Procurement Bill [ Lords ] (Fourth sitting)

Florence Eshalomi Excerpts

Committee stage
Thursday 2nd February 2023 Public Bill Committees

[Alex Burghart]

The clause explains what we mean by “award criteria”. They are the criteria against which contracting authorities assess tenders under a competitive tendering procedure, and the clause sets out the rules that apply to them.

The clause requires that award criteria are clear, measurable and specific, comply with the rules on technical specifications, are a proportionate means of assessing tenders, and relate to the subject of the procurement. The clause requires that the way in which tenders are evaluated is transparent and set out in the assessment methodology, and that contracting authorities set out the relative importance of the criteria.

The clause makes it clear that award criteria can cover a wide range of things, from price to how things are produced to what happens at the end of the solution’s lifecycle, provided criteria relate to the subject matter of the contract. The rules allow a contracting authority to limit the number of lots that it wishes to award to a single supplier, when it has broken down a larger procurement into smaller lots or components. Where the contract is for light-touch services, which are person-centred services, reference is made to additional matters that can be considered to be relevant to the subject matter of the contract.

We want contracting authorities to be confident when designing and running procurement procedures. An area that often causes confusion is how far award criteria can be iterated during the process. Given the flexibility afforded to contracting authorities under the new regime, clause 24 makes it clear that award criteria may be added to through greater detail, or tweaked to add clarity during a procurement procedure, but any such refinements to award criteria should be made at specified points. The clause does not allow for wholesale changes to award criteria. For example, during a procurement procedure that allows for a research phase, a design phase and a development phase, the overarching criteria will remain constant, but the specifics may evolve. That is what the clause seeks to achieve.

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Mr Mundell.

Clauses 23 and 24, as the Minister highlighted, relate to the award criteria and their refinement before the invitation of tenders. Award criteria for procurement need to be finely balanced to achieve the best deal for the public. If they are too narrow, we risk missing out on innovative processes, and the potential to save the taxpayer money and deliver those services efficiently; if they are too broad, we risk delivering substandard and inappropriate services.

In the lead-up to our consideration of the Bill, I spoke to different groups and charities. They said that broad contract terms often mean that contracting authorities end up awarding the contract to the cheapest bidder. That is despite the charities offering more bespoke and important services that address the needs of procurement far more substantially.

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[Alex Burghart]

The clause sets out a specific and somewhat technical provision, whereby a contracting authority can either permit or direct a supplier to subcontract the supply of goods, services or works to another supplier.

In certain procurements, circumstances exist where part of the contract needs to be subcontracted to a specified supplier. That could be due to economic or technical reasons relating to requirements of interchangeability or interoperability with existing equipment, services or installations. It could also be due to the protection of exclusive rights.

For example, a contracting authority might require the use of certain technical software that is owned by a single supplier. Therefore, in such procurements, a contracting authority may need to nominate a particular subcontractor that must be used. For direct award under clause 41, however, a contracting authority may only require a supplier to subcontract the supply of goods, works or services to a particular supplier where the justifications for a direct award set out in schedule 5 also apply to the subcontractor.

[Florence Eshalomi]

The clause states that where a contract could be supplied to a supplier under a direct award, the contracting authority can mandate that a supplier that wins a competitive tender process must subcontract the supply of those works, goods and services to the supplier that could have supplied the contract via a direct award. We have discussed the issues of subcontracting and of direct awards, and we will discuss them further under clauses 71 and 41 respectively. This clause is relatively uncontroversial, in that it seeks to ensure that the mechanisms for direct awards can apply via a subcontract. We therefore do not wish to oppose the clause and are happy for it to stand part of the Bill.

Question put and agreed to.

Clause 25 accordingly ordered to stand part of the Bill.

Clause 26

Excluding suppliers from a competitive award

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clauses 27 and 28 stand part.

[Alex Burghart]

We come to the clauses concerning the exclusion of suppliers. I appreciate that there is considerable interest in these clauses, and rightly so; they are an important part of the Bill.

Clause 26 sets out the basic principles governing the exclusion of suppliers from competitive award of contracts. Subsection (1) provides that contracting authorities must disregard tenders from suppliers that are “excluded”. Excluded suppliers are defined in clause 57 as those in respect of which a mandatory ground for exclusion applies, as set out in schedule 6, and the issues in question are likely to occur again, or that are otherwise treated as excluded suppliers under the Bill.

Subsection (2) provides that contracting authorities must consider whether a supplier is an “excludable supplier” before assessing tenders, and may, at their discretion, disregard tenders from such suppliers. Excludable suppliers are those in respect of which a discretionary exclusion ground applies, as set out in schedule 7, and the issues in question are likely to occur again.

Subsection (3) requires contracting authorities to give the supplier the opportunity to replace an associated person, such as a subcontractor that the supplier is relying on, to meet any conditions of participation, if the exclusion situation pertains to such a supplier.

Clause 26 is essential to give effect to the exclusions regime set out in the Bill with regard to the assessment of tenders, which protects contracting authorities and the public from suppliers that may not be fit to compete for public contracts. However, the clause does not provide the detailed grounds for exclusion and the process for how authorities should apply them. Those are set out in clause 57 and in schedules 6 and 7, which we will come to on a future day.

Clause 27 sets out the basic principles governing the exclusion of suppliers from competitive, multi-staged procurements. Those provisions are needed in addition to clause 26 to ensure that contracting authorities consider the exclusions at the start of multi-stage procedures, as well as when considering tenders.

Subsection (1) provides that contracting authorities must apply the exclusions regime to interested parties at the outset of all multi-staged procurements. For those procurements, authorities should consider whether each interested supplier meets any of the grounds for exclusion and, if so, whether the issues in question are likely to occur again, and whether that supplier is to be treated as an excluded supplier under the Bill for other reasons.

If a supplier is an excluded supplier under subsection (2), the authority must prevent the supplier from participating in, or advancing any further in, the procurement. Where the supplier is an excludable supplier under subsection (3), the authority may, at its discretion, permit the supplier to participate. That has the effect of making exclusions a gateway into the procurement.

Subsection (4) requires contracting authorities to give the supplier the opportunity to replace an “associated person”, such as a subcontractor the supplier is relying on, to meet any conditions of participation, if the exclusion situation pertains to such a supplier.

Clause 27 is essential because it gives effect to the supplier exclusion regime set out in the Bill, which protects contracting authorities and the public from suppliers that may not be fit to compete for public contracts. However, as with clause 26, clause 27 does not provide the detailed grounds for exclusion and the process for how authorities should apply them. Those are set out in clause 57 and schedules 6 and 7.

Clause 28 deals with exclusions and subcontractors. It sets out the circumstances in which contracting authorities must, or may, consider whether the exclusion grounds apply to subcontractors that the bidder in question intends to work with, and how to apply the exclusion regimes where that is the case. Importantly, that is not limited to direct subcontractors of the bidder but includes other subcontractors further down the supply chain.

Subsection (1) requires contracting authorities to request information from suppliers about all intended subcontractors and to check that they are not on the debarment list. Subsection (2) then allows contracting authorities to request additional information about any subcontractors and consider whether they are excluded or excludable suppliers. Contracting authorities may choose to do that for particular types or categories of subcontractors, such as all first-tier subcontractors or service-critical subcontractors.

If a subcontractor is an excluded supplier under subsection (3), the contracting authority must disregard their tender and exclude them from taking part in a competitive tendering procedure. If the subcontractor is an excludable supplier under subsection (4), the contracting authority may disregard their tender or exclude them from the procedure. Before disregarding a supplier’s tender or excluding them from a procedure under this clause, under subsection (5), the contracting authority must give the supplier the opportunity to replace the subcontractor in the supply chain in order to avoid itself being excluded.

We know that some of the worst corporate misconduct and unlawful behaviour occurs deep in supply chains to Government. That is particularly true with respect to forced labour and other modern slavery abuses. This clause is essential to ensure that the same standards to which we hold bidders for contracts can be applied all the way down the supply chain.

[Florence Eshalomi]

Clauses 26 to 28 concern the exclusion of suppliers on the grounds listed in schedules 6 and 7 related to mandatory and discretionary grounds for exclusion. We support the inclusion of exclusion grounds in the Bill. In the Green Paper “Transforming Public Procurement”, the Government said:

“The current procurement regulations allow contracting authorities to take into account the past performance of a supplier on only very limited grounds and commercial teams often have to rely on bidders’ self-declarations rather than objective, evidence-based information. We can act now to raise the bar on the standards expected of all suppliers to the public sector and ensure that outstanding small suppliers are able to secure more market share, increasing productivity and boosting economic growth.”

I am sure that there is complete agreement on that in the Committee today. There can be no question but that we should not give public money to those convicted of wrongdoing or acting in a way that damages the country and our communities.

Clauses 26 to 28 put into place terms to bring the mandatory exclusion grounds from schedule 6 and schedule 7 into force by using the language of “excluded” and “excludable”, as defined in clause 57. Of course, the strength of this clause is heavily determined by the strength of the grounds for exclusion.

We are pleased to see some steps forward from the system inherited from European Union directives, which was brought into power in this country via the Public Contracts Regulations 2015. In particular, we are pleased to see environmental misconduct implemented as a discretionary exclusion ground. Our environment is a key natural asset that provides us with the building blocks for living in this country. Those who seek to damage our environment—for example, by dumping waste and causing significant damage to plant or animal life—should not be given Government contracts. We are also pleased to see national security within the system, although, as the Minister can guess from our planned amendments, we feel that this could have a stronger presence in the Bill, with some of the ambiguity removed.

When reading through the clause, we had some concerns about how it will be applied and some of the doors that it leaves open on discretionary exclusion grounds. Although the Bill is clear that those excluded on mandatory grounds must be disregarded from a tendering process, it is not clear on the fate of suppliers that fall foul of the discretionary grounds. Here, the Bill says that contracting authorities “must consider” whether a supplier is excludable on discretionary grounds but “may disregard” their tender, as the Minister said. This discussion may seem similar to ones we have already had, but this could have far more serious consequences.

For example, let us say that a supplier is decided to be a national security risk following an assessment by a contracting authority and that is confirmed by the Government via the provisions in clause 29. That supplier then applies for a tender to another contracting authority. What is stopping that contracting authority awarding this contract, should it so wish? There does not seem to be any mechanism to permanently exclude an excludable supplier in the Bill. Even when the Government consider a threat so severe that it should go on the debarment list, the Bill would still allow authorities to apply the “may” rather than the “must” exclude part.

I am sure the Minister will say that he will issue clear guidance on this and that contracting authorities should, of course, exclude a supplier in this case, but these are serious grounds for exclusion; we all agree on that. We cannot leave it to chance that a contracting authority uses the powers as they are written in the Bill, rather than as the Minister wishes. At the very least, that creates ambiguity around the whole system.

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[Alex Burghart]

On that final point, the hon. Lady will have heard me say that we intend to introduce a major programme of training and guidance across many areas covered by the Bill, as part of breathing new life into procurement in our country.

On the hon. Lady’s previous points, this part of the Bill deals with the creation of the mechanism, the details of which are dealt with subsequently in the Bill. The mechanism is that there are some discretionary grounds for exclusion and some mandatory grounds for exclusion. When we get to the relevant clauses and schedules, we will be able to put our arguments, and she and her party can say whether they think that certain issues should be mandatory or exclusionary. I think she will see, when we get there, that sometimes there are grounds for mandatory exclusion on particular issues, but sometimes, on a different version of the same issues, there can be grounds for discretionary exclusion. As I say, we will get into the detail of that as we progress.

Question put and agreed to.

Clause 26 accordingly ordered to stand part of the Bill.

Clauses 27 and 28 ordered to stand part of the Bill.

Clause 29

Excluding a supplier that is a threat to national security

[Florence Eshalomi]

I beg to move amendment 18, in clause 29, page 20, line 42, leave out

“paragraph 14 of Schedule 7”

and insert

“paragraph 42A of Schedule 6”.

This amendment is consequential on Amendment 15.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 15, in schedule 6, page 104, line 25, at end insert—

“National security

42A A mandatory exclusion ground applies to a supplier if a decision-maker determines that the supplier or a connected person poses a threat to the national security of the United Kingdom.”.

This amendment, together with Amendment 16, would move national security from among the discretionary exclusion grounds in Schedule 7 to the mandatory exclusion grounds in Schedule 6.

Amendment 16, in schedule 7, page 110, leave out lines 28 to 31.

See explanatory statement to Amendment 15.

Amendment 17, in schedule 7, page 111, line 39, leave out sub-sub-paragraph (e).

See explanatory statement to Amendment 15.

Amendment 19, in clause 78, page 53, line 38, leave out

“paragraph 14 of Schedule 7”

and insert

“paragraph 42A of Schedule 6”.

This amendment is consequential on Amendment 15.

New clause 1—National Security Procurement Committee—

“(1) The Secretary of State must establish a committee, chaired by the Minister for Resilience, to consider (a) national security and (b) cyber security within the Government’s supply chain.

(2) The committee must consider whether suppliers should be excluded on the basis of the discretionary exclusion ground in paragraph 14 of Schedule 7 (threat to national security).

(3) The committee must review ongoing major government contracts, with focus on threats to national and cyber security.

(4) The committee must meet no less than once every three months.”

This new clause will mandate that a new committee must be set up with a view to proactively identifying potential security threats within the Government’s supply chain.

New clause 4—Dependence on high-risk states—

“(1) The Secretary of State must within six months publish a plan to reduce the dependence of public bodies upon goods and services which originate in whole or in part in a country considered by the United Kingdom as a high risk sourcing country.

(2) For the purposes of this section, a country is considered a high risk sourcing country by the United Kingdom if it is defined as either a systemic competitor or a threat in the latest Integrated Review of Security, Defence, Development and Foreign Policy.”

[Florence Eshalomi]

Amendments 18 and 15 to 19 relate to the discussions that we just had—on clauses 26 to 29 stand part—on exclusion and excludable grounds. Taken together, the amendments would move the national security ground for exclusion from schedule 7 to schedule 6. In practice, that would mean taking the consideration that a supplier is a threat to national security from being a discretionary to a mandatory ground.

As I mentioned, we considered removing the distinction between mandatory and discretionary grounds entirely in the Bill, and to some degree, the amendment serves as the first step towards considering wider reform of these parts of the Bill. However, we believe there is a particular case for national security to be a mandatory, not a discretionary ground.

Perhaps the Minister can cast his mind back to Second Reading, over a month ago. During that debate, Members on both sides of the House raised a number of valid concerns about national security in procurement. We in the Opposition share those concerns. Procurement deals with our basic infrastructure and offers a million doors into our country to those who represent a security threat. We cannot be too arrogant to believe that those who represent such a security threat cannot think of innovative ways to get access to critical and sensitive information.

Just last month, we heard how SIM cards capable of tracking location were found in ministerial cars, which was very concerning. We need to think about all the data that could be revealed and the sensitive information that could end up in the hands of malign actors. Even for minor contracts, important information about the country could be extracted without our knowledge. It is worth reiterating that we cannot be too arrogant about knowing what information is sensitive and what is not.

As we enter the age of the internet, our data and the strength of our infrastructure become more valuable and at even greater risk. There is no room to open up the operating strands of the country to national security risks. Doing so confers unnecessary risk on the state.

Let me take the Minister’s mind back to the speech from his hon. Friend the hon. Member for Rutland and Melton (Alicia Kearns). He can look at some of the points she highlighted if he doubts the severity and importance of the issue. She made a powerful case, and the test for what constitutes a national security threat should be strong, as it is in the Bill.

Clause 29 provides that suppliers may be excluded on those grounds only with the express permission of a Minister. It is right to have that test in the Bill, as no one wants contracting authorities making decisions on such important matters. However, it makes no sense for there to be such a high-level test in the Bill if no high-level response comes with it. It also makes no logical sense to the path of decision making in the Bill. It also makes no logical sense for the path of decision making in the Bill. If the matter is so important that the decision to exclude cannot be left to authorities, why do contracting authorities have discretion to decide whether to disregard a tender? Surely at the very least the decision to disregard a tender should also be taken at Secretary of State level. Under the Bill, even when the Secretary of State decides to place a supplier that is deemed to be a national security threat on the debarment list, contracting authorities still have discretion over whether to award the contract.

It does not take much imagination to see that an under-resourced contracting authority might decide that national security issues were not relevant to a small contract, and that could inadvertently open a door to sensitive information being shared. We are clear that there are no circumstances where a national security threat should be awarded a Government contract.

There is an unacceptable and unknown threat associated with having suppliers that are considered a national threat in our procurement system. I welcome the positive Government amendments that go in the direction of acknowledging that; the Bill is a step forward on national security. However, amendments 15 to 19 are the only way to close the loopholes in our procurement system.

In the Select Committee, the hon. Member for Rutland and Melton said that

“we must ensure we do not end up in a relentless whack-a-mole trying to hunt down the companies responsible for such things. We need to focus on the components within sensitive industries or sensitive items, and to ensure that any public body procuring such components or companies within relevant industries must come to someone for a second review. That means we are not attacking a specific country and saying China’s products are bad or saying that certain companies are awful; we are doing due diligence in sensitive areas. That is why we need a SAGE-style committee on public procurement specifically looking at national security.”

We completely agree with that sentiment. New clause 1 is an attempt to bring to life that committee in the style of the Scientific Advisory Group for Emergencies. As I said on amendment 11 to clause 13, there are a multitude of examples from the past decade of procurement giving rise to national security concerns, the latest of them involving SIM cards being found in ministerial cars; I mentioned that earlier. We are seeing the same questions arise throughout our debates. What damage has already been done? How much will it cost to repair? How did we not spot this earlier? These are all good questions. Without fail, the answer to all those questions is that the cost and damage is far greater than if we had acted earlier and prevented concerns from arising.

I hope the Minister will agree that new clause 1 aims for a cultural change in national security and procurement. We cannot afford to be reactive when it comes to national security threats. The sooner we act, the less valuable information we lose, and the less risk we are at from the threats that we identify. The SAGE-style committee could consider whether a supplier could be excluded on national security grounds. It could also consider wider threats across the supply chain. In his closing remarks on amendment 11, the Minister said:

“National security is, of course, of paramount importance.”––[Official Report, Procurement Public Bill Committee, 31 January 2023; c. 63.]

That being so, I hope that he will support new clause 1.

Clause 29 adds provisions relating to exclusion on national security grounds; it ensures that the grounds for exclusion are verified by the Secretary of State. Declaring that a supplier is a threat to national security is serious, and it is right that there be scrutiny in the system to ensure that contracting authorities do not do it lightly, or without due care. I hope the Minister can inform me how that will interact with the debarment test that he mentioned. Given the scrutiny and certification that is needed if a supplier is to be disregarded on the grounds that they are a national security threat, it is logical that the great bulk of those suppliers will end up on the debarment list. Can the Minister confirm whether that is the case? If it is not, what circumstances relating to national security would lead to a supplier not being added to the debarment list?

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[Alex Burghart]

Clause 30 requires contracting authorities to exclude suppliers that have gained an unavoidable, unfair advantage in a procurement as a result of improper behaviour in relation to that procurement, and suppliers that have failed to provide an accurate and complete list of connected persons and associated persons when requested to by the contracting authority.

Subsections (1) and (2) are clear that exclusion as a response to improper behaviour, defined in subsection (4), is a last resort. It is to be used only where the supplier has gained an unfair advantage that cannot be remedied other than by exclusion. Subsection (3) requires contracting authorities to give suppliers the opportunity to remedy their improper behaviour. When suppliers seek to tilt the playing field in their favour via mis-representation or undue influence, and fail to remedy that, it makes fair and open competition for contracts impossible, and it is taxpayers who pay the price.

Transparency is another essential component of fair procurement, so subsections (5) and (6) are clear that suppliers that are not prepared to disclose full and accurate details of their connected persons, including beneficial owners and directors, or associated persons—for example, subcontractors that are relied on to meet conditions for participation in the procurement—are not fit to bid for public contracts. Contracting authorities must know who owns or has control over the suppliers with which they are contracting. The clause will support them in gaining that knowledge.

[Florence Eshalomi]

As the Minister has highlighted, clause 30 concerns the exclusion of suppliers who behave improperly during the procurement process. It is important that we do not tolerate improper behaviour in procurement. Many procurement contracts are public-facing and require a huge amount of trust, because the suppliers represent the contracting authority to the public. If there is evidence of misleading and improper behaviour that betrays a lack of integrity during the procurement process, it will raise doubts about whether such behaviour may flow through into how the company carries out the contract. Critical goods are procured via these processes, which are vital to the way our country functions, and we cannot let those who embellish their evidence during the tendering process have access to our supply chains.

The Opposition support the clause, but I have a few questions about how it will work. What steps will be taken to establish improper behaviour during the tendering process? What steps can be taken if information comes to light after the award of a contract? It is crucial that improper influence does not permeate into our procurement system; the measures in the Bill can prevent that, but there also needs to be transparency in the system so that we can spot things like undue influence and prevent improper behaviour from falling through the cracks. What steps is the Minister taking to ensure that undue influence, both formal and informal, is spotted during the procurement process?

I must also ask what consistent remedy is available to contracting authorities that find out about breaches following the award of a contract. Let me take hon. Members back to the covid-19 scandal, when billions of pounds-worth of unsellable personal protective equipment was written off. I know that that was not all due to fraudulent behaviour from suppliers, and that some fraudulent behaviour would not fall under the clause if a competitive tender were used. However, it is shocking that the Government admitted on 20 December 2022, in answer to a parliamentary question, that only £18 million of taxpayers’ money had been clawed back from PPE contracts.

There needs to be stronger clawback and remedies when suppliers act improperly. Perhaps that is a matter of culture more than legislation, as many contracts include such a clause, but it would still be helpful to hear what the Minister thinks needs to be done to ensure that more public money is clawed back from those who act improperly.

[Alex Burghart]

In answer to the hon. Lady’s final point, the Government are absolutely seeking to recover public money. The Department of Health and Social Care has been in a process of mediation, but obviously there will come a point at which mediation may need to lead to litigation. Contracts have been drawn up in a way that ensures that we can do the right thing by taxpayers.

On the hon. Lady’s earlier point, I can reassure her that we will publish guidance to support contracting authorities in this area, so that they can conduct due diligence on suppliers and their connected persons.

Question put and agreed to.

Clause 30 accordingly ordered to stand part of the Bill.

