Procurement Bill [Lords]

Debate between Danny Kruger and Caroline Lucas

Report stage
Tuesday 13th June 2023 Commons Chamber

[Danny Kruger]

My right hon. Friend makes important points, and I recognise the difficulty of comparing our productivity figures with those of other countries. The comparison I am making is with our own recent history, but he is absolutely right in what he says. Indeed, the point about what is measured matters enormously. In our debates, we often make the mistake of thinking that the only things that matter are those that can be easily quantified. That is a great challenge we face, particularly in the social sector.

The Government are rightly committed to improving the efficiency and productivity of the public services—I absolutely support them on that—but we face another great challenge that does not get enough of a mention: the need to reduce demand on the system as a whole. We are spending so much not just because we are inefficient, but because the demand on the system is so high. I do not need to run through all the details of the enormous budgets we spend on social breakdowns and the consequences of social problems that we should have averted, in criminal justice, in the health budget, in what is called “social protection”. Some £150 billion is categorised under “social protection” in the public finances—not pensions, but paying for people who have tough lives. We should be seeking to reduce the cost of those budgets, because each one of those costs represents, in a sense, people in trouble. Both for financial and social reasons, we should be trying to reduce that expenditure.

How do we do that? We need social reform. I am not going to bore the House with long thoughts on that, but we need public sector reform, as has been mentioned a bit today, and that includes procurement reform. I acknowledge what Labour is suggesting in some of its amendments and in some of the speeches we have heard: an objection to the whole model of outsourcing. I recognise the objections to some of the failures of public service management—new public management—over the past generation, and some of the challenges of outsourcing and of competition in the public sector or for public services. However, I do not think insourcing everything is the answer. Reverting to a pre-1990 model of everything being delivered by the central state, as one of the amendments and Unison are championing, is not the right model. We need a better model of outsourcing that relies much more on civil society and, in particular, on the local, community-based services in which the UK is so rich and which do such a great job. We need to be able to measure their value properly and commission their services effectively. That is what this Bill aims to do.

I declare an interest, in that I set up and ran for many years projects working in prisons and with youth services. I have personal acquaintance with the challenge of EU procurement, not only social fund commissioning, but central and local government contracts. None of this is easy and I am familiar with all of that. I am familiar with the frustrations of getting on the frameworks; expressing interest; bidding through tenders; and being treated as bid candy on a long contract. I am also familiar with going through a pointless competition process where there is only one obvious provider—the one that helped to design the service—which still has to jump through loads of competitive hoops only for some other random provider to come in and swipe the contract; I speak bitterly from experience. The challenges that small social enterprises face are significant.

The difference between procurement and commissioning is not often acknowledged. We often have procurement departments doing work that is too complicated for them on their own. We need to have proper commissioning where people who are paying for a service work collaboratively with providers, stakeholders, service users and other parts of the system. Everybody needs to bring their assets, resources, skills and experience to co-design the service that is needed locally. The Bill brings us much closer to that model. I greatly welcome the measures that have been included, especially around the simplification of tendering. The single portal is an important development and it is good for transparency as well. The Tell Us Once registration is essential, as is the help that will be given to SMEs and social enterprises, including the active reduction in the barriers to tendering, lower reporting requirements and so on.

Most of all there is the shift from the most economically advantageous regime to the most advantageous regime. That small excision of the word “economically” is an important recognition of the point that my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) was just making about the need to go beyond a purely commercial estimation of the value of social projects. I would go further. In 2020, I wrote a report for the Government who were trying to maximise and sustain the enormous contributions that communities were making during the first lockdown. I suggested that we recognise and declare that the whole of Government commissioning—the whole of public service spending—is to deliver social value for the public. Essentially, that is what we all believe and it should be stated much more explicitly in my view. I just bring the House’s attention back to the Conservative Government’s Social Value Act 2012, which gets those principles right.

I recognise that we need to take enormous steps forward. I honour what the Government have been doing around national security. I also honour the steps that have been taken to ensure greater opportunities for SMEs and social enterprises, and I commend the Bill to the House.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I wish to associate myself with the remarks made by hon. and right hon. Members across the House about the dangers of sourcing from high-risk countries and parts of countries and those implicated in serious human rights abuses. The appalling persecution of the Uyghurs in Xinjiang is a very powerful case in point that has been echoed by many Members around the House, and I agree very strongly with that.

