Public Procurement

Kelvin Hopkins Excerpts

Tuesday 6th March 2012 Commons Chamber

[The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)]

I beg to move,

That this House considers that European Union Documents No. 18966/11 and Addenda 1 and 2, relating to the Draft Directive of the European Parliament and of the Council on public procurement, and No. 18964/11 and Addenda 1 and 2, relating to a Draft Directive of the European Parliament and the Council on procurement by entities operating in the water, energy, transport and postal services sectors, do not comply with the principle of subsidiarity for the reasons set out in Chapters 2 and 3 of the Fifty-seventh Report of the European Scrutiny Committee (HC 428-lii); and, in accordance with Article 6 of Protocol (No. 2) of the Treaty on the Functioning of the European Union on the application of principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the Presidents of the European Institutions.

This debate gives the House a welcome opportunity to consider the subsidiarity questions—pronouncing that word will be one of today’s challenges—identified in the draft directive on public and utilities procurement. It may assist the House if I give some general context on subsidiarity, after which I shall turn to the draft directives under consideration, focusing in particular on the subsidiarity concerns.

This is the fifth time the House has considered a motion for a reasoned opinion on subsidiarity. The first three related to financial services, and one related to justice. The Under-Secretary of State for Justice, my hon. Friend the Member for Reigate (Mr Blunt), read into the record on 7 December—at column 313—a very good definition of subsidiarity. That is not only my opinion; the hon. Member for Stoke-on-Trent South (Robert Flello), speaking for the Opposition, said precisely the same thing, so there is clearly general approbation on both sides of the House for that definition. I do not propose to trouble the House by reading out the definition again—[Interruption.] There is approbation for that from those on the Government Benches behind me. However, colleagues can, of course, read it for themselves, if they so wish.

The Government support the Lisbon treaty provisions to uphold the principle of subsidiarity and want to work with Parliament to highlight any subsidiarity concerns that the Government may share. Our explanatory memorandums on the proposals in question drew attention to those concerns, and I am very pleased that the European Scrutiny Committee—chaired by my hon. Friend the Member for Stone (Mr Cash), who is present—decided to pursue the matter with suitable dispatch. I also note that the National Assembly for Wales has written to the European Scrutiny Committee expressing concerns about subsidiarity in respect of the procurement proposals.

We have looked into whether other member states share these concerns, and I know of at least one case: the Swedish Parliament has raised similar concerns and tabled reasoned amendments on both proposals in very similar terms to those of our motion.

[Kelvin Hopkins (Luton North) (Lab)]

Does the Minister agree that the principle of subsidiarity is too little used and too little understood? We take it seriously, but many other European Union member states do not. Should we not take a lead on this issue more often?

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[Mr Harper]

Off the top of my head, no, as I do not pretend to have an encyclopaedic knowledge of all public procurement for cars across Europe. We will not help our car industry by having people make procurement decisions to buy such cars regardless of other criteria. We need to ensure that we take into account a wider range of criteria and the hon. Gentleman will know that the Government set out our steps towards making procurement decisions, taking wider features into account. The European Commission suggests using public procurement strategically to meet challenges such as increased innovation and environmental protection to ensure that some of those extra, wider issues are built into procurement decisions.

[Kelvin Hopkins]

On this matter of trade, we do not so much have a problem with the rest of the world, but we have a serious trade problem with the rest of the European Union where we have a very big trade deficit. That is evidence that the other parts of the EU do not play fair on trade, particularly when it comes to currency. The Germans have persistently maintained a low parity for their currency over many decades, which has meant that their manufacturing sector has been built up at the expense of ours.

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[Mr Harper]

My hon. Friend makes a very good point. The Government have been doing a great deal of work on this, and my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs has been setting out some of the Government’s policies to improve that position. However, I shall not go into those in depth, because that would take us away from the focus of this reasoned opinion.

[Kelvin Hopkins]

Will the Minister give way?

[Mr Harper]

I shall take one more intervention on this, and then I shall set out our concerns about the oversight body, which is the focus of the reasoned amendment.

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[Kelvin Hopkins]

The Minister is being very patient and generous in giving way. On Bombardier, is it not the case that with such complex and big contracts, it is very hard to make judgments between bids? Over time, the Siemens bid might turn out to be a lot more expensive and a lot less good than we first imagined.

[Mr Harper]

If the hon. Gentleman will forgive me, I have answered the point made by my hon. Friend the Member for Stone about the procurement process and I am not going to go into specifics about a particular procurement decision because I have not seen the detail and I was not involved in making that decision. The hon. Gentleman makes a good point about such procurement contracts being significant and complex and there is a need to get the specification right in the first place. There has been a considerable amount of controversy about that particular case.

