which needed to take account of the fact that most utility activities in most of those states are effectively provided by arms of the state, whereas in the UK we have blazed a successful path of privatisation, so many utility activities that in other parts of the single market are carried out by the state are carried out here by private companies. The noble Lord, Lord Berkeley, makes a very important point when he says that those private companies are, in nearly all instances, subject to some form of regulation.

Before I go further, I draw attention to Schedule 4, which specifies those activities. The subheadings, which I know are not technically part of the Bill, include “Gas and heat”, “Electricity”—

[Baroness Neville-Rolfe (Con)]

I think electricity is later taken out, as I mentioned.

[Lord Moylan (Con)]

Oh well. I shall just work on the text I have; I mean, what is one meant to do? There is “Water” and “Transport”. “Ports and airports” and “Extraction of oil and gas” are also mentioned, but it is the first few that matter. It is striking that the rollout of broadband, the internet and such things do not count as a utility; I should have thought that they were characteristically examples of a utility. My noble friend will no doubt be able to give me a compelling rationale why they are not included.

I come back to the point I made a moment ago about the regulator. I read out the subheadings because noble Lords can see that the activities we are discussing are nearly all regulated, funded by the commitment of private capital with an assumption that private capital will be reasonably efficient in procurement, even if simply for the benefit of shareholders. This does not preclude defalcation, fraud, bribery or giving contracts to your best mate but, as I explained at Second Reading, the Bill does not deal with those issues. If they arose, be it in a public authority or a private company, they would be dealt with through the criminal law because they are all criminal offences. One would not pursue them for a trivial breach of a procedural requirement under the Bill; one would go after them for fraud, taking bribes or all these other criminal things, which are nothing to do with the Bill.

All that makes me think that including private utilities is not entirely appropriate. If it were felt that procurement undertaken by private utilities needed some form of statutory control it would be better in a separate Bill that actually focused on the principles, rather than the procedure, allowing private companies to pursue those procedures appropriate to achieving their shareholders’ ends, just as we allow Tesco to do—with the exception of selling cars next door to fruit. I cannot contemplate for a moment why the European Union should take exception to that, but apparently it did. Essentially, we leave Tesco to decide what procurement processes to follow because it is a private company risking private capital. That is the essential ground on which I make my point.

Finally, I turn to transport, because I have more direct experience of it as a utility than I do the others. There are some distinctions to be drawn. I take as an example Transport for London; as noble Lords may know, I served on the board. Transport for London perhaps should be subject to procurement regulations of this character, but Transport for London is in part categorised as a local government body. It is covered by some local government legislation, as well as by its own Act. That might be the rationale for including a body such as Transport for London, or some of its equivalent bodies that have been created around the country.

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[Lord True (Con)]

Yes, my Lords. I have committed to write in relation to that and I will pick up other questions that have been raised, including by the noble Lord. Obviously, there are existing international agreements that are, if you like, deposited, and which we have to work with, as well as issues of how we move forward case by case, but I will certainly address in a letter the point the noble Lord asks about. It is a legitimate question. The status of international agreements was also raised from the Front Bench opposite, and I will write to the noble Lord on that matter and copy it to colleagues in the Committee.

[Baroness Neville-Rolfe (Con)]

My Lords, this has been a workmanlike discussion, the unpeeling of the onion—the first of many unpeelings of onions, I think. I thank my noble friend Lord Moylan for his support, and the noble Lord, Lord Berkeley, the noble Earl, Lord Lytton, and the noble Lord, Lord Fox—the philosophy of scope is a good phrase. The noble Baroness, Lady Hayman of Ullock, made a strong point about the WTO, which leads me to ask the Minister whether in his follow-up letters he will be able to give us a little more feeling about what is in and what is out for each of the utilities.

I am concerned about that because when we come on to talk about what is covered, it makes a difference—for example, doing special things for small businesses, could we have rules that are not too bureaucratic? Schedules 6 and 7 look quite burdensome through the eyes of a small company. It seems that a lot is covered and then there are executive powers to decide what is taken out and excluded, so the power is with the Minister. I would like to come back to that when we debate the amendment tabled by the noble Lord, Lord Wallace of Saltaire, on delegated powers. It is an important issue.

Can we find a way of not making things too bureaucratic? The noble Baroness, Lady Hayman, made the same point from the other side. Can we improve productivity and growth, which we all desperately want to do in the current circumstances? Can this Bill be a vehicle for that and for improving our international competitiveness? I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

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[Lord Scriven (LD)]

My Lords, I shall speak on this set of amendments, particularly Amendment 42. It is the first time that I have been able to speak on the Bill. I was not able to participate in Second Reading, but I have followed the debate and, like many noble Lords, spent the weekend probably losing a little hair trying to make sense of the number of amendments that have come out. I thank the Minister for the withdrawal of Amendment 1 and for looking to find a way forward with some of the issues that those amendments made.

Particularly with Amendment 42, I raise my interests in the register, particularly as a vice-president of the Local Government Association and as an adviser to the Robertson group of organisations, which does work with the public sector. Amendment 42 is genuinely probing. It addresses what is in, what is out and what is the autonomy and the role of local authorities within the Bill. In particular, when a local authority works with others, how do some of the provisions within the Bill work—whether it is a central purchasing authority or not—particularly when they overlap with other procurement legislation in, for example, the Health and Care Act?

I shall put a couple of scenarios to the Minister and genuinely look forward to hearing some of his replies. First, local authorities are being asked to significantly integrate social care and health. They will be part of integrated care boards, which are purchasing organisations. Some public sector money from local authorities will come forward as part of that. When they are purchasing as an integrated care board and significant amounts of local authority money is put in there, which provisions will the local authority be asked to enact? Will it be the provisions within this Bill or the provisions under Sections 79 and 81 of the recently enacted Health and Care Act? There will be potential conflicts of interest as to by which procurement rules two different partners procuring a public good will be bound. I hope the Minister can help to explain that scenario.

There are also lots of local authorities that have significant public-private partnerships. Again, what rules will the public-private partnership be bound by, particularly when the local authority purchases significant services or goods with a private sector organisation which are to be used for public procurement? How will the private sector organisation be bound by that? For example, what rules will there be for that public-private partnership when purchasing a good, depending on whether the 51% amount has been put forward by the public sector—the local authority—or by the private sector entity?

I understand from reading the Bill that there will be the national procurement policy statement. I just need to understand from the Minister what autonomy local authorities will have to move away from the procurement guidelines that will be in the NPPS.

Finally, it would be helpful if local authorities could be put in the Bill as centralised procurement authorities. Is there any particular reason why the Government did not take that on board in the Bill?

There are many general questions about local authorities; those are a number that I wish to probe. I genuinely look forward to the Minister’s answers.

[Baroness Neville-Rolfe (Con)]

My Lords, I very much welcome the question of the noble Lord, Lord Scriven, about local authorities. They are so often underappreciated and undervalued, and we need to know what can and cannot be done in a collective way—the question he is rightly probing. For example, a simple question would be: for planning services—where my committee has identified a huge shortage of talent and resources in some planning authorities—could you have a collective procurement, and would that be caught by this Bill?

I also ask what the GPA does on telecoms and the internet infrastructure. I must say that I tried in vain, as a Minister, to get contracts for the roll-out of infrastructure around Washington DC—there was not a level playing field. I fear that overseas interests will benefit preferentially from this Bill, as they have done in some other areas, such as contracts for difference in energy. Can the Bill help to hold the GPA to level the playing field?

I strongly support my noble friend Lady Noakes, both on her brilliant technical points, which I barely understand, and on ARIA. On the latter, I agree with her that it must be free from hassle—I think we agreed that in our debates in this House. It probably does not have enough money, but it is important to ensure that it can proceed without the benefit of lots of new regulations, which could be quite bureaucratic to them.

[Lord Berkeley (Lab)]

My Lords, I shall speak to my Amendment 7. I do not think I need comment on any of the other amendments in this group. I tabled this probing amendment to ask why this particular piece of text is here:

“This Act does not apply to Her Majesty acting in her private capacity.”


That is quite unusual in Bills. Usually at the end there is a clause that says something along the lines that Her Majesty and, often, the Duke of Cornwall have given their consent to that piece of legislation. Sometimes when I ask the Minister what relevance the Bill has to the Duke of Cornwall they cannot answer; no one seems able to because it is nicely confidential.

Obviously I can see why Her Majesty acting as the Crown is included in this Bill because effectively the Crown is the Government. However, why is the Duke of Cornwall not included in the Bill in his private capacity? He usually appears alongside Her Majesty. The Duchy of Cornwall has said it is in the private sector, which means, whatever we are going to call it, that it is a private sector organisation that presumably will have to comply with every other part of the Bill.

It is interesting to see where the sovereign grant for transport comes in. I happened to get a Written Answer today. I asked who funded the return charter flight of the Duke of Sussex from the United States for the jubilee. According to media reports, it was the most expensive charter plane that you could possibly get, and it seemed to me that, as in so many of these matters, they could actually have gone on the scheduled service. The answer I had was that it was not funded by the sovereign grant because that

“only covers expenses incurred by other Members of the Royal Family when they undertake official duties on behalf of Her Majesty”,

and clearly that was not the case. When it comes to the sovereign grant and the award of contracts for helicopters or planes across the world that the Royal Family—or even occasionally members of the Government—might take, presumably that will be subject to competitive tendering because they are acting in their public capacity.

It would be good to hear from the Minister what correspondence, if any, took place before Clause 1(9) came into the Bill. Are the Government quite happy with it? I look forward to hearing his answer.

Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

It is quite clear that Ministers want to see competitive tendering, which is the normal way of getting good value for money. I cannot see any reason why buses, trains or the air service, which is in a later amendment, should not be put out to competitive tendering. There may be reasons for this, but we need the Minister’s explanation, because it all sounds so easy: “Everything will go fine. Ministers can be trusted”. I am sure that they can, but we do not know what will happen in five years’ time, when things could be very different. I believe that there will be a good reason for not applying the principle of competitive tendering in the railway legislation—the buses are slightly different—but we need the Minister to explain why all of these powers are necessary. I hope we can persuade him that a small reduction in the powers would give us better scrutiny and make sure that everything was above board.

[Baroness Neville-Rolfe (Con)]

My Lords, I support the noble Lord, Lord Wallace of Saltaire. I put my name to Amendment 18, and I am glad that the noble Lord, Lord Berkeley, did so too and that it is being debated with many other amendments about which I have a similar concern. It is right that this is a cross-party challenge to the Bill. It reflects the report of the Delegated Powers and Regulatory Reform Committee, now chaired by my noble friend Lord McLoughlin, and of course previously chaired by my noble friend Lord Blencathra. I do not think that I have ever seen such an excoriating report on the abuse of delegated powers.

This is a hugely important piece of legislation, affecting £300 billion a year of public money and its impact on those who supply it. That is nearly as much as the enormous sums spent and misspent on Covid. We now need much more information on the secondary legislation and regulations to be made under the Bill. Even if this is clarified and information is provided, my noble friend needs to bear in mind that he cannot bind a future Government or Prime Minister and their teams. Frankly, the regulatory and other delegated provisions before us are extremely dangerous and need to be reconsidered in the light of the DPRRC report and of course today’s debate and the answers that we are given. I am just sorry that we are not on the Floor of the House.

I will give a few choice quotations from the report. First, paragraph 20 says that

“in general [the relevant provisions of the Bill] leave the content of such notices, etc to be set out in Regulations”.

This includes notices about awards made without competitive tendering, the exclusion of suppliers and modifications or terminations.

Secondly, paragraph 23 says:

“We are also disappointed that the Government have provided no illustrative regulations. Illustrative regulations would have been very helpful and, without them, scrutiny of clause 86 is considerably hampered.”


This is delightful in its politeness, but it is very strong.

Thirdly, paragraph 33 says:

“The Government have failed to adequately explain”—


split infinitives would not be allowed in my day—

“why Ministers are to be given such a broad power to override the existing statutory bar on public authorities”.

This is an open-ended power to override primary legislation by order. The matters covered include: “conditions of employment” of a contractor’s workforce, “industrial disputes”, countries of origin and—this stuck in the gullet—

“political, industrial or sectarian affiliations or interests of contractors or their directors, partners or employees”.

This is utterly over the top, unless you are Mr Jeremy Corbyn, I suppose.

Finally, paragraph 53 says:

“The Government have failed to provide any justification for leaving entirely to regulations the question of which concession contracts for air services provided by air carriers are to be exempted from the Bill.”


From sitting in the Competitiveness Council of the European Union for several years, I can tell noble Lords that air services are big politically, and decisions need to be properly scrutinised by Parliament and not concluded by officials who tend—in my considerable experience—to exercise the power once matters are put into delegated legislation. There is also a vast shareholder base in aviation that should be quaking when it sees this Bill, if I have understood it correctly.

I apologise to my noble friend the Minister, with whom I have worked so well over the years, but resolving our challenge to these delegated powers is a real test of his mettle and of this Committee’s competence. They mean that the Bill is, in practice, regulatory, not deregulatory as we all hoped. I very much look forward to supporting my noble friend the Minister and others in making some very necessary changes to the Bill.

[Lord Blencathra (Con)]

My Lords, it is a pleasure to speak after my noble friend Lady Neville-Rolfe and after listening to the speech of the noble Lord, Lord Wallace of Saltaire. They have gone through each of the individual recommendations of the Delegated Powers Committee’s report and each of the amendments, which saves me having to quote from them as well, so I will speak in more general terms.

I did not speak on Second Reading, because a quick look at this Bill convinced me that the delegated powers report would be worth waiting for—and what a scorcher it turned out to be. Now that I am no longer committee chairman, I can speak more bluntly than I have in the past, even though I might not now get a phone call from No. 10 asking me to form a Government of national unity tonight. I fully support the concept of the Bill, but it is an appalling mess. I exonerate my noble friend the Minister, who had no part in drafting it, but how on earth can officials and the Office of the Parliamentary Counsel—the OPC—spend two years coming up with these shambles where 345 government amendments—my count on Monday—are necessary? However, what concerns me today is not the shambolic drafting but the abuses of parliamentary protocols as evidenced in the Delegated Powers Committee’s report.

Last year, the Delegated Powers Committee and the Secondary Legislation Scrutiny Committee published two reports: Democracy Denied? and Government by Diktat. We produced countless examples of legislation presented to the House with very wide regulatory powers granted without any justification for them, but with the usual excuse: “just in case they might be needed one day”. The reports cited “skeleton legislation” and clauses where the policy had not been thought through. In addition, powers were being taken to fill in, not just the details, but the general principles which should have been in the primary legislation and not in secondary legislation.

Then we have the negative procedure applied in completely unacceptable cases where the affirmative should be used, such as increasing penalties or charges, for example. Then, of course, we have the dear old Henry VIII powers attached almost automatically now to almost every Bill without any thought. No, I correct that—the thought among Bill teams and drafters is that the department can change any primary legislation it likes in future without having to go through the hassle of producing new primary legislation and getting approval for it. What a marvellous “Get out of jail free” card this is: change any legislation at the stroke of a Minister’s pen.

In this Bill, the Delegated Powers Committee has drawn attention to all these gross abuses and—let us face it—they are abuses. Just because Governments have got away with treating Parliament with contempt in the past does not mean that this should be the norm. I will quote only one paragraph from the Delegated Powers Committee’s report. Before doing so, I note that the committee is not hostile to this Government or any Government; indeed, it is now chaired by one of the longest-serving Commons Conservative Chief Whips in history, and so it is not a partisan committee. Paragraph 7 says:

“This report identifies multiple failures in the Memorandum to adequately explain and justify very broad delegations of power which enable implementation of significant policy change by delegated legislation. This would give us cause for concern at any time but is particularly disappointing as it comes so soon after the publication of our report, Democracy Denied? The urgent need to rebalance power between Parliament and the Executive, in November 2021, and of revised guidance for departments on the role and requirements of this Committee.”


The new guidance by the Delegated Powers and Regulatory Reform Committee was circulated to all departments, and, in the first week of January, I personally wrote to every Minister and every permanent secretary giving them copies of the revised guidance. This is a Cabinet Office Bill, so I want my noble friend the Minister to go back to the Cabinet Office and call in Simon Case, the Cabinet Secretary, Alex Chisholm, the Permanent Secretary, and Elizabeth Gardiner, the First Parliamentary Counsel, and ask them why they seem to have deliberately ignored every word of the guidance with which they were issued.

Worse than that, they have reneged on their promises to the committee. In the response to our report, they said that the Government agreed that the statement of principles of parliamentary democracy set out in both our reports should be included in the Cabinet Office’s Guide to Making Legislation. We reported way back last December, so they have had five months to adjust the Bill taking that into account. Why have they not done so?

The Government agreed that the routine use of just-in-case powers was not appropriate, so why include them in the Bill? They agreed that guidance should not be used to create rules that must be followed, should not be relied on for interpretation of legislation, and should describe the law accurately. They said that the Cabinet Office’s Guide to Making Legislation would be strengthened to reflect the committee's revised guidance. Will my noble friend the Minister ask why that has not happened? I am tempted to ask the non-executive board member, the noble Lord, Lord Hogan-Howe, to maybe conduct an investigation into the Cabinet Office, but I will keep that in reserve.

Of course, the Government justified skeleton legislation, Henry VIII powers and the negative procedure even when there were alternatives that would not subtract from the thrust of the legislation. Not one single item in any of the DPRRC reports would stop any Government of any persuasion driving through their programme. At worst, it would mean a Minister—usually a Lords Minister—perhaps having to do a few more 90-minute SI debates.

I conclude with something the Government did agree on. They welcomed the end-of-Session report that the Delegated Powers Committee said it would produce. The committee has now produced the first end-of-Session report, even though it covers only half or less than half of the last Session, and it makes for some very uncomfortable reading for some Bill teams and OPC drafters. It criticises the quality of delegated powers memoranda by the Ministry of Justice, and two of those by BEIS and the Home Office each. If we cannot trust the delegated powers memoranda, how can we trust the rest of the departments’ assertions?

The report highlights serious deficiencies in the Health and Care Bill, describing it as

“a clear and disturbing illustration of how much disguised legislation a Bill can contain and offends against the democratic principles of parliamentary scrutiny.”

However, by far the most egregious and insidious example was the Subsidy Control Bill, which had a delegated power which enabled the Government to disapply the Bill’s subsidy control requirements by a direction that had to be kept secret from Parliament. Added to which, the delegated powers memorandum had the effrontery, and indeed the honesty, to justify this absence of parliamentary scrutiny on the grounds of

“the potential for non-approval by Parliament”

—in other words, a risk of defeat.

Can noble Lords believe that? Noble Lords who were on the committee can believe it, because they had it removed eventually. Officials drafted provisions to enact a law in secret and not tell Parliament in case Parliament voted against it. We do not have that in this Bill, but I am quoting some general examples to show how appalling some of the general delegations of power have been.

Of course, Ministers have ultimate responsibility, but we all know that Ministers were not responsible for the 345 government amendments in this Bill. Nor are they the ones who have devised and insisted on inserting all these parliamentary abuses into legislation. I suspect that my noble friend the Minister was as shocked as the rest of us when he was handed this Bill and saw the extent of the completely inappropriate delegation of powers.

I want him to go back to the Cabinet Office and tell officials and parliamentary drafters that if they do not want their names on the list of bad boys and girls when the DPRRC publishes the full report at the end of this Session, they had better bring in the changes on Report, as suggested by the Delegated Powers Committee. They should amend the Bill not only to keep their noses clean but because it is the right, democratic thing to do.

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[Baroness Neville-Rolfe (Con)]

I want to express a concern. Although the Minister’s argument seems to be that the powers are already rather limited and that there are natural limitations—for example, the GPA—I am not convinced that we actually need to put all this into delegated legislation. In some places, we could decide things and make it clear in the Bill. Then, if there is future evolution of the market or the development of technical regimes, as my noble friend suggests, we should come back to the House and look again at legislation in those areas.

Obviously, I come from a business background, and, as I said, the thought that officials can effectively make major changes that will affect the market in which you are operating is actually quite worrying. We had an example of this on Monday. The example we received from the noble Baroness, Lady Hayman of Ullock, about

“a tool to cover imperfect policy development”

was a quote from the report in relation to private utilities. Therefore, I did not repeat it, but it is a good example of where there might be a changing market, which might then generate quite substantial uncertainty in the procurement field and be a big problem for our companies.

I took four egregious examples out of a respected cross-party report to try to be constructive, but my noble friend has unfortunately tried to explain why the Bill is as it is, rather than to respond to these individual examples. I really need his response to these examples because I need to know how much to press on things such as notices and concessions when we get to those parts of the Bill. If it is clear that the delegated powers cannot be misused, it makes it a lot easier to agree to other parts of the Bill. I apologise to the Committee for speaking at length, but I feel very strongly about this.

[Lord True (Con)]

My Lords, it is Committee and my noble friend and all other noble Lords are entitled to intervene as much as they wish. She makes an important point, and I was just on that paragraph in my speech—it is slightly small compared to the rest of the speech—and was trying to set out the Government’s rationale for why the balance is probably right.

Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

Committee stage
Monday 11th July 2022 Grand Committee

[Lord Hope of Craighead (CB)]

My Lords, I return to Amendment 37 in the name of the noble Lord, Lord Moylan. He made the point that the words at the end of Clause 10(1),

“except in accordance with this Act”,

are a hostage to fortune. The words range right across the whole of this complicated Bill and of course a disaffected client will invite his lawyer to search through all the provisions to find some flaw in the way in which the procurement exercise was carried out, which he can then attack.

I wonder whether the words

“in accordance with this Act”

are wider than they need to be. First, Clause 10 contains a prohibition, but Clause 10(2) contains a definition of procurement and Clause 10(3) tells you that

“a contracting authority may only award a public contract in accordance with”

the four matters set out there.

In my mind, that raises the question of whether the words at the end of Clause 10(1) should really be

“except in accordance with this”

section, the purpose of which is to describe the framework or scope of the power, before Clause 11 tells you that that power must be exercised in accordance with the procurement objectives set out there. It would make sense if Clause 10 simply said what may be done in accordance with that section. If I am wrong about that, the Minister might like to reflect on whether the words

“in accordance with this Act”

go further than they need to.

Choice of words, as I say from time to time, is always very important and the noble Lord, Lord Moylan, raises an important point. What he wishes to put in place at the end of Clause 10(1) is already in Clause 11 and will have to be complied with. I understand that the Minister may be reluctant to go as far as the noble Lord, Lord Moylan, has invited him to go, but he has raised an important point. That is why I suggest that the word “section” might be a more sensible and less dangerous word to use than “Act”, at the end of Clause 10(1).

[Baroness Neville-Rolfe (Con)]

My Lords, it is always a great pleasure to follow the noble and learned Lord, Lord Hope of Craighead, who is always so brief and makes such constructive suggestions. The more I listen, the more I feel that this Bill in many respects strikes the wrong note. It is overregulatory and calls for a rethink, which I hope the Government will be thinking about.

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[Lord Moylan (Con)]

My Lords, my noble friend the Minister has a difficulty with his throat, and I commiserate with him on that. He also has a difficulty with the Bill. He wants to have a Bill which is highly prescriptive, but his answer to those who wish to amend it is that that would make it too prescriptive. The question is: what are the bounds of prescription, and has he given an adequate defence of them? It may be the heat, but I suspect we are condemned this afternoon to receiving a series of responses from Ministers which are not as adequate and embracing of our original ideas as one might hope.

It has been a very important debate because it is about the principles underlying the Bill. My noble friend said that there was a degree of confusion and contradiction in the debate. There is often confusion in debate when you have a broad range and number of topics to discuss, but I do not think there was any contradiction if one understands that the debate on principles has been taking place on two levels. The first is about what the principles should be—whether they should involve what the noble Baroness, Lady Hayman of Ullock, has suggested should be incorporated and whether they should involve a certain interpretation of value for money. We all agree that has to be an element of it, but what does that actually mean? That has been the tenor of part of the debate. I have said that I intend to remain neutral in a sense on that question.

The second level on which we have been debating the principles is: on the assumption that we can agree what the principles are, what role do they then play? What purchase or leverage do they give in the procurement process? In particular, should they be a basis on which disappointed contractors should be able to nitpick through this procedural Bill in order to bring complaints when, in my view, it would be better if they were limited to doing that only if the broad principles of the Bill—which we might have agreed on—had been breached? The noble and learned Lord, Lord Hope of Craighead, clearly grasped that point, and the noble Baroness, Lady Hayman of Ullock, heartily agreed that we should ensure that there is a degree of flexibility in the tendering process so that unforeseen circumstances that lead to idiotic outcomes can be handled in a sensible way.

My noble friend Lady Neville-Rolfe made a similar point, but I am going to quibble with her very slightly, because she used the word “frequent” in reference to frequent legal challenges to procurement processes. In my experience, they are not very frequent, because what happens is that precise attention to the detail of the process is often prioritised over sensible outcomes in order to avoid those legal challenges in the first place. The structure of the approach that we are taking often leads to poor outcomes in procurement terms precisely to avoid legal challenges, but we congratulate ourselves on having gone through a successful procurement even though we have a suit with a pair of trousers with one leg shorter than the other, or something like that.

[Baroness Neville-Rolfe (Con)]

On the business of frequent challenge, I think it would be quite useful to have some information before we discuss this again. My experience—I have worked in the industry, although admittedly not as an executive—is that there are quite a lot of challenges, and they absorb a lot of resources. However, if they are rare, that is important as well.

[Lord Moylan (Con)]

I heartily second that call for information.

To conclude, my noble friend the Minister said that he thought that flexibility in response to the sort of circumstance that I am describing is desirable. To that extent, he agreed in principle with me and with my noble friend Lady Neville-Rolfe, and it is for him, as we go forward, to show how he intends to instantiate that in his own amendments, so as to give us that sensible, practical outcome. In the meantime, I beg leave to withdraw the amendment.

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Moved by

[Baroness Neville-Rolfe]

38: Clause 10, page 8, line 5, at end insert “, unless tenders will only be considered from suppliers with an annual turnover of less than £5 million.”
Member’s explanatory statement
This amendment seeks to reduce the burden on business of the Bill’s provisions.

[Baroness Neville-Rolfe (Con)]

My Lords, Amendment 38, on helping small business, would free up procurement for those businesses with a turnover of under £5 million. I am particularly grateful for the support of my noble friend Lady Noakes, and I am glad of the opportunity to endorse her review amendment, Amendment 534, which she will introduce later.

I shall also speak to my Amendment 50, which aims to keep the bureaucratic burdens on small businesses as low as possible, and to Amendments 97 and 100, which seek to exclude small businesses from complex competitive procedures. Finally, I will also speak to Amendments 290 and 295, which seek to exclude SMEs from the bureaucratic burden of cross-compliance in Schedules 6 and 7, which give long lists of reasons for excluding suppliers from bidding.

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Overall, I hope that I have assured noble Lords that this Bill is a good deal for SMEs and that there is good reason why we cannot go as far as noble Lords would like. As I have said, the Government support SMEs, the third sector and the voluntary and community sector. This is something on which we will have a number of meetings between now and Report to discuss what we can do further, if we can. I respectfully ask that these amendments be withdrawn or not moved.

[Baroness Neville-Rolfe (Con)]

My Lords, I start by thanking everyone in this Room for taking part and for the widespread support for my amendment and for doing something in the Bill for small business.

I was sorry to get such a disappointing reply from the Minister. She repeated the positives that I had already identified and given the Government due credit for, but she did not offer a lot else. She said all bidders must be treated in the same way; I think that is at the heart of the problem. We have to find some way to help SMEs. The Minister mentioned the billions going to SMEs, but that is compared to the £300 billion opportunity. There is a huge opportunity to grow the SME and social enterprise sector in the procurement area and to do it in a way that represents value for money—I am coming from that angle as well.

I also thank my noble friend Lady Noakes, who made a very strong case for a regular, five-yearly review of procurement to be written into the Bill. I remember that we did this in the intellectual property area and it has worked well. She rightly fears that SMEs will be discouraged by the new laws and SIs—there are so many SIs coming through—and that that might heighten the barriers to entry that deter small business from bidding. This was reinforced very strongly by the noble Lords, Lord Wigley, Lord Aberdare and Lord Coaker. The killer line from my noble friend Lady Noakes—I am going to embarrass her—was like something from Oscar Wilde: “SMEs find engaging with public procurement daunting.” It is wonderfully understated, but it summarises the issue beautifully.

My noble friend also persuasively presented the capacity building amendment from the noble Lord, Lord Lansley, and attracted support for that from across the Committee, both in relation to SMEs and social enterprise. I strongly agree that capacity building is the way to improve productivity in the economy, so it would be great if we could encourage it in some way or another.

We also heard about social value from the noble Baronesses, Lady Thornton and Lady Bennett. The noble Baroness, Lady Bennett, reminded us that care is covered by this Bill, but I do not agree that you cannot have improved productivity in care. I have noticed how, as in Bupa homes, the distribution of medicines to old people is much improved as a result of private sector innovation in trying to make sure that they are not taking the wrong pills and that the nurses are giving them the right ones. There have been other improvements in the care area, with wheelchairs and so on, as well as the use of internet-enabled things, which can be really helpful. It was great that the noble Baroness reminded us of care even though, as usual, we come at this from slightly different angles. As the noble Lord, Lord Scriven, said, productivity and quality actually go hand in hand with good procurement in care.

It is clear that we need to do more for SMEs and social enterprise, and—not or—we need to put a review clause into the Bill or be assured that there will be a review of it, given its novelty. I very much appreciate the offer of a meeting with those of us who are interested in moving this forward with the Government during the Recess, before we come back to look at this gargantuan Bill again, presumably in October. With the leave of the Committee, I would like to withdraw my amendment.

Amendment 38 withdrawn.

Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

Committee stage
Monday 18th July 2022 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, I have listened to the debate and rise to address the Question that Schedules 6 and 7 be agreed. I am grateful for the support of my noble friend Lord Moylan, although he cannot be here today.

As the Committee knows, I speak from the perspective of someone who has worked in business and as a company secretary and a chair of the compliance committee in a British multinational business employing half a million people in several regions of the world, as well as in smaller for-profit and not-for-profit operations. I have also worked in government as a civil servant and a Minister. I worry intensely about the perverse effects of these provisions. My fear is that they will exclude good, dynamic and honest operators from contracts and serving the public good through procurement. Some firms and social enterprises could be put out of business. Many others, especially SMEs, will be persuaded to have nothing to do with procurement; and of course this Bill is immensely wide-ranging and covers at least £300 billion-worth of UK value added, including most utilities, which I have argued against.

The lists in Schedules 6 and 7 are very wide. Some exclusions are entirely new compared to the EU law they replace. Others have been promoted from the discretionary category to become mandatory. The new mandatory exclusions include corporate manslaughter, theft and fraud, and failure to co-operate. Schedule 6 also brings into the Bill offences in areas including money laundering and competition law, which are dealt with perfectly well in existing and separate regulations. There have also been several extensions to the grounds for discretionary exclusions; for example, a breach of contract, poor performance and “acting improperly in procurement”—goodness knows what that means.

I ask the Minister to think again about every new item and consider whether this gold-plating is justified, as I think it may be in the case, for example, of national security, assuming that is not covered in other regulations. Each and every firm and social enterprise will be involved in more red tape in having to verify compliance with every item across their organisation.

Clause 54, defining excluded suppliers, is key, so I want to play devil’s advocate. First, it gives contracting authorities a lot of discretion, so they can be difficult if they want to favour a particular bidder. Secondly, a mandatory exclusion applies to a supplier or an associated supplier, so compliance checks have to be spread into the nooks and crannies of their supply chains, over which prime suppliers have no direct control—that will help the French, by the way, who have more integrated supply chains. Finally, if there is a contravention such as a tragic manslaughter on a major building project, a theft or a fraud, a single conviction for modern slavery, or a tax or cartel offence a firm is pushed into settling by the regulators, that firm will then have to operate a tick-box system across all its operations to demonstrate in the words of Clause 54 that the circumstances giving rise to the application of the exclusion are not “likely to occur again”. How will they be able to do that?

Of course, I am against most of the evils listed in the schedules, but they do not need to be in this statute. In trying to do the job of the policemen, we risk seriously undermining the procurement sector and choking it with red tape. If we want to nationalise procurement, we should be more honest about it.

For large companies in many climes, compliance with these two schedules will be a nightmare, so they could decide not to bid and stick to non-public sector activities. Firms focused on procurement alone will be in constant fear of a contravention which will write off the value of their company, as they would be excluded from bidding in future, although officials reassured me that they would be allowed in again after five years.

This is not the public sector; a company cannot hang around for five years without any new business. I know from my own experience that small firms may be put off completely. We will see the loss of small suppliers to prisons, local authorities, transport systems and even defence, as we have already seen in the City and in housing because of complex regulation in financial services and delays in planning. Small firms do not have the risk capital needed to operate in such high-risk environments. This negative behavioural change is not costed in the impact assessment, although there is a brief non-monetised discussion on page 36. My concerns about Schedules 6 and 7 are not discussed at all; more unscrutinised guidance is suggested as the answer.

I feel that this is cross-compliance of the worst sort. It is inconsistent with a productive economy, and the people who will flourish will be lawyers and their counterparts in the public sector trying to apply these complex, wide-ranging regulations. I think that the schedules will have chilling effect. I ask my noble friend the Minister to look at both schedules again in the light of my comments on practicality, and devise arrangements that will avoid the perverse effects I have outlined.

As regards the other amendments, as I think I am speaking last, we had a good debate on small business last week, for which the noble Lord, Lord Mendelsohn, was sadly absent. I think we all agreed that it is an area that needs to be looked at again. However, for the reasons I have stated, I am a little nervous about a further exclusion to achieve the noble Lord’s objective, as proposed in Amendment 174, but we must come back to this issue.

As to further extending exclusions by SI, as proposed in Amendment 184, this is far too wide-ranging and vague, and could be abused. It could also cast yet a further chill on procurement by honest and good organisations and lead to retaliation against our own UK exporters. The more political we make procurement, the less vibrant the sector will be, hitting our growth and productivity, which already sadly lags behind that of many other countries. I hope that the noble Lord, Lord Hain, can find another way forward at his prospective meeting with the Minister of State.

My questions about compliance and resources also apply to Amendment 353, however well intentioned. I worry a bit that we are over-influenced by our experience on PPE, which was poor. However, we are now looking forward, of course, not backward. I am sorry to be critical.

In conclusion, there are many problems with this Bill. The easiest and best thing would be for it to be withdrawn, to look at the various points that have been made in recent days, and for the new Government to think again. In the meantime, I stand by the points that I have made as a practitioner.

[Baroness Stroud (Con)]

I just want to respond to my noble friend’s comments about Amendment 353 and underline a comment that my noble friend Lord Alton made. Actually, this is something that has already been done in the United States of America; there is already an Act that has been passed there. There has no chilling effect at all on government procurement. In fact, their Act is significantly stronger than anything we are proposing here. I ask my noble friend to be mindful of that. Companies are appreciating more and more being able to be confident and to tell their customers that they are in fact free of slavery in their supply chains.

[Baroness Neville-Rolfe (Con)]

The point is well made. I would be interested to know how long that Act has been in operation in the United States. One of the concerns I have had, looking at these various provisions in all their complexity, is that we are actually continuing relatively new EU requirements; they came into our law between 2014 and 2016 with a directive and a number of regulations. I am not clear to what extent they have been reviewed to be effective. You need them to be fair and effective, and you need to consider the people who are excluded as well as those who happily champion them—as one does if one works for a big multinational; I have worked for one. My comments are intended to encourage the Committee to look at the detail to ensure that perverse effects are minimised and excluded where they can be.

[Lord Scriven (LD)]

My Lords, this has been a fascinating discussion on a number of amendments that are grouped around what I would call value-based procurement. The values should allow £300 billion of taxpayers’ money to be used to create good business and a solid foundation. We wish to see public money spent in a way that is based on the values we hold as a nation, not just in the UK but elsewhere.

It was interesting listening to the noble Baroness, Lady Neville-Rolfe, who just said very distinctly that a value-based approach could have the effect of destroying competitiveness and productivity for certain companies and exclude them. All the businesses I have worked with—big ones, small ones, social enterprises, small and medium-sized enterprises—want a nudge from government at times to be able to do the right things. When the Government nudge in their procurement, they send a signal to the market that enables business to make decisions based on things other than the bottom line. I tend to find that that is a useful thing for them, rather than a negative thing. Therefore, I think that value-based procurement is really important.

I start by speaking to Amendment 331, signed by my noble friend Lord Fox—as you can see, I am struggling so I will not go on at great length, like the Minister did last week. Clause 59 creates a centralised debarment list that allows Ministers to prohibit suppliers from contracting with public bodies if they fall under the certain exclusionary grounds in Schedules 6 and 7. However, a supplier’s involvement with serious human rights abuses is not listed even as a discretionary ground for exclusion. I am sure that that is an omission by the Government and not a deliberate exclusion. Human rights abuses should be on the face of the Bill as a reason for debarment. You can argue whether it should be mandatory or discretionary—personally, I would like it to be mandatory—but it has to be at least discretionary. The purpose of this amendment is to allow Ministers to debar companies that have proven involvement with serious human rights abuses. I hear what the noble Lord, Lord Alton, said about listing genocide there.

I have a particular interest in Gulf states, particularly human rights abuses in Bahrain. I could keep the Committee for hours on the significant human rights abuses in that country. A number of companies in the UK, both large and small, trade with some of the organisations that are directly linked to human rights abuses in Bahrain. However, under this Bill on public sector procurement, there would be no way of debarring them, even though these companies are sponsoring or are directly involved in working with organisations that are implicated in death, torture and the deprivation of liberty—for at least 20 years, in some cases. So I ask the Minister: why is this exclusion there? Has there been an oversight in not having human rights abuses on the face of the Bill?

