Oral Answers to Questions

David Simpson Excerpts

Wednesday 11th March 2015 Commons Chamber

[Mrs Villiers]

I agree that politics and economics are intertwined in Northern Ireland. Political stability is crucial for a successful economy. I note the Labour commission on this, but I think the crucial thing is to stick to the Government’s long-term economic plan, because that is delivering economic recovery in Northern Ireland.

[David Simpson (Upper Bann) (DUP)]

Does the Secretary of State recognise the feeling of injustice in the Unionist community on the issue of parades? In my constituency we have waited 16 years to get a return parade—a church parade. When are we going to get a resolution?

[Mrs Villiers]

I am very conscious of the concern felt in the community in the hon. Gentleman’s constituency. It is crucial that the Parades Commission’s determination needs to be abided by, but it is also important to press ahead with a reformed and devolved system of parades adjudication, as envisaged by the Stormont House agreement.

Infrastructure (South-West)

David Simpson Excerpts

Tuesday 24th February 2015 Westminster Hall

[Mr Gary Streeter (South West Devon) (Con)]

It is a pleasure to serve under your chairmanship, Dr McCrea. It is also a pleasure to see the Minister in his place. I recognise that he has not been carrying out his duties for very long. I also know that the issues I am about to raise are possibly cross-cutting, and therefore do not expect him to be an expert on them. There may be some issues on which he will want to come back to me after the event.

I want to raise a specific example of how public procurement of infrastructure in the south-west could, in my opinion, be greatly improved. However, before I get on to that issue, I should say how much I welcome the extra investment the Government are making in our nation’s infrastructure. I often think that Governments do far too much, but one thing the Government can do really well—perhaps only they can do it—is ensure that the country’s infrastructure, whether it be for transport, education, communications or whatever, is in the first-class condition we would expect in a first-class country. I am glad that our disciplined adherence to our long-term economic plan has released the resources to invest in our country in that way.

I should clarify that, for the purposes of the example I am giving, the south-west is the seven counties of Cornwall, Devon, Somerset, Dorset, Wiltshire, Gloucestershire and Bristol, a vast region that stretches from the Isles of Scilly and Land’s End in the south to the Forest of Dean in the north and Stonehenge in the east. It does not quite take in Northern Ireland, Dr McCrea, but it comes quite close.

I welcome the two recent announcements of major infrastructure spending and improvements in our part of the world. The first is the dualling of the A303 all the way from the M3 to the M5, with a tunnel under Stonehenge, which when complete will give the far south-west a second major arterial road to underpin our growing economy. I am also exceedingly grateful to the Prime Minister and the Secretary of State for Transport for the commitment given to working with the Peninsula Rail Task Force to work up its three-point plan into a deliverable proposal with timings and costings that will give the far south-west a rail service fit for the 21st century, including journey times of two and a quarter hours from Plymouth to Paddington. That is all very welcome.

My specific concern, and the reason for calling the debate today, is the way in which the coalition Government have recently chosen to procure the building of new schools and the refurbishment of existing schools throughout our region. Of course, some think that what school buildings and classrooms are like does not matter for education, as long as the teachers are good, but I do not agree. Modern, well-designed buildings can lift the spirit and help a child to attain his or her potential. The gradual replacement of ancient school buildings, of which we have many in the south-west, is extremely important to the academic prospects of the next generation.

The Education Funding Agency regional framework is a four-year arrangement through which the EFA, academies, local authorities and other educational establishments can arrange contracts for individual school projects, both new build and refurbishment. In July 2014, the Education Funding Agency regional framework appointed seven contractors for lot 4, which is its rather unromantic bureaucratic description of the south-west. Thereby hangs the first problem I wish to raise with the Minister. Not one of the construction companies on our regional framework is local to the south-west—not one. There are some outstanding construction companies in our region, many with an excellent track record on public sector projects, yet not one made it on to the list. I will go further than that and say that some of the companies that are on the list do not have a proven track record in our region at all.

[David Simpson (Upper Bann) (DUP)]

The hon. Gentleman may, in a way, have answered my question, but will he elaborate for me the process of procurement? In Northern Ireland, we have procurement clusters for councils that are close together and so do a lot of procurement together. Does the procurement system operate in the same way in his region?

[Mr Streeter]

That is a helpful and interesting question. I will describe the procurement process in a moment. The hon. Gentleman may be able to understand it more clearly than I do. I find it extremely complex. That is one of the things that has gone wrong. The system itself is complex and—dare I say it?—over—bureaucratic.

Not one regional company has made it on to the framework list. I believe—this is the thrust of what I am raising with the Minister today—that essential changes are needed to the framework system so that local businesses have a fair chance of winning prize public procurement contracts and projects. It sounds like the situation in Northern Ireland is similar, and I do not suppose for a moment that the south-west is unique. This is an issue to which civil servants and Ministers need to give a little more thought.

I understand the benefits of multi-user framework agreements for procurement. They give a pre-competed route to market, procuring a vehicle to centralise procurement spend. They also share procurement expertise and resources, and risk and contract management. They reduce the administrative burdens of the time and cost of running a full procurement procedure each time. Infrastructure work is also very attractive to suppliers in such large volumes, but—I use my words carefully—it is an insult to our region to exclude all our companies. It may also be counter-productive, as I hope to explain.

First, how did this come about? I will try to explain the process as I understand it. Prior to issuing the notice in the Official Journal of the European Union in 2013, the EFA was looking to engage with the market to invite ideas as to how best to encourage the markets at a local level to participate in tendering for the framework on offer in a way that would deliver the most economically advantageous commercial agreement for all parties. Although local companies, including many with a tremendous track record of delivering schools over many years, applied in the south-west, that clearly had no effect on the outcome. Of the seven construction companies chosen, not one is local.

The final seven are as follows. The first is a French company called Bouygues, which has its headquarters in Paris, France. The second is BAM, which has its headquarters in Bunnik, in the Netherlands. The third, Skanska, is perhaps better known—its headquarters are in Stockholm, Sweden. The others are UK companies: Interserve, a well-known company, ISG plc, Galliford Try and Kier Group, which, again, is well known. They are all based in the south-east.

I accept that the first three international companies have small UK offices, but they are essentially overseas companies. They have no relationship whatever with the west country and any profits made are unlikely to be spent in the UK. I recognise the nature of the world in which we live—multinational corporations get contracts in every country and work in and contribute to our country—but I firmly believe that regionally based companies are able to deliver schools successfully in a cost-effective manner, and so should not have been excluded from the EFA framework. Local companies are much more likely to understand and wish to contribute to the community in which they are working.

It is also the case that international companies tend to bring with them their own supply chain and specialist sub contractors. The Minister may be thinking of saying in his response—it may already be written in front of him—that, if a contract is won by a major national or international company, that company will sub contract parts of the work to local companies, but I urge him not to say that, because the evidence on the ground is that, more often than not, it simply does not happen, and those companies bring their own supply chains with them.

It might help the House to hear that there were plenty of alternatives to the way in which the Government chose to proceed. For example, Midas Construction, one of the outstanding and successful construction companies in our region, has developed something it calls the Midas model school solution. That concept, which is now in its fifth year, has delivered 13 cost-effective schools.

It began with the requirement to deliver a primary school pursuant to section 106 of the Town and Country Planning Act 1990. A housing development contractor thought that it could deliver a school directly in a more cost-effective manner and use surplus moneys to fund IT equipment. The school was designed on the standard template, using a framed solution with traditional construction. The concept allowed for future expansion from a one-form to a two-form school as the housing development progressed. The school was delivered successfully and benchmarked about 20% lower than the Department for Education allowance. The project was successful and, consequently, it was rolled out to a number of the contractor’s other sites and local authorities.

The evidence is that the model school is between 15% and 20% cheaper on average than the traditional public procurement route. The model has proved to be adaptable over time, but the most powerful testament is that every head teacher has been happy to accept the learning environment as fit for their school and, after years of use, they remain delighted with the product.

That model and others like it are now excluded from the south-west because of how the new framework agreement has been put together. Some excellent regional firms have also been excluded. I mentioned Exeter-based Midas Construction, but what about Henry Pollard and Sons from Bridgwater in Somerset, Ryearch Ltd, based in my constituency, Rydon Ltd in Bristol, or Devon Contractors, another Exeter-based concern? They are all capable of building and refurbishing local schools, but they are all excluded because of a needlessly bureaucratic approach to procurement.

[David Simpson]

I am sure the hon. Gentleman will agree that that flies in the face of Government policy to try to rejuvenate local economies. Certainly, in my part of the United Kingdom, many companies have fallen foul of EU legislation under which, if contracts are above a certain price, they have to go out for tender, as he has explained. However, if we get indigenous businesses operating again, surely that will benefit local economies and jobs.

[Mr Streeter]

I absolutely agree. It does fly in the face of Government policy, but I do not think Ministers are necessarily aware—I would not necessarily expect them to be—of the detail of the very technical framework agreements being put in place. I understand that clever people have brought them about for all the right reasons and with good intentions, but the upshot is that we have a product that local people are not happy with. That is why I am asking the Minister about this. I am optimistic that in a moment he will say that he will revamp the entire process—that would be good.

