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.