Procurement Bill [HL]

Baroness Scott of Bybrook Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

[Baroness Hayman of Ullock (Lab)]

My Lords, this is an important group of amendments, which focus on what we believe work in this country should look like. There are a number of amendments in the name of my noble friend Lord Knight of Weymouth, to which I was pleased to add my name. He introduced them in his usual way—eloquently, knowledgably and passionately. I thank him for that.

We believe that a commitment to good work standards in procurement, in response to the new challenges faced in the labour market that noble Lords have talked about, is an extremely important and appropriate part of what we need to be looking at. We know that Scotland introduced a commitment to fair work first and my noble friend Lord Hendy talked about its introduction by the Welsh Government, so this is not new or untried. Other parts of the United Kingdom are looking at how best to achieve this and we think that the Treasury should also be looking at it. It should be not just about procurement but much broader: how do you underpin good work?

My noble friend Lord Knight of Weymouth’s amendments clearly recognise that procurement can be a powerful tool to support public policy goals and targets, beyond just ensuring value for money. We have heard about the Institute for the Future of Work and its research that shows that creating and protecting good-quality jobs provides resilience and promotes well-being and prosperity at every level. Again, that supports the Government’s levelling-up agenda. My noble friend Lord Knight also mentioned how it would increase productivity in this country. Surely that is an ambition that the Government and the Minister share. We believe that promoting good work is a public good that advances national, economic, social and health interests and priorities.

The noble Baroness, Lady Bennett of Manor Castle, spoke in support of my noble friend Lord Knight’s amendments. She made a couple of important points about how work intensity has increased while, at the same time, work security has decreased in this country. I agree with her on the issue of outsourced contracts. That is something that we have to look at because, as the noble Baroness rightly said, quality of work is related to quality of life, because we spend so much time at work.

The noble Lord, Lord Clement-Jones, spoke to a number of amendments and focused particularly on AI, automation, the impact of new technologies and their potential disruption to jobs. There has been some good research on this, which we need to take account of as we develop legislation. It would be interesting to hear the Minister’s thoughts on how that could be managed in this Bill or perhaps through other means.

My noble friend Lord Hendy also had a number of amendments in this group and I thank him for his detailed and careful introduction. A lot of this is incredibly important. He spoke about previous and other legislation and how we need to bring it up to date in this Bill. That is incredibly important if we are to get the best legislation that we can. He was quite right when he said that we need to use procurement to improve the lot of Britain’s workforce and ensure that we have high standards.

We all need to pay attention to the point that my noble friend made about P&O Ferries because, as he explained on his Amendment 186, we need some buffer or means to manage bad employers—as you could simply call them—as opposed to good employers. The Government condemned the actions of P&O Ferries, as I am sure the Minister did. If there is anything that we can do with the Procurement Bill to stop that kind of behaviour happening again, we should take clear advantage of it. The noble Baroness, Lady Bennett of Manor Castle, also supported the amendment.

I am sure that the Minister would support the fact that we are trying to improve the quality and security of the British workforce. I will be interested to hear his thoughts on the debate.

[Baroness Scott of Bybrook (Con)]

My Lords, I am sorry to disappoint. The following amendments are concerned with placing additional requirements on contracting authorities so that their procurements create good jobs and opportunities in local areas. I will address the issues in turn.

Amendment 54, tabled by the noble Lord, Lord Knight, whom I thank for his extremely interesting opening remarks, the noble Baronesses, Lady Hayman and Lady Bennett, and the noble Lord, Lord Hendy, seeks to include a new procurement objective in Clause 11, requiring contacting authorities to have regard to the importance of local “good work” when carrying out a procurement. We believe this is unnecessary. Under the Bill, contracting authorities will already be able to give more weight to bids that create good-quality jobs and opportunities for our communities, where this is relevant to the contract being procured and is not discriminatory. This is absolutely in line with the Government’s levelling-up objectives and means better value for money.

Additionally, the concept of “good work” includes a wide range of matters, such as union representation and access to facilities for career guidance and training. Including this provision would have the effect of slanting public procurement away from SMEs and VCSEs, which this Government have worked hard to champion in the Bill, and in favour of large employers with significant resources and a highly unionised workforce. That is very much the opposite direction of travel to the policy behind the Bill.

Amendment 67 was tabled by the noble Lords, Lord Knight, Lord Hendy and Lord Clement-Jones, and the noble Baroness, Lady Hayman. I thank the noble Lord, Lord Cement-Jones, for not only taking us into the future but looking at what is starting now and what has been going on for quite a few years to create a different workforce from the one we have now. He talked about something that we will have to discuss further in both Houses—both the opportunities and the challenges to the workforce that we see today. That is probably not for this Bill, but I can see much further work being done on the issue.

The amendment seeks to include in the national procurement policy statement the creation and protection of “good work”. We have already set out in previous debates the rationale for not including policy priorities in the Bill and why instead the national procurement policy statement is a more appropriate vehicle for this.