The Department for Environment, Food and Rural Affairs has a strategy for buying locally, so why cannot the Department for Education do the same for its contractors? All public bodies must become far better at doing local procurement. Our south-west economy and regions like it would be transformed if Departments, Government agencies, local authorities, the health service, emergency services and so on all procured locally whenever possible, especially for major projects.

The Minister may be tempted to say in his reply that it is possible for a local authority or academy to contract to build a school with a construction company that is not on the framework agreement, but I urge him not to hide behind that thought, because that will almost certainly never happen. Why would anyone or any committee wishing to build a new school voluntarily take on board that additional risk? Most decision makers when grappling with that will feel the need to play it safe and—this is the tragedy—stick with what will be perceived to be the seven Government-approved contractors. That puts everyone else on a second-class footing, which is simply not right or fair.

My less wordy second point is that the framework agreement actually increases the cost for the taxpayer. This is how I understand it to work. The contractors in the framework appear to have been selected via a contract notice published on Tenders Electronic Daily, the online version of the Supplement to the Official Journal of the European Union, dedicated to European public procurement. The notice asked potential suppliers to bid to be part of the framework—so far, so good. Bidders had to have a minimum financial turnover threshold of £25 million for the region and they are supposed to be evaluated on the basis of essential and specific criteria that together offer the most economically advantageous tender.

However, the bidding system for being part of the framework is based not on which contractor can do the job at the lowest price with the highest quality, but on which seven construction companies are closest to the mean average of the bids offered. The system penalises competitive pricing and rewards higher bids. The winners are those that, by chance, bid closest to the mean of all bids. The pricing criterion contributes to 70% of the overall score, which cannot result in the most economically advantageous tenders. For example, one local construction company outscored four of the seven chosen construction companies in quality, so those four were not the most capable of delivering the product.

The successful framework bidders following selection need to participate in a subsequent, local competition process for each project. At that point, the competition process is scored 70% on quality and 30% on price. At least four of the seven construction companies chosen have little or no experience or track record in the region, so it is highly unlikely that, in the context of the local market, a competitive price will be procured. Unlike some of the excluded local construction companies that I mentioned, those other companies certainly do not have a track record for delivering £3 million to £7 million education projects in these areas, which are typically the projects for which they will be competing.

With such limited competition and only 30% of the award criteria on price, it is close to inevitable that any public sector bodies using the framework will pay non-competitive prices. What kind of mind came up with selection criteria that did not judge on quality and price, but focused on selecting those bids that were closest to the average, rather than the cheapest? Surely if the quality threshold is crossed, the taxpayer should expect to pay the cheapest price, not the price closest to the average. If I have misunderstood the process, I am sure the Minister will correct me when he responds.

I suspect that the selection criteria were put together by intelligent, well intentioned officials in the DFE and Cabinet Office. We are so well served by our civil service in this country and I am in no way criticising them, but I suspect that there was next to zero input from Ministers on such technical decision making. I was a Minister 1,000 years ago when someone called Sir John Major was the Prime Minister. In those days, we were talking about procuring new magistrates courts using something that was quite new in those days: private finance initiative contracts. I therefore know that such technical issues are largely taken forward by civil servants. Perhaps that is right, but there needs to be political, regional input, with an understanding of how people in the region might respond to the end product. We have ended up with a process that excludes local firms and does not choose the cheapest price. That is not a good day’s work.

Finally, on the involvement of foreign contractors, the necessity of the current framework comes from Europe. However, despite of the Europe-wide requirement to treat companies equally regardless of origin, which I support, it is increasingly hard, according to several construction companies I have spoken to, for British companies to work in other European countries. One director told me he was laughed at even for suggesting that a British company might win a contract in France. Can the Minister name any major construction projects undertaken directly by British companies in France for which the French Government are paying? We have an equivalent project on our framework agreement for the west country. The four freedoms guaranteed for the internal market of the European Union are not enforced or strictly kept to in other countries, which creates an unfair system in which British businesses and small and medium-sized enterprises are limited in where they can work, so why do we bend over backwards in this country to gold plate and comply with every jot and tittle of the rules, when our European competitors do not?

I am afraid that I would have to describe the new way of procuring schools in the south-west as a lose-lose situation. It favours multinational and centralised national firms that have no vested interest in the area at the expense of regional firms. It is likely to reduce the opportunities for local contractors rather than increase them, and it has been put together in a way that does not guarantee the selection of the lowest price for the taxpayer. I urge the Minister to look into the matter very carefully, and if possible, to adapt or terminate the current framework agreement, which has another three years-plus to run. If not, the Government can expect the feelings of deep dissatisfaction and deep resentment in the south-west to continue to rumble on.

[Lisa Nandy (Wigan) (Lab)]

I am grateful to you for chairing this debate, Dr McCrea, and I particularly want to put on record my gratitude to the hon. Member for South West Devon (Mr Streeter) for securing the debate. Although in recent weeks we have debated in this place and the other place the contracting out of services, he has put firmly on the agenda the contracting out of infrastructure, which is becoming much more important. That is especially true at the moment, because as he rightly says, new funding is being brought forward to replace the funding that was lost under Building Schools for the Future, in the education area in particular.

Listening to the hon. Gentleman’s speech, I could feel his frustration at the way the outcome of this process has shut out some of the outstanding construction companies in his region. I think that that frustration is shared in many other parts of the country, particularly by companies that have a strong track record of providing goods, services and contracts in the public sphere and which feel, understandably, that this sends a very strong message to them that their work has not been valued. Although I would not suggest for a moment that the Government have intended to produce that outcome, he is right to put this very firmly not just on the Minister’s agenda, but on my agenda, as the spokesperson for the Opposition.

That frustration is particularly felt in areas of the country where local authorities have pushed ahead with a local procurement agenda that has sought to build on local and regional expertise to ensure that the benefits of those contracts are felt fully in the areas in which they are granted. However, when they look to national Government to do the same, they find that many of those contracts have been awarded to overseas companies, or companies out of the area.

[David Simpson]

The hon. Member for South West Devon (Mr Streeter) made the point that the idea of someone from the United Kingdom getting a contract in France was laughable. That is one of the major problems; other countries practise protectionism. We are not very good at that, and I do not think we should do it, but other countries in the European Union certainly do, and that has a detrimental, knock-on effect on the rest of the United Kingdom.

[Lisa Nandy]

Yes, and in a moment, I will come on to things that the Government might consider doing to strike the balance better in this country, to ensure that we do not shut out some of our best companies with a really strong track record of delivery.

First, I say to the Minister that when commissioning goods, services and big capital projects of the sort that the hon. Member for South West Devon described, we accept that there is a balance to be struck between trying to guarantee value for money and trying to ensure the maximum social and local good. As the hon. Gentleman illustrated well during his speech, those things are often complementary and are not in contrast to one another. That is particularly the case when we look at what has happened to the economy, and particularly regional and local economies, over recent years. It makes a significant difference when services are procured locally and regionally, because that money remains in the region, as he said. Jobs are created and salaries are boosted. Every pound that goes into the pockets of working people in regions such as the north-west or south-west, where he is based, is then spent again in local shops and local businesses, and that cycle of growth continues.

However, in recent years we have seen the opposite. Although I accept that this Government have no huge plans to invest in our regions in the next few years, they have significant spending power; £187 billion was spent by national Government on public procurement in 2012, and I think there may be some more recent figures. That can have a significant impact if it is spent in local areas.

As the hon. Gentleman said, big national contracts are not always value for money. He made the point that many of the construction companies he was talking about have proven track records in his region. We have seen what happens when big national contracts are handed out without a real understanding of local areas. The Work programme was probably the most stark example, but that applies to infrastructure as well. As he said, one of the critical things that the Government could do is think about the impact that procuring services from outside the region has on supply chains, because often companies that come in from outside local areas bring their own supply chains with them.

The Government also need to recognise strongly that at the moment, in the way in which we contract and procure services and goods, there is a power imbalance between the prime contractor and any subcontractors or those providing services as well. A recent example of that was Capita and the civil service training scheme, which the Minister will be well aware of. That £250 million contract was supposed to be about opening up the best deal to the taxpayer, but subcontractors suffered a great deal because of the way in which the terms of that contract were drawn. Even where we decide that we will award contracts to big multinational firms, often based and operating overseas, we need to think much more clearly about how we balance that power relationship and ensure that those further down the supply chain are protected. One way in which we ought to do that is by getting a grip on how payment is made to providers. Quite often, in the procurement that we carry out, that is simply not thought about at the very beginning.

Another way in which the Government could help to move the agenda forward is by concentrating strongly on the expertise within the Government—of which there is a great deal, but it is patchy across different Departments—and on the staffing levels needed. An example of that was the west coast main line franchise, which was a £50 billion contract that was managed in the original instance by just three civil servants.