I come to a couple of the other amendments that noble Lords have addressed. Amendments 174 and 179 on payment are really interesting and quite important, because cash flow is king, particularly for small and medium-sized enterprises. Within the Bill are assumptions about 30-day payments to public sector organisations. There is an implied assumption in the Bill that the same subcontracting arrangements will take place between the major contractor and the subcontractor, but there is no mechanism for sanctions if that does not happen. That is why I think Amendments 174 and 179 are an interesting way of saying that there will be sanctions, in debarring people from getting public sector contracts.

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[Lord Coaker (Lab)]

My Lords, I will try to be reasonably brief in summing up some of the points made. I start by welcoming my noble friend’s Amendment 174 about late payment. It is a point he has made continually and this important amendment should not get lost in these great debates about serious international issues. His point about trying to support small and medium-sized businesses through dealing with late payments deals with the point that my noble friend Lady Hayman and I are also trying to deal with in Amendment 179. I would not want that to get lost.

In speaking to Amendment 329, in my name and that of my noble friend Lady Hayman, and Amendment 331, in my name and those of my noble friend Lady Hayman, and the noble Lords, Lord Bethell and Lord Fox, I want to wrestle with whether the group is too big or not. At its heart it has the discussion and debate we have had through the Committee—and no doubt will have again on Report, when there will be votes on it—which is on what the Government are trying to achieve through their procurement policy. We are saying that, as well as being efficient, effective, value for money and all those things, there are certain social, economic and other objectives that the Government should also pursue. When we look at this group of amendments, which is about exclusion grounds, a whole range of different issues can be raised to say that, if a firm or supplier does this, it should be excluded from consideration when the contracting authority comes to make its procurement decisions.

Maybe the Government will say that these amendments are not necessary and that they do not want to add them to the Bill. A question then arises for the Minister—I do not believe he believes in accepting serious human rights abuses. If that is not going to be put in the Procurement Bill, how will the Government pursue their objective of trying to do something about serious human rights abuses through the Bill or will they not? Will they just leave it to the market to do?

That is the point of Amendment 331, which my noble friend Lady Hayman, the noble Lords, Lord Bethell and Lord Fox, and I have put down. We have listed just some of the grounds, and we think that, if a supplier is guilty of those human rights abuses as listed in the amendment, and others, the contracting authority should not procure from them. If that is not the right way of going about it, how will the Government ensure that contracting authorities do not purchase from those who have been guilty of serious human rights abuses such as war crimes, crimes against humanity, genocide, forced sterilisation and so on? I take the point made by the noble Lord, Lord Alton, that perhaps genocide needs taking from that; that may be helpful and is obviously something that can be looked at.

It is not just us in this Committee; the Foreign Affairs Committee has also said that the Government and the contracting authority need to take these things into account when it comes to purchasing. The Government’s response to the Foreign Affairs Committee’s report, published in November, says:

“The forthcoming Public Procurement Bill will further strengthen the ability of public sector bodies to disqualify suppliers from bidding for contracts where they have a history of misconduct, including forced labour or modern slavery.”


There is a lot of pressure from lots of different bodies to do something about this.

I thought my noble friend Lord Hain made a brilliant speech on his Amendments 184 and 187. He talked about Bain with respect to South Africa. If his amendments are not the right way of going about things, what will the Government do about it? These are the Committee’s questions.

The noble Baroness, Lady Boycott, made a very important point about environmental considerations in Amendment 310 and so on. The Government will say, “We are very concerned about the environment; we agree with the thrust of the amendment.” If that is true, and the amendment is not going to be accepted and go into the Bill, how will that aim be achieved? That is certainly the frustration that I feel, and I want the Minister to answer on how it will be achieved if this is not in the Bill.

I come to Amendment 353 in the name of the noble Baroness, Lady Stroud, supported by the noble Lord, Lord Alton of Liverpool, the noble Baroness, Lady Smith of Newnham, and me. The noble Earl, Lord Dundee, also came in on that. I thank him for his kind remarks about my report at the Council of Europe; I appreciated that. That amendment is, again, about supply chains and how we ensure that contracting authorities do not contract with those who have modern slavery, exploitation and all those things that we would object to within their supply chains. If the Government do not agree with Amendment 353 and think it is unnecessary, how are they going to achieve what that amendment seeks to achieve? That is an important question for the Government to answer.

In other words, why are all the amendments in this group unnecessary? Why do they not matter? Why are they irrelevant? Why do we not need them in the Bill? How will the Government achieve all these objectives if they are going to say that all these amendments are not acceptable?

On the point that the noble Baroness, Lady Neville-Rolfe, made—she also picked up one or two of the points that the noble Baroness, Lady Noakes, made—Schedules 6 and 7 are massive. To be frank about it, whatever the rights and wrongs of those schedules, they have huge implications. All I want to ask the Minister is: how have the lists in Schedules 6 and 7 both been arrived at?

You could pick up a number of examples. Why, for example, does Schedule 7(15) set out a discretionary ground for exclusion for threats to national security? I find that quite difficult to understand. No doubt there is a good reason for it but you would have thought that a national security threat would be a mandatory ground for exclusion. The reason is probably in there somewhere but I could not find it. If you look at Schedule 7, there is a whole list of slavery and trafficking offences that are discretionary. It might be that they should be so but you would have to do a lot to convince the noble Earl, Lord Dundee, and me—let alone the noble Baroness, Lady Stroud—that they should be discretionary.

As the noble Baroness, Lady Neville-Rolfe, noted, whatever the rights and wrongs of these schedules and whether they should be there or not, how have the lists been arrived at? The purpose of Committee is to try to understand what the Government are doing so that, on Report, we can make our minds up on whether amendments that can be voted on should be taken forward.

[Baroness Neville-Rolfe (Con)]

I thank the noble Lord for taking up the point about the extent of the schedules and the shared detail that people who are procuring—they are sometimes quite small organisations —will have to comply with. We have also heard that there will be guidance, so not only do you have the nightmare of a complicated Bill with rules that are different from the EU ones that, with great difficulty, people have become used to; you also have extra guidance that I do not suppose will be scrutinised by Parliament. That creates further difficulties for the people on the receiving end who are trying to do a good job. I emphasise that I am as keen as anybody to have companies doing the right thing but we have to find a way of getting this through, in not too complex a fashion, so that this can go forward smoothly.

[Lord Coaker (Lab)]

That is a point well made. Indeed, the whole issue of the increase in the use of regulations by the Government is something that various Select Committees and other committees have commented on. It is a real difficulty because you do not know what the regulations will be. The legislation just gives the power to the Secretary of State to make regulations; you then wonder what they will be.

If I understood her amendment right, the noble Baroness, Lady Noakes, asked why some provisions in the schedules, perhaps really important ones, do not apply if a supplier contravenes them before the Bill becomes an Act. It strikes me that the self-cleansing we talked about earlier would have to be pretty dramatic if, on 26 February 2023, a firm was found guilty of breaking some of the mandatory conditions laid out in Schedule 6 then, on 3 March, it said it had dealt with those but you could not take into account the five days before when it had broken a lot of the conditions because it was before the Bill become an Act. Is that really what the Government intend? I am not sure because, when I read it, I could not quite make this out. I think that the point of the amendment from the noble Baroness, Lady Noakes, is to try to understand exactly what the Government are getting at. What does “before” mean? There are a range of things in that.

The central point I want to make in speaking to our various amendments is that, if all these things are unnecessary around all these things that are really important, how are the Government going to achieve these objectives, many of which are part of their own policies? Many of us wish to see the Procurement Bill used as the vehicle to achieve that but the Government are resisting, and will resist, that. How will they be achieved if not through this Bill?

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However, I point out to my noble friend that we have also narrowed the scope of certain grounds where appropriate. For instance, the current discretionary ground for violations of applicable obligations in the fields of environmental, social and labour law is so broad that suppliers face exclusion for relatively trivial breaches. We have boiled this down to target the most serious cases of labour and environmental misconduct. That may not please all, but the Government are seeking to find a balance. Overall, Schedules 6 and 7, in our submission, represent a significant refresh of the grounds in the EU directive, and we contend it was a much needed one. However, I say to my noble friend that we are obviously ready to engage on the details in the schedule between now and Report.

[Baroness Neville-Rolfe (Con)]

As it is still Committee, can I just ask a question about tax and competition offences? I am not clear whether those are forward-looking or backward-looking, so if you are a company that, for example, has had a competition or a cartel offence—a minor offence in a subsidiary—are you saying that those groups will be on a debarment list and can no longer be engaged? Similarly, if somebody has had a tax argument, which people have had in the past, and that has been settled—I think there have been some big brands in the past, not that I have been involved, that have had such settlements—are we somehow now saying that those are pariahs, and they are not allowed to engage in procurement for the future? I would just like to be clear about this because my worry is about the perverse effects of this debarment list you are going to have.

[Lord True (Con)]

My noble friend makes an important point. There are elements in here which are looking back and there are elements which are about the present. Legal issues are raised here, and it is important that I come to my noble friend and the Committee with a very specific definition and response to her question in relation to tax and finances.

Amendments 174 and 317 proposed by the noble Lord, Lord Mendelsohn, and Amendment 179 from the noble Baroness, Lady Hayman, seek to bring matters related to prompt payment performance into scope of the supplier exclusion regime. Prompt payment is important; it is lifeblood, in many cases, to small enterprises. The Government are committed to ensuring prompt payment of suppliers, and there are a number of ways in which the Bill does this. For example, 30-day payment terms will apply throughout the public sector supply chain, regardless of whether they are expressly written into the contract. In addition, payment performance can be assessed as part of the award criteria, providing it is proportionate and relevant to the contract.

The Government encourage suppliers to sign up to the Prompt Payment Code. However, we submit that requiring every potential bidder to become a signatory to the Prompt Payment Code is too onerous on some suppliers and would discourage them from bidding, undermining the ability of contracting authorities to achieve value for money.

The noble Lord, Lord Hain, with support from others, proposed Amendments 184 and 187, which seek powers for Ministers to exclude suppliers which have acted in any way unlawfully or unethically. The noble Lord was abundantly clear about what he had in mind when he spoke to his amendments, although he did not stop there; he made broader points about multinational behaviour which I also listened to and took in. We believe that, in the way the proposal is drafted, the threshold is too low for such a serious measure of acting in any way unlawfully or unethically. Exclusion should be reserved for suppliers which pose a serious risk to contracting authorities or the public. We believe that it is also appropriate that the decision to exclude suppliers falls in general to the contracting authority running a procurement.

However, the exclusion grounds cover unethical conduct. Any serious breach of ethical or professional standards applicable to a supplier is deemed to be professional misconduct, whether or not those standards are mandatory. The noble Lord will be pleased to know that professional misconduct is a ground where a debarment case could be made, as drafted in Schedule 7, paragraph 12(1), although I make it clear that I am not commenting on any individual case. As the noble Lord, Lord Hain, told the Committee, I understand that he is meeting my right honourable friend the Minister to discuss this issue. The review led by Cabinet Office officials into the case that he asked for—and indeed the Prime Minister instructed to be done—is now complete and is currently being considered by the Minister. Unfortunately, I cannot say any more at this stage.

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[Lord True (Con)]

My Lords, I referred to the position where there may be no relevant national laws. The Government’s submission is that this Bill greatly strengthens the defences we have against modern slavery and the vile abuse of individuals in these circumstances. As I said, this will apply whether or not there has been a conviction or a breach of an international treaty.

[Baroness Neville-Rolfe (Con)]

On modern slavery, the Minister is surely saying that there has to have been a conviction for somebody to be on the debarred list. The first person prosecuted under the Modern Slavery Act—I almost hesitate to say this—was Sainsbury, so they had a case against them. Sorry, I am just trying to understand this; is the Minister saying that they would therefore be on the debarment list? I do not think that is the intention.

[Lord True (Con)]

No: I said that the current rules are too weak. They do require the supplier to have been convicted. I am saying that we are moving beyond that to a different evidential base and test. I recognise the strength of feeling among noble Lords on this issue. I commit to engaging further with my noble friend and other Members of the Committee on this prior to Report. On that basis, I respectfully request that these amendments are not pursued.

Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

Committee stage
Monday 24th October 2022 Grand Committee

[Baroness Hayman of Ullock (Lab)]

My Lords, I also start by welcoming the Minister to her new role. I thank her and her officials for having a useful meeting with us ahead of today. Let me say how pleased we are to have a Minister who is genuinely interested in this Bill. The noble Lord, Lord Fox, talked about the Minister’s previous involvement; I am sure that her knowledge and interest will lead us into a better place.

I will start with the two amendments in the name of my noble friend Lord Hunt of Kings Heath, Amendments 177 and 180, to which we offer our strong support. Clearly, all of us should embrace anything we can do to tackle tax abuse and tax avoidance. I hope the new Government—we are looking forward to hearing what they have to say—will prioritise this area.

My noble friend talked about Amazon, the lack of accountability and the kind of poor practice that is replicated by many companies, and gave a thorough explanation of why the legislation in front of us could be used to make a difference to cases of tax avoidance and abuse. I hope the Minister listened to those concerns seriously and considers whether this Bill is an appropriate vehicle to address them.

The noble Lord, Lord Fox, introduced a number of amendments in the name of the noble Lord, Lord Wallace, to which I have added my name. I will not go into them in detail, only to say that we support incorporating evasion of criminal sanctions into the Bill. The failure to prevent bribery offences has been incredibly disappointing, and the Bill could be used to tighten that up and make more progress. Also clearly disappointing are the very few convictions there have been under the Proceeds of Crime Act. How can we use this Bill to make a difference in these areas where there is still concern? I am sure all noble Lords agree that we need to ensure proper and effective enforcement to curb any serious wrongdoings in these areas.

Briefly on Amendments 323, 326 and 327, in the name of the noble Baroness, Lady Noakes, she clearly introduced something that I had not really considered until I read these amendments. Again, “considered” is the important word here. She is absolutely right that you need to think about the strength of a subjective test and how it would be interpreted. I completely agree with her; we need to understand this better. I would be interested to hear from the Minister on this, because the noble Baroness, Lady Noakes, is correct that judicial review is simply not a practical option for SMEs; it just is not. How will this be interpreted and managed through the Bill? I look forward to the Minister’s responses.

[The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)]

My Lords, I thank all noble Lords for their kind welcome on my appointment as Minister of State at the Cabinet Office. I echo the words of the noble Lord, Lord Hunt, about my predecessor, my noble friend Lord True, and his willingness to engage—a model I will try to follow. I am very much in listening mode today, as we are still in Committee, working on the Bill.

I am poacher turned gamekeeper, and that can be a good qualification. As noble Lords know, I have consistently taken a keen interest in the Bill, although from a slightly different perspective. I will not delay you with a long introduction, but I am pleased that the Bill consolidates 350 EU regulations. That is simplification at a stroke: it streamlines public procurement and reduces burdens on business, and it turns EU-based law into UK law, which is why we can be confident of its progress.

In particular, it will benefit SMEs, for which we must do our best to offer a level playing field, so that they can increase their share of the £300 billion spent by public authorities each year. I think the noble Baroness, Lady Bennett, will agree with that. I am also looking forward, if I get the chance, to rolling out training on the Bill—simple, clear, comprehensive training in central and local government, and elsewhere. That will answer some of the concerns that I and others across the House have had on the Bill.

I thank noble Lords for their contributions on the grounds for financial exclusion and will try to respond constructively. I begin with Amendments 177 and 180 tabled by the noble Lords, Lord Hunt and Lord Hain. These seek to ensure that the suppliers who fail to provide contracting authorities with various details in relation to their tax affairs when bidding for contracts must be excluded from procurements. I should start by making it quite clear that the Government expect businesses to take all necessary steps to comply with their tax obligations.

However, noble Lords will know that the basis on which contracts must be awarded under the Bill is by reference to award criteria that relate to the contract being tendered, not to other matters such as where a supplier pays tax. This is the right principle to deliver value for money for the taxpayer and ensures that suppliers are not required to provide swathes of information that is irrelevant to the contract. This principle is also a feature of the UK’s international obligations, notably under the WTO government procurement agreement. It is for His Majesty’s Revenue and Customs to enforce the law on tax and, indeed, UK-based multinational enterprises are required to make an annual country-by-country report to HMRC. I note what was said by the noble Lord, Lord Hunt, about Amazon.

The grounds for exclusion in the Bill focus on criminal convictions and other serious misconduct that raises a risk to public contracts, including, importantly, in relation to tax. But investigation does not mean guilt in this country. Exclusion is not a substitute for a judicial process. It is important to let due process run its course before subjecting suppliers to mandatory exclusions.

However, we have broadened the scope of the current regime with the mandatory exclusion grounds related to tax in Schedule 6, which cover all tax evasion offences and involvement in abusive tax arrangements. This is a significant broadening from the current regime, which is limited to where there has been a breach of tax obligations and lets suppliers off where they have repaid or committed to repay unpaid tax. I am confident that these grounds are sufficient to protect contracting authorities and taxpayers.

[Lord Fox (LD)]

During that spirited defence of the need to keep things open for international companies to be able to bid, the Minister used the phrase “value for money”. Can she define the Government’s view of how they calculate value for money?

[Baroness Neville-Rolfe (Con)]

If I may, I will think about the answer, make some progress, and come back to that on a future occasion.

[Lord Fox (LD)]

It is surprising that the Minister cannot answer that.

[Baroness Neville-Rolfe (Con)]

Well, I think that “value for money” is a clear term, but I am listening seriously to the point that the noble Lord is making in this context. Value for money is about quality and quantity; indeed, it is about many things, as I know, having been on the buyer side in real life as well as on the selling side. As for what the definitions are in the Bill, I am not sure.

I come back to the important points from the noble Lord, Lord Hunt, on the subject of tax. It was clear from feedback on the Green Paper that the existing tax exclusion ground is one that many authorities are struggling to apply. By reframing the ground in terms of UK offences and regulatory decisions, we believe that it should be easier for UK contracting authorities to apply this. I also add—because I remember it well from the time that I served in David Cameron’s Government—that the UK has tried to lead the way internationally in making sure that multinational companies pay their share. Strong HMRC compliance action has secured and protected over £250 billion for public services since 2010 that would otherwise have gone unpaid, including £3 billion from those trying to hide money abroad. This is work that goes on—and work to which HMRC is devoted, as I remember well.

The noble Lord also raised tax havens. The Bill will deliver unprecedented levels of transparency in procurement, including—this point needs to be made—with respect to the beneficial ownership of suppliers. All suppliers will be expected to declare their beneficial owners when bidding for contracts. Failure to provide accurate details of beneficial ownership when asked will now be a mandatory ground for exclusion.

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[Noble Lords]

Oh!

[Baroness Neville-Rolfe (Con)]

I try to wake up early, as noble Lords know. Value for money is not defined in Clause 11(1)(a), to leave a degree of flexibility for future refinement. In practice, we will use the HMT definition, which is currently,

“the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcome of the business case.”

It is quite a nice mixture—economy, efficiency and effectiveness.

[Lord Fox (LD)]

I thank the Minister, but the question I was rather clumsily trying to ask was whether we extract from the cost the amount of money we expect to take in tax or merely use the cost as a flat sum. In other words, with a British company paying full British tax versus one of the companies described by the noble Lord, Lord Hunt, which pays no tax, does the overall cost of that service become less for the one paying tax? It seems the Minister’s answer is that the tax take is not included in the calculation of value for money.

[Baroness Neville-Rolfe (Con)]

I think we have made a bit of progress; I will not go down that rabbit hole or we will not make enough progress.

If I might, I turn to Amendments 306, 307, 308 and 320 tabled by the noble Lords, Lord Wallace, Lord Fox and Lord Hain. They would introduce new mandatory exclusion grounds in relation to offences of sanctions evasion, money laundering and failure to prevent bribery, and new discretionary exclusion grounds in relation to various financial and economic misconduct when the contracting authority has sufficient evidence in the absence of a conviction.

The mandatory grounds for exclusion cover the types of misconduct which raise only the most serious risks for contracting authorities. We have already strengthened the mandatory grounds significantly in comparison to the EU regime, but they cannot and should not cover every offence. On sanctions, the types of freezing orders referred to in the amendment are unlikely to be relevant to public contracts. On bribery and money laundering, we have included a range of mandatory exclusion grounds covering the most serious offences. This expands the scope of the offences covered in the EU regime to cover blackmail as well as bribery. However, I reassure noble Lords that the offences in question which are not listed as mandatory exclusion grounds are likely to be subject to discretionary exclusion, under the ground of professional misconduct. This will depend on the circumstances, but if the ground is met, contracting authorities could exclude the supplier.

As to the amendment to include financial and economic misconduct as a new discretionary exclusion ground, we have already explained to this Committee that the exclusion regime is not a substitute for a judicial process. I am not prepared to require contracting authorities to weigh up complex evidence of financial and economic misconduct in which they have no relevant experience. That is a key issue with the ambitious proposals described by the noble Lord, Lord Fox.

Amendments 323, 326 and 327, tabled by my noble friend Lady Noakes, concern the discretionary exclusion grounds for potential competition infringements and the test for when these apply. These exclusion grounds recognise that there may sometimes be evidence of competition infringements in the absence of a regulatory decision or ruling. It is critical that suppliers known to have been involved in collusion, bid-rigging and anti-competitive behaviour are held to account, given the fundamental importance of fair and open competition to procurement.

However, I reassure the Committee that these grounds should not be used to exclude suppliers merely because they are under investigation by the CMA or another regulator; there must be sufficient evidence that a breach of competition rules has occurred. I think my noble friend pointed out that the language used in the Explanatory Notes differs from that in the Bill. I am advised that this does not reflect a difference of policy or meaning. Authorities must “consider” that the conduct specified has occurred before determining that the exclusion ground applies. She went on to ask about why there were subjective tests in the discretionary grounds. I have to say that I had some difficulty in exactly following her logic in all this, and we may need to discuss these points further after Committee. The answer is because exclusion is a risk-based measure and a last resort, and suppliers are protected by a right to challenge the exclusion decisions because of the nature of those decisions.

[Baroness Noakes (Con)]

A moment ago my noble friend said, in respect of the amendment by the noble Lord, Lord Fox, that she did not want decision- makers trying to weigh up complex financial matters, but she somehow seems quite happy to have decision-makers weighing up equally complex matters scattered throughout Schedule 7 and in the discretionary exclusion grounds. I struggle to see the intellectual cohesion in the Government’s position.

[Baroness Neville-Rolfe (Con)]

I thank my noble friend for her further comments, which I will consider carefully. I myself feel strongly, as someone who has witnessed small construction companies being investigated by a competition authority that at the end of the day have been found completely innocent, that it would be difficult if they were not able to continue to engage in procurement during a long period of investigation. However, as she explained, we need to get right how we deal with the discretionary grounds and ensure that there is enough certainty so that authorities do not spend too much time going round in circles. We need to reflect further on the points that she has made. I think I slightly misunderstood the purport of her original amendment, so I look forward to discussing that with her. I thank the noble Lord, Lord Fox, for his intervention.

[Lord Fox (LD)]

I thank the Minister for her response. The notion of, in a sense, using professional misconduct as the catch-all for everything else is something that we could pursue after Committee. It may be something that requires some definition or clarification, either within the legislation or from the Dispatch Box on Report. If that is going to be the way that the Bill operates, some clearer idea as to how it would work would help to ameliorate some of the fears that have been expressed around the Bill.

[Baroness Neville-Rolfe (Con)]

We have to get the right result but we also have to avoid a chilling effect. That is my basic approach to this.

[Lord Fox (LD)]

A chilling effect on corruption?

[Baroness Neville-Rolfe (Con)]

A chilling effect on corruption is obviously positive but a chilling effect on people being prepared to engage in government procurement is not, particularly smaller suppliers, which might be put off by some of these rules. That is why we brought in Schedule 6, which will bring a certain clarity. There may be some further discussions to be had on Schedule 7 and exactly how it works.

[Lord Purvis of Tweed (LD)]

I too welcome the Minister to her position. My question relates to a later group in which I have an amendment. Given that the Bill will allow for there to be no discrimination against any treaty-state supplier, how will a contracting body or procurement body operate under Schedule 7 for any of the suppliers from any of the countries with which we have a trade agreement? This comes back to the point made by the noble Baroness, Lady Noakes. It is not simply the case that businesses are going to have to work through Schedule 7 to satisfy all the grounds for this; they are going to have to do it with every single country with which we have an FTA for the suppliers coming from them. How is that making the job easier?

[Baroness Neville-Rolfe (Con)]

As the noble Lord said, we will come on to discuss those aspects, and I will try to answer that question when we get there. I have probably said enough on that.

Amendment 328 in the names of the noble Lords, Lord Wallace and Lord Fox, provides for a new discretionary exclusion ground in relation to deferred prosecution agreements. This issue was explored in the Green Paper. Due consideration was given to feedback from the public consultation, as well as discussions with the Serious Fraud Office and the Crown Prosecution Service. The Government’s response to the Green Paper set out the rationale for their decision not to include a separate exclusion ground on deferred prosecution agreements. In brief, the actions taken and commitments made by suppliers as part of the DPA typically constitute good evidence of self-cleaning. Reaching a DPA requires a supplier to accept culpability for the offence, co-operate with the relevant authorities and make reparations. Prosecuting authorities typically will not consider a DPA appropriate unless the supplier has already made reforms, such as proactive changes to corporate structures or the replacement of personnel.

DPAs will involve judicially approved terms that the supplier must commit to—for example, on actions to improve compliance and audit functions within the company, and external reviews to test those improvements to ensure that further misconduct does not occur. Non-compliance with a DPA is unlikely to be something that contracting authorities are equipped to assess. I hope that the noble Lord, Lord Fox, will understand and accept that.

Compliance is for either the Serious Fraud Office or the Crown Prosecution Service to assess, depending on which is the owner of the DPA in question. If a supplier fails to comply with a DPA, there are a number of options open to the enforcing body, including the prosecution of the supplier for the original criminal misconduct, but that cannot be part of procurement law, or for enforcement by the many differently sized authorities engaged in buying goods or services in the public sector.

Finally, Amendment 443 tabled by the noble Lord, Lord Wallace, seeks to remove

“a British Overseas Territory or a Crown Dependency”

from the definition of a UK supplier. The Bill confers rights on UK suppliers in a number of places, including, in Clauses 18 and 19, an entitlement to be considered as part of a competitive tender, or, in Clause 89, to access remedies. They are also used as the basis for an assessment of no less favourable treatment in the non-discrimination provisions, in Clause 82(2). This amendment would remove this guaranteed access to the UK’s procurement markets from suppliers from Gibraltar, which is the only overseas territory or Crown dependency whose suppliers currently enjoy access under the existing procurement regime.

Although overseas territories and Crown dependencies are not part of the UK constitutionally, they do not become party to treaties in their own right. The UK must extend the territorial scope of its ratification of treaties to include them. As such, overseas territories and Crown dependencies are unable to secure rights to markets in the United Kingdom in the same way as other states. That is a long way of saying that in view of the special nature of the trading relationship between the UK and overseas territories and Crown dependencies, it is right to include them in the definition of a UK supplier.

This discussion has been useful and illuminating to me. I respectfully request that the amendment be withdrawn.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to the Minister. I particularly welcomed her comments on SMEs and training rollout. I really agree about the importance of investment in training as the Bill is enacted. However, I remain concerned about the Government’s approach, which seems supine in many respects when dealing with these multinational companies.

Only this afternoon at Oral Questions, we had a fascinating exchange about the remarkable decision to award Fujitsu a £48 million contract to upgrade the police national computer, given the role of that company in developing Horizon software for the Post Office. We were told by a Minister that in effect, there was no alternative because of the continuing arrangements with that company. Listening to the comments made by the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett, about performance issues, corruption, competition infringements, which were added to by my noble friend, and the issues on tax, essentially the Minister has an ideological objection to the use of contracts to further government policy outside the narrow procurement interest. This is where I fundamentally disagree with her.

It is not good enough simply to say that it is down to HMRC. Procurement can be used to enhance policy in a number of areas. Many of these multinational companies are taking this country for a ride. We need to see tougher action. Having said that, I hope that we can continue to debate this important issue. I beg leave to withdraw my amendment.

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Moved by

[Baroness Neville-Rolfe]

178: Clause 30, page 19, line 26, at end insert “or”

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Moved by

[Baroness Neville-Rolfe]

181: Clause 30, page 19, line 32, leave out “suppliers” and insert “persons”

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[Baroness Neville-Rolfe (Con)]

My Lords, Amendment 185 would require the Minister to publish in regulations a list of countries considered to be at high risk of performing forced organ harvesting. It would also require contracting authorities to exclude suppliers from those countries from certain procurements.

Clearly, I appreciate the seriousness of the issue of organ harvesting; I agree that it is a difficult matter for the Government. This is an abhorrent practice, as we heard from the noble Lord, Lord Hunt, which is all the more egregious when sponsored by the state. It is an issue that has been frequently debated in recent years; I recognise the dedication with which it has been pursued by the noble Lords, Lord Hunt and Lord Alton, and the noble Baroness, Lady Northover, with the support today of the noble Baroness, Lady Finlay, and the noble Lord, Lord Ribeiro. It is understandable that they take opportunities such as today to draw attention to the awful things that are happening and the scale of the issue.

The noble Lord, Lord Hunt, is right to record that the Government are taking action to address this issue on a number of fronts. The Health and Care Bill was amended during its passage through Parliament to prohibit commercial organ tourism and send an unambiguous signal that complicity in the abuses associated with the overseas organ trade will not be tolerated. Equally importantly, the Government continue to monitor and review evidence relating to reports of forced organ harvesting in China, and they maintain a dialogue with leading NGOs and international partners on the issue. This includes Foreign, Commonwealth and Development Office Ministers writing to the World Health Organization in Geneva to encourage it to give careful consideration to the findings of the China Tribunal on organ harvesting, published in March 2020.

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[Baroness Neville-Rolfe (Con)]

My Lords, I was talking about the international angle and the importance of doing things internationally. I am particularly grateful for the reminder of the need to discuss these issues with my noble friend Lord Goldsmith of Richmond Park. I will also talk to the FCDO, DHSC and DIT about the UK-China hospital partnership and whether there has been any use of UK Export Finance. I have not been briefed on the issue, but I will write to the noble Lord, Lord Alton, who is not in his place, and the noble Baroness, Lady Northover, if they are content.

Turning to the main issue, I must resist this amendment on a number of counts, which I will explain. First, it treats suppliers as excluded simply for being located in a country at high risk of organ harvesting. This is guilt by association. It would undermine the principle, which runs throughout the exclusions regime, that suppliers can be excluded only where the supplier or a connected person has committed relevant misconduct. This is really important to ensure fairness and proportionality in exclusion decisions. The amendment could also have perverse effects—for example, preventing the NHS procuring life-saving devices in a country, even though they have nothing to do with organ harvesting or people trafficking.

Finally, there is already a provision in the Bill which would allow for the exclusion of suppliers who participate in forced organ harvesting. The Bill is clear that any serious breach of ethical or professional standards applicable to the supplier would meet the discretionary exclusion ground for professional misconduct. It is almost certain that involvement in these practices by suppliers of goods or services related to transplant medicine or human tissue would constitute a breach under the detailed standards set by health sector institutions.

The exclusion ground of professional misconduct is intended precisely to cover all the particular ethical issues that arise in different industries and sectors. That is of course an exclusion we agreed earlier, which merited further discussion. The grounds for exclusion cannot and should not list every issue within a particular industry. I should repeat that the exclusion and debarment regime in the Bill represents a significant overhaul and enhancement of the EU system; we should not forget that.

Finally, to respond to the noble Lord, Lord Alton, I have already promised, in his absence, to write on the subject of the hospital, but I am also of course aware of the concerns regarding Hikvision.

[Lord Alton of Liverpool (CB)]

I apologise to the noble Baroness; I got trapped in the Chamber when the doors were locked at the end of the Division—it serves me right. Some people may wish it had been permanent. I am grateful to the noble Baroness and look forward to reading her reply in Hansard.

[Baroness Neville-Rolfe (Con)]

I look forward to getting delayed in the Lobby in the next Division.

I am aware of the concerns regarding Hikvision and other Chinese technology companies; we take these concerns extremely seriously, as the noble Lord knows. We are taking action in the Bill to introduce a new ground for exclusion, specifically to address situations where a supplier poses a threat to national security. The new exclusion ground allows a contracting authority to reject bids from suppliers that the authority considers pose a threat to the national security of the United Kingdom.

It is the long-standing policy of successive British Governments that judgment as to whether genocide has occurred is for a competent national or international court. It is not for the contracting authorities. Genocide is a crime and, like other crimes, whether it has occurred should be decided after consideration of all the evidence available in the context of a credible judicial process.

This has been an important debate. I have learned a lot but, for today, I respectfully request that this amendment be withdrawn.

[Lord Purvis of Tweed (LD)]

I would be grateful if the Minister could clarify a little her argument as to why organ trafficking—which is prohibited under the UK’s statute book—cannot be mentioned in Schedule 6 under the mandatory exclusion grounds. Under labour market, slavery and human trafficking offences, there is a fairly comprehensive list of UK domestic offences that are mandatory grounds. I do not see why that list cannot be added to, as I cannot see where the ethical grounds are included within Schedule 6 on the mandatory grounds.

Can the Minister also clarify why, in Schedule 7, on discretionary grounds, those offences are included for prevention orders? The Government seem to be suggesting that for a company that is subject to prevention orders for these heinous crimes—or could be subject to them, if it were a foreign supplier—this is simply discretionary. A contracting body would have to make a judgment itself as to what it considers would be the likelihood of a supplier meeting the threshold for a prevention order, rather than an offence. That does make any sense to me. I would be grateful if the Minister could address those two points.

[Baroness Neville-Rolfe (Con)]

I will need to take the noble Lord’s first point away and look at it. His explicit point is that there is a bit of legislation, so why do we not refer to it? His second point is tied up with how this discretionary schedule works and how we define “professional misconduct”, which, in our interpretation, includes ethical issues. I thank him for raising these issues again.

[Lord Purvis of Tweed (LD)]

I would be grateful if the Minister were willing to consider this. It is not about the ethical point. It comes under paragraph 1 of Schedule 7, which is headed “Labour market misconduct”. Sub-paragraphs (a) to (d) specifically refer to slavery and trafficking prevention orders and trafficking and exploitation prevention orders. If a supplier is considered to be acting in a way that would satisfy a prevention order in the UK, it would be a discretionary exclusion ground rather than what I consider it should be: a mandatory exclusion ground. I am happy for the Minister to reflect on it and write if she cannot answer today.

[Baroness Neville-Rolfe (Con)]

Clearly, I have learned during this debate. I will obviously have to learn a little more about how we have tackled this issue. As was said right at the beginning of the debate, there is clearly some difficulty around the principle of how much detail to include and how many things to cross-reference in the Bill but, in the light of the noble Lord’s helpful clarification, I will go away, look at the various areas and come back to him.

[Lord Hunt of Kings Heath (Lab)]

My Lords, this has been a very interesting debate. I am grateful to the noble Lord, Lord Alton, the noble Baroness, Lady Northover, and my noble friend Lord Coaker for their profound speeches. Of course, I also thank the noble Baroness, Lady Finlay, and the noble Lord, Lord Ribeiro, who cannot be here today.

The noble Lord, Lord Alton, put a number of pertinent questions to the Minister, not just about the UK-China hospital partnership but more generally about the principles behind our trade with China. I must say that I find government policy inconsistent and incomprehensible. The new Administration, if I can call them that, need to get a grip on what exactly our relationship with China ought to be in terms of diplomacy, trade and strategic investment. Over the past few years, it has seemed completely all over the place.

There is an argument—my noble friend Lord Coaker referred to it—about the principle of how much we should use procurement legislation for wider, desirable policy aims. I believe passionately that it is right to use a Procurement Bill to try to influence this abhorrent practice. I am grateful to the Minister because she gave a careful response and appreciated the seriousness of this abhorrent practice, which we are doing our best to help eradicate. She also acknowledged the changes made in legislation in the past few years. However, she was critical of the amendment’s wording; she has quickly taken on the mantle of ministerial office again, by finding all amendments that do not emanate from her own department technically deficient.

The Minister’s key point around what is wrong with the amendment is that it is guilt by exclusion. I understand that but I believe that the amendment is tightly drawn. It is not just about excluding suppliers

“located in a country categorised … as at high risk of forced organ harvesting.”

It would exclude only in the event of

“a public contract involving … any device or equipment intended for use in organ transplant medicine or activities relating to”

that. That is tightly drawn and entirely justifiable.

The Minister also said that these practices would be covered by the exclusion grounds in the Bill. We have now had a debate on that; I thought that the noble Lord, Lord Purvis, raised some important questions. I accept that one can look to general provisions in a Bill and say, “Well, those cover it”, but I believe that there is sometimes a strong place for explicit provision on a practice that we find abhorrent. I hope that the Minister will be prepared to discuss this with us between Committee and Report because I am convinced; I am grateful to my noble friend Lord Coaker for his pertinent comment that we will come back to this on Report. Having said that, I beg leave to withdraw the amendment.

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[Baroness Neville-Rolfe (Con)]

My Lords, this is a rather confusing group, so I will start by speaking to the two government amendments. Amendment 237 removes duplication of the direct award ground, which is adequately covered in Clause 41; and Amendment 245 requires appropriate assessment prior to the direct award of whether a supplier previously submitted an unsuitable tender.

