Procurement Bill [Lords]

John Penrose Excerpts

Report stage
Tuesday 13th June 2023 Commons Chamber

[John Penrose (Weston-super-Mare) (Con)]

The hon. Lady is being very complimentary about an amendment that I tabled and she kindly signed to show cross-party support. Does she agree not only that the cost of evaluation is a rounding error but that the savings from weeding out dud contracts early would dwarf any possible cost? In any case, we already have a network of so-called what works centres, which are arm’s length, independent bodies that have been doing precisely this for ages. The problem is that they cover only about 8% of all that we buy, but they are already in place, so the additional marginal cost would be even smaller.

[Dame Meg Hillier]

I agree with the hon. Gentleman. Of course, if evaluation is built in from the beginning, the company that has been contracted to do the work would be required to collect data. They will say that that involves more cost but, over time, it would wash out. We need a better standard of data collection on all sorts of issues.

Take the example of a contractor that was asked to run a prison. The Government provided data on the prison’s maintenance, but the data was not right as it did not count the number of windows and toilets, and so on, that needed to be fixed, so the company had to come in and count them. In that case, the company had not banked on prisoners breaking more windows than the average in other buildings. There is lots of data, and we keep pushing for it to be collected, and that data could be built into evaluations.

The hon. Gentleman is bang on about making sure we do not send good money after bad. If something is not working, we need the evidence and the political courage, sometimes, to end the contract. We need to make sure that the people delivering a contract are clear that they are delivering the contract’s aims. Evaluation should have the impact of tightening procurement, tightening the management of contracts by the civil service and sharpening up those who bid for contracts to do a better job and to be proud of that job, in the knowledge that doing a good job may well mean that the contract is extended, but not if they do not do a good job. We should also reward good behaviour. I am keen to hear what the Minister has to say about that.

My right hon. Friend the Member for Barking (Dame Margaret Hodge) tabled amendments that would ensure that organisations involved in nefarious activities are excluded from public procurement. It is extraordinary that companies that are making money in nefarious ways can bolster their activity and give themselves credibility through public procurement. Others have talked a lot about the issues around China, so I will not go into that much more. My right hon. Friend has a strong reputation in this area, and her amendments speak for themselves.

We do not want to miss this opportunity. I recognise that not everything in procurement is about legislation. It would give me some comfort, as Chair of the Public Accounts Committee, if the Minister showed that that is being thought about a bit more deeply across Whitehall.

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[Caroline Lucas (Brighton, Pavilion) (Green)]

I wish to associate myself with the remarks made by hon. and right hon. Members across the House about the dangers of sourcing from high-risk countries and parts of countries and those implicated in serious human rights abuses. The appalling persecution of the Uyghurs in Xinjiang is a very powerful case in point that has been echoed by many Members around the House, and I agree very strongly with that.

I rise to speak to amendment 60 and new clause 17. I welcome the provisions in the Bill that aim to help small and medium-sized enterprises to access public contracts. SMEs are often best placed to meet the needs of the communities in which they operate, providing numerous social and economic benefits. Those benefits, often referred to as a social value, cannot simply be reduced to a tick-box exercise. Nor can we allow social value to amount only to crumbs of compensation from corporate giants, while they extract wealth from our communities. Wider economic, social and environmental priorities need to be built in from the start of every procurement process.

The UK spends about £300 billion a year on public procurement. We could question whether that is a good thing. That has already been hinted at—whether some of these services at least would be better off delivered in-house by public bodies themselves rather than via contracts. However, this is probably not the place to go into that debate. I want to focus on the need to use that procurement spend as a force for good—to keep wealth in local economies, to ensure that public money goes to responsible companies and not those that exploit people and nature, and to help us meet our climate goals and to preserve a liveable future for all of us. I want to see values, not just value, at the heart of the public procurement process in public life.

That brings me to amendment 60 on the national procurement policy statement, which sets out the strategic objectives that the Government want public procurement to achieve. The amendment would require the Government to assess and report on the impact of the national procurement policy statement on meeting environmental and climate targets and to set out any steps that they intend to take to meet them.

Thanks to the efforts of climate campaigners across the country, we are now seeing the net zero goal and the need for climate action acknowledged in strategies and policy statements across the public sector. But these acknowledgements remain meaningless unless we assess the real world impact of those statements. Are our plans to reduce emissions actually being implemented and are they working? The amendment would signal to contracting authorities and businesses that the Government are serious about aligning procurement with climate and environmental goals. It would also enable Government to see where policy might need to be strengthened if it is not having the intended impact.

New clause 17 would require public contracts that include the supply of food to be aligned with nutritional guidelines and to specify options suitable for a plant-based diet. We know that animal agriculture is one of the largest contributors to global heating and biodiversity loss, representing around 15% of all greenhouse gas emissions according to the United Nations Food and Agriculture Organisation. More and more people are choosing to move to more plant-based eating and almost one quarter of people in Britain now follow a mainly or entirely meat-free diet.

The 2022 progress report to Parliament by the Climate Change Committee urges the Government not to ignore the role of diet and notes:

“Government can influence diet shifts, through mandating plant-based options in public settings”.