I rise to speak to amendment 60 and new clause 17. I welcome the provisions in the Bill that aim to help small and medium-sized enterprises to access public contracts. SMEs are often best placed to meet the needs of the communities in which they operate, providing numerous social and economic benefits. Those benefits, often referred to as a social value, cannot simply be reduced to a tick-box exercise. Nor can we allow social value to amount only to crumbs of compensation from corporate giants, while they extract wealth from our communities. Wider economic, social and environmental priorities need to be built in from the start of every procurement process.

The UK spends about £300 billion a year on public procurement. We could question whether that is a good thing. That has already been hinted at—whether some of these services at least would be better off delivered in-house by public bodies themselves rather than via contracts. However, this is probably not the place to go into that debate. I want to focus on the need to use that procurement spend as a force for good—to keep wealth in local economies, to ensure that public money goes to responsible companies and not those that exploit people and nature, and to help us meet our climate goals and to preserve a liveable future for all of us. I want to see values, not just value, at the heart of the public procurement process in public life.

That brings me to amendment 60 on the national procurement policy statement, which sets out the strategic objectives that the Government want public procurement to achieve. The amendment would require the Government to assess and report on the impact of the national procurement policy statement on meeting environmental and climate targets and to set out any steps that they intend to take to meet them.

Thanks to the efforts of climate campaigners across the country, we are now seeing the net zero goal and the need for climate action acknowledged in strategies and policy statements across the public sector. But these acknowledgements remain meaningless unless we assess the real world impact of those statements. Are our plans to reduce emissions actually being implemented and are they working? The amendment would signal to contracting authorities and businesses that the Government are serious about aligning procurement with climate and environmental goals. It would also enable Government to see where policy might need to be strengthened if it is not having the intended impact.

New clause 17 would require public contracts that include the supply of food to be aligned with nutritional guidelines and to specify options suitable for a plant-based diet. We know that animal agriculture is one of the largest contributors to global heating and biodiversity loss, representing around 15% of all greenhouse gas emissions according to the United Nations Food and Agriculture Organisation. More and more people are choosing to move to more plant-based eating and almost one quarter of people in Britain now follow a mainly or entirely meat-free diet.

The 2022 progress report to Parliament by the Climate Change Committee urges the Government not to ignore the role of diet and notes:

“Government can influence diet shifts, through mandating plant-based options in public settings”.

My amendment would require public contracts for the supply of food to be in line with the Eatwell Guide, which drew inspiration from the nutritional guidance of what was then Public Health England, developed in conjunction with the devolved nations. Analysis by the Carbon Trust found that, thanks to lower consumption of meat, dairy and sugary foods, the environmental footprint of the Eatwell diet is around one third lower than the current national diet.

In settings such as hospitals and schools, where good nutrition can make all the difference, our public sector should lead the way by offering nutritious and sustainable food. That is too often overridden by a narrow notion of value for money, resulting in vulnerable people being given food that does not meet nutritional guidelines. As we all remember, during the pandemic the Government were forced to U-turn on school meal vouchers after widespread outrage at the poor quality and quantity of food being distributed to families. That was not just one isolated failure; it was symptomatic of a political culture that thinks we can package up children’s nutrition, health or any public service and hand it over to whichever corporate giant says it will do it most cheaply. That is the culture that has to change.

Last year the all-party parliamentary group on the green new deal, which I co-chair, produced a report setting out how local community-based solutions are key to climate action. As part of that inquiry we heard from the Sustainable Food Places network, as well as from community farms and kitchens. A key recommendation that came up again and again was to use the procurement system to support more local food and plant-based diets.

The Government’s own food strategy proposes a target of at least 50% of food spend to be on food produced locally or to high environmental standards, a move I certainly applaud. However, nine months on from the Department for Environment, Food and Rural Affairs consultation, we are still awaiting the Government’s response.