We think that the Government could do more to think about the wider impact of commissioning and procurement on the public. One way in which they could do that—we would strongly encourage them to do this—is by introducing a public interest test when they are going through the procurement process. We have committed to ring-fencing some contracts for companies in pursuit of a public service mission—that recently became one of the tools in the Government’s armoury. I would be interested to know whether this Government have thought about doing the same.

We are also committed to a community right to challenge where major projects have been announced that do not seem to be of enormous benefit to local areas or regions. It would be interesting to apply that community right to challenge in this case, because I suspect that the hon. Member for South West Devon speaks for many people in his constituency and across south-west England when he expresses anger about the fact that many organisations or firms that could have delivered the projects have not made it on to the list.

One way in which local providers can be of particular help is through their understanding of the local work force. That is one reason why we have given the committed that any national contract or major infrastructure project that is worth more than £1 million will specify that apprenticeships have to be provided as part of the deal. There is a particular benefit from procuring services locally and regionally, because quite often those firms—the sorts of firms that the hon. Gentleman talked about in his speech—will have knowledge of the local work force. They will already be working with education providers and other local businesses to help to provide opportunities for young people. The Minister recently visited the Youth Zone in Wigan, in my constituency, which has a very good record of working with local employers and local education providers to ensure that those links are made. In the case of High Speed 2, that policy would provide 33,000 apprenticeships. We think that the Government could commit to doing that.

It is also important, when commissioning projects and services, to think about the impact on the staff. In recent years, we have seen appalling examples of companies that have been commissioned from outside a local area to provide services. There was an example during the Olympics of a company in the Wigan borough that was commissioned to steward parts of the Olympics. The treatment of the staff in that company was found, when it was investigated, to be absolutely appalling. It was undercutting the minimum wage. There was no regard whatever for people’s terms and conditions, to the extent that staff were made to sleep under a bridge overnight in order to carry out their duties. That case hit the headlines nationally.

There is a particular impact from taking into account the strong and existing ties that local firms have to their own work force. I am thinking of the need to preserve their integrity and reputation. The hon. Gentleman talked about that. When we think about spending very large sums of public money, we should think about the impact on the people who end up delivering the services.

One of the very welcome things that the Government have done is introduce the Public Services (Social Value) Act 2012, of which the Minister’s predecessor but one, the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd), was a very strong supporter. Recently, the Government published the review of the social value Act to see what impact it has had. The review, by Lord Young of Graffham, unfortunately concluded that it has had a fairly limited impact, but ruled out extending the Act to goods and services, which could have made a huge difference to the sort of commissioning approach that we have heard about today. Surely the ethos of the Act should go beyond the limited scope that it has at present.

I would be interested to know what the Minister plans to do to try to extend the spirit of the social value Act to the sorts of projects that the hon. Member for South West Devon talked about. One point that Lord Young made in the review was that very few public sector commissioners know about the Act, so I hope that the Government will tell us today that they will take up his invitation to promote the Act much more heavily and the principles that lie behind it, because although at present it does not apply directly to school infrastructure projects, the spirit and ethos of the Act would have been extremely helpful in this case.

There is an agenda coming, I think, to most regions, regardless of who is in government after the general election. All three major political parties are committed to a greater devolution agenda. We need to think that through and get it right in advance of power being devolved to city and county regions and locally, because as more and more of these spending decisions are taken at local and regional level, getting it right will become very important indeed. It would make nonsense of the devolution agenda if the responsibility for major projects lay with a national Government who did not take account of the strengths and talents in regions such as the south-west, so I would be interested to hear what the Government have planned, as part of the devolution agenda, to ensure that we draw on those skills and help to boost growth and productivity in every region of the UK, not just a small section of it.

[The Minister for Civil Society (Mr Rob Wilson)]

I am very grateful to my hon. Friend the Member for South West Devon (Mr Streeter) for initiating the debate. He is a great champion of his constituents and of Devon, but also of the wider south-west region. This debate is evidence of that fact. I will start with general comments and then move on to the specific issues that he raised.

Changing and improving the way in which the public sector spends money on goods and services has been a Government priority since 2010. We have brought about unprecedented and comprehensive reform across all areas of procurement and will continue to do so, making Whitehall leaner and more efficient, so that Britain can compete in a global sense. Through our rigorous commercial reform programme, stripping out waste and buying more goods and services centrally, we have made the way in which we do business in central Government quicker, more competitive, more transparent, better value and far simpler than ever before. Those commercial reforms, combined with a baseline of spend in 2009-10, have created savings of £2.9 billion in 2010-11, £3 billion in 2011-12, £3.8 billion in 2012-13, and £5.4 billion in 2013-14.

To be regarded as a global competitor, Britain must ensure that the right investment is made in national infrastructure, with a focused investment in skills, technology and efficiency initiatives that help businesses to operate and expand in a global economy. The construction industry underpins the growth of this sector and facilitates future prosperity. We are reforming public construction enterprises to make them more efficient, collaborative, innovative and competitive, both at home and abroad, ensuring that the money that we spend boosts Britain’s competitiveness and delivers greater social mobility.

We are rebalancing the economy to achieve strong, lasting growth and widely shared prosperity. The Government construction strategy is about cutting waste and reforming our procurement processes, and reinvesting the savings that we make in more progressive ventures that stimulate the economy, ensuring liquidity of all businesses, big and small. It gives us a competitive advantage, underpins economic growth and generates higher-quality jobs.

We are backing the industries of the future and making Britain a great place to do business. The construction pipeline will provide more than £127 billion of strategic investment opportunities for businesses from this year onwards—a significant boost to economic growth in the sector. Government and industry are working together to create strong communities and to support local and national economies, investing in world-class, functional public buildings and spaces and inspiring businesses to grow.

Let me turn to the south-west. I can assure my hon. Friend that the Government are fully committed to a flourishing and prosperous south-west. Last month, my right hon. Friend the Chancellor of the Exchequer set out the Government’s long-term economic plan for the region. In delivering it, we will increase regional productivity, create more jobs and improve road, rail and digital communications infrastructure. My hon. Friend gave a couple of examples of where we are doing that, including the tunnel under Stonehenge and some of the rail improvements that will ensure a better rail service to the south-west in due course. The Government are therefore actively reforming procurement, encouraging construction and promoting regional growth, all of which is good news for companies in the south-west. Nevertheless, we recognise there is still a lot more we can do.

I am grateful to my hon. Friend for his three comments about the procurement activity undertaken by the EFA as part of its regional framework in the south-west, and I would like to deal briefly with each in turn. The first was about tenderers being selected on the basis of not the cheapest tender, but being closest to the average of the tenders. I understand from EFA officials that tenderers were selected on more complex price grounds than those mentioned by my hon. Friend, and I would be happy to share with him separately details of the methodologies used. I can assure him, however, that the approach adopted was meant to ensure a level playing field for suppliers by preventing larger companies from artificially deflating prices in their initial bid and then squeezing subcontractors in the supply chain. Contracts awarded under the framework follow a mini-competition to ensure that best value for money is achieved.

My hon. Friend asked about the procurement process, so let me briefly outline it for him. Public procurement rules apply to public purchases above defined thresholds and require those purchase opportunities to be advertised across Europe. In October 2013, the EFA advertised a prior information notice in the Official Journal of the European Union. Bidder days were then held to explain the tendering process to interested applicants. Interested firms were required to provide submissions by completing a pre-qualification questionnaire consistent with the Government’s publicly available specification 91 format. Following their submission, the PQQs were evaluated according to the published selection criteria. Shortlisted bidders were then invited to tender. I hope that gives my hon. Friend confidence that the proper process was followed in this case.

[David Simpson]

The Minister’s last comments were about as clear as mud, but I understand that that is what was on the paper he was given. I do not doubt for one minute the Government’s sincere objectives in this procurement process, but what is happening on the ground is totally different from what he has just said about procedures preventing subcontractors from being squeezed. Subcontractors are being squeezed, and that is why we need to look at what is happening down at the coal face.

[Mr Wilson]

I thank the hon. Gentleman for raising that issue. If what he says is the case, we will certainly look at it. The second point my hon. Friend the Member for South West Devon raised was that there are no local companies in the framework, despite there being substantial companies in the south-west.

Government Contracts (SMEs)

David Simpson Excerpts

Wednesday 28th January 2015 Westminster Hall

[Dr McCrea]

I agree with my hon. Friend. That will certainly be part of the effort that I am endeavouring, through the debate, to achieve.

The Government plan for growth published alongside the Budget in March 2011 highlighted a number of policies stated to be of particular benefit to SMEs, including such measures as making it easier for them to access public sector procurement by eliminating the prequalification questionnaire for contracts worth less than £100,000, advertising procurement opportunities on Contracts Finder and setting an aspirational target that a quarter of Government contracts should be awarded to SMEs.