Looking at the group in the round, the noble Baroness, Lady Hayman, and the noble Lord, Lord Coaker, raised Amendment 235A, so that we could rightly debate the direct award of contracts; and the noble Lord, Lord Wallace, in his absence, gave notice of his intention to object to Clauses 40 and 41—I think because he wants to understand what is happening and wants answers to some of the questions that have been put by the noble Lord, Lord Fox.

Clause 40 permits a direct award to a supplier, other than an excluded supplier, if a justification in Schedule 5 is met. This is based on the World Trade Organization’s Agreement on Government Procurement grounds for limited tendering and is similar to the current law. We have been commended by external stakeholders for bringing clarity to the justifications and reducing the risk of unintended use of these provisions. As the noble Baroness said, publication of transparency notices is an extremely important development.

Just to let noble Lords know, I will deal with standstill provisions in the next group so, in the interests of time, will not cover them in this group. But I will deal here, a little later, with sunset clauses, which the noble Baroness also raised.

I was very interested to hear the explanation for Amendments 235ZA and 243A from the noble Lord, Lord Clement-Jones. He made a lot of points that I was not aware of, which I will study, in relation to the important areas of cloud computing and UK businesses. But I make clear that existing frameworks allow contracting authorities to buy cloud-based services separately, rather than in a package. In this way, SMEs are encouraged to provide services directly to the public sector, which is something that we are keen that they do.

Frameworks are of course created following a competition and they create a period of uncertainty on contractual terms, albeit they allow a closed list for contracts to be awarded, so it makes sense that they are for a limited duration—I think that is what the noble Lord was asking about. This should not lock out competitors for too long. Directly awarded contracts have a shorter duration for a different rationale: they allow contracting authorities to put alternative arrangements in place. That is the rationale, and we worry that the amendments put forward by the noble Lord, Lord Clement-Jones, would add more time as an unnecessary burden on contracting authorities by mandating them to check for and use available framework agreements, even where these might not be appropriate. Requiring them to keep within existing arrangements can actually stifle innovation and new entrants, particularly where the prototype in development ground is being used. The framework formalities, which may include a requirement for competitive process, may be impractical in cases such as those of extreme urgency.

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[Baroness Hayman of Ullock (Lab)]

Perhaps I might add that what the Minister said makes a lot of sense and is helpful, but one of the problems we have is that we do not know how effective it is going to be and whether it would work until we get into that situation again. Is there any ability to build in a review once the system has been tested, perhaps against a major public problem like we had with Covid-19?

[Baroness Neville-Rolfe (Con)]

I think our intention is to try to get rid of the VIP lanes. I will take the point away but there is a committee sitting—it will unfortunately sit for a long time, no doubt—that is looking at a lot of these important issues, and at some of these lessons. It is doing things in phases, so hopefully we will begin to get some output soon. We have had the Boardman review and, as the Committee can hear, we have tried in this Bill to learn from that and not to have a preferential system. The point about non-discrimination and such things is in the same spirit. I will take away the point about spirit and what we are doing here, but we have some good things in the Bill. I have listened to what the Committee has said but also tried to convince your Lordships about what we are trying to do.

I am advised that Clause 41 would prevent VIP lanes, as regulators will set out in advance what direct awards are permitted and Parliament would not approve anything too wide-ranging—I am sure that is true. The other point is that the Bill’s provisions on conflicts, which I am sure we will come on to debate further, also help against VIP lanes. We have quite a lot of things going on here; obviously, I am worried about piling it on. Everybody is concerned, so they all come in with different suggestions for trying to improve things. But if you pile those one on the other, you end up with rules that are too burdensome and do not work too well.

On the issue of a review, I think my noble friend Lady Noakes referred to some sort of review clause at an earlier juncture. “Review” is something that one tends to write into Bills where you have a problem. Perhaps we can discuss this further before Report to see whether a review is the right thing or whether enough is going on to try to ensure that we are in a good place on the Covid front. I respectfully request that the various amendments are withdrawn, and I would like to move the government amendments in my name.

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

My Lords, I remind the Committee that, where amendments are grouped, only the first amendment is moved. The others must be moved or not moved as they are reached on the Marshalled List.

[Lord Clement-Jones (LD)]

My Lords, it falls to me as the mover of the lead amendment to respond to the Minister. Clearly, there was quite a lot in what she said and we will need to brood over Hansard when the time comes because there are a large number of issues here. I recognise the Minister’s track record on SMEs but I am somewhat amazed that the Government have been commended on bringing greater clarity, as she put it, because our intention was to provide much greater clarity—and, indeed, equity—in all of this for SMEs. In terms of the addition of more time, burden and so on, I believe the Minister would normally think that we should go the extra mile for SMEs in these circumstances.

[Baroness Neville-Rolfe (Con)]

Certainly. We have discussed SMEs before; we have gone away to have a look at that issue. I recently held a round table with SMEs. Basically, they were positive about the Bill. Clearly, we have to see through and teach them about the new proposals. The basic point is that there are fewer different ways forward. I was quite surprised that that was the case but clearly there is complexity, and we have got to make sure that the Bill is in the right form.

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Moved by

[Baroness Neville-Rolfe]

237: Schedule 5, page 89, line 27, leave out paragraph 15

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Moved by

[Baroness Neville-Rolfe]

244: Clause 42, page 26, line 28, after “satisfy” insert “the contracting authority’s requirements or”

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[Lord Coaker (Lab)]

My Lords, we are getting into some detail now. That is the purpose of Committee and it is very constructive and informative. I very much agreed with the points made by the noble Lord, Lord Aberdare, about framework alliances and whether Clauses 44 to 47 include such alliances. If they do not, why not? The noble Lord’s point requires a simple answer: yes, they do, or no, they do not. He has asked an important question about the inclusion of framework alliances.

Similarly, I thought the points of the noble Lord, Lord Lansley, were really well made. Amendments 247, 248 and 249 have been put down specifically to ask the Minister whether the Government’s new subsection (3G) answers some of those points. That is the sort of detail we need to get into, as the cascade principle is really important. I think the noble Lord, Lord Scriven, also supported that.

I have a couple of specific points on the importance of transparency and openness, which we are all striving for. The noble Lord, Lord Fox, asked the Minister about what “value for money” means; that could almost be taken as a trick remark but it is crucial, as these sorts of definitions are really important. Therefore, can the Minister say what “proportionate” means in government Amendment 246? One person’s “proportionate” would be to allow people to get through without proper checks. However, without “proportionate”, the burden on some businesses and suppliers would be completely unacceptable—just too much and unrealistic. It would be helpful for the Committee to understand the use of “proportionate” in new subsections (3A) and (3D) and “may not” in new subsection (3C).

Government Amendment 246 talks about proportionate means of ensuring that suppliers have the relevant

“qualifications, experience or technical ability”

to perform a contract. It would be helpful if the Minister said a bit more about what that means.

More generally, since we are discussing Clauses 44 to 47, can the Minister explain why so many respondents to the Government’s consultation opposed open frameworks? Some 27% of the respondents did so. Is that a high negative response? I am not sure whether it is high or low, but it struck me as quite a lot. The Government did not agree with that view and ploughed on with Clause 47.

On Clause 45(3), can the Minister explain what sort of reasons there could be for a framework to exceed the normal eight years for a defence and security contract and four years for other frameworks? The Government seem to believe there might be a necessity to clarify that through their own Amendment 251, which seeks to clarify some of that but also reflects a concern about the number of years that could apply to a contract. That would be helpful.

Our limited discussion on the use of frameworks has been very important; it has sought to get into some of the details, which are what mean they do or do not work well—sometimes on the basis of what a particular word means. Like many noble Lords, I read the assessment in preparing for this Committee; you can see the point the noble Lord, Lord Fox, made in our earlier debate about a cry for clarity on what the Government are seeking to achieve. What different words mean is crucial. Building on the noble Lord’s plea to know what “value for money” means, a little more about what “proportionate”, et cetera, means in the context of government Amendment 246 would be helpful. The Minister may need a little more time to reflect on that but, if you are seeking a contract under a framework, the word “proportionate” will mean everything—or nothing. It would be very helpful if the Minister could clarify that.

With that, I think the Government have taken some very important steps forward under these clauses.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank the noble Lords, Lord Aberdare and Lord Scriven, and my noble friend Lord Lansley, for their kind words.

I will start with the government amendments, because even though this will not be in strict order, it will help to answer the other points that have been raised. Frameworks are a well-established commercial purchasing tool, used widely across the public sector. Having looked at some of the public responses, that percentage figure that was quoted is not worrying. Key is whether this is a sensible provision and whether we are reforming them in the correct way. The Bill makes a number of improvements to the effectiveness of frameworks, to increase flexibility, provide value for money, et cetera.

I am glad that the noble Lord referred to government Amendment 246 because it is quite a substantial and important amendment among the hundreds that I apologise for having tabled in Committee. It allows contracting authorities to set conditions of participation in a competitive selection process for the award of a contract under a framework. New subsections (3A) to (3F) impose restrictions on the use of such conditions to those which apply to conditions of participation in a competitive tendering procedure under Clause 21. These include limiting the conditions in various ways, for example, to those which are a proportionate means of ensuring that suppliers have the relevant qualifications, experience and technical ability to perform the contract, of ensuring that the conditions do not break the rules on technical specifications, and of requiring that equivalents must be allowed where particular qualifications are required. The question on proportionality is a good one. I do not have as good an answer for the noble Lord as I would like, so I will write to him on that point.

My noble friend Lord Lansley commended new subsection (3G). This restricts the basis on which proposals received as part of a competitive selection process under a framework can be assessed to all or some of the award criteria against which tenders the frameworks were assessed. This is to ensure that suppliers that have already been admitted to a framework do not have to meet entirely different criteria later. New subsection (3H) allows for the award criteria to be refined.

Government Amendments 251 to 255, and 258 to 260, relate to rules for frameworks for the future award of contracts. The remaining government amendments in this group deal variously with light-touch contracts, ensuring open frameworks work as intended, and with minor tidying-up changes.

Turning to the noble Lord, Lord Aberdare, the thing that we worked on together when I was last a Minister is still unresolved, so I feel a sense of guilt.

[Lord Aberdare (CB)]

The Minister did make some progress though.

[Baroness Neville-Rolfe (Con)]

I agree with the objective behind the noble Lord’s Amendment 245A. There is a need for this Bill to ensure that multiple contracting authorities may join to award a framework. Frameworks can result in significant savings, financially and in time, and they say that time is money. This is particularly the case where they are put in place for the benefit of more than one contracting authority, for example by centralised procurement authorities.

To that end, Clause 10 provides for contracting authorities to carry out procurements jointly and for centralised procurement authorities to put in place arrangements for the benefit of other contracting authorities. This enables them to delegate their obligations to run lawful procurements to centralised procurement authorities, in their capacity as specialists, or to jointly procure with them and remain responsible, together with their procurement partners, for the award of any resulting contract. The noble Lord will wish to look carefully at that, but I do not think that his amendment is necessary.

Amendments 247 and 248, tabled by my noble friend Lord Lansley, seek to add additional requirements for the award of contracts under frameworks, without a further competitive process. The first of these, a system based on the suppliers’ ranking in the competition for the award of the framework—the noble Lord talked of a cascade; we have talked of ranking—is certainly one mechanism by which contracts can be awarded under a framework without a competition. However, this is only one selection mechanism, and there are others. They might include a “taxi rank” system, where the next supplier on the list gets the work, or the supplier chosen could simply be the cheapest for that good or service, which contracting authorities might consider to be more appropriate for their requirements on that occasion. There is nothing in the Bill preventing contracting authorities from including rankings in a framework, but there is no need to require this for all frameworks.

The second requirement is to allow for the provision of additional information by suppliers in order to make an award without a competition. In this connection, I draw noble Lords’ attention to Clause 44(6), which allows contracting authorities to ask for additional information to ensure that call off competitions are effective. Sorry, that is a bit repetitive. This seems preferable to receiving large amounts of potentially unnecessary or irrelevant information and adding burdens to the award process, which we are all keen to avoid.

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Moved by

[Baroness Neville-Rolfe]

246: Clause 44, page 27, line 18, at end insert—
“(3A) A competitive selection process may provide for conditions of participation only if the contracting authority is satisfied that the conditions are a proportionate means of ensuring that suppliers party to the framework have—(a) the legal and financial capacity to perform the contract, or(b) the technical ability to perform the contract. (3B) In this section, a “condition of participation” means a condition that a supplier must satisfy in order to be awarded a public contract in accordance with the framework.(3C) A condition set under subsection (3A)(b) may relate to suppliers’ qualifications, experience or technical ability, but may not—(a) require suppliers to have been awarded a contract under the framework or by a particular contracting authority,(b) break the rules on technical specifications in section 24, or(c) require particular qualifications without allowing for their equivalents.(3D) When considering whether a condition is proportionate for the purposes of subsection (3A), a contracting authority must have regard to the nature, complexity and cost of the public contract.(3E) A condition of participation may require the provision of evidence that is verifiable by a person other than the supplier.(3F) If a supplier does not satisfy a condition of participation, the contracting authority may exclude the supplier from participating in, or progressing as part of, the competitive selection process.(3G) A competitive selection process may provide for the assessment of proposals, but only by reference to one or more of the award criteria against which tenders were assessed in awarding the framework.(3H) The award criteria may be refined for the purposes of subsection (3G).”

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Moved by

[Baroness Neville-Rolfe]

250: Clause 44, page 28, line 6, leave out “under an open framework (see section 47)”

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Moved by

[Baroness Neville-Rolfe]

252: Clause 45, page 28, line 24, leave out “a framework awarded”

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Moved by

[Baroness Neville-Rolfe]

256: Clause 46, page 28, line 42, leave out “supplier” and insert “person”

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Moved by

[Baroness Neville-Rolfe]

258: Clause 47, page 29, line 12, at end insert “(but see subsection (2A))”

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Moved by

[Baroness Neville-Rolfe]

261: Clause 48, page 30, line 10, after “competitive” insert “tendering”

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Moved by

[Baroness Neville-Rolfe]

263: Clause 49, page 30, line 31, after second “the” insert “contract”

[Baroness Neville-Rolfe]

My Lords, this group deals with Parts 9 and 10 of the Bill. Providing suppliers with an effective remedy is not only required by the World Trade Organization’s Agreement on Government Procurement, the GPA—a very important international agreement—but a critical aspect to any well-functioning and accountable procurement regime. It gives the market confidence to invest resources participating in government procurement, knowing that public contracts will be awarded fairly and transparently.

As such, in most cases, suppliers have 30 days from the point at which a breach should have been discovered to raise a claim, and in the majority of procurements a standstill period will apply. The standstill period of eight working days is a short pause between the point when the contract award decision is notified to bidders and the final contract conclusion. It allows bidders to consider the assessment summary, which includes evaluation feedback.

If a claim is filed at court during the standstill period, an automatic suspension will apply, preventing signature of the contract until the legal claim is resolved or the suspension is lifted on application of the contracting authority. If the standstill passes without challenge, it protects against the contract being set aside after it goes live. Clearly, we do not want court proceedings to be the only way to motivate contracting authorities’ compliance with the new Act, which is why we have introduced the procurement oversight regime in Part 10, which will enable an appropriate authority to investigate non-compliance, make recommendations and issue guidance across all contracting authorities, as a result of the investigations. This will encourage the consistency and continuous improvement we all want to see.

Government Amendments 263 and 266 correct the reference to the contract award notice in Clause 49(1)(b) and (4) respectively.

Amendments 265, 267, 393 and 394 make it clear that any time a contracting authority chooses to enter into a standstill period, which is known as a voluntary standstill period in circumstances where the Bill does not mandate a standstill period, it must match the mandatory standstill period and be for a minimum of eight working days.

Amendment 461 clarifies that failure to have regard to the national or Welsh procurement policy statements is not enforceable via Part 9.

Amendments 464 to 469 make some textual amendments and make it clear that the automatic suspension applies only when a claim has been notified during the standstill period.

The structure and drafting of Clause 95 will be amended by Amendments 470 to 476 to make the intent of the clause easier to interpret.

There are various amendments related to oversight functions. Amendment 481 to Clause 96 makes a straightforward clarification to the meaning of “section 97 recommendation”. Amendments 483 and 484 reflect the principle that an appropriate authority may issue guidance to contracting authorities only in line with restrictions on relevant authorities in Clauses 99 to 101. Amendments 501 and 502 amend Clause 101 to reflect agreements with devolved authorities that, where appropriate, UK government Ministers can issue guidance under Clause 98 to all contracting authorities, including devolved and transferred authorities, to maximise joint working and efficiency.

I pause at this point so that my noble friend Lady Noakes and others can speak to their amendments.

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[Lord Coaker (Lab)]

My Lords, this has been another interesting debate. This group is on oversight and remedies. If you are going to have something worth legislating for, it has to have some sort of oversight and remedy. In other words, you have to see whether you are achieving what you wanted to and, if not, know what you going to do about it. It is therefore an important section, but to do that you have to have the right fundamentals in the Bill to have oversight and remedy.

I agree with my noble friend Lady Thornton’s amendment. She has been consistent throughout this Committee in trying to ensure that the Bill reflects the importance of social value. The noble Lord, Lord Scriven, supported that in his remarks. I know my noble friend will continue to argue for it, and we will support her should she wish to take it further on Report. It is really important, and I thank her for that.

As we are coming to the end of our remarks, I shall say that I agree with the point made by the noble Lord, Lord Fox, on Amendment 353A, tabled by the noble Lord, Lord Wallace, on what has happened to the procurement review unit. It was in a Green Paper and it seemed to be universally applauded—except, obviously, somewhere in government, so it was struck out. It would be interesting to know why it was struck out. Everybody supported it, except the Government, so why were they wrong and the Government right? Sometimes I find it baffling to understand why something is done. A procurement review unit seems essential to review what you are seeking to achieve. It is not a weakness but a strength. Those are my remarks about that.

I have to say this openly to the Committee: I am devastated that I did not notice the amendment from the noble Baroness, Lady Noakes: Amendment 477. Honestly, it is absolutely brilliant. The noble Lord, Lord True, has been promoted for being a socialist in charge of the Bill; the noble Baroness, Lady Neville-Rolfe, is on her way; and now we have this from the noble Baroness, Lady Noakes. Clause 96 is quite astonishing. I reread it to make sure; when I read it before, it completely passed me by. I will read it out, because people will not understand if they read Hansard without also reading this. Clause 96(1) says:

“An appropriate authority may investigate a relevant contracting authority’s compliance with requirements of this Act.”


So, we have a really important government Bill that will become law, and then, in subsection (5):

“In this section—‘procurement investigation’ means an investigation under subsection (1)”—


which I have just read out—

“‘relevant contracting authority’ means a contracting authority”,

as the noble Baroness, Lady Noakes, points out,

“other than … a Minister of the Crown or a government department”

and various others. Why would the Government set up something that is desperately important—in other words, a procurement unit—which makes purchases of hundreds of billions of pounds, but their own Bill says they will not investigate them?

Amendment 477 is brilliant and, as I say, I am devastated that I did not think of it or notice it. Fair play—I am very fair. More seriously, the amendment points out something that fundamentally seems to be a flaw in the way the Bill is drafted. Otherwise, there must be some incredible explanation or reason that I cannot think of—I do not know if anyone else on the Committee can think of any.

To finish, oversight and remedies are an extremely important part of any Bill, because that is how you ensure that what you seek to achieve is achieved and that you are held accountable. The amendments seek to answer those questions. Unless the Minister is able to respond in a way that persuades us, I think there are certainly one or two issues that we must come back to. With that I will sit down. It is a brilliant amendment, honestly.

[Baroness Neville-Rolfe (Con)]

I thank noble Lords for an interesting debate on these non-government amendments. I do not think that I have a perfect reply to my noble friend Lady Noakes’s three questions. We are due to meet to discuss various aspects of the Bill and I would like to explore her questions further, and then perhaps I can write to the Committee when it is clear to me what the right replies to those questions are.

I will attempt to comment on the amendment that the noble Lord, Lord Coaker, has just talked about, on why government departments do not have the same obligation to have regard to recommendations under Clause 97. It is a simple question, and our response is that it is not necessary to include government departments in Clause 96 and 97, because the appropriate authorities have sufficient influence over contracting authorities to ensure that any recommendations that result from an investigation are duly taken into consideration. To confirm, investigations, findings and progress reports may be published by the relevant authority acting as a further incentive. It is simply unnecessary to provide statutory powers in respect of government departments, whereas due to the different relationship with non-central contracting authorities, statutory powers were required to ensure appropriate engagements for these purposes. As noble Lords will know, we have quite a well-developed procurement operation now, right at the heart of Government, sitting in the Cabinet Office, which I think is an improvement. That is why it is not provided for in the Bill.

Just before I leave voluntary standstills, let me say that I will make sure we come back properly on the exchange we had earlier. We want to maintain voluntary standstills for dynamic markets—they are intended to be quick to use, agile and efficient, as we heard from my noble friend Lord Lansley—and for light-touch contracts, which are often for time-sensitive services such as the provision of health and social care. We do not want to make the light-touch contract rules stricter in this regard than current legislation, as we think that could lead to some problems.

Amendments 349A, 349B and 353A were tabled by the noble Lord, Lord Wallace of Saltaire, and others. They seek to legislate for the procurement review unit with a new clause. The procurement review unit, which is very important, is not specifically referenced in the Bill as it will be exercising statutory and non-statutory powers on behalf of Ministers. The proposed new clauses would therefore conflict with existing provisions. Furthermore, considering the importance and potential implications of the decisions the PRU will support the Minister of the day in making—the proper statutory process—we believe it would be inappropriate to delegate that ultimate responsibility to unelected officials below ministerial level.

The PRU will work on behalf of the Minister of the day in two key areas. The first area is debarments. Clauses 56 to 61 set out the process for the establishment of a debarment list of excluded and excludable suppliers; this has already been debated. Under these clauses, it is envisaged that the PRU will investigate whether a supplier is subject to an exclusion ground and whether the issues in question are likely to arise again. The PRU will issue advice to the relevant Minister, usually the Minister for the Cabinet Office, who will take the final decision whether to add the supplier to the debarment list.

The second area is improving compliance with the Bill. Clauses 96 to 98 provide the framework and statutory powers required for carrying out procurement oversight. The PRU will exercise these oversight functions on behalf of the Minister and make proposals regarding any investigations, recommendations and statutory guidance it considers appropriate for the Minister’s ultimate approval.

[Lord Fox (LD)]

My Lords—

[Baroness Neville-Rolfe (Con)]

I will have a little more to say about this later on, so why not let me finish? If I do not answer the noble Lord’s questions, we will try to get at what is needed.

Amendments 477 to 480 seek to examine why government departments have been excluded from the appropriate authority’s investigatory powers. The definition of “relevant contracting authority” in Clause 96 is in recognition of existing governance. Ministers already have the authority to investigate government departments without the need for statutory powers; I think I have said that already. There are also established routes for co-operation with investigations.

Amendment 477A was tabled by the noble Baronesses, Lady Thornton—it is good to see her in the Committee—Lady Hayman of Ullock and Lady Bennett of Manor Castle, and the noble Earl, Lord Devon. Amendment 482 was tabled by the noble Baroness, Lady Noakes. These amendments would expand the scope of the statutory oversight powers beyond compliance with the Bill, straying into areas of policy. The scope of the statutory powers provided by these clauses has been carefully drafted to maintain the boundary between law, which must be adhered to, and policy, where some leeway is allowed in terms of its implementation.

Expanding Clause 96 and/or the Section 97 recommendations to include social value, as well as considering how contracting authorities have chosen to meet obligations to have regard to policy and principles, would blur that boundary and start to erode the autonomy of contracting authorities, which we recognise are best placed to make policy implementation decisions that are appropriate for their business. It would also move the statutory regime away from objective and measurable concerns into more subjective areas of debate, which could impact the effectiveness of the oversight system. We believe that the scope of Clauses 96 to 98 creates a proportionate, effective and compelling incentive for improvement. It is worth noting, however, that the drafting of Clauses 96 and 97 does not prevent the Minister from making observations regarding a contracting authority’s policy implementation. Policy guidance can indeed continue to be provided to contracting authorities.

Non-statutory procurement policy notes, which we have discussed before, are currently released to guide contracting authorities. In the new regime, under Clause 98, statutory guidance, which may be published as a result of investigations, can also address matters of policy. Contracting authorities will be required to have regard to any guidance released under Clause 98; I think this helps to deal with the social value issue. The removal of Clause 97(3) would result in the appropriate authority having the power to intervene in specific procurements.

The restriction in Clause 97(3)(c) ensures probity of the procurement by, for example, preventing a Minister of the Crown from using Section 97 to exert influence over which supplier is awarded the contract. That is an important point. To remove this restriction would be concerning to contracting authorities and suppliers alike.

Finally in this group, the noble Baronesses, Lady Thornton and Lady Hayman, and the noble Lord, Lord Coaker, tabled Amendment 486A. This seeks to stipulate that the expertise of SMEs, voluntary organisations and social enterprises is accessible to an appropriate authority that is conducting investigations under Clause 96. The PRU will be managed and delivered by a small, experienced team of civil servants based in the Cabinet Office, supported by a panel of experts, which can be consulted regarding investigations and any resultant Section 97 recommendations and guidance under Section 98. The Cabinet Office aspires to provide perspectives from procurement experts from across the Civil Service, local authorities and various types of private organisations, including SMEs and VCSEs, to benefit the oversight regime.

However, it should be recognised that having a panel which includes external procurement professionals is dependent on the availability of suitably qualified individuals and the ability to manage any potential conflicts of interest. I am therefore unwilling to make a legislative commitment of the kind proposed. However, the establishment of the panel will be transparent, and appropriate documentation will be published in due course, including on the process for appointing members. It seems to me that this is an important error, which is why I make that point.

[Lord Purvis of Tweed (LD)]

Can the Minister clarify whether it is the Government’s intention that the PRU will be an appropriate authority, so that panel members themselves will have legal powers under Section 96? If not, I am really confused as to what legal powers the panel will have when it comes to calling for documents, and what duty will be on other contracting authorities to provide the panel with any information at all. At the moment, it does not look as if the panel is considered to be an appropriate authority, so it will not have any other legal powers under Part 10.

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[Lord Scriven (LD)]

Following on from what the noble Baroness, Lady Thornton, has said, and from what the Minister said about how this could not be in the Bill because it is a policy initiative, the procurement objective in Clause 11(1)(b) is “maximising public benefit”, which is a policy issue. All the noble Baroness is trying to do is ensure that social value is looked at by the appropriate authorities. Actually, it is more defined and specific in law, because there is a social value Act but no public benefit Act. The Minister’s answer that it is just a policy issue really does not stack up.

[Baroness Neville-Rolfe (Con)]

We do have a social value Act; I think the answer is—subject to correction—that social value features in the NPPS, the policy guidance note, and that failure to have regard to the NPPS is challengeable via judicial review rather than by suppliers for breach of statutory duty under Part 9 of the Bill. That is more appropriate as the NPPS will inform procurement strategy, and failure to comply should not result in suppliers being able to seek compensation from the public purse in respect of an individual procurement. There is quite a lot of complication in that area, but that is the approach. There is a social value Act, but obviously I will listen to what has been said today.

To return to the PRU, the unit will exercise powers on behalf of an appropriate authority. The panel will consult the PRU when appropriate and, if the Government set up a panel, as Governments often do—we have various panels in different departments that I have been involved with, and in my experience they tend to endure; certainly this one will be useful—the PRU will make recommendations to the Minister, who is the appropriate authority and will make the final decisions. That seems to be the right approach constitutionally.

[Lord Purvis of Tweed (LD)]

I am grateful for that response. To be clear, will the panel be the investigating body?

[Baroness Neville-Rolfe (Con)]

No. The PRU, a Civil Service unit, will be the investigating body, which will consist of experienced people of the right kind. The panel will advise that body.

[Lord Purvis of Tweed (LD)]

I am grateful, but Clause 96 says the “appropriate authority may investigate”. The Minister has been referring in this short debate to “investigations” with regard to the panel. I am grateful that she has clarified that it will simply be an advisory group, not an investigatory group, and will not itself have the legal powers to seek documents. I am therefore not entirely sure what the PRU will do other than what existing civil servants do, which is to advise Ministers.

[Baroness Neville-Rolfe (Con)]

We have put together this whole new system of procurement, which includes various checks and balances. Panel members will be available for the procurement review unit to help regarding investigations and the unit’s work. Their reports and recommendations will help with moving forward on procurement and the complexities of this change of the law. Their advice can be published, and we will be able to reference the assistance that the panel has provided. That is the approach that we are proposing following a process of consultation. The PRU is central. I am sure we will revert to this issue.

[Lord Fox (LD)]

The Minister will have got the message that there is deep disquiet about how this will be structured and will operate. If the Minister has time, can she reflect on Hansard and write a letter before Report setting out how this unit will be set up and what its roles, on a statutory or non-statutory basis, will be? That would be very helpful.

[Baroness Neville-Rolfe (Con)]

Of course, I will write setting out how this will work. I ask the Committee to look at it constructively in the light of what we are trying to achieve across a very wide area of procurement. I go back to where we started in Committee, as this is probably the final amendment this evening, and say that there is also a process of cultural change, training and so on that will be going on, which is an important complement to the investigatory powers that we are looking at in this amendment.

I respectfully ask noble Lords not to move their amendments.

Amendment 263 agreed.

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Moved by

[Baroness Neville-Rolfe]

265: Clause 49, page 31, line 2, after “period” insert “(a “voluntary standstill period”)”

Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

Committee stage
Wednesday 26th October 2022 Grand Committee

[Baroness Hayman of Ullock (Lab)]

My Lords, this has been an interesting debate that I hope has been helpful to the Minister. I have three amendments in this group. Amendment 273 requires that one KPI is compliant with the carbon-reduction plan. Tied into that is Amendment 274, which requires that, where public contracts in scope of the KPIs fall below the threshold for mandatory carbon-reduction plans, at least one KPI should assess the supplier’s performance against climate or environmental considerations.

As I said on Monday, the transparency requirements are very welcome. We believe they could provide the opportunity for contracting authorities and their suppliers to demonstrate that they are having regard to climate change and are managing the risks through regular environmental reporting as a KPI. However, those requirements are not set out in the Bill but will be left to secondary legislation. For example, they do not impose requirements in relation to the environmental commitments made by the supplier awarded the contract or for the regular reporting on whether the commitments have actually been met. We feel that that needs to be strengthened, which is why we have tabled the two amendments on this area.

My Amendment 353AA would create the process to ensure that contracting authorities safeguard the public interest. I thank the noble Lord, Lord Fox, for his support. The noble Lord, Lord Scriven, gave a detailed explanation of the importance of this, so there is no need for me to go into any further detail. Looking at the public interest and the wider potential impacts of any contracts that are supplied is something that we need to be extremely aware of and cautious about.

I turn to other amendments in this group. The noble Lord, Lord Lansley, made some important points here; we are very sympathetic to them and I would be interested to hear the Minister’s thoughts. These seem to be straightforward areas where the Bill could be improved. In particular, the noble Lord explained how the time modifications, going from one-10th to one-sixth, made sense and would make life a lot easier for people. Again, these are sensible amendments so it would be interesting to hear the Minister’s response.

My noble friend Lady Thornton has tabled some amendments around KPIs and social value, and we strongly support both of them. I am sure the Committee is aware that social value is included in the national procurement policy statement, but there is no reference to social value in the Bill itself, as has been said on a number of occasions when we have debated this in Committee. We have been told by officials—and by previous Ministers before the noble Baroness—that social value is integrated into the concept of public benefit, but we believe that “public benefit” is just too vague a concept and it is just not clear where social value sits within this framework. My noble friend raises an important point with her amendments, and I hope the Government will start to take this issue more seriously.

As usual, the noble Baroness, Lady Noakes, put her finger on an area that needs proper clarification. I am sure the Minister will have listened very carefully to everything she said.

The noble Lord, Lord Scriven, introduced some of the Liberal Democrat amendments by talking about the importance of sustainable local improvements and, again, the wider public benefit: what is this, what does it mean and what will we get out of it in the Bill? Again, a lot of what he was saying—and what the amendments from the Liberal Democrats are doing—is very similar to, and ties in with, the amendments we have put down: they look at the environmental and social value impacts and how we can build these into the Bill to make important improvements.

The noble Baroness, Lady McIntosh of Pickering, made some important and specific points with her amendments, and I was happy to add my name to them. They draw attention to a really important issue, which has been missed out and is extremely pertinent at the moment when we consider current concerns over inflation—particularly food price inflation, as she mentioned—and the rise in prices more generally. Public sector catering businesses were really badly hit during the pandemic and are still struggling, so we need to pay proper attention to her amendments. If we are genuine about supporting SMEs, this is an area where they really need some strong support from the Government at the moment.

I commend my noble friend Lord Mendelsohn for his work on tackling the issue of late payment. His dogged approach to this has achieved much, but there is still much more to achieve. His amendments are very important and helpful; again, they are about helping SMEs, something the Minister has said time and again she wants to do.

As the noble Lord, Lord Fox, asked, why is there nothing on late payments, or the issues he raised in particular, in the Bill? This is a real opportunity to do that. The noble Lord, Lord Aberdare, raised similar issues around small and medium-sized businesses and the kind of support they need for procurement if they are to be able to make the most of the contracts that are out there for them. I totally agree with him on the issues around SMEs and the construction sector: it can be very difficult for SMEs to break into that sector, and very difficult for them to manage their cash flows if they start having issues around late payment, which unfortunately happens all too often. In addition, we would strongly support his request for picking up the meeting idea to see whether we can make some progress on this matter between Committee and Report.

To summarise, the Bill needs to ensure that it specifies that KPIs are flexible, proportionate, realistic, agreed properly with the provider and informed by engagement with the people accessing any services. These are helpful amendments, seeking to achieve many of these aims. I hope that the Minister is sympathetic to much that has been proposed and I look forward to her response.

[The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)]

My Lords, I am glad to be debating this group, which deals with prompt payment of suppliers throughout the supply chain, an important innovation in the Bill to deal with a long-standing problem. I am slightly perplexed by the words of the noble Lord, Lord Fox, because one of the advantages of the Bill is that we are making progress on prompt payment and adding rules in relation to the indirect suppliers, which is a considerable breakthrough.

There are a number of government amendments. Amendments 354 and 434 confirm the start of the period during which payment must be made following receipt of an invoice. Amendment 361 signposts the reader to an electronic invoicing provision in Clause 63. Amendments 360, 362, 363, 431 and 432 align wording with equivalent provisions elsewhere. Amendment 433 corrects the territorial application of this regulation-making power in Clause 80.

I now turn to government amendments to Clauses 69 and 70 and Schedule 8 on contract modification. Amendments 365 to 371 to Clause 69, “Modifying a public contract”, have been made to correct technical errors and make the clause clearer. Many of the amendments to Clause 70—I reference Amendments 390, 391 and 392A—arise as a consequence of the decision to divide this clause to make it simpler for contracting authorities to understand their publishing obligations.

Amendment 372 has been made to ensure that contract change notices are published when a contract is transferred to a new third party under paragraph 9 of Schedule 8. Amendments 373 and 374 clarify the anti-avoidance provisions. Amendment 375 creates a new paragraph (b), which reduces the burden of publication. Amendment 376 sets out certain contracts that are exempt from the obligation to publish contract change notices. Amendments 377, 381 and 385 are consequential. Amendments 378, 380 and 383 have been made to ensure that the clause will work effectively for Wales and Northern Ireland. Amendment 384 and 389 provide that certain other contracts are exempt from the requirement to publish details of a qualifying modification.

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[Baroness Neville-Rolfe (Con)]

Amendment 392 makes it clear that the power to change the percentage thresholds in Clause 70 applies to Welsh Ministers as well as a Minister of the Crown.

I apologise in advance for the length of my reply to the substantive points in this important group. I turn first to key performance indicators in Clause 50. My noble friend Lord Lansley’s first amendment would require contracting authorities to set at least three KPIs that are “quantifiable measures” as well as

“such further factors and measures as the contracting authority considers justified in relation to the requirements and value of the contract”.

The very nature of a KPI means that it has to be quantifiable; otherwise, performance cannot be effectively measured. In addition, the Bill already requires contracting authorities to set “at least three” KPIs, but they can set more where they consider it justified. His second amendment relates to where the KPIs are derived from. It proposes that they be tied to the specifications of the tender rather than to the contract itself. Forcing KPIs to be tied to the specifications of the tender means performance is not measured effectively. They need to relate to the final agreement, not to a previous document that may have been changed during the competitive tendering procedure. However, I can assure my noble friend that further regulation and guidance will describe the best way to set and monitor KPIs.

Amendment 269A, tabled by the noble Baroness, Lady Thornton, Amendment 272, tabled by the noble Lords, Lord Wallace and Lord Scriven, and Amendments 273 and 274, tabled by the noble Baronesses, Lady Hayman and Lady Bennett, and the noble Lord, Lord Coaker, would require KPIs to relate to wider policy matters, such as social value, carbon reduction and, as I think the noble Lord, Lord Scriven, mentioned in his intervention, sustainable local improvement. As stated a number of times in Committee already, and for good reason, procurement policy is not fixed and evolves as new strategic priorities emerge, such as our action to address climate change in procurement in recent years. Policy matters such as these should therefore not be included in the Bill and are better addressed in the national procurement policy statement.