Amendment 104, tabled by the noble Lords, Lord Knight and Lord Hendy, and the noble Baroness, Lady Hayman, seeks to lay out a new rule in the Bill which would allow contracting authorities to request information from a supplier submitting a tender about good work standards and practices. This amendment is not necessary: the Bill already allows contracting authorities to set the criteria against which they wish to assess tenders and it is open to them to include these matters within those criteria. Any bidder will therefore have to submit information setting out how they meet the chosen criteria. Including a specific power for contracting authorities to require such information could call into question the ability of contracting authorities to request other information relevant to the assessment of tenders.

Amendment 116, tabled by the noble Lords, Lord Knight, Lord Hendy and Lord Clement-Jones, and the noble Baroness, Lady Hayman, requires extensive quantities of information about contracting authorities’ good work policies and measures to be included in the tender notice. I have set out already the Government’s objections to including significant requirements on contracting authorities in relation to this and other similar matters. Public procurement needs to be focused on achieving value for money. We do not consider that it would be appropriate to embed obligations on policy objectives such as “good work” in the tender notice or indeed elsewhere throughout primary legislation for public procurement.

Amendments 186, tabled by the noble Lords, Lord Hendy, Lord Hain and Lord Monks, and the noble Baroness, Lady Bennett, and Amendments 315 and 319, tabled by the noble Lords, Lord Hendy, Lord Hain, Lord Monks and Lord Woodley, seek to introduce new exclusion grounds in relation to breaches of labour rights. Employers who seriously violate the rights of their workforce are not fit to compete for public contracts. The Bill expands the range of serious labour violations to be considered as part of the mandatory grounds for exclusion, for example the failure to pay the national minimum wage and offences relating to employment agencies.

--- Later in debate ---

[Lord Hendy (Lab)]

Why would breaches of ILO conventions not apply to bidders in this country if they apply to bidders from outside this country?

[Baroness Scott of Bybrook (Con)]

As that is a legal question, I shall get a legal answer for the noble Lord, and I will certainly write. I thought I had answered him, but I will make sure that that is clearly written legally.

On the TCA, with respect to Articles 387 and 399 of the EU-UK Trade and Cooperation Agreement, procurement law does not grant rights to workers and, as such, the exclusion grounds are not inconsistent with the UK’s obligations under those articles. The rights protected by these provisions are provided elsewhere in national laws, none of which are affected by the Bill. The exclusion grounds are not intended as a means of enforcing labour rights; rather, exclusion is a mechanism to ensure that contracting authorities do not award contracts to suppliers that pose a risk.

I am confident this will enable contracting authorities effectively to protect the rights of workers delivering public contracts, especially when combined with other changes we are making to strengthen the exclusions regime, such as the inclusion of serious labour misconduct in the absence of a conviction as a discretionary ground for exclusion; requiring assessment of whether the exclusion grounds apply to subsidiaries of the supplier; and extending the current time limit for discretionary exclusion grounds from three years to five years.

Amendments 292 and 297, tabled by the noble Lords, Lord Hendy, Lord Hain, Lord Monks and Lord Woodley, remove the requirement for contracting authorities to consider the risk of the circumstances giving rise to an exclusion ground recurring in applying the exclusions regime. Exclusion is not a punishment for past misconduct; that is for the courts to decide. Exclusion is a risk-based measure and, as such, suppliers should be encouraged to clean up their act and given the right to make the case that they have addressed the risk of the misconduct or other issues occurring again. This might be through better training, stronger compliance controls or dismissing the staff involved in any misconduct. It is for contracting authorities to decide whether the evidence they have seen is sufficient to reassure themselves that the issues in question are unlikely to occur again.

Amendment 519, tabled by the noble Lord, Lord Hendy, proposes to use Clause 104 of the Bill to omit Section 17(5)(a) and (b) from the Local Government Act 1988. It would remove the prohibition on relevant authorities, as detailed in Section 17(5)(a) and (b) of the 1988 Act, to consider in relation to public supply or works contracts the terms and conditions of a contractor’s workers and the employment status of their subcontractors.

The Bill provides for a range of labour violations to be considered as part of the grounds for exclusion, which must be considered for every supplier wishing to participate in each procurement within the scope of the Bill. These matters will be subject to further debate, possibly later today, when the Committee considers the exclusions and debarment regime in the Bill. I am sure my noble friend Lord True will have more to say on that.

The purpose of Clause 104 in the Bill is, first, to ensure that authorities to which Section 17 of the Local Government Act 1988 applies are not prevented by that section from complying with their duties under this Bill; and, secondly, to enable a Minister of the Crown or the Welsh Ministers to make regulations to disapply, when required, a duty under Section 17. The clause ensures that authorities covered by the 1988 Act can take advantage of domestic procurement policies that may be implemented during the life of the Bill.

Clause 104(1), which amends Section 17(11) of the Local Government Act 1988, directly achieves this. However, it amends Section 17 only to the extent necessary to ensure that the relevant authorities are not prevented by virtue of the section from complying with the Bill. It would not be appropriate to use the Bill as a vehicle to make further amendments to the 1988 Act, as proposed by the noble Lord, Lord Hendy.