My amendment would require public contracts for the supply of food to be in line with the Eatwell Guide, which drew inspiration from the nutritional guidance of what was then Public Health England, developed in conjunction with the devolved nations. Analysis by the Carbon Trust found that, thanks to lower consumption of meat, dairy and sugary foods, the environmental footprint of the Eatwell diet is around one third lower than the current national diet.

In settings such as hospitals and schools, where good nutrition can make all the difference, our public sector should lead the way by offering nutritious and sustainable food. That is too often overridden by a narrow notion of value for money, resulting in vulnerable people being given food that does not meet nutritional guidelines. As we all remember, during the pandemic the Government were forced to U-turn on school meal vouchers after widespread outrage at the poor quality and quantity of food being distributed to families. That was not just one isolated failure; it was symptomatic of a political culture that thinks we can package up children’s nutrition, health or any public service and hand it over to whichever corporate giant says it will do it most cheaply. That is the culture that has to change.

Last year the all-party parliamentary group on the green new deal, which I co-chair, produced a report setting out how local community-based solutions are key to climate action. As part of that inquiry we heard from the Sustainable Food Places network, as well as from community farms and kitchens. A key recommendation that came up again and again was to use the procurement system to support more local food and plant-based diets.

The Government’s own food strategy proposes a target of at least 50% of food spend to be on food produced locally or to high environmental standards, a move I certainly applaud. However, nine months on from the Department for Environment, Food and Rural Affairs consultation, we are still awaiting the Government’s response.

Pioneering local authorities and public bodies are leading the way, and my constituency has had some notable successes. In 2020, Brighton received the first-ever Sustainable Food Places gold award. It has brought in improved standards for procurement as part of a wider campaign to get more people eating more vegetables and its school food supplier meets the Food for Life gold standard for championing healthy, local, climate-friendly food.

A more joined-up approach to food, climate and nature and a real commitment to supporting local businesses and community organisations would have huge benefits for our health and our local economies. In addition to the provisions in this new clause, I would therefore hope to see much more support for public bodies that want to put social value at the heart of procurement, to help them to find out how best to get sustainable food from local producers into public sector canteens.

[John Penrose (Weston-super-Mare) (Con)]

I rise to speak to my amendment 68, which was tabled with not just my signature on it, but those of the Chairman and the deputy Chairman of the Public Accounts Committee.

The amendment is about value for money and evaluation. We have heard during the course of this debate that this excellent Bill, which covers an enormous amount of much-needed reform in this area, deals with about £300 billion-worth of taxpayers’ money every year. That is a vast amount of cash and it is vital that we spend it as effectively as we possibly can. It matters not just for the value for money that taxpayers get, but for the efficiency and effectiveness with which our public services are delivered. That ought to be a compelling dyad if there ever was one.

The aim of amendment 68 is to achieve that evaluation, which we have already heard about from the Chairman of the Public Accounts Committee. I stress that this is not just a cross-party amendment, with support from both Labour and Conservative Members and from the cross-party Public Accounts Committee. It also has a very unusual political coalition behind it, which includes not only the Centre for Policy Studies, the TaxPayers’ Alliance and the Adam Smith Institute—all good, solid free-market, centre-right think-tanks—but Transparency International, Spotlight on Corruption, the Campaign for Freedom of Information and the Centre for Public Data. In other words, it is a very unusual political coalition, backing something because it is right in principle and because it yields better value for taxpayers’ money.

I urge Ministers to give the amendment much closer attention. I appreciate that it is different from the equally important questions that we have also addressed during the course of this debate, about exploitation of workers, exploitation of Uyghurs and human rights abuses around the world. However, domestically, in the middle of a cost of living crisis, it really matters to everybody in our constituencies, the man and woman in the street and hard-working families up and down the country and it can make a prompt difference.

[Mary Robinson]

Value for money is, of course, at the heart of procurement, and we all want to see it. The Royal Institute of British Architects has recommended post-occupancy evaluation. That would be an effective tool for public buildings such as hospitals and schools. Could it form part of the evaluations that my hon. Friend is talking about?

[John Penrose]

Absolutely; that is a good and broad-based example that proves the concept’s breadth of applicability.

The whole idea behind that is based on the What Works Network, which is currently backed up by the evaluation taskforce—a joint unit between the Cabinet Office and His Majesty’s Treasury. That is long-standing expertise—over 10 years’ worth—in arm’s length evaluation of Government contracts. It is a great idea in principle, and it has its roots very firmly in successful examples such as the National Institute for Health and Care Excellence, which does a crucial job relating to the medicines bought by the NHS.

But—and it is a very big and important “but”—just how much of that £300 billion-worth of public expenditure is properly evaluated each year? The answer, or the “stat of shame” as it is described in the civil service, is 8%—£1 in every £12. That is shocking and should worry us all. Whether or not we are concerned about value for money or the effectiveness of our public services, 8% is far too low. It is true that some major projects have their own arrangements, including gating agreements and a much more structured approach, which we hope will drive improvements, but for everything else—the annual contracts granted on a three-year rolling basis, then renewed, extended and renewed again—that is where the opportunity is, that is where the magic is, and that is where the potential for massive savings and better value for money really lies.