Amendment 271, proposed by my noble friend Lady Noakes, suggests that Clause 50(2) should be removed. This provision confers a discretion on the contracting authority not to publish KPIs if the contract in question could not be appropriately assessed by reference to KPIs. Subsection (2) serves a vital purpose. It is not appropriate to measure all contracts by reference to KPIs—for example, a goods contract for an order of IT hardware or office furniture. We therefore need to confer a discretion on contracting authorities, rather than create a legal obligation that cannot be met in every case and which, in some instances, would add legal and administrative burdens with limited additional benefit that would be hard to justify. Moreover, the discretion in subsection (2) not to publish KPIs can be exercised only when appropriate. The transparency obligation in Clause 51 should, I believe, help to prevent any abuse of the provision. In addition, the Freedom of Information Act, which was mentioned in the discussion, allows stakeholders to exercise scrutiny over the form of KPIs that contracting authorities write into their contracts. It is not in their interest to avoid these requirements as the information will become public in any event.

I thank the noble Lord, Lord Fox, for his Amendments 275A and 276ZA and his thinking on KPIs, although I must confess to having a sense of déjà vu. The balance of benefit against burden is an important matter that we must look at in this Bill, and one that merits investigation by us all. I am therefore grateful for the opportunity to set out our position on this.

The power in Clause 50(4) allows amendment of the £2 million threshold in subsection (1) above which KPIs must be set and reported on. The two proposed amendments probe that power in different ways. The first amendment seeks to remove the ability to amend the threshold in its entirety and the second limits the power to reducing the threshold.

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[Lord Scriven (LD)]

I am confused by that answer; I do not understand, in practice, what the Minister has just said. There could be at least two public bodies involved in an individual’s care, through social care and the NHS. Can the Minister clarify a little better how the public interest is served when one public body decides to outsource, having an impact on another public body which has no control or say over the contract that has been let, when the client the contract could serve impacts on both bodies?

[Baroness Neville-Rolfe (Con)]

I was trying to make sure that the noble Lord knew that I had listened to his point. There is a point about what is covered by the Bill and what is not, so perhaps I will reflect a little further on how we achieve the best outcome in the sort of circumstances he describes.

Moving on, I thank the noble Lord, Lord Mendelsohn, for his kind words. I look back with great pleasure on the work we did together on those Bills. I very much agree with the noble Baroness, Lady Hayman of Ullock, that he has made a huge contribution in this area. To some extent, his dogged determination has been rewarded with this Bill, which, I think, as I said right at the beginning, makes something of a breakthrough. That is why I am glad now to be the Minister and to make sure that that breakthrough is reflected in a larger share of procurement for SMEs, with payment being more consistently speedy. It is clear that, in a lot of areas, payment is quite good.

The noble Lords, Lord Aberdare and Lord Mendelsohn, have tabled Amendments 353B, 370A and 430A. They would create a process for resolving payment disputes that would mandate escalation to the Small Business Commissioner, who we remember so well, for arbitration and resolution. Going back, I think that the noble Lord, Lord Mendelsohn, wanted me to be the commissioner, but it never happened. The amendments would also require the automatic payment of late payment interest in the event of a contracting authority being found to be in violation of the payment provisions of this Bill.

I believe that this Bill represents a big step forward in tackling late payment, as I have said. However, I believe that these amendments could introduce unwelcome complexity into the system for government suppliers and remove the parties’ ability to be flexible in matters of dispute resolution by tailoring dispute resolution and escalation procedures to particular contracts. There are now—this is an important point—a range of existing mechanisms in place to deal with late payment. Suppliers, including those in public sector supply chains, can raise payment delays with the Public Procurement Review Service, which the noble Lord, Lord Aberdare, kindly drew to our attention and which will work to unblock any overdue payments. It is a well-established service. It has been successful in releasing more than £9 million of late payments to date and has grown in confidence since we passed the Small Business, Enterprise and Employment Act 2015. I assure noble Lords that the PPRS will continue to carry out this function under the new regime to unlock contract-specific instances of late payment.

[Lord Mendelsohn (Lab)]

I have just two things to say very briefly. First, I did say that I thought the noble Baroness would be a brilliant Small Business Commissioner, but I think that she is a brilliant Minister.

I did not put the Public Procurement Review Service in my speech because I have issues with it. It has unlocked £9.4 million. When I first read its work in 2020, it said £8 million. I thought that meant £8 million in that year, but £9.4 million is the entire sum that it has unlocked since it was set up in the Small Business, Enterprise and Employment Act 2015. Last year, its achievement was £1.4 million. It has dealt with 400 cases and has, it says, been 100% successful. However, it is also reported elsewhere that it has dealt with more than 1,900 cases, most of which involved suppliers that gave up on it during the course of its process. Let me retell the numbers: 23,000 invoices in one local authority alone. The Minister can tell me that 400 cases over an eight-year performance is good, but I am not so sure. I appreciate that there is a vehicle—again, I am not picky about which one it is—but one cannot say that that performance is making any meaningful impact. That is why I would be grateful if the Minister could look at that in more detail.

[Baroness Neville-Rolfe (Con)]

I will certainly look at the figures, which I am very interested in, but this Bill obviously represents something of a step change. The key thing is how we can make it work effectively. I also highlight that suppliers already have the ability to claim interest on late payment under the Late Payment of Commercial Debts (Interest) Act 1998, which has been referenced. A reference to it in our Bill therefore seems unnecessary.

The proposed amendment would also significantly alter the remit of the Small Business Commissioner. Under current legislation, a small business may complain only about a large business. As such, it would not be appropriate to reference the Small Business Commissioner in this context; it is a slightly different type of system.

The noble Lord, Lord Mendelsohn, has also tabled Amendment 356A, which would place a duty on contracting authorities to report payment performance under regulations made under Section 3 of the Small Business, Enterprise and Employment Act 2015. These regulations currently place a duty on the UK’s largest companies to report on a half-yearly basis on their payment practices, policies and performance. We are thinking about what we can do to open up more contractual opportunities to SMEs and will come back to that on Report. We recognise the need for alignment with the private sector so that we can have a bit more comparison of performance.

However, we do not, for example, want to constrain the Government in the future from pursuing the reporting of higher payment standards for the public sector should we wish to do that, nor can we add new requirements to the private sector without some form of consultation, especially at this difficult time. I am happy to look at the possibilities on publishing payment performance information for private companies alongside those in the public sector and at trying to make the results more easily comparable. It may take a little time, but I hope that noble Lords will find that assurance helpful. We will see what we can do.

Turning to Amendment 361A, tabled by the noble Lord, Lord Aberdare, this amendment would enable contracting authorities to pay subcontractors in their supply chain directly where a prime contractor does not pay within agreed terms. The contracting authority would then be able to reclaim the outstanding amounts from the prime contractor, either by discounting the sum owed or by reclaiming the money as a debt. This amendment would, of course, utilise public money as a method of resolving such disputes. Where insufficient money remained, this would introduce risk and liquidity pressure to public sector accounts, with financial implications that are extremely difficult to countenance, especially in current circumstances.

The noble Lord, Lord Aberdare, asked whether we could introduce the “step-in” right, as suggested by Amendment 361A, as a right rather than an obligation. This could lead to confusion for contracting authorities about when they should step in. It would also expose them to unnecessary challenge when they decided not to step in. However, suppliers in public sector supply chains can, as we have noted, use the Public Procurement Review Service to help unlock late payments where existing contractual routes fail. Further, there are some other mechanisms available, for example, project bank accounts, which may work in some cases and allow protected sums to be distributed to those in the supply chain.

Turning to contract modifications, my noble friend Lord Lansley has tabled Amendment 364 to substitute a 10% term threshold with a threshold of one-sixth of the contract term. Noble Lords will wish to note that the Bill does not say that contracting authorities cannot extend a contract’s duration by more than 10%. They can do so, but they must use other grounds within the contract modification rules. They are set out in Clause 69 and Schedule 8. These other grounds, in the majority of cases, will oblige them to publish a contract change notice, which will set out why they are making that modification.

We do not think that contracting authorities should be given greater leeway by increasing the 10% to one-sixth. Under the current regime, we have seen contracting authorities extend contracts by substantial periods time and time again without the public or the market being aware of the situation and therefore able to challenge it. We hope Clause 69(3)(a) will change that behaviour.

Amendment 370ZA, tabled by my noble friend Lady McIntosh, the noble Baroness, Lady Hayman, and the noble Lord, Lord Coaker, proposes that we insert a provision in the Bill that contract reviews should be held by both parties every three months. The Procurement Bill covers a huge variety of contracts—that is one of the challenges—and suppliers and contracting authorities are in frequent contact. A legal obligation that contract reviews must be held every three months is overly prescriptive. Contracts are kept under review by contracting authorities and suppliers as appropriate. One size does not fit all.

I see from Amendment 370B that the proposition that contract reviews should be held every three months has arisen from current concerns over inflation. Prices may be index-linked, and contracts may contain review clauses related to inflation. In those circumstances, modifications under the ground of Schedule 8(1) are already permitted.

My noble friend Lady McIntosh raised an important point relating to the context of rising food prices, caused, ultimately, by the situation in Ukraine. Complex public contracts, including large outsourcing contracts which cover food provision for public bodies, generally do account for inflation. Obviously, coming from a farming and retail background, I understand some of the issues that my noble friend described. I particularly agree about the importance of SMEs, as we all say again and again, and trying to get them a bigger share of procurement. However, her approach is too prescriptive and could lead to yet more inflation, and would put costs on the public sector at a particularly difficult time.

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[Baroness Noakes (Con)]

I feel obliged to pursue this issue just a little further. When I spoke to the amendment, I referenced the imbalance of power between contracting authorities and small and medium-sized enterprises, which was its focus. I understand the points that my noble friend is making about when there are parties on either side of the transaction with equal bargaining power, but it does not work like that when there is unequal bargaining power. I am not suggesting that Amendment 486 is a perfect answer to that, but I do not think my noble friend has addressed the point as it applies to SMEs. I know that is a theme that has run throughout our consideration of the Bill, but I want to record that I do not regard her response to my amendment as really getting to the heart of the problem.

[Baroness Neville-Rolfe (Con)]

I thank my noble friend for her intervention. I agree that we need to try to get at the issue of the balance of power; indeed, we were discussing it at my briefing meeting. I think it may be worth having a further discussion with the Government Office for Technology Transfer, because it needs to understand the importance of these small companies to innovation and how the kinds of decisions that they make on rights and intellectual property can make an important difference. I am grateful to her for raising that further point.

[Baroness McIntosh of Pickering (Con)]

I listened very carefully to what the Minister said to our noble friend and to her response to my two little amendments. I am struggling to understand how she believes that Amendments 370ZA and 370B would transfer cost to the public sector. I know from her time on the Back Benches how much my noble friend likes impact assessments, so I refer to page 44 of the impact assessment, which states strongly that this is to encourage SMEs. I hoped that I had made the case—as did a number of others, including my noble friend Lady Noakes—for how SMEs should be benefiting from this, but, in two specific areas that I set out, SMEs are actually being handicapped by the current provisions under the Bill.

[Baroness Neville-Rolfe (Con)]

I will certainly look carefully at Hansard. I think my noble friend was basically talking about an inflation adjustment.

[Baroness McIntosh of Pickering (Con)]

Five per cent, plus the three-month review.

[Baroness Neville-Rolfe (Con)]

And a three-month review. The point about inflation is that if you build it in—this is a wider economic point—and then it goes up further, you can get an inflationary spiral. We have to try to find a way for people to come together and think about how we can best handle that, and I think the current system does that well. That is certainly my own experience, having been involved in procurement on both sides of the divide.

You can write in three-monthly reviews, but the difficulty is that this is an all-embracing Act and putting that into the Bill could lead to a lot of extra meetings and reviews that might not fit in with simplicity. But obviously this is Committee and we will be reflecting further on the right thing to do. I thank my noble friend for, as always, pursuing her point with such clarity and doggedness.

Finally, this is not in my script but I would like to confirm that I and the team are looking back at the undertakings made on earlier days in Committee to make sure that balls are not dropped. I confirm that we will be arranging meetings on the SME angle, even though I am not able to champion them. I have already had a round table with SMEs and the official team to see what can be done. I do not want to overpromise, but we want to do our best. I respectfully request that the various non-government amendments be respectively withdrawn or not moved.

[Lord Lansley (Con)]

Thank you. That was a long group so the reply was necessarily substantial, and we are most grateful for that. I was happy to have the confirmation that KPIs must be quantifiable. I am still slightly uncertain whether 10% works very easily—maybe it would have been easier to express it as one month in a year or something like that to deal with time—but still I am grateful.

If the question of force majeure is taken up through the general terms and conditions, I just ask that it requires the system, as it were, to say that we have standard terms and conditions and, as a result of some of the debates on the Bill, we also need to look at our general terms and conditions, and how things are to be expressed in future. As far as Amendment 268 is concerned, I was grateful for the Minister’s response and I beg leave to withdraw the amendment.

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Moved by

[Baroness Neville-Rolfe]

277: Clause 51, page 31, line 24, leave out “awarded under this Part”

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Moved by

[Baroness Neville-Rolfe]

288: Clause 52, page 33, line 6, at end insert—

“The contract being awarded is being awarded by reference to suppliers’ membership of a dynamic market

10 days”

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Moved by

[Baroness Neville-Rolfe]

291: Clause 54, page 34, line 2, leave out “supplier” and insert “person”

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Moved by

[Baroness Neville-Rolfe]

294: Clause 54, page 34, line 5, leave out second “supplier” and insert “person”

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Moved by

[Baroness Neville-Rolfe]

296: Clause 54, page 34, line 10, leave out “supplier” and insert “person”

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Moved by

[Baroness Neville-Rolfe]

299: Clause 54, page 34, line 13, leave out second “supplier” and insert “person”

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Moved by

[Baroness Neville-Rolfe]

302: Clause 54, page 34, line 19, leave out first “section” and insert “Act”

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Moved by

[Baroness Neville-Rolfe]

303: Schedule 6, page 91, line 14, at end insert “, other than an offence under section 54 of that Act”

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Moved by

[Baroness Neville-Rolfe]

309: Schedule 6, page 93, line 1, leave out paragraphs 2 and 29 and insert—
“28(1) An offence under the law of any part of the United Kingdom consisting of being knowingly concerned in, or in taking steps with a view to, the fraudulent evasion of a tax.(2) In this paragraph,“tax” means a tax imposed under the law of any part of the United Kingdom, including national insurance contributions under—(a) Part 1 of the Social Security Contributions and Benefits Act 1992, or(b) Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.”

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Moved by

[Baroness Neville-Rolfe]

311: Schedule 6, page 94, line 15, leave out “a tax arrangement that is abusive” and insert “tax arrangements that are abusive (within the meaning given in section 207 of the Finance Act 2013)”

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Moved by

[Baroness Neville-Rolfe]

316: Schedule 6, page 95, line 1, leave out paragraph (b)

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Moved by

[Baroness Neville-Rolfe]

324: Schedule 7, page 99, line 38, leave out “the supplier or connected person is”

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Moved by

[Baroness Neville-Rolfe]

334: Clause 55, page 34, line 27, leave out second “supplier” and insert “person”

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Moved by

[Baroness Neville-Rolfe]

336: Clause 55, page 34, line 30, leave out second “supplier” and insert “person”

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Moved by

[Baroness Neville-Rolfe]

339: Clause 55, page 35, line 5, leave out paragraph (b)

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Moved by

[Baroness Neville-Rolfe]

341: Clause 56, page 35, line 15, leave out “procurement” and insert “competitive tendering”

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Moved by

[Baroness Neville-Rolfe]

352: Clause 59, page 38, line 34, leave out “a Northern Ireland department” and insert “the Northern Ireland department that the Minister considers most appropriate”

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Moved by

[Baroness Neville-Rolfe]

354: Clause 63, page 41, line 13, at end insert—
“(b) a reference to a contracting authority receiving an invoice includes a reference to an invoice being delivered to an address specified in the contract for the purpose.”

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Moved by

[Baroness Neville-Rolfe]

355: Clause 64, page 41, line 30, leave out “An appropriate authority” and insert “A Minister of the Crown or the Welsh Ministers”

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Moved by

[Baroness Neville-Rolfe]

357: Clause 65, page 42, line 1, leave out “An appropriate authority” and insert “A Minister of the Crown or the Welsh Ministers”

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Moved by

[Baroness Neville-Rolfe]

360: Clause 66, page 42, line 32, leave out “remedy the breach or”

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Moved by

[Baroness Neville-Rolfe]

361: Clause 68, page 43, line 37, leave out “subsection (8)(a) of section 63” and insert “section 63(8)(a) (electronic invoices)”

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Moved by

[Baroness Neville-Rolfe]

362: Clause 68, page 44, line 2, leave out “the whole” and insert “all”

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Moved by

[Baroness Neville-Rolfe]

365: Clause 69, page 44, line 25, leave out from beginning to “materially”

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Moved by

[Baroness Neville-Rolfe]

371: Schedule 8, page 104, line 36, after “assignment” insert “(or in Scotland, assignation)”

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Moved by

[Baroness Neville-Rolfe]

372: Clause 70, page 45, line 19, at end insert—
“unless the modification is a permitted modification under paragraph 9 of Schedule 8 (novation or assignment on corporate restructuring).”

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Moved by

[Baroness Neville-Rolfe]

380: Clause 70, page 45, line 37, leave out “or a transferred Northern Ireland procurement arrangement”

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Moved by

[Baroness Neville-Rolfe]

383: Clause 70, page 45, line 39, at end insert “or a transferred Northern Ireland procurement arrangement”

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Moved by

[Baroness Neville-Rolfe]

389: Clause 70, page 46, line 3, leave out subsection (10)

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Moved by

[Baroness Neville-Rolfe]

392A: After Clause 70, divide Clause 70 into two clauses, the first (Contract change notices) to consist of subsections (1) to (5) and (9) and (12) and the second (Publication of modifications) to consist of subsections (6) to (8) and (11)

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Moved by

[Baroness Neville-Rolfe]

393: Clause 71, page 46, line 12, after “period” insert “(“a voluntary standstill period”)”

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Moved by

[Baroness Neville-Rolfe]

395: Clause 72, page 46, line 24, leave out “supplier” and insert “person”

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Moved by

[Baroness Neville-Rolfe]

398: Clause 72, page 46, line 30, leave out “ 28(1)” and insert “ 28(A1)(a)”

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Moved by

[Baroness Neville-Rolfe]

401: Clause 72, page 47, line 22, leave out “8” and insert “9”

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Moved by

[Baroness Neville-Rolfe]

402: After Clause 72, insert the following new Clause—
“Terminating public contracts: national security
A contracting authority may not terminate a contract by reference to the implied term in section 72 on the basis of the discretionary exclusion ground in paragraph 15 of Schedule 7 (threat to national security) unless—(a) the authority has notified a Minister of the Crown of its intention, and(b) the Minister considers that—(i) the supplier or sub-contractor is an excludable supplier by reference to paragraph 15 of Schedule 7 , and(ii) the contract should be terminated.”

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Moved by

[Baroness Neville-Rolfe]

403: Clause 73, page 47, line 37, at end insert “, or
(b) in relation to a contract awarded under section 40 by reference to paragraph 16 of Schedule 5 (direct award: user choice contracts).”

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Part 5 is one of the most important parts of the Bill. If we can improve it and get it right, it will start to address the very real lack of public confidence in how public procurement operates at every level. Again, far too many people think that there is one rule for those who are in the system and one rule for people who are not. We have an opportunity to do something about it. With that, I hope the Minister will address some of these amendments and the points that have been made.

[Baroness Neville-Rolfe (Con)]

My Lords, we come to Part 5 of the Bill on conflicts of interest, where the Government have sought to give greater clarity on these obligations, partly in the light of the difficult experience during Covid-19.

On the one hand, it is critical that the public and businesses trust our approach in procurement. They must trust that we are acting with integrity—an important word today—spending public money responsibly and that suppliers will be treated fairly. The Bill is a step forward, as the noble Lord, Lord Coaker, has been kind enough to acknowledge. On the other hand, we must not have a process which overall has a chilling effect because good honest suppliers who do not understand the arrangements are needlessly put off participating in procurement.

I turn to the various amendments tabled by the noble Lord, Lord Wallace, and spoken to with great passion by the noble Lord, Lord Scriven: Amendments 404, 407, 409, 410, 412, 413, 421, 422 and 423.

The Cabinet Office commissioned Sir Nigel Boardman to review communications procurement in the department. His first report was published in December 2020 and focused on Covid-19 and the difficulties then. A major public inquiry is now on the way, and of course we need to learn the lessons of that. However, his recommendations in that report have been substantially implemented by the department. For example, Procurement Policy Note 04/21 includes comprehensive guidance for authorities on how to ensure that conflicts are managed appropriately.

Before I comment on the individual amendments, I will try to reply to the comments made by the noble Lord, Lord Scriven. I emphasise that the Boardman recommendations have not been ignored. The Cabinet Office has implemented them in its commercial operations. It is not appropriate to put every recommendation into legislation, which of course applies for many different types of contracting authority and procurement —large and small. Our provisions allow for a framework in which authorities can implement best practice in accordance with their governance structures.

The noble Lord raised the subject of sanctions. Boardman’s recommendation 26 highlighted that there needed to be sanctions and that these should be made clear in policy and guidance. The Procurement Bill is not the place to detail every possible sanction for every breach. Disciplinary action should be for each authority to enforce as well. If a supplier believes there to be a breach, the Bill provides appropriate remedies in Part 9.

The noble Lord, Lord Scriven, also questioned the recommendations on direct award. As mentioned on Monday, we have introduced a new requirement that contracting authorities must now publish a transparency note before they award a direct award contract. This obviously did not happen during Covid and is a major safeguard.

Amendment 404 would require contracting authorities to take all steps to identify conflicts. This risks creating an impossible threshold for authorities to meet. It could always be argued that more steps should have been taken.

On Amendments 407 and 409, we agree that the Bill’s current scope of those “acting in relation” to the procurement is the right one. We have set out more detail on different groups of individuals involved in commercial guidance, as obviously there are broader groups now involved, in the Procurement Policy Note 04/21, which is the right place for that information. Amendment 410 would add obligations on suppliers relating to conflicts. Suppliers of course also have a role in mitigating conflicts, and this can be seen in Clause 75(2).

The Bill has generally sought to avoid regulatory obligations on suppliers, and such prescriptions are better placed in guidance than in legislation. This ensures that a proportionate approach can be applied by both smaller local councils and large central government departments. The purpose of Amendment 412 is to broaden the evaluation of conflicts. We do not think that this is needed, as the Bill already includes the principle of integrity, in Clause 11.

Amendment 413 requires that suppliers declare, during the procurement process, whether they have given a donation or loan of more than £7,500 to a political party in a calendar year. This was mentioned by the noble Baroness, Lady Bennett. UK electoral law already sets out a stringent regime of donation controls, which I am very familiar with. Donations from the same source that amount to over £7,500 in one calendar year are included. Donation reports are published online by the Electoral Commission for public scrutiny, providing an appropriate level of transparency. We do not see the need to add this to the Bill.

Amendments 421 and 423 concern former Ministers and civil servants. We certainly want to avoid the risks of individuals leaving the public sector and exploiting privileged access to contacts in government or sensitive information. To mitigate these risks, the Civil Service Management Code includes business appointment rules, which apply to all civil servants who intend to take up an appointment after leaving the Civil Service. They replace requirements on former civil servants which include standing aside from involvement in certain activities: for example, commercial dealings with their former department or involvement in particular areas of their new employer’s business.

[Baroness Brinton (LD)]

I am grateful to the Minister for allowing me to intervene. I absolutely accept the point about the change to civil servants’ arrangements. The example that I gave is outside the Civil Service, as would be many other contracts issued through this Bill when it becomes an Act. Can she assure me that every member of staff in any body or agency would be covered in the same way?

[Lord Scriven (LD)]

Before the Minister answers that, a number of times in my intervention I highlighted that there must be a standardisation not only for the Civil Service. Billions of pounds of procurement is carried out by non-central government departments. The rules need to be clear and uniform across the procurement process for the whole public sector, not just for government departments. That is a key issue and why many of these provisions need to be in the Bill, so that they are applicable to all public sector procurement bodies.

[Baroness Neville-Rolfe (Con)]

I thank the noble Baroness, Lady Brinton, and the noble Lord, Lord Scriven. I will not continue with the Advisory Committee on Business Appointments, as it sounds as though the Committee is familiar with that. Having experienced it, I would say that it is quite effective.

[Baroness Bennett of Manor Castle (GP)]

To take us back 30 seconds, to Amendment 413, about political donations over £7,500, I take the Minister’s point that yes, that register exists, but this amendment requires the supplier to take reasonable steps to make the declaration. If the supplier is not required to do that in their bid application, does that mean that every commissioning authority must add to their list of things to do, “Go and check the donations register every quarter to see what is happening”? Would not structuring it in this way make it much easier for the commissioning body?

[Baroness Neville-Rolfe (Con)]

I will start by trying to answer the point that the Civil Service has rules and this Bill is far wider in its application, which we accept. If we are too prescriptive in listing every relevant person in legislation, we may miss persons who should be considered. We think guidance provides a comprehensive list; Peers should see the guidance for commercial professionals in PPN 04/21, for example. As we have discussed in relation to other parts of the Bill, we have to have a combination of the Bill and guidance.

[Lord Scriven (LD)]

But this is the whole point of the Boardman review. By not having clear legislation and rules which are applicable across the public sector, we end up with things happening because they fall through the gaps. People in local government, for example, may not be aware of some of the guidance given to departments by central government, because it is not given to local government. It may be given to the ministry, but it does not necessarily filter down.

That is why we should have a standardised approach—which is not chilling. Then, regardless of whether you are in a local authority, the NHS, a central government body or an arm’s-length body, these are the rules on dealing with conflicts of interest. All that these amendments seek to put on the face the Bill is consistency across procurement in the public sector.

[Baroness Neville-Rolfe (Con)]

To come back to how you do it, you can do things in guidance as well as in the Bill. I take the noble Lord’s point that consistency would be helpful, but I have explained that there can be difficulties. I will just add that transparency will be a fundamental pillar of the new regime, which I think we all support. Extended transparency requirements, a single digital platform and so on will mean that decisions and processes can be much more closely monitored in future.

[Baroness Noakes (Con)]

Could my noble friend help me on the legal effect of the Civil Service management rules? It is my understanding that they cannot actually be enforced in a court of law because it would act as a restraint on the individual’s ability to earn a living. So the rules might exist and there might be advisory bodies et cetera, but it has always been my understanding that they cannot actually be enforced in a court of law. I am not trying to speak for the amendment, but the advantage of it is that it creates a statutory basis for it to have legal effect.

[Baroness Brinton (LD)]

My Lords, if I might try to assist, employment tribunals in the private sector have taken the view that you can have fairly tight, limited terms. I am sure that one of the reasons my noble friends Lord Wallace and Lord Scriven chose six months was that that is the sort of term that is acceptable.

[Baroness Neville-Rolfe (Con)]

I will look into the point about the Civil Service, but certainly people are very careful about the Civil Service rules when they leave. I say that as someone who left many years ago. The rules are observed by civil servants on the whole and we try to emphasise that. As has been said, what we are trying to do here is have a regime that covers not only the Civil Service but elsewhere. However, as always, my noble friend Lady Noakes has bowled a good ball, so I will look into that.

I turn now to Amendment 422, which proposes to introduce a power specifying how conflicts of interest are to be managed on a day-to-day basis. The Bill covers the plethora of organisations which make up the public sector and gives clear obligations on all contracting authorities to identify and mitigate their conflicts. It would not be wise to start dictating the implementation of such a process for each and every authority, so we do not think the power is right.

My noble friend Lady Noakes has spoken to Amendments 415 and 419 on the definition of a conflict of interest, and the noble Baroness, Lady Bennett, came in helpfully too. I recognise that Clause 74 does not explicitly define “conflict of interest” as it does “Minister”, for example. However, Clause 74(2), combined with the definitions, does give conflict of interest a meaning, so it is correct to say elsewhere, as in Clause 75(5), that conflict of interest has the meaning given by Clause 74.

By inference, then, a conflict of interest is where a personal, professional or financial interest of a relevant person, as set out in Clause 74, could conflict with the integrity of the procurement. Essentially, this is where there is a risk that someone from the contracting authority, who is involved in the procurement, could benefit from taking a decision that might not be in the best interests of the contracting authority itself.

Finally, there is Amendment 417, which would remove Clause 76(4). I reassure my noble friend that the purpose of Clause 76(4) is to help, not hinder, contracting authorities. A perceived conflict, as provided for in Clause 76(4), is where a person might wrongly believe there to be a conflict when in fact no actual or potential conflict arises. We must obviously make sure that the public and suppliers are confident that the public sector is conducting its procurements in a fair and open way. We therefore need to consider what others may perceive about the procurement process. I have asked officials to look at the precise wording in Clause 76(4) to ensure that this is properly expressed and is not misleading. I hope that at this late hour my contributions have helped noble Lords to understand the balance that we are trying to draw and what we are trying to achieve. I respectfully request that the amendment be withdrawn.

[Lord Scriven (LD)]

I thank the Minister. The Committee will have to give her 10 out of 10 for trying to explain, but we might not give as high a score on being convinced that she has alleviated some of our concerns.

Many noble Lords who have spoken on this group have tried to explain that the balance seems wrong. That is the issue in terms of conflicts of interest. The puzzling thing for all of us is that the Government agreed and accepted the Boardman recommendations, and some of them need to be in the Bill. Like other noble Lords, I accept that not all of them need to be, but some do.

These clauses have been written in haste. The noble Baroness, Lady Noakes, gave a definition. Clause 75(2) states:

“Reasonable steps may include requiring a supplier to take reasonable steps.”


So a reasonable step is a reasonable step. Unless the Government come back on Report with some serious amendments to this, I think we on these Benches will want to consult His Majesty’s loyal Opposition to see how we can strengthen this. As other noble Lords have said, this is really important in terms of the public’s perception and their trust that their taxes are being used in a way where no one gets an unfair advantage. That is what these amendments are about.

[Baroness Neville-Rolfe (Con)]

Clearly, trust is important and we are trying to do the right thing here. We are also trying to have a balance so that the interest provisions do not have a chilling effect. I said that right at the beginning. In any event, we are planning to have further meetings between now and Report, and it is something we should add to the agenda.

[Lord Scriven (LD)]

I hope the Minister has heard what I said; this is about getting the balance right. Certain things probably need to change and others might be referred to in guidance. Having said that, I beg leave to withdraw the amendment.

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Moved by

[Baroness Neville-Rolfe]

414: Clause 75, page 48, line 34, leave out from “must” to end of line 35 and insert “in relation to the award—
(a) treat the supplier as an excluded supplier for the purpose of—(i) assessing tenders under section 18 (competitive award), or(ii) awarding a contract under section 40 or 42 (direct award), and(b) exclude the supplier from participating in, or progressing as part of, any competitive tendering procedure.”

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Moved by

[Baroness Neville-Rolfe]

427: Clause 78, page 50, line 20, leave out “Where” and insert “If”

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Moved by

[Baroness Neville-Rolfe]

429: Clause 79, page 51, line 5, leave out “where” and insert “if”

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Moved by

[Baroness Neville-Rolfe]

431: Clause 80, page 52, line 8, leave out “the whole” and insert “all”

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[Baroness Hayman of Ullock (Lab)]

My Lords, I shall be very brief, as time is ticking away. I start by saying that we completely support Amendment 436 in the name of the noble Lord, Lord Lansley. It is really important to get proper reassurance and clarification in this area, and I hope that the Minister will be able to give that to us today.

We also absolutely support what Amendment 441, in the name of the noble Lord, Lord Purvis, is trying to do. Environmental, social and labour conditions are incredibly important when looking at who you are procuring with. The noble Lord introduced it very thoroughly, so I will not go into any further detail, but he is absolutely right that we need clarification on this.

One thing I have found with this Bill is that different bits are cross-referenced all the way through and, on occasion, I have got somewhat confused, to say the least. This might not be important at all but I ask for some clarification. Schedule 9 is on the various parties with which we have trade agreements, and we have been talking about trafficking, slavery, exploitation and so on, which are all mentioned in Schedule 7. We welcome the fact that Schedule 7 covers all these areas, but paragraph 2 of that schedule says that engaging in conduct overseas that would result in an order specified in paragraph 1—trafficking, exploitation, modern slavery and so on—if it occurred in the UK constitutes a discretionary ground for exclusion from procurement. Does that conduct overseas, as referred to in Schedule 7, cover anything that happens with procurement coming out of a trade agreement? That is what I do not understand. If it does, it alters what we have just been talking about. If it does, how does that operate and how is it enforced? Who manages it? If it does not, how do we address that when we are negotiating trade agreements in order to achieve the outcomes that we would all like to see? It may be that the Minister does not know and needs to talk to officials, but that is something on which I would like clarification.

[Baroness Neville-Rolfe (Con)]

My Lords, this group seeks to deal with amendments relating to treaty state suppliers. There are three minor government amendments either to improve the drafting or to ensure the proper functioning of the clauses, Amendments 438, 440 and 442. As the time is late, I will not go into detail, but I am happy to explain them to noble Lords on another occasion if they wish.

Amendment 436, tabled by my noble friend Lord Lansley, proposes that regulations could be made only in relation to agreements that had been laid before Parliament under the Constitutional Reform and Governance Act 2010. The use of regulations in the Procurement Bill in relation to implementing international agreements is limited to two circumstances. The first is to give effect to the procurement aspects of new trade agreements. For these, the Committee will know that treaties requiring ratification follow the established domestic scrutiny process set out in the CRaG Act. However, not all agreements will necessarily require ratification, and the amendment would place the implementation of such agreements outside the scope of this power. For the agreements that fall within the Act, the Committee will be aware that the Government have previously made commitments in our response to the International Agreements Committee, of which my noble friend is a prominent member, concerning the submission of international agreements to Parliament for scrutiny.

The second set of circumstances is to give effect to any changes to trade agreements over their lifetime. These are envisaged to be small technical changes, such as updating schedules following machinery-of-government changes or modifications to market schedules. In such circumstances, those more administrative matters may not trigger the CRaG procedures and, as such, the amendment would prevent them being implemented using this power. Any such updates and modifications would therefore require new primary legislation to implement, at a huge cost in time and resources. However, I reassure noble Lords that the Government intend to keep the relevant Select Committees aware of any changes during the life cycle of a free trade agreement.

Amendment 441, tabled by the noble Lords, Lord Purvis and Lord Wallace, seeks to provide that a contracting authority does not discriminate against a treaty state supplier if it takes into account environmental, social and labour considerations and indicates in the notice of intended procurement or tender documentation how such considerations are defined. The impact of this would be that a contracting authority could, within the rules, apply environmental, social and labour considerations in a way that breached a treaty state supplier’s entitlement to no less favourable treatment, and that would risk breaching our international obligations. For example, if a contract can be delivered remotely from an overseas base, our obligations to ensure no less favourable treatment for treaty state suppliers mean that it would not be appropriate for a contracting authority to require socioeconomic or environmental criteria that could not be performed from overseas. However, I assure the Committee that the Bill as drafted allows contracting authorities to include social, environment and labour considerations when setting award criteria, as long as they are non-discriminatory.

[Lord Purvis of Tweed (LD)]

I am grateful for that response. I struggle with the first part of what the Minister said because I lifted the wording from Articles 16 and 17 of the Australia agreement. If we have those obligations with Australia, how are we not able to provide that with all the other treaty state suppliers in the schedule where we do not have that language? Japan is lower than that, for example. I am struggling to understand why that would be the case. If she is reassuring me that the power provided by my amendment is already within the Bill, she has basically contradicted her own argument that we are not providing that to all the other countries. I do not understand.

[Baroness Neville-Rolfe (Con)]

The noble Lord’s question was why social considerations are not in the Japan agreement but they are in the Australia agreement. The answer is that every trade deal is unique. The noble Lord is trying to apply one principle to all trade deals.

[Lord Purvis of Tweed (LD)]

That is what the Government are doing. All the other requirements in the Bill are not in the trade agreements with other countries. That is the point that I was making. The Government are introducing a whole set of requirements under the Bill that are not in treaty obligations. I am just trying to say that it would be better if this were consistent.

[Baroness Neville-Rolfe (Con)]

The honest truth is that we seem to have a bit of a disagreement on this; maybe a bilateral discussion would be helpful. The noble Lord, Lord Lansley, also raised a question on which we should have a further discussion; I will write to him on that on the points he was raising. We had advice from the people involved in trade agreements in preparing our response.

[Lord Purvis of Tweed (LD)]

I am very grateful for that offer. I am very happy for it to be multilateral rather than bilateral if that assists the Committee. If the Minister wants to make officials available for the discussion, I will be happy with that, or she may want to write to me in advance of that. It will be helpful if she is able to write to Members before we have a discussion, so that we get a bit more information from the Government first. I will then be more than happy to have the discussions with her about this before Report.

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[Baroness Neville-Rolfe (Con)]

That would be helpful. We can certainly look at Hansard and write a letter, but we should get together in the next 10 days or so to try to sort this out, because it is complicated—that was clear from being at the briefing.

The noble Lord asked one or two questions which I can clarify. Schedule 9 lists countries, states or regions with which we have an agreement that covers procurement —obviously, that is the purpose of that schedule. All the agreements in that schedule are binding; in contrast, obviously MoUs are not legally binding. On the Colombia agreement, any human rights obligations in the Andean trade agreement will have been reviewed by the CRaG process before it came into force—I think that was probably accepted—and the procurement chapter in trade agreements must be complied with unless these agreements are breached and coverage withdrawn.