Clause 31

Modifying a section 19 procurement

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

There will be times when changes need to be made to the terms of a procurement. Clause 31 sets the scope for such modifications, with the intention of striking a balance between permitting changes required by contracting authorities and preventing abuse of that flexibility, for example to suit a particular supplier. Modifications are allowed in all procedures, but—with the exception of light-touch contracts, which have greater flexibility—they must be confined to non-substantial changes. In essence, that prevents a change that would be likely to impact the market response to the procurement.

Where a permitted modification is made, the contracting authorities must, in consequence, consider revising the time given to suppliers to respond to the invitation to tender or request to participate. The making of modifications will also be transparent, as the contracting authority must provide revised documentation that highlights the changes.

[Florence Eshalomi]

Clause 31 relates to the modification of a section 19 procurement prior to the deadline for submitting a request to participate in the procedure, where there has been no invitation to submit such requests. This sensible clause has proportionate provisions relating to the alteration of contracts. It is right that contracting authorities should be able to modify terms early in the process and carry out later alterations where they are not substantial, or relate to light-touch contracts.

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[Alex Burghart]

Amendments 32 and 33 seek to ensure that the provision is applied widely and as intended, so as to support disabled or disadvantaged people who might otherwise struggle to find employment effectively. Many of the organisations that wish to provide that assistance through the delivery of public contracts do so via arrangements commonly referred to as “employment programmes”, which can be established by one organisation or a number of organisations working together. We need to ensure that those programmes can qualify for a reserved contract. Amendments 32 and 33 therefore seek to clarify that the 30% threshold for disabled or disadvantaged workers can be applied to the programme or part of an organisation, and not just to the organisation as a whole. Where a programme is established as a result of organisations working together, each organisation can contribute to the 30% threshold.

The amendments also seek to clarify that, in order to qualify, an organisation does not necessarily need to have been set up with the sole purpose of assisting disabled or disadvantaged people in employment, but the part of the organisation interested in delivering the contract must have that purpose. This may be a subsidiary or a specific project within an organisation. Where it is applied to a programme made up of a number of organisations working together, the purpose applies to the programme.

Clause 32 allows procurements to be reserved for organisations that provide employment and/or assistance in finding and retaining employment for disabled or disadvantaged people, allowing public procurement to support organisations that assist people who might otherwise struggle to access the labour market, while delivering public services to a high standard. Such companies are often not for profit and will therefore benefit from a more level playing field when competing for a reserved procurement than might otherwise be the case. In order to qualify, the organisation, or an arrangement between organisations, must have the aim of assisting disabled or otherwise disadvantaged people in employment, and at least 30% of the workforce must be disabled or otherwise disadvantaged.

[Florence Eshalomi]

I thank the Minister for his explanation of amendments 32 and 33. We support the use of supported employers and believe that they could go even further, as I will argue in relation to our amendments 92 to 94, but I will first touch on amendments 32 and 33.

We are concerned that Government amendments 32 and 33 expand the definition of supported employment provider so that it would apply where the part of the organisation delivering the contract would meet the relevant thresholds, which could potentially allow for a further watering down of the requirements. Has the Minister considered the potential of the amendments to limit the effectiveness of supported employment by allowing more providers that are not focused on the needs of disabled people to access reserved contracts, or even the potential for larger contractors to game the system? We do not intend to push the amendments to a vote, but I would welcome clarity from the Government and I hope that the Minister’s response will satisfy me. We reserve our right on that.

On amendments 92 to 94, supported employment is a long-established practice and plays an important role in increasing employment opportunities for disabled people. The principle of reserving contracts so that only supported employment providers can bid for them is welcome. However, there are concerns that the Bill does not set a sufficiently high bar for an organisation to be a supported employer, dilutes the aims of reserving contracts and potentially opens the system to abuse.

The Public Contracts Regulations 2006 required 50% of employees to be disabled people, which provided a greater focus on the specific aim of supporting the employment of disabled people. Clause 32 instead enshrines the weaker standard defined in the Public Contracts Regulations 2015, which require only 30% of workers to be disabled or disadvantaged. That potentially limits the impact of supported employment in providing employment opportunities for disabled people.

Concerns have been raised that that approach does not fully recognise the importance of deaf and disabled people’s organisations, or DDPOs, which not only provide supported employment but have a wider role in society. There are clear links between the work of DDPOs and social value. DDPOs protect and uphold disabled people’s rights, campaign for equality and inclusion, and provide a range of peer-led accessible services. Their services support disabled people in accessing services and entitlements, challenging discrimination and exclusion, and having choice, control and independence.

Amendments 92 to 94 would return to the broad definition of a supported employment provider set out in the Public Contracts Regulations by requiring 50% of employees to be disabled and placing a greater emphasis on the role of DDPOs. Inclusion London, a membership body for DDPOs in London, defines a DDPO as an organisation the management committee or board of trustees of which has at least 75% representation from deaf and disabled people, the staff of which is made up of at least 50% deaf and disabled people at all levels of the organisation, and that works to provide services for or works on behalf of deaf and disabled people.

Amendments 92 and 93 would remove “disadvantaged” from the definition. Disability is clearly defined in the Equality Act 2010, which provides a more robust definition that would ensure that the aim of reserving contracts is effectively targeted at the right providers. Did the Government consider the merits of the 2006 definition in preparing the Bill, and did the Government assess whether that definition more effectively targeted the measure of reserving contracts? Will the Minister consider engaging with DDPOs to ensure that the benefits of those organisations are considered in implementing the Bill?

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[Alex Burghart]

Clause 33 operates similarly to clause 32, but allows only specific procurements to be reserved for organisations that have spun out of the public sector to provide social services, with company decisions managed by company employees. Those companies are known as public service mutuals.

Public service mutuals play a vital role in supporting communities at a local level, delivering essential services and contributing to economic growth. However, they may struggle to compete with larger or more well-established suppliers, and it is therefore appropriate that we encourage these public service mutuals by enabling competition in certain limited circumstances among only those organisations that meet the requirements of this clause.

Subsection (6) provides a full definition of a public service mutual body for the purposes of applying this clause. For example, in order to qualify, the company must be run on a not-for-profit basis or restrict the distribution of profits to its members. The exact list of services that can be reserved under clause 33 will be provided in secondary legislation under subsection (8). All reservable services are also light-touch services; examples include adult educational services and rehabilitation services.

[Florence Eshalomi]

As the Minister has mentioned, clause 33 gives contract authorities the ability to reserve certain light-touch contracts for public service mutuals. I am pleased to discuss this matter; as a very proud Labour and Co-operative MP, I am happy to have another opportunity to talk about how fabulous co-operatives are and how they can benefit the public sector. It is fair to say that the Minister and I agree that public service mutuals have so much to offer in terms of innovation and how they can help the wider public sector. The running of services by people rooted in their community helps to bring an understanding of local needs to the heart of public service mutuals, and they can also improve both employee morale and the quality of services for users.

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[Alex Burghart]

This substantial grouping of clauses is of considerable importance to the Bill.

Clause 34 relates to the awarding of contracts under the new concept of a dynamic market. This is a highly flexible commercial tool. Dynamic markets are established by contracting authorities and essentially are “live” lists of suppliers that are pre-qualified to deliver certain types of contracts.

Dynamic markets are similar to existing dynamic purchasing systems, in that they will allow for suppliers to be admitted to the market if they meet the conditions of membership. To maximise the benefits of this flexible purchasing tool, we have significantly broadened the type of contracts that can be awarded in dynamic markets. Dynamic markets will be available for all types of procurement and not just for commonly used goods and services, as was the case for dynamic purchasing systems.

Clause 34 is the first in a series of clauses relating to dynamic markets. It allows a contracting authority that has established a dynamic market to award contracts under the market by undertaking a competitive flexible procedure. The use of a dynamic market does not avoid the need to comply with the usual rules for a competitive flexible procedure under clause 20.

Subsection (1) allows contracting authorities to restrict procurements to suppliers that are members of a dynamic market or a part of the market, for example if the dynamic market comprises categories of works or services. A supplier will be a member of a dynamic market if the market allows for the award of the contract in question by that contracting authority and the supplier has been admitted to the market. Subsection (3) requires contracting authorities to disregard tenders from suppliers that are not members of the dynamic market.

Dynamic markets are open to new suppliers to join at any time, as long as they meet the conditions for membership, which is a substantial improvement on the way things have been done up to this point. For that reason, subsection (4) requires contracting authorities to consider membership applications from non-member suppliers before excluding them from the procedure or disregarding their tenders. Subsection (5) says that the only exception to that is where, due to the complexity of the procurement, the application for membership cannot be considered in the timescales set out by the contracting authority for requests to participate or tenders.

Clause 35 sets out how dynamic markets, including utilities dynamic markets, may be established. It allows contracting authorities to establish arrangements known as dynamic markets, which are essentially live lists of suppliers that are pre-qualified to deliver certain types of contracts for the purpose of contracting authorities awarding contracts to suppliers that are members of the dynamic market.

Subsection (2) defines a utilities dynamic market, which is a particular type of dynamic market for the award of utilities contracts by utilities. Subsection (3) allows utilities to award utilities contracts under a utilities dynamic market established by any person, as long as the market has been established in accordance with the rules applicable to utilities dynamic markets as established by private utilities.

Subsection (4) defines a utility as a public authority or public undertaking that carries out a utility activity or a private utility. Utility activities are set out in schedule 4; private utilities are defined in clause 2. Subsection (5) states that the establishment or modification of a dynamic market is not a contract for the purpose of the Bill, making it clear that all the rules on the award of contracts do not apply.

Clause 36 sets out the rules on how suppliers can become members of dynamic markets, including utilities dynamic markets. Subsection (1) allows contracting authorities to set conditions of membership that suppliers must meet in order to be admitted to a dynamic market. The conditions of membership must be a proportionate way of assessing suppliers’ legal and financial capacity and technical ability to deliver contracts that might be awarded as part of the arrangement.

Subsection (2) prohibits conditions of membership that require the submission of annual audited accounts by suppliers that are not already required by law to have their annual accounts audited. It also prohibits conditions of membership that require insurances to be in place before the contract is awarded. As hon. Members will be aware, this is a major boon to SMEs that are seeking to get involved.

The restrictions on the conditions of membership of a dynamic market, set out in subsection (3), are similar to those applicable to conditions of participation in a competitive tendering procedure under clause 22. They include limiting conditions to those that are a proportionate means of ensuring suppliers have the relevant qualifications, experience and technical ability to perform the contract, ensuring that the conditions do not break the rules on technical specifications, and requiring that equivalents must be allowed where particular qualifications are required.

Subsection (4) says that when deciding on what is proportionate, the contracting authority must have regard to the types, complexity and cost of contracts that will be awarded through the dynamic market. Subsection (5) ensures that contracting authorities can require evidence that a condition of membership is met to be independently verifiable by a person that is not the supplier.

Subsection (6) ensures that dynamic markets remain open to new suppliers as long as the dynamic market is in operation. Applications for membership must be considered within a reasonable period and suppliers must be informed of the outcome of their application, with reasons. Suppliers that meet the conditions of membership must be admitted to the market in a timely manner. This measure is another great innovation. Where these systems have been in place previously, once the list is set up, it has been closed to new entrants. Now, new entrants will be permitted throughout the operation of the market.

Subsection (7) says that the membership of a dynamic market cannot be limited to specific numbers of suppliers and the conditions of membership cannot be amended during the lifetime of the arrangement.

Clause 37 outlines the rules on removing suppliers from a dynamic market. Any supplier that is on the debarment list for a mandatory exclusion ground must be removed from a dynamic market under subsection (1). It would be entirely inappropriate for suppliers subject to debarment on that basis to remain on a dynamic market.

Subsection (2) allows contracting authorities to remove a supplier from a dynamic market if it is an excluded supplier or has become an excludable supplier, or it is discovered to have been an excludable supplier when it applied for membership. Additionally, if the conditions of membership are no longer met, the supplier may be removed from the dynamic market. That provides contracting authorities with flexibility to manage their dynamic markets as they best see fit. Subsection (4) states that, before being removed from a dynamic market, a supplier must be told in writing of the decision and the reasons why.

Clause 38 sets out when fees can be charged to suppliers that participate in dynamic markets, including utilities dynamic markets. Subsection (1) allows for fees to be charged when a supplier is awarded a contract under a dynamic market—other than a utilities dynamic market, which is addressed separately. That avoids “pay to play” arrangements and ensures that fees are only chargeable if the supplier is awarded work. The fees must be calculated as a fixed percentage of the estimated value of the contract awarded. For utilities dynamic markets, subsection (2) states that fees may be charged in connection with obtaining and maintaining membership of the market.

Clause 39 sets out the transparency requirements for the creation and management of dynamic markets. Subsection (1) states that the notices are referred to as dynamic market notices. Subsection (2) requires contracting authorities to publish a notice before they set up a dynamic market. The notice must detail the authority’s intention to establish the market. A notice is also required, under subsections (3), (4) and (5), once the dynamic market has been established or modified, or when the market ceases to operate. Additional content requirements for the various notices will be set out in secondary legislation under clause 93. Clause 39(6) states that private utilities are not required to issue a notice when a utilities dynamic market ceases to operate.

Clause 40 speeds up procurements and reduces the burden for utilities using a utilities dynamic market, or UDM, by only requiring utilities to provide tender notices for upcoming procurements to suppliers already on a UDM, or appropriate part of a UDM, instead of having to publish the notices. In practice, that means utilities can, for example, provide the tender notice to suppliers on the UDM as part of the associated tender documents as each procurement under the UDM is commenced.

In order to take advantage of that flexibility, the notice setting up the UDM must meet minimum information requirements, which will be set out in regulations under clause 88. Utilities must specify in the UDM notice that only members of the UDM will be provided with tender notices. The notice setting up the UDM will be published continuously and will remain open so that new members may join at any time. If accepted, they would then be entitled to receive future tender notices.

[Florence Eshalomi]

Clauses 34 to 40 relate to dynamic markets. Dynamic markets expand on the existing dynamic purchasing system scheme by allowing such markets to be used for all procurements. That means that a reliable and ready pool of bidders can be gathered, which the contracting authority has verified meets the conditions of participation for the contract. When used correctly, such market innovations help save contracting authorities significant amounts of money and time by requiring early scrutiny only once for similar contracts.

Labour does not oppose the proportionate use of that mechanism. However, we note that those who supplied written evidence to the Committee picked up on some concerns. The Local Government Association, in its submission, outlined concerns about terms that are present in the current system but missing in the Bill:

“Councils use dynamic purchasing systems to effectively deliver a range of services that need to be procured quickly, for example, adult’s and children’s residential social care, apprenticeship training, asbestos removal, cleaning services, home-based care services etc.

In particular, local authorities heavily rely on DPS for school transport procurement, where a significant number of contracts must be let quickly each summer as children are allocated school places. These contracts are straightforward, with pre-approved suppliers typically competing on price. These contracts have no cross-border implications so don’t disadvantage operators in other countries as no operator without a local base is likely to bid.

Regulation 34(12) of the Public Contracts Regulations 2015 states: ‘Sub-central contracting authorities may set the time limit for the receipt of tenders by mutual agreement between the contracting authority and all selected candidates, provided that all selected candidates have the same time to prepare and submit their tenders.’

The Bill no longer allows this, and should therefore be amended to reinstate this important flexibility, to ensure that everything from school transport to social care services can be delivered on time for the individuals who rely upon…them”.

Procurement Bill [ Lords ] (Third sitting)

Florence Eshalomi Excerpts

Committee stage
Thursday 2nd February 2023 Public Bill Committees

[The Chair]

Before we begin, I remind Members that Hansard colleagues would be grateful if they could send their speaking notes via email to hansardnotes@ parliament.uk. Please switch all electronic devices to silent. No tea or coffee is to be consumed during the sitting.

Clause 16

Preliminary market engagement

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

I beg to move amendment 20, in clause 16, page 12, line 35, after “suppliers” insert

“, including small and medium-sized enterprises,”.

This amendment, with Amendment 21, seeks to ensure preliminary engagement explicitly refers to SMEs.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 21, in clause 16, page 12, line 38, after “suppliers” insert

“, including among small and medium-sized enterprises,”.

This amendment, with Amendment 20, seeks to ensure preliminary engagement explicitly refers to SMEs.

Amendment 25, in clause 21, page 16, line 29, at end insert—

“(6A) Subject to subsection (6D), subsection (6B) applies where a tender notice or associated tender document indicates that a public contract is suitable for small and medium-sized enterprises.

(6B) If no small or medium-sized enterprise submits a tender, the contracting authority must withdraw the tender notice, and may not republish the tender notice until it has fulfilled the condition in subsection (6C).

(6C) The condition is that the contracting authority has conducted preliminary market engagement (see section 16) with a view to engaging with suppliers who are small and medium-sized enterprises.

(6D) Subsection (6B) does not apply if the contracting authority can demonstrate that it fulfilled the condition in subsection (6C) before the tender notice was published.”

This amendment would require contracting authorities to engage with small and medium-sized enterprises before describing a contract as suitable for SMEs. The requirement would only apply if no SME submits a tender.

[Florence Eshalomi]

It is a pleasure to serve under your chairship this morning, Mr Efford. Taken together, amendments 20 and 21 would specify that small and medium-sized enterprises should be considered when carrying out preliminary market engagement. These amendments are the first of a number that we have tabled to try to improve the Bill’s support for SMEs, and we are pleased to see the progress made on SMEs in the other place. As I mentioned previously, Labour supports the amendments made in the Lords; we want SMEs to have fair access to public procurement, and the amendments would make a positive impact by including SMEs in the procurement system. Baroness Neville-Rolfe’s amendments in Committee have added a depth of support for SMEs. I believe the Bill will be a step forward even if those amendments are not accepted, but we should not have a poverty of ambition in this place, which is why we want to go further. The Government talk about improving SMEs’ chances when it comes to procurement, but for far too long that has been just talk. We have not seen enough action.

The statistics on SMEs and procurement are truly shocking. Analysis by the Spend Network found that big corporations still win the lion’s share—almost 90%—of contracts, worth £30 billion a year, that are deemed suitable for bids from smaller businesses. Research from the British Chambers of Commerce and Tussell found that over £1 in every £5—around 21%—spent by Government on public sector procurement in 2021 was awarded to small and medium-sized enterprises. The British Chambers of Commerce also found that SMEs are now receiving a relatively smaller amount of reported direct Government procurement spending than they were five years ago. As a proportion of the overall procurement budget, direct spend with SMEs by local government bodies was the highest, at 38%. NHS bodies across England spent 22% of their procurement budgets with SMEs, while the figure for central Government was significantly lower than the average—they awarded only 11% to SMEs.

That point was addressed in written evidence to this Committee. Anthony Booth from Bromford Housing Group stated:

“Please note that many SMEs do not have the capacity, IT capability, resource or knowledge to participate in the proposed single supplier onboarding / contract portals. Housing associations do rely on the use of smaller regional and local suppliers and a more effective and simplified process would be welcome to allow them to participate. The use of email trails and traditional spreadsheet analysis for simple tender exercises would support these instances rather than involving complex procurement systems such as precontract. This would encourage the flexibility in the supply chain that the Bill is…designed for and also allow an improved competitive position in order to achieve VFM which is also a core requirement of the bill.”

I think we would all agree with that. It is the kind of insight that pre-tender engagement could gather and feed into a more efficient procurement system.

Labour does not feel that SMEs are getting their fair share under this Government, and we believe that we must go further. Our amendments 20 and 21 would address some of the problems that SMEs face. By ensuring that they are engaged during the pre-tender market engagement, our amendments would help to break down some of the barriers that SMEs face in accessing procurement. Early engagement is vital. It can help with efficient contract design, to avoid any bias towards big and established firms that know how the system works. It also means that SMEs will feel more involved in the process and have the confidence they need to bid for programmes.

[Kirsty Blackman (Aberdeen North) (SNP)]

The shadow Minister is making a powerful and well-researched case that builds on the case she made in Committee on Tuesday. I do not want to test the Committee’s patience by making a speech on this, but I want to let her know that I am willing to support her amendment should she push it to a vote.

[Florence Eshalomi]

I thank the hon. Member for her support.

At the moment it is clear that SMEs find the process frustrating and time-consuming. In his written evidence to the Committee, Colin Cram, who set up the conference company Open Forum Events Ltd to run conferences to support the delivery of improved public services, outlined his experience of the procurement system for SMEs. He stated:

“Tendering is expensive and time consuming. The way the UK’s public sector operates all too frequently inadvertently discriminates against SMEs, which will include the most innovative of suppliers on which the UK’s economy and future global competitiveness will depend. Many SMEs—which means most businesses in the UK—do not know how to tender properly and they don’t have the time to do so. According to the Federation of Small Businesses, at the end of 2021 there were 5.5 million SMEs employing fewer than 50 people each. Their average turnover was £1.25 million. However, only half were registered for VAT, so most will have a turnover well below that. Many of these will be capable of delivering contracts greater than the thresholds”.

He continued:

“Having to tender for every contract that might interest a small business would prove prohibitively expensive. To illustrate the point, a mid-cap business sought my advice. It was winning just 1 tender in 20 and was thinking of withdrawing from the public sector. I suggested that it should employ 2 full time tenderers. It took my advice, and its win rate went up to 1 in 4—without changing either the products or services that it was providing...To put together the simplest of tenders will cost not less than £1000 if properly costed. So, 4 attempts at tendering for the simplest of contracts would cost £4000 and 20 in order to win at least 1 contract would cost £20,000.”

I am pleased that we have made progress on SMEs, but Labour Members fear that, without more clarity and market engagement, SMEs will still be put off by the cost of applying for contracts that they think they have little chance of getting.

SMEs should not have to employ two full-time tenderers to improve their chances of winning contracts that they know they can do. Pre-tender marketing engagement can help to establish contracts that are more easily digested through the bidding process. We understand that some contracts will not be suitable for SMEs, but early engagement can help in figuring out where that is the case and hopefully open up more contracts to a variety of companies. I thank the hon. Member for Aberdeen North for supporting our amendment, and I hope other Members and the Government will support our amendments 20 and 21.

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

It is a pleasure to serve under your chairmanship, Mr Efford. Amendments 20 and 21 seek to ensure that preliminary market engagement explicitly refers to SMEs.

I thank the hon. Member for Vauxhall for her support of the changes that Baroness Neville-Rolfe made in the House of Lords. We are all committed to improving options and opportunities for small and medium-sized enterprises to take advantage of the substantial amount of public procurement that exists in this country. We fully agree that preliminary engagement is an important part of that. That is why we have included the new duty to have regard to SME participation in the procurement objectives.

