Procurement Bill [HL]

Baroness Noakes Excerpts

2nd reading
Wednesday 25th May 2022 Lords Chamber

[Baroness Noakes (Con)]

My Lords, there is a lot to like in this Bill and, like my noble friend Lord Maude of Horsham, I do not think that it will be improved by adding a lot of extra things to it.

My favourite kind of Bills are the ones which repeal EU-derived legislation and replace it with legislation designed for the UK. As such, my favourite clause in this Bill is Clause 107, and my favourite schedule is Schedule 11. Unfortunately, some of the new rules still seem to be written in EU-speak. In particular, I have in mind the description of a “public contract” in Clause 2 which uses the term “for pecuniary interest”, which I have failed to find in any UK-based legal usage in this context. I am sure we can explore that in Committee.

I have one main problem with the Bill: the public procurement rules are still very complicated. Creating the new procurement system requires over 110 pages of primary legislation in this Bill, and who knows how much more in the secondary legislation. I acknowledge that we must remain compliant with the WTO’s Agreement on Government Procurement, and I also pay tribute to the extensive consultation the Government have carried out before bringing this Bill forward. Of course, the Government have made significant changes, reducing seven procurement categories to three, and having a single set of procedures for most public procurement. I will say in passing that I regret that there is a power in the Bill to allow the NHS to go its own way; it would have been very much more satisfactory if a single code had applied across all public procurement. The NHS, in particular, needs to be exposed to more competitive procurement, not protected from it. I would really like to see Clause 108 removed. However, I am a political realist when it comes to the quasi-religion of the NHS, and I accept that I may not achieve that ambition.

My challenge to my noble friend the Minister is whether more simplification could have been achieved. Could the procurement code be even more streamlined and even more principles-based?

My personal knowledge of public procurement is limited to being engaged in a number of public procurements as both a seller and a buyer over the years, and therefore I claim no specialist knowledge of public procurement and I cannot point to a better way to draft it. However, I am aware that there is a whole army of public procurement specialists out there. A number of noble Lords have already referred to the sorts of numbers of people in various parts of the public sector who are handling public procurement. I have a feeling that we should have a way to liberate more of them so that they can be more productively employed in the economy.

My noble friend the Minister will also be aware that the UK’s reputation for gold-plating regulations is well known and that we often went voluntarily much further even than we were required to by the EU. Can my noble friend tell the House how the Government satisfied themselves that gold-plating does not live on in this Bill? It would be terrible if we allowed the UK to be dragged down by the kind of bureaucratic groupthink that we really ought to have left behind.

I said earlier that there is a lot to like about the Bill, and, like other noble Lords, I particularly like the way in which the Government have shaped the basis of contract award, shifting from the “most economically advantageous tender” to the “most advantageous tender”. The previous formulation had a tendency to drive contracts towards lowest-cost tender and left little scope for longer-term strategic considerations or for innovation, which other noble Lords have spoken about. Although it was entirely possible under the EU system not to award contracts to the lowest bidder, the new formulation makes it clear that a narrow economic evaluation is a part of, but not the heart of, public procurement—and that is good.

Turning to SMEs, which other noble Lords have already covered, we know that they have traditionally found the public procurement processes intimidating and inaccessible. With its emphasis on proportionality, the Bill may well help to open up public procurement to more SMEs. The 30-day payment term throughout the supply chain will certainly be welcomed by SMEs if it is actually delivered. The noble Lord, Lord Mendelsohn, who is no longer in his place, made some important points about that.

The Government will be aware that SMEs may still perceive that significant barriers will be associated with engaging with public sector procurement, despite the improvements made in the Bill. What will the Government do to promote SME involvement in public sector procurement and to demystify the new regime and help them to access it?

My final point relates to light-touch contracts, which are allowed under Clause 8. I rather liked the Government’s initial proposal in their consultation to subsume light-touch contracts into the mainstream, especially given the reformulation of contract classifications and the articulation of procurement objectives. However, the Government have given in to pressure to keep the light-touch regime going. I do not challenge that, but I hope that the Government will keep it under review.

The extraordinarily wide power to designate light-touch contracts under Clause 8 has already been mentioned, in particular by the noble Lord, Lord Fox. Although there are matters to which the Government must have regard for specifying services as light-touch, there is no actual restriction on what the Government could put in this category. The regulation-making power is the affirmative procedure, which is of course better than the negative procedure, but not by much in practical terms. I hope that my noble friend can explain why the Government have chosen to make the light-touch regime so open-ended, otherwise we may need to look at that very carefully in Committee.

I look forward to scrutinising the Bill in Committee, but also hope that we can get it on to the statute book as quickly as possible so that its benefits can be realised. That hope may well be unrealistic given the evident enthusiasm from other noble Lords for an extensive Committee stage, but I can but hope.

[Baroness Young of Old Scone (Lab)]

My Lords, I declare my interests, as listed in the register, as a chair, vice-president or commissioner of a range of environmental and conservation NGOs.