Following that agreement with the noble Lord, I move on to Amendment 443A, tabled by my noble friend Lady McIntosh, which proposes to remove the power of a Minister of the Crown to make regulations under Clause 83. Under current drafting, either a Minister of the Crown or a Scottish Minister is entitled to make regulations to ensure that treaty state suppliers are not discriminated against in Scotland in relation to devolved procurement. The use of these concurrent powers would allow either the Minister of the Crown or a Scottish Minister to legislate with respect to devolved procurements in Scotland in order to implement new and existing international trade agreements. Similarly, concurrent powers were used in Section 2 of the Trade Act 2021. Of course, the power would not prevent Scottish Ministers legislating in respect of devolved procurements. However, in the event that they chose not to do so or if they wished, perhaps for reasons of efficiency, to allow a single set of regulations to implement a new trade agreement, this power would allow a Minister of the Crown to pass the necessary legislation. I should say that we continue to engage with the Scottish Government on this and other matters; your Lordships will have seen that the new Prime Minister has indeed spoken to the First Minister since his appointment.

I think we have probably debated this as much as we can this evening.

[Baroness Hayman of Ullock (Lab)]

Can the Minister clarify the question around Schedule 7 or will we perhaps discuss that when we get together at the meeting?

[Baroness Neville-Rolfe (Con)]

I think the greatest brains behind me have not managed to answer the noble Baroness’s question—she has bowled another good ball. Perhaps we can add that to the list for our discussions.

With that, I hope that the noble Lord will withdraw his amendment.

[Lord Lansley (Con)]

My Lords, only 110 amendments to go, so, with the benefit of that promise of further discussions, I beg leave to withdraw Amendment 436.

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Moved by

[Baroness Neville-Rolfe]

438: Clause 81, page 53, line 17, leave out “or services” and insert “, services or works”

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Moved by

[Baroness Neville-Rolfe]

440: Clause 82, page 53, line 37, at end insert—
“(3A) In this section, a reference to a supplier’s association with a state includes a reference to the fact that the state is the place of origin of goods, services or works supplied by the supplier.”

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Moved by

[Baroness Neville-Rolfe]

442: Clause 82, page 53, line 42, leave out “virtue of” and insert “reference to”

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Moved by

[Baroness Neville-Rolfe]

446: Clause 84, page 54, line 35, leave out “An appropriate authority” and insert “A Minister of the Crown or the Welsh Ministers”

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Moved by

[Baroness Neville-Rolfe]

457: After Clause 88, insert the following new Clause—
“Data protection
(1) This Act does not authorise or require a disclosure of information that would contravene the data protection legislation (but in determining whether a disclosure would do so, take into account the powers conferred and the duties imposed by and under this Act).(2) In this section “the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act).”

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Moved by

[Baroness Neville-Rolfe]

461: Clause 89, page 56, line 32, at end insert—
“(4A) A contracting authority’s duty to comply with section 12(9) or 13(8) (requirement to have regard to procurement policy statements) is not enforceable in civil proceedings under this Part.”

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Moved by

[Baroness Neville-Rolfe]

464: Clause 90, page 57, line 11, after “if” insert “during any applicable standstill period”

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Moved by

[Baroness Neville-Rolfe]

469: Clause 91, page 57, line 33, leave out “entering” and insert “entry”

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Moved by

[Baroness Neville-Rolfe]

470: Clause 95, page 60, line 1, at end insert—
“(A1) A supplier must commence any specified set-aside proceedings before the earlier of—(a) the end of the period of 30 days beginning with the day on which the supplier first knew, or ought to have known, about the circumstances giving rise to the claim;(b) the end of the period of six months beginning with the day the contract was entered into or modified.”

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Moved by

[Baroness Neville-Rolfe]

481: Clause 96, page 61, line 12, at end insert—
““section 97 recommendation” has the meaning given in section 97”

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Moved by

[Baroness Neville-Rolfe]

483: Clause 98, page 62, line 14, after “to” insert “relevant”

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Moved by

[Baroness Neville-Rolfe]

496: Clause 100, page 63, line 28, leave out “in” and insert “by”

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Moved by

[Baroness Neville-Rolfe]

501: Clause 101, page 64, line 5, at end insert “or 98 (guidance following procurement investigation)”

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Moved by

[Baroness Neville-Rolfe]

510: Clause 102, page 65, line 28, after “framework” insert “agreement”

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Moved by

[Baroness Neville-Rolfe]

518: Clause 103, page 66, line 6, leave out “section” and insert “Act”

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Moved by

[Baroness Neville-Rolfe]

520: Schedule 10, page 108, line 6, leave out “the parties to it agree”

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Moved by

[Baroness Neville-Rolfe]

533: Clause 110, page 70, line 10, leave out “Part 2” and insert “section 29”

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Moved by

[Baroness Neville-Rolfe]

536: Clause 111, page 70, line 35, leave out “payable” and insert “paid, or to be paid,”

[Baroness Neville-Rolfe (Con)]

My Lords, this final group deals with amendments on VAT. The Government’s Amendment 536 simply broadens the notion of amounts payable to include amounts that have already been paid, as contracting authorities may be required to take into account expected or completed payments.

I turn to Amendments 537 and 538. With the agreement of the Committee—I have agreed this with my noble friend Lady Noakes, whose amendments they are—I will reply to her later.

[Baroness Noakes (Con)]

My gift to the Committee is not to make an extended speech on the subject of value added tax. I know that many noble Lords would like to hear that, but we have expedited procedure and my noble friend the Minister will respond instead.

[Baroness Neville-Rolfe (Con)]

I am very grateful to my noble friend Lady Noakes, who, as usual, has come to the rescue. She raised the question of whether VAT should be taken into account when calculating the value of a concession contract. I confirm that, when a contracting authority values a concession contract, it should calculate the maximum amount the supplier could expect to receive. I thank my noble friend for raising whether this policy intent is adequately covered in the current drafting of Clause 111 and will give this careful consideration ahead of Report.

My noble friend Lady Noakes also asks why the formulation

“any amount referable to VAT”

has been used in Clause 111(2). Amendment 538 proposes to remove the words

“a reference to any amount referable to”.

As I understand it, the amendment does not aim to change the effect of the clause. Rather, the intent is to rationalise the drafting. I assure noble Lords that the proposed edits have been carefully considered and the existing wording is thought to be better suited to achieving the desired policy outcome.

I therefore respectfully request that these amendments be withdrawn. I will move the other government amendments in my name but, before I sit down, I thank our Deputy Chair of Committees and the Committee for their patience and good humour with the large number of government amendments. We will try to keep up our good record of government engagement and do better on the number of amendments.

[Lord Fox (LD)]

I would just like to congratulate the Minister on the smooth transition from Back-Bench jabs to Front-Bench defence. We look forward to seeing the reprinted version of the Bill so that we can start to track where all these amendments have gone and what they do. We also look forward to the meetings we will be having to sort these matters out.

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Moved by

[Baroness Neville-Rolfe]

539: Clause 112, page 71, line 3, leave out “supplier” and insert “person”

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Moved by

[Baroness Neville-Rolfe]

541: Clause 112, page 71, line 25, leave out “35” and insert “34”

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Moved by

[Baroness Neville-Rolfe]

544: Clause 112, page 72, line 11, at end insert—

requirements

section 18”

Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

Report stage
Monday 28th November 2022 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

1: Before Clause 1, insert the following new Clause—
“Procurement and covered procurement
(1) In this Act—(a) “procurement” means the award, entry into and management of a contract;(b) “covered procurement” means the award, entry into and management of a public contract.(2) In this Act, a reference to a procurement or covered procurement includes a reference to—(a) any step taken for the purpose of awarding, entering into or managing the contract;(b) a part of the procurement;(c) termination of the procurement before award.(3) In this Act, a reference to a contracting authority carrying out a procurement or covered procurement is a reference to a contracting authority carrying out a procurement or covered procurement—(a) on its own behalf, including where it acts jointly with or through another person other than a centralised procurement authority, and(b) if the contracting authority is a centralised procurement authority—(i) for or on behalf of another contracting authority, or(ii) for the purpose of the supply of goods, services or works to another contracting authority.(4) In this Act, “centralised procurement authority” means a contracting authority that is in the business of carrying out procurement for or on behalf of, or for the purpose of the supply of goods, services or works to, other contracting authorities.”Member’s explanatory statement
This new Clause would distinguish between “procurements” and “covered procurements”, the latter relating specifically to public contracts, so that provision in the Bill can be more clearly applied to one or the other, and consolidate certain definitions previously found elsewhere.

[The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)]

My Lords, as we begin Report, I start by thanking noble Lords for their contributions in Committee, and for the lively debate there. For those in the House coming to it fresh today, I say that this is an important Bill which follows two years of hard work and preparation, which I have the honour of taking over from my noble friend Lord True, who now leads this House.

Each year, £300 billion is spent on public procurement and we seek to make it quicker, simpler, more transparent and better able to meet the UK’s needs than the current patchwork of former EU rules, while remaining compliant with our international obligations. There will be a central Cabinet Office online platform to bring in new players, to improve value for money and to accelerate spending with SMEs. There will also be a comprehensive training programme for those involved in all the new rules and conventions—for example, on managing conflicts of interest. It is, however, a very technical Bill, and I am sorry that we had to withdraw a number of government amendments tabled in Committee to allow further discussion. This was largely successful, so we will come first to a number of amendments in my name, most of which were withdrawn on day one in Committee. As we go through, there will be further technical amendments and other amendments to respond to points made in Committee, notably to stimulate economic growth and to reduce burdens on SMEs. I thank noble Lords for their patience with the sheer number of amendments.

Amendment 1 and the amendments consequential on it introduce new technical definitions of “procurement” and “covered procurement”. I know these concepts caused some concern in Committee, so I will try to clarify matters. “Covered procurement” means those procurements that are covered by the vast majority of the provisions in the Bill. They are mostly procurements by contracting authorities, above the relevant thresholds for goods, services and works, which are not exempted from the Bill. These are the procurements which most of us will have had in mind during our deliberations in Committee.

However, the Bill also covers some aspects of procurements which go beyond this, which is why we have a wider definition of “procurement”, meaning any procurement. That allows the Bill to make some limited provision in relation to matters such as below-threshold procurements—for example, in Part 6—and notably to comply with international rules or certain treaties. I understand that the term “covered procurement” may seem unusual, but it is one included in our international procurement agreements, including the GPA—the WTO agreement on government procurement—and familiar to the procurement community.

Amendment 1, and a number of other government amendments, streamline fundamental concepts that are relied on throughout the Bill and will improve the readability and consistency of the legislation. Amendments 2, 5 and 6 recast the definition of “contracting authorities” to ensure that the right bodies are covered. We are committed to a definition that is broadly consistent in effect with both the existing regulatory scheme and with our international commitments under free trade agreements. Feedback from our ongoing dialogue with stakeholders has indicated that the effect of certain wording differences could lead to some bodies being incorrectly brought within, or excluded from, the scope of the rules. I am grateful for these views, particularly those from the Local Government Association, as they will help to ensure correct application. I am also grateful for its constructive approach to the Bill, which represents a big change for its members, and we appreciated its input.

The amended definition removes the reference to

“functions of a public nature”,

as this does not align with the existing definition. It makes clear that the notion of contracting authority oversight can include oversight by more than one authority. Lastly, it ensures that certain bodies that are publicly owned but operate commercially can operate outside the procurement regime.

Amendment 187 ensures that educational establishments are fully and appropriately excluded from the rules on below-threshold contracts, as well as those relating to implied payment terms in public contracts, payment compliance notices and reporting on payments made under public contracts. This mirrors the approach taken in the current procurement rules and ensures that burdens on low-value contracts in the education area are applied in a proportionate fashion. Amendments 98 to 102, 117, 119, 191, 193, 197, 201 and 202 are consequential.

Amendments 24, 25, 26, 27 and 28 provide direction to contracting authorities when a mixed contract involves two or more different elements which could each classify it as a “special regime” contract. We expect that such situations will be rare, but could arise occasionally. Our amendments clarify which regime will apply to their mixed contracts in such circumstances by discouraging unrelated requirements being combined in one procurement. I hope that sentence is clear. More importantly, we must also ensure that the rules concerning mixed contracts are compliant with our international trade agreement obligations.

This group also includes other minor changes, including Amendment 7, which ensures that thresholds are applied properly to frameworks, and Amendment 8, which ensures that frameworks for the future award of exempted contracts only are also exempt. Frameworks involving a mixture of elements covered by both the Bill and the forthcoming healthcare procurement regulations will be subject to the same basic tests as set out in Clauses 4 and 9 on mixed contracts, which determine which rules will apply. This is important to prevent abuse of the exemption provisions; it also includes Amendment 185, which corrects a mistaken reference to a power for Northern Ireland departments, which unfortunately does not exist.

Amendment 170 is a technical adjustment to Clause 111 to make it clear that any regulations made to disapply the Bill to procurements in scope of the forthcoming healthcare procurement regulations can be made whether or not the procurement regulations are yet in force. Finally, Amendments 194, 195 and 196 amend the index of defined expressions in Clause 115.

I thank noble Lords for their patience, and will turn to the amendments tabled by other noble Lords when I have heard from them. I beg to move.

[Baroness Brinton (LD)]

My Lords, I shall speak to my Amendments 3 and 173. I thank the Minister and the noble Lord, Lord True, for responding to my questions, in private meetings but also at previous stages of the Bill, about why the NHS is treated differently from every other part of the public procurement sector covered by the Bill. The problem is that I have not yet heard a clear answer to that; nor, indeed, did those noble Lords who took part in the Health and Care Act during its time here get a clear answer from the Health Minister as to why this was proposed. More recently, in Committee, the Minister said that it was because only clinical services would be covered by these special arrangements for the NHS. I will come in a minute to the reasons for my concerns that that is not the case, but I start by saying very simply that Amendment 3 puts the NHS in the Bill, in the definition of a public body that has to observe the details of regulation under the Bill.

Moving on to the practical problems, the key issue is what is said in the National Health Service Act 2006 and the Health and Care Act 2022, which attempts to amend it. The specific amendment has not been enacted yet, but we can all assume, with the permission of the House, that it is this Bill that is holding that up. The Health and Care Act adds new Section 12ZB to the National Health Service Act, which says:

“Regulations may make provision in relation to the processes to be followed and objectives to be pursued … in the procurement of (a) health care services … and (b) other goods or services”.


The problem is that the new section goes on to say:

“Regulations under subsection (1) must, in relation to the procurement of all health care services … make provision for the purposes of ensuring transparency; ensuring fairness; ensuring that compliance can be verified; managing conflicts of interest”.


That is a very different bar of compliance than the Government want to see for every other part of the public sector covered by the Bill. At the strategic level, it will be enormously helpful to understand why the Government feel it is appropriate for the NHS not to be included, but my practical problem is that we have relied somewhat on the assurances of Ministers at the Dispatch Box that only clinical services would be caught by the new SIs under the Health and Care Act and the NHS Act 2006. I have just read out the parts that show that is absolutely not the case. In fact, there is a catch-all in “other goods or services”. So, while we spent a little time in Committee trying to discuss where the boundaries are, it seems to me that there are no such boundaries, and that leaves me very greatly concerned about how this will work in practice.

I have tabled Amendment 173 because if Amendment 3 is carried, Clause 111 is not needed. There is also an argument that if, for any reason, Amendment 3 is not carried, Amendment 173 will stand in its own right, but the two are inextricably linked. These two amendments are saying that the NHS should be covered in the Bill. I end by saying to the Minister that, despite the many amendments from noble Lords all around the House, I think everyone agrees that the Bill is better than the procurement arrangements we have had in the past, particularly in attempting to get transparency and accountability. The problem is that the arrangements for the NHS are not visible; they are SIs at the discretion of any Secretary of State for Health, and we have not even seen those in draft yet. I hope the Minister can give me some very clear reassurances or explanations, otherwise I may have to test the opinion of the House later.

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[Lord Coaker (Lab)]

My Lords, I thank the Minister and her predecessor for their engagement with us and other noble Lords on this Bill as it made its progress through your Lordships’ House. I join with other noble Lords in saying to the Minister that we all believe, from where I am speaking, that this is a great improvement, and the Bill will make a big difference; we are generally very supportive of it. It is important, as other noble Lords have done, to start with those remarks to set the context for this discussion and those which will follow.

I do not want to speak for very long, but I will start with Amendment 3, in the name of the noble Baroness, Lady Brinton. I very much support the amendment, which seeks to put on the face of the Bill—for the avoidance of doubt, for the avoidance of the sort of discussion that we are having here this evening and for the avoidance of the sort of discussions that will go on, as to which set of regulations procurement for the NHS comes under—that procurement includes the NHS in Clause 1. The important point, following the excellent speech by the noble Baroness, Lady Brinton, was set out in my noble friend Lord Hunt’s question to the Minister, which encapsulated the problem that we are going to have under two sets of regulations.

I thought that my noble friend put the argument very well in his question—and I am going to repeat it—about the sort of thing that will happen without clarification of where we are with respect to procurement. What happens if a procurement contains both clinical and non-clinical parts and services? Which Act and which regulations regime would apply? That encapsulates the problem in one, because the answer is that it will not be clear at all if we carry on with the current two-system regulatory regimes that will operate for the NHS. I am always very practical about these things and, of course, noble Lords will have seen as well that there is actually a clause—Clause 111—that makes it perfectly clear that there is a power for Ministers to disapply, through regulations, this Act in relation to procurement by the NHS in England. Therefore, on the one hand we have the health Act of 2022; on the other hand, we have a Bill going through that, in some sense, is supposed to include the NHS but, in other senses, is not supposed to do so. We do not know where the boundary is going to come between clinical services and goods and services, so there is a whole realm of difficulty and problems.

I said at the beginning of my speech that all of us are supportive of the Bill, but we need to resolve these difficulties. We cannot just say, “Well, the regulations will sort it out”, or “Good sense or common sense will deal with it.” There is a real legislative problem that we should try to resolve before we pass the legislation. The noble Baroness, Lady Noakes, pointed this out in a couple of important technical amendments. As always, we are thankful to the noble Baroness for trying to improve the Bill and to make suggestions, one of which, I understand, the Government have accepted. That is the sort of spirit in which we take the Bill forward.

Therefore, I hope that the Minister is listening carefully to what the noble Baroness, Lady Brinton, my noble friend Lord Hunt, and the noble Lord, Lord Alton, have said. We all noticed that the noble Baroness, Lady Bennett, was not a supporter of Amendment 2. We say that loudly and clearly so that her future in the Green Party is assured, but Amendment 3 is what the noble Baroness put in, and for some reason it appeared under Amendment 2. We are all very clear which amendment the noble Baroness supports.

The comments made in the short speech by the noble Lord, Lord Lansley, on government Amendment 34, are extremely important, showing how one word here or there can fundamentally change the Bill. He is quite right to point out that Clause 11 refers not to thresholds but to objectives. What is procurement trying to achieve? As the noble Lord outlined, by inserting “covered”, the Government imply that it is only covered procurement that takes account of the various points that are listed in the Bill. The noble Lord read out four, but I choose just one, to show how important it is that the Government listen to what he has said and think again about moving their Amendment 34. It is acting and being seen to act with integrity. The one thing that you would expect any procurement process to act under, whatever the threshold, whatever the regulations, whatever law it comes under, whether it is for £10 or £10 million, is integrity. Yet as it reads now, the only procurement that this clause will relate to as an objective, if the government amendment is agreed to, is covered procurement. That was the crucial point that the noble Lord made—as an objective. It is not an objective. It is closer to being law, that you are supposed to act openly, honestly and transparently. However, leaving that aside, it is an extremely important point that the noble Lord has made. In full support of what he has said, I hope that the Government have listened to his very well-made points, particularly when he went on to relate them to Clause 12, which seems to be the opposite of that. That point was well made.

The government amendments before us in many ways improve the Bill. I thank the Minister for listening to what was said to her and for trying extremely hard to table amendments that have improved many parts of the Bill. There are important tweaks that the noble Baroness, Lady Noakes, has pointed out. There is a fundamental point that was raised by the noble Lord, Lord Lansley. However, the points raised by the noble Baroness, Lady Brinton, and supported by many noble Lords, point to a fundamental choice for us. We must resolve this issue about procurement and the NHS. The noble Lord, Lord Alton, pointed out some of the difficulties that have arisen, but for all of us, clarity, certainty and clearness in legislation is crucial, particularly when it comes to procurement. We have the opportunity to sort this out. I hope that noble Lords will support the amendment tabled by the noble Baroness, Lady Brinton, should she put it to the vote.

[Baroness Neville-Rolfe (Con)]

My Lords, Amendment 3, tabled by the noble Baroness, Lady Brinton, of Kenardington, and the noble Lord, Lord Scriven, of Hunters Bar, would, as the noble Baroness said, explicitly name the NHS in the definition of a contracting authority. We are also debating Amendment 173, to which the noble Baroness, Lady Bennett of Manor Castle, added her name, and Amendments 171 and 172, to which the noble Lord, Lord Hunt, spoke so eloquently.

There is a concern, which I understand after several meetings with those involved, about the interplay in health between this Bill and the arrangements across the NHS in the light of the Health and Social Care Act. I very much enjoyed the meetings that I had with the noble Baroness, Lady Brinton, and thank her and the noble Lord, Lord Alton, for their kind comments on the Bill more generally, as well as my noble friends Lady Noakes and Lord Lansley. It has been a pleasure to work on this Bill across the House. I thank the noble Lord, Lord Coaker, for his comments, although we are no longer working together from the Back Benches.

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[Lord Scriven (LD)]

Like most noble Lords, probably, I have listened to what has just been said and am more confused now than when the Minister started. I ask a very simple question: if the Bill applied to NHS procurement, as it does to the rest of the public sector, would it not harmonise the procurement of NHS provision, whether clinical or non-clinical, including social care? That would make it simpler, not just for the procurement body but for organisations that might wish to tender for NHS clinical services.

[Baroness Neville-Rolfe (Con)]

That is a point, but I did try to explain in my introduction that there was concern during the passage of the Health and Care Act, to which I was not party, that the NHS arrangements—I see that the noble Baroness, Lady Brinton, is nodding her head. Perhaps she is nodding it negatively.

[Baroness Brinton (LD)]

The important thing the House needs to hear is that during the passage of the Health and Care Act, Members from all sides of your Lordships’ House asked repeatedly why special arrangements were being made for NHS procurement when we knew that there was a Procurement Bill coming down the line and had not seen any detail of it. That is the question we are all waiting to hear the answer to.

[Baroness Neville-Rolfe (Con)]

I think I have been clear on the background to why it is different. I have also promised that regulations and guidance are being put together and will make very clear the differences: where the NHS rules need to apply and where the Procurement Bill needs to apply. That is the way in which these Bills have been constructed together. There are reasons. Especially on small NHS contracts involving social care, clinical services and so on, it clearly makes a great deal of sense to have a separate regime.

I am sure we will come back to that at the end, but out of courtesy I turn to the other amendments. Amendment 4, tabled by my noble friend Lady Noakes, proposes to rework the notion of control in the definition of a contracting authority in amended Clause 1(3)(b), to be consistent with the notion of a controlled person in Schedule 2. We have looked at this again in dialogue with the concerned stakeholders, notably the Local Government Association.

The meaning of control in Clause 1 is different from that in Schedule 2, and they need to be kept separate. The use of “control” in Clause 1, which sets out the contracting authority definition, is intended to ensure that contracting authorities that have a board where public authorities appoint more than half the members are themselves considered to be contracting authorities. This might include, for example, some centralised procurement authorities.

By contrast, the “controlled person” for the purposes of Schedule 2 is much narrower and intentionally very limited as it is intended to capture only a narrow group of entities, closely owned and controlled by contracting authorities. It requires that the controlling contracting authority is a “parent”, within the meaning of the Companies Act 2006. Although this might cover some of the same ground as majority board appointments, the concept used in Clause 1, it is not the same thing, and the text of the amendment can be satisfied in other ways. There is also a secondary activity threshold, which means that 80% of the activities carried out by the controlled person must be on behalf of its controlling authority. I am afraid that neither factor is appropriate to the contracting authority definition and their inclusion would have the effect of taking many organisations outside the scope of the contracting authority definition.

I recognise that, as my noble friend said, consistency is often desirable, but these terms achieve different aims. It is important that the Procurement Bill covers, as closely as possible, the same scope of bodies as in the existing procurement regulations, both for certainty and continuity for our authorities and to ensure compliance with the definition of a contracting authority in our free trade agreements.

I should, in passing, thank my noble friend Lady Noakes for her Amendment 190, which reflects discussion in Committee and which the Government are glad to support.

Moving on, I come to some of the very wide points made by the noble Lord, Lord Alton, although it is possible that some of these will come up again later on Report. It may be disappointing to the noble Lord, but we cannot go into the detail of individual contracts. Where a contract has been found to have underperformed or the PPE provided was not up to standard, the Department of Health and Social Care is working to reach a successful outcome—this includes mediation—for the taxpayer.

Offers for the supply of PPE came from a wide range of people from within government and outside. No matter where they came from, offers went through a robust process of checks and controls led by officials. This included price and quality checks as well as due diligence and credibility. As for Medpro, this is a live issue; we are currently engaged in a mediation process with PPE Medpro and I am therefore unable to comment on the specifics of this contract.

More positively, however, the Covid inquiry will cover procurement and the distribution of key equipment and supplies, including PPE and ventilators. In my view, that is quite right. It will also identify the lessons to be learned from all this and inform preparation for future pandemics across the UK.

[Lord Alton of Liverpool (CB)]

I thank the Minister; that is a helpful reply and I am indebted to her. She has referred us to later amendments—I think she is referring to the amendment tabled by her noble friend Lady Stroud in the 10th group, on modern day slavery, which I am supporting—but a number of my questions go much wider than that. I would be appreciative if, between now and our discussion on Wednesday, she could give further consideration to what she can answer, some of which is not covered specifically by the point she has just made about confidentiality. Could she touch on what the noble Baroness, Lady Brinton, is saying now about how the NHS should be caught under the same terms as everything else that she has been arguing? Our failure to do this has been highlighted by the noble Lord, Lord Coaker, and others, and demonstrates an inconsistency in how we handle these things.

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[Baroness Neville-Rolfe (Con)]

I understand. I have tried to answer, although I am obviously somewhat limited by confidentiality. I would also draw the noble Lord’s attention to the Boardman report, of which he is well aware. Nigel Boardman went through the Covid processes and his comments were, on the whole, accepted. As I said, I will look at what the noble Lord, Lord Alton, said and see whether there is anything useful to add before we meet again on Wednesday.

I turn to my Amendment 34 and the comments made by my noble friend Lord Lansley, of Orwell, with whom I have had useful meetings. He is concerned that the procurement objectives in Clause 11 should apply to all procurement, not just to covered procurement. I am afraid I do not agree, as he and I have discussed. This is too wide-ranging and the Clause 11 objectives will not be relevant to the award of all types of non-covered procurement. The concept of procurement is crafted very widely and captures all contracts. For example, it is difficult to see how a contracting authority would be able to apply principles such as having regard to the importance of transparency or the wider public benefit in relation to employment contracts or leasehold agreements exempted under Schedule 2 to the Bill. In addition, it is difficult to see how a contracting authority could have regard to the importance of transparency in a procurement exempted on national security grounds.

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[Lord Lansley (Con)]

My noble friend used the important word “security” in relation to security contracts, but surely Clause 11 and the procurement objectives apply to security contracts that exceed the threshold set in Schedule 1. In what sense is it inappropriate for the objectives or principles set out in Clause 11 to be applied simply because those thresholds fall below about £5 million?

[Baroness Neville-Rolfe (Con)]

I should reflect further on this. Clearly, some parts of the Bill are carved out. We have discussed this in relation to the NHS and we will discuss it on Wednesday in relation to the Ministry of Defence. We have to be very careful about national security—there is agreement on that across the House. I have been advised that the sheer breadth of Clause 11 would have a damaging effect if we apply this right across the board on procurement, and I am disturbed about that. I am happy to look at that further and talk further to my noble friend Lord Lansley.

[Lord Coaker (Lab)]

We would all be grateful if the noble Baroness reflected further on Clause 11 and government Amendment 34, as she said.

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[Baroness Neville-Rolfe (Con)]

I turn finally to my noble friend Lord Maude, who brought in the importance of social enterprises in the health area, which I was extremely keen to hear about and would like to discuss with him further. It seemed to me, when reflecting on what he said, that the greater flexibility to award contracts—which was behind the Health and Social Care Act and the PSR regulations that were being brought forward—was an argument in favour of the approach that we have set out and for some different arrangements in the NHS. I find myself in the slightly awkward position of trying to defend these different arrangements for the NHS because I am worried about the implications for things similar to those that my noble friend raised.

I think that I have dealt with all these comments. I will reflect further on Amendment 34. It is a bit difficult not to move it—

[Noble Lords]

Oh!

[Lord Wallace of Saltaire (LD)]

My Lords, it would be perfectly acceptable to come back to that at Third Reading. I think that the House would accept that.

[Baroness Neville-Rolfe (Con)]

I am a little rusty, so I was just trying to understand what the possibilities were. I thank noble Lords for clarifying that we have some time to reflect on this; it is extremely helpful. I respectfully ask noble Lords not to press their amendments. I will move the government amendments in my name when we reach them, other than Amendment 34.

Amendment 1 agreed.

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Moved by

[Baroness Neville-Rolfe]

2: Clause 1, page 1, line 5, leave out from first “authority” to end of line 10 on page 2 and insert “, or
(b) in the case of a utilities contract, a public authority, public undertaking or private utility,other than an excluded authority.(2) In this Act—“public authority” means a person that is—(a) wholly or mainly funded out of public funds, or(b) subject to public authority oversight,and does not operate on a commercial basis (but see subsection (8A));“public undertaking” means a person that—(a) is subject to public authority oversight, and(b) operates on a commercial basis;“private utility” means a person that—(a) is not a public authority or public undertaking, and(b) carries out a utility activity.(3) A person is subject to public authority oversight if the person is subject to the management or control of—(a) one or more public authorities, or(b) a board more than half of the members of which are appointed by one or more public authorities.(4) The following are examples of factors to be taken into account in determining whether a person operates on a commercial basis— (a) whether the person operates on the basis that its losses would be borne, or its continued operation secured, by a public authority (whether directly or indirectly);(b) whether the person contracts on terms more favourable than those that might reasonably have been available to it had it not been associated with a public authority;(c) whether the person operates on a market that is subject to fair and effective competition.(5) The following authorities are excluded authorities—(a) a devolved Scottish authority;(b) the Security Service, the Secret Intelligence Service and the Government Communications Headquarters;(c) the Advanced Research and Invention Agency;(d) any person that is subject to public authority oversight—(i) only by reference to a devolved Scottish authority, or(ii) by reference to an authority mentioned in paragraph (b) or (c).”Member’s explanatory statement
This amendment would change the definition of contracting authority to better deal with the difference between a public authority and public undertaking and to exclude certain bodies which, despite their relationship with public authorities, operate on a commercial basis.

[Baroness Neville-Rolfe (Con)]

I beg to move.

Amendment 3 (to Amendment 2)

Moved by

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Moved by

[Baroness Neville-Rolfe]

5: Clause 1, page 2, line 22, at end insert—
“(8A) For the purposes of this Act, a person that operates on a commercial basis but is, as a controlled person, awarded an exempted contract by a public authority in reliance on paragraph 2 of Schedule 2 (vertical arrangements) is to be treated as a public authority in relation to any relevant sub-contract.”Member’s explanatory statement
This amendment would ensure that bodies that are awarded contracts by virtue of being controlled by public authorities are treated as public authorities (and therefore as contracting authorities) in relation to contracts awarded for the purpose of performing that contract.

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Moved by

[Baroness Neville-Rolfe]

7: Schedule 1, page 79, line 46, at end insert—
“(2) In this Schedule—(a) a reference to a contract for the supply of goods, services or works to a particular kind of authority includes a reference to a framework for the future award of such contracts;(b) a reference to a works contract includes a reference to a framework for the future award of works contracts.”Member’s explanatory statement
This amendment would ensure that frameworks are properly taken into account in applying the thresholds in Schedule 1.

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Moved by

[Baroness Neville-Rolfe]

8: Schedule 2, page 80, line 5, at end insert “, or
(b) a framework for the future award of contracts only of a kind listed in this Schedule.”Member’s explanatory statement
This amendment would ensure that frameworks only for exempted contracts are exempted contracts.

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[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the noble Baroness, Lady Noakes, for her introduction to her amendment which was very clearly laid out. Again, I would like to join with other noble Lords who talked about the number of government amendments, not just here but in Committee. People who were here on the first day will probably remember that I was a little bit cross about it. But in response, the Minister has really grappled with our concerns in the lead-up to Report and I appreciate the time that she has spent doing that.

I will be brief. I will just say that we strongly support the noble Baroness, Lady Noakes, with her amendment. She clearly laid out why this is important for local authorities and by including her amendment you increase the efficiency of the public sector when it is structuring the way it delivers its services, much of which do not need to include the procurement laws that we see before us. All I would say is that it is important that we can ensure that local authorities and other public sectors bodies within this area can continue to deliver better public services and make savings, as the noble Lord just mentioned, by collaboration, working together and sharing services. That makes eminent sense, and I would hope that the Minister will be able to reflect on that.

[Baroness Neville-Rolfe (Con)]

My Lords, Amendment 9 tabled by the noble friends Lady Noakes and Lord Moylan—whom I am very glad to see back in this place—seeks to preserve the rules which currently apply to public service collaborations at paragraph 2 and 3 of Schedule 2. It was also very good to hear from my noble friend Lord Greenhalgh with his extensive local government experience.

I agree that the Bill needs to preserve these rules but believe that we have already done so. Paragraph 1(2)—to which the noble Baroness referred—says that a contract is not exempted if the main purpose of the contract could reasonably be supplied under a different contract, and that contract would not itself be an exempted contract. This provision serves to close a loophole where contracts that are mixed—that is that they contain both exempted activities and not exempted activities—might be inappropriately exempted from the regime.

However, unlike the exemptions for specific activities, all types of goods, services and works contracts are capable of being exempted under the vertical and horizontal exemptions, so the second part of the test at Schedule 2(1)(2)(b) is not met. The contract would remain exempt.

While I believe that we have preserved the rules, the Bill needs to be better understood by users and stakeholders. My noble friend Lord Greenhalgh also made some good points about unnecessary tendering. I met the Local Government Association, as I was concerned about this provision, and my officials are engaging with it following its representations to reach a common understanding. They will come back to me with an amendment that could be put forward in the House of Commons to clarify this provision, should one prove necessary. It will take a bit of time. Accordingly, I ask my noble friend to withdraw the amendment.

[Baroness Noakes (Con)]

My Lords, I thank all noble Lords who have taken part in this short debate and those noble Lords who supported this amendment. I was delighted to hear what the Minister had to say, which was in the spirit of the quest for a good procurement system for this country that has permeated the way we have operated on this Bill to date. I am sure that the discussions with the Local Government Association will prove fruitful. On that basis, I beg leave to withdraw the amendment.

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[Lord Fox (LD)]

My Lords, this is a very important group of amendments. We have had many speakers, so I will be concise. My noble friend Lady Parminter has already made some important points on our part. I will not repeat her comments, but we regard the issue of economic, social and environmental benefits to be paramount and we do not subscribe to the idea that it should not be in some way guided by the legislation or the operational part of the legislation.

I have listened carefully to the other speeches. I am minded to side with the approach of the noble Lord, Lord Lansley, of using the NPPS as the vehicle through which this aim and principle is achieved. I hope that we shall be able to support both him and the noble Baroness in His Majesty’s Opposition if they decide to press their amendments. Amendments 35 and 46 bear my name; clearly, I stand by them and the speeches that others have made.

There are two other areas on which I want to speak very briefly. Not least, the noble Lord, Lord Hunt, was unable to be here, but I know that he and my noble friend Lady Brinton have tabled Amendments 38 and 83, which reflect on accessibility. The previous legislation had prior regulations about accessibility and the fact that public procurement should ensure accessibility to all people. It has been lost in the drafting of this Bill. It is not clear to me whether that is a deliberate or accidental dropping of something, so it will be very useful to hear from the Minister what the Government’s thinking was on this. If it was deliberate, I would urge them to think again; if it was accidental, there is time to put it right.

Finally, I would like to make a pitch to support the noble Earl, Lord Lindsay, who has unearthed something that must be another unintended consequence of this legislation. I cannot believe that this was deliberately put in place by the Government. His Amendments 58 and 82 are an important way of righting that situation. I hope, again, that the Minister will think again.

In conclusion, we on these Benches absolutely believe that there should be a public purpose to procurement. We feel that the legislators have a role, as well as the very important role outlined by the noble Lord, Lord Maude, for the professionals, when it comes to implementing that policy. It is really important that we seek to achieve public good through the £300 billion of procurement that this country makes.

[Baroness Neville-Rolfe (Con)]

My Lords, we have had an extremely interesting debate—a shorter one than I was expecting—and I am grateful for all the contributions.

I will start by saying that, while I understand that noble Lords rightly wish to pursue their particular interests, many of which I agree with, we have to bear in mind that procurement is, above all, an economic activity. That does not mean that we cannot take other things into account, but no amount of environmental or social benefit could make a procurement satisfactory if it failed to deliver economically on its intended purpose. We need to avoid the Christmas tree that my noble friend Lord Maude referred to. Of course, the NPPS allows for the inclusion of these sorts of policies—including net zero, as the noble Baroness, Lady Parminter, said—but that does not mean to say that we want to put them on the face of the Bill.