The duty will apply in relation to pre-market engagement just as it will cover the whole of the procurement life cycle. Consequently, we do not consider it necessary to clarify in the pre-market engagement clause that the word “suppliers” captures SMEs. It clearly does, and in view of the broad application of the general duty to support SMEs, there is no need for any drafting changes to be made.

To be clear, the new SME duty will lead contracting authorities to consider not only whether they have engaged with SMEs in their preliminary market engagement, but whether their procurement process and timelines are accessible to smaller businesses, supporting them to win and deliver more public contracts. It is nice to hear the hon. Member for Aberdeen North support small and medium-sized enterprises in England—would that the SNP in Scotland had supported the Bill, giving those same opportunities to SMEs in Scotland. I once again extend my invitation to her and the Government at Holyrood to join us on this journey.

--- Later in debate ---

[Alex Burghart]

Certainly not, because I am sure that there would be no need, whereas it was very clear that there was a need in the case to which the hon. Lady refers. She will know that the Government used that constitutional power reluctantly, but very well advisedly.

Amendment 25 would require contracting authorities that have stated in the tender notice that a contract is suitable for small and medium-sized enterprises to, in the event that no SMEs submit a tender, withdraw that tender notice and engage with small and medium-sized enterprises prior to republishing it, unless they can show that such engagement took place prior to the original publication. The Bill supports—indeed, it actively encourages—buyers to conduct preliminary market engagement. We have gone further than existing regulations: clause 17 requires the publication of a preliminary market engagement notice, and clause 12 contains a duty to have regard to reducing barriers facing SMEs. That should lead to increased openness and greater inclusion of SMEs in preliminary market engagement.

However, amendment 25 would add an extra layer of bureaucracy and delay for procurers to manage, and could well frustrate suppliers who have prepared a tender, only for it to be withdrawn if no qualifying bids are received. It is far better for us to increase SME participation in procurement by reducing barriers and highlighting the many benefits they bring to the public sector. I respectfully request that the amendment not be moved.

[Florence Eshalomi]

The Minister has said that there is no need for amendment 25, but it would cover similar grounds to those that we are discussing and would go further, ensuring that SMEs are given access to suitable tenders. When a contracting authority tags a tender as suitable for SMEs, it is only right that due diligence is carried out to ensure that SMEs have the opportunity to come forward. Unfortunately, tagging a contract as suitable for SMEs does not make it particularly accessible to them: it bears repeating that analysis by the Spend Network found that big corporations still win 90% of contracts, which we know are worth over £30 billion.

“Suitable for SMEs” cannot be another buzzword like “affordable housing”—one that does not mean anything to those SMEs that already say they are struggling to win these tenders. Amendment 25 would help to address that. If a contracting authority thinks that a contract is suitable for SMEs, it should be doing the work to engage those SMEs, ensuring that that contract is truly suitable. Under our amendment, contracting authorities would not have to go through that unnecessary bureaucracy. They will have had to engage with SMEs prior to offering the contract, but if none came forward, that would not hinder the contracting authority’s ability to award it. The purpose of the amendment is to help small businesses. Again, I hope the Minister will consider it carefully and support it.

[The Chair]

Minister, I realise you have given your response, but do you have anything to add?

--- Later in debate ---

[Alex Burghart]

Clause 16 covers preliminary market engagement and is followed by clause 17, which includes provisions on related notice requirements. We want to promote and encourage contracting authorities to conduct preliminary market engagement. The information gathered during this stage can be invaluable for the authority as it clarifies its requirements, assesses the market’s capacity and develops its procurement strategy. This is even more important in the new regime, within which contracting authorities are given more flexibility to design their own competitions that are tailored and fit for purpose.

Clause 17 makes provision for contracting authorities to publish a preliminary market engagement notice prior to publishing a tender notice. The purpose of this preliminary market engagement notice is to advertise the fact that the contracting authority intends to conduct or has conducted preliminary market engagement. It is another great example of there being greater transparency and greater opportunities both for suppliers and authorities as a result of this Bill.

[Florence Eshalomi]

As the Minister outlined, clause 16 gives local authorities the power to undertake pre-market engagement. Although it may be expedient for there not to be pre-market engagement in relation to a number of contracts, particularly small contracts or contracts that are pretty standard for the market, it is entirely sensible for there to be such engagement when an authority is dealing with novel markets or markets where there is innovation. Pre-market engagement can be a powerful tool to help contracting authorities to understand the nature of their contract, what terms are fair in a contract and the nature of the market in relation to a particular piece of work. When it is done correctly, it can also help businesses to get a sense of whether they should put in for particular tenders.

Of course, it is right that any company that receives an unfair advantage in preliminary market engagement is not included in the contract, and we support this addition to the clause. However, I will ask the Minister a couple of questions about this clause that are in a similar vein to the questions I asked during the stand part debate on clause 15.

How often can we expect contracting authorities to undergo preliminary market engagement? As I have said previously, I understand why it is impractical to carry out such engagement on every above-threshold contract. However, it is important that there is some level of consistent practice in the system. In addition, although I also understand the need for flexibility among contracting authorities, I know that businesses want certainty and some certainty can come from knowing that different authorities will follow a similar level of preliminary market engagement as standard.

However, I also have concerns about the burden that this process may place on already stretched procurement departments, a concern I have already raised in earlier debates. The written evidence this Committee received from John Lichnerowicz is telling. He says:

“In my experience Procurement Departments particularly those containing CIPS qualified professionals are extremely overstretched and a bottleneck to public sector organisations being able to deliver their services.”

So it is easy to envision that this clause, as well as lacking clear mandates for local authorities to carry out pre-market engagement, will also mean that stretched procurement departments will not have the resources to carry out such engagement.

If pre-market engagement is done proportionally, it could save the taxpayer a small fortune. Will the Minister be issuing clear instructions as to when he intends such engagement to take place?

Many forms of pre-market engagement will involve consideration of contracts that are already being carried out for other contracting authorities. Although every contract will have some bespoke elements, this does not mean that what we learn from one engagement round in one place has no relevance to similar engagement rounds or similar contracts in other places. Will the Minister confirm that information from pre-market engagement will be shareable across contracting authorities and indeed that sharing such data should be relatively common where it is possible to share it?

Regarding subsections (3), (4) and (5) of clause 16, can the Minister say what the threshold for an unfair advantage would be? Of course we cannot have suppliers writing contracts, but engagement will necessarily expose suppliers to some level of information about the planned tender. At what level will such activity be considered to constitute an unfair advantage? Will guidance be issued to decision makers about this matter?

Finally, on clause 17 will the Minister confirm that efforts will be taken to ensure that such notices are received as widely as possible? Again, we all know it is important that small and medium-sized enterprises, charities and social enterprises are made aware of these notices and can then take part in preliminary market engagement if we are to have a true picture of the market. What steps will be taken to ensure that it is not just those who have keen eyes on contracting authorities who engage with them?

[Alex Burghart]

Let me take the hon. Lady’s questions in turn. Effective preliminary market engagement is a great tool to improve procurement. It will improve contracting authorities’ ability to act as an intelligent customer—that very much came out in the engagement work we did in the construction of the Bill—because it benefits suppliers, as the potential customer understands the market’s capability, is exposed to industry best practice and learns of potential innovative solutions being designed or tested. That will lead to more effective and efficient procurement by reducing the burdens on suppliers during the competition, avoiding the customer considering an unrealistic bid and improving the drafting of contract terms. We will not dictate to authorities when to undertake preliminary market engagement—we think it is better that that is their decision—but we are obviously encouraging them to do so. Of course, as the hon. Lady will know from other discussions we have had, transparency runs throughout the Bill. Sharing the outputs from such engagements will be possible and essentially a great thing.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

Clause 17 ordered to stand part of the Bill.

Clause 18

Duty to consider lots

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Alex Burghart]

The clause requires the contracting authority, before advertising the opportunity, to consider whether the contract can be split into smaller chunks, or lots. That may be the right thing to do for a number of reasons. It could reduce supply risk by having numerous suppliers, or encourage smaller organisations to bid by making the opportunity more accessible and manageable—for example, breaking a large facilities management contract into regional contracts that local companies can deliver. Because that is important to provide opportunity, particularly for SMEs, clause 18(2) requires contracting authorities to either

“arrange for the award of…contracts by reference to lots”

or

“provide reasons for not doing so.”

[Florence Eshalomi]

As the Minister outlines, the clause obliges authorities to divide larger contracts into smaller lots where that is appropriate for the contract. That is a useful and necessary power, and it is one that we hope SMEs will welcome. Breaking down contracts is a good way of making them more accessible for smaller companies. I mentioned the evidence from John Lichnerowicz, who said that it can be difficult for all but larger suppliers to take on bigger contracts that are not broken down. His written submission states that

“overstretched Procurement Departments would lump requirements into a single large procurement which would go to only the biggest companies in their field who would then have the freedom to pick their favourite sub-contractors effectively eliminating the contribution of equally capable sub-contractors and adding a main contractor’s margin into the sub-contractor’s costs for little benefit”.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

In a number of contracts awarded recently by my council, the overall contractor ended up subcontracting people who had made separate individual bids but did not have the capacity to take on the bigger contract and therefore were not awarded it on that basis. Having big contracts is just a way of diverting money away from the taxpayer and into shareholders’ pockets, is it not?

[Florence Eshalomi]

I thank my hon. Friend for that valuable point. What we want for SMEs, and what SMEs tell us they want, is fair access to Government contracts—public money that should be going back into local communities up and down the country. Unless we ensure that larger contracts can be broken up into smaller lots and awarded directly to smaller companies, there will be a repeat of what we see with those big contracts. No one wants those same practices to be employed all over the country. I want the Minister to stress what oversight will be put in place to ensure that the important provisions in the clause are carried out and to ensure that all our SMEs truly benefit from public contracts.

--- Later in debate ---

[Kirsty Blackman]

The hon. Gentleman is absolutely right that there is an issue with that, because the national living wage is set differently for apprentices. He is correct that the Living Wage Foundation’s rules on apprenticeships are different. I do not have the figures on whether the wages of our apprentices have risen as a result of the changes that have been made. However, I am sure that the fair work procedures and the rules around that—the inability to fire and rehire, for example—are applicable to apprentices and ensure that they have a higher level of protection than they did previously. In exactly the same way, we have greater requirements with respect to flexible working requests.

Although I cannot give the hon. Gentleman the exact details on figures and wages, I can say that working conditions are, as standard, better as a result. I am sure that many people who were putting procurement contracts out to tender required the real living wage and great working conditions. The amendments would mandate that, so that it is set in stone and everyone is brought up to that minimum standard, although some will well exceed that.

[Florence Eshalomi]

I thank my hon. Friend the Member for Brighton, Kemptown and the hon. Member for Aberdeen North for their remarks. The amendments are important because so many people are having to take the difficult decision to take strike action as their wages cannot sustain them. We are seeing situations where people are unable to feed their children and heat their properties. People who work in our core public services are relying on food banks. Instead of demonising those people, we as politicians, and the Government, should be looking at how we can help them.

I am proud to be a member of GMB and Unison. We should remember that trade union members are ordinary people. They pay their union subs, yet they are losing a day’s pay by going on strike to show the Government that their wages cannot sustain them. People are effectively on poverty wages. During this cost of living crisis, it is important that we listen to their valid concerns.

We see a number of employers still not doing the right thing by recognising the issues that their employees are going through, while still making millions of pounds in profits. As I said in my remarks on amendment 107, Labour is committed to delivering fair treatment for all workers, and that must include fair pay and conditions, workplace wellbeing and the development of workers’ skills. We believe that procurement offers a great opportunity to increase social value. Our later amendments will make it clear that we do not want to see those who are breaching the rights of their workers awarded public contracts.

Our ambitions on the minimum wage should not be limited to workers in procurement. Instead, Labour believes we should increase the minimum wage for everyone across the economy. An incoming Labour Government would want to ensure that everyone across the economy is paid a fair day’s wage. We would instruct the Low Pay Commission to factor in living costs when it sets the minimum wage, ensuring that it covers the cost of living.

The cost of living continues to increase for many people and, as inflation continues to rise, their salaries are not keeping pace. These measures would put hundreds of pounds into the pockets of the lowest-paid workers. We would also scrap the low pay category for workers aged 18 and 19.

[Alex Burghart]

Amendments 95 to 99, tabled by the hon. Member for Leeds East, would place legal requirements on contracting authorities in respect of the Resolution Foundation’s real living wage in their procurements. That would ensure that no public contract could be awarded unless the supplier guaranteed the payment of the real living wage to all those involved in the delivery of the contract, including subcontractors.

While the principle behind the amendments is admirable, the Government cannot support them. It is imperative that all contracts are awarded on the basis of the best value for money for the taxpayer and that staff employed on the delivery of public contracts are paid fairly, in line with existing legal requirements. But using procurement rules to compel private sector employers to pay their workers beyond minimum legal requirements would be disproportionate.

The hon. Member for Brighton, Kemptown talked about a floor. There is a floor: for this Government, it is the national minimum wage, or the national living wage for workers over 23. He also mentioned insourcing. Obviously, procuring authorities are completely at liberty to insource if they so wish, and the Bill does nothing to prevent that. If procuring authorities feel that they can get better services, a better deal or better conditions by insourcing, they are entirely at liberty to do so.

I should also let hon. Members know that when constructing a contract, a procuring authority can stipulate pay and conditions as part of that contract. Procuring authorities have big levers at their disposal.

--- Later in debate ---

[Alex Burghart]

We tabled amendments 30 and 31 to ensure that contracting authorities can assess and disregard abnormally low tenders where the supplier cannot demonstrate to the buyer’s satisfaction that it will be able to perform the contract for the proposed price. We are committed to delivering value for money and the amendments will provide helpful safeguards against suppliers that seek to undercut the competition with unrealistic tenders.

[Florence Eshalomi]

While our response to amendments 30 and 31 is lukewarm, we think that they are important. We want all contracting authorities to consider value for money for the taxpayer when making procurement decisions, but there is a substantial risk of accepting below-value tenders for bids. Procurement has to be sustainable, and we know too well the risks when we get that wrong.

When considering the Bill, we must all remember 15 January 2018 and the collapse of Carillion. When it went into liquidation, it employed 42,000 people, including nearly 20,000 people in the UK. It also had a liability of £2 billion to some 30,000 suppliers and subcontractors, some of which sadly fell into insolvency themselves as a result of the collapse. While there are excludable grounds relating to poor procurement practices set out in later clauses of the Bill, I do feel that these amendments provide another check against the reckless behaviour of companies such as Carillion.

In 2018, following the collapse of Carillion, the then Chair of the Public Administration and Constitutional Affairs Committee, the hon. Member for Harwich and North Essex (Sir Bernard Jenkin), said:

“It is staggering that the Government has attempted to push risks that it does not understand onto contractors, and has so misunderstood its costs. It has accepted bids below what it costs to provide the service, so that the contract has had to be renegotiated. The Carillion crisis itself was well-managed, but it could happen again unless lessons are learned about risk and contract management and the strengths and weaknesses of the sector.”

[Lloyd Russell-Moyle]

To some extent, has that not already happened again on the east coast franchise? Twice, unrealistic bids have been accepted and then collapsed, requiring the Government step in. It is not unusual for that to happen, so the amendments are good but probably not strong enough.

[Florence Eshalomi]

I thank my hon. Friend for highlighting that those lessons do not seem to have been learned.

The hon. Member for Harwich and North Essex went on to say:

“Public trust requires that outsourcing better reflects public service values. The Government must use this moment as an opportunity to learn how to effectively manage its contracts and relationship with the market.”

The amendments will not fully solve the problems associated with Carillion, or the problem just mentioned by my hon. Friend the Member for Brighton, Kemptown, and a culture shift in procurement should have taken place following the collapse of Carillion. However, they do provide a safeguard for authorities to use against abnormally low and unsustainable bids.

Finally, will the Minister outline the wider impact of changing “most economically advantageous tender” to “most advantageous tender”?

[The Chair]

Minister, do you wish to respond?

--- Later in debate ---

[Florence Eshalomi]

The clause contains a small change, which could have significant ramifications, but it is one that we support. Moving from “most economically advantageous tender” to “most advantageous tender” can make a significant difference to the reality of how contracts are awarded. Throughout this process, we have heard of many people who apply for contracts, and have a lot to offer, but fail the most economically advantageous tender test. The new wording gives them a fighting chance at winning contracts.

Charities may also benefit from that. However, the National Council for Voluntary Organisations is cautious about the power of the new term. I hope the Minister is aware of some of the concerns that it raised. It says, in its submission that

“this alone will not have the desired effect. This was already possible under current regulations and guidance, as contracting authorities are meant to account for the wider benefits of any bid, but in reality, it has rarely been applied, with decisions continuing to be dominated by lowest unit costs.

The change in language to assessing for the MAT will not be sufficient to change practice and culture. Further clarity and expectations are needed so that assessing the MAT includes placing more emphasis on the importance of social value and recognising the different ways this can be delivered.”

I think it is important to get clarity on how this will be applied. With the right instruction, this new rule can open up how authorities judge applications, but if the Government get it wrong, it could lead to confusion and be little better than the status quo.

It is worth considering the advice from Colin Cram, which I mentioned earlier. He said that it costs £1,000 for all the effort that goes into that tender, so SMEs need to know how much things such as the social value will matter in this new test, and whether it is worth them tendering for contracts. Everyone needs clarity to help them to understand that, and to make economic decisions about how to bid. I would therefore welcome a firm commitment from the Minister and the Government on how we could plan for clarity on that term, and a timetable on how that will be published widely to SMEs.

[Alex Burghart]

I am very pleased to hear the Opposition’s support for this clause and for our significant shift from MEAT to MAT—from most economically advantageous tender to most advantageous tender. That framing sends a very clear signal to contracting authorities to take a broader view, beyond price, of what can be included in the evaluation of tenders—wider social and environmental considerations, for example. We think that the clause will make a significant difference and that, partnered with the national procurement policy statement—NPPS—it will open the way for new thinking about public procurement. I commend it to the Committee.

Question put and agreed to.

Clause 19, as amended, accordingly ordered to stand part of the Bill.

Clause 20

Competitive tendering procedures

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

A key proposal in the Green Paper was simplification of the existing procurement procedures in the public contracts regulations, and clause 20 is the enactment of that proposal. It sets out how competitive tendering procedures should be run. The first option is an “open procedure”. That is a single-stage procedure whereby any supplier can submit a tender in response to the tender notice. The second option is a “competitive flexible procedure”. That will allow contracting authorities to design the procedure that works best for their procurement, allowing them to engage with suppliers, negotiate, and undertake numerous phases such as for research and development and prototype delivery. Once determined, that procedure will be set out in the tender notice and associated documents.

[Florence Eshalomi]

This clause is an important one. Again, it relates to the competitive tendering process. Although the mechanisms of these procedures are an incredibly important element of the Bill, many aspects of the procedure are addressed later in the Bill. Those are also referenced in the latter part of this clause. I will cover that later, but I do want to address some aspects of the clause now.

It is welcome that we are seeing a two-stranded procedure system in the Bill. We are aware that some contracts will attract very few bids and are suited to a single-stage tendering process. We are also aware that some tenders will attract many bidders and it is necessary to have a multi-round process to come to a conclusion as to who the best bidder is. Although this provision is welcome, there is discontent from some stakeholders about how the bidding processes will work in practice.

In written evidence, which we all received the other day, Zurich Insurance stated:

“As currently set out, it appears the ‘Competitive Flexible Procedure’ could be the most suitable approach for the Risk and Insurance services. However, it would be useful if more detail on how each of these procedures will operate could be provided within the Bill.”

I therefore have some questions regarding the nature of the multi-round process and how it will work in practice. First, how much effort will be required from contractors at an early stage of the competitive flexible procedure, before putting in a bid? Earlier I referenced and highlighted the evidence from Colin Cram, and we have also heard from him that the cost of putting in a tender can, for some small businesses, be in four figures. For contracts that could attract a large number of bidders—for example, a relatively small contract that can be carried out anywhere—that would mean that many bidders would in effect be entering a really expensive lottery with little chance of winning with their bid. That is particularly off-putting for SMEs, which do not want to spend a significant amount of their budget bidding for these contracts. Mr Cram, who supports the current system of restricted procedure, says that although that system is not perfect, it is much better than what is proposed. He says that the current system

“has a formal and very simple, easily understood and low cost approach to shortlisting businesses/organisations before asking them to tender. Typically, this might result in just 4 being invited to tender. That gives each one a decent, though still expensive, chance of winning.”

We all know that the new system will have advantages over the old, restricted procedure, but I hope that the Minister can address some of the concerns and outline how the new system will not be expensive for SMEs.

--- Later in debate ---

[Alex Burghart]

The clause describes the requirement for contracting authorities to publish a tender notice in order to advertise and commence a competitive procedure. A tender notice may act as an invitation to submit a tender for the contract under the open procedure, or an invitation to suppliers to submit a request to participate in a multi-stage tender process under the competitive flexible procedure. In either case it must be published on the central platform, the publishing location for all notices required throughout the procurement cycle.

The central digital platform will contain public sector procurement information, allowing the citizen to understand the authorities’ procurement policies and decisions and to see how much money the Government, local authorities and the NHS spend on purchasing essential goods and services, and who is really benefiting from the public purse. Contracting authorities will also be required to provide any relevant associated tender documents, which will provide further details of the procurement. Transparency runs through the Bill like sunlight.

The Bill gives contracting authorities significant freedom to choose a procedure that will best deliver their requirement, but they must set out the process to be followed at the outset. While there is some limited ability to modify those—as we will see in clause 31 —contracting authorities must follow the processes set out in their tender notices or associated tender documents, and failure to do so will leave them at risk of challenge. Further details on the contents of the tender notice and associated tender documents await us in clause 93.

[Florence Eshalomi]

As the Minister said, the clause pertains to tender notices and all the associated documents. It is crucial to get this right. We cannot just expect measures to be in the Bill—they have to be in there.

The existing Contracts Finder function is the central functioning database for companies to find public contracts that are open for tender. With the Bill, the Government have talked about a new digital platform that will go much further than Contracts Finder, making the finding of contracts even easier. I wish the Government well in that goal, and it is important for a number of reasons.

