Procurement Bill [HL]

Earl of Lytton Excerpts

Committee stage
Monday 4th July 2022 Grand Committee

[Lord Moylan (Con)]

You could have more of me, my Lords, but I will simply say that I know nothing about ports. However, I know a little about airports and they are technically subject to economic regulation by the Civil Aviation Authority. It is true that that authority has, through its own risk assessment, decided that only Heathrow Airport will be subject to full economic regulation. Gatwick and Stansted are subject to some, while most other airports are not economically regulated; that is, they can set their own charges and if people do not want to fly into their airport, they will fly to another. It is not entirely true, it is fair to say, that where it matters airports are not economically regulated, because they are. I suppose that the Civil Aviation Authority could always reverse its decision, if it saw fit. It has the power to expand economic regulation to other airports if that were felt necessary. Having added that, I shall subside and look forward to my noble friend’s response.

[The Earl of Lytton (CB)]

My Lords, this is my first intervention on the Bill because on the day of Second Reading I was convalescing at home and not allowed to go anywhere.

On this business, regarding utilities, I am afraid I come at this from a simple property professional’s standpoint. It always used to be gas, water, electricity, drainage and telecoms; those were the utilities on which people relied for the use of buildings and property of all sorts. We seem to have dropped drainage, for reasons I cannot quite understand, when it is merely the dirty-water function of the clean-water provider of drinking water, which is referred to.

I declare my interest as one of those who serve under the chairmanship of the noble Baroness, Lady Neville-Rolfe, on the Built Environment Committee, as do the noble Lords, Lord Moylan and Lord Berkeley. I am very privileged to do that. Last week, when we were talking about the Product Security and Telecommunications Infrastructure Bill, it was noted that the very purpose of the telecoms giants was to try to convince government that they were a utility, should have utility powers and should, encompassed in that, have certain powers of coercion. They have come into that from the private sector, whereas dear old British Telecom, aka Openreach and a few other things, has come at it from the other direction—the hardwired traditional utility standpoint that was protected, with all sorts of powers to acquire wayleaves and so on.

The noble Baroness referred to imperfect policy development. I almost got up and said “Hear, hear” to that, because we need to start sorting out what exactly we mean by these utilities that look in lots of different directions. Some of them are very commercial—some are very controversial—and others come from a highly and necessarily regulated background because they are important for health, stability and all sorts of other basic things that require regulation as to quality and quantity in the essential needs of the public. It is not so much the voluntary needs, and perhaps even less the voluntary needs of business, but the essential needs of the public.

We seem to have an increasing muddle between what may be regarded as that essential element that has to be regulated for the purposes I have suggested and the wider commercial endeavour that goes with it. Because that distinction has been made ever less clear, for reasons that I perfectly understand—the utilities were privatised for reasons to do with funding, and I do not pass judgment on that—like Voltaire’s Candide I stand here noting both cause and effect. This is exactly the situation we are in; utility activities are mired in this very issue. I look forward very much to the Minister’s answer on that. He has a great grasp of these intellectual refinements, and I hope he will be able to enlighten us. I think a bit of a distinction needs to be made here between essential purposes and processes that are essentially voluntary and commercial.

[Lord Fox (LD)]

My Lords, I am sure the Minister will pick up on the noble Earl’s Voltaire reference and tell us that we live in the best of all possible worlds. In my previous intervention, I mentioned the Government’s productivity. The noble Lord, Lord Moylan, appears to be spoiling that, trying to do in two Bills what the Minister is trying to do in one. I think one Bill on this may be enough.

The point raised by the noble Lord on utilities, developed by the noble Earl, is extremely pertinent. It is a wider question that spreads into things such as the Building Safety Act, for example, where there is an assumption that utilities have a particular role to play. Are hardwiring, broadband and things such as that utilities or not? There are wider implications in this than simply the nature of the Bill. There are questions to be answered.

There is also a precedent already forming in the Bill about public services being carved out. That is the NHS issue, of course, where separate legislation is pulling out some aspects of the jurisdiction of this Bill. I do not expect to have that debate on this group, because the Minister has helped us to move everything into one group. We can have that debate later, but the principle of carving things out has been accepted by the Government. In that respect, the tablers of these amendments have something to go on. The interesting question they are providing through these amendments is: what is in and what is out? In a sense, that covers part of our curiosity around the Bill.

We should not be too obsessive about this, and nor should the noble Lord opposite, because Clause 109,

“Power to amend this Act in relation to private utilities”,

allows the Government to turn the whole thing upside down anyway. Clause 109(1) says:

“An appropriate authority may by regulations amend this Act for the purpose of reducing the regulation of private utilities under this Act.”


In fact, none of this debate makes any difference because, by regulation, the Government can ignore themselves in any case. We already have a problem, Houston.

The noble Lord talked about the difference between private delivery of services and the noble Baroness, Lady Neville-Rolfe, talked about the fact that these organisations took on risk. With the train operating companies, when the risk turned around they just surrendered their licences. It is not real risk in the sense we might understand it in the private sector; it is a different world.

For that reason, I find it very difficult to go along with the amendments that try to extract private delivery of public service from the Bill’s ambitions. Large sums of money that have, lest we forget, originated from the pockets of UK citizens in the form of tariffs, fares or subsidies are then disbursed, or potentially disbursed, by the private companies as they procure things to deliver from their private sector the public services they are pledged and allowed by licence to supply. The Bill may, as the noble Baroness, Lady Neville-Rolfe, set out, interfere with the board’s licence to operate on a wider scale when it decides how to go about making purchases, but that is not unreasonable, given that it has hitched its wagon to a public service. When capital enters the business of delivering a public service, in my view it sacrifices the true independence to operate that it would have if it delivered a private service to private individuals. That is the deal: business gets to ply its trade on the condition that government and usually a regulator, but not always, meddle with its business model. It is a condition to operate.

For this reason, I am very interested to hear how the Minister will respond to your Lordships’ questions. These have been very worthwhile amendments and I thank the tablers. I look forward to the Minister explaining, first, what a “public service” is, secondly, what a “utility” is and, thirdly, where they sit in the context of the Bill.