Draft Public Procurement (Electronic Invoices Etc.) Regulations 2019

Jo Platt Excerpts

Thursday 7th March 2019 General Committees

[Jo Platt (Leigh) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Gapes. I will start by expressing our support for efforts to modernise and improve the UK’s broken procurement system. From the outset, I should state that we support the principle of e-invoicing. However, there are a number of specific issues with these regulations that I must raise.

First, the timing of the implementation of this regulation derives from an EU directive passed on 16 April 2014, but it has not reached this House until close to the deadline of 18 April 2019. As the Minister is well aware, we are in the midst of a Brexit crisis, with dozens of essential SIs hit by a parliamentary logjam. For the Government to wait until now to lay this SI seems grossly negligent.

There were ample opportunities to pass the regulations—for example, during the passage of the Small Business, Enterprise and Employment Act 2015, which had its First Reading on 25 June 2014. I hope the Minister will explain why the Government have waited until the deadline and laid this SI at a time when Parliament is facing enormous and unprecedented pressure. Why has the Minister also chosen to delay the implementation of provisions relating to sub-central contracting authorities and contracting entities until next year?

One of the most important aspects I wish to raise is the support available for small businesses to adopt these changes. Currently, the Connecting Europe Facility provides funding to businesses adapting to new regulations such as these. Between 2014 and 2016, the Connecting Europe Facility provided over €430 million of funding to the UK. When we leave the European Union, funding such as that will no longer be available. As we know, the Government have consistently refused to commit to replacing EU funding for key areas and have failed to invest in sectors of our economy that need it most, especially regions such as the one I represent.

If we leave with or without a deal, will the Government provide the necessary support businesses need to adapt to these new e-invoicing changes? The regulations are a positive move towards supporting and encouraging e-invoicing, but as prevalence increases we must also ensure that our small businesses, which are often less able to adapt to new and emerging technology, are not left behind.

I do not need to remind the Minister of the potential problems of introducing new technology to procurement. It was recently revealed, for example, that technological flaws in the new shared service platform saw a substantial increase in the number of late payments from the Cabinet Office to its suppliers. Indeed, the number of businesses receiving late payments from the Cabinet Office has nearly tripled in the past two years, despite the Department’s promise to crack down on contractors who pay suppliers late. That has sent a worrying signal to businesses who are looking to the Government for leadership, which the Government have failed to provide.

Without concrete reassurances that our procurement market is ready for another technological evolution, we risk further inflicting financial difficulties, which our small and medium-sized enterprises find harder to bear. That is the reason why we request impact assessments, which are made. The worrying trend emerging of the Government inadequately assessing risk further undermines the long-term stability of our already broken procurement system. This SI is another example of that.

I will also raise with the Minister the cyber-security threats presented by the growth of e-invoicing. What safeguards are in place to prevent fraud and protect the integrity of the system? As the procurement market is digitising, we are faced with unique challenges that require specific and rigorous safeguards. We know that UK organisations are particularly vulnerable, with a recent survey finding that 77% of organisations still operate with limited cyber-security and resilience. We also know that Government communication is poor, with only 4% of businesses recalling using any Government sources of information for their cyber-security. The further promotion of e-invoicing will not be without risk, so I hope the Government are able to detail how they are planning on mitigating that risk.

I turn to the final aspect of the regulations: the imposition of public procurement exclusions based on modern slavery tests. We fully welcome these steps. The Government should lead the way on this issue. However, although this is a positive move forward, because there are tens of thousands of people in the UK living in slavery, there is clearly far more that we need to do.

It is right that our procurement market is evolving and modernising to meet the realities of the modern economy, and we support the efforts to speed up the invoicing process, and to reduce waste and costs. If it is managed well, this would be an extremely positive and beneficial move for some of our small and medium-sized enterprises, but if they are again left behind to fend for themselves, we risk creating barriers to their involvement and competitiveness in the modern economy.

We can only hope that this evolution will not be met with the disruption that is becoming characteristic of this Government’s record on implementation.