[David Simpson (Upper Bann) (DUP)]

My hon. Friend is certainly in the flow today, so it is hard to intervene. As well as action on procurement, does he agree that over the past number of years the Government also promised to speed up payment terms for small companies? A lot of what has been done, however, has been paying lip service. Northern Ireland has improved, but a lot of work remains to be done. Cash flow is vital to small companies if they go for Government contracts.

[Dr McCrea]

I absolutely agree with my hon. Friend and will also deal with that as we continue with the debate.

--- Later in debate ---

[Dr McCrea]

I wholeheartedly agree with the hon. Gentleman. The lack of an up-to-date and modern broadband connection makes it very difficult to get into Government contracts.

To promote the further growth of SMEs, following on from the recommendation in Lord Young’s report, a new scheme was designed to make it simpler for small firms to win public sector contracts, which are estimated to be worth £230 billion a year. In addition, there was a commitment to tackle the late payment of small firms to ensure that those small businesses supplying the public sector and its supply chain were paid at the same time as the large contractors.

In May 2013, Lord Young published “Growing Your Business”, a report on growing micro-businesses following on from his report on entrepreneurship and start-ups published in May 2012. The 2013 report makes a number of policy recommendations for businesses employing fewer than 25 people, including the establishment of a small business charter and, crucially, a

“new ‘single market’ commitment to ensure a simple and consistent approach is taken across public sector procurement.”

In 2012-13, the public sector spent £230 billion on procurement of goods and services, including capital assets, accounting for 34% of total managed expenditure. Of that £230 billion, approximately £38 billion was capital procurement, the rest being current. Of the current procurement, approximately £40 billion is by central Government, £84 billion by local government, £50 billion by the national health service and £13 billion by the devolved Administrations.

Hon. Members will note the public interest in several recent awards of major procurement contracts, which have attracted scrutiny and even criticism from some hon. Members. In the light of the recent difficulties, the Government set themselves a target of procuring 25% of goods and services by value from SMEs by 2015, with the flattering words that such businesses are

“a crucial engine for growth”

as they account for 99.9% of UK businesses.

Research by the FSB reveals that every £1 a public body spends with a small business generates 63p of additional benefit to the economy, compared with 40p of additional benefit when spent with a large business. Although there is much ongoing debate about the advantages and disadvantages of EU membership and whether the UK should remain within its bureaucratic quagmire, the position remains that the Government not only can but should do more to support SMEs in accessing public procurement in compliance with EU diktat.

[David Simpson]

Does my hon. Friend accept that, although there is a problem with procurement, in some small companies there is a lack of understanding of the procurement process? There needs to be a robust educational process, perhaps through councils, under which small, young micro-companies learn exactly what it is all about.

[Dr McCrea]

I thank my hon. Friend for making that point. However, to give an illustration from my own constituency experience, I often find that a small business not only finds it difficult with all the filling in of forms, but is blocked from getting into contracts. That is the issue that I want to get to the heart of, but I must first lay the foundations.

A core principle of the EU is to establish a single market that encourages trade and maximises value for the taxpayer in public procurement, obtaining the latter through increased competition by allowing companies from other EU nations to bid for contracts. As SMEs are crucial to the UK’s economic recovery, what have the Government done to encourage and assist them in accessing EU markets and public procurement in other EU member states?

EU procurement rules include transparency, fairness and non-discrimination. They apply to SMEs accessing public procurement in other EU member states, but do nothing to tackle those issues within the United Kingdom, as such rules do not apply. It remains an anomaly of the single market rules that, although under EU law one member state is not allowed to discriminate against an SME from another member state as part of public procurement of goods and services, subject to certain criteria, member states are entitled to act in a discriminatory fashion towards their own nationals.

It is admirable that the coalition Government have engaged with SMEs as one of their two main priorities concerning public procurement and that they intend to achieve that aim by making the procurement process

“much simpler, more open and less bureaucratic—so all businesses, no matter what their size, have a chance of success”.

However, the realisation of that priority, by opening doors for SMEs and providing them with the tools to apply, will make the real difference to our businesses and propel this country’s economic recovery forward.

--- Later in debate ---

[Dr McCrea]

I am happy to agree with my hon. Friend on that point and am delighted that he has a genuine interest in that environmental issue. I am sure that will be noted carefully.

The old proverb says, “Give a man a fish and you feed him for a day. Teach him to fish and you feed him for life.” Although Stephen Allott, the Government’s appointed SME champion, argues that the

“big change is that procurement reform under Labour was a nice thing to have, whereas today saving money is central”,

the Government need to realise that people’s livelihoods are at stake. Owners of SMEs have often bravely given up a comfortable lifestyle and made significant investment to start up businesses from scratch. They are not mere pawns on a Government chessboard to be played when election time comes around. Much more needs to be done to upskill SMEs in the public procurement process. If a supplier has not bid before and is not very skilled at completing the tender, although it might be the best supplier, it will not win the contract. That was the point raised by my hon. Friend the Member for Upper Bann (David Simpson) a few moments ago.

Interestingly, Mr Allott has stated that the difficulty in fast-tracking the SME agenda arises because of staff cutbacks in the public sector, and notably cuts to the number of individuals in procurement. Such streamlining has led to greater aggravation. It may on occasion save the taxpayer money, but it does nothing to support SMEs. Mr Allott has gone further, stating that the pressures now borne by remaining procurement staff have led many to

“stick with the suppliers they know rather than spend time researching potential partners or having speculative meetings with untried suppliers”—

so it is not what you know but who you know. That leaves SMEs isolated while large companies continue to court those with influence.

On indirect contracts, how will the Government ensure there is a “David and Goliath” approach to prevent prime contractors from driving down prices and creaming off the best work for themselves, leaving slender pickings for their smaller partners? What will the Government’s SMEs champion be doing to help SMEs to get the best possible deal when working with large companies?

[David Simpson]

On the “David and Goliath” issue, when many large companies receive Government contracts, SMEs turn out to be subcontractors and are pressurised harder on pricing, so their job becomes even more difficult.

[Dr McCrea]

I accept what my hon. Friend says.

I turn now to what the UK Government could learn from the devolved Administrations. According to FSB research, in 2013, authorities in Northern Ireland spent on average 80% of their total procurement spending with SMEs. Details of all current Northern Ireland public sector tender opportunities are available on one centralised web portal. In addition, a number of events have been organised to encourage economic co-operation and trade, enabling local businesses to meet a wide range of public sector buyers, including buyers from central Government Departments, councils, universities and other public bodies.

In 2009, the Assembly’s Committee for Finance and Personnel conducted an inquiry into public procurement and practices in Northern Ireland. As a result of that inquiry, the Committee made 52 recommendations to the Department of Finance and Personnel in a report published in February 2010, including all the recommendations put forward by the FSB. That shows that key stakeholders such as the FSB are listened to in Northern Ireland.

According to the Cabinet Office papers “Direct and Indirect Spend with SMEs” and “Making Government business more accessible to SMEs”, the total proportion of procurement spend with SMEs by central Government Departments has increased year on year. However, that analysis fails to include public bodies outside central Government. Hon. Members need to note that there are 22 non-ministerial departments, 346 agencies and other public bodies, 70 high-profile groups and 12 public corporations that, in total, have considerable spending power.

In October 2012, when Lord Heseltine published his independent review on increasing UK growth, “No Stone Unturned”, he recommended that the Government

“should place a general duty on all public bodies”—

not just those in central Government—

“setting out the procurement standards to which they should adhere, by providing a pan-government procurement strategy, legislating if necessary.”

When the Government published a consultation on a range of measures to simplify and standardise public sector procurement in “Making public sector procurement more accessible to SMEs” and “Small Business: GREAT Ambition”, in September and December 2013 respectively, they said that they would legislate and make changes across the wider public sector. However, it is regrettable that none of those changes included placing a duty on all public bodies, not just those in central Government, to set out

“the procurement standards to which they should adhere, by providing a pan-government procurement strategy”,

as Lord Heseltine recommended, because that has not happened.

I have tried to explain my general feeling about SMEs and Government contracts to set the scene for the debate, which I was urged to secure because of an experience in my constituency. That experience has not just troubled me; it has really got to me. A local person has put all their money into trying to be innovative and to create something good as a British enterprise, but that seems to have been stamped on and put into the ground.

That small, innovative British SME in my constituency has been failed by the Government and a public body for which it is accountable—the Highways Agency. That failure has affected not just the company, but the work force on the strategic road network, the taxpayer and the British motorist. This case study illustrates: the extent of the barriers erected to prevent market entry; the power of the small number of big companies that dominate the road maintenance market on the strategic road network; the disregard for safety and efficiency exhibited by the Highways Agency; and the seeming impotence of Departments to ensure that British SMEs are treated fairly and given appropriate opportunities, in this instance to introduce new products designed specifically to improve safety for the work force and the motorist, and to secure much better value for money for the public purse.

It is clear from the evidence that the safety of the work force is not given the priority that is required. On 8 January 2015, the Highways Agency was censured for the death of a traffic officer in September 2012 and, recently, another road traffic worker was killed on the strategic road network. It is also clear that the automation of traffic management processes could be made much more efficient through the use of an automated system of cone laying and retrieval.