--- Later in debate ---

[Alex Burghart]

Clause 22 enables contracting authorities to set conditions on suppliers’ participation in a procurement process. They are the conditions that a supplier must satisfy to be awarded a public contract. The current regime has often described these as the selection criteria. Conditions of participation must relate only to the legal and financial capacity and the technical ability to fulfil the requirements of the contract. Any conditions of participation set for those purposes must also be proportionate to the nature, complexity and cost of the public contract. That means the conditions should not be unnecessarily onerous for the supplier. A contracting authority can include qualifications, experience or technical ability but, to ensure fair treatment of suppliers and equality of opportunity, they cannot relate to a particular prior award of a public contract or contravene the rules on technical specifications in clause 56.

[Florence Eshalomi]

Clause 22 gives contracting authorities the power to set conditions of participation for contracts where necessary to get the suppliers to fulfil their full terms of contract. This is an important clause because it allows contracting authorities to put checks and balances in place to ensure that suppliers are fit to carry out the contract. That gives contracting authorities the confidence to engage with novel suppliers, providing a certifiable window into procurement. It ensure that checks can be carried out against the kind of collapse we saw with Carillion. This is a proportionate and necessary measure, so I would welcome assurances from the Minister that the guidance will be provided to contracting authorities on how to impose conditions of participation.

[Alex Burghart]

I thank the Opposition for their support of the clause. Obviously, we will set out a whole range of guidance around the Bill, but the conditions of participation set out in the clause speak for themselves.

Question put and agreed to.

Clause 22 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Julie Marson.)

Oral Answers to Questions

Florence Eshalomi Excerpts

Thursday 2nd February 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

Unfortunately, the Procurement Bill in its current form does very little to prevent a repeat of the VIP scandal that, sadly, contributed to almost £10 billion-worth of personal protective equipment being written off by the Government. We know that sunlight is often the best disinfectant, so will the Minister support our amendment to ensure that any Minister, peer or senior civil servant involved in recommending suppliers under direct award must publicly declare any private interest in that supplier’s success?

[Alex Burghart]

The hon. Lady will know from the many debates we are having on this subject that transparency is a key element of our new regime, which replaces the old, outdated EU regulations and will ensure that there is sunlight throughout the procurement process, from start to finish.

Procurement Bill [ Lords ] (Second sitting)

Florence Eshalomi Excerpts

Committee stage
Tuesday 31st January 2023 Public Bill Committees

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

Colleagues will be sad to hear that we have only 117 clauses to go as we enter this second sitting. Clause 8 defines the concept of a concession contract. It is a type of public contract, and its award is regulated by the Bill. Subsection (1) sets out the key concepts specific to a concession contract. There are two main features. First, under a concession contract, at least part of the consideration received must lie in the right to exploit the works or services. A good example might be a concession contract to operate a canteen where the supplier receives income from customers.

Secondly, in exploiting that right, the supplier or concessionaire must be exposed to a real operating risk. Subsection (2) defines an operating risk, which is a risk that the supplier will be unable to recover its costs through the concession—for example, the risk of fluctuating vehicle numbers and income under a contract for the construction and operation of a toll bridge where the supplier has the right to receive the toll income.

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

Apologies for my lateness, Mr Efford. Clause 8 refers to concessionary contracts—contracts through which the authority contracts out work on the basis that the contracted company may be able to exploit or charge for extracted resources. Examples include the channel tunnel, which was paid for by private finance, with the financiers picking up the benefits. We support these contracts in principle—they can help us to build things without much cost to the taxpayer, and can help to expand the state—but there needs to be a balance. There needs to be guidance on what the right cost is. We could lose millions if the cost is wrong and the concession is given away too cheaply. Also, when deals regarding important infrastructure are signed, there needs to be caution to ensure that the long-term running of the system is up to standard. It is important that performance-based targets are included, as well as provisions for infrastructure building.

The Green Paper highlights that proposals for integrating the regulations for concession contracts into the core regime will be taken forward. However, there will be specific provisions covering the definition of a concession, how a concession contract is to be valued, and the duration of that concession. Those specific provisions address the key points raised by stakeholders in the consultation. The Government also propose to retain the higher financial threshold for concession contracts, greater discretion with regard to the method of calculating the estimated value of a concession contract, and an exemption for lottery-operating services, as well as other exemptions that come under the current regime; in all other respects, procurements for concession contracts will be subject to the new regime. We support the clause.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9

Light touch contracts

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Light-touch provisions reflect the fact that certain public contracts, including those for social, healthcare and legal services, can warrant special treatment and greater flexibility. Flexibility is permitted by the scope of our international agreements. Clause 9 introduces the term “light-touch contract”, and provides for regulations to define which exact services should be subject to the lighter rules. As in the existing regime, common procurement vocabulary codes will be used to specify services.

The special features of the contracts are identified in subsection (4), which helps to prevent any inappropriate use of the power, as does compliance with our international agreements, which would prevent us from expanding the scope of what is included in the light-touch regime.

Light-touch contracts will be openly advertised unless a direct award ground applies. Contracting authorities will have to apply the exclusions and consider conflicts of interest. Transparency will be maintained through publication requirements, including requirements for an award notice, a contract detail notice and, when the contract is over £5 million, publication of the contract. By integrating these light-touch contracts into the broader regime, and having carve-outs where greater flexibility is justified, we have made it much clearer how such procurement should be run, and have ensured that probity and transparency are built into the process, while respecting these contracts’ unique characteristics.

[Florence Eshalomi]

I understand the need for a light-touch contracts regime, but I share the concerns expressed in the other place about the scale of the changes. Lady Noakes tabled a probing amendment that pressed the Government on why such contracts are not more narrowly or widely defined. Her amendment 30 sought to confine light-touch contracts to those concerning health or social care services provided to individuals, on the basis that that is how they are used at the moment—that is my understanding. However, if the Government believe that the definition should be wider, they should put that in the Bill. Open-ended regulation-making powers should not be necessary and are not desirable.

As the Minister is aware, the Cabinet Office delegated powers memorandum justifies the power by saying:

“While the scope of what is to be included in regulations made under this power is known, it is not practical for the Bill to include a long list of detailed…CPV codes to indicate which categories of contracts may benefit”

from the light-touch regime. It goes on to say that

“CPV codes may evolve over time, which would…require amendment to the Bill.”

However, the report of the Delegated Powers and Regulatory Reform Committee found that explanation to be inadequate, as

“it does not explain why it is considered appropriate for the power to be so broad that the issue of which kinds of contracts are to be subject to the ‘light touch contract’ regime is left entirely to regulations. There is nothing of substance on the face of the Bill to limit the discretion afforded to Ministers to allow less rigorous regulation for contracts of a kind that they choose to specify in regulations. Clause 8(4) lists three factors which Ministers must consider but without saying what effect these factors are to have. The Memorandum suggests that the provision made in exercise of the power will simply be a list of CPV codes but the power need not be exercised in that way.”

In its conclusion, the Committee said that

“the reasons given by the Government for leaving entirely to regulations the question of which contracts should be subject only to the ‘light touch’ regulatory regime are inadequate”,

and recommended that

“unless the Government can fully justify doing otherwise, the Bill should include criteria for determining which contracts should be subject to that regime.”

I understand the Government’s response to the consultation—that it might be tricky to tie down a definition and put it in the Bill—and Labour therefore does not seek to amend clause 9 today. However, I share the concerns aired in the other place about the scope of this part of the Bill. I am also concerned that the Government have not justified their stance beyond pointing to the existence of the common procurement vocabulary codes. Many feel that that does not answer the question posed by the Delegated Powers and Regulatory Reform Committee. I would like clarity from the Government on whether they are working closely with the likes of Lady Noakes to put their minds at rest. In particular, I would welcome a clear definition of what the powers in clause 8 mean in practice and how the Government intend to use them.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Clause 10

Mixed procurement: special regime contracts

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 10 concerns mixed contracts that involve an element to be procured under the general rules regime and an element to be procured under one of the special rules regimes. We discussed the objective of clause 5, which is in a similar vein. It is important to provide for such mixed contracts—a need for them will inevitability arise—while safeguarding against exploitation of exemptions and the lighter-touch rules. That will be achieved through the introduction of a test of separability, a safeguard similar to that in clause 5.

If separation of the general rules regime and special rules regime elements are possible, but a contracting authority chooses not to separate out the contract, then that mixed contract must be awarded in accordance with the general rules. It will not qualify for the special rules regime if the elements could reasonably be procured separately, having regard to the practical and financial consequences of splitting the requirement out.

--- Later in debate ---

[Florence Eshalomi]

As the Minister outlined, clause 10 is similar to clause 5. It is uncontroversial, as we see it, and it closes a loophole where one part of a contract could come under the special rules regime.

Question put and agreed to.

Clause 10 accordingly ordered to stand part of the Bill.

Clause 11

Covered procurement only in accordance with this Act

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 11 requires contracting authorities to carry out covered procurement solely in accordance with the Bill. Specifically, they must use the procedures in the Bill for competitive award, direct award and framework agreements. That will ensure that contracting authorities properly engage with the market and achieve value for money.

The duty that clause 11 creates will allow a supplier to hold a contracting authority to account. Remedies are available under part 9 when it can be demonstrated that a contracting authority has materially failed to have regard to one or more of the requirements in the Bill— for example, where there is direct award without proper justification, or discriminatory technical specifications —and the supplier consequently suffers, or is at risk of suffering, loss or damage.

[Florence Eshalomi]

We support this uncontroversial clause. It underpins many parts of the Bill, and mandates that procurement must be carried out under the terms of the Bill. The clause also points to different parts of the Bill for different forms of procurement—to clause 19 on competitive award, clause 41 on direct award in special cases, clause 43 on direct award after switching procedures, and clause 45 on award under frameworks.

Question put and agreed to.

Clause 11 accordingly ordered to stand part of the Bill.

Clause 12

Covered procurement: objectives

[Florence Eshalomi]

I beg to move amendment 9, in clause 12, page 9, line 24, after “money” insert

“, including value that is social value within the meaning of the Public Services (Social Value) Act 2012, overall providing the optimum balance of economy, efficiency, effectiveness and equity”.

This amendment would require social value to be considered in the procurement objectives.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 10, in clause 12, page 9, line 25, after “benefit” insert

“and public value, including in relation to benefits and value contributing to socio-economic development, to be realised over time and in relation to areas of public responsibility of other contracting authorities.”

This amendment would require public value to be considered in the procurement objectives.

Amendment 100, in clause 12, page 9, line 28, at end insert—

“(e) mitigating climate change and “Net Zero” commitments.”

Amendment 101, in clause 12, page 9, line 28, at end insert—

“(e) transparency and anti-corruption efforts.”

Amendment 89, in clause 12, page 9, line 28, at end insert—

“(1A) In having regard to delivering value for money under subsection (1), a contracting authority must consider the impact of delivering the contract on—

(a) social value,

(b) the ability to meet the needs of service users,

(c) long-term value, including the prevention of adverse life outcomes and the increasing demand for services that results from adverse life outcomes,

(d) savings to other areas of public service delivery, and

(e) furthering equality and tackling inequality.”

This amendment would define value for money when carrying out covered procurement.

New clause 2—Procurement principles—

“(1) In carrying out a procurement, a contracting authority must pursue the following principles—

(a) promoting the public good, by having regard to the delivery of strategic national priorities including economic, social, environmental and public safety priorities,

(b) value for money, by having regard to the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcome of the business case,

(c) transparency, by acting openly to underpin accountability for public money, anti-corruption and the effectiveness of procurements,

(d) integrity, by providing good management, preventing misconduct, and control in order to prevent fraud and corruption,

(e) fair treatment of suppliers, by ensuring that decision-making is impartial and without conflict of interest, and

(f) non-discrimination, by ensuring that decision-making is not discriminatory.

(2) If a contracting authority considers that it is unable to act in accordance with any of these principles in a particular case, it must—

(a) take all reasonable steps to ensure it does not put a supplier at an unfair advantage or disadvantage, and

(b) publish a report within 90 days setting out the principles with which it could not act in accordance and its reasons.”

This new clause would require contracting authorities to pursue a series of principles when carrying out procurements

[Florence Eshalomi]

Our amendment 9 would require social value to be considered as a procurement objective. We welcome the changes made in the other place to include social value in the national procurement policy statement, but I was disappointed to see scant mention of social value in the original version of the Bill.

Social value is a tool that makes it easier to give money to local British enterprises, creating jobs, skills and green opportunities in those communities. It rewards providers that want to build a better society and contribute to our nation’s prosperity in the long term, and it can convey a huge amount of value.

I have quoted these figures to the Minister before: Social Enterprise UK found that between 2010 and 2020 we may have missed over £700 billion-worth of opportunities to create economic, social and environmental value. The Bill provides an opportunity to make, buy and sell more in Britain, which is something that we should all champion, and a chance to give more public contracts to large, medium and small-sized British companies, so that contracts do not automatically always go to giant offshore corporations with the lowest price. Those contracts should go to businesses that create local jobs, and provide skills and training, and to businesses that maintain workers’ rights and trade union access.

--- Later in debate ---

[Mick Whitley (Birkenhead) (Lab)]

My hon. Friend is making a good speech. Obviously, we do not see much social value in the Bill. I would go back to a speech that I made in the Chamber a week ago about Mersey ferries. The Liverpool Mayor commissioned a replacement for the iconic but decades-old Mersey ferries, and Cammell Laird, which sits on the River Mersey, was singularly well-suited to build it. It had a reputation for quality and innovation across the sector, and sits right on the banks of the Mersey. Building a new ferry in Cammell Laird would have guaranteed the viability of the site and allowed the yards to make further investments. Not only that, but it would have employed a lot of local people. This is all about social value. Why should it be only companies that benefit? The community should level up, and get the value out of social value.

[Florence Eshalomi]

I thank my hon. Friend for that example of why social value is so important. That contract was a missed opportunity to employ local people. We all want those local benefits, and employment in our constituency, so it is important that contracts be awarded to local companies, as well as the big ones.

Amendment 10 would require public value to be among the procurement objectives. That would complement our amendment on social value; together, the amendments would add real teeth to the Bill, and would give contracting authorities the mandate to make decisions that would benefit not only their area but the whole country. That is important because we spend £3 billion a year on procurement, and although the Bill is a step forward, without clear mandates on social value and public value, contracting authorities may miss out on the chance of creating tremendous value for the public through their procurement processes. Amendment 89 clarifies that by explicitly providing a wider definition of value for money. The Bill does not define value for money, nor does it set out what can or should be considered when an assessment is being made of which is the most advantageous tender.

Legislation allows for wider considerations of value, but the determining factor too often remains the low unit cost. That is problematic because it can lead to services being procured that do not effectively meet needs, and it can drive higher costs in the long term, particularly when it leads to a spiral of support needs. People do not get the support that they need, and their need for support escalates as a result. They are forced to keep going to services that cannot give them the help that they need, or cannot address the root causes of their issues.

Although the Cabinet Office is planning training to be rolled out alongside the legislation to encourage culture change, it is important that the legislation goes as far as possible in encouraging better practice. Further defining value for money is an example of how it could be done.

The aim of amendment 89 is to help to prevent the false economies that arise when we take value for money on a short-term and shallow basis. When we are considering such massive parts of public spending, crossing many levels, it is vital that every penny spent ties together. We do not want a situation where saving a penny in one pot loses a pound from another. By defining value for money in the way that the amendment does, we could ensure that contracting authorities consider the wider impact of their decisions. Again, that could lead to significant efficiency savings for this and future Governments, and to stronger public services for all to enjoy.

New clause 2 would place the procurement principles on the face of the Bill: promoting the public good; value for money; transparency; integrity; fair treatment of suppliers; and non-discrimination. In their December 2020 Green Paper, “Transforming public procurement”, the Government proposed enshrining those principles in law. In responding to the consultation, the Government stated that 92% of 477 respondents agreed with the original desire to put the procurement principles in the Bill, so I was not the only one surprised when the principles were missing from the Bill when it was published in the other place.

Our new clause 2 seeks to accomplish the original aim of the Bill. I know that we will hear from the Minister that we should trust the Government on such issues, and that we should wait for the national procurement policy statement, rather than looking to put things in the Bill. The principles are so important to how we carry out procurement, however, and perhaps the best source for why that is so comes from the Government. In the Green Paper, the Government say of the public good:

“The decision to invest public funds into policies, services, projects and programmes is subject to analysis and appraisal to assess the public good that is expected to accrue as a result of the expenditure. For national spending this will have been conducted in accordance with the HM Treasury Green Book guidance and subject to National Audit Office scrutiny. Procurement should draw a clear link between the objectives, outcomes and anticipated benefits that underpin the investment decision and the selection of contracting parties to deliver those benefits…Public procurement should also be leveraged to support strategic national priorities. Commercial teams should have regard to the Government’s national priorities when conducting public procurement. These will be set out in the National Procurement Policy Statement…This is consistent with international practice where public procurement is regularly leveraged to achieve social and environmental value beyond the primary benefit of the specific goods, services and capital works through operational delivery that contributes additional social value.”

The Green Paper goes on to say of value for money:

“The Government is making clearer the ways in which value for money is assessed at the point of the investment decision, which will be set out in a revised Green Book. A critical element of the assessment is a strong strategic case that sets: a clear objective aligned to government priorities, a rationale for intervention, and/or robust evidence and analysis for how different options for delivering that intervention will advance that objective…The role of procurement is to translate the desired outcomes into the right contracts and select the supplier or suppliers that will deliver these in the way that offers best social value for money. For many procurements there may only be a single contract, but for complex major projects there will be many hundreds of separate contracts of different types, sizes and sectors that need to be packaged and procured in such a way as to deliver the whole project successfully. Whether there is one contract or many it is critical to maintain the ‘golden thread’ from government priorities via the business cases through to procurement specifications and the assessment of price and quality when awarding contracts.

Value for money does not therefore mean simply selecting the lowest price, it means securing the best mix of whole-life quality and effectiveness for the least outlay over the period of use of the goods, works or services bought. Value for money also involves an appropriate allocation of risk and an assessment of the procurement to provide confidence about its probity, suitability, and economic, social and environmental value over its life cycle.” On transparency, the Green Paper states:

“The principle of transparency in public procurement is central to the integrity and accountability of the system and the fight against corruption. This is consistent with best international practice. It ensures business opportunities are accessible and processes and decisions can be monitored and scrutinised. It ensures that decision makers are held accountable for spending public money and helps open up public procurement to more effective competition that in return can deliver better value for money.”

On integrity, it states:

“The principle of integrity is key to strengthening trust and combating corruption. Procurement professionals must always bear in mind the needs of the ‘customer’ or ‘user’. Planning a public procurement must promote good governance, sound management of public money, and a professional relationship between buyer and supplier, e.g. managing conflicts of interest, protecting intellectual property and copyrights, confidential information or other standards of professional behaviour.”

On the fair treatment of suppliers, it states:

“The principle of fair treatment of suppliers means all suppliers must receive fair and reasonable treatment before, during and after the contract award procedure so as to encourage participation by suppliers of all types and sizes. Suppliers should have timely access to review mechanisms to ensure the overall fairness of the procurement process.”

And on non-discrimination, the Green Paper states:

“The principle of non-discrimination applies to procurement under the new regulations and means contracting authorities cannot show favouritism among domestic suppliers. This principle also applies to suppliers who have rights under an international trade agreement that covers the procurement. Non-discrimination in this context means that suppliers, goods and services from any other party to the agreement are given no less favourable treatment than domestic suppliers, goods and services.”

Thank you, Mr Efford, for indulging me; I felt it was really important to outline the very same principles that the Government put in the Bill, but on which they have now reneged. I do not think anyone in this room would disagree with those principles, but the treatment of the procurement principles during the lifetime of the Bill shows why we are keen to make sure we get this down in legislation. We cannot rely on just words and expect to trust the Government when they have already changed their mind on the Bill so much.

Delegating so much responsibility to regulations and statements risks taking the Bill further away from its original intentions, and I do not think that even the Minister wants that. I hope he has listened to those key statements, as outlined by his Government. I urge him to live up to the pledges in the Green Paper, which were supported in the other place, and to support our amendment.

[Kirsty Blackman (Aberdeen North) (SNP)]

Thank you for chairing our sitting this afternoon, Mr Efford; we appreciate it. I am going to talk about my amendment 101 and also the Labour party’s amendments 9, 10, 89 and new clause 2.

I am happy to support all the Labour party’s amendments. It is particularly important to put new clause 2 in the Bill. I cannot find a definition of value for money or of public benefit in the Bill. If the Government are making suggestions about how contracting authorities should proceed, they should be clearer about what that means and what outcomes they are seeking in the Bill, rather than in a national procurement statement to come at a later time. I understand that the Government’s priorities will change, which is to be expected, particularly when we expect a change of Government. That will happen and they will definitely have different priorities, but the principles that we are talking about in new clause 2 will surely not change. They are the threads that should run through everything we do and all the decisions we make.

I want to mention integrity specifically. The Prime Minister has said that he wants his Government to be marked by professionalism, accountability and integrity; it is very clear that integrity is one of the Government’s priorities in this regard, so not having it on the face of the Bill when the Government have been very clear that they support it seems odd to me. Adding it to the Bill through new clause 2 would be incredibly useful.

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[Alex Burghart]

I will try to treat all the amendments in this large group in order. Amendment 9 seeks to replace the well-understood concept of value for money with a new duty, by importing into the procurement objectives the meaning of “social value” under the Public Services (Social Value) Act 2012. There are difficulties with that approach, I am afraid, in particular that there is no definition of “social value” in that Act. Contracting authorities are also likely to struggle to understand the concept of equity in the context of procurement.

Amendment 10 is unnecessary, as “public benefit” already allows for “public value” and for contributing to socioeconomic development to be considered where appropriate and relevant. This amendment also undermines the concept of what is in the public benefit by overlaying a similar but different concept of public value. That suggests that benefit and value are different things, and narrows the former term in a way that is not legally helpful.

Amendments 9 and 10 are also not necessary to ensure that social value is considered in the procurement objectives. The public benefit objective in subsection (1)(b) requires contracting authorities to think about the extent to which public money spent on their contracts can deliver greater benefit than it otherwise would—for example, broader social value or equitable outcomes for groups such as armed forces veterans, local employment and such like.

Amendment 101, tabled by the hon. Member for Aberdeen North, seeks to add transparency and anti-corruption efforts to the list of procurement objectives in the Bill. The Bill, however, will establish a world-leading transparency regime. It will see more commercial information published in three nations of the UK than ever before, including information on upcoming procurements prior to opportunities being advertised, and data against key performance indicators on major contracts, so that taxpayers can see how well contracts are being performed. Transparency is therefore already a mandatory requirement.