In my view, value for money comes first, especially given the financial difficulties that we now face, but it is important to recognise that, as a result of Clause 18, contracting authorities will be working to a new definition, which nobody has mentioned, of “most advantageous tender” rather than “most economically advantageous tender”—that is, MAT not MEAT—so the days of focusing on price alone, not quality or wider matters such as generating UK employment opportunities, are over. Specific policies could also be put into bespoke tender documents, as my noble friend explained.

Secondly, my experience of many Bills is that it is unwise to attempt to define everything in detail at a particular point in time. As the years pass, relative priorities change. Who would have thought two years ago that inflation, the price of energy and the consequences of war would feature so highly on the national agenda? There will no doubt be other surprises—as, indeed, has been the scale of climate change; 20 or 30 years ago, most of us did not realise what would happen.

Thirdly, productivity growth is worryingly low in this country. It is essential that this Bill and the £300 billion of public procurement each year provides a boost and that small businesses are able to secure a share of that, as my noble friend Lord Lindsay’s comments implied. Innovation and competition have an important part to play here—I know that my noble friend Lord Lansley feels that strongly; they are two very important objectives. Procurement should be an enabler of innovation rather than increasing barriers to entry for competition, as my noble friend Lord Maude said.

Against this background, I come to Amendment 33, moved by the noble Baroness, Lady Hayman. This seeks to restate the six principles consulted on in the Green Paper. In addition to the 619 responses we received, we have carried out extensive consultation with interested groups, as the noble Baroness will know. As a result, our principles were refined and then translated into the objectives and specific obligations that now exist in the Bill. The language of a Green Paper is not the language of legislation, and we have reflected the principles in a way designed to help contracting authorities understand how they will implement them. That goes for value for money, public good, transparency and integrity.

The public consultation 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” in Clause 11(2); and “non-discrimination” has been converted from an objective to a hard-edged obligation in Clauses 83 to 85. We believe that the combination of the objectives and specific legal obligations in the Bill deals with procurement principles in a more effective and practical way.

Amendment 35 in the name of the noble Baroness, Lady Hayman, changes the recognised concept of “value for money” in the procurement objectives into a more amorphous one, which includes the concepts of “social value” and “equity”. I have a number of concerns with what that amendment does. First, it moves contracting authorities away from the well-known concept of “value for money” and creates a new, and perhaps confusing, duty. Contracting authorities will not know this new duty and it will take time, resources and probably a number of costly legal challenges—a bugbear of procurement—to work that out. It is also an unfair burden to place on them in this new regime; we need to minimise legal doubt wherever we can.

It is also worth reminding noble Lords that the current national procurement policy statement already includes social value as one of its key themes. I am also concerned by the assumption that an obligation to have regard to some degree of social value must ensure some degree of equity in procurements. I do not think I am alone in being unclear on what “equity” is supposed to mean in this context, and doubtful that the simple existence of “social value” would deliver it.

Amendments 36 and 42, tabled by the noble Baronesses, Lady Worthington and Lady Hayman, and the noble Lord, Lord Coaker, seek to define “public benefit” to include various social and economic matters. The public benefit objective in Clause 11(1)(b) is deliberately undefined, so it is a flexible concept that gives contracting authorities a wide degree of discretion. These amendments seek to define “public benefit” in a much narrower way, limited only to economic, social and environmental benefits.

As I said at the beginning, we have lost sight of the need for our procurement spend also to be used to increase productivity, drive efficiency and stimulate growth. So let us keep the Bill as clear and simple as we can so that we do not swamp contractors and SMEs in paperwork. Let us instead ensure that we have an appropriate national procurement policy statement that can evolve as times change.

Amendments 38 and 83, tabled by the noble Lord, Lord Hunt, and the noble Baroness, Lady Brinton, but spoken to by the noble Lord, Lord Fox, require contracting authorities to have regard, when carrying out a procurement, to the accessibility of what is being procured for disabled people. I reassure noble Lords that we share the same intent. However, amendments to the Bill are not required: there is no need to change the Bill because, although disability accessibility is of great importance, it is already catered for in the public sector equality duty in the Equality Act 2010. It is appropriate that these matters are considered at the point that contracting authorities draw up technical specifications, and they must apply the requirements of existing law. My officials, however, would certainly welcome further engagement with bodies representing disabled people as the technical specifications and guidance are developed.

[Lord Fox (LD)]

The noble Baroness is right that the public sector equality duty is in the Equality Act, but the current system, which we will lose when the Bill comes into force, incorporates both the PSED and provisions under secondary legislation, such as the Public Contracts Regulations 2015. Therefore, when those regulations were laid, there was a tacit acceptance that the PSED alone was insufficient. If the Minister does not accept the amendments, will she bring forward other provisions in another way to backfill what is clearly being lost as we move from one set of rules to the other?

[Baroness Neville-Rolfe (Con)]

My attitude to this is clear, and I have offered to engage on the subsidiary detail of the transformation that we are planning with the Bill.

I turn to the important matter of the national procurement policy statement, which sets out strategic priorities for procurement. Amendment 43—I hope noble Lords will forgive me if I do not mention their names in relation to every amendment they have tabled—would require the Government to publish a national procurement policy statement, rather than just allowing them to do so. This is the so-called move from “may” to “must”. Amendment 44 then requires a statement to be published within 12 months of the relevant section coming into force.

I think the clause is right as it is. Think of how much more important issues such as supply chain resilience have become since the outbreak of Covid and the conflict in Ukraine. The current approach enables the Government to react nimbly to changes in priority, which my noble friend Lady Noakes thought was important, and they can issue a new statement as appropriate. However, importantly, I can assure noble Lords that this Government will publish such a statement when the Bill takes effect; indeed, they have already done so in draft. The Bill will put the new statement on a statutory footing. Importantly, the clause provides that, once the statement is published, contracting authorities must have regard to it when carrying out their procurement activity. The amendment as drafted requires a Minister to publish a statement. However, a Minister would be unable to fulfil this requirement were Parliament to vote against it, perversely meaning that the amendment would potentially prevent a Minister discharging the statutory duty. I would therefore prefer to avoid the formula proposed in Amendment 43.

Amendment 46 proposes that, prior to publishing a statement, the Minister must give due regard to a number of specified principles, most of which represent elements core to the procurement regime. This is evident from the drafting of the Bill overall: for example, value for money, integrity and maximising public benefit are set out clearly, and transparency is a specific requirement running throughout the Bill. There is a lot in common here with what I said at the beginning so I will not repeat that.

Amendment 47, tabled by my noble friend Lord Lansley, the noble Baroness, Lady Worthington, and the noble Earl, Lord Devon, would require the inclusion of specific priorities in the national procurement policy statement relating to the achievement of targets and requirements set under the Climate Change Act and other legislation, as well as promoting innovation and minimising the incidence of fraud. As discussed in Committee, the range of topics suggested by noble Lords during the process demonstrates that stakeholders have different priorities for procurement. These matters are already well covered in our statute book. It is important that policy priorities are addressed in a targeted way and that our regime does not contribute to a deterioration in productivity. That said, noble Lords will be reassured to know that many of these themes—net zero, social value and innovation—feature in the current non-statutory statement that we have already published.

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Moved by

[Baroness Neville-Rolfe]

34: Clause 11, page 8, line 32, after first “a” insert “covered”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

[Baroness Neville-Rolfe (Con)]

My Lords, earlier today, we discussed government Amendment 34 on covered procurement, and, as promised, I have reflected on the contributions made by noble Lords. They will have noted that I left the Bill to my noble friend Lady Bloomfield for a while for this very purpose. I have looked at the implications of not proceeding with this amendment with my experts, and I still intend to move it. It is the Government’s view that, if it is not agreed, the objectives will still have to be considered for all procurements, including exempted procurements under Schedule 2, which would create the perverse situation I mentioned of needing to consider transparency in those exempted security contracts or—to give another example—contracts with law firms, which would include legally privileged information, and that would not be appropriate. It will also extend to small, low-value contracts, including those let by small authorities such as parish councils.

For these reasons, and those I set out earlier, I move Amendment 34. Should your Lordships disagree, the House can make its view known.

[Lord Lansley (Con)]

If that is the argument, why will the national procurement policy statement be applied to all procurements and not just covered procurements?

[Baroness Neville-Rolfe (Con)]

As we have discussed, the national procurement policy statement is wide-ranging. In the Bill, we have tried to set up a framework and lots of rules for contracting authorities to try to ensure that they are adopting procedures that will improve and simplify procurement, which, as we all agree in this House, is not in the state it needs to be in. We believe that not moving Amendment 34—that is, not restricting procurement in certain respects—will lead to a great deal more difficulty for contracting authorities, particularly in these exempt areas. We have looked at the exemptions carefully and, contrary to what I think my noble friend thinks, individual procurements would have to be considered in a much more detailed way as a result of the perverse effect without this amendment.

As I said, should your Lordships disagree, the House can make its view known, should it wish. I beg to move Amendment 34.

Amendment 34 agreed.

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I hope that my noble friend will look favourably on these two amendments in particular, Amendments 37 and 53. I beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, it may aid the House if I set out the government amendments in this group. I thank my noble friend Lady McIntosh of Pickering, and will respond to her when I have heard other contributions. I share her tribute to Lord Plumb, whom I dealt with in all the stages of my career—at Defra, in Europe and in this House—and I am only sorry that government business prevented me from celebrating with others his wonderful life and success today.

There are a number of amendments in my name relating to SMEs. They are important government amendments to help SMEs to win a bigger share of the £300 billion procurement pie. I know that this issue is close to the hearts of noble Lords from across the House. Throughout Committee, noble Lords questioned whether the Bill had gone far enough in removing barriers to SMEs accessing public procurement. It has certainly been a top priority for me since I was lucky enough to become a Cabinet Office Minister. It is right that we support this vital sector of our economy. At the start of 2022, there were 5.5 million small businesses, accounting for 99% of all businesses in the UK, with over 16 million employees and a turnover of over £2 trillion. We must do more to champion these entrepreneurs.

The new measures that I am announcing today complement the existing provisions in the Bill, which make it easier for businesses to enter public sector supply chains and benefit SMEs. They include greater visibility of upcoming public sector opportunities and preliminary market engagement; developing a supplier registration system, meaning that suppliers need to submit their credentials only once; improvements to commercial tools, such as the introduction of dynamic markets and open frameworks; and, crucially, requiring that 30-day payment terms will apply throughout the public sector supply chain.

I am glad to be moving amendments in three areas to add to this momentum. First, we have introduced a new duty for contracting authorities to have regard to the participation of SMEs. It sends a very clear signal that the Government are open for business to this sector. For the first time, SMEs will be on the face of the Bill, which means that authorities have a responsibility to consider them and the barriers they face. To put this in practical terms, contracting authorities will, for example, need to specifically consider through an SME lens whether the requirements they are asking for are proportionate to the contract. Are the bidding times realistic when some businesses do not have a dedicated bidding team? Have they provided clear pipelines of opportunity? Is there a diverse representation of businesses in pre-market engagement?

Secondly, we have further stripped out unnecessary barriers which SMEs face. I thank my noble friend Lady Noakes and the noble Lord, Lord Scriven, for highlighting ideas in Committee. I particularly appreciated the point that he raised, that we need to

“release some of the normal procedures and bureaucracy”.—[Official Report, 11/7/22; col. GC 385.]

As a result, we have banned authorities requiring the provision of audited accounts to test the financial standing of bidders to bid in procurements, to compete for contracts under frameworks and to join dynamic markets, except in so far as that is required under the Companies Act. This ensures that start-ups and SMEs which are not legally required to file audited accounts due to their size or age will not be shut out of procurements, provided that they can demonstrate their financial capacity by another reliable means.

Thirdly, we are going further to reduce unnecessary costs on businesses by preventing contracting authorities from requiring insurance relating to the performance of the contract, to be in place prior to the award. We know from feedback that this acts as an obstacle to participation.

Following Committee, I have reflected on the points raised by noble Lords during the debates and would like to thank many of them for follow-up discussions on this topic. I have also met trade associations such as the Federation of Small Businesses and the Business Services Association at a recent round table. We hope that the amendments will give SMEs a better chance of winning public sector contracts and allow the public sector wider access to the first-class skills, innovation and ideas that many agile, creative smaller firms offer. In turn, this will allow us to improve and enable the transformation of procurement services. These are all captured in Amendments 40, 122, 57, 70 and 74. Amendments 75, 76, 134, 140, 179, 183, 186, 188, 192 and 203 are consequential amendments, including splitting Clause 43 into two to avoid it becoming unwieldy.

I have also tabled Amendment 55, which requires a contracting authority to provide sufficient information in the tender notice or associated documents to enable suppliers to prepare tenders. It facilitates a clear trigger for the start of the tendering period identified in Clause 51. As the time available for bid preparation is so important, we consider that small suppliers will welcome this practical clarification. Amendments 40 and 122 in my name create new obligations on contracting authorities to consider the removal or reduction of barriers in procurement to small and medium-sized enterprises. We need to make sure that small and medium-sized companies do better in the procurement world.

[Lord Wallace of Saltaire (LD)]

I rise to speak to Amendments 41 and 123, which are amendments to government amendments. We welcome Amendment 40 but, as the noble Lords, Lord Maude and Lord Lansley, have said, we need in the Bill to make sure that, as well as SMEs, social enterprises, mutuals and non-profits are eased and get around some of the barriers otherwise placed in their way. I hope that the Minister will be able to give a sufficiently strong assurance that this is what is intended for it not to be necessary to divide the House on this issue, and perhaps even to come back at Third Reading with an adjustment to the current Amendment 40.

In the Green Paper that started this process, the importance of social enterprise, mutuals and non-profits was clearly marked; it has now disappeared altogether. Many of us are conscious that there are those on the libertarian right who think that every form of economic activity should be in the pursuit of profit and that the idea that you can do anything without wanting to make a profit is absurd and against free market principles. The libertarian right in the United States, which clings to such theological doctrines, has begun to infiltrate parts of the Conservative Party and, I am told, was a visible presence at the Conservative Party conference—but I am confident that real Conservatives do not share that absurd theological view. They recognise that there are many areas, particularly in personal services and care, where the different approach that comes from mutuals and non-profits makes a considerable amount of difference. There have been a number of scandals in care homes run for profit in recent years. I speak with passion on this subject because I have had a relative in a charitable care home who was wonderfully well treated in the last few years of her life.

I hope that the Minister will be prepared to recognise that the importance of social enterprise and non-profits needs to be here, and that she will give absolute assurance that this is what the Government intend, and that they do not intend to leave them with the barriers that the Government intend to remove for SMEs.

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[Lord Coaker (Lab)]

My Lords, I have just a few brief remarks on this group. Before I come on to the main point that I want to make, I shall say that I think Amendment 37, tabled by the noble Baroness, Lady McIntosh, about local produce and the local procurement of foodstuffs is something that is growing in importance. All of us know in our own communities that people individually are doing that, as well as local businesses. I think that before long the 50% target she put in her amendment will grow. I think it is an important amendment. Given the other things being talked about, it should not be lost in the general debate.

I thank the Minister for government Amendment 40, which goes to the heart of the discussion in this group, which is about encouraging small and medium-sized enterprises in the procurement process to do better than they are present, and the responsibility of contracting authorities to achieve that. The real question for the Minister—and, frankly, if there are changes of Minister in future—is how we will ensure that that happens, because successive Governments have tried to encourage small and medium-sized enterprises, and it has not been as successful as we wanted. The question is about how we make this procurement system work in a way that benefits small and medium-sized businesses in the way that we would all want.

I am very supportive of Amendment 41, tabled by the noble Lord, Lord Wallace, which talks about the barriers faced by social enterprises and not-for-profit companies in competing for procurement. I think that is something that will become increasingly important.

I know my noble friend Lord Hendy will speak about his later amendment in more depth. His amendment in this group, Amendment 162A, allows procurement to take into account the terms and conditions of staff and the legal status of subcontractors. I think it is an extremely important area, and I thank my noble friend for raising it because all of us would wish to see that people are paid properly for the work they do and that nobody is undercut in the winning of various contracts.

The noble Baroness, Lady Noakes, pointed to Amendment 163 in the name of the noble Baroness, Lady Bennett, and her supportive Amendment 164, which she ably put forward. She made some important points which we can look at in due course and to which I hope the Minister will respond.

However, I go back to where I started: the key amendment in this group is government Amendment 40. We are grateful that it has been brought forward and hope that it will encourage greater success for small and medium-sized enterprises in the procurement business in this country. The key for us is to make sure that this time it works and that we do not have another government amendment in two years’ time trying to achieve the same.

[Baroness Neville-Rolfe (Con)]

My Lords, the noble Lord, Lord Coaker, is right that the challenge is to make the shift to SMEs a reality. I will take that away as my homework. I thank all noble Lords who have spoken, especially the noble Lord, Lord Aberdare, who progressed matters with me and saved me from a further group of amendments.

I was also very interested in the real-life experience of my noble friend Lord Maude as to the difficulties of getting potential small suppliers to apply for government contracts, because in my experience SMEs can represent very good value for money. They do not have the same costs and scale of central services that some of the bigger operators have, and that can feed through into great prices and great service.

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Moved by

[Baroness Neville-Rolfe]

39: Clause 11, page 8, line 39, after first “a” insert “covered”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

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Moved by

[Baroness Neville-Rolfe]

40: Clause 11, page 8, line 43, at end insert—
“(4) In carrying out a covered procurement, a contracting authority must—(a) have regard to the fact that small and medium-sized enterprises may face particular barriers to participation, and(b) consider whether such barriers can be removed or reduced.”Member’s explanatory statement
This amendment would require a contracting authority, in carrying out a covered procurement, to have regard to the particular barriers to participation in public procurement that small and medium-sized enterprises may have, and whether they can be removed or reduced.

[Baroness Neville-Rolfe (Con)]

I beg to move.

Amendment 41 (to Amendment 40) not moved.

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Moved by

[Baroness Neville-Rolfe]

49: Clause 12, page 9, line 33, leave out “any” and insert “procurement under a”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

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Moved by

[Baroness Neville-Rolfe]

51: Clause 13, page 10, line 22, after “to” insert “procurement under”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

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Moved by

[Baroness Neville-Rolfe]

55: Clause 20, page 14, line 32, leave out from beginning to “the” and insert “A contracting authority may not invite suppliers to submit a tender as part of a competitive tendering procedure unless it is satisfied that the tender notice or associated tender documents contain—
(a) information sufficient to allow suppliers to prepare such a tender, and(b) in particular, details of”Member’s explanatory statement
This amendment would ensure that a contracting authority provides sufficient information to suppliers before the beginning of a tendering period.

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Moved by

[Baroness Neville-Rolfe]

57: Clause 21, page 15, line 2, at end insert—
“(2A) A condition set under subsection (1)(a) may not—(a) require the submission of audited annual accounts, except from suppliers who are, or were, required to have the accounts audited in accordance with Part 16 of the Companies Act 2006 or an overseas equivalent;(b) require insurance relating to the performance of the contract to be in place before the award of the contract.”Member’s explanatory statement
This amendment would prevent contracting authorities from requiring audited accounts from suppliers that do not otherwise prepare audited accounts (for example, small companies), or insurance to be in place before award.

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Moved by

[Baroness Neville-Rolfe]

59: Clause 28, page 18, line 35, leave out from first “a” to “intends” on line 36 and insert “relevant contracting authority”
Member’s explanatory statement
This amendment and the other Government amendment to this Clause would ensure that the House authorities are not required to seek the approval of a Minister of the Crown to exclude a supplier on the basis of national security.

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[Baroness Neville-Rolfe (Con)]

My Lords, I rise to introduce a number of government amendments. These include several technical amendments, so I will be brief.

Amendments 59, 60, 108 and 109 exempt the corporate officers of Parliament from the requirement to seek agreement from a Minister of the Crown before excluding a supplier or terminating a contract under the national security exclusion ground. Amendment 85 ensures that the mandatory exclusion grounds capture all Scots law offences equivalent to the already specified English and Welsh offences.

Amendments 86 and 87 refer to the relevant sections in the Theft Act to align with other legislation on economic crimes. Amendment 88 amends the transitional regime for mandatory exclusions to ensure that the correct time period is applied for the mandatory exclusion ground for conspiracy to defraud. Amendment 90 simplifies the exclusion grounds for suppliers which are insolvent or bankrupt. Amendments 92 and 93 amend the rules on how far in the past events can be taken into account as discretionary exclusion grounds in relation to breach of contract and poor performance.

I will turn to the amendments tabled by other noble Lords when I close. I beg to move.

[Lord Fox (LD)]

My Lords, I rise to speak to Amendment 89 in my name. I feel that the time pressure has lifted, so perhaps I can make a nice long speech to your Lordships now. Amendment 89 is intended to allow Ministers and contracting authorities to exclude businesses from procurement where there is evidence of financial and economic criminal activity, such as fraud, money laundering, bribery or sanctions evasions, but there has not yet been a conviction by a court.

This follows the debate we had in Grand Committee on Amendment 320, when the Minister made some cogent points about the problems of excluding organisations that had not been convicted—that point was understood. However, given the length of time involved in carrying out investigations and then securing the resulting enforcement action, we remain concerned that there is a real possibility that unsuitable suppliers may be awarded procurement contracts while they are awaiting the full length of the process.

It was therefore with some interest that my attention was drawn to the Government’s Review into the Risks of Fraud and Corruption in Local Government Procurement. This review looked into the risks of fraud and corruption in local government procurement—not surprising; that is what it was supposed to do—and made the recommendation that the exclusions regime for public procurement should be examined to see

“if more could be done to allow procurers to exclude bidders from the process (with reasonable cause and without the requirement to disclose), for example when there are known concerns with law enforcement that have not yet resulted in a prosecution”.

We believe that the Bill provides an opportunity for the Government to fulfil this recommendation, and suggest that the process of studying how to do that, recommended in that report, could happen. I should be grateful if the Minister would bring forward some sort of government process to have that assessment. If this is not the Government’s intention, she needs to explain to your Lordships’ House why she is prepared to recommend one process for local authorities through a report that had ministerial backing while ignoring the actual issue in the appropriate legislation, which is the Bill. This was the subject of a letter that I wrote to the Minister many days ago and I am still waiting for the reply.

It is in everyone’s interest to ensure that the contracting authority can act when it has evidence of financial or economic offences, but formal conviction is outstanding. We understand the problems, but the Government themselves have identified this as an issue with local authorities. The exclusion regime is not just a deterrent for bad actors; it is also supposed to prevent them getting the contracts in the first place.

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[Baroness Hayman of Ullock (Lab)]

My Lords, this has been a short debate, but this group contains some very important amendments that the Minister should consider carefully.

I turn first to the amendment in the name of the noble Lord, Lord Fox. He introduced it extremely clearly and explained why he considered it necessary. He made an important point: if you give a contract to somebody who, not a very long time afterwards, is found guilty of the offences outlined in the noble Lord’s amendment, what recourse is there for other people who have bid for that contract and behaved perfectly properly? We know that contracts are often given for a number of years, so this is likely not to be something that happens once in a blue moon; it could become a problem. If the Minister is not inclined to accept the noble Lord’s amendment, I ask her to take his concerns back to her department to see whether there is another way to have some kind of recourse or review if such a situation were to arise.

My noble friend Lord Hendy’s amendment is incredibly important because, as he rightly said in introducing it, we have Clause 29, which looks at excluding suppliers for improper behaviour—he listed many of the improper behaviours that are included in this—but what is not included is what happens if the rights of an employee or worker are breached. Surely the rights of those who work on contracts and work for people should be fully supported by the Government. We have laws on employment rights for a purpose. Surely, in looking at procurement and who to give what are often extremely lucrative contracts to, this Bill should consider employees’ rights and ensure that companies that have behaved improperly by breaching employment rights are excluded.

This seems a very straightforward amendment to add to the Bill. It would give employees more confidence and would give people who are looking to employ people confidence that they are treating their workforce in the way the law of our country dictates. I urge the Minister to support this amendment.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank the noble Lord, Lord Fox, for Amendment 89 on financial and economic misconduct. The amendment would permit the exclusion of suppliers where there is evidence of certain economic and financial offences. Of course, suppliers who commit fraud, bribery and money laundering and have failed to self-clean have no place winning government contracts. There are already mandatory grounds for exclusion that cover the most serious offences of this nature, as set out in Schedule 6. It is worth noting that the scope of economic and financial offences covered is significantly wider than in the EU regime that it replaces, including a broader range of theft, fraud and money laundering offences.

However, the mandatory grounds in Schedule 6 rightly require the supplier or a connected person to have been convicted. By providing for exclusion without the requirement for a conviction, the amendment would require authorities to make a judgment as to whether there is sufficient evidence that offences have been committed in order to apply the ground. They would need to make this judgment at a point when the investigating authorities have not reached a view, which would be very difficult. The exclusions regime requires all grounds to be considered in respect of every bidder in a procurement, so authorities would have no choice about whether to consider these matters.

I thank the noble Lord for drawing our attention to the review of finance and corruption in local government. The recommendation in that review was that we consider whether this proposal is feasible. We have given it careful consideration but are not taking it forward, for the reasons I have already touched on. However, I would add that the very fact pointed out by the noble Lord—that investigations by the authorities into these matters, which can apply to many different areas of regulation, often take considerable time—speaks to the complexity of making these judgments within the contracting authorities. There is no reason to think that they would find this any easier than the relevant and proper authorities. In fact, they would find it harder, so it would be a new burden on those investigating suppliers—it could be a significant one—and on suppliers themselves, which I am unwilling to impose.

I turn now to Amendment 91A, tabled by the noble Lord, Lord Hendy, which introduces a discretionary exclusion for “significant” breaches of workers’ rights. I pay tribute to the noble Lord’s work in this area. In my view, the exclusion grounds already cover the most serious breaches of workers’ rights, so the mandatory grounds in Schedule 6 include slavery and human trafficking offences, offences relating to employment agencies and gangmasters, and refusal or wilful neglect to pay the national minimum wage. These are based on the serious labour offences within the purview of the director of labour market enforcement.

The amendment begs the question of what constitutes a “significant” breach. Unless there is a settled consensus on this point, which I am not aware of, it will be difficult for both suppliers and contracting authorities to interpret. We should remember that suppliers will need to self-declare whether they are subject to any of the grounds, and that contracting authorities will need to consider whether suppliers meet the grounds in each procurement that they run. That is quite wide-ranging in relation to employment rights. Questions of whether a breach is significant, and, indeed, whether it relates to rights derived from statute, common law or international obligations, will consume a disproportionate amount of time and resources. I do not doubt that there are a number of behaviours in different areas which the exclusion grounds we have set out might or might not cover; but the purpose of the exclusions regime is to protect against suppliers that may be fundamentally unfit to compete for public contracts. It is not a means to enforce employment rights, or a lever to incentivise certain behaviours.

What we have introduced in this Bill is a much tougher regime of debarment, with central resources devoted to assessing suppliers and deciding centrally on debarment. This is tough for direct and indirect suppliers, as one bad apple in a company can cause them to be debarred—a very strong incentive to ensure that bad behaviour does not occur in the first place, of course; or, where it does, to take remedial action. However, expanding the exclusion grounds, as proposed in this amendment, will have a chilling effect on engagement in procurement, as I explained from a business perspective before I became a Minister and turned into the gamekeeper. We must be fair and remember that we have an interest in more competitive markets that improve value for money, innovation and productivity. I am grateful to those who have spoken for raising these issues. However, I believe we have done enough in Schedule 6, and I respectfully ask the noble Lords, Lord Fox and Lord Hendy, not to press their amendments, given the lateness of the hour.

The noble Baroness, Lady Hayman, raised a new point about the carry-on consequences of the issues we have discussed in this group. I am not sure that we can do anything about that, but I will certainly have a look at that as the Bill progresses. I beg to move.

Amendment 59 agreed.

Moved by

[Baroness Neville-Rolfe]

60: Clause 28, page 19, line 3, at end insert—
“(4) In this section, a “relevant contracting authority” means a contracting authority other than—(a) a Minister of the Crown or a government department,(b) the Corporate Officer of the House of Commons, or(c) the Corporate Officer of the House of Lords.”Member’s explanatory statement
This amendment and the other Government amendment to this Clause would ensure that the House authorities are not required to seek the approval of a Minister of the Crown to exclude a supplier on the basis of national security.

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Moved by

[Baroness Neville-Rolfe]

61: Clause 29, page 19, line 6, leave out “a procurement” and insert “the award of a public contract”
Member’s explanatory statement
This amendment and the Government amendment to subsection (1)(b) of this clause would clarify that it is improper behaviour relating to the award of a particular contract that is relevant in deciding whether to exclude someone from competing for that contract, and would reflect the change in terminology in new clause before clause 1.

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Moved by

[Baroness Neville-Rolfe]

62: Clause 29, page 19, line 8, leave out “of a public contract”
Member’s explanatory statement
This amendment and the Government amendment to subsection (1)(a) of this clause would clarify that it is improper behaviour relating to the award of a particular contract that is relevant in deciding whether to exclude someone from competing for that contract, and would reflect the change in terminology in new clause before clause 1.

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Moved by

[Baroness Neville-Rolfe]

63: Clause 30, page 20, line 2, after second “a” insert “covered”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

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Moved by

[Baroness Neville-Rolfe]

69: Clause 34, page 23, line 18, leave out “public”
Member’s explanatory statement
This amendment would ensure that documents establishing or modifying a dynamic market are not subject to any requirements applicable to contracts under the Bill.

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Moved by

[Baroness Neville-Rolfe]

70: Clause 35, page 23, line 26, at end insert—
“(1A) A condition set under subsection (1)(a) may not— (a) require the submission of audited annual accounts, except from suppliers who are, or were, required to have the accounts audited in accordance with Part 16 of the Companies Act 2006 or an overseas equivalent;(b) require insurance relating to the performance of a contract to be in place before the award of the contract.”Member’s explanatory statement
This amendment would prevent contracting authorities from requiring audited accounts from suppliers that do not otherwise prepare audited accounts (for example, small companies), or insurance to be in place before award.

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Moved by

[Baroness Neville-Rolfe]

71: After Clause 38, insert the following new Clause—
“Qualifying utilities dynamic market notices: no duty to publish a tender notice
(1) The duty to publish a tender notice in section 20(1) does not apply in relation to the award of a contract by reference to suppliers’ membership of—(a) a utilities dynamic market established by reference to a qualifying utilities dynamic market notice, or(b) a part of such a market.(2) A contracting authority must instead provide a tender notice to members of the market, or part of the market, for the purposes set out in section 20(1). (3) A contracting authority may also provide a tender notice to suppliers that have applied for membership of the market, or part of the market, but have yet to be accepted or rejected.(4) The reference in section 20(5) to a tender notice or associated tender documents includes a reference to a qualifying utilities dynamic market notice.(5) Section 33(4) (duty to consider applications for membership) does not apply in relation to the award of a contract by reference to suppliers’ membership of—(a) a utilities dynamic market established by reference to a qualifying utilities dynamic market notice, or(b) a part of such a market.(6) In this section, “a qualifying utilities dynamic market notice” means a dynamic market notice under section 38(2) (dynamic market notices) that—(a) relates to the establishment of a utilities dynamic market, and(b) sets out—(i) that only members of the market will be notified of a future intention to award a contract by reference to suppliers’ membership of the market, and(ii) any other information specified in regulations under section 88.(7) In this Act, a reference to publication of a tender notice includes a reference to provision of a tender notice under subsection (2) or (3).”Member’s explanatory statement
This new Clause would relieve a utility that establishes a dynamic market by reference to a qualifying utilities dynamic market notice from the obligation to publish a tender notice.

Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

Report stage
Wednesday 30th November 2022 Lords Chamber

[The Minister of State, Cabinet Office (Baroness Neville- Rolfe) (Con)]

My Lords, I thank noble Lords for their contributions to this debate and thank my noble friend Lord Moylan for his general point about the purpose and effect of the Bill; it was a point well made. I also agree with the noble Baroness, Lady Hayman of Ullock, that we need to restore trust in procurement. I will come on in a minute to explain what we are doing to avoid a repetition of the VIP lane problems.

I shall speak first to the government amendments. The Bill strengthens existing obligations on conflicts of interest, and I think everyone will agree that it is crucial that the requirements are clear. I am therefore tabling Amendment 116 to Clause 78(4), which will avoid a contracting authority being required to address all circumstances that a reasonable person “might” consider a conflict, a potentially impossible feat. Instead, the Bill will require the authority to address those circumstances the authority believes “likely” to cause a reasonable person to consider there to be a conflict.

I do not accept that this is a problem. The noble Baroness, Lady Bennett, spoke on this issue, and it is always good to have her challenge. This amendment narrows the scope of the obligation, but in a way that makes it deliverable. Sensible, practical ways of doing things are an issue that I have been concerned about, and when I get feedback on these points, we try to make changes.

Part 10 of the Bill allows Ministers to undertake investigations of contracting authorities’ compliance with the Act and issue recommendations that contracting authorities must have regard to when considering how to comply. Without government Amendment 139, Ministers could investigate the House of Commons, the House of Lords and the devolved Administration equivalents, which we believe would create a constitutional impropriety.

Government Amendment 153 ensures that a Minister of the Crown may issue statutory guidance, as a result of a procurement investigation, to Northern Ireland departments only with the consent of a Northern Ireland department, in order to be consistent with the requirement for consent from Welsh Ministers.

The Bill has improved obligations regarding conflicts of interest that apply to all procurement procedures, including direct award. I accept that concern remains over conflicts of interest in Covid procurement, partly because of the history we have all been debating, and these are being addressed by the Government. The concerns expressed from a public procurement perspective are around failings in due diligence and contract management. The noble Lord, Lord Alton, eloquently raised some of these issues on Monday, and I am very glad he found our letter useful. That letter is of course in the Lords Library.

I reassure noble Lords that the Department of Health and Social Care is continuing to investigate contracts and to work through resolution processes with companies that provided PPE which cannot be used. There is a confidentiality issue, as we have heard several times, but I appreciate that there is a desire for more specific information on this. That is why I will be raising it with Health Ministers, as the noble Lord has mentioned. However, I hope I can also reassure the Committee in relation to this group of amendments.

Amendment 72, a key amendment in this group, has been tabled by the noble Lord, Lord Scriven, to help prevent the future use of parliamentary VIP lanes for public contracts. I do not believe the amendment is right or necessary, as I will explain. The Bill contains safeguards ensuring that if a conflict of interest puts a supplier at an unfair advantage, and if steps to mitigate cannot avoid that advantage, the supplier must be excluded. That is laid out clearly in Clause 77(3). Noble Lords should note that this is not at the contracting authority’s discretion; it “must” exclude in those circumstances.

The noble Lord asked what we are doing to prevent VIP lanes in future. Perhaps it is worth reiterating two or three points for the convenience of the Committee. Yes, we will be preventing VIP lanes in future. Our direct award provisions have clear and narrow parameters for use. They include new transparency obligations, requiring contracting authorities to publish a notice before making a direct award, and retain obligations to publish contract details once awarded. So we are getting sunlight and transparency.

Conflicts provisions also make a clear requirement in relation to conflicts assessments which are applicable to direct award. If a situation like Covid-19 were to occur again—I heartily hope it will not—pursuant to Clause 40, the Government could set out in advance what types of direct awards were required to address the situation, meaning advance transparency to the market and suppliers. Finally, the equal treatment obligation in Clauses 2 and 3 will ensure that VIP lanes cannot happen again.

The conflicts of interest provisions in the Bill are intentionally broad to capture any person who influences a decision made by or on behalf of a contracting authority, and cover direct and indirect interests. Furthermore, outside the Procurement Bill, the ministerial and Civil Service codes provide that conflicts of interest must be avoided in the exercise of official duties. Elected officials in local government also need to adhere to the rules around keeping a register of interests—as the noble Lord, Lord Moylan, said, this is also in relation to such things as corruption. As we know, parliamentarians also have to register all their interests.

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[Noble Lords]

Oh!

[Baroness Neville-Rolfe (Con)]

I meant a noble friend. We intend to issue guidance recommending that contracting authorities include provisions allowing spot checks on the payment performance of supply chain members through their terms and conditions. This does not need to be done in legislation; we are currently exploring options to include it in the model government contract and terms and conditions. As I have made clear throughout, digital tech is integral to these reforms, as the noble Lord said, and we will use it.

I apologise for speaking like this, but I feel passionately that we have learned from the past and that it is important not to overreact to past problems. I have felt this in many areas that I have dealt with in my long life. I respectfully request that the noble Lord withdraws his amendment and the other noble Lords do not move theirs.

[Lord Scriven (LD)]

My Lords, I thank all noble Lords who have taken part in this debate, which is a continuation of what we have spoken about in Committee and on Report. It is about ensuring that, if the Bill—which concerns spending billions of pounds of taxpayers’ money—is to go through, trust, fairness and integrity are central to everything that happens and every penny of taxpayers’ money spent. Every amendment in this group is about that.

I have listened intently and diligently to what the Minister said on my Amendment 72, but the noble Lord, Lord Moylan, made a very important point. In answer to my noble friend Lord Fox, Clause 40 gives exactly the same powers that previous Ministers have had through statutory instruments, and this will get us to the same potential mess that the VIP lanes got us to with PPE. I note everything that the Minister said, but Clause 40 could do away with nearly everything in the Bill because it gives the Government unfettered discretion to set up a fast-track lane, as we have seen before. Giving that amount of power to a Minister in a time of crisis, when all power reverts to the Minister and those who are close can have privileged access to contracts, as we have seen, means that I wish to test the opinion of the House on this occasion.

