Procurement Bill [ Lords ] (Seventh sitting)

Chris Evans Excerpts

Committee stage
Thursday 9th February 2023 Public Bill Committees

[Alex Burghart]

Part 7 of the Bill is concerned with the implementation of the United Kingdom’s international obligations. The UK is currently party to 24 international agreements that contain procurement obligations, with each listed in schedule 9 to the Bill. They include trade agreements signed before our exit from the EU, such as the World Trade Organisation Government procurement agreement, and the recently signed Australia and New Zealand trade agreements.

Clause 88 uses the term “treaty state suppliers” to identify suppliers from countries that are entitled to benefit from one of the international agreements listed in schedule 9. The clause ensures that treaty state suppliers have the right to no less favourable treatment than domestic suppliers under the UK procurement regime to the extent covered by their relevant agreement, including the right to seek remedies. As the UK negotiates new international agreements or is required to amend existing agreements, delegated powers under subsection (3) will allow schedule 9 to be revised accordingly. In this way, schedule 9 will continue to reflect our updated international obligations and ensure that the UK remains compliant.

It is important for the Committee to understand that the delegated power in subsection (3) does not allow for substantive changes to the rules set out in the Bill regime, even where required by an international agreement. This is partly the reason why separate primary legislation is required to implement the UK-Australia free trade agreement. It is therefore not capable of being used to implement rule changes that might affect matters such as food standards, environmental standards or control over the health service. For that, the Government would need to return to Parliament with further primary legislation. Schedule 9 to the Bill is a list of international agreements that contain substantive procurement obligations and to which the UK is party.

Clause 89 sets out that a UK contracting authority may not discriminate against a treaty state supplier; that is to say that UK procuring entities may not treat the goods, services and works of treaty state suppliers less favourably than those of UK suppliers. Clause 89 is imperative in order to meet our international obligations. The principle of non-discrimination is firmly embedded in the WTO’s Government procurement agreement and other international agreements to which we are party. Being party to these agreements will ensure that UK goods, services, works and suppliers also receive the same fair treatment from our trading partners. In doing so, the UK will continue to enjoy the benefits of existing and future trade agreements, including guaranteed access to procurement opportunities in some of the world’s largest economies.

The power set out in clause 90 allows regulations to be made in relation to devolved procurement in Scotland to ensure that treaty suppliers are not discriminated against. The power is to be exercisable concurrently by a Minister of the Crown or Scottish Ministers, meaning that in the course of implementing international obligations under the Bill, a Minister of the Crown could also implement obligations for the whole of Scotland, in respect of both reserved and devolved procurement. This recognises both that the implementation and observation of international obligations is a devolved matter, but that the UK Government are ultimately responsible for compliance with our international obligations.

Amendments 59 and 60 seek to address a concern raised by the Scottish Government that the power in clause 90 is broader than is necessary, and in particular broader than the equivalent power that allows the updating of schedule 9 to the Bill to reflect new free trade agreements.

Although I can assure the House that it is not the Government’s intention to use the powers in clause 90 to interfere with Scottish procurement rules, we have listened and added a number of factors that would limit the exercise of the power. These amendments will ensure that either a Minister of the Crown or Scottish Ministers would only be able to make provision that is equivalent to provision in part 7 and only when it is necessary in order to ratify or comply with an international agreement, such as by adding to or amending the list of international agreements in Scottish procurement legislation. It could not be used to amend Scottish procurement rules substantively. I thank colleagues in Scotland for working constructively on this point.

New clause 11 and the consequential amendments 69, 77, 79, 81, 82 and 83 are needed to give the UK the ability to take necessary retaliatory or compensatory action as a result of a procurement-related dispute under the World Trade Organisation’s Government procurement agreement, or with a country with which we have a free trade agreement on procurement.

Under the UK’s trade agreements, if a country does not comply with its international public procurement obligations, we must be able to implement practical retaliatory measures; otherwise, we may not receive the full benefits of the commitments under these agreements. These amendments would give the UK a power to amend its domestic procurement legislation to take such action, for example to remove market access to particular procurement markets for suppliers from a trading partner that is in breach. Similarly, if the UK is in breach, it may need to implement measures to bring itself back into line.