[Florence Eshalomi]

Is the Minister aware that the Government’s own “transparency ambition” document outlines a failure to provide for transparency in our procurement system? Some of the measures he has outlined are a step forward, but they still lack substantiveness to give providers and the public access to the full transparency that we need. Should we not look to follow in the steps of Ukraine in publishing an accessible digital dashboard, which would help the Government?

[Alex Burghart]

As the hon. Lady knows, transparency sits throughout the Bill. As I have just said, there are far greater requirements to publish than ever before, on an online platform that the Government will provide. She gave the important example of Ukraine. She will remember that we talked about this on Second Reading: the Ukrainians were advisers to the UK Government when we were putting our ideas together, so we are very much building on what they did in Ukraine. This will be an extraordinary step forward for transparency in the nations that are taking it up.

The Bill also requires contracting authorities to have regard to acting, and being seen to act, with integrity. That will oblige them to consider how to prevent fraud and corruption through good management, prevention of misconduct, and control. Failure to take anti-corruption steps or measures will be an indication that the contracting authority did not have a regard to the importance of acting and being seen to act with integrity.

Contracting authorities will also be required to comply with the provisions in the Bill on conflicts of interests and the exclusion of suppliers, preventing contracts from being awarded to inappropriate suppliers. That provides further opportunities to directly address transparency and anti-corruption issues within the context of a procurement. I hope that we all agree that it is essential that the procurement regime commands the trust of suppliers, the public and our international trading partners. In our view, the Bill already provides for those matters as it stands.

Amendment 89 seeks to define value for money. Clause 12 specifically does not define value for money to leave a degree of flexibility for different types of contracting authorities to adapt the concept for their own procurements. Contracting authorities should be able to select the most advantageous tender that prioritises things that deliver value for money for them. There are many precedents on the statute book where the term is left undefined, and that allows for a degree of flexibility. I could point to the Communications Act 2003, the Energy Act 2004, the Defence Reform Act 2014, the Bus Services Act 2017, and so on.

[Alex Burghart]

No, I am happy to say that it is already set out in the social value Act, I think, which I mentioned at the start of my remarks. Similarly to amendment 9, we feel that amendment 89 is unnecessary, as “public benefit” already allows for those factors to be considered, where appropriate and relevant to the contract being awarded.

New clause 2, also tabled by the hon. Member for Vauxhall, seeks to oblige contracting authorities to follow the six principles that the Government consulted on in the Green Paper. Now, the Green Paper was just that; it was a Green Paper and it formed the basis of what came subsequently. The six principles in the Green Paper were subsequently refined and then translated into the objectives and specific obligations that now exist in the Bill in the light of the responses to the Green Paper.

The language of a Green Paper is not the language of legislation, and one of the main lessons from the Green Paper and the consultation was the need to reflect the principles in a way that helps contracting authorities understand how they will implement them. That is what we have done. However, I assure the Committee that each of those principles remains within the Bill in an appropriate form. “Value for money” remains a fundamental tenet of the procurement regime. It is well understood by contracting authorities so does not need to be elaborated on.

“Public good” was focused on the delivery of strategic national priorities, so we revised it to the objective of “public benefit” to address the concerns raised in the public response to the Green Paper that it was solely about national, and not local, priorities. The revised principle supports wider consideration of social value benefits.

As we have discussed, “transparency” remains as an objective to encourage information sharing with suppliers, and “integrity” also remains an objective. The public response to the Green Paper indicated that “fair treatment” was too subjective for contracting authorities to determine by objective standards, so we introduced the concept of “treating suppliers the same”, which hon. Members will find in clause 12(2). Finally, “non-discrimination” has been converted from an objective to a hard-edged obligation in clauses 88 to 90.

The combination of the objectives and specific legal obligations in the Bill deals with procurement principles more effectively than the broad principles that the Government consulted on in the Green Paper. I therefore respectfully request that the amendments be withdrawn.

[Florence Eshalomi]

I heard the Minister’s response, and I think, again, that it is disappointing that there is a total shift between what was introduced by the Government in the Green Paper and what we now see in front of us. That was also noted in the other place.

I welcome the aim of the amendments tabled by the hon. Member for Aberdeen North. That is something that we do support, and I know that she highlighted it in a Westminster Hall debate just last week. Climate change is something that we are very much concerned about.

On ensuring that we think about the next generation, we can only do that if we protect the environment and the Earth that we are on now. We only have one opportunity. We cannot do it later, because there will be nothing left. That is a key issue that our young people are concerned about, and it must be front and centre in this Bill.

The climate elements of the Bill are really important. They touch on social value and on public value. There is an interwoven link showing why that is important, and that should receive due consideration, so it is a shame to hear the Minister not wanting to take those measures forward.

[Kirsty Blackman]

If possible—I did not indicate this before—I would like to push amendment 100 to a vote.

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Division 4

Ayes: 6

Noes: 9

[Florence Eshalomi]

I beg to move amendment 1, in clause 12, page 9, line 36, after “enterprises” insert “and co-operative societies”.

This amendment, together with Amendments 2 and 3, would ensure that the barriers to cooperative societies are considered by contracting authorities during the procurement process.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 90, in clause 12, page 9, line 36, after “enterprises” insert “and charities”.

This amendment, together with Amendment 91, would ensure that the barriers to charities are considered by contracting authorities during the procurement process.

Amendment 91, in clause 16, page 13, line 17, at end insert—

‘(6) In carrying out preliminary market engagement, a contracting authority must consider potential barriers to participation by small and medium sized enterprises and charities, and take steps to mitigate any barriers identified.’

This amendment, together with Amendment 90, would ensure that the barriers to charities are considered by contracting authorities during the procurement process.

Amendment 2, in clause 85, page 57, line 27, after “enterprises” insert “and co-operative societies”.

See explanatory statement to Amendment 1.

Amendment 3, in clause 119, page 77, line 24, at end insert—

‘“co-operative society” means—

(a) a society registered as a co-operative society under the Co-operative and Community Benefit Societies Act 2014, or

(b) a pre-commencement society (within the meaning of that Act) that meets the condition in section 2(2)(a)(i) of that Act;’.

See explanatory statement to Amendment 1.

[Florence Eshalomi]

The amendments relate to co-ops and charities, respectively. As a proud Labour/Co-op MP and a huge believer in the co-operative movement, I am proud that the amendments relating to co-ops were the first to be tabled.

The amendments follow in the same vein as amendments made in the other place, which Labour supports, to help remove barriers to the procurement process. We want SMEs to have fair access to public procurement, and those amendments will help to make a positive impact on the inclusion of SMEs in the procurement system. In fact, we think the amendments have so much potential that we want them to apply to other groups that we see as disadvantaged by the system.

One of those groups is co-ops. There are over 7,000 co-operatives across the UK employing 250,000 people, and they make an annual contribution to the UK economy of nearly £40 billion. They range in size from large retail co-operatives, such as the Co-op, to small community pubs, and include co-operative financial institutions such as credit unions and building societies. Indeed, many will be SMEs and already covered by the clause.

Historically—and as evidenced by experiences during covid—co-ops are a more resilient form of business, in large part due to the commitment and support of their members and their ability to make democratic decisions for the long term, rather than based on short-term returns. The number of independent co-ops grew by 1.2% in 2020, despite the impact of covid. In the same year, just 1.5% of co-ops were dissolved, compared with 6.5% of businesses in the wider economy, meaning that they were arguably four times less likely to cease trading. In the same vein, co-ops are seen as more productive, as their members have a vested interest in their success, bringing natural social value to their contracts.

Despite that, co-operatives make up less than 1% of the total number of UK businesses. The sector should be encouraged and supported to grow to ensure a more democratic economy, where wealth and power are shared more fairly and business is rooted in the interests and geography of local communities. Given the nature of these businesses and their model—they are run by people who work on the ground—they have a lot to offer the procurement system. Many of those who would work at a procurement co-op service may be service users themselves, able to see the cracks in the system and offer innovative solutions to create a public service provider that offers true value for public money.

Co-ops have a lot to offer our procurement system, and our procurement system has a lot to offer co-ops. That is why we have tabled these amendments. I hope the Minister will look at them carefully and accept them.

Amendments 90 and 91 would do a similar thing to amendments 1 to 3 but for charities. While all types and sizes of charities experience challenges relating to the commissioning and procurement of public services, smaller organisations often face greater barriers. The National Council for Voluntary Organisations highlighted to the House of Lords the barriers charities face in delivering services for communities and the lessons learned from how authorities worked with charities during the covid-19 pandemic.

I hope the Minister will agree that the Bill must reduce barriers to entry for charities and voluntary organisations, because they are often best placed to deliver a range of public services. They are trusted in communities, able to reach people who are overlooked or underserved by mainstream services, and can provide wraparound support to address the root causes of the challenges many people face.

Charities and voluntary organisations often combine support with a focus on prevention of future needs, with a versatility and agility that enables them to respond quickly to changing circumstances. Their ability to do that while delivering wider social value for individuals, communities, the local economy and other public services means that their impact reaches not only those accessing services, but others in their local communities and taxpayers more widely.

The Government spent £11.6 billion on contracts with charities alone in 2019-20. Ensuring that the Bill works for such organisations and services is therefore crucial. To help address some of the barriers facing charities, we would like the Government to commit to include specific reference to charities in guidance and in learning and development content. I know that many charities are likely to be covered by the clause as they are SMEs, but I would like to take that further by passing amendments 90 and 91.

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[Alex Burghart]

Clause 12 sets out the procurement principles that establish what the Bill is designed to achieve, and how its success will be judged. The clause splits the procurement principles into objectives and other rules to help contracting authorities to understand what they are obliged to do.

The objectives in clause 12(1) set out the values of public procurement, the furthering of which contracting authorities must give proper consideration to in the course of making procurement decisions. Public procurement needs to be focused on achieving value for money, which is rightly at the top of the list of objectives set out in clause 12(1). However, each of those objectives has its own merit, and each must be considered independently. It is not the intention of the Bill that value for money, however important, disapplies or overrides the obligation on contracting authorities to have due regard for the objectives of public benefit, information sharing and integrity.

The rules on equal treatment in subsections (2) and (3) are obligations that set minimum standards that contracting authorities must follow. The Bill will also accelerate spending with SMEs through the creation of new duties that will require contracting authorities to have regard to SME participation. We want to level the playing field for smaller businesses and for buyers, not only to avoid putting up, but to remove barriers to their participation.

Question put and agreed to.

Clause 12 accordingly ordered to stand part of the Bill.

Clause 13

The national procurement policy statement

[Florence Eshalomi]

I beg to move amendment 22, in clause 13, page 10, line 2, leave out “may” and insert “must”.

This amendment would require a Minister to publish a National Procurement Policy Statement.

The amendment seeks to mandate that the Government “must” publish a national procurement policy statement, instead of just “may”. I am sure the Minister will tell me that the amendment is unnecessary as, of course, the Government will seek to publish a national procurement policy statement. However, as has been stated, the change that we have seen in the Bill from the Green Paper to today means that we can take nothing for granted when it comes to the Government’s word on procurement.

The amendment is identical to the one tabled in the other place by Lord Lansley. When Baroness Noakes introduced it, she said that the clause’s current wording leaves the door open for a statement not to be published. Given the importance of the policy statement in setting rules for covered procurement, it would be deeply damaging for it not to be published. I urge the Minister to ensure that that cannot happen by supporting our amendment.

[Kirsty Blackman]

It seems to me that this is probably the easiest amendment for the Government to accept. They have made it clear how important the national procurement policy statement will be, and how a significant proportion of the decision-making processes in the Bill will flow from that statement.

I support the amendment, and I would suggest going even further in saying that every Government should publish a national procurement policy statement. We have had quite a lot of Governments recently, but after every general election and every first King’s Speech of a new parliamentary Session, the Government should be clear in a number of areas. They should set out their policy direction of travel, not just in procurement but in general. That is a key moment when the Government could refresh their national procurement policy statement.

I do not have a significant issue with the Government updating the statement based on priorities. We have seen what has happened in the last few years with covid, and in the past decade or so, we have developed a better public understanding of the impacts of climate change. Science has changed, and not only have priorities changed, but the social system has changed as a result of covid. It therefore seems that updating the statement would be a sensible thing to do. If the Minister is not willing to accept the amendment, I urge him to make it clear that the Government intend to publish the national procurement policy statement, no matter whether the clause says “may” or not.

We will come to the clause stand part debate, but the clause states that there is an intention to keep the statement “under review”. Does the Minister expect that if Government priorities were to change significantly, a new or a tweaked statement would be published? For example, if something major happened, as with covid or the war in Ukraine, priorities may change as a result. Does he expect Government Ministers to at least consider updating the national procurement policy statement in the light of drastic changes that may or may not come to us in future?

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[Alex Burghart]

The purpose of amendments 28 and 29 is to overturn amendments added to the Bill in the other place, which require that prior to publishing a national procurement policy statement, the Minister must give due regard to a number of specified principles and mandate the inclusion of a number of priorities in the NPPS.

I reiterate that the Government recognise that those principles are important to procurement, which is why most of them are already core elements of the procurement regime and are reflected throughout the Bill. That is evident in the Bill’s drafting overall. For example, value for money, integrity and maximising public benefit are set out in clause 12 as procurement objectives that contracting authorities must have regard to directly when carrying out procurements. As discussed, transparency is also a requirement running through the Bill. Furthermore, specific requirements in the Bill place obligations on contracting authorities regarding fair treatment of suppliers and non-discrimination in decision making—for example, the conflicts of interest provisions in part 5. Therefore, although the principles are important, to incorporate them as part of the national procurement policy statement process when they are already applicable to procurements on the face of the Bill is unnecessary.

Similarly, the other place added a subsection that requires the inclusion of specific priorities in the national procurement policy statement. Those relate to achieving targets set under the Climate Change Act 2008, the Environment Act 2021 and the Public Services (Social Value) Act 2012, as well as to promoting innovation among potential suppliers and minimising the incidence of fraud.

We carefully considered which policy priorities should and should not be included within the regime, in order to maximise productivity and ensure that the Bill is as streamlined as it can be to deliver for all contracting authorities and maximise the benefits from all procurements. It is, I believe, more than adequate that the Public Services (Social Value) Act requires contracting authorities to consider the economic, social and environmental wellbeing of an area when undertaking specified procurement. Restating that in a policy statement would be unnecessary, as that Act is already binding on contracting authorities.

The amendment introduced in the other place looks to increase innovation and minimise fraud, but that is already at the core of the Bill. With our new approach to small businesses, we are unleashing innovation in the supply chain, and by embedding transparency throughout the procurement lifecycle, alongside our plans for oversight, tackling fraud will be easier than ever before. It would be counterproductive to restrict the flexibility of the national procurement policy statement by placing specific priorities in primary legislation.

We have made it clear that the NPPS will be used to set out strategic policy priorities, over and above those enshrined in the Bill, that are relevant at the time that the NPPS is to take effect.

[Florence Eshalomi]

I oppose amendment 28; it would remove Lords amendment 46, which was added on Report. Clause 13 currently mandates the Government to give due regard to a number of important principles before publication of their national procurement policy statement. Those principles follow on from the procurement principles promised in the Bill— namely, promoting the public good, value for money, transparency, integrity, fair treatment of suppliers and non-discrimination.

Those principles are important. We know that public good allows us to put what we believe is best for the country at the heart of procurement. When we also consider the huge amount of money spent on procurement —ultimately, it is the public’s money going towards delivering goods and services—it is right that the Government expect the money to be spent in the public’s interest. Procurement must always have that idea in mind, and it cannot be driven by any other aim of individuals in Government or other private individuals.

[Lloyd Russell-Moyle]

It is particularly important to include these principles in the Bill. Although we all agree with them, have there not been many accusations that during covid, the principles were not followed? We know that a huge amount of reclaimed money has still not been discovered. There were fast-tracks for mates and friends with no experience. People lobbied and pushed for their mates to get contracts—we know that because one Member of Parliament has had to resign over it and the scandal is ongoing. Without having these principles in the Bill, there is a danger that even if Conservative or other Governments are whiter than white, the public will not believe it and think that something murky is going on? That destroys trust in politics, so including them will protect us all.

[Florence Eshalomi]

I thank my hon. Friend for that important point; I will highlight that further as I make progress.

It would be completely wrong, especially when households up and down the country are struggling to put the heating on during this cold winter, to not carry out the due diligence and get every bit of public value out of our procurement budget. Again, this is public money and, as my hon. Friend highlighted, transparency is even more critical now. The Government must not take money from the taxpayer and then be opaque about how it is spent. As has been highlighted, we saw during the pandemic why that principle was so important. Shining a light on our procurement not only is fair, but makes it more efficient and helps to achieve more value for money for the public.

During the pandemic, we saw billions of pounds of personal protective equipment written off. I believe that greater transparency in the process could have helped prevent some of that waste and some of the scandals that unfortunately lie at the Government’s doorstep today. We have concerns about transparency in the Bill as it stands, and I want to speak about that at greater length.

Integrity ties all this together. Ensuring good management and fighting against fraud and corruption is critical in ensuring public trust in the system and ensuring we get value for money. That links closely with transparency—we need a transparent system where integrity naturally flows and corruption is highlighted. It also links to ensuring that the public get their money back when contracts are not carried out or are carried out to a poor standard. Too often in the current system, those who deliver poor services get away with it. They are even awarded further contracts despite poor performances. We do not see enough money clawed back: just before Christmas, the figure was just over £10 million from fraudulent PPE contracts during the pandemic. Perhaps the Minister can update us on that; I hope that it is far more, considering the amount of waste in that area.

Fair treatment of suppliers is also vital to maintaining the best possible procurement system. I know that that may be frustrating at times when considering wider policy goals. It is always tempting to mandate certain procurements to support groups such as SMEs or to follow agendas such as levelling up, yet this is equally as important as the other principles.

We cannot have favouritism in the system or decide what is best based on the supplier and not the merits of the offer. As my hon. Friend the Member for Brighton, Kemptown highlighted, we saw that during the pandemic, with the VIP lanes ultimately being ruled unlawful in court. In her ruling in January last year, Mrs Justice O’Farrell said the Good Law Project and EveryDoctor had established that the VIP lane system was

“in breach of the obligation of equal treatment”.

She went on:

“There is evidence that opportunities were treated as high priority even where there were no objectively justifiable grounds for expediting the offer.”

It is clear that that cannot happen again. I hope the Minister will outline what steps are being taken to ensure that that principle is adhered to and that there are consequences for going against it.

Similarly, non-discrimination is an important principle to ensure we show no favouritism among suppliers. That is particularly important when we sign up to trade agreements and want to ensure respect between partners. I expect the Minister to say that we should trust the Government and that it will be in a policy statement, but if the Government can go against their own words in the Green Paper, why should we trust them now?

More importantly, the amendment ensures that future policy statements from any Government would have to follow these principles in procurement. I think we all agree that the principles are important, and should a future Government want to go against them, that should be done via primary legislation and not through a policy statement with far less oversight. Primary legislation can always be introduced, so we are not tying a Government to the principles for life, but given their importance to the system that runs through the Bill, any policy note brought by this piece of legislation should take this into consideration. I urge the Government to think carefully and withdraw amendment 28.

I will now speak to amendment 7 and urge the Government to go further to strengthen the procurement principles in the policy statement. Our amendment 7 would introduce cyber-security as a strategic national priority for the Government. The past 12 months have reminded us of the risks to our security from every corner of the globe—from nation states, criminals and rogue actors. This year’s National Cyber Security Centre annual review confirmed that cyber-crime continues to be the most significant threat for consumers and small businesses. Looking at the big picture, it is clear that the cyber-security threat is not at the forefront of minds when it comes to risk, despite the recent joint warning from the heads of MI5 and the FBI that commercial organisations on both sides of the Atlantic are increasingly being targeted by state-sponsored hackers. This is a challenge that requires us to raise our game domestically and collaborate more effectively internationally.

Endpoint security is a major challenge, particularly for the public sector. The Government’s cyber-security strategy is very welcome, but fails to mention device security once. When it comes to cyber-security, everyone thinks about software, but the resilience of our PCs, laptops and printers is often under-appreciated. A lack of protection for hardware in our schools and hospitals leaves the UK vulnerable to malign actors, and data shows that the Government remain an attractive target for cyber-attackers, with 40% of cyber incidents between 2020 and 2021 affecting the public sector. The Chancellor of the Duchy of Lancaster recently acknowledged that the UK is now the third most targeted country for cyber-attacks, behind only the USA and Ukraine.

Combating fraud requires the Government, businesses and individuals across the UK to work together. Greater co-operation and knowledge sharing can make a real difference. Raising awareness of the different types of fraud we face and its impact on all corners of the UK is the first key step to arming us with the knowledge to stay safe online. The NCSC’s cyber aware campaign—which in the run-up to Christmas revealed that victims of online shopping scams in the same period last year lost an average of £1,000 per person—is a great move in the right direction. We need to ensure our policies and requirements have greater teeth to better protect UK plc, and there are three simple steps that the Government can take to do that. Now that the UK has left the European Union, we are in a much stronger position to defend our national interest within our own public procurement rules. If the Bill allowed the Government to exclude suppliers to the public sector on cyber-security grounds, that would send a strong signal to malicious actors around the world.

Our amendment would insert cyber-security requirements as a required purchasing criterion for public sector procurement into the national procurement policy statement, which sets out national priorities and guidance for contracting authorities. It would make cyber-security one of the strategic national priorities for procurement, and would strengthen the Bill’s national security focus. I hope it gets cross-party support and is accepted by the Government, as it would help to safeguard the UK from attacks from rogue actors and nation states, and would bring us into line with best practice from across the world.

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[Alex Burghart]

Clause 15 concerns the planned procurement notice. It is designed to give as much advance information to the market as possible, so that interested suppliers can determine whether they wish to bid in the procurement covered by the notice, and so that they have the maximum time for preparation. It also gives contracting authorities the option of reducing tendering periods by publishing a planned procurement notice. Publication of that notice may take place at any time before publication of the tender notice, but if its publication occurs at least 40 days and no longer than one year before publication of the notice, the contracting authority may, if it wishes, benefit from reduced tender periods of a minimum of 10 days.