Between 2002 and 2006, the SME that I am speaking about focused on ensuring its compliance with all UK industry standards, which involved complex interactions with several public bodies including the Highways Agency, the Health and Safety Executive, the Department for Transport and the Transport Research Laboratory. By 2006, its manufactured system had been thoroughly tested and trialled across the UK, and it was fully compliant and market-ready. The Highways Agency funded all of the trialling, which signalled its interest in this innovative automated product.

In August 2006, the product was launched with a DFT press release and a statement from Dr Ladyman, the then Minister. He commented:

“In 2005, five road workers were killed in the course of their work on England’s motorways and major roads, making the motorway one of the most dangerous working environments in Britain…This new machine will help to give extra protection to workers and the public on our busiest roads, and help the Highways Agency to use lanes more efficiently during roadwork programmes…Road workers risk death and injury from traffic accidents every day, while making sure our roads are safe and well maintained”.

At that point, given such a press release, one would have expected that the product was well placed for adoption throughout the strategic road network.

The Highways Agency introduced the company to one of its major contractors in 2006. In the company’s view, their negotiations were not conducted in good faith. It transpired that the major contractor wished to purchase only one or two systems, because what it really wanted was the transfer of all intellectual property and manufacturing rights to itself, although what was proposed would have involved a loss for this small business.

As the months followed, it appeared that the role of the Highways Agency was to exert pressure on the company to accept the contractor’s offer at the contractor’s price, even if that involved a loss. The Highways Agency used its influence to support the major contractor, but not to support the SME, the theme behind Dr Ladyman’s statement about how road workers

“risk death and injury from traffic accidents every day, while making sure our roads are safe and well maintained”,

nor achieving a good price.

During 2008, to facilitate Highways Agency contractors to trial the new technology locally, a vehicle, system and skilled traffic management crew were made available for the entire Highways Agency network, ready to mobilise at short notice. Direct involvement with the Highways Agency failed to attract any business from the contractors.

Following my intervention in 2009, the Transport Research Laboratory, acting on behalf of the Highways Agency, presented the company with a proposed new contract. A signature on the contract would have transferred all intellectual property and manufacturing rights from my constituents to the Highways Agency, acting on behalf of the Crown. As part of the proposed contract, the agency would have been free to appoint a third-party supplier to benefit from the rights, to the loss of the original SME. The SME was expected to support the potential new supplier.

The company refused to sign the contract, but was prepared to negotiate. That led to an extended trial in 2009-10, which was carried out by the TRL and the agency. The trial was deeply flawed because untrained workers were used on the live road network, which meant that only seriously understated benefits could be derived from the use of the new product. Once again, for the benefit of the industry and to test this new technology locally, a vehicle and system was made available for the entire Highways Agency network between March and September 2010. There was professional support from about 20 depots across England, but Highways Agency contractors were not interested.

In 2011, on the company’s behalf, I, again, engaged with the Department and its then Minister, the right hon. Member for Hemel Hempstead (Mike Penning). As a result, the Highways Agency conducted a cost-benefit analysis, which suggested that there would be huge additional costs and limited benefits, due to poor value for money and little safety benefit. Following a challenge of the work, the then Minister—I give him full credit—ordered an independent review, which was carried out by Jacobs, an international consultancy. It proved extremely difficult to secure proper data from the Highways Agency—I needed to table a series of questions, as a Member of Parliament—but eventually, in February 2012, the Jacobs report concluded definitively that the product could provide significant value for money, improved traffic flow and considerable safety benefits, which was the opposite of what civil servants said to the Minister. For example, when the then Minister asked how many stoppages there would be, the civil servants said that there would be 120,000 lane closures a year, but when I asked the question, as I did again and again, the answer that I received was 26,000. They were only out by about 4:1, so of course that really means little. The cost-benefit analysis was proved completely wrong.

The company wrote to the contractors and approached the SME champion at the Department for Transport. That engagement led to a report from the contractors that displayed a total lack of interest in a product that an independent and credible evaluation had declared could bring significant efficiency savings, value for money and safety benefits. The Highways Agency arranged a meeting between the company and the contractors, but appeared to be content that its contractors, using public resources, could turn their back on efficiencies, modernisation and safety. Then, of course, the Minister was moved from the Department, and the new Minister who took over did not seem to have the same interest.

The early contractual negotiations were not conducted in good faith. They were designed to ensure that a major contractor could benefit from the intellectual property rights and manufacturing potential of an SME-driven innovation. So much for getting SMEs into Government contracts.

It appears that after the refusal to sign the contract that was offered, the product was closed out of the market, even when it was ready to be used locally across the network. The independent report by Jacobs, which identified good value for money and safety benefits, was ignored by the contractors and also, largely, by the Highways Agency. The Department proved unwilling to challenge either the agency or the contractors with any degree of rigour, despite being the funder of the agency’s contracts. All the bodies involved did not address with sufficient vigour the safety benefits that the product would have brought. In addition, the Department and the agency refused access to the minutes of the Road Workers Safety Forum trials team because that might inhibit a free and frank exchange of views by contractors. The public interest did not appear to be paramount.

The experience of this company from 2006 to the present day has created the impression that a cartel of big contractors can ignore potential value for money, efficiency and safety considerations with impunity, and that that does not matter, as they will get their pay at the end of the day. They will be paid for what they put in, but the small company or micro-business can be trampled into the ground.

The system of accountability for the expenditure of public money appears to lack any effective scrutiny or teeth. There is a real issue about the safety dimension of this experience that does not appear to have been given serious attention by any of the major public or private players. The question at the heart of the matter is about the relationship between a public body and its private contractors. How far are decisions on road safety being determined by commercial concerns, and to what extent are the Government content to allow the self-regulation of safety standards for road workers and users?

This is an important issue and I will not let it go. I will continue to try to find out exactly how this happened. I do smell something wrong in this, as it seems that some persons within Departments are happy to play along with the big contractors.

Social Economy

David Simpson Excerpts

Tuesday 2nd September 2014 Westminster Hall

[Hazel Blears]

Everyone has to have a bit of fun now and again. I am sure they kept a close eye on me when I helped to service the Volvo. I did not realise until afterwards that the young man who helped me had very serious mental health problems. He had been detained at Broadmoor for a significant period of time, yet that organisation, because it was prepared to take risks and believe in people, was able to do something that virtually no other organisation could. Ronnie Wilson, who runs that organisation, does a fabulous job.

Having said all that—those organisations are brilliant—there is much more that the Government can do to bring social enterprises to the mainstream. On each of my three issues, I will go through a couple of specific points, for the Minister and for my Front Bench team, with whom I have had the opportunity to discuss some of this. At the next election, the manifestos of all political parties need to have some specific and concrete offers to social enterprise, social value and social investment, if we are to build the social economy we want to see.

On social enterprises, I want to see the social sector established with a clear corporate identity. I want it to have respect and to be seen as the place to go to for creative, innovative solutions. That is the first point. The Government say, “There are lots of problems that we cannot solve. We need you to come into this space and begin to help us do that.” That is starting to happen, and it needs to happen more clearly.

[David Simpson (Upper Bann) (DUP)]

On a point of clarification on social enterprises in the right hon. Lady’s constituency, are there any links between further education colleges or educational institutions and young people who have difficulties?

[Hazel Blears]

The hon. Gentleman raises an extremely good point. We have some links. We certainly have some enterprise models in some of our schools, academies and FE colleges. In the past, that would have simply been a small business option, but a social enterprise option is increasingly coming through. I find—I am sure we all see this—that more and more young people want values. They want to go home at the end of the day and be proud of what they have done and who they work for. That is why one in three start-ups across Europe is a social business. Young people with the best talent want to work in those organisations. That brings me back to my first point, which is that there is a business case for social enterprise. If a business wants the best talent, it has to have a social mission at its heart, so that young people are proud of what they have done at work.

First, we need a real recognition that social enterprise is a corporate form that can solve problems. Secondly, we need to look at financial incentives that can help to grow social enterprises—such as tax reliefs or looking at business rates again—so that we can incubate and grow the kind of organisations that can help us. Thirdly, we need to work with the European Union and look at state aid issues. An exemption for social enterprises and charities would make a huge difference and lift the burden of reporting requirements from this sector, which often cannot cope with some of the bureaucracy that bigger businesses can cope with. I will come to Europe in a minute, because Europe is doing great things in this arena, but the exemption is one more thing that we could do.

Moving on to social value—I am conscious of time—I pay tribute to the hon. Member for Warwick and Leamington. He has done an absolutely superb job in taking through the social value legislation in the House. The legislation will be game-changing. It will last and be hugely influential. We will look back in 10 years’ time and say, “Why did we not do it 30 years’ ago?” It is a market leader for many other countries across Europe and the world, which are now talking about doing similar things. I went to the Isle of Man to talk to some people about social value. Their Parliament does not half work quickly. I went to a Saturday conference and a Saturday night dinner, where I made a speech. On Monday morning, one of the Members of the Tynwald came up to me with a draft four-clause Bill. He said, “Would you like to come with me to Parliament, and we will present it?” It was amazing. I hope the Isle of Man will get a social value Act as well.