Pioneering local authorities and public bodies are leading the way, and my constituency has had some notable successes. In 2020, Brighton received the first-ever Sustainable Food Places gold award. It has brought in improved standards for procurement as part of a wider campaign to get more people eating more vegetables and its school food supplier meets the Food for Life gold standard for championing healthy, local, climate-friendly food.

A more joined-up approach to food, climate and nature and a real commitment to supporting local businesses and community organisations would have huge benefits for our health and our local economies. In addition to the provisions in this new clause, I would therefore hope to see much more support for public bodies that want to put social value at the heart of procurement, to help them to find out how best to get sustainable food from local producers into public sector canteens.

Financial Services and Markets Bill

Debate between Danny Kruger and Caroline Lucas

Report stage
Wednesday 7th December 2022 Commons Chamber

[Caroline Lucas]

This Bill should be a once-in-a-generation opportunity to ensure a rapid, stable, co-ordinated and just transition to a low-carbon economy, to advance financial inclusion and to protect consumers, investors, banks, asset managers and other financial institutions against the catastrophic financial risks associated with climate and nature breakdown. Sadly, I believe that it fails to deliver on all those counts, and many others too.

I have signed a number of new clauses with the aim of improving the Bill, on matters such as free access to cash and better regulation of buy now, pay later credit. I also strongly support the new clauses tabled by the hon. Member for Sheffield, Hallam (Olivia Blake). However, I want to use my speaking time to focus on three new clauses in my name.

New clause 25 goes to the heart of what the Bill is about. It seeks to reposition the objectives of the regulator so that they are consistent with the future that we are facing. It would change the strategic objective so that it is no longer simply about ensuring that the relevant markets function well, but about ensuring that they deliver long-term economic resilience and prosperity. It would also create two new operational objectives. The first is a climate objective to facilitate the meeting of targets set out in the Climate Change Act 2008 and the 1.5°C temperature rise limit of the Paris agreement. The second is a nature objective, to facilitate alignment with the Government’s commitment to halting and reversing biodiversity loss by 2030.

Those changes matter on a great many levels. Most obviously, as the United Nations Secretary-General warned just last month:

“We are in the fight of our lives and we are losing…And our planet is fast approaching tipping points that will make climate chaos irreversible.

We are on a highway to climate hell with our foot on the accelerator.”

We therefore need to deploy every tool at our disposal to the task of creating an economy that reflects this new reality. There is no greater moral imperative, or indeed any greater financial imperative.

The Bank of England’s first climate stress test was published in May. It sought to understand how climate change would affect banks’ business models, and whether they held enough capital to cover climate-related risks. The results were clear: banks need to take climate action immediately, or face a hit to annual profits of up to 15%. If the net zero transition is delayed by a decade and global temperatures reach 1.8°, by 2050 banks will face losses of £225 billion. However, the banks are not alone in being exposed to huge climate risks. Investors, consumers, anyone with a pension, asset managers, savers, mortgage holders and other financial institutions are all threatened.

The Bill should provide an opportunity to meet those challenges and lay the foundations for a secure and stable future-facing economy, but I believe that without my new clauses, it simply does not do that. Leading financial institutions agree, including Aviva Investors, Phoenix, Hargreaves Lansdown and BUPA Insurance. They raised concerns with the Bill Committee, saying that

“the proposed regulatory principle will not provide a sufficiently strong legal basis for regulators to promote a thriving net zero financial sector. It certainly won’t encourage the regulators to ensure that the UK becomes the world’s leading green financial centre.”

Moreover, as it stands, nothing in the Bill acknowledges the crucial role of nature, although the Economic Secretary himself recognised in Committee that we could not achieve our climate goals without recognising and acknowledging that vital role.

New clause 25 would go further and remove the proposed competitiveness and growth operational objective for the FCA. The financial impacts of pursuing a climate-busting competitiveness and “growth at all costs” approach over climate action is clear. For example, it is estimated that the UK will lose 10% of GDP by 2050 if we do not tackle climate change, and that Europe will see a 30% rise in defaults on corporate loans to the most exposed companies. No wonder the Treasury Committee advised against a primary focus on competitiveness, warning that it could lead to weakening standards and a reduction in the UK’s financial resilience, and could undermine the reputation of the UK’s finance sector.