[Florence Eshalomi]

As the Minister has outlined, clause 15 relates to planned procurement notices. When used well, such notices allow for significant benefits, both for the contracting authority and for the companies wanting to bid. For the contracting authority, they reduce the time limits associated with procurement notices by significant amounts; in many cases, that reduction may be from 25 days to 10 days, which represents a significant decrease in the time limit and reduces bureaucracy for contracting authorities. The clause will mean that suppliers get 40 days to plan for a bid before the official bidding time limit opens. We welcome that; it is a sensible mechanism that will benefit a number of SMEs, which often do not have legions of administrative staff. They will welcome that extra notice to prepare a bid for a contract.

As the Minister may be aware, Lord Hunt of Kings Heath and Lord Aberdare supported an amendment in the other place that attempted to make those notices mandatory. Lord Aberdare said:

“The existing wording in Clause 14(1) allows for better practice, confirming that contracting authorities are able to publish a planned procurement notice. But your Lordships will know that being able to do something within legislation does not mean that it actually happens…My preference might be simply to replace ‘may publish’ with ‘must publish’.”—[Official Report, House of Lords, 6 July 2022; Vol. 823, c. GC279.]

I do not think I need to push that point particularly hard with the Minister, but I hope that as we progress, he will explore in more detail what support can be given through the Bill to help SMEs.

How does the Minister expect the notices to be used by contracting authorities? When it comes to small contracts, the amendment tabled in the Lords may be too onerous on contracting authorities, but I think we can all agree that the notices are used by contracting authorities. As Lord True said in response to the amendments in the name of Lord Hunt of Kings Heath and Lord Aberdare,

“I agree that it is vital that the market—particularly certain aspects of it to which the noble Lord and others referred—is given sufficiently early warning of what contracting authorities intend to buy so that suppliers can gear up to deliver. This is particularly important for SMEs and charities, which were referred to by the noble Lord and others.”—[Official Report, House of Lords, 6 July 2022; Vol. 823, c. GC290.]

Will the Minister outline to contracting authorities how often they should use those notices, and will he take a proactive approach to investigating how they are used by contracting authorities, and whether their use can be expanded?

Also, how can groups such as SMEs and charities find out about the notices? Perhaps the Minister is leaving much of this to the Government’s planned digital platform, but I hope he can confirm that the notices will be on the platform, and that SMEs will be able to find them efficiently.

[Alex Burghart]

Absolutely. This is all part of our enhanced transparency regime, which will make it much easier for everyone—authorities, suppliers, the public, the press, and hon. Members of this House—to see what is going on in public procurement. Planned procurement notices are a very good thing; they give authorities the option of making clear what they are about to do, thereby giving themselves the chance to speed up that process slightly later on. We have every expectation and hope that they will be widely used, and as the hon. Member for Vauxhall has said, it is often small and medium-sized enterprises that will particularly benefit. When this initiative is considered alongside our plans to encourage authorities to publish their pipelines, we can really start to see the benefits of enhanced transparency in this area.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Julie Marson.)

Procurement Bill [ Lords ] (First sitting)

Florence Eshalomi Excerpts

Committee stage
Tuesday 31st January 2023 Public Bill Committees

[The Parliamentary Secretary, Cabinet Office (Alex Burghart)]

It is a pleasure to serve under your chairmanship, Mr Mundell, and with all hon. Members on both sides of the Committee. This is a significant piece of legislation in this Parliament, and a substantial one. We have 124 clauses in 13 parts with 11 schedules to discuss in 12 sessions, and I look forward to sharing them all with hon. Members present.

Clause 1(1) sets out the technical definitions of “procurement” and “covered procurement”. Covered procurement means those procurements that are covered by the majority of the provisions in the Bill. They are mostly procurements by contracting authorities above the relevant thresholds for goods, services and works that are not exempted from the Bill.

However, the Bill does cover some aspects of procurements that go beyond that. That is why we have a wider definition of procurement, which means any procurement. That allows the Bill to make some limited provision in relation to matters such as below-threshold procurements, and procurements in accordance with certain international rules or certain treaties. For example, the provisions in part 6 of the Bill regulate certain procurements that are of a lower value than the thresholds set in schedule 1 but are none the less subject to some regulation under the Bill.

Subsection (2) makes it clear that the term “procurement” —and, by extension, “covered procurement”—includes all steps taken in the contract award, as well as the management of a contract, up to and including termination. Subsections (3) and (4) make it clear that references to procurement and covered procurement also apply where contracting authorities conduct joint procurement and procurement by a centralised procurement authority for the benefit of other contracting authorities.

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Mundell. I start by paying tribute to Sarah, Christopher and Huw in the Public Bill Office for all their hard work in going through over 100 amendments tabled for Committee stage. I also thank the Minister for his opening remarks.

We have been clear that we want to work constructively with the Government to get the Bill into as good a state as possible. We all want procurement to work for British people, inspire confidence in the system and offer genuine value for money. I hope that the Minister will consider our amendments on their merits, as genuine attempts to get the Bill into as good a place as possible.

As we know, the Bill began its life in the Lords and underwent significant changes before reaching this place. While we expected the Government to table amendments to their own Bill—especially given that, sadly, we have seen four Chancellors of the Duchy of Lancaster since the Bill’s introduction in the Lords on 11 May 2022—I have to say that the scale of change between the Bill as drafted and the Bill before us today does not inspire confidence that what we end up with will be without significant loopholes. Even as we start Committee stage today, the Minister has put his name to 71 amendments. That is a noticeable number, following on from the hundreds we had in the other place. Of course, we welcome changes that bring the Bill into a more workable state, but if we are having to amend it on such a scale with just one stage of parliamentary scrutiny left, we cannot have much confidence that the end product will not be riddled with errors and inconsistencies that have gone unfixed.

When we are talking about a third of public spending and the livelihoods of countless workers rely on us getting this right, it is disappointing that the Government introduced a Bill that still clearly needs significant work in Committee and on Report. I know that several of the amendments have come as a result of the ministerial merry-go-round that the Government have subjected us to over the past year. We broadly welcome those changes, particularly in relation to the increased consideration of small and medium-sized enterprises within the Bill.

[Kirsty Blackman (Aberdeen North) (SNP)]

Does the hon. Lady share my concern that a lot of the evidence we have seen, such as the oral evidence given in the Lords, was provided on pretty much a different Bill from the one we are discussing today, and the one we will end up with after all the Government amendments?

[Florence Eshalomi]

I thank the hon. Lady for that point. It is so important, because we have seen what can happen when we do not get procurement right. We all know the impact it has on our local communities; we all have small businesses and organisations in our communities that are good at handling and dealing with public contracts but never get a look in. The fact that so many really good amendments were tabled in the other place but not taken up by the Government is quite disappointing.

What businesses ask us for is certainty, especially during these difficult economic times, but the mess the Government have made of the Bill does nothing but offer more confusion to the many businesses who rely on procurement. The Bill today is vastly different from the Bill introduced in the Lords, but it is also different from the Bill promised in the Government’s Green and White Papers and—who knows?—it may be vastly different from the Bill that ends up on the statute book. That does not scream strong and stable from this Government, and it is unacceptable when public services and livelihoods are on the line.

I am sure we will hear warm words from the Government that many of the amendments we discuss in Committee are unnecessary as they plan to address them in the national procurement policy statement. But how can the Government ask us, businesses and the people who rely on procurement for the day-to-day running of the country to trust them on their word after the year of chaos and uncertainty they have subjected us to, not least in the state of the Bill?

Even this first clause had to be forced in by the Government in the other place due to confusion in the Bill originally introduced to the Lords. Labour did not oppose the introduction of clause 1, which narrows down the definition of procurement to cover public contracts, and we will not oppose it today. We understand why the definition has been included—to distinguish between the specified procurements and other general procurements, particularly as we know that certain procurements that are not meant to be caught by the full framework of this legislation are no longer automatically included. We also agree with the need to familiarise our language in respect of the World Trade Organisation’s agreement on Government procurement, which the United Kingdom became a part of on 1 January 2021.

However, I share some of the concerns expressed by Lord Coaker in the other place about the use of the term “procurement” in the Bill. In particular, amendment 34 moved in the other place took non-covered procurement outside the remit of procurement objectives. I understand why that is necessary for the purpose of the Bill, but I would like to think that all procurement, covered or not, is carried out along the principles of value for money, integrity and maximising public benefit. However, I read carefully the explanation from Baroness Neville-Rolfe in the other place and found her explanation convincing enough to not table an amendment on the issue.

[Alex Burghart]

I thank the Opposition for their support for the clause.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Contracting authorities

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[Alex Burghart]

I am delighted by the hon. Lady’s enthusiasm to hear my next paragraph.

The relevant NHS bodies that are covered by the Bill will be specifically identified in regulations made under the power in schedule 1(5). This is exactly the same approach as under our existing procurement regulations, which is appropriate and helpful as it enables the list of central Government authorities to be updated from time to time as organisations change. There is absolutely no doubt that NHS trusts and various other NHS bodies are contracting authorities. This is because they clearly meet the test for a public authority set out in clause 2(2)(a), which is that they are publicly funded. That test is how we determine whether an entity is a public authority.

Clause 116, which was inserted in the other place, needs to be removed and replaced with the original clause. As it stands, the clause would delete the power agreed by Parliament in the Health and Care Act 2022 for the Department of Health and Social Care to make healthcare procurement regulations that are appropriate for patient care—otherwise known as the provider selection regime. NHS England and the Government have consulted extensively on proposals for the provider selection regime since 2021, and it has received strong support from health and care stakeholders.

The 2022 Act and the powers within it were approved by Parliament and received Royal Assent as recently as April 2022. Parliament recognised then that the procurement of healthcare services provided to patients is a special case and would benefit from procurement rules that would allow for the further integration of services and more joined-up care for patients. The provider selection regime is designed to support the reforms made by the 2022 Act by having flexible and robust procurement rules to support greater collaboration and integration in the NHS.

If clause 116 remains unamended, DHSC will be unable to proceed with its plans to foster the greater integration of healthcare services that better serve patients. If this power is not reinstated, procurement for NHS healthcare services will end up with a confusing scheme of double regulation under the Department of Health and Social Care’s healthcare procurement regulations and under this Bill. It is also likely to lead to greater competition and less collaboration for those healthcare services. I am working closely with colleagues in DHSC to ensure that the provider selection regime is compatible with, and not used to circumvent, the procurement obligations in the Bill, which properly apply to much of the NHS procurement landscape. Parliament will have the opportunity to scrutinise the provider selection regime regulations through the affirmative procedure when they are laid by DHSC in due course.

New clause 13 provides a power for a Minister of the Crown to make regulations disapplying the Bill in relation to areas covered by healthcare procurement regulations made under section 12ZB of the National Health Service Act 2006, as inserted by section 79 of the Health and Care Act 2022. Hon. Members will recall from the debate on the Health and Care Act that a separate but interrelated process of reforms is under way for the procurement of certain healthcare services. Using the powers in that Act, DHSC is currently preparing regulations to govern its proposed provider selection regime, with the aim of improving collaboration in the sector and removing barriers to integrating care. The Bill, following enactment, will therefore need to be disapplied to the relevant extent to enable that scheme of regulations to exist and achieve its intended purpose.

[Florence Eshalomi]

Labour does not intend to oppose amendment 27, nor the Government’s changes through clause 116 and new clause 13. Although we of course want the NHS included in clause 2 and the scope of the Bill, I am satisfied by the Minister’s response and do not intend to vote against the Government’s amendments.

I wish to touch on some issues relating to clause 2, which I will raise now to avoid the need for a separate clause stand part debate. In some ways, the issues relate to the intentions behind the amendment in the other place. The term “public authority” by necessity covers a wide range of organisations, from central Government bodies to local councils to arm’s length bodies and NHS contracting authorities. The number of organisations that fall under the definition of

“(a) wholly or mainly funded out of public funds including the NHS, or

(b) subject to public authority oversight,”

is exceptionally broad. With such a broad definition, there are always likely to be organisations that function on the edge of being a public body. Therefore, doubt still exists over some organisations’ status as public bodies and whether they come under the scrutiny that the Bill hands down to public bodies. There are two important examples of a vast number of bodies where such ambiguity lies: in our housing and education systems.

There is consistent ambiguity about whether housing authorities are public bodies, and the definition has a significant impact on millions of households. The latest English housing survey statistics, released in December 2022, show that approximately 2.4 million dwellings in England were managed by housing associations in 2021. The Minister will be aware that previous questions about the status of housing associations have gone to court. In Weaver v. L&Q in 2009, the Court of Appeal said that, for the purpose of the Human Rights Act, housing associations are public bodies and susceptible to claims. The Office for National Statistics has also found it difficult to put its finger on the status of housing associations, and their classification moved from private to public in 2015 and then public to private in 2017 following the passage of Government legislation.

Obviously, the status of housing authorities and their management goes far beyond the intentions of this Bill. We did not table an amendment on the issue because we understand the greater implications that tabling an amendment of that nature would have created, but I urge the Minister to address the point and give clarity on the issue, so that public bodies and housing associations have a clearer picture of what to expect from the legislation.

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The Bill therefore preserves the current rules under the existing regime, but the Government accept that the provision needs to be readily understood by users and stakeholders. To aid understanding, the amendment splits schedule 2 into part 1 for contracts that are exempt due to the relationship with the other party, and part 2 for exemptions for specific goods and services that are the subject matter of the exemption and may be procured in mixed contracts with exempt and non-exempt parts. The separable test will not apply to part 1. There are two Government motions to transfer paragraphs in schedule 2, as the split into parts 1 and 2 required the moving some of the exemptions.

[Florence Eshalomi]

I have a few points to raise regarding both schedules, so will take them in turn.

Schedule 1 pertains to the threshold agreements that govern the levels above which many of the terms in the Bill become applicable to contracts. We want all contracts—whether they are for £50 or £50 million—to follow some level of basic principle in procurement: we have to ensure there is value for money for the taxpayer. However, we recognise the burden that the management of those contracts places on both the contracting authorities’ procurement managers and the companies that bid for the contracts themselves. We therefore understand the purpose of threshold levels within the system as a fair way to balance the need for scrutiny with the need to ensure the system is not over-burdensome. We also understand that the threshold levels are set by the agreement between the World Trade Organisation and the United Kingdom, and we do not wish to put an important trade agreement into jeopardy by attempting to meddle with them.

However, I have a couple of questions regarding the functioning of the schedule and the bureaucratic process that goes with amending the hard numbers in the Bill, as their real-terms value shifts in the dynamic world before us. First, does the Minister consider the mechanisms in place with the World Trade Organisation and in the Bill are sufficient to account for the current high inflation levels? The World Trade Organisation’s revised agreement on Government procurement, published in 2012, defines the current mechanism to deal with currency shifts. It states:

“The conversion rates will be the average of the daily values of the respective national currency in terms of the SDR over the two-year period preceding 1 October or 1 November of the year prior to the thresholds in national currency becoming effective which will be from 1 January...Thresholds expressed in national currencies will be fixed for two years, i.e. calendar years for all Parties except Israel and Japan”.

Having joined the GPA on 1 January 2022, we will have our threshold set at the value measured at that time until 1 January 2024. Does the Minister not see significant problems arising from having threshold levels based on the value of the pound at that time?

In December 2022, the Office for National Statistics found that inflation rose by 9.2%. If that trend is followed when the data from 2023 is released, the threshold values will be nearly 10% lower in real terms than the thresholds agreed when we joined the GPA. That is a significant amount of money, and it could draw in many contracts over the next year that have simply been the victim of weak economic management by the Conservative party.

Although there may be benefits to having extra scrutiny of more contracts, it should not happen by accident as a result of high inflation. Nor should it mean that a significant amount of contracts will be flung into scrutiny this year, then out of scrutiny on 1 January next year. I hope the Minister recognises that that creates inconsistency for businesses and procurement managers alike. Will the Minister inform the House whether steps are being taken at the WTO to assess the impact of inflation on the thresholds? What is his assessment of the impact of inflation on the rollercoaster workload of those responsible for near-threshold contracts?

Schedule 2 sets out contracts that are excluded from the definition of a “public contract” and the provisions that apply to public contracts. I understand the need for excluded contracts and do not object to any of the listed justifications for excluding contracts from the Bill. We cannot expect areas such as the intelligence services and particularly sensitive national security matters to follow all parts of an Act relating to public services. It is right for sensible and proportionate exemptions to help make procurement efficient, save people millions and run the services that we desperately need.

One such exemption is the horizontal and vertical arrangements that form paragraphs 2 and 3 of schedule 2. Those paragraphs carry over provisions from regulation 12 of the Public Contracts Regulations 2015. Vertical and horizontal arrangements are often used by local authorities to save public money. The vertical arrangements exemption, also known as the Teckal exemption, enables the award of contracts to entities that, although separate entities, are de facto in-house to the contracting authorities. The horizontal arrangements exemption, known as the Hamburg exemption, allows public authorities to co-operate to deliver services collectively.

Taken together, such arrangements give local authorities the tools to enter agreements to share services and achieve savings through economies of scale, and those savings are significant. The Minister highlighted the LGA, whose research shows that such agreements saved the public nearly £200 million in 2018-19. When we face a cost of living crisis and families are choosing between eating and putting on the heating, it is critical that we are as efficient as possible in how we run procurement. It is critical that we do not hinder innovative agreements that help councils, which have had their budgets slashed over the past decade, in saving the money they need to deliver services such as social care.

As the Bill stands, however, there is real concern that it will hinder the use of horizontal and vertical agreements within local authorities. Paragraph 1(2) of schedule 2 stipulates that

“a contract is not an exempted contract if…the goods, services or works representing the main purpose of the contract could reasonably be supplied under a separate contract”.

Groups such as the LGA have highlighted the fact that many contracts that fall under the vertical or horizontal arrangements can be supplied by a separate contract:

“It will often be the case that public services, whether front-line or back-office, could ‘reasonably be supplied’ by a provider that is not a public entity. As a result, the legislation can be interpreted as requiring the public sector to have to engage the market, even for arrangements wholly within the public sector”.

If enacted, the new wording could therefore close down models of collaboration and efficient service delivery that save public money.

Sub-paragraph 1(2)(a) of schedule 2 also opens up a new avenue of legal challenge against the public sector. From the words of Baroness Neville-Rolfe on Report in the other place, I understand that the provision is necessary to avoid a loophole when mixed contracts are inappropriately excluded. I am therefore pleased that the Government have tabled amendments 85 and 86, and I know that the LGA has worked hard with the Government to try to fix this loophole. However, I hope the Minister keeps up engagement with the LGA to ensure that the amendments fix the problem and do not create unintended threats to the existence of horizontal and vertical agreements.

[Alex Burghart]

On the hon. Lady’s two points, she is absolutely right that the mechanism that exists in our WTO arrangement is biennial. As I said, the next upgrade, relative to inflation, is in January 2024. There is nothing we can do about the fact that the updates are biennial—it is part of the agreement, and we have obligations internationally.

The hon. Lady is right that the high rate of inflation—which we are experiencing as a result of Putin’s dreadful war in Ukraine and the end of covid, and which is common to many western democracies at the moment—will make some previously below-threshold contracts into above-threshold contracts. There are pros and cons to that. It means that we will have a degree of extra competition that we would not have had before, but we will see a re-correction in what will now be less than 12 months.

[Florence Eshalomi]

Does the Minister agree on the inconsistency that this will bring for procurement managers, especially when we are proposing this legislation to cut some of the red tape and burden on those same procurement managers?

[Alex Burghart]

Obviously, some contracts will, as I said, be brought above threshold, and those contracts will need to be conducted in accordance with the law. However, as I said to the hon. Lady, that is something that all countries that are signatories to the WTO and that are experiencing inflation will find is happening. In some instances, it will also mean that there is better competition for contracts, which could result in lower costs to the public purse, so it is not all bad.

On mixed contracts, the hon. Lady is absolutely right. The work that my hon. Friend Baroness Neville-Rolfe did in the Lords with the LGA means that we have closed the loophole, and that is to the strength of the Bill.

Question put and agreed to. 

Clause 3 accordingly ordered to stand part of the Bill. 

Schedule 1 agreed to. 

Schedule 2

Exempted contracts

Amendments made: 85, in schedule 2, page 84, line 11, leave out from “in” to end of line 17 and insert—

“this Part of this Schedule.”

This amendment would ensure that contracts within the new Part 1 of Schedule 2 (which will comprise paragraphs 2, 3, 25, 31 and 32) are always exempted from being public contracts.

Amendment 86, in schedule 2, page 85, line 39, at end insert—

“Part 2

Subject-matter exempted contracts

General

3A (1) A contract is an exempted contract if it is—

(a) a contract of a kind listed in this Part of this Schedule;

(b) a framework for the future award of contracts only of a kind listed in this Part of this Schedule.

(2) But a Part 2-only contract is not an exempted contract if, on award of the contract, a contracting authority considers that—

(a) the goods, services or works representing the main purpose of the contract could reasonably be supplied under a separate contract, and

(b) that contract would not be a contract of a kind listed in this Part of this Schedule.

(3) In considering whether goods, services or works could reasonably be supplied under a separate contract, a contracting authority may, for example, have regard to the practical and financial consequences of awarding more than one contract.

(4) In this paragraph ‘Part 2-only contract’ means a contract of a kind listed in this Part of this Schedule that is not of a kind listed in Part 1 of this Schedule.”—(Alex Burghart.)

This amendment would apply the exception previously applied to all contracts listed in Schedule 2 to those listed only in Part 2 of Schedule 2, ensure it operates by reference to the opinion of a contracting authority, and clarify that the authority may have regard to practical and financial consequences.

Ordered,

That paragraph 25 of Schedule 2 be transferred to the end of line 39 on page 85.—(Alex Burghart.)

This is a motion to move paragraph 25 of Schedule 2 (defence and security contracts with governments) to the new Part 1 of Schedule 2 to ensure such contracts are always exempted from being public contracts.

Ordered,

That paragraphs 31 and 32 of Schedule 2 be transferred to the end of line 39 on page 85.—(Alex Burghart.)

This is a motion to move paragraphs 31 and 32 of Schedule 2 (utilities contracts with affiliates and joint ventures) to the new Part 1 of Schedule 2 to ensure such contracts are always exempted from being public contracts.

Schedule 2, as amended, agreed to.

Clause 4

Valuation of contracts

Question proposed, That the clause stand part of the Bill.

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[Alex Burghart]

Clause 4 and schedule 3 are fundamentally interrelated. Clause 4 requires contracting authorities to estimate the value of contracts in accordance with a simple methodology set out in schedule 3, in order to determine whether the contract is above or below threshold and consequently what relevant rules need to be followed. It also includes an anti-avoidance mechanism that makes it unlawful to exercise any discretion in valuing a contract with a view to avoiding the effects of this legislation.