It is an old marketing truism that most marketing and advertising directors will say that they know that they waste roughly 50% of their advertising budget, but they just do not know which half. This will be an opportunity for us, when it comes to Government expenditure, to break that particular truism in half and say, “We will know.” The amendment allows the Minister to exclude contracts if he thinks they are too small or are governed by national security, but for everything else in that £300 billion, or as much of it as we can possibly manage, we will know up front what the contract is supposed to achieve, which is, after all, a rather basic thing—one would think that that would be automatically recorded, but at the moment it just is not.

We have to say up front what we are trying to do, and we are supposed to say at the end of the contract, “Well, did we do it?” That has to be evaluated by an arm’s length body according to the existing independent criteria laid out in something called the Magenta Book, which is long established and well respected. If we do that evaluation, we can then ask, “Did it work?” If it did not, we get a learning loop; an opportunity—as the new economy specialists and entrepreneurs call it—to “fail fast”, to ensure that we spot the duds and do not renew or extend them, or allow them to carry on rolling over willy-nilly. Instead, we say, “We are going to change something because this did not work.” That will be published, and then we will not renew that contract in that form. We will change it to fix the faults that would by then have been identified. At the moment, those faults are not being identified and are allowed to continue to roll and roll.

That is a blessedly simple idea. It will also pay for itself, as I said earlier when the Chair of the Public Accounts Committee was giving her speech, because the amount of money that it would save would pay rapidly not just for the existing costs of the What Works Network, but probably for a huge expansion, were Ministers so minded, of such evaluations to other parts of the national procurement effort. It would therefore cost the taxpayer net not a bean, it would dramatically improve value for money, and it would improve the credibility of our public service delivery, which all Governments of every stripe always struggle with. It would be a ready-made arm’s length route for politicians of any party to say, “We are doing the right thing. This is done independently. We will make sure that, next time around, we weed out the bad and expand the good.” That could be genuinely revolutionary.

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats support the provisions in the Bill that will speed up and simplify procurement, and create greater opportunities for new entrants, such as small businesses, to access public contracts. However, we have concerns about those areas of the Bill that create opportunities for circumventing the rules that govern the procurement regime. The Government’s shambolic procurement of personal protective equipment during the pandemic exposed the weaknesses in our procurement system, and showed what can happen when Ministers are awarded too much power, and face too little scrutiny. It is vital that safeguards are in place to ensure that billions of pounds of taxpayers’ money does not go to waste.

Amendment 1, which is in my name, seeks to prevent the use of VIP lanes in the procurement of public contracts. The bypassing of the usual procurement rules via VIP lanes during the pandemic saw £3.8 billion of taxpayer funds handed over to 51 suppliers, many of whom were closely tied to Conservative Ministers and their friends. We all know of the scandals that emerged off the back of those contracts; they included reports of excessive profits and conflicts of interest. The Public Accounts Committee, of which I am proudly a member, has, under the chairmanship of the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), carried out an inquiry on the management of PPE contracts. We found that at no stage was any consideration given to potential conflicts of interest between individuals making referrals through the VIP lane and the companies that they were referring.

The Prime Minister said that he was “absolutely shocked” to read of the allegations against Baroness Mone, but future scandals will not be a shock unless the Government take action to ensure that our public procurement regime cannot be exploited, and prevent Ministers from giving special treatment to their friends without proper scrutiny. Transparency of procurement decisions is paramount. I therefore urge the Government to accept amendment 1, ban VIP lanes and crack down on future cronyism and sleaze.

New clause 9 would ensure that the national health service complied with the public procurement rules set out in the Bill—I would like to press it to a Division this afternoon. Liberal Democrats in the Lords successfully amended the Bill to bring the NHS into its scope, so I am extremely disappointed that the Government have overturned the Lords amendment and are reinstating a huge carve-out for the NHS. Without new clause 9, the Secretary of State for Health will be able to make up their own rules for huge swathes of NHS procurement via secondary legislation. Handing over such a wide-ranging power to the Secretary of State without ensuring proper scrutiny is not the hallmark of a Government who wish to govern with integrity and transparency.

The Government argue that the procurement rules are important for all procurement decisions, so it is unclear why they believe that the NHS, which has a procurement spend of many billions of pounds, should fall outside the new regime. Surely it is essential that the largest public organisation in the country follow the same procurement rules as all other organisations. I therefore urge the Government to accept the new clause, and support the Liberal Democrats in ensuring that NHS procurement represents value for the taxpayer and is subject to proper scrutiny.

To conclude, the Liberal Democrats support efforts to reform our procurement regime, and to introduce new rules to increase transparency and create opportunities for small businesses, but there is too much room in the Bill for the rules to be circumvented. The Prime Minister’s pledge to act with integrity and professionalism risks becoming an empty promise unless the Government take action to prevent the use of VIP lanes. Further, it would be ludicrous for NHS spending to be left outside the regime that governs all other public bodies. Public procurement is the largest area of public spending, totalling approximately £300 billion a year. It is vital that the taxpayer has confidence that the Government are taking due care, and confidence that money is spent in accordance with fundamental principles of transparency and fairness.