I declare today Groundhog Day for two reasons. First, I am following the noble Baroness, Lady Noakes, for the second day in a row. I am pleased to do so; and it proves that the Whips’ Office has a sense of humour since I revealed yesterday that I have disagreed with the noble Baroness consistently for the past 44 years.

[Baroness Noakes (Con)]

I think it is actually 34 years.

[Baroness Young of Old Scone (Lab)]

I take the noble Baroness’s challenge: I will do the maths shortly and pass her a note, although I did look up her CV yesterday to check the date. It was 1988; the rest of your Lordships can now do the maths.

The second Groundhog Day phenomenon is that, yesterday, I and many other noble Lords pressed the Government on the lack of climate change, environment and biodiversity objectives in the UK Infrastructure Bank Bill. We asked why the Government were missing an opportunity to ensure the delivery of their target to halt species decline by 2030 through the mechanisms of that investment vehicle.

Today, we have a similar—even bigger—real opportunity in the Procurement Bill. Many of the opportunities on the environment and climate change were outlined by my noble friend Lady Hayman of Ullock. The Minister told us that public procurement is big: it was worth £357 billion in the past year, makes up a third of all public expenditure, represents 13% of GDP and is estimated to account for 15% of climate-changing emissions. Public procurement on this scale has the capacity to be a huge influencer for good in terms of the climate change and environmental performance of the whole of the public supply chain. This influence could go even further because public procurement shapes the performance not only of the suppliers of goods and services that are publicly procured but of the wider markets to which the same suppliers also sell. Basically, my message is that it can influence a big slug of the economy.

The twin crises of climate change and biodiversity decline are allegedly two of the Government’s highest priorities. We boasted about this on the world stage at COP 26 in Glasgow only a few months ago. Yet when the Minister, the noble Lord, Lord True, signed off the Bill’s formal statement under the Environment Act 2021, he never spoke a truer word—if I can pun—when he said that this Bill cannot be construed as environmental legislation. He was absolutely right because it cannot, although it may talk about “maximising public benefit” as a key objective. The Green Paper on which the Government consulted referred to public benefit as including

“the delivery of strategic national priorities”,

including those relating to the environment, yet we have no formal definition of “public benefit” in the Bill. Your Lordships’ House is being asked to pass the Bill when some key elements of public benefit, climate change and performance in support of targets in the Government’s 25-year environment plan are relegated to the National Procurement Policy Statement and a set of policy notes.

The current version of the National Procurement Policy Statement is pretty flabby. It says:

“All contracting authorities should consider the following national priority outcomes”,


which include climate change, the environment and biodiversity. The phrase “should consider” is a bit weak, is it not? It is not “must deliver” or “must adhere to”; it is just “should consider”. That is not good enough. We are at a “Thelma & Louise” moment; for those noble Lords who are not cinema buffs, let me explain. We in the world are currently living it up beyond our means and driving madly towards a cliff edge. We need action to meet the Government’s urgent environment and climate change targets as an objective of public procurement in the Bill and we need it to be a requirement, not simply a consideration.

Can I also ask the Minister whether we can have sight of whatever upgrade to the national procurement policy statement the Government are planning to issue? It is so important to this Bill—otherwise, we are considering a bit of a pig in a poke. Will the Minister also consider whether the process of changing the NPPS could be improved? Currently, it is subject to a procedure equivalent to the negative procedure. Does the Minister think that this is sufficient parliamentary scrutiny of such an important document?

I turn to two further elements of the Bill. The Government are touting the exclusions section as progressive and praiseworthy. That has some merit. The Bill says that the conviction of an offence involving

“significant harm to the environment”

constitutes discretionary guidance for excluding suppliers from procurement—but only “discretionary”. The exclusion provisions must be much tougher than that, to give a clear signal that only operators who consistently meet high environmental standards will be considered.

Secondly, though the transparency requirements are very welcome, they depend on secondary legislation and do not currently impose requirements for suppliers to report publicly on environmental commitments, either in the NPPS or in individual contracts. The Government’s record on tracking performance is not great. The National Audit Office has repeatedly raised concerns about the lack of data and monitoring of compliance with the current government buying standards. It is interesting to see that the Ministry of Justice, the Department for Transport and the Ministry of Defence simply stopped collecting the data because it was so embarrassing to have to report. The Environmental Audit Committee at the other end concluded that it appears impossible to know whether departments have improved their sustainable procurement performance. So should the Minister not consider including reporting environmental commitments in the transparency framework that the Government are proposing to establish, and saying so in the Bill?

Somebody once told me that football would be a terrible game if you did not keep the score. I actually think that football is a terrible game—but let us at least keep a proper, transparent score on how public procurement is delivering these important public benefits.

Along with many other noble Lords, I look forward to returning to these issues at subsequent stages of the Bill, to make sure that this terrific opportunity to use procurement as a powerful lever for improving the performance of the Government’s climate change and environmental targets is not lost. We are drinking in the last chance saloon, and if we do not use all the levers at our disposal, we will not meet the climate change and biodiversity decline challenges—and I am amazed that the Government have not recognised how much of an own goal this would be.