Schedule 3 contains the methodology that clause 3 requires contracting authorities to follow when they estimate the value of contracts. As well as the general rules in paragraph 1 of schedule 3, there are also special rules for frameworks in paragraph 2 and concessions in paragraph 3. The anti-avoidance provision in paragraph 4 is designed to ensure that contracting authorities do not artificially subdivide procurements to evade the rules. There is also a new rule for how to proceed when an estimate is not possible; in such circumstances, contracting authorities must treat the contract as above threshold.

In general terms, the long-standing mechanism in existing regulations works well, so the Bill proposes a similar mechanism, albeit with some adjustments to take advantage of opportunities for simplification and reduction of regulation and some inevitable structural differences as we move from one style of drafting to another.

In clause 5, as there are different thresholds for different types of contract, it is important that the rules adequately address the inevitable situations our contracting authorities will face, such as where a contract contains multiple elements that are subject to different thresholds—that is, a mixed contract. The existing regulatory environment provides a mechanism, across four different regulatory schemes, that allows authorities the flexibility to separate elements into separate contracts, or to mix the elements into a single contract, subject to certain safeguards to prevent rule avoidance.

However, those rules comprise around 14 pages of legislation, are somewhat complicated and can appear repetitive due to their need to address the multifarious combinations of elements within and spanning each regime. Thankfully, the harmonisation approach taken in the Bill means these complicated and seemingly repetitive provisions can be streamlined and simplified, while continuing to provide the necessary flexibility and safeguards against rule avoidance.

Clause 5 provides a safeguard to ensure that authorities do not mix above-threshold and below-threshold contracts purely for the purposes of avoiding the rules. Of course, separate elements can always be procured separately, and mixed contracts with elements that are properly inseparable should be allowed. But the basic safeguard remains that if separation is reasonably possible, but a contracting authority chooses not to separate, a mixed contract containing both above and below-threshold elements must be treated as above-threshold and therefore in scope of the legislation. When determining whether separation is reasonably possible, the practical and financial consequences of awarding more than one contract can be taken into consideration.

[Florence Eshalomi]

I thank the Minister for his explanation of clause 4 and schedule 3, which relate to the estimated value of the contracts, and are both relatively short and simple parts of the Bill. However, the importance of a value estimation is critical to the Bill and the management of procurement. That particularly relates to above-threshold contracts, regulated below-threshold contracts and the application of key performance indicators, as well as the publication of high-value contracts. Given the importance of that estimation, it is critical that contracting authorities get it right and that similar contracts do not end up with widely different values as a result of the calculation values. I would like the Minister to outline the support the Government are giving to those managing procurement within contracting authorities, so that the figures are correct. I have no doubt that such work has been done, but I would welcome an outlining of it.

I welcome the clarity of paragraph 4 of schedule 3 on anti-avoidance. It is critical that all contracts should be scrutinised under this legislation and that there should be no attempt through inventive accounting to avoid them coming under the provisions of the legislation.

I would like clarity on paragraph 5 of schedule 3, which states:

“If a contracting authority is unable to estimate the value of a contract in accordance with this Schedule (for example because the duration of the contract is unknown), the authority is to be treated as having estimated the value of the contract as an amount of more than the threshold amount for the type of contract.”

While it makes sense for contracts with uncertain value to be treated as having above the threshold amount, I have a question on how that applies to the cut-off value of £5 million for key performance indicators and the publication of contracts. Obviously, we do not want every contract without an estimated value to be covered by measures designed for larger contracts. But, similarly, there will be contracts where the value will likely exceed the £5 million currently set as the limit, even when their value cannot be estimated by the clause. Can the Minister inform me whether the clause covers the higher £5 million cut-off and what steps are being taken to ensure that the right level of scrutiny is applied when the value of contracts cannot be estimated?

[Alex Burghart]

As I said a few moments ago, the group we are discussing is in part about making sure that we do not create another loophole where, in a mixed contract, it is possible for a contracting authority to go for a below-threshold requirement because one part of the contract is covered by that. As we discussed in the previous group, the measure is intended to make sure that we are not creating an opportunity for people to play the system.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Schedule 3 agreed to.

Clause 5 ordered to stand part of the Bill.

Clause 6

Utilities Contracts

Question proposed, That the clause stand part of the Bill.

[Alex Burghart]

Clause 6 explains that a utilities contract is a contract for the supply of goods, services or works wholly or mainly for the purpose of a utility activity. Utility activities are set out in schedule 4, but do not include activities that are carried out wholly outside the UK. In the case of private utilities, they include only activities carried out where a private utility has been granted a special or exclusive right.

A special or exclusive right exists where a private utility has been granted a right under a statutory, regulatory or administrative provision that has the effect of substantially creating a monopoly situation that would limit competition. A right is not special or exclusive if it is granted following a competitive tendering procedure under the Bill or otherwise on the basis of a transparent procedure and non-discriminatory criteria.

The utility activities set out in part 1 of schedule 4 cover the water, energy and transport sectors. Part 2 of schedule 4 lists specific activities that are not utility activities. An appropriate authority may make regulations to add or remove activities from part 2 of schedule 4. However, activities can be added to part 2 only where there is fair and effective competition in the relevant market and entry to that market is unrestricted.

Schedule 4 sets out the scope of utilities activities. This largely mirrors the coverage of the existing domestic regime and reflects our commitments in trade agreements such as the WTO Government procurement agreement.

[Florence Eshalomi]

Clause 6 and schedule 4 relate to the procurement of utilities, covering the scope of the Utilities Contracts Regulations 2016. Historically, the procurement of utilities as defined in schedule 4 has run slightly differently from general procurement. For example, the value at which a contract passes the thresholds in schedule 1 is £426,955 for general utilities contracts, as opposed to £138,760 for central Government authorities and £213,477 for sub-central Government authorities.

I thank the Minister for explaining the mechanisms in place specifically for utilities contracts. I do not disagree with the rationale behind the systematic differences between how utilities contracts are awarded and managed and how general contracts are awarded. Following the publication of the Green Paper, the Government have responded to the sector’s concerns that the proposed system would be too onerous compared with the Utilities Contracts Regulations 2016. However, I do not believe that the measures in the Bill should subtract from the significant problems that need to be addressed in the utilities sector.

In particular, we have seen the rail sector have deeply troubling issues among some contracted-out services in the past months, and it is vital that we manage contracts in a way that will help to mitigate those risks. For those of us who come from an Italian background, the word “avanti” means “to come in”, but I think it is fair to say that the word “Avanti” will see my hon. Friend the Member for Birkenhead and many others roll their eyes in despair. The fact is that too many of Avanti’s trains have not, in fact, been coming into stations, with many cancellations and packed trains becoming a sad norm for huge swathes of the country.

Those on Avanti are not the only ones struggling. TransPennine Express, which connects places such as Grimsby, Doncaster, Sheffield and Liverpool, has also seen its performance struggle significantly. That is despite reports in The Telegraph that shareholders are due to earn a share of £75 million. For customers who turn up for their trains, day in and day out—many of whom have annual season tickets costing thousands of pounds—to see shareholders due to earn a share of that £75 million is a slap in the face. That also happened during the pandemic, when a number of trains up and down the country were cancelled, yet shareholders were again in line to pocket big payouts.

We have also seen franchises such as the east coast main line and Northern fall to the operator of last resort following the termination of the previous operator’s contract. The fact is that the operation of train contracts in this country is simply not fit for purpose. Even the Prime Minister cannot deny the problems, saying at Prime Minister’s Question Time on 30 November 2022:

“My right hon. Friend is absolutely right about the unacceptable deterioration in the quality of Avanti’s service.”—[Official Report, 30 November 2022; Vol. 723, c. 898.]

Despite the criticism from the Prime Minister, the Government went on to award Avanti with a contract extension until 1 April 2023. That beggars belief.

My hon. Friend the Member for Lancaster and Fleetwood (Cat Smith) put it best when she said:

“By giving Avanti this six-month contract extension, after months of failure and rail chaos, this Government are frankly rewarding that failure. Avanti promised to improve services back in September, and instead it has gone and cut services, introduced this emergency timetable and almost entirely stopped selling tickets online.”

I remember trying to book tickets for annual conference last year; I kept going online and refreshing the page. I stopped using the laptop and went on to the iPad, thinking it was maybe the laptop that had problems. I stopped using the iPad and went on to my phone, thinking it was the iPad that had problems. But the tickets were not for sale; they came on sale a day before we were all due to travel to Liverpool. That mad rush at the whim of the train operators, effectively holding people to ransom, is frankly unacceptable.

My hon. Friend continued:

“The provision of reliable train services is essential for the economic growth and prosperity of more than half the UK’s population.”—[Official Report, 25 October 2022; Vol. 721, c. 160.]

At this time, we are hoping to see more people leave their cars at home and use public transport so that we tackle the really serious climate emergency. However, the fact that these companies are being awarded contracts yet are failing to deliver is another way in which the Government are not taking the climate emergency seriously.

Will the Minister provide clarification on the metrics that he will use to assess improvements or, indeed, failure, given that the bar is currently set so low? It is clear that the west coast franchise has been fundamentally mismanaged by Avanti. It may be beyond the Bill’s scope to completely fix the franchising mess in this country, but it is critical that we create a culture of procurement that is carried out in a way that restores public trust and offers fair treatment to everybody across the country.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

Very often, these contracts consider only value for money and the relationship between the contracting parties, not the consumer. We have tabled other amendments that look at social value and the consumer, but is it not important, particularly in relation to utilities, that the consumer is key? The outcome of that is that the consumer gets a better service, rather than the contracting parties scrimping and saving, or slicing off money for their friends.

[Florence Eshalomi]

Hear, hear, and I thank my hon. Friend for making that important point. We all remember the summer flash floods almost two years ago. People may think, “Actually, London is insulated from that”, but a number of my constituents were affected, and one issue that they outlined was the failure of Thames Water to maintain its pipes. Thames Water is another utility company that is essentially rewarding its shareholders instead of making sure that the public, which receives a vital and critical service from the company, is treated fairly. Customers see their water rates increasing and ad hoc repairs causing disruption on many roads, but all some of those companies think about are their shareholders, who continue to receive massive payouts. When we talk about procurement contracts, it is important that we think about the end users—the customers, the residents, our constituents—who all deserve value for money.

[Kirsty Blackman]

It is the case, though, that this Government are not keen to make a public service a public service. An awful lot of local banks have been closed, changes to Royal Mail since privatisation mean that people cannot get the services they need, and post offices have been closed. All that could be avoided by changing the mindset and ideology, and classing those things as public services for the benefit of the public, rather than for the benefit of shareholders.

[Florence Eshalomi]

I thank the hon. Lady for making such a vital point. The Minister will wonder why I have so many examples, but just last week, I was notified that another local bank in my constituency, NatWest on Clapham High Street, will close and that a number of the branch’s customers had not been told. That is just another example of key services on our high streets, which many of our constituents rely on, disappearing. It is important that we remember the public element of those key services that continue to benefit from public contracts.

[Lloyd Russell-Moyle]

I want to raise the disastrous Southern Water and its continued spillage of sewage into our seas. Many of my constituents have become ill from sea and river swimming. Southern Water was prosecuted and found guilty of breaching water quality standards and pumping pollution into our rivers and oceans, but in the same year, the chief executive received a six-figure bonus. Clearly, there is something wrong with these utilities: there is no competition, never any procurement and they have the contract permanently, forever and ever. Does a clause that does not allow a company to be excluded from any form of procurement in the future simply let such a company continue to misbehave, as regulations are weak and shareholders run away with the profits?

[Florence Eshalomi]

My hon. Friend makes a valuable point. A number of these companies know that they can get away with it. What they are doing is effectively legal, yet for our constituents who have to suffer the consequences it is not fair. The Government have spoken about trying to make a Procurement Bill that is fair, transparent and value for money, but this is not value for money because our constituents will receive hefty fines if they are a day late with their water bill or even if they send a package without the correct postage. We see the situation with Royal Mail and the chief exec, who, when he appeared before the Business, Energy and Industrial Strategy Committee a few weeks ago, was not very clear about the bonus he received, even though the figures were there and the Chair quoted them back to him. It cannot be acceptable for managing directors, chief execs and CEOs to continue to receive big payouts and for their shareholders to be paid while the services that our constituents and the public rely on are not delivered.

[Lloyd Russell-Moyle]

The case of British Telecom and Openreach is another good one. In my constituency, they planned to make all the engineers redundant and to move them to a place in the midlands at lower pay through a fire and rehire scheme. Fundamentally, that means that people will not have well-paid local engineers ploughing money back into the local economy. Is that not the problem of trying to centralise services and underpay engineers and technical staff? The profits go to offshore companies and they do not get recycled into the local economy.

[Florence Eshalomi]

I thank my hon. Friend for making such a valuable point. I am sure that Members will remember the fantastic private Member’s Bill on fire and rehire promoted by my hon. Friend the Member for Brent North (Barry Gardiner), which we debated in the House. Sadly, the Government voted it down. Throughout the pandemic, up and down the country, we saw a number of big multinational organisations using the cover of the pandemic to fire their staff, make drastic changes to their work conditions and try to re-employ them on lower wages and weaker conditions. In organisations such as British Gas/Centrica and British Airways, dedicated levels of service from staff were thrown out of the window, yet those companies continue to receive big payouts for their shareholders and CEOs. We need to address this situation; the Government could have addressed it, but they failed to do so. We have a Procurement Bill in front of us that could help to address some of the loopholes, yet the Government are failing to take it on board.

Perhaps the most frustrating thing for our train passengers is the poor service that they continue to receive while they know that the train operating companies that do such a poor job will continue to be rewarded with those contracts. LNER runs the east coast main line and we might think that it would face similar logistics to Avanti, yet it has nowhere near the same problems. It is not just a timing issue. It is shameful that until 27 November 2020, Northern rail services between some towns were carried out using bus-like Pacer trains that were designed to be inexpensive temporary solutions in the ’80s.

We have heard a lot about levelling up, but we cannot level up when we have such inequal transport across the country. I say that as a Londoner, where we have Transport for London and regular buses. Whenever we leave—this issue is raised by many Members from all parties—we see that the level of service and transport provision across the country is not fair.

[Kirsty Blackman]

I am lucky enough not to have to travel on the west coast main line terribly often, but when I did last year I ended up having to get an overnight Megabus because there were no trains. It has put me off ever visiting any of those places on the west coast that I would normally get to by train. Those communities are losing out as a result—not just the people who live there all the time, but the people who want to visit the really cool places on that line.

--- Later in debate ---

[The Chair]

I am sure that these are important points, but we are straying slightly off the clauses. Can we stick to the clause we are debating?

[Florence Eshalomi]

Thank you, Mr Mundell, for your guidance. I agree with the hon. Lady that if we want to ensure that all sectors of our economy recover after the pandemic, it is important that people can get to those places.

I hope the Minister will work with the Department for Transport in implementing these regulations to ensure that proper levels of security and resources are in the Bill. Hopefully, that will restore trust in our rail sector.

[Alex Burghart]

Thank you for your guidance on digressions, Mr Mundell. As the hon. Member for Vauxhall is aware, rail is not dealt with in the Bill. Schedule 2(17) states that public passenger transport services are exempt and will continue to be regulated by other means, but I believe that Transport questions are coming up shortly, so she will have the opportunity to raise her concerns with the Secretary of State.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Schedule 4 agreed to.

Clause 7

Defence and security contracts

Question proposed, That the clause stand part of the Bill.

Public Procurement Processes

Florence Eshalomi Excerpts

Wednesday 25th January 2023 Westminster Hall

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Ms McVey. I pay tribute to my hon. Friend the Member for Birkenhead (Mick Whitley), who not only managed to sit through Second Reading of the Procurement Bill, but clearly came out thinking he wanted more. Who can blame him? He spoke passionately about the importance of the wider social and economic considerations. He also highlighted the need for procurement to help promote British businesses and invest in places such as his constituency.

I also thank other Members, who have spoken with a lot of knowledge on this issue. On the face of it, it can seem quite dry and clunky, but it is important, as all Members have highlighted. My hon. Friend the Member for Hemsworth (Jon Trickett) mentioned that almost £300 billion is spent on procurement, yet the OECD has highlighted concerns about fraud or corruption in many areas. It is important that we look at which companies are getting contracts and ensure that enough procurement officers are reviewing them. How about we insource instead of outsource, and work with local councils to get those contracts? I am pleased that many local authorities, including mine in Lambeth, are looking at insourcing.

It is always a pleasure to see the hon. Member for Strangford (Jim Shannon) in these debates. He spoke with a lot of passion about some of the things happening in Northern Ireland. As a former London Assembly member and chair of its transport committee, I know that Wrightbus is doing fantastic work to produce buses that are going up and down London. Last year, the Mayor of London went to County Antrim to visit the Wrightbus depot and look at more buses coming on to London streets. That is why it is important to invest in local UK businesses that help the whole of the UK.

The hon. Member for Aberdeen North (Kirsty Blackman) highlighted the glaring omission that we are seeing from this Government. Climate change must be front and centre of everything that we do. Yesterday, my hon. Friend the Member for Hemsworth and I had the honour of meeting some fantastic young people who had come to see my hon. Friend the Member for Nottingham East (Nadia Whittome) about the Climate Education Bill. It is so important that we teach our young people, who are so passionate about the climate emergency, yet we are seeing an omission here.

[Hywel Williams]

The hon. Lady will recall that I mentioned the Social Partnership and Public Procurement (Wales) Bill, which is focused on achieving some socially responsible outcomes. Does she share my concern that the aims of that Bill might be in conflict with the Government’s current legislation, which is—as far as I can see—much more concerned with process?

[Florence Eshalomi]

I thank the hon. Gentleman for raising that important point. As my hon. Friend the Member for Bootle (Peter Dowd) highlighted, key issues were raised in the other place that now seem to have disappeared from the Bill. That is one of those many areas, and I will come on to it later.

We have heard that procurement makes up around a third of public spending. If it is done right, procurement can have such a transformative impact on our whole economy. My hon. Friend the Member for Birkenhead highlighted that social value should not just be an empty phrase. Social Enterprise UK found that between 2010 and 2020, the UK may have missed out on £700 billion-worth of economic, social and environmental opportunities. We are missing out on so much. That is a staggering amount of money. It is crucial that we address some of the problems in the Procurement Bill as it passes through the House.

As I mentioned on Second Reading, Labour supports the introduction of the Bill and recognises the genuine steps forward that it takes. That is why we want to work constructively with the Government to produce a Bill that is fit not just for today, but for the next Government and the Government after that. The Minister has heard my concerns about the Bill a number of times—we have sat through urgent questions and Second Reading—and we will be spending the new few weeks in Committee, which I am sure he is looking forward to, but I want to raise some of the problems that we see with it. I hope that he will think carefully before tomorrow’s deadline for tabling amendments and look at how he can make genuine improvements to the Bill. I am sure that he has had the chance to look at the amendment paper and that none of our concerns are novel to him, so I hope that he will be able to provide full and frank answers to the House on the issues that I raise.

First, I have deep concerns about the workings of the excluded, excludable and debarment systems in the Bill. My hon. Friend the Member for Hemsworth highlighted the practice of companies winning contracts and then doing down staff wages. The right hon. Member for Orkney and Shetland (Mr Carmichael) highlighted the CCTV cameras that councils are sourcing from Hikvision and the fact that we should be worried about some of the companies we are seeking contracts for. Labour is clear that we do not want to see those who act improperly, who abuse their workers or who are a threat to this country being awarded public contracts.

We therefore welcome the purpose of the powers in the Bill, but we can see loopholes in the system, which must be closed while the Bill is before the House. It is concerning that references to excludable contracts seem to give the contracting authorities discretion about whether to disregard a tender. Can the Minister please explain why excludable suppliers are not automatically disregarded in the same way as excluded suppliers?

While I understand that there may be some need for flexibility on discretion grounds, there is no mechanism in the Bill to decide where that flexibility should stand. That is extremely troubling given that grounds as serious as national security can be discretionary—that is outrageous. Can the Minister assure us that companies that are considered national threats will be excluded from contracts under the Bill? Will he ensure that contracting authorities will never be able to bypass this judgment and not disregard such suppliers during the process?

A similar problem exists with the debarment list. In his letter to Baroness Neville-Rolfe on 4 August, the Minister in the other place, Lord True, wrote that

“the debarment list is intended to focus on the most serious cases of supplier misconduct, where suppliers may pose a significant risk to contracting authorities or the public. It is not the case that every supplier which meets a ground for exclusion will be considered for inclusion on the debarment list. Rather, there will be a prioritisation policy which governs how cases are selected for investigation. It is likely that only a small number of cases will be considered each year.”

However, the Bill outlines no such qualification for ascension to the debarment list. As it is currently drafted, the only firm qualifications beyond the Minister’s wishes are mandatory and discretionary grounds for exclusion. Given the merry-go-round of Ministers we have seen over the past year, does the Minister not believe that it is right to put a mechanism in the Bill to provide clarity about the scope of the debarment list?

Will the Minister confirm that the Government’s intention for the debarment list is as Lord True laid out in his letter to Baroness Neville-Rolfe? If only the most serious cases of misconduct go on the debarment list, how can it be fair that those put on the list for discretionary reasons are still treated as excludable suppliers? If the Minister believes that a supplier poses a significant risk to the public, that supplier must be disregarded automatically from the process as an excluded supplier.

I have a further concern about the 30-day payment period down the supply chain. On Second Reading, the Paymaster General said that

“we will be paying the prime contractor within the 30-day period. People in the supply chain will be aware of the contract under which they are supplying to the prime, and we expect that 30-day payment to trickle all the way down”.—[Official Report, 9 January 2023; Vol. 725, c. 347.]

Many small and medium-sized enterprises in all our constituencies rely on prompt payment to keep afloat; they cannot rely on expectations of a trickle-down effect. The Minister may say that it will call into doubt the contract of the prime supplier, but how long will this take?

[Jon Trickett]

My hon. Friend is making a strong speech, although I wish her good luck if she is trying to persuade this ideologically driven Government to change their course. She may recall that three Prime Ministers ago—not so long ago in weeks or months, but some time ago in politics—the then Prime Minister advocated Brexit on two grounds: state aid to industry and procurement. Does my hon. Friend think the Government’s procurement policies are doing anything to level up the country socially, economically or otherwise?