I was pleased to be associated with the legislation, which is incredibly important, but there is more we can do. I held a round table this year with people from the private sector, local authorities, social enterprises and the voluntary sector. We presented the then Minister for Civil Society, the hon. Member for Ruislip, Northwood and Pinner, with a lengthy report on the issues that had been highlighted. I am more than happy to talk to the new Minister for Civil Society, the hon. Member for Braintree (Mr Newmark) about that round table and some of the practical things we can do. I am delighted that more and more local authorities are putting social value clauses in their contracts and their procurement. That always used to be completely forbidden under European Union law. The EU has done a 360° turn and is now saying that not only can these social clauses be put in, but that they should be put in. That is amazing. I went to a procurement conference in Brussels with 1,000 procurement officials from across the European Union—it shows my dedication to duty that I went to a Brussels procurement conference—and to see those officials enthused by the possibility of being able to do good in how they use procurement was heart-warming and amazing.

In the European Union, Commissioner Andor has been hugely instrumental, as has President Barroso, and the whole agenda has been embraced. Commissioner Andor is coming to Salford on 22 September, where we are organising a round table for him to look at what more can be done in Europe to take forward the social value provisions on procurement and the social investment agenda. We are running with the grain, but there is more that we can do on social value.

One of the big issues is measurement and data, because everyone is doing the social economy now, but there are 57 varieties in how it might be measured. While there is inconsistency and uncertainty, it is difficult for people to get on a level playing field. I am not in favour of rigidity or one-size-fits-all. Part of the beauty of the agenda is that things develop and grow, but we need some core agreement on consistent principles for measuring social impact and social value, so that those who are tendering know exactly what they have to put in and so that those who reply to those tenders and provide services know how they can shape those services to have the best chance of winning a tender. This is a plea to the Minister: we have to have consistent principles and grounds for the measurement of value.

Guy Battle, who used to work for Deloitte and now has the Sustainable Business Partnership, has done some great work in setting up a social value portal, looking at measurement, metrics and developing the whole agenda. I think that he is someone who the Minister would want to meet and consult. The manifesto asks for social value including trying to ensure that we have some consistent principles and standardised measurement. Secondly, can we look at ensuring that social value clauses are included and given equal consideration to other criteria, or at least some clear weighting? People are saying to me, “We do not know whether the weighting is five points, 10 points or 15 points. We are very unsure about how to design our contracts.” The third ask—this is perhaps slightly more radical, but I believe it is essential—is to extend the Public Services (Social Value) Act 2012 from services to goods and infrastructure. The big spend in the next 15 to 20 years will not be on revenue, because we all know that money is tight; the big spend will be on big infrastructure projects, such as High Speed 2 and a new airport, wherever that might be, whether it is in the estuary or not. It is about the big rail developments and all those big infrastructure projects. If we can include social value clauses about local labour, using local supply chains and having a social impact in all those big infrastructure projects, imagine the prize that awaits. Now that Europe says that we can do it, we should extend social value legislation to include infrastructure and goods.

My final points are on social investment and I draw attention to my unpaid interest that is in the Register of Members’ Financial Interests with regard to Big Society Capital. Social investment is an exciting area of development. We had a G8 forum this year on social investment and Britain is clearly a global leader. We have more social investment than anywhere else with 15 in operation and 50 in development. The US and Australia have five each only. It is fantastic to be a global leader and to be better than America for once, much of which is down to the former Minister.

Social investment is exciting because it is new, but I recognise that money will be tight for whoever is in government after the next election. There will not be much public money around, so if we are to continue to reform, transform and improve public services, as well as the private sector, we will have to find new sources of finance to facilitate some of that transformation. I want to give one quick example. I do a lot of work on dementia and I have an idea that we could get social investment into dementia care to support community-based interventions to keep more people at home, so that they do not end up in the acute sector, which is the worst possible place for them. Dementia sufferers stay twice as long in the acute sector as people without dementia, they get readmitted twice as often and they die more often, all of which costs the NHS a fortune. If we can get social investment in and keep people well in the community, their lives will be better, their families’ and carers’ lives will be better and the acute sector will save money. The reason why that does not happen is because the money of clinical commissioning groups is all tied up in the acute sector. If we can get social investment, which would allow some headroom for double-running, community interventions, such as gardening, singing, befriending and buddying, can be scaled up. There is an emerging evidence base that such activities are effective and can lead to a virtuous circle.

I am meeting the Minister of State, Department of Health, the right hon. Member for North Norfolk (Norman Lamb) next Tuesday with Big Society Capital and the Social Investment Business and I hope that we can do something here. It will require courage and determination from the whole system, but the prize is worth having. We had a G8 forum on social investment and we had a G8 forum on dementia, which is the biggest global health challenge. It would be amazing if we could use this new global finance to tackle that challenge. We must cross our fingers and watch this space and see how far we get with that. It is exciting and is an illustration of what we could do.

I have some more manifesto asks. I have discussed them with my Front-Bench team and I am more than happy to send the Minister some detailed analysis. On social investment, we could look at charitable trustees’ investment decisions and give them the confidence that they can perfectly properly take social considerations into account when investing money. It is ludicrous that charities are not allowed to consider social impacts. We could make it clear that pension funds can also consider social reasons for investment rather than always having to get the best price and the most money. If we start to motivate charitable foundations and pension funds, the amounts of money could be massive, but we are not utilising them to their fullest extent. We could have a social investor exemption from the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, so that retail people can learn about social investment. When we get a social investment ISA, we will have broken through all the bureaucracy and it will be an everyday thing. I want such an ISA because I want my investment to do good as well. That is where we need to be. On tax incentives, we have the social investment tax relief, which is a great step from the Government, but let us ensure that it is broad enough to enable collaborative funding and new structures, such as social investment bonds and funds. We could also simplify the community investment tax relief to ensure that intermediaries can quickly get money and get it out to those who need it.

The previous Labour Government started a plan, which has been carried on by the coalition, to use money in dormant bank accounts. There are other funds to which we could extend that idea, such as insurance, long-term investments and unclaimed gambling winnings. There is a lot more money out there that we could bring in. Instead of lying dormant and being wasted, it could be used to tackle some of our biggest social problems, so I ask the Minister and my Front-Bench team to consider that.

Finally on social investment, I want to discuss local impact funds. The Social Investment Business has been developing local funds to enable relatively small amounts of money to go to local organisations. The money that comes from social investment can sometimes involve big numbers, but there are many small organisations that need small grants. The first local impact fund was launched in Liverpool some two months ago, and of the 39 local enterprise partnerships, 11 have already said that they want local impact funds. This is a fabulous opportunity. The next round of European Union structural funds is coming with the proviso that 20% must be spent on social impact. Wow! What an opportunity to use EU funds to do good. That would rehabilitate the European Union in many people’s minds and even some of our not-very-pro-EU colleagues may think it a fabulous thing to do.

I am conscious that I have spoken for a long time, but I say to the Minister that I am delighted that he is in his role. He has a fabulous job. I have no doubt that he is raring to go and I am willing to give whatever help I can and the whole sector is willing to do the same. There are excellent companies out there in the marketplace. This is no fluffy public sector agenda; Fujitsu is examining its whole supply chain in terms of social impact and Interserve has recently invested in a social investment bond to fund a social innovation centre, which is amazing. Chief executives and chairmen really get this. The synergy of public, private, voluntary and mutual social enterprise is a powerful and irresistible idea. I ask the Minister to go with the grain and make his name—his mark—on this agenda.

Oral Answers to Questions

David Simpson Excerpts

Wednesday 25th June 2014 Commons Chamber

[The Prime Minister]

I think my hon. Friend put it rather better than I did—[Interruption.] Thank you.

[David Simpson (Upper Bann) (DUP)]

Q8. I am sure that the Prime Minister and the whole House will join me in welcoming the successful visit by Her Majesty the Queen and the Duke of Edinburgh to Northern Ireland this week. Will the Prime Minister also join me in condemning Sinn Fein’s foolish approach to welfare reform, which, instead of protecting the vulnerable in Northern Ireland, is costing the Northern Ireland Executive £5 million per month in fines?

[The Prime Minister]

I agree with the hon. Gentleman on both counts. As ever, the Queen’s visit to Northern Ireland has been a huge success, and it has highlighted the economic renaissance that is taking place there. With over 800 foreign investors, Northern Ireland is now one of the top UK destinations for investment. May I just say that I am extremely envious of Her Majesty’s being able to see the iron throne on the set of “Game of Thrones”? That is now one of the most successful television productions anywhere in the world, and it is hosted in Northern Ireland.

The hon. Gentleman is also right about welfare reform. The point of it is to help people to get back to work, rather than just to cut budgets, and we need to explain to all the parties in Northern Ireland that we should be engaging in welfare reform to help to get people back to work.