It is worth recalling that Parliament itself deliberately removed competitiveness from the mandate of the financial regulator just a decade ago, learning the lessons from the regulatory failure leading up to the global financial crisis of 2007-08, which saw millions lose their savings, homes, businesses and jobs. With so much at stake, I can think of no good reason why the Government is making such a reckless move, and no good reason why it could not instead support a focus on the creation of a wellbeing economy designed to foster long-term economic resilience and prosperity.

I have also tabled new clause 21, which mandates the introduction of a one-for-one capital requirement for the financing of new fossil fuels. In other words, for each pound that finances fossil fuels, financial institutions should have a pound of their own funds held liable for potential losses. It is a principle that is used elsewhere. In June 2021, for example, the Basel Committee on Banking Supervision—the global standard setter for the regulation of banks—recommended its application to some cryptocurrencies’ exposures. At present, however, the Government are not seizing these opportunities.

Even with no fossil fuel expansion, by 2025 global emissions from existing projects will be 22% too high to stay below 1.5° and 66% too high by 2030—all while the scientific reality makes it clear that fossil fuels assets are uneconomic and financially uncompetitive in a 1.5° or 2° world. Fossil fuel financing increasingly threatens economic stability. It increases the physical risks of climate change, thereby leaving the financial system exposed to significant losses from balance sheets and from environmental damage to the wider economy. That is why these amendments are so important and that is why we should get fossil fuels out of our financial sector now.

[Danny Kruger (Devizes) (Con)]

I am going to speak briefly to new clause 7 on access to cash, and to new clause 27 on access to banking services. I very much support the Bill and completely commend what the Government are trying to do. It is a source of great pride that they are bringing financial regulation home as one of the great benefits of Brexit. I applaud what they are doing and appreciate all the engagement that Ministers have had with colleagues on the new clauses that I am speaking to.

I understand that there is an intention not to push new clause 27 to a vote, and I intend to abstain on new clause 7 if there is a Division on it, because I look forward to the policy statement that the Government have promised. I support the principle behind both the new clauses. As Members have mentioned, we seem to be moving inevitably towards a cashless society, and we can all see the personal convenience of that. Like the royal family, I personally do not carry cash around. It is only embarrassing when I am in church and the platter comes around. That is pretty much the only occasion when I feel the need for it, but that is not the case for everyone.

For anyone using a digital payments system, the operator of the platform has potentially immense control over their life, in principle and in practice. That is why what PayPal did to the Free Speech Union and others a few months ago is so important. Yes, we can acknowledge that that event was an outlier. It was a rare and slightly inexplicable event and, yes, it was quickly corrected in some of the cases of the accounts that were closed, but the fact is that it happened. It was a straw in the wind, and the fact that individuals and organisations with heterodox political opinions found themselves unable to operate economically because of the decision of a private company acting entirely on its own initiative, possibly under pressure from external campaigns, is a troubling development. So it is vital that we send the strongest regulatory, and also cultural and political, signal to these private payment platforms that the opinions of their customers are none of their business.

Nor are private opinions any business of the state, and this is why the question of access to cash is about more than the important issue of protecting the vulnerable, although I agree with the points that have been made on that. It is also about liberty. Just now, behind the scenes, the Government and the Bank of England are developing plans for their own central bank digital currency. Again, we can see the practical appeal, but the threat is that the Government will have oversight of the economic activity of private citizens, which is something that no Government of this country have ever had in our history. It is therefore vital that the debate on a central bank digital currency has liberty front and centre. We can all say warm words about the importance of safeguards and freedoms, but the fact is that if the emergency is bad enough and the powers are available, those powers could well be used.

We saw this happening around the world, and to some degree in our own country, during the covid crisis. We have only to look at what the Canadian Government did to block access to the bank accounts of truckers protesting against the covid policy there to see what can be done in a modern liberal western country. It would be a shame if we took back control of financial regulation from the EU only to empower private payment platforms, or indeed our own central bank, in that way. Cash services and banking services are part of the infrastructure of our communities. They are also part of the infrastructure of liberty.