[Florence Eshalomi]

I thank my hon. Friend for highlighting that. I think again of the example of Scotland, where procurement issues are being decided at the whim of Ministers. If anything, that is not levelling up; it is levelling down. We need a Procurement Bill that highlights and recognises small and medium-sized businesses, which often do fantastic work, ensure that their staff have good terms and conditions, and recognise trade unions. They should be given a fair chance at bidding for Government contracts paid for by public money, as my hon. Friend highlighted earlier.

Given how long colleagues on both sides of the House have to wait for responses from the Government, what steps will the Minister take to ensure that instances of late payment reported to the Government are dealt with promptly? In many cases, that could be the difference for an SME that stops it going under and having to hand redundancy notices to its staff. Does the Minister agree that putting strong enforcement down the supply chain in the Bill is the best way to guarantee that no supplier goes without the vital funds that it needs?

The Minister has heard many concerns this morning and I hope he will respond to all our pressing questions. Of course, I will be picking up many of these issues again in Committee.

--- Later in debate ---

[Alex Burghart]

I blush to quote the hon. Gentleman back at him, but there is a lot less of the form of retention that he describes in this Bill than he would have found in the existing European rules. As he heard me say to the hon. Member for Birkenhead, the system is moving from MEAT to MAT. This is a broader understanding of what public authorities can choose to do when they procure goods and services, and that is a really good thing.

The hon. Members for Bootle (Peter Dowd) and for Birkenhead talked about buying British. This Bill will help, but we start from a strong position: between 2016 and 2019, 98% of contracts given out by public authorities in the UK went to British firms. In the Bill, we are making it easier for small and medium-sized enterprises, the majority of which are likely to be in the vicinity of public body procuring, to access contracts from public authorities. We are making it much more likely that there will be more jobs and more opportunities for growing businesses. That is very exciting and one of the most appealing things about the Bill. My noble Friend Baroness Neville-Rolfe wrote a good piece for The Times showing how we are removing barriers to engagement for SMEs in a meaningful way. She has vast experience in business and was able to shine a light on that.

Let me turn to the hon. Member for Hemsworth (Jon Trickett), who talked about insourcing and outsourcing, and the need for an ideological shift. I hope he will not mind me reminding the House that he entered the Commons in 1996 and supported one of the great outsourcing Governments—that of Tony Blair and Gordon Brown. It is so interesting to see the hon. Gentleman’s ideological shift since that time.

I gently remind the hon. Gentleman that public authorities absolutely have the freedom to insource if they think that is the best thing to do. The important thing is that they have the choice, and I hope he would not want to deprive local authorities and local councils of that choice. Maybe he would.

[Florence Eshalomi]

On that particular point, does the Minister recognise the issue highlighted by my hon. Friend the Member for Hemsworth (Jon Trickett), which is that a number of our local councils and public bodies have seen their funding cut over the past 13 years? The procurement teams that would be looking at bringing contracts back in house have shrunk, and a number of councils face difficult decisions—do they fund social workers or fund procurement officers? It is not as simple as saying councils have the freedom to insource.

[Alex Burghart]

I hesitate to remind the hon. Lady why funding for local authorities was reduced, but it had something to do with the behaviour of the Labour Government up to 2010. We all remember the letter that Labour’s Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), left for his Lib Dem successor.

The fact of the matter is that we have highly capable local authorities across the country that manage public contracts very well and which have worked with us in the construction of the Bill to ensure they have a legal framework that helps them make the decisions they want. I have no desire at all to talk them down. I have seen their capabilities up close, and I know that they are looking forward to taking advantage of the powers they will get from the Bill.

I would also very, very gently say this to the hon. Member for Hemsworth. I know that this is political knockabout, but the statements he made about PPE procurement could have been taken to insinuate that Ministers made the awarding decisions. That is absolutely not the case. Those decisions—

Procurement Bill [Lords]

Florence Eshalomi Excerpts

2nd reading
Monday 9th January 2023 Commons Chamber

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

It is a pleasure to be closing this debate on behalf of the Opposition. I thank right hon and hon. Members for their contributions this evening. My hon. Friend the Member for Blaenau Gwent (Nick Smith) highlighted the serious lack of transparency within our system, which led to huge waste during the pandemic, with millions handed out to many personal protective equipment companies. It was great to welcome my newly elected hon. Friend the Member for City of Chester (Samantha Dixon), who painted such a beautiful picture of her city that I am keen to visit it. She also highlighted the real benefits of social value and why it is a missed opportunity for this Government. My hon. Friend the Member for Birkenhead (Mick Whitley) also mentioned the support for social value.

As many Members have mentioned this evening, procurement is such an exciting and interesting topic! Let me be honest: if I went back and told that girl from Brixton that one day she would be closing a debate for the Opposition on this subject, she would probably have said, “What the hell is procurement?”

Having come to this place via local government and the London Assembly, I know how important procurement is to our communities. I know how local businesses, which are rooted in our communities, feel when they are sidelined for public contracts that they are more than capable of delivering. I know how important it is to make sure that we get value for every single penny of public money, and to make sure that we get the right framework for procurement to deliver the best services for our country.

Procurement accounts for a third of all public spending and most people involved with the sector will recognise the need for a simplified regime to replace the current daunting list of former EU regulations when approaching a contract. I want to work constructively with the Minister to make the new regime deliver for the British people as best it can, but unless the Government make the crucial amendments to the Bill that can deliver the value for money that our country deserves, it will be a missed opportunity. The Bill is also a missed opportunity to restore trust in our procurement process. We must recognise that trust in the procurement system has sadly been damaged by the mess of the personal protective equipment contracts on the Government’s watch.

I know the Government are keen to get maths on the agenda, so perhaps the Minister will not mind me doing a bit of “quick maths”— in the words of Big Shaq—in the House today. What do we get if we add a lack of due diligence over billions of pounds-worth of PPE, plus £18 million recouped from potentially fraudulent PPE contracts, plus an unfair VIP lane, giving access to lucrative contracts to those with connections to the Government? Let me tell the Minister: he will get £10 billion of PPE written off, with the public picking up a bill of more than £777,000 a day for PPE stored in China. As my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) said, that could cover 75,000 spaces in after-school clubs desperately needed by parents up and down the country. The Government do not need a report card to know that they have got an F in delivering value for money for the taxpayer.

No one is denying that covid caused incredible stresses in our procurement processes, but we on the Labour Benches were expecting the Government to learn the lessons from the PPE scandal. We expected the Bill to offer a system that gives the public confidence that it is fair and transparent, but what we have is a direct contract scheme that hands more, not fewer, powers to Ministers. It would give them a free rein to bypass crucial elements of whatever scrutiny they felt was needed. If the Minister wants an example of why scrutiny is important, I invite him to look at the Public Accounts Committee’s damning report on the awarding of contracts to Randox Laboratories. As the hon. Member for Richmond Park (Sarah Olney) said, there were a number of failings that cannot be excused. The report found that

“basic civil service practices to document contract decision making were not followed.”

It also said:

“The role of the Department’s ministers in approving the contract was also confused and unclear.”

It gets worse. Despite struggling to deliver on its first contract, the company was then awarded another contract extension worth £328 million, just seven months later. In this time, Randox saw a four-hundredfold increase in its profits in the year to June 2021. That is disgraceful.

[Anthony Mangnall]

Does the hon. Lady not take confidence from the platform the Bill creates whereby a business or organisation that has performed badly will not be able to bid into a contract? The whole point of the transparency measures is to stop that from happening. We have addressed those concerns and placed them in the very Bill that we are debating this evening.

[Florence Eshalomi]

I thank the hon. Gentleman for that point. What we in the Opposition are trying to say is that the transparency clauses the Government are talking about do not go far enough. We have a system that does not claw back the money that is wasted; at a time when we are telling members of the public to look at the cost of living, we are seeing money wasted and not clawed back.

Public transparency is not just a nice thing to say, but a vital tool to ensure that every single penny of public money is spent efficiently. I welcome some of the moves towards transparency in this Bill, but we can and must go further. We must look at Ukraine, which has created a transparency system that is open to the public and inspires trust. The Ukrainians have managed to do that while under attack by Russia. If they can do it, so can we.

Labour would follow in Ukraine’s footsteps and publish an accessible dashboard of Government contracts that is available to anyone as part of our public works pledge. We say that not only because transparency inspires public trust, but because it helps us to track the value created by public procurement in the UK. That matters, because value for public money and spending is ultimately about value to our communities. It is about creating well-paid jobs, ensuring environmental standards are fit for the next generation and preventing a race to the bottom on workers’ rights.

To that end, this Bill is a perfect chance to guarantee a strong commitment to social value and legislation. While I welcome some of the significant progress made on social value in the Lords with the national procurement policy statement, the Bill sadly does little to further the promise of social value or to build on the promise of the Public Services (Social Value) Act 2012.

Labour would go further. Our public works pledge would make social value mandatory in public contract design, but that is not all we would do. We would get tough on suppliers who fail to deliver for the taxpayer. We would guarantee transparency on how taxpayers’ money is spent. We would cut the red tape to give our SMEs a fair chance at winning contracts. We would oversee the biggest wave of insourcing in a generation to deliver public services that we can all be proud of.

The Bill is large and technical and there are many things I look forward to working constructively on with the Minister during line-by-line scrutiny. In that spirit, I end my remarks by praising the progress made on the Bill in the other place. Important amendments on the national procurement policy statement and protecting human rights are now included in the Bill as a result. I close by urging the Minister to commit today that the Government will not roll back on those key victories—that is vital. I hope he will work with me to ensure that our procurement system delivers for people up and down this country.

Infected Blood Inquiry

Florence Eshalomi Excerpts

Thursday 15th December 2022 Commons Chamber

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

I thank the Minister for the statement, which is welcome but long overdue. It is very disappointing that the Government did not find time for an oral statement in the House earlier this year when they published Sir Robert’s report. Ministers were dragged kicking and screaming to publish the report when it was leaked. That has been the pattern throughout this long painful process and it seems no different today.

Victims of the contaminated blood scandal will be watching today with great interest. Heartbreakingly, many of those infected have not lived to see today’s exchanges and the prospect of proper justice at the end of the inquiry. My right hon. Friend the Member for Kingston upon Hull North (Dame Diana Johnson) has campaigned tirelessly to raise awareness of this issue, but throughout that time more than 3,000 people have died and statistics from the Terrence Higgins Trust show that, between the start of the inquiry in July 2017 and February 2022, some 419 infected people have died.

I know personally how important this issue is and what it is like to have a loved one rely on a clean blood supply. My late mother suffered from sickle cell anaemia and because of that disease she required regular blood transfusions, which were vital. Without those blood transfusions, her life would have ended a lot earlier. I cannot imagine the pain and trauma experienced by families who were let down by basic failures of standards. The least they deserved was a prompt and thorough response from the Government. While we await the conclusion of the report and inquiry, one person dies every four days. Every day that we delay the compensation is justice denied to those people. The Minister owes it to those victims to provide real answers today.

In a recent Westminster Hall debate, the Minister’s colleague, the Parliamentary Secretary, Cabinet Office, the hon. Member for Brentwood and Ongar (Alex Burghart), gave a frankly insulting response on the subject. He dodged the question and failed to give any certainty about the timeline for payment or the publication of the Government’s response to the report, which they have had for more than eight months. Victims will not accept empty gestures. It seems to families that the plan changes with every announcement.

Can the Minister make a promise to the House today to publish a timetable for the compensation framework for those affected by the infected blood scandal? What plans does he have to work in partnership with the infected blood community to develop the compensation framework for those affected? When will he end the Government’s silence on the other 18 recommendations that have gone ignored? How will the Minister make sure that everyone who wants to respond to the proposals has the opportunity to do so? Rather than sporadic updates without any substance, will the Minister commit to more regular updates on progress and the direction of travel on this heartbreaking issue, ahead of the report next summer?

The contaminated blood scandal had a life-changing impact on tens of thousands of victims who were promised the hope of effective treatment. It can only be right that they see the justice they deserve as soon as possible.

[Jeremy Quin]

I thank the hon. Lady for her remarks. She spoke movingly of the impact on those infected and affected. I concur that time is of the essence. I appreciate that, for family reasons, she knows how difficult it must be for the people who saw these things happening to their relatives, and how awful that process has been. I also appreciate that it is incredibly important, given all that has happened to this community, that trust is built and retained. I certainly commit that we will update the House regularly.

I cannot commit to a timetable. The reason is that I do not want to say anything in this House that we cannot meet. There is a complex series of steps to be taken and work to be done across Government and with the devolved Administrations. But I assure hon. Members that it is my intention to update the House as we make progress. We must do so in order to ensure that those infected and affected are fully apprised of the progress we are making.

I am grateful to Sir Robert and Sir Brian for how they have incorporated the views of those infected and affected in their work. My impression is that those infected and affected have appreciated the engagement they have had through the work undertaken. I hope that means that Sir Brian’s work is fully reflective of the thoughts of the community. I have said that I wish to meet members of the community. I want to ensure that our work is timely and ready to fully consider and respond to the work that Sir Brian produces during the course of next year.

Draft Public Contracts (Amendment) Regulations 2022

Florence Eshalomi Excerpts

Monday 12th December 2022 General Committees

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Mr Pritchard. I thank the Minister for his opening remarks.

As the Minister outlined, this statutory instrument has been introduced to correct an inconsistency arising from the UK’s exit from the EU and our joining of the World Trade Organisation’s agreement on Government procurement as an independent entity from 1 January 2021. As a consequence of that change in relationship, new thresholds were agreed for the public contracts that are subject to a full range of procurement regulations in the UK. These new thresholds include a change to how we calculate public contracts to be inclusive of VAT, effectively reducing the real-terms value where public contracts are subject to regulation.

The Public Procurement Regulations 2021 brought into force new thresholds for fully regulated public contracts. They also introduced a new VAT calculation method, which is relevant to the Public Contracts Regulations 2015. However, an inconsistency in the SI meant the threshold for compliance with certain requirements—for instance, inclusion on the Contracts Finder—were not adjusted, despite being made significantly lower in real terms by the inclusion of VAT. Given the reference to the new VAT regime in the explanatory memorandum, it appears the Government did not intend to bring these thresholds down in the Public Procurement Regulations 2021. This begs the question: why has it taken the Government nearly a year between the introduction of the new regulatory scheme on 1 January 2021 and their attempt to fix this inconsistency? Surely, the extra regulatory burden should have been made clear to Ministers swiftly after this change and a solution could have been presented earlier.

We do not oppose the simple addition of 20% to the threshold, as laid out in the procurement policy note on these changes of December 2021, as the suggested method of calculating the extra VAT. But it is noteworthy that the thresholds for full regulation only increased by just under 13%. Will the Minister inform the Committee as to the rationale for the different levels of increase between these two thresholds? I understand the desire to reduce Government burdens by increasing these thresholds, so we do not intend to oppose this SI today. But it is important for the Government to consider that some of the increased scrutiny will have been especially welcomed by small and medium-sized businesses, who will find these smaller contracts more desirable. For example, the publication of more opportunities on Contracts Finder provides a good chance for businesses to find and bid for smaller bits of work. The requirement for authorities to pay suppliers within 30 days is also welcomed to give businesses the certainty they need to pay day-to-day bills on time. I look forward to discussing the wider issues around procurement during the Commons stages of the Procurement Bill, so I will end my remarks for today and await the Minister's response.

Infected Blood Inquiry and Compensation Framework

Florence Eshalomi Excerpts

Thursday 24th November 2022 Westminster Hall

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

I too pay tribute to my right hon. Friend the Member for Kingston upon Hull North (Dame Diana Johnson) and the Father of the House, the hon. Member for Worthing West (Sir Peter Bottomley), for securing this vital debate, and for fighting for justice for those affected by the contaminated blood scandal. All the Members who have made important contributions today campaign tirelessly to get affected constituents the justice that they deserve. I pay tribute to them all, and to Members who could not join us today, for keeping the pressure on the Government and delivering for the victims of the scandal.

My hon. Friend the Member for Llanelli (Dame Nia Griffith) highlighted that many people have been waiting for decades, and that over 300 children have died of AIDS. We must look at how we can help those children who are still living with the condition. The hon. Member for Central Ayrshire (Dr Whitford) highlighted her medical experience. The treatments that we have seen over the years, and being able to spot contaminated blood, are vital, but what about the people who were contaminated before those medical breakthroughs?

My hon. Friend the Member for Wirral West (Margaret Greenwood) highlighted her constituent’s case, and said that this is a long, upsetting and depressing process. We have to remember that people are still living with this mentally. They are suffering daily. Think about the toll that lockdown will have had on the mental health of these people. Every day that compensation is delayed is another day that they suffer.

The hon. Member for Southport (Damien Moore), and a number of other hon. Members, said that we must think about the carers: the people who cared for their family members and loved ones. Where is their voice, and where is the justice for them? No amount of money will change the fact that many people had to bury their children. We have to remember the children. That was highlighted eloquently by my hon. Friend the Member for Wansbeck (Ian Lavery), who passionately reminded us that, for all the statistics around the scandal, we are talking about people. We are talking about real lives, which continue to be impacted daily.

My hon. Friend the Member for Newport East (Jessica Morden) highlighted her work, and that of fantastic voluntary and charity groups that support the many families affected. Even within their financial constraints, they still do a fantastic job supporting many families up and down the country. I also pay tribute to those organisations and groups. The Haemophilia Society, the Hepatitis B Positive Trust, the Hepatitis C Trust, the Sickle Cell Society and the families of thousands of people up and down the country continue to raise awareness. They contributed to this inquiry, and have fought for justice over the past years and decades.

This is the first debate in which I have represented the Opposition Front Bench in this Chamber, but this is a topic in which I take a deep personal interest. My late mother suffered from sickle cell anaemia, and I am a sickle carrier. As a result of the disease, my mum required regular blood transfusions, which were vital to her. Without them, her life would have ended a lot earlier —she died when she was 60. The transfusions helped to ease her sickle pain, and ensured that she was able to see me and my sisters grow up, see her first grandchild, and live her life.

Today, vitally, all blood is screened to avoid the risk of the transmission of serious infection. I am pleased that that has helped more people come forward to give vital blood. Every so often, I get a ping from NHS Blood and Transplant—a call-out for people to come forward and give blood. It is vital that people give blood and know that that blood will be safe.

[Sir Peter Bottomley]

The hon. Lady is making an important point. It reminds me that it was only two weeks ago that, in the Jubilee Room around the corner, there was a plea for people, especially from ethnic minorities, to register to donate blood and, potentially, organs, as many do not need them all. I agree that it is critical that people be aware of the importance of being donors, and of the gift of donations.

[Florence Eshalomi]

I totally agree with the Father of the House; that is so important. As I say, every so often, we get the ping from NHS Blood. At that NHS blood donation event, we called for a bus in Parliament, so that we could get more people here, including parliamentarians, to give blood.

Thorough screening of blood has come alongside the emergence of synthetic clotting factors for haemophilia sufferers, which eliminates the risk of contaminants from important treatments. Together, these treatments have significantly improved the safety of blood treatments in the UK, and patients now have a low risk of contracting serious diseases such as hepatitis or HIV from blood. Sadly, treatments in the ’70s and ’80s put patients at unacceptable risk of contracting serious and life-threatening diseases. In the ’70s, people with bleeding disorders had transfusion treatment replaced with the new product factor concentrate, which was then produced by pooling and concentrating tens of thousands of donors’ blood. As the hon. Member for Central Ayrshire highlighted, just one sample was enough to contaminate the entire batch, and could risk infecting thousands of people; that caused significant concern.

The tragic result was that thousands with blood and bleeding disorders were infected with deadly diseases, which had and continue to have a significant impact on their lives. Without modern, effective treatment, diseases such as HIV were acutely fatal and came with horrific consequences. Heartbreakingly, many of those infected have not lived to see today’s debate and the prospect of proper justice at the end of this inquiry. My right hon. Friend the Member for Kingston upon Hull North highlighted that more than 3,000 people have died, and statistics from the Terrence Higgins Trust show that between the start of the inquiry in July 2017 and February 2022, some 419 infected people have died. While we await the conclusion of this report and inquiry, one person dies every four days. This is about the human element of the inquiry; every day that we delay this compensation is justice denied to those people.

The impact of the scandal goes beyond the immediate medical concerns. My hon. Friend the Member for Warrington North (Charlotte Nichols) highlighted the stigma. We must remember the stigma that those with HIV and AIDS suffered during the ’80s and ’90s. Disgraceful racist and homophobic stereotypes were widely perpetuated, and victims were persecuted and shunned for suffering from this horrific disease.

Diseases associated with contaminated blood often impact not just the immediate victim, but their families and friends. As the primary carer for my late mother, I remember some of the challenges in the late ’90s in making sure my mum got the right treatment when she was suffering. Many of the loved ones of the victims will have gone through similar challenges in trying to get the right treatment, and victims are often misunderstood and continue to be stigmatised for having a disease.

The inquiry is finally coming to a close, and interim payments have begun to be made. It would be remiss of me to pre-empt the recommendations of the inquiry. However, I hope that the Minister has heard loudly the concerns raised by a number of Members this afternoon, and those concerns raised in other debates. I hope that he can fully address some of those clear asks when he responds. As Dame Elizabeth Anionwu—the first ever sickle cell nurse—pointed out, it can be very hard for people suffering with infectious disease, including blood contamination, to come forward because of the stigma.

Sir Robert’s report was published on 7 June 2022 and made 19 clear recommendations. It is frankly disgraceful that only one of those recommendations has been followed up. Sir Brian acknowledged that there is a moral case for the interim payments to be made. I ask the Minister to respond to a number of those claims and ensure that the victims get the payments they deserve. We cannot ignore the impact on the families and friends of victims, who fought alongside them for this justice. Can the Minister provide assurances that those groups will not be ignored when the Government finally respond to the inquiry?

The contaminated blood scandal had a life-changing impact on tens of thousands of victims who were promised the hope of effective treatment. It can only be right that they see the justice they deserve as soon as possible.

--- Later in debate ---

[Alex Burghart]

Thank you, Dame Angela. As I say, this is the continuation of a conversation that I very much look forward to having with the right hon. Member for Kingston upon Hull North and the Minister for the Cabinet Office.

[Florence Eshalomi]

I hope the Minister will appreciate that a number of people who have come today to listen to the proceedings, the people who are watching and those who will watch on playback may not feel reassured that the Government are taking the matter seriously. My hon. Friend the Member for Newport East (Jessica Morden) mentioned how people do not want to have to travel again to relive and retell what they went through. I hope the Minister will understand that a number of us do not feel that his response has been acceptable.