Oral Answers to Questions

David Simpson Excerpts

Wednesday 2nd April 2014 Commons Chamber

[Mr Robathan]

My hon. Friend will know that last June an economic pact was signed by the Northern Ireland Executive and others that looked forward to a rebalanced economy with more private sector jobs. In the last year some 10,000 jobs have been created in the private sector. As I have said, we are expecting another 13,000 this year, and 23,000 new jobs over the next year.[Official Report, 28 April 2014, Vol. 579, c. 10MC.]

[David Simpson (Upper Bann) (DUP)]

The Minister will be aware that 42% of the households in Northern Ireland suffer from fuel poverty. The most vulnerable are the elderly and cancer patients. Surely more can be done to help those vulnerable in our society?

[Mr Robathan]

I have great sympathy with what the hon. Gentleman says, and I am aware that some 68% of households in Northern Ireland heat their homes with fuel oil, which has gone up dramatically in price in the last few years. Our stop on the fuel escalator will have a decent impact on all those who heat their houses with fuel oil. Of course, we wish to see people doing better and those in poverty helped out of poverty, and that is why we are focusing on economic recovery, as is the hon. Gentleman’s party in the Northern Ireland Executive.

Transatlantic Trade and Investment Partnership

David Simpson Excerpts

Tuesday 25th February 2014 Commons Chamber

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I welcome this debate and I am honoured to have put my name to the motion before the House. I am also pleased to be a member of the all-party parliamentary group on European Union-United States trade and investment, and I pay tribute to the hon. Member for Aberconwy (Guto Bebb) and the right hon. Member for Wentworth and Dearne (John Healey) for guiding our work. I apologise to the right hon. Gentleman for missing his opening remarks. I was at a hospital appointment and I thought the debate would start slightly later in the day.

I must be honest and admit that when I was approached to join the all-party group, I had little knowledge of the transatlantic trade and investment partnership, but I quickly gained an understanding of the potential economic significance of the deal if it goes ahead. Wales is an exporting nation and outperforms the other component parts of the UK. We have a trade in goods balance of £4.9 billion based on 2012 figures; by contrast, England has a deficit of £122 billion. Despite recent setbacks in Welsh exporting figures, this potential trade deal is hugely significant.

It is right and proper that the House of Commons debates this issue, such is the potential far-reaching impact of the trade deal for the economy and public services. If I was a Member of the Welsh Parliament, knowing what I know now I would also be demanding a debate and Welsh Government attention. I read today in the Western Mail that the First Minister is visiting the United States, and I would like to know whether he has raised the TTIP with the authorities there and the Westminster Government.

The UK Government have published a swish pamphlet promoting the positive potential of the TTIP, and we will hear many speeches in favour of it today. To add balance therefore, I will concentrate on some of the issues that I believe policy makers at Welsh and UK level, and the EU negotiating team, should focus on during negotiations.

Enthusiasm in Wales for the European Union values of the single market—one of the largest trading blocs in the world—is high, as it is for the fact that Welsh citizens are allowed to travel unimpeded and without visas within its territories, with the rights and protections that affords us in workers’ rights and human rights. I have my concerns about the privatisation obsession of the EU, but I believe the Welsh economy benefits more from being a constituent part of the EU than from being outside it. That is why my party argues for a full and equal voice for my country as a member state.

Coming from that position, it is difficult to argue wholeheartedly against building on the EU single market by developing the TTIP. The EU single market essentially offers free movement of goods, services, capital and labour, and the TTIP would extend the same principles for goods, services and capital. However, putting a Marxist cap on for a minute, the TTIP would neglect labour—[Interruption.] I had to get it in. As I will explain later, that creates a potential imbalance that worries me and on which I need reassurance from those on the Government Front Benches.

It is a further irony that the Government are trumpeting an EU-US trade deal while edging closer towards withdrawal from the EU in all their thoughts and deeds. I suspect that some Tories secretly harbour the desire to withdraw from the EU while remaining in some future US free trade area. As President Obama recently alluded to, and as common sense would dictate, why would US companies—or for that matter any other major trading country—invest here if it did not afford access to the European Union?

[David Simpson (Upper Bann) (DUP)]

Although this is a good news story in that it can create about £10 billion for the UK economy, does the hon. Gentleman agree it is important that we help and encourage small businesses to take advantage of this, and of every help given to them that the Government can afford?

[Jonathan Edwards]

I am grateful for that intervention and I will go on to agree with some of the points the hon. Gentleman has just raised.

We in Plaid Cymru support the principle of affording exporters in Wales the opportunity to further their trade with the USA. It is the largest destination for Welsh exports outside the EU and involves 23.7% of all trade, which naturally leads to the question of whether there is actually a problem to solve with the proposed trade deal. Certainly, we would support any deal that was of mutual benefit and in the Welsh national interest, and we would want guarantees that SMEs are genuinely afforded entry into the market with the chance to create more jobs and grow the economy. For example, exports from local farmers in Carmarthenshire could benefit from a favourable deal. Indeed, the Farmers Union of Wales is very encouraged by the TTIP.

However, Plaid Cymru would be opposed to any deal that ended up favouring big corporations and allowed the further hollowing out of industrial sectors of the Welsh economy. We also have grave concerns about the proposed EU-US trade deal as it currently stands with regard to investor state dispute settlement—I will talk a little more about that later in my remarks.

Much needs to be done to increase transparency in these negotiations. I am an avid follower of the Twitter account launched by the EU negotiating team, but much greater effort needs to be made by the EU and member states to explain and inform people about the TTIP. Economists at the Munich-based Ifo Institute found that a trade deal would lead to a 13.4% increase in US income per head in real terms over the long term, but an average rise of only 5% among the EU 27, now 28—we in Wales welcome our friends in Croatia to the EU table.

The figures assume that the US and EU agree on a deal that would lower transatlantic tariffs, and harmonise and ease regulations in many sectors that are often referred to as non-tariff barriers to trade. Trust in any trading partner is essential. That is why last year I read with great concern the revelations that the National Security Agency surveillance programmes had been spying on Governments in Europe, with the help of intelligence services in the UK. The spying revelations had the potential to derail the proposed deal, given the understandable outrage in some European capitals. I am amazed that there has not been more public outrage here, given the level of intrusion into private lives. I imagine that had any other foreign Government pursued such blanket intrusion, the UK Government would have armed the nukes. Their deafening silence about the NSA revelations indicates a worrying collusion aimed at sidestepping UK civil liberty protections. That is why it is incredibly important that, at every stage of the negotiations on any deal, there is full transparency and accountability, and that all groups are allowed input. This is a matter for all EU nations and regions, not just the leaders of a few select large and economically powerful states within it.

EU Trade Ministers agreed on a mandate for the European Commission to conduct negotiations with the USA on the TTIP. A lack of transparency in future negotiations is a major cause for concern, yet EU Governments insist on keeping the mandate confidential. The trumped-up excuse—that it is necessary for negotiations —does not stand up to analysis, as it will be available for the US to access. The mandate on the terms of any deal should be freely debated in the European Parliament and in European Parliaments, and not arrogantly assumed by the European Commission and state Governments.

The French Government have apparently secured the exclusion of culture and audiovisual services from the mandate. There are still many risks that deserve the same attention. There are serious concerns that negotiations could lead to investor claims that threaten core EU standards and rules on the protection of public services— such as the NHS, which was raised earlier—intellectual property, food safety, GMO crops, and health and environmental standards.

Oral Answers to Questions

David Simpson Excerpts

Wednesday 10th July 2013 Commons Chamber

[Mrs Villiers]

Small business Saturday was raised with me by Glyn Roberts of NIIRTA when I met small businesses just a few days ago. The Government are determined to rebalance the economy to create the right conditions for growth in Northern Ireland. That was the aim of the extensive economic package that we agreed with the First Minister and Deputy First Minister, which was broadly welcomed by people such as the Taoiseach, the US President and even the shadow Secretary of State. That provides a good platform to help small businesses.

[David Simpson (Upper Bann) (DUP)]

One of the obstacles to the growth of the economy in Northern Ireland has been the lack of funding from banks to help small and medium-sized enterprises. What discussions has the Secretary of State had with the banks so that funding can be made available to these companies?

[Mrs Villiers]

I have had extensive discussions with the banks, Treasury Ministers and the Finance Minister of the Northern Ireland Executive. That informs an important part of the work stream that we will take forward as part of the economic package.

Patrick Finucane Report

David Simpson Excerpts

Wednesday 12th December 2012 Commons Chamber

[The Prime Minister]

I myself met the Finucane family and I will always listen to what they say, but I have to say that I think that what we have done—we have taken a very open approach, putting all the information out there in public—is the right approach and is the best way to get to the truth of what happened.