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Moved by

[Baroness Neville-Rolfe]

74: Clause 43, page 27, line 40, at end insert—
“(5A) A condition set under subsection (4)(a) may not—(a) require the submission of audited annual accounts, except from suppliers who are, or were, required to have the accounts audited in accordance with Part 16 of the Companies Act 2006 or an overseas equivalent; (b) require insurance relating to the performance of the contract to be in place before the award of the contract.”Member’s explanatory statement
This amendment would prevent contracting authorities from requiring audited accounts from suppliers that do not otherwise prepare audited accounts (for example, small companies), or insurance to be in place before award.

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Moved by

[Baroness Neville-Rolfe]

76: After Clause 43, divide Clause 43 into two Clauses, the first (Frameworks) to consist of subsections (1) to (3) and (12) to (17) and the second (Frameworks: competitive selection process) consisting of subsections (4) to (11B).
Member’s explanatory statement
This is a motion to divide Clause 43 into two Clauses and make it easier to follow.

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Moved by

[Baroness Neville-Rolfe]

77: Clause 48, page 31, line 40, at end insert—
“(ba) awarded under section 39 or 41 (direct award and switching to direct award) by a private utility;”Member’s explanatory statement
This amendment would mean that a private utility would not have to wait until the expiry of a mandatory standstill period before directly awarding a contract.

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Moved by

[Baroness Neville-Rolfe]

78: Clause 49, page 32, line 7, leave out “£2” and insert “£5”
Member’s explanatory statement
This amendment would mean that a contracting authority is only required to set key performance indicators for a public contract if the contract’s value is more than £5 million.

[Baroness Neville-Rolfe (Con)]

My Lords, forgive me; I thought I could move this amendment formally too. I try to find a sensible and reliable pathway through, as your Lordships know. I look forward to debating this group, which discusses the single digital platform and transparency.

Transparency has been central to the development of this Bill, and it should be noted that there is a significant extension to transparency under the regime. The publication of documents and notices that follow the award stage will allow interested parties to see how contracts are being implemented. While we have stated publicly that it was always the Government’s intention to create a central digital platform to host this data, we acknowledge the concerns raised by noble Lords during Committee around the importance of the online platform. Amendment 129 therefore creates a new duty requiring a Minister of the Crown to provide an online system for the purpose of publishing notices, documents and other information under this Act.

In addition, the duty requires that the platform has to be accessible to people with disabilities—a point we were debating on Monday—and provide access to procurement information that is published under the Act, free of charge. This means everyone will have access to public procurement data and can track contracts as they progress through the commercial lifecycle from tender to award and delivery. Citizens will be able to scrutinise contracting authority 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, for example on their spend with SMEs.

In addition to the principal amendment, Amendment 132 is a technical amendment which removes an existing statutory power as this platform is expected to be delivered through common law powers. Since becoming the Minister responsible for this Bill, I have been keen to ensure that it strikes the right balance between transparency and not imposing undue burdens on contracting authorities. Contracting authorities will continue to be bound by the obligation to publish opportunities for all advertised procurements that are above a threshold of £12,000 for central government authorities or £30,000 for others. This will ensure that there is a high degree of transparency for SMEs, so that they can bid.

However, at the other end of the commercial process, the Bill introduces additional transparency requirements after the award of the contract. I have reflected on these, and Amendments 78, 80 and 104 all seek to raise the original threshold for the publication of contract key performance indicators, public contracts and modifications to a public contract from £2 million to £5 million. This will reduce the administrative requirements for contracting authorities while ensuring transparency of the public sector’s larger contracts. I am pleased to say that these amendments have been welcomed by the Local Government Association in the briefing note it published on 25 November.

I will turn to the other amendments tabled in this group in closing, having heard the points raised by noble Lords. Meanwhile, I beg to move Amendment 78.

[Lord Clement-Jones (LD)]

My Lords, I rise to speak to Amendment 130 to government Amendment 129. Many of us will be pleased that the Minister has decided to put the new online system for procurement information on the face of the Bill. At the same time, however, we need some assurance that it will be fit for purpose and achieve the objectives set for it, otherwise the Government seem to have carte blanche to construct whatever system they see fit to inflict on the vendor community, without any required standards or reporting duty. Let us face it: even the modest database under the Subsidy Control Act is subject to a form of reporting duty, and this system will be of far greater significance.

The amendment in my name and that of my noble friend Lord Fox is designed to provide assurance but in very simple terms. There would be the requirement for a report, first, on the performance standards expected and, secondly, on the standards achieved in the relevant period, including metrics on satisfaction and the accessibility experience of stakeholders. This is a modest proposal; how can the Minister possibly argue against it?

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[Baroness Hayman of Ullock (Lab)]

My Lords, I have some amendments following on from the government amendments. They are simple probing amendments on the figure that the Government have come up with in their amendments. Amendment 79 seeks to delete from Clause 49 the figure of “£2” and insert “£3”. All I am doing here and in my further two amendments is trying to probe where the figure that the Government put into their amendments came from. I appreciate that in her introduction the Minister said that a lot of this was based on reducing admin requirements and addressing concerns raised by the Local Government Association, for example, but it seems quite a big jump. We are seeking to understand why the threshold has jumped from £2 million to £5 million. If the Minister could give some explanation as to where the figure came from, we would be very grateful.

I welcome government Amendment 129 on setting up the online system. That was raised by a number of noble Lords and discussed at length in Committee, so it is good that the Government have acted and produced this amendment. The noble Lord, Lord Clement-Jones, raised the important point that anything that is introduced has to be seen to be fit for purpose, so again it would be very helpful if the Minister could provide noble Lords with assurance as to how the system will work. If there is no annual report on the operation of the system, what is the overview process? How is it being assessed and monitored to ensure that it is fit for purpose?

I shall comment very briefly on the two amendments in the name of the noble Baroness, Lady Noakes. She introduced them clearly and succinctly, as she always does, for which I am very grateful. I am aware that the LGA had concerns about these areas, as it raised them with us, so I thank her for tabling the amendments. They address a very legitimate concern, so I hope the Minister has listened and will revisit this area of the Bill.

[Baroness Neville-Rolfe (Con)]

My Lords, Amendments 79, 81 and 105 have been tabled by the noble Baroness, Lady Hayman, and the noble Lord, Lord Coaker, to amend to £3 million the financial threshold above which contracting authorities would be required to publish contracts and contract modifications, and set and publish KPIs. The government amendments raise these thresholds to £5 million. The intention of this is to reduce the administrative burden on contracting authorities, while still providing increased transparency on larger contracts. Redacting contracts for publication where they contain commercially sensitive information is particularly burdensome for smaller contracting authorities, requiring detailed and costly checking by legal teams that they may not have or expensive legal advisers.

Where does the figure come from? I do not know exactly; that is the honest answer. I was offered options of £50 million, £10 million and £5 million. I chose £5 million because that is quoted in the Sourcing Playbook, which seemed a reasonable point. I believe that a threshold of £5 million balances the benefits of transparency with the costs and burdens of implementation.

The higher threshold in the government amendment has been welcomed by the Local Government Association. We want the arrangements to work, so we will monitor them carefully. We have powers to change the thresholds if we need to do so—for example, to bring in extra contracts as the system grows and matures—and if analysis of the new data gathered allows us to better understand how to ensure that the obligations are effective and proportionate; or, to go the other way, if we end up with a lot of difficulties. It seems a reasonable approach.

Amendment 130 tabled by the noble Lords, Lord Clement Jones and Lord Fox, seeks to require the Minister of the Crown to report annually on performance standards and feedback on the online system, including stakeholder satisfaction and accessibility. The data on the platform will be available in real time, and interested parties—of which there will be many—will be able to access information by using the tools available on the platform and by downloading the data for external analysis, such as statistics on the publication of notices and the progress of contracts. The platform will be accessible, as I have said, and will comply with the relevant legislation, including the Public Sector Bodies (Websites and Mobile Applications) (No. 2) Accessibility Regulations 2018, on which I am not, I fear, an expert. The Government are continuously monitoring the existing online platform that supports noticing under the current regulations and will continue to do so under the new regime and make changes as they are needed, so we are not inclined, on this occasion, to write in a review clause.

[Lord Clement-Jones (LD)]

What mechanism will there be for feedback from vendors and so on?

[Baroness Neville-Rolfe (Con)]

We have talked several times about the PRU and the role it will have in looking systematically at things. It seems to me that one of the main sources of information for it will be this online system. It has the merit of largely being an all-singing and all-dancing system. I will come on to my noble friend Lady Noakes’s amendment in a minute. I think, therefore, that this is going to work well, but if the noble Lord discovers in the fullness of time that it is not doing so, I am sure he will come back and ask the Cabinet Office what it is up to.

Amendments 166 and 168 in the names of my noble friends Lady Noakes and Lord Moylan have been tabled to remove provisions in two pieces of transport legislation, both relating to contracts for subsidised public passenger transport services. The first repeals two subsections from Section 89 of the Transport Act 1985—that is a long time ago—dealing with the obligation to invite tenders for such contracts. This change would remove the requirement to issue invitations to tender individually to anyone who has given a written notice requesting this. The second amendment revokes two regulations from the Service Subsidy Agreements (Tendering) (England) Regulations 2002, dealing with information to be published regarding accepted tenders and where no tenders are accepted. These amendments were raised in Committee and, while both rightly seek to reduce the burden on contracting authorities, there are further considerations for the Department for Transport.

Not all transport is covered by the Bill, and we have carved out certain public passenger transport services under Schedule 2. The Department for Transport is reviewing procurements that fall under this separate regime as part of its review of retained EU law and its legislation more widely. It is important that what we do in our schedules does not impinge on that review. We are therefore unable to accept my noble friend Lady Noakes’s repeals today, but I have asked my officials to work with the Department for Transport to see whether it is possible to sort this out and bring forward a government amendment in the Commons to address her concerns. In the light of those various assurances, I respectfully request that noble Lords do not press their amendments.

Amendment 78 agreed.

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Moved by

[Baroness Neville-Rolfe]

80: Clause 50, page 32, line 36, leave out “£2” and insert “£5”
Member’s explanatory statement
This amendment would mean that a contracting authority is only required to publish a public contract if the contract’s value is more than £5 million.

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Moved by

[Baroness Neville-Rolfe]

84: Clause 54, page 36, line 19, after first “a” insert “covered”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

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Moved by

[Baroness Neville-Rolfe]

85: Schedule 6, page 95, line 38, after “steal,” insert “uttering, embezzlement,”
Member’s explanatory statement
This amendment would ensure that additional relevant Scots common law offences are contained in the mandatory exclusion ground in paragraph 4.

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Moved by

[Baroness Neville-Rolfe]

90: Schedule 7, page 104, line 14, leave out paragraph 6
Member’s explanatory statement
This amendment would remove the discretionary exclusion ground relating to a supplier being unable to pay their debts.

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[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful for the debate on this issue, and I hope that the House will forgive me if I take a little time to address the important matters that have been raised. As always, there has been much emotion, and there have been some strong speeches, for which I am grateful. However, I need to take the House back to the Bill.

On Amendment 91, tabled by the noble Lord, Lord Hunt, and the noble Baroness, Lady Northover, on forced organ harvesting, I pay tribute, as I have done before, to the tenacity with which the noble Lord has pursued this important issue. It is right that this abhorrent practice is exposed and confronted. The Government have taken action, both at home and abroad, to make clear that complicity in the abuses associated with the overseas organ trade will not be tolerated. As the noble Lord said, the Health and Care Act made it an offence to travel outside the UK to purchase an organ, and the Government have urged the World Health Organization to consider the findings of the China Tribunal on organ harvesting. I confirm to the noble Lord, Lord Alton, that the hospital he referred to in China will not carry out organ transplants. Moreover, it did not receive any government funding.

However, I am afraid it remains the case that the Procurement Bill is not the right place to take action on this issue. Every exclusion ground, whether mandatory or discretionary, must be considered for every supplier on every procurement—that is thousands of contracts every year. Each additional ground will add a burden for contracting authorities that, however marginal, will add up to a significant amount of time and money overall. I am reminded of my noble friend Lord Maude’s comments on Monday about the risk of trying to include too many wider public policy objectives in the Bill. If we add this, what else do we need to add? This is why I have sought to limit the grounds, particularly those that, like this one, require an assessment of factual circumstances, to those where there is a major and particular risk to public procurement. I am not aware of any evidence that any supplier to the UK public sector has been involved in forced organ harvesting.

Moreover, the scope of the proposed exclusion ground is very broad, covering not just organ harvesting but also any

“unethical activities relating to human tissue”.

The third limb of the amendment permits exclusion simply for

“dealing in any device or equipment or services relating to conduct”

covered by the first two limbs. This would seem to extend so broadly as to cover even the use of ordinary surgical equipment, where the supplier might have had no prior knowledge that it was previously used for the prohibited purposes. For these reasons, I am concerned that this ground would be extremely difficult for contracting authorities to apply in practice. While I sympathise with the noble Lord, Lord Hunt, I cannot see a way of including organ harvesting in the Bill, although I am glad that we have focused on it this evening.

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[Baroness Neville-Rolfe (Con)]

I think that would be extremely helpful. I am grateful to the noble Lord.

I turn finally to Amendment 141 tabled by my noble friend Lady Stroud and others. I am grateful to her for tabling it and for the debate today. The amendment covers two distinct issues: supply chain resilience and modern slavery. I congratulate her and others on all they have done in recent years to promote awareness and encourage change on these important issues—a great deal has changed in the last 15 years. I am also grateful to her for a very useful meeting on the amendment, to help me understand how it might work in practice. While I admire her campaigning on modern slavery, discussion revealed the impracticality of some of the details of her amendment, as I shall try to explain.

The Government have publicly stated the importance of strong and resilient supply chains to our economic and national security. The Ukraine war and the shortages and economic challenges it has precipitated have really brought that home, and the decision announced last week in relation to ownership of the Newport microchip plant demonstrates how seriously these issues are being taken. As the noble Lord, Lord Fox, said, our plan for transparency and the new online platform will help us to assess the risk. Through our trade agreements and market access work, we support British businesses and contracting authorities to build more diverse and resilient supply chains.

Supply chain resilience considerations are now embedded in the work of every government department. A global supply chains directorate has also been established in the Department for International Trade to strengthen the supply of critical goods to the UK. I will be happy to facilitate a meeting with the Minister responsible, so that my noble friend can bring her knowledge and challenge to that important work: I believe that would be helpful in progressing matters, having spoken to her about these issues. Strong and resilient supply chains have a diverse base, which relies on an effective trading system. I know this from my own practical experience of diversifying retail supply from China to Vietnam, Bangladesh and Ethiopia. As far as possible, this means promoting a market-led approach to supply chain resilience and encouraging a range of import sources.

From time to time, there can be a crisis or an issue, such as modern slavery, in any market and with almost any supplier, so we need options. The appropriate proportion of supply from an overseas market can go up or down, but the proposal in the amendment to set dependency thresholds across all categories of public procurement would be a major exercise and a market-distorting measure.

While I welcome recent trends towards western manufacturing in certain strategic industries, such as battery technology, the UK continues to trade with China to support British jobs and growth in non-strategic areas and keep inflation down—which noble Lords do not seem to be worrying about—but I emphasise that we will uphold our values and ensure that our national security, freedom and democracy are protected as we work with allies to hold China to its international commitments.

[Lord Alton of Liverpool (CB)]

Before the noble Baroness leaves that point, it is important to put on the record that we currently have a trade deficit with the People’s Republic of China of £40 billion. Dependency, resilience, and the destruction of our own manufacturing base because we are outcompeted through the use of slave labour and goods that are priced much more cheaply than people on a living wage can produce in the United Kingdom—these are issues that the Government need to take rather more seriously than she has just done.

[Baroness Neville-Rolfe (Con)]

I do take these issues seriously and I commented on diversification, which I have personally been involved in. It is because there is a large amount of trade with China that this cannot be changed overnight—and there might not be a case to do so in non-strategic areas. Inflation is very important and the opening up of Asia has historically been helpful in this country. The Prime Minister said in his speech that we must be realistic and clear about China, but that obviously does not mean we should abandon our values.

It goes without saying that practices such as slavery and human trafficking have no place in government supply chains. We have shown our determination to address modern slavery in many ways, including in the Bill. I draw my noble friend’s attention to the fact that under Clause 27, contracting authorities must ask suppliers to provide details of their intended supply chain for the contract. Authorities can consider whether a subcontractor is subject to a ground for exclusion such as modern slavery. If they conclude that this is the case and that it has failed to self-clean, the lead supplier itself is liable to be excluded from the procurement if it does not take the opportunity to remove the subcontractor from its supply chain. However, we must recognise the complexity of the issue.

My noble friend’s amendment says that

“The Secretary of State must … make provision”


in procurements and contracts to eradicate slavery and human trafficking, and that this is to be done by secondary legislation, but I fear that the amendment fails to reflect the sheer complexity of the matter. Regulations cannot specify precisely which award criteria might be appropriate to address the risk of slavery and human trafficking in every different procurement: this depends on the nature of the particular contract being tendered, including what is being purchased and the likely nature and location of supply chains. The right vehicle to help contracting authorities address slavery and human trafficking risks is in guidance, and there is already comprehensive guidance setting out the action that departments must take. This is 46 pages long and includes sections on managing risks in new procurements, assessing existing contracts, taking action when victims of modern slavery are identified, supply chain mapping, useful tools, training and questions to ask.

My noble friend will know that I have committed to put the matters addressed in the guidance on a statutory footing as part of the national procurement policy statement, provided for under Clause 12 of the Bill. This would mean that all contracted authorities would have to have regard to that guidance, which I think the noble Baroness can see is a significant step forward.

Finally, I note that the draft provisions in the amendment go significantly beyond the language in the Health and Care Act with which it was my noble friend’s stated intention to bring the Bill into alignment. Amendment 141 also creates a strong expectation that the Minister will make regulations, and that they will cover the matters referred to in the amendment, so it is effectively a must.

I know that people are looking forward to getting to the end of this debate, so I will not go through the problems with proposed new subsection (5)(d) to (f), but I will ask noble Lords to note that this will be burdensome to contracting authorities as well as small businesses. I know that my noble friend does not much care about the latter, but there might be wider concern about the gumming-up of contracting authorities in this matter when we have already made arrangements in the Bill to give modern slavery much more focus, and have added that to the relevant schedules.

We believe that proposed new subsection (5)(f), for example, is disproportionate and contrary to the open principles of our procurement regime, as well as to the interests of efficiency, value for money and common sense. Moreover, countries and regions that pose risks change over time, and that is another reason to use guidance, and not this Bill, on this matter.

Finally, I say to my noble friend Lord Blencathra that we should remember that the new regime will give broader exclusion powers to contracting authorities—he referenced Huawei—which will have primary responsibility for applying the exclusions regime.

In closing, I respectfully ask the noble Lord, Lord Hunt, to withdraw his amendment, but I emphasise the progress that this Bill has made, and I therefore find some of the comments on this group a little disappointing.

[Lord Scriven (LD)]

Just before the Minister sits down, so we understand, because some may want to press this to a Division, I ask: what would the Government’s intent be if this Bill was to pass with a debarment list, particularly with regard to companies that the Government no longer wish to deploy their surveillance equipment in the UK? Would such companies go on the debarment list, or would it just be down to guidance to determine whether such equipment is purchased by non-central government bodies?

[Baroness Neville-Rolfe (Con)]

If the noble Lord looks at Schedule 6, which is the criteria for the debarment list, he will see that it includes modern slavery and security, so there is no reason why those could not be used in an appropriate way. I hope that helps.

[Lord Scriven (LD)]

My question was: is it the Government’s intention to use the debarment list for these types of companies, or is it still going to be down to guidance?

[Baroness Neville-Rolfe (Con)]

They are mandatory grounds for exclusion, so if you find that you have a security issue—as we obviously found in relation to Hikvision—those become mandatory exclusions. On modern slavery, again, they are mandatory exclusions. Clearly, if a company is able to self-clean and has shown that it has changed the arrangements, it will not necessarily stay on the debarment list. I do not want to mislead the noble Lord.

[Lord Hunt of Kings Heath (Lab)]

My Lords, this excellent debate has been both moving and profound, because it has dealt with horrific human rights abuses in China but has also attempted to develop an argument about our strategic relationship with that nation.

The Minister said that she was disappointed by some of the remarks. She gave us a full reply, which I am very grateful for, but I too was rather disappointed by her response. Essentially, she said that our concerns are legitimate but that this Bill is not the right place for them to be expressed. But, as the noble Lord, Lord Fox, and my noble friend Lord Coaker both suggested, this is a Procurement Bill, setting the regime for government procurement for a number of years ahead. Where better to place values—not just the issue of the lowest common denominator price—than in this Bill, which sets the parameters under which billions of pounds are going to be spent by government and government agencies over the next decade?

The arguments that the Minister put forward were technical, and the Government could have come back and tabled their own amendments, which might have met the technical issues she faces. However, ultimately, the Government have set their face against expressing some profound values in this legislation, but I think that we should do so. I would like to test the opinion of the House on Amendment 91.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

92: Schedule 7, page 107, line 20, at end insert—
“(da) paragraph 13(4) (adverse information about supplier published by contracting authority), where the information is published in relation to a breach of contract;”Member’s explanatory statement
This amendment would ensure that the discretionary exclusion ground in paragraph 13(4) (publishing of adverse information) is reflected in paragraph 16(3), so far as that ground is triggered by the publishing of information in relation to a breach of contract by a supplier.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

98: Clause 63, page 42, line 27, leave out from “by” to end of line 28 and insert “a school”
Member’s explanatory statement
This amendment is consequential on the new definition of “school” inserted by the Government amendment to clause 114.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

100: Clause 64, page 44, line 8, at end insert “or in relation to a public contract awarded by a school”
Member’s explanatory statement
This amendment is consequential on the new definition of “school” inserted by the Government amendment to clause 114.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

101: Clause 65, page 44, line 21, leave out from “by” to end of line 22 and insert “a school,
(d) awarded by a transferred Northern Ireland authority, unless it is awarded as part of a procurement under a reserved procurement arrangement or devolved Welsh procurement arrangement, or(e) awarded as part of a procurement under a transferred Northern Ireland procurement arrangement.” Member’s explanatory statement
This amendment would exclude transferred Northern Ireland authorities and procurements by a school (as defined in the Government amendments to clause 114) from the duty to publish information under this clause.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

102: Clause 68, page 46, line 22, leave out from “by” to end of line 23 and insert “a school”
Member’s explanatory statement
This amendment is consequential on the new definition of “school” inserted by the Government amendment to clause 114.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

103: Clause 70, page 48, line 12, after “awarded” insert “as part of a procurement”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

104: Clause 72, page 48, line 29, leave out “£2” and insert “£5”
Member’s explanatory statement
This amendment would mean that a contracting authority is only required to publish a modification of a public contract if the contract’s value is (or becomes as a result of the modification) more than £5 million.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

106: Clause 72, page 48, line 35, after “awarded” insert “as part of a procurement”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

108: Clause 74, page 50, line 25, before “contracting” insert “relevant”
Member’s explanatory statement
This amendment and the other Government amendment to this clause would ensure that the House authorities are not required to seek the approval of a Minister of the Crown to terminate a contract with a supplier on the basis of national security.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

110: Clause 76, page 51, line 10, after “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 ---

Moved by

[Baroness Neville-Rolfe]

114: Clause 77, page 51, line 34, after “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 ---

Moved by

[Baroness Neville-Rolfe]

115: Clause 78, page 52, line 12, 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 ---

Moved by

[Baroness Neville-Rolfe]

117: Clause 79, page 53, line 26, leave out paragraph (a)
Member’s explanatory statement
This amendment is consequential on the new definition of “school” inserted by the Government amendment to clause 114.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

122: After Clause 80, insert the following new Clause—
“Regulated below-threshold contracts: duty to consider small and medium-sized enterprises
(1) Before inviting the submission of tenders in relation to the award of a regulated below-threshold contract, a contracting authority must—(a) have regard to the fact that small and medium-sized enterprises may face particular barriers in competing for a contract, and (b) consider whether such barriers can be removed or reduced.(2) Subsection (1) does not apply in relation to the award of a contract in accordance with a framework.”Member’s explanatory statement
This new Clause would require a contracting authority, before inviting the submission of tenders for a regulated below-threshold contract (other than under a framework), to have regard to the particular barriers to competing for a contract that small and medium-sized enterprises may have, and remove or reduce them where possible.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

124: Clause 83, page 56, line 8, leave out “, below-threshold procurement or international organisation procurement”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1 - there, “procurement” includes below-threshold procurement and international organisation procurement.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

126: Clause 84, page 57, line 2, leave out from “procurement” to end of line 3
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

--- Later in debate ---

[Baroness Hayman of Ullock (Lab)]

My Lords, both the amendments in this group ask for clarification and information from the Minister on the exact status of the trade agreements and how they are going to operate. I think the loophole that the noble Lord is trying to close is something that we need to think about very seriously, because we do not want to have trade agreements that then start to unravel. That is one of the big concerns around this.

In Committee, we had a quite extensive debate around this. I asked the Minister a specific question on Schedule 7 and I thank her for her detailed response, which I think it is worth drawing to the attention of the House. Schedule 7 says that a discretionary exclusion ground applies to a supplier whether the conduct occurred in or outside the United Kingdom. The question I wanted confirmed was whether Schedule 7 covered procurement opportunities that came through trade agreements.

The response from the Minister was that the conduct overseas, as referred to in Schedule 7, does cover anything that happens within procurement coming out of a trade agreement. I was very grateful for her clarification on this and thought that I should draw it to the attention of the House. It is a very helpful clarification of the remit of the Procurement Bill as far as trade agreements are concerned. However, it would be helpful if the Minister was able to provide reassurance, explanation and clarification on the questions raised by the amendments from the noble Lords, Lord Purvis and Lord Lansley, so that we all know exactly where we are, particularly around the Australia and New Zealand trade agreement.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank noble Lords for their contributions to this short debate, particularly the noble Baroness, Lady Hayman, for repeating the advice we received on the application of Schedule 7 so that it sits on the face of Hansard. I hope the other things I have to say will help with her general understanding of the interplay between the trade and procurement Bills under consideration.

I will start by responding to my noble friend Lord Lansley. I understand the point he makes in his Amendment 167: in the coming months there may be important amendments to the Trade (Australia and New Zealand) Bill that will be designed to survive into the new regime. However, I respectfully suggest that an open-ended preservation of unspecified parts of that Bill, as his amendment proposes, is not the right way to deliver what is needed.

As he knows, I also think it would be a legislatively curious way of going about things. I have been consistent in saying that when we are certain of the amendments needed as a result of that other Bill, we will consider the provisions in the Procurement Bill and the best way to retain any such obligations. As I understand it, the timing should allow for this. Thanks to the eloquence of my noble friend Lord Lansley, we are well aware of the problem. Of course, the Government will have due respect for the expressed will of your Lordships’ House.

The noble Lord, Lord Fox, asked about contracting authorities. My response is that they just need to follow the provisions in the Bill. That will mean they are compliant with the trade agreements. I hope this gives the noble Lord some reassurance: they do not need to familiarise themselves with each individual agreement when they are engaged in procurement. If he finds that confusing, I am sure we can talk further on another occasion.

Amendment 127, tabled by the noble Lords, Lord Purvis and Lord Fox, has the effect that a contracting authority cannot be considered to discriminate

“if it takes into account environmental, social and labour considerations”

in dealing with a treaty state supplier. To accept this would create the opportunity for UK contracting authorities to actively discriminate against overseas suppliers. That could place the UK in breach of our international trade agreements, including the GPA. I am sure noble Lords will agree that that would not be acceptable, but I hope they will take some comfort from the fact that the Procurement Bill already achieves the main objective of this amendment. It includes flexibility to structure procurements in a way that furthers these ends. For example, Clause 22 is drafted widely enough that these matters can be used by contracting authorities as part of the basis for determining a winning bid, as long as it is non-discriminatory.

The noble Lord, Lord Purvis, who I think is not in his place, is a great expert in this area. He was concerned that some trade agreements refer to environmental and social criteria and some do not. I can reassure noble Lords that, where a trade agreement does not expressly permit these criteria, it does not mean that a contracting authority in the UK cannot take them into account. The Bill and the UK’s international commitments allow contracting authorities to continue to apply these criteria as they have for many years.

[Lord Fox (LD)]

I think the Minister has just confirmed the point I was making. On that basis, contracting authorities need to have knowledge of what is in each different agreement in order to start to discriminate in the way she has just described. If it is in some trade agreements and not in others, surely there will be different options. As the Minister said, my noble friend Lord Purvis is our expert on this. He was concerned about this, and therefore I think I am concerned about it.

[Baroness Neville-Rolfe (Con)]

I think the point I made is that contracting authorities need to follow the provisions of the Bill and then they will be compliant with the trade agreements. I think the whole point is that we are trying not to require them to familiarise themselves with every trade agreement, and my advice is that that works. The time is late. I hope I have managed at least to reassure the noble Lord, Lord Lansley, and I respectfully urge the noble Lord, Lord Fox, to withdraw his amendment.

[Lord Fox (LD)]

As noble Lords can see by the vexed look across my brow, I am both out of my depth and no comprende. On that basis, that is two good reasons to step back. I think probably there is another conversation when the noble Lord, Lord Purvis, is back in the country to go over this because I trust his instincts on these things. On that basis—

[Baroness Neville-Rolfe (Con)]

I should perhaps make it clear that I do not think this is something we would expect to come back at Third Reading, but of course there will be further discussions in another place.

[Lord Fox (LD)]

That is completely understood. I do not think we will be bringing back an amendment. Do not worry. I beg leave to withdraw Amendment 127.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

128: Clause 85, page 57, line 31, leave out from “means” to “by” in line 33 and insert “procurement carried out”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

129: Clause 88, page 59, line 15, at end insert—
“(4) A Minister of the Crown must make arrangements to establish and operate an online system for the purpose of publishing notices, documents and other information under this Act.(5) An online system established or operated under subsection (4) must—(a) make notices, documents and other information published under this Act available free of charge, and(b) be accessible to people with disabilities.”Member’s explanatory statement
This amendment would require a Minister of the Crown to set up an online system for the publication of notices, documents and other information under the Bill.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

131: Clause 89, page 59, line 17, after first “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 ---

Moved by

[Baroness Neville-Rolfe]

132: Clause 90, page 59, line 36, leave out subsection (2)
Member’s explanatory statement
This amendment would remove an unnecessary power to establish and operate an online system, since it can be done using common law powers.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

134: Clause 92, page 60, line 26, after “with” insert “section 11(4) (requirement to have regard to barriers facing SMEs), or”
Member’s explanatory statement
This amendment would mean that the duty to have regard to barriers facing small and medium-sized enterprises inserted by the Government amendment to Clause 11 is not enforceable under Part 9.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

139: Clause 99, page 64, line 42, at end insert—
“(ca) the Corporate Officer of the House of Commons;(cb) the Corporate Officer of the House of Lords;(cc) the Senedd Commission;(cd) the Northern Ireland Assembly Commission;”Member’s explanatory statement
This amendment would add the listed bodies as contracting authorities not subject to procurement investigations.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

140: Clause 100, page 65, line 23, at end insert—
“(ba) comply with section (Regulated below-threshold contracts: duty to consider small and medium-sized enterprises) (regulated below-threshold contracts: duty to consider SMEs);”Member’s explanatory statement
This amendment would mean that the duty to have regard to barriers facing small and medium-sized enterprises inserted by the Government amendment to Clause 80 may not be the subject of a “section 100 recommendation”.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

142: Clause 102, page 66, line 23, leave out “the award of contracts” and insert “procurement”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

147: Clause 103, page 67, line 19, leave out “the award of contracts” and insert “procurement”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

150: Clause 104, page 67, line 42, leave out from “to” to end of line 45 and insert “procurement under—
(a) a reserved procurement arrangement, or(b) a transferred Northern Ireland procurement arrangement.”Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

155: Clause 105, page 68, line 25, leave out from second “a” to “awarded” on line 26 and insert “procurement under a procurement arrangement is a reference to a procurement as part of which the contract is”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

157: Clause 106, page 69, line 30, at end insert “devolved Scottish authorities carrying out procurement under”
Member’s explanatory statement
This amendment is consequential on the change in terminology in new clause before clause 1.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

165: Schedule 10, page 113, line 39, at end insert—
“6A_(1) Section 42 (single source contract regulations: general) is amended as follows.(2) In subsection (4)(b), omit the second “or”.(3) After subsection (4)(b) insert—“(ba) provision made by virtue of section 15(2)(b) (pricing of contracts), whether alone or with other provision, or”.”Member’s explanatory statement
This amendment would apply the affirmative procedure to an exercise of powers under the new provision in section 15 of the Defence Reform Act 2014 inserted by paragraph 3(3) of this Schedule.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

169: Schedule 11, page 118, line 8, leave out paragraphs 8 to 11
Member’s explanatory statement
This amendment would preserve the Commission Decisions.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

170: Clause 111, page 71, leave out lines 11 to 20 and insert—
“(1) A Minister of the Crown may by regulations make provision for the purpose of disapplying any provision of this Act in relation to regulated health procurement.(2) In subsection (1)—“regulated health procurement” means the procurement of goods or services by a relevant authority that is subject to provision made under section 12ZB of the National Health Service Act 2006 (procurement of healthcare services etc for the health service in England), whether or not that provision is in force;”Member’s explanatory statement
This amendment would clarify that the power to exclude certain procurement relating to health services may only be excluded from the scope of the Bill if it is the subject of provision under the National Health Service Act 2006.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

174: Clause 113, page 72, line 17, at end insert—
“(za) section 5 (utilities contracts)”Member’s explanatory statement
This amendment would apply the affirmative procedure to an exercise of the powers inserted by the Government amendment to Clause 5.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

187: Clause 114, page 74, line 24, at end insert—
““pupil referral unit” means—(a) in England, a pupil referral unit within the meaning given by section 19 of the Education Act 1996;(b) in Wales, a pupil referral unit within the meaning given by section 19A of the Education Act 1996;“school” means—(a) the governing body of a maintained school (see section 19(1) of the Education Act 2002);(b) the proprietor, within the meaning given by section 579(1) of the Education Act 1996, of an Academy within the meaning given by that section;(c) the proprietor, within the meaning given by section 579(1) of the Education Act 1996, of a school that has been approved under section 342 of that Act;(d) the governing body, within the meaning given by section 90 of the Further and Higher Education Act 1992, of an institution within the further education sector within the meaning given by section 91 of that Act;(e) the Board of Governors of a grant-aided school within the meaning given by Article 2(2) of the Education and Libraries (Northern Ireland) Order 1986 (S.I. 1986/594 (N.I. 3));”Member’s explanatory statement
This amendment would create a new definition of “school” for the purposes of excluding them from certain obligations under the Bill.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

188: Clause 114, page 74, line 24, at end insert—
““small and medium-sized enterprises” means suppliers that—(a) have fewer than 250 staff, and(b) have a turnover of an amount less than or equal to £44 million, or a balance sheet total of an amount less than or equal to £38 million;”Member’s explanatory statement
This amendment would insert a definition of “small and medium-sized enterprises” for the purposes of the Government amendment to Clause 11 and the Government’s new clause after Clause 80 inserting duties in relation to those enterprises.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

191: Clause 114, page 74, line 31, at end insert—
“(3) In this Act, a reference to a contract awarded by a school includes a reference to a contract awarded wholly for the purposes of supplying goods, services or works to a pupil referral unit.”Member’s explanatory statement
This amendment would ensure that the new definition of “school” for the purposes of the Bill inserted into this Clause would apply such that references to contracts awarded by a school are read as references to contracts awarded for the purposes of pupil referral units.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

193: Clause 115, page 74, leave out line 37
Member’s explanatory statement
This amendment is consequential on the new definition of “school” inserted by the Government amendment to Clause 114.

Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

3rd reading
Tuesday 13th December 2022 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

That the Bill be now read a third time.

[The Minister of State, Cabinet Office (Baroness Neville- Rolfe) (Con)]

My Lords, before the Procurement Bill is read a third time, I will deal with the legislative consent aspects. Most of the provisions apply to England, Wales and Northern Ireland only, and a few also apply to Scotland. Throughout the preparation and passage of the Bill, we have been working closely with each of the devolved Administrations. As noble Lords will know, there are provisions in the Bill which engage the legislative consent process in the Scottish Parliament, Senedd Cymru and the Northern Ireland Assembly. Currently, the devolved Administrations have not granted a legislative consent Motion; however, we are engaging constructively with officials and Ministers on addressing outstanding points, and I reassure noble Lords that the Government will continue with this engagement as the Bill is introduced into the House of Commons. I beg to move.

Bill read a third time.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

Clause 110, page 72, line 35, leave out “11([subsection removed])” and insert “1(4)”
Member’s explanatory statement
This amendment would correct the cross-reference so it refers to the definition of “centralised procurement authority”.

[Baroness Neville-Rolfe (Con)]

My Lords, I will move a minor technical amendment to Clause 110 in my name. I know how keenly noble Lords have scrutinised the Bill, and I am therefore confident that they will have noticed that, in the definition of “equivalent body” in Clause 110(6), the very incongruous words, “[subsection removed]”, appear in square brackets. I am informed that this cannot be amended administratively to make the appropriate cross-reference. Therefore, in the interests of sending the Bill to the other place in a form which can be understood, I have tabled an amendment to insert the missing cross-reference, which is to Clause 1(4). I beg to move.