This power is clearly limited in scope to procurement-related disputes and can only be used to make provision relating to procurement. The power cannot be used to address disputes relating to other areas of the UK’s trade agreements. It will also be subject to the affirmative procedure, so that there is a sufficient level of scrutiny in Parliament when it is to be used.

Without these amendments, the UK would be at a disadvantage among its trading partners, because it would not be able to take retaliatory action to incentivise other countries to comply with their procurement commitments and, in the absence of the necessary domestic legislative mechanism to compensate its partners in case of non-compliance, the UK would not be viewed as a trusted international partner.

[Chris Evans (Islwyn) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Mundell, on what is the fourth day of our deliberations in this Committee.

Mr Mundell, you, my hon. Friend the Member for Merthyr Tydfil and Rhymney, the hon. Member for Aberdeen North and I are all members of the Celtic fringe, and we have all been accused in the past, somewhat unfairly, of speaking too fast. However, the Minister put us to shame just now, so I wonder whether he has Scottish or Welsh roots somewhere. [Laughter.]

As the Minister set out, part 7 of the Bill, which includes clauses 88, 89 and 90, sets out the implementation of international obligations in relation to procurement. These clauses have a strong theme of ensuring that no discrimination takes place between contracting authorities and treaty state suppliers, which are set out in schedule 9 to the Bill. Clause 90 also reaffirms this for procurements made by devolved Scottish authorities.

What is important about this part is our commitment to meeting our international obligations. I know from my role as a shadow Defence Minister how important it is to be an active member of the international community. It is important not only for the UK’s standing in the world; I have also found that when we meet these standards, we are also doing the best for this country here at home.

I think that we were all deeply moved yesterday by President Zelensky’s speech in Parliament. The war in Ukraine is a prime example of how important it is to meet our international obligations. By donating weaponry to Ukraine, we are aiding a member of our international community in their fight against an illegal invasion. However, if we are to continue to support the international community, we need to ensure that our procurement system can keep up.

As it stands, we will have a gap in our defence capabilities. In March 2021, the Defence Committee concluded that the Army would be “hopelessly under-equipped” in “obsolete armoured vehicles” and would be “very heavily outgunned” if it was called to fight an adversary, such as Russia, in eastern Europe in the next few years.

The war in Ukraine has shown us how dangerously close we are to this reality. We need to ensure that we are capable of defending ourselves first, so that we can then help others in need. I believe that a commitment to buy, sell and make more in Britain within our procurement system would help us to achieve that. Now, more than ever, we have to ensure we continue our commitment to a fairer world. I believe the way we conduct our procurement has a huge role to play in that.

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[Alex Burghart]

To address the most pressing issue in this group, I must confess to having a Celtic heritage. Indeed, my grandfather was from south Wales, and his grandfather was born in the workhouse, not terribly far from the constituency of the hon. Member for Islwyn, so he has found me out.

[Chris Evans]

We are related in some way.

[Alex Burghart]

One family, one Wales.

I am pleased to hear the hon. Gentleman support NATO and the Government’s actions with regard to our allies in Ukraine. He will know that we have a trade agreement in place with Ukraine, and yesterday was a sign of the ongoing, very close relationships between President Zelensky’s Government and our own, and the necessary partnership in the face of tyranny.

Let me turn to amendment 102, in the name of the hon. Member for Aberdeen North. I must assure her at the outset that this is a power that the UK Government would only need in extremis. I completely understand that Holyrood and the Scottish Government—certainly under the SNP, I am sure—would always want to implement our international agreements. But what if another party that was not so upstanding was one day to be in power? What if another group of nationalists was to seize control from the SNP and wished to hold up our international agreements? There are other nationalist options—the former head of the hon. Lady’s party has formed a renegade bunch running under the name Alba—and perhaps they would not be as reasonable the hon. Lady’s party. Perhaps they would wish to prevent us from implementing our international trade agreements. That would not only prevent us from delivering the benefit of those agreements to the whole of the United Kingdom, but completely ruin our chances of signing future trade agreements. We understand her objections, but we believe that it is essential to ensure that in all circumstances the UK Government can make good on the promises that they sign with partners.