The hon. Gentleman says that public inquiries do not necessarily take a long time. I refer him to the fact that the other inquiries set up after 2004 ended up costing tens of millions of pounds. The Baha Mousa inquiry was about one individual and a number of hours spent in custody, whereas this is about an issue that has had the biggest police investigation in British history—involving three separate sets of investigations and millions of documents. There would be no concept of a short inquiry for this; it would be multi-year, multi-million pound, with absolutely no guarantee that it would get closer to the truth than this extremely open and truthful document we have in front of us.

[David Simpson (Upper Bann) (DUP)]

The review has now been completed, the Prime Minister has, again, come to the Dispatch Box and apologised, and, yes, the murder has to be condemned. However, may I remind the Prime Minister that there are those of us on these Benches, including my own family, who have lost loved ones to the provos over the past 25 years? My family lost four of its members, but no review and no public inquiry was offered to them. When are we going to see equality for all families?

[The Prime Minister]

Many people in this House have suffered loss because of terrorists. I remember the first Member of Parliament who ever represented me, Airey Neave, and I think of Ian Gow, for whom I once had the huge privilege of writing a speech when I was a junior researcher. I remember going to have a drink with him in this House and getting to know him a little, and then reading one day that he had been murdered by the IRA. We cannot have an inquiry into every one of those murders; we have to find a way of trying to come to terms with the past. People have suffered dreadfully, but we have to find a way of moving ahead in Northern Ireland, which the people of Northern Ireland have done, and I believe it is our job to encourage that.

Freedom of Information Act

David Simpson Excerpts

Wednesday 14th March 2012 Westminster Hall

[Lisa Nandy (Wigan) (Lab)]

I requested this debate to seek clarification about a specific piece of Cabinet Office guidance that was apparently issued to the Department for Education last year to clarify its responsibilities under the Freedom of Information Act.

Ministers from both Departments—the Cabinet Office and the Department for Education—have refused to answer any of my parliamentary questions about the guidance, except to confirm that it was issued. However, this is a matter of pressing public importance about which I have sought answers for nearly eight months. There is evidence now in the public domain that the Secretary of State for Education and his advisers used personal e-mail accounts to discuss matters relating to the award of public money and the Building Schools for the Future programme.

Disclosure of those e-mails was refused because Ministers wrongly appeared to believe that the e-mails were not covered by the Freedom of Information Act. The Secretary of State has since told me, at a recent hearing of the Education Committee, that he believed that to be the case because of the specific Cabinet Office guidance that is the subject of today’s debate.

I will briefly summarise the background and say why the matter is of such pressing public importance that the guidance should be published without delay. In August and September last year, in the leaked e-mail obtained by The Guardian, the Secretary of State’s adviser told officials that he would no longer respond to inquiries on his official departmental e-mail address and urged them to do the same. At the time, Ministers in the Department appeared to believe that private e-mail addresses were not covered by the Freedom of Information Act.

Further e-mails were then revealed by the Financial Times that had been leaked to them by officials in the Department for Education. Those e-mails revealed that personal e-mail accounts had been used by the Secretary of State and by his advisers in relation to Government business. Requests were made for some of the leaked e-mails in question but those requests were refused. The Secretary of State told me in January at the Education Committee hearing that the decisions were taken clearly on the basis of guidance issued by the Cabinet Office. That guidance remains unpublished, may or may not have been written down and has since been discredited, hence my keenness to shine a spotlight on that mysterious guidance today. It apparently contradicts earlier guidance given to the Secretary of State for Education by his Department’s chief freedom of information officer, stating that personal e-mails were covered by the Act. The Information Commissioner also clarified that in December last year, but the Secretary of State confirmed to me that he had ignored both those pieces of guidance and preferred instead to rely on the mysterious piece of guidance apparently issued by the Cabinet Office.

I would like to know why the Cabinet Office is still refusing to publish the guidance given the Secretary of State’s constant references to it, its apparent centrality to decisions taken and the seriousness of the allegations that have arisen against the Department for Education. Will the Minister publish the guidance now, so that we can assess whether any attempt was made to evade the requirements of the Freedom of Information Act? The Minister for the Cabinet Office told me that he would not publish it due to a long-standing convention, but can the Minister tell me why he and his colleagues cannot even tell me in what form it was communicated? Surely there is no convention around that? Freedom of information requests suggest that the DFE holds a copy of the advice, but according to press and FOI queries to the Cabinet Office, it says that its guidance was, variously, not written down, or not held. Can the Minister explain this contradiction for me today?

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Lady on securing the debate. She will be aware of the controversy about the whole aspect of freedom of information requests in recent months. Does she agree that the matter is not only about the case she is outlining, which is very interesting, but the whole aspect of the abuse of freedom of information, and its cost?

[Lisa Nandy]

I very much echo the hon. Gentleman’s comments; this kind of affair damages us all, which is why I am seeking answers today.

I would also like to understand how the situation could arise. That understanding is important if the commitment to transparency, which was made very clearly in the coalition agreement, is to have any meaning. Why was the guidance written by the Cabinet Office in the first place, given that the Department for Education’s chief freedom of information officer had already clearly communicated his view? Who requested the guidance? When was it communicated by the Cabinet Office? Was it sent only to the Department for Education? If not, has it now been revoked for every Department, given the extreme criticism of it by the Information Commissioner? In his recent ruling, he said:

“The DfE contends that the information is not held because the email in question is ‘political’. However, almost all the work of a special adviser, by definition, has a political dimension to one extent or another. Equally, the Secretary of State is a political figure…There is therefore an inevitable overlap between matters of party policy and government policy. To accept the DfE’s interpretation would be to, in effect, create a blanket exemption for communications between ministers and special advisers. In the Commissioner’s view the DfE has created an artificial distinction between ‘official’ information which is subject to the Act and ‘political’ information which is not.”

Did this interpretation, or description, of a blanket exemption from the Act arise directly from the guidance issued by the Cabinet Office? If so, can the Minister tell me how he, or officials in his Department, came to interpret the guidance in that way? Will he tell me who wrote it? Was that person aware that the DFE’s chief FOI officer had already issued contradictory advice? Did the person who wrote it have any discussions with the Information Commissioner, or indeed the Ministry of Justice, which holds overall responsibility for the Freedom of Information Act, before issuing it? Who was it sent to in the DFE? Did the Minister personally sign it off? If not, will he tell me who did?

I am seeking to understand how a situation can arise where the Cabinet Office’s guidance explicitly contradicts that of the DFE’s own chief FOI officer and the Information Commissioner, yet the Department is able to choose which guidance it wishes to follow. Does that not cause the Minister concern? Is it how the Government operate? Can Departments pick and choose different policy advice and guidance depending on which they prefer to follow? Does the Minister think it is acceptable that the Government are in the farcical situation where the DFE is apparently relying on guidance that the Information Commissioner has discredited, which is contradictory to the guidance issued by the Department itself, and which the Government still refuse to publish?

Less than two weeks ago, the Information Commissioner issued a ruling that the information withheld by the DFE amounted to departmental business and must be disclosed. The Secretary of State is currently considering whether to exercise his right to issue a refusal notice giving valid reasons for withholding it, as I understand. In the meantime, he still does not appear to have accepted the guidance of the Information Commissioner and his own Department that states clearly that those e-mails are covered by the FOI Act.

In January, I asked the Secretary of State a series of questions at a hearing of the Education Committee to clarify whether he or his advisers had ever used private e-mail accounts to conceal information from civil servants or the public that related to departmental business; whether he had ever directed civil servants not to answer FOI requests on specific issues; and what steps he was taking to prevent the deletion of private e-mails relating to Government business and deemed by the Information Commissioner to be covered by the FOI Act. It has since transpired that officials in the DFE repeatedly destroyed official Government records—130 e-mails, according to reports by the Financial Times. I have the transcript of the Secretary of State’s appearance before the Education Committee. I repeat that it is not clear, from his answers, whether he or his advisers sought to use, conceal, or delete those personal e-mails to evade the Act. What is clear is that the Secretary of State says that he was following Cabinet Office guidance in his actions.

There is an urgency to this matter, as it is unclear whether private e-mails relating to Government business are still being deleted. I asked the Secretary of State about that at the end of January at the Select Committee hearing, and he would not confirm whether that was or was not the case. Will the Minister please clarify whether that revised, updated guidance has been issued, and that, in light of the Information Commissioner’s ruling, the guidance has changed? Has revised guidance gone to every Department? If not, what is the delay? Given the clarity of the Information Commissioner’s statement, it seems extraordinary that that would not have happened. If it has not happened, does it mean that the Government are currently without guidance on the use of private e-mails and the FOI Act?

Does the Minister know whether the DFE has decided to fight the decision notice, and if so, on what grounds? Perhaps the Minister cannot answer that, but can he answer this: if the Secretary of State for Education decides to fight the decision notice from the Information Commissioner, will the Cabinet Office defer publishing new advice until the case is finalised? If so, that could mean that the FOI Act is effectively inactive and subject to a blanket exemption for a year. That is surely a broken commitment, given the prominent commitment to transparency in the coalition agreement. What is being done to ensure that this situation cannot happen again?