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

--- Later in debate ---

[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.

--- Later in debate ---

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.

--- Later in debate ---

[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.

COP27

Florence Eshalomi Excerpts

Wednesday 9th November 2022 Commons Chamber

[The Prime Minister]

I am pleased that air pollution has fallen significantly since 2010, which includes about a 40% reduction in nitrogen dioxide. Our Environment Act 2021 has new targets in place and we have supported local authorities with about £800 million in funding for that. On plastics, that Act means that we will ban more single-use plastics, charge for others and have a new enhanced producer responsibility and a deposit return scheme. It is an incredibly ambitious agenda to reduce the amount of plastic in our system.

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

I am proud that my Vauxhall constituency is leading the way with so many of my constituents concerned about global warming. My local council, Lambeth Council, was the first local authority in London to declare a climate emergency, leading the way on policies to clean up the air. However, this action needs not just local but national and international leadership, so it was sad that the Prime Minister failed to show that through his reluctance to attend COP27. Will he match the commitment from my constituents by showing his commitment and financing to help to address this important issue?

[The Prime Minister]

We have given that commitment, including to £11.6 billion for international climate finance. However, as we have discussed, this is not just about what the Government can do; we need the private sector and private finance to help with the transition. That is why all the changes that we are making to the financial system are equally important, because that is where we will unlock the trillions of dollars required.

Oral Answers to Questions

Florence Eshalomi Excerpts

Thursday 27th October 2022 Commons Chamber

[Mr Speaker]

I call Florence Eshalomi, the new shadow Minister.

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

Thank you, Mr Speaker. My hon. Friend the Member for Slough (Mr Dhesi) highlighted the fact that, during the pandemic, we saw the Government ignore qualified companies and use its VIP lane to give their friends enormous contracts. This does all have consequences. Meanwhile, 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. This is not value for money. Far too often, small businesses end up at the back of the queue for public contracts behind big corporations that have an army of PR staff and flashy websites. So will the Minister cut the red tape, and create a fairer, more transparent and streamlined procurement process that gives all our small businesses a fighting chance?

[Jeremy Quin]

Yes, I will. May I welcome the hon. Lady to, I believe, her first Dispatch Box performance? It is good to see her on the Front Bench. If I may say so, where we can we try to work together across the Floor, and I think there is commonality of view that we need to cut red tape, to reduce regulation and to give the maximum opportunity to small businesses across the country to access procurement. I hope that she and her team will be welcoming the Procurement Bill when it arrives in this place. [Interruption.] She is going to wait to see it. That is perfectly reasonable, and she will be very impressed when she does. It will increase transparency, reduce regulation and, I am certain, increase opportunities for smaller companies.

Home Secretary: Resignation and Reappointment

Florence Eshalomi Excerpts

Wednesday 26th October 2022 Commons Chamber

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

I have listened to the Minister this morning outline that the Home Secretary has apologised and been reappointed. We have a situation where six police authorities are in special measures and where in some parts of the country trust and confidence in the police is at an all-time low, yet we want these same officers to go out and arrest criminals and uphold the law. Does the Minister not recognise that a Home Secretary who has broken the law—something so serious—might not command trust and confidence among those same police officers?

[Jeremy Quin]

I think the hon. Lady will accept that there is no suggestion here of a breach of the law. There was a mistake made by the Home Secretary, which she has accepted and apologised for. I am sorry that there is very little to add to that. She is determined, as we all are, to give the police the powers and resources they need to go after the criminals, which the hon. Lady referred to. I think she will welcome, as I do, the fact that we have now got 15,000 additional police officers.

Departure of Previous Home Secretary

Florence Eshalomi Excerpts

Thursday 20th October 2022 Commons Chamber

[Brendan Clarke-Smith]

I thank the hon. Lady for her question, but—once again—we are not here today to discuss specific policies, we are not here to discuss gossip, we are not here to discuss rumours and we are not here to discuss what people think did or did not go on yesterday.

This is a completely different issue: we are here to discuss the resignation of the Home Secretary for a breach of the ministerial code. The Prime Minister has been very clear that she expects the highest standards in the Government and that all Ministers are expected to adhere to the ministerial code. When they have not done so—when they have breached it—they are expected to resign. That is what the former Home Secretary has done, as she outlined in her letter.

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

The Minister will have heard right hon. and hon. Members talking about the former Home Secretary’s comments about seeing refugees fly away. For a Member to talk in that way about people who are seeking refuge and fleeing war and persecution is deeply beneath this House. It is beneath the standards that we should have. The current Chancellor, who as we all know is probably the Prime Minister, has said that he wants to see a more compassionate conservatism. Will the new Home Secretary be outlining that compassion in dealing with and talking about people seeking asylum and refuge in our country?

[Brendan Clarke-Smith]

Although I cannot discuss policy, I will that this Government have shown compassion. I point not just to the aid that we give abroad, but to the Homes for Ukraine scheme and to what we did before that with Syria and with Afghanistan. This country has a proud history of welcoming refugees. That will continue. The Government have been committed to it and will continue to be committed to it. I am certainly committed to it.