[Lord Fox (LD)]

I thank the Minister because I have been worrying myself to death about this issue and clearly welcome her amendment.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

That the Bill do now pass.

[Baroness Neville-Rolfe (Con)]

My Lords, having taken over this crucial Bill from the now Leader of the House, I have had the pleasure of hearing a range of informed contributions from across the House on it. Noble Lords have offered a rich and stimulating debate in Committee and on Report, and I thank them for engaging constructively with what has at times been a challenging piece of legislation. As ever, I thank noble Lords for their forbearance with what I fear may be a record number of government amendments tabled in the Lords to help the Bill function optimally.

My objective in leading this Bill has been to ensure that it encourages a more open, effective and transparent public procurement while encouraging economic growth. One in every £3 of public money—some £300 billion a year—is spent on public procurement, yet at present we must wrestle with over 350 different procurement regulations across four different regimes. Noble Lords know my passion for paring back needless bureaucracy, in particular removing barriers for SMEs, and I know they have welcomed the new provisions I instigated to require contracting authorities to think about SMEs routinely. We have also put provisions in the Bill for the new single central online platform, which will underpin the new system and achieve a real step change in transparency.

This simplification of regulations is not at the expense of stringent, well-thought-out measures ensuring that procurement is done safely and appropriately in the relevant sector. Noble Lords will be aware of the national procurement policy statement, the procurement review unit and the debarment list. All these measures will make public procurement safe and ethical and take into account wider factors that I know many noble Lords right across the House care deeply about. These reforms are intended to provide a shift towards a modern and flexible procurement regime and deliver better outcomes for taxpayers, service users and the businesses and social enterprises involved.

Before I conclude, I would like to make noble Lords aware of an error on my part during the second day of Report, which I must correct. Amid the highly technical debate, I wrongly said that the national security exclusion ground was mandatory. In fact, it is discretionary. This is because it is desirable to have flexibility for contracting authorities considering exclusion on this ground, depending on the specific circumstances involved—for example, the nature of the threat to national security and/or the risk to the contract being tendered.

In concluding, I thank my noble friends Lady Bloomfield and Lady Goldie for their support on this Bill. I also extend particular thanks to my noble friends on the Back Benches for their contributions, challenge and support. I am very grateful to noble Lords on the Front Benches opposite and on the Cross Benches for their time and constructive engagement from the day I took the Bill over from my noble friend the Leader of the House. Finally, I thank the officials who have worked on the Bill, particularly Sam Rowbury, Ed Green, the previous Bill manager Phillip Dunkley and the current Bill manager Katrina Gajewska, as well as the wider official team, others supporting noble Lords across the House and my private office. I wish the Bill a safe passage through the other place.

--- Later in debate ---

[Baroness Hayman of Ullock (Lab)]

My Lords, I am sure that noble Lords will be very surprised to know that I thank my noble friend Lord Coaker for supporting me and sticking with the Bill all the way through. It has been a long haul, and I think we are all pleased we are at Third Reading.

I thank the noble Lord, Lord True. At the beginning of the Bill, he gave me an awful lot of time, as did his officials, when we had some serious concerns. As the noble Lord, Lord Fox, mentioned, we had a bit of a sticky start. The officials worked incredibly hard to get us to a position where we could properly debate the issues in Committee; at the beginning, we were not in that position, unfortunately. We all congratulated the noble Lord, Lord True, on his promotion, but we were also delighted as a Committee when the noble Baroness took over this Bill, because she was genuinely interested in what we were debating and genuinely understood what we were trying to achieve. I think she worked very hard and brought in some important improvements to the Bill, having listened to Committee. I thank her for her time, efforts and energy in helping us all to come out with a Bill that was better than what we had at the start.

I also thank the noble Lord, Lord Fox, and other Members who took part for the constructive work we did going forward on the Bill. It is much appreciated. I think all Members of the Committee would agree that the Bill we have sent to the other place is in a much better state than it was when we received it. I thank everybody very much for their hard work. I hope the other place considers our amendments seriously—I think they make the Bill better—and perhaps brings some further improvements that we can look at when it arrives back. It has been a pleasure to work on the Bill, but I am pleased we are now moving on.

[Baroness Neville-Rolfe (Con)]

I would like to briefly thank all those who have spoken. I agree with them on almost everything, and I also agree that we should commend my noble friend Lord True, now the Leader of the House, perhaps partly because of his achievements in this area. It has been a great pleasure to become a gamekeeper for the Government rather than be a poacher for the Back Benches. My noble friend Lady McIntosh of Pickering raised the devolved issues; of course, we hope that these things can be amicably resolved in the other place. Procurement is a devolved issue—the Scottish Government have not joined the UK Government’s Bill and will be maintaining their own legislation. Contracting authorities in Scotland will therefore not be bound by the Bill other than to enable their use of frameworks, dynamic markets and joint procurement. They are operating their own regulations, having transposed the EU directives into their own statute book. There are some outstanding issues, particularly with the Scottish Government. We are pursuing those, and I hope they will be resolved before we see the Bill again.

Bill passed and sent to the Commons.

Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 1.

1: Clause 2, page 2, line 13, leave out “including the NHS”

[The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)]

My Lords, in moving this Motion I will speak to Amendments 1, 4, 5, 81 and 82. I am very pleased to bring this important Bill back to the House today for consideration of amendments made in the other place. It is, I believe, a key Brexit dividend, making it possible for us to develop and implement our own procurement regime, which will be simpler, more transparent, better for small businesses and better able to meet the UK’s needs. I thank noble Lords on all sides of the House who contributed to the lengthy discussion on the original Bill, first introduced to this House in May last year.

In the other place, we made a number of important changes to the Bill, including a debarment appeals process, clarification of the City of London’s status under the Bill, at its request, and provisions to address trade disputes relating to procurement. Importantly, we also took significant steps to strengthen national security provisions in the Bill, creating a new mechanism that will allow us to protect public procurement from risky suppliers. We also committed to removing Chinese surveillance equipment from government departments’ sensitive sites and dedicating additional resources within the Cabinet Office to scrutinise suppliers for potential national security threats. It is now crucial that we take the Bill through to Royal Assent, so that we can implement its many useful provisions.

This first group of amendments focuses on procurement rules for healthcare services and the national procurement policy statement. They overturn amendments made to the Bill on Report in this House. Amendments 1, 81 and 82 are necessary to ensure the proper functioning of the Bill and the regulation of healthcare procurements. Engagement with the NHS has identified the requirement for a bespoke regime for healthcare services to drive the integration of healthcare and the development of better, more joined-up patient pathways through healthcare systems. This responds to the idiosyncrasies of the health system, as identified by those who work in it.

The forthcoming provider selection regime is a free-standing regulatory scheme of procurement rules which commissioners of healthcare services in the NHS and local government will follow when arranging healthcare services in their area. Parliament accepted this when passing the Health and Care Act 2022, which was debated for many days in this House. The DHSC published the results of its latest consultation in July and aims to lay the regulations in Parliament this Autumn. It would be incredibly unhelpful at this critical stage for both schemes, when both the healthcare regulations and the Procurement Bill are on the cusp of delivery, to start attempting to unpick it all. Doing so would add unacceptable and entirely avoidable costs and delays to both programmes for no tangible benefit.

Amendment 1 removes from the definition of a public authority in Clause 2(2)(a) the words “including the NHS”. This addition is unnecessary because it clearly meets the test for a public authority set out at Clause 2(a), which is that it is publicly funded. This is backed up by the fact that the relevant NHS bodies to be covered by this Bill as central government authorities are identified in draft regulations to be made under the power at Schedule 1(5). These regulations were consulted on over the summer and have been welcomed in this regard. Setting out the list of central government authorities in regulations is appropriate, as updates are needed from time to time as organisations inevitably change. Moreover, the NHS is not a single legal entity and does not have a clear meaning in law, so the naming of the NHS as a public authority in Clause 2 would have reduced clarity.

I turn now to Amendments 81 and 82. The version of what was then Clause 116 inserted on Report in this House needed to be removed and replaced with a provision that enables the DHSC to proceed with the provider selection regime. This is crucial for the reasons I have already set out, and I emphasise that this House will have the opportunity to scrutinise the new affirmative regulations when they are laid. I hope that I have been able to provide the noble Baroness, Lady Brinton, whose Motions 1A and 81A deal with these matters, with sufficient reassurances and that she will not press her amendments today.

Amendments 4 and 5 removed two amendments from Report stage in the Lords relating to the national procurement policy statement. These required that, prior to publishing an NPPS, the Minister must give due regard to a number of specified principles and mandated the inclusion of a number of priorities in the NPPS itself. In respect of the first amendment, the noble Baroness, Lady Hayman of Ullock, has subsequently tabled a modified version of it—in Motions 4A and 4B in lieu—which, as before, would require the Minister drafting the NPPS to have regard to a set of principles. The modification suggests a set of principles more in line with those we have already established in Clause 12, and I am happy to set out the Government’s stance on this issue now.

The Government recognise that these principles are important to procurement, which is why they are already reflected throughout the Bill. For example, value for money, integrity and maximising public benefit are set out as procurement objectives in Clause 12, which I have already mentioned. Contracting authorities must have regard to these when carrying out procurements, and transparency requirements already run throughout the Bill.

[Lord Lansley (Con)]

Before we proceed further in relation to Clause 12, will my noble friend confirm that the procurement objectives in Clause 12 relate to covered procurement only—that is, procurements that are in excess of the threshold—and therefore does not include exempt contracts, whereas the national procurement policy statement applies to all procurement?

[Baroness Neville-Rolfe (Con)]

If I may, I will come back to that when I have finished presenting. I did ask that question today; I do not think there is that much difference, but I will come back to my noble friend.

There are other specific requirements in the Bill that place obligations on contracting authorities regarding the fair treatment of suppliers and non-discrimination in decision-making. On value for money, I know there is concern from across the House that it is often interpreted to mean lowest cost. We have sought to address this through the move from most economically advantageous tender to most advantageous tender at Clause 19, which stakeholders tell us is a powerful signal in this regard.

Including a similar set of principles in respect of the NPPS risks creating duplication and confusion when we are looking to simplify the regime. However, while the NPPS should focus on the priorities of the Government of the day, many of them are already reflected in the current non-statutory NPPS introduced by this Government, and we have consistently demonstrated our commitment to them through measures such as the strengthening of social value policy following the collapse of Carillion and the procurement policy on carbon reduction introduced in 2021. In addition, the Public Services (Social Value) Act 2012 will continue to exist alongside the new regime established by the Bill. I hope that this will satisfy the noble Baroness.

The second amendment made by this House added a sub-section which required the inclusion of specific priorities in the national procurement policy statement relating to achieving targets set under the Climate Change Act 2008 and the Environment Act 2021, meeting the requirements set out in the Public Services (Social Value) Act 2012, promoting innovation among potential suppliers and minimising the incidence of fraud. I believe that these issues are already addressed in the Bill—for example, in Clause 12—or elsewhere outside of this legislation. For example, the Public Services (Social Value) Act 2012 requires contracting authorities to consider the economic, social and environmental well-being of an area when planning specified procurement, and there are additional obligations imposed by the Environment Act 2021. From 1 November 2023, Ministers will be under a statutory duty to have due regard to the environmental principles policy statement when making policy and will be subject to this duty when preparing the NPPS.

Finally, the scope and extent of the NPPS needs to be flexible, and these things should not be set in stone. Noble Lords have highlighted net zero, social value and innovation, but new challenges arise, such as the security threat from the Russia-Ukraine war. The Government of the day need to be able to respond to each major new challenge in an appropriate manner, without needing to change primary legislation. I beg to move.

Amendment to the Motion on Amendment 1

Moved by

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[Baroness Noakes (Con)]

My Lords, I have much sympathy with Motion 1A in this group, tabled by the noble Baroness, Lady Brinton, because I believe that treating the NHS as a special case in any area of public policy has the effect of insulating the NHS, which is a seriously underperforming organisation that desperately needs change.

Having said that, I am afraid I cannot support the noble Baroness’s amendments. Parliament has already decided, in the shape of the Health and Care Act 2022, that the NHS should be subject to a bespoke regime. In effect, the other place was asked to think about that again when this House sent the Procurement Bill there for consideration, and it has sent it back with its response—it wants to keep a bespoke regime for the NHS—so I think we have the answer to that. My noble friend the Minister has made clear that much work has already been done on the interface between the two regimes to make sure that nothing will fall through the cracks.

This boils down to a simple difference of view; the Government want to do it one way and the noble Baroness, Lady Brinton, wants to do it another way. I wonder whether this is really the kind of issue that should be the subject of a prolonged battle between the two Houses. I cannot see that there is a real point of principle here. Also, as my noble friend the Minister pointed out, implementation of that new system in the NHS is already quite a long way advanced and it would appear wasteful to try to undo all that.

I turn to Motion 4A in the name of the noble Baroness, Lady Hayman of Ullock. She has tabled a list of what she calls “priorities and principles” that Ministers must consider before publishing a national procurement policy statement. At first sight these look wholesome and unobjectionable, as one might expect. I have two main reasons for not supporting her amendment.

First, the amendment is unnecessary. Government Ministers and their officials are already focused on value for money, transparency, integrity and even, I say to my noble friend Lord Lansley, innovation. It is government policy to pursue innovation; it is already part of the day-to-day life of government. Many of these items are either implicitly or explicitly already in the law, either administrative law or general law. As has been pointed out, some already feature in the objectives for covered procurements. My noble friend the Minister explained all this in her introductory remarks. Thinking that the Government need a special list of things to think about, in statute, misunderstands the processes of government.

Secondly, the list of items always reflects today’s concerns and is not future-proofed. While some issues such as transparency seem like eternal issues, they were not always unambiguously so. Today’s obsessions with things such as environmental matters will, I predict, be overtaken by other issues of concern, whether Russia and Ukraine or something that we have not yet thought about. I am not clever enough to predict what those other things will be; I just know that the world changes and the orientation of government policy will change with it. The inclusion of a list runs a real risk of being overtaken by events, which is why it is not good legislative practice to put such lists in statute. I hope that both noble Baronesses will not feel it necessary to pursue their amendments and divide the House.

[Baroness Neville-Rolfe (Con)]

My Lords, I begin by sharing my appreciation for the number of incisive contributions we have heard in the course of this short debate. It is always a pleasure to debate these things here. Of course, they have now been reviewed in the other place, as my noble friend Lady Noakes said, and there was a long discussion, including a long Committee stage attended by my friend in the other place Alex Burghart. I particularly thank noble Lords for all the work that has gone into this across the House, including these important provisions.

My noble friend Lord Lansley is correct that the objective in Clause 12 applies to cover procurement. The NPPS clause allows an NPPS to cover all procurement, but in practice its scope will be determined by the contents of the statement. In my opening remarks I explained at some length the position on the coverage of the NHS. I will come back to one or two of the questions from the noble Baroness, Lady Brinton.

I particularly thank the noble Baroness, Lady Hayman, for all that she said. Concerning principles that need to be considered by Ministers in preparing the NPPS, these principles are already covered through other commitments and legislation, as I have already set out. The amendment is therefore not necessary, as my noble friend Lady Noakes said. In addition, our fundamental view is that the Government of the day should not be constrained by the Bill in their ability to prescribe something more specific. They are free to do so—and I think this is the charm of the Bill—through the NPPS rather than through primary legislation. The Bill is about clarity and simplicity, not layering rules on rules.

To understand how it works in practice, I refer my noble friend Lord Lansley—I think I have already discussed this with him—to the current non-statutory NPPS, which covers innovation and social value. Attempting to drive innovation, which I am as keen on as he is, in every single procurement will not always be relevant or proportionate. Our Bill drives innovation through, for example, our new competitive flexible procedure, pre-market engagement and our duty for contracting authorities to have regard to reducing barriers for SMEs—which will also benefit social enterprises, as the noble Earl, Lord Devon, referred to. Future NPPSs will also be subject to parliamentary scrutiny and consulted on as appropriate.

The consideration of environmental targets and objectives relating to social value in preparing the NPPS, and the other principles set out in this amendment, are duplicative and would render the Bill more complex and confusing for contracting authorities and suppliers. Singling out specific objectives for Ministers to consider will create the impression that they trump others, which could unduly constrain flexibility for a Government to set priorities in future, which they will do through the NPPS. This is a principle seen in other legislation, where you have framing legislation and then statutory guidance.

Finally, regarding environmental considerations—as highlighted in discussions during the REUL Bill debates, although perhaps I should not remind noble Lords of those as they took a long time—Ministers will now be under a legal duty to have due regard to the environmental principles policy statement when making policy, including the development of policies in accordance with the Bill.

On the NHS amendments championed by the noble Baroness, Lady Brinton, I am grateful for the meetings that we have had but I believe that they stem from a confusion. NHS bodies are contracting authorities and therefore already covered by the Bill; we had a good conversation about mixed contracts and so on, which I think was helpful to us both. It would be inappropriate to remove the power to make the provider selection regime regulations, especially given the benefits that they will bring to patients.

In response to a question about the definition of healthcare services, the scope of services in the PSR has been consulted on and will be further supported by reference to a list of common procurement vocabulary codes, set out clearly in the PSR regulations. An indicative list of those codes was included in DHSC’s recent consultation on the PSR.

The noble Baroness made a point about conflicts of interest. Our Bill strengthens existing legal duties on conflicts of interest and embeds greater transparency throughout the commercial life cycle. This has been welcomed and, I think, is important. Furthermore, the provider selection regime regulations will clearly set out provisions for the effective management of conflicts of interest. The PSR is designed to ensure transparency across all procurement decisions to which it applies, including how the decisions were made. This transparency will help ensure that there is proper scrutiny and accountability of decisions to award contracts for healthcare services.

Finally, an independently chaired panel will provide expert review and advice concerning decisions made under the PSR, helping to ensure that procurement processes are transparent, fair and proportionate. I very much hope that that additional information about our plans for the PSR will enable this debate about just how these two regimes, both of which have been discussed constructively and at length in this House, fit together, and that noble Lords feel able to support the government amendments and withdraw the amendments that they have put forward.

[Baroness Brinton (LD)]

My Lords, I thank everybody who has spoken in this brief debate. I particularly thank the noble Baroness, Lady Noakes, for at least agreeing with the principle, even if she cannot support me in the Division Lobby, because it is really important.

For all the reasons that the Minister outlined, we are where we are. When we were working on the Health and Care Bill, it was absolutely evident that the secondary legislation changes would be outlined quickly thereafter—I am looking at others who were in the Chamber at the same time—and agreed by last autumn. We are now 17 months on and there is no sight of them at all.

The Minister outlined the NHS provider selection scheme and all its arrangements. That it is not looking for a culture change worries me most. In my earlier speech I gave examples of the behaviour of three senior managers at three CCGs, which the public would not have known about if the losing company had not gone to the Technology and Construction Court. This revealed that it is all too easy, where the culture is poor, for people to believe that the rules are being followed when they are not.

I appreciate that we have a point of difference on this, but on our Benches we believe that there is much benefit in this Procurement Bill and do not understand why the NHS is excluded. It is perfectly possible to include some special arrangements for it, but nothing has happened since the Health and Care Act was enacted. At the moment, nothing we are hearing from the NHS is about that culture change. On that basis, I wish to test the opinion of the House.

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Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 2 and 3.

2: Clause 2, page 2, line 16, leave out “subsection” and insert “subsections (8A) and”

3: Clause 2, page 3, line 12, at end insert—
“(8A) In this Act, a reference to a public authority includes a reference to the
Common Council of the City of London.”

[Baroness Neville-Rolfe (Con)]

My Lords, in moving this Motion I will speak to the other amendments in the group.

Amendments 2, 3 and 99 ensure that the City of London is appropriately regulated by the Bill and that its private sector activities are not inappropriately captured.

Amendments 6 to 12 deal variously with abnormally low and unsuitable tenders, and the definition of disabled and disadvantaged people in contracts specifically directed to help them.

Amendment 10, which I know is of interest to the noble Lord, Lord Fox, who I thank for his co-operation on this large number of amendments, requires that any procedural breach that results in a tender being unsuitable must be material. This tightens the circumstances in which a switch to direct award can be made. The transparency notice will ensure that any awards under Clause 43 are publicised, and, if the provision is abused, there will be opportunity for suppliers to bring a challenge and for the procurement review unit to investigate.

Amendments 13 to 22, 48 to 56, and 61 to 64 deal with the publishing of KPIs, tendering timescales for utilities and non-central government contracting authorities, standards and accreditation, electronic communications, e-invoicing and payment compliance, and contract change notices.

Amendment 60 and the consequential amendments—Amendments 76, 85, 88, 90, 91 and 92—introduce an enabling power which gives the UK the ability to take retaliatory action as a result of a procurement-related dispute with a country with which we have a free trade agreement on procurement.

Amendments 65 and 66 strengthen the record-keeping obligations with the Bill, to reflect obligations under our international agreements.

Amendments 83, 87 and 89 relate to financial thresholds, ensuring that, where thresholds for the publication of KPIs need to be changed, the affirmative procedure will apply.

Amendments 95 and 96 clarify the reasonableness test in Schedule 2, following feedback from the Local Government Association.

Amendment 104 extends the new power that the Bill will insert into the Defence Reform Act by allowing regulations to ensure that, under specified circumstances, certain existing contracts, when amended, can be treated as new contracts and brought within the scope of the single-source regime. Amendment 104 relates to single-source defence contracts entered into after the Act came into force but which were below the regime threshold and are subsequently amended to a contract value above that threshold.

Amendments 23, 24, 26 to 28, 30, 32, 35, 36, 39, 43, 44 to 46, 68, 72, 73, 75, 84 and 103 strengthen and ensure that the debarment and exclusion regimes in the Bill function as intended by inserting a substantive debarment appeals regime to replace the enabling power. Noble Lords will remember that, in this House, we thought it was better to have that in the Bill rather than in regulations.

Finally, the Government introduced Amendments 58, 59, 69, 70, 71, 74, 77 to 80, 86 and 93 in the other place at the request of the devolved Administrations. These amend how the legislation applies in relation to devolved procurement in Wales or Scotland and ensure that the regime runs effectively. They reflect constructive discussions.

I apologise for the number of amendments but we have sent out a letter explaining exactly what these all entail. I beg to move.

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Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 4.

4: Clause 13, page 10, line 9, leave out paragraph (b)

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Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 5 to 24.

5: Clause 13, page 10, line 29, leave out subsection (4)

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Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 25.

25: Clause 57, page 39, line 30, at end insert—
“(2A) If a supplier is an excluded supplier on the basis of the supplier or an associated person being on the debarment list only by virtue of paragraph 34A of Schedule 6 (threat to national security), the supplier is to be treated as an excluded supplier only in relation to public contracts of a kind described in the relevant entry.

[Baroness Neville-Rolfe (Con)]

My Lords, with the leave of the House, I will also speak to Amendments 29, 33, 34, 37, 38, 40, 41, 42, 57, 100 and 101 in this group. These amendments significantly strengthen the exclusions and debarment provisions on national security grounds. I hope they will further assure noble Lords that the Government are taking the issue of national security seriously and are ready to take action. I thank particularly the noble Lord, Lord Alton, who I see in his seat and who has worked tirelessly to raise this issue in the House, for our constructive meetings.

The new amendments will enable a Minister of the Crown to take a stronger approach in response to a specific risk profile of a particular supplier and make targeted decisions about whether the debarment should be mandatory for particular types of contracts, depending on the nature of the risk. If the supplier poses an unacceptable risk in relation to selected goods—for example, networked communications equipment—the Minister will be able to enter on the debarment list that the supplier is an excluded supplier for contracts for the supply or support of that type of equipment.

The entry may also, or as an alternative, stipulate that the supplier is excluded from contracts relating to certain locations or sites, or from contracts let by certain contracting authorities. This removes discretion from contracting authorities regarding exclusions where a supplier poses a threat for particular contracts, thereby reducing the risk of a supplier being allowed to participate in those procurements. By allowing this type of targeted and proportionate approach, we can direct that suppliers must be excluded where the risks are unacceptable and allow contracting authorities to make appropriate choices where the risk is manageable—for example, for the provision of pencils or plastic furniture.

Amendment 31 commits a Minister of the Crown to keep suppliers under review for potential investigation for debarment on national security grounds. This amendment commits Ministers to proactively consider new debarment investigations where there is evidence of risk so that the Government can act effectively and on time. We believe this would be highly advantageous in minimising the risk of those who pose a threat to our national security being awarded public contracts.

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[Baroness Hayman of Ullock (Lab)]

My Lords, I will be very brief. I thank both noble Lords for such excellent speeches on really important issues and important amendments that have been brought back for further discussion. The noble Lord, Lord Alton of Liverpool, again and again draws our attention to where we need to act on wrongs in this world. Clearly, we must do all we can to tackle modern slavery, genocide and crimes against humanity. He is right to draw our attention to the serious examples he gave us in his speech of where this is happening. We believe that procurement policy can and should contribute to that end where it can. I say to the Minister that the Government have listened to much of what the noble Lord has said; we have moved forward to some extent on this.

My noble friend Lord Hunt’s amendment clearly spells out why we need to be doing something about this. Reading his amendment, what struck me was the definition. I will read it, because I think it is at the crux of this:

“‘Forced organ harvesting’ means killing a person without their consent so that their organs may be removed and transplanted into another person”.


I cannot think of many things more appalling than that, so we fully support my noble friend. He deserves the thanks of the House for bringing this forward. He has our full support, but I wish the Government would consider amending the Bill in this way.

[Baroness Neville-Rolfe (Con)]

My Lords, I agree with the noble Baroness on the excellence of the two speeches we have had during this important debate. I thank the noble Lord, Lord Alton, again for his contribution. I am delighted that we have been able to agree on this matter so that the changes we have agreed can be moved forward. I thought his speech, ranging from what the Co-op and Tesco are doing, through the Cambridge spies, the absolute horror of what is being imposed on the Uighurs, and all the other things he said that I will not repeat, bears reading and reflecting on.

On the use of surveillance equipment—to respond to one point the noble Lord made—in the wider public sector, I should add that if the Government consider the risk to be intolerable, they are able to take action. That does not have to be enshrined in primary legislation. On the point about parliamentary scrutiny, the Government carefully consider and respond to all Select Committee recommendations. The annual written report on surveillance cameras, once laid in Parliament, will be available to all committees. I am sure it will receive appropriate scrutiny and a great deal of interest.

Turning to the remarks made by the noble Lord, Lord Hunt, and the noble Baronesses, Lady Northover and Lady Hayman, we all agree that organ harvesting is a horrific practice. However, given that we already have provisions in this Bill relating to professional misconduct—which will cover organ harvesting—it would seem inappropriate and odd to single out this particular, albeit horrific, practice in this Bill, and not others, especially given that the risk of this practice occurring in public contracts is low. While the issue is of key importance, the amendment itself largely duplicates the Government’s existing efforts. I cannot agree with the criticism of this given all we have done to try to improve this Bill and make the arrangements better. As I have said, there is a reference to organ harvesting in the NHS legislation. To pick up on the various security areas we have now in the Cabinet Office, they will work closely together. That is how you defeat the enemy on these things.

The Deputy Prime Minister has spoken in the other place on these issues today, and the Leader of the House will be repeating the Statement shortly when we finish this business. Obviously, that is some context. This Government have already taken steps to act on the risk from foreign influence and demonstrated that they are willing to act when the risk is intolerable. Our action on the risk of using certain surveillance equipment on government-sensitive sites was necessary and proportionate. This Bill will help us further, as the national security debarment provisions will enable us to act in public procurements where we see malign influence. This is a major change that has been made to this Bill. It is very encouraging that this House has influenced it and then welcomed it on its return from the other place. This is how good legislation is made, I hope.

It is crucial that we bring this most important Bill to Royal Assent as quickly as possible. I hope noble Lords will back us today, and I hope that in view of what I have said, the noble Lord will consider withdrawing his amendment. In any event, we need to move forward and get this Bill on the statute book.

Commons Amendment 25 agreed.

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 26 to 46.

26: Clause 58, page 39, line 40, after “are” insert “continuing or”

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Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 47.

47: After Clause 64, page 44, line 34, leave out Clause 65

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Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 48 to 80.

48: Clause 66, page 45, line 30, at end insert—
“(5A) The implied term does not prevent a contracting authority—
(a) requiring the use of a particular system in relation to electronic invoices;
(b) in the case of a defence authority (as defined in section 7(5)), requiring the use of a system that requires the payment of fees by the supplier.”

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Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 81.

81: Page 74, line 16, leave out Clause 116

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Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 82 to 101.

82: After Clause 116, insert the following new Clause—
“Power to disapply this Act in relation to procurement by NHS in England
(1) A Minister of the Crown may by regulations make provision for the purpose of disapplying any provision of this Act in relation to regulated health procurement.
(2) In this section—
“regulated health procurement” means the procurement of goods or services by a relevant authority that is subject to provision made under section 12ZB of the National Health Service Act 2006 (procurement of healthcare services etc for the health service in England), whether or not that provision is in force;
“relevant authority” has the meaning given in that section.”

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Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 102.

102: Schedule 7, page 110, line 33, leave out paragraph 15

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Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 103 and 104.

103: Schedule 7, page 111, line 44, at end insert—
““event” means a conviction, decision, ruling, failure or other event by virtue of which a discretionary exclusion ground would apply to a supplier;”

Procurement Bill [HL]

Baroness Neville-Rolfe Excerpts

Consideration of Commons amendments
Wednesday 25th October 2023 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

That this House do not insist on its Amendment 102B in lieu of Commons Amendment 102, to which the Commons have disagreed for their Reason 102C.

102C: Because it is unnecessary to have a specific discretionary exclusion ground for involvement in forced organ harvesting in light of the ground for professional misconduct and the lack of evidence that any supplier to the UK public sector has been involved in forced organ harvesting.

[The Minister of State, Cabinet Office (Baroness Neville- Rolfe) (Con)]

My Lords, the other place has now been clear, for the second time, that it is firm in its position on this amendment. Noble Lords asked the Commons to reconsider, and it has reached the same decision.

The Bill creates new rules for suppliers and contracting authorities that will stay on the statute book for the foreseeable future. We therefore need to be measured and prudent in our approach and avoid imposing further unnecessary bureaucracy on UK businesses that duplicates both the existing provisions in the Bill and the steps being taken outside the legislation.

I commend the noble Lord, Lord Hunt of Kings Heath, for the debates he has led on organ harvesting. We share a unanimous view that organ harvesting is an abhorrent practice that has no place in our supply chains. Accordingly, if a supplier or one of its connected persons fails to comply with the established ethical or professional standards within its respective industry, including relating to the removal, storage and use of human tissue, the supplier could face exclusion on the grounds of professional misconduct. However, as far as I am aware, no supplier to the UK public sector has been involved in forced organ harvesting. Given that the exclusion grounds in the Bill have been selected based on the areas of greatest risk to public procurement, it is not necessary to single out organ harvesting in this Bill.

The Government are already actively addressing this awful practice. For example, it is an offence to travel outside the UK to purchase an organ, by virtue of new offences introduced by the Health and Care Act 2022. In addition, the Government continue to monitor and review evidence relating to reports of forced organ harvesting and maintain a dialogue with leading non-governmental organisations and international partners on this very important issue.

I make one further remark concerning an issue which, while out of scope of today’s debate, is of significant importance to this Bill and the country’s security. It relates to concerns raised by the noble Lord, Lord Alton, following recent press coverage regarding surveillance equipment, which I look forward to discussing with him in person tomorrow. On 24 November 2022, the Chancellor of the Duchy of Lancaster made a Statement in the other place instructing government departments to cease deployment on their sensitive sites of surveillance equipment produced by companies subject to the National Intelligence Law of the People’s Republic of China.

During our last debate in this House, I set out the definition of “sensitive sites” to which our commitment would apply and which I am happy to reiterate today. As I said on 11 September, our commitment will apply to government departments and cover their sensitive sites, which are any building or complex that routinely holds secret material or above, any location that hosts a significant proportion of officials holding developed vetting clearance, any location routinely used by Ministers, and any government location covered under the Serious Organised Crime and Police Act 2005. I went on to reiterate that our commitment does not extend to the wider public sector. However, in no way is this an endorsement of the use of such surveillance equipment by these organisations or by organisations in the private sector. Indeed, these organisations may instead choose to mirror our action. I believe that some of them already have, including the police.

I beg to move.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to the Minister for the explanation behind the Motion. She kindly referred to the amendments I tabled on Report following our debate in Committee, which focused on the appalling practice of forced organ harvesting, principally in China, which involves the removal of organs from living prisoners of conscience for the purpose of transplantation, killing the victim in the process. It is state sanctioned, widespread throughout China and has become a multi-billion-pound commercial operation.

We know that the victims are mainly Falun Gong practitioners, but more recently, evidence has indicated that Uighur Muslims are also being targeted on a massive scale. Further to that, there are several pieces of evidence suggesting that Tibetans and house Christians are as likely to be the victims of forced organ harvesting. As the noble Baroness said, my amendment was passed by your Lordships’ House on Report and went to the Commons, where it was rejected. We had another go in September and again, I am afraid, the Commons has reinserted the original provisions in the Bill.

I regret that this has happened for three reasons, the first being the scale of the atrocities being carried out in China and specifically in Xinjiang province. Secondly, Ministers are wrong to dismiss the need for the amendment. Above all else, its passage would have been a powerful signal in the UK and globally of our abhorrence of these awful practices. Thirdly, you cannot consider my amendment on forced organ harvesting without setting it in the context of the Government’s approach to China more generally. The Prime Minister has talked quite tough in recent weeks on the Government’s approach to China. However, the overall approach, to put it at its kindest, is clouded in inconsistency, ambiguity and sometimes downright confusion. That has been reflected in any number of Select Committee reports over the last year or two.

However, I recognise that this has gone as far as I could expect it to go. I am grateful to all those who supported me, particularly my Front Bench, the Lib Dems and many noble Lords around the House. I particularly pay tribute to Lord Bernie Ribeiro, who retired from the House on Monday. He has been a tower of support to me on this very worrying issue over many years. I wish him all the best in his retirement.

--- Later in debate ---

[Baroness Hayman of Ullock (Lab)]

My Lords, I start by thanking my noble friend Lord Hunt of Kings Heath for continuing to press the issue of the terrible practice of organ harvesting and to raise awareness of it. I do not think that there was sufficient awareness of what was happening in China until my noble friend tabled his amendments, and I hope that he continues to work on this in the future. So we are also very disappointed that the Government chose not to accept his amendment, but we are where we are.

As the noble Lord, Lord Fox, said, ethical procurement has to be right at the centre of how we continue to do business. Hikvision was debated during the progress of the Bill and there is more work to do on some of these issues.

Having said that, I thank very much the Minister and her team for her comments today and for her constructive approach to improving the Bill, following a fairly sticky start in Committee. It has been a pleasure to work with a Minister, department and noble Lords across the House who genuinely wanted to make a better Bill. I know that there were an enormous number of government amendments—perhaps the Bill should have been better drafted in the first place—but they were very important. We are in a much better place than where we started, so I thank the Minister and all noble Lords who helped to bring us here.

[Baroness Neville-Rolfe (Con)]

My Lords, I express my gratitude to the noble Lords, Lord Hunt and Lord Fox, and the noble Baroness, Lady Hayman, for their insightful contributions in this brief debate—not least on the threat from China and on ethical procurement. It has been a pleasure to work with them all and to set the slightly troublesome record of tabling a very large amendments in this House.

I of course acknowledge the importance of tackling the abhorrent practice of organ harvesting, but this amendment is duplicative, unduly burdensome and not appropriately suited to its intended purpose, which is why the Bill has been returned to our House in this form. For these reasons, I do not think that the amendment is necessary and I reiterate the many commitments we have made in this House and in the other place.

The noble Lord, Lord Fox, mentioned the NHS. The Bill applies to NHS bodies and their procurement of goods and services, which are not classed as healthcare services under the provider selection regime. I am pleased to tell the noble Lord, as I hope he knows, that the underpinning regulations were laid by the Department of Health and Social Care on 19 October, which puts a line under that and ensures a consistent approach.

The noble Lord, Lord Fox, remarked on the definition of sensitive sites. Both our Written Ministerial Statement from November last year, which was trailblazing to some extent, and the definition of sensitive sites that I set out only last month make our position on the issue clear to all concerned. We will be sharing annual reports on the removal of surveillance equipment, as I promised the House when we last debated this on 11 September.

[Lord Fox (LD)]

I thank the Minister for that comment, but that was not my point. It was actually that the language that the Government have used about non-sensitive sites is being used by Hikvision as a marketing tool to placate potential customers and say that it is okay. If the Minister has not seen that wording, I expect that the noble Lord, Lord Alton, will provide it; otherwise, I would be happy to. The Government need to reflect to Hikvision that they are not endorsing its technology for non-sensitive sites, which is what the company seeks to communicate.

[Baroness Neville-Rolfe (Con)]

I thank the noble Lord for his clarification. That is why I chose to reiterate what I have said. I will talk to the noble Lord, Lord Alton, tomorrow, but I reiterate that we are keeping an eye on this. The reports on the withdrawal of the surveillance equipment will be important. Public bodies outside government and some private bodies have already decided to withdraw these cameras, so I think the message is clear.

I thanked noble Lords across the House for their valuable contributions to the scrutiny of the Bill when it left for the other place on 13 December. I reiterate everything I said then. I add my thanks to our Whip, my noble friend Lord Mott, and my noble friends Lady Noakes, Lord Moylan, Lord Lansley and Lord Maude, who I did not mention last time. I much look forward to Royal Assent and the legacy that I believe will stem from the collective efforts of both Houses, which are all represented here this evening.

Motion A agreed.