Amendment 535, tabled by the noble Lords, Lord Knight and Lord Hendy, and the noble Baronesses, Lady Hayman and Lady Bennett, creates the concept of “good work”, relied upon by the other amendments in this group. In the light of my responses on substantive amendments, there is little I can usefully add on this amendment. I therefore respectfully ask that noble Lords do not pursue these amendments.

[Lord Knight of Weymouth (Lab)]

My Lords, I am grateful for the response and to those who took part in this relatively short debate. The arguments were well made, and I think the Minister at the Dispatch Box, the noble Baroness, Lady Scott, agrees with the basic premise. As ever with these things, I was not surprised but disappointed at the response.

My noble friend Lord Hendy made a really good case about the importance of punishing bad labour practice. Recalling P&O Ferries is important; these cases come along and it always ends up feeling like too little too late. This is an opportunity to act more proactively and actually put something into statute.

On the amendments in my name, I was grateful to hear about the UNISON report, as I was not aware of that. I was grateful to hear that the Labour Administration in Wales are getting on with something like this. It is good to hear, as ever, the insights from the noble Lord, Lord Clement-Jones, on AI and algorithmic accountability and regulation. I will need to think about that. I was really pleased to hear the Minister say that she thought more needs to be done on that.

In closing, I offer this up to the Minister: before we come to Report, is it worth having a chat? I listened carefully to what she said about the impact on SMEs from the way we frame some of this. If she is interested in having a meeting to discuss how we can achieve something on the good work agenda in this Bill, probably including David Davis, because I think he is minded to table similar amendments when it goes to the other place, we would be delighted to do that. Perhaps, with the noble Lord, Lord Clement-Jones, tagging along too, we can start to sketch out what we might be able to do on algorithmic regulation in this Bill or in future legislation. On that basis, I withdraw my amendment.

--- Later in debate ---

[Lord True (Con)]

I would be happy to. There were a lot of amendments. I do not want to break down and not continue, but I have about four more minutes to go. With the Committee’s permission, would my noble friend—

[Baroness Scott of Bybrook (Con)]

Would my noble friend like me to take over his speech, as he is coughing?

[Lord True (Con)]

Yes please.

[Baroness Scott of Bybrook (Con)]

My Lords, Amendment 131, tabled by the noble Lord, Lord Best, would prohibit contracting authorities applying relative assessment methodologies for price, costs or value-for-money award criteria, with the aim of preventing “race to the bottom” behaviour by suppliers and helping contracting authorities achieve safe, quality and value-for-money outcomes.

The objective of the Bill is to make public procurement more flexible for contracting authorities and suppliers, not less. In deciding how to assess tenders, contracting authorities must be able to determine what is important to them and the best means of assessing this. In some cases, price may be more important than others and, in particular, price assessment methodologies may be more appropriate in certain circumstances. I must also stress that contracting authorities will be very aware of the need for safe outcomes and that those cannot be compromised. To reiterate, we will publish guidance on assessment to help contracting authorities decide how best to assess tenders.

Amendment 147, tabled by the noble Lord, Lord Hunt, would require a Minister, within three years of the Bill being enacted, to undertake a review of the impact of the rules on how contracts subject to a competitive procedure must be awarded. In particular, the review must assess the impact of the change from “most economically advantageous tender”, commonly referred to as MEAT, to “most advantageous tender”, commonly referred to as MAT. On the delivery of social value, and whether the needs of service recipients have been met under contracts, the change from MEAT to MAT sends a much clearer message to contract authorities that the contracts do not have to be awarded on the basis of the lowest price. I can assure the noble Lord that the matters he refers to are within the scope of MAT, where they are relevant to the contract being procured.

Amendment 149, tabled by my noble friend Lord Lansley, would make explicit that contracting authorities may exclude a supplier where it has failed to explain satisfactorily why the price or cost proposed in its tender appear to be abnormally low. We discussed this point during a recent SI debate, and I welcome his contribution. I appreciate that tenders may appear abnormally low for a variety of reasons, some of which ought to concern contracting authorities. The Bill’s silence on this point is not intended to discourage authorities seeking to understand the proposed price and cost or interrogating suppliers where they appear to be abnormally low. Authorities are already under an overarching duty to award contracts to the most advantageous tender. This should be sufficient to allow for questions to be asked of suppliers about proposed price and costs, and authorities can structure their evaluation to ensure that tenders can be rejected where the authority has reason to believe a tender is abnormally low.

In summary, this Bill aims to deliver a simpler regulatory framework. It therefore does not include every possible action a contracting authority might wish to take in assessing the validity of tenders or awarding contracts. This approach is better than the existing EU approach, as it offers increased flexibility to design efficient, commercial and market-focused competitions, while reducing burdens for smaller firms. Therefore, I respectfully request that these amendments are not moved.

[Lord True]

My Lords, I thank your Lordships for your indulgence in letting my noble friend complete the speech. I am most appreciative. Thank you.

Amendments 84 and 85 not moved.

[Baroness Scott of Bybrook (Con)]

My Lords, I think this is a convenient point for the Grand Committee to adjourn on the Bill.

Committee adjourned at 8.44 pm.