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[Kelvin Hopkins (Luton North) (Lab)]

It is always a great pleasure to listen to the hon. Member for North East Somerset (Jacob Rees-Mogg), whose speech was properly prepared and helpful to the debate. I am very pleased with the Government’s motion, and it is not often that I am unqualified in my support for the Government. Indeed, from time to time I am critical of my own side, although the robust speech by my hon. Friend the Member for Barnsley East (Michael Dugher) was also very welcome. We also heard some particularly helpful interventions from both sides of the House, and I concur with them all.

I am happy to speak in favour of the motion and support the principle of subsidiarity in this instance. The proposal states:

“The subsidiarity principle applies in so far as the proposal does not fall under the exclusive competence of the EU.”

I am rather pleased that the national health service and various other public bodies do not fall under the exclusive competence of the EU. In fact, I rather like them being under the exclusive competence of the British Parliament, but that is my personal view. I think that we ought to decide democratically what we do with our public services and not be dictated to by anyone else.

We are putting forward a reasoned opinion, but I would go even further and call it a reasoned opposition. Indeed, I think that opt-outs or derogations would be preferable to subsidiarity, as I have argued from time to time. The Government have talked about the possibility of regaining some powers from Brussels, and I could suggest one or two to be returned—but that might go beyond the boundaries of the debate.

The draft directive is about contracting authorities or public bodies, but some of those are now more or less in the private sector, so I am not sure whether they really fall within the scope of the EU’s proposal. The idea of a national oversight body, presumably set up by the British Government, that would police British contractors or contracting organisations on behalf of the EU is bizarre. If the EU wants to set up a body to police things, it should do that itself. It should not expect us to do it. Even then, I would, of course, object.

We are talking about the EU trying to lever public services into the marketplace, and the EU marketplace rather than the British one. I am in favour of strong public sector organisations with public sector employees, paid for publicly and accountable to this Parliament, local authorities or other public bodies. I am against the privatisation of our public services in principle, but if there is to be any private involvement it should be British private involvement, and we should not see our public services sold off to foreign organisations over which we have little control, if any. The whole proposal is unacceptable.

The European Scrutiny Committee’s document refers to social services. It states:

“The evaluation on the impact and effectiveness of EU public procurement legislation has shown that social, health and education services have specific characteristics which make them inappropriate for the application of the regular procedures for the award of public service contracts.”

That is a long way of saying that it is inappropriate for the EU to intervene in our public services, and I strongly agree. I am a member of the European Scrutiny Committee. Sadly, on this rare occasion I was unable to attend the meeting at which the matter was discussed, as I was out of the country on parliamentary business—I obviously missed an interesting and serious debate—but I absolutely support the Committee’s decision.

There have been some general comments on public procurement, what other countries do and what we do, and it has been observed that some countries seem expert at somehow managing to secure contracts for their companies rather than foreign ones. Indeed, I remember some years ago Signor Agnelli, the proprietor of Fiat, being asked why there seemed to be Fiat cars everywhere in Italy, whereas other countries seemed to import cars. He denied the existence of any sort of protectionism or arm-twisting in Italy and said that it was simply because Italians preferred to drive Fiat cars. We all know that Italy is completely above suspicion in these matters, so I will go no further.

Members also talked about railways. I really think that we have made a terrible mistake in offering the Thameslink contract to Siemens. I have been travelling on Thameslink and its predecessors for 43 years, and if the contract proceeds as we expect, I shall be very unhappy about the fact that in future I will be travelling on Siemens trains rather than Bombardier trains made in Derby.

I am known to be sceptical about the EU arrangements. I want voluntary arrangements with our fellow European countries. I am an enthusiastic European in the genuine sense. I love Europe as a place, the countries, the people, the politics and the philosophies that have come out of this great subcontinent, but I am not in favour of an ever-growing EU that is increasing its control over our lives and economies and trying to dictate how we run our countries. That should be done by democratically elected Parliaments. I hope that in time other countries will feel as we do about that. With the current crisis in the eurozone, I suspect that other countries are already starting to think in those terms. The Greeks are very unhappy about what is happening, and who can blame them? Around 25% of their population are unemployed. Wisely, the UK has been somewhat more sceptical of the EU, and perhaps has been leading the way towards a more sensible future for the whole of Europe in the coming years.

[Mr Cash]

rose—

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[Kelvin Hopkins]

It has been said that the European Union is one way of avoiding conflict between the nations of Europe, but, with the pressures inside the eurozone at the moment, tensions are being exacerbated by the European Union, not lessened.

[Mr Cash]

I do not need to go any further down that route, other than to say that public procurement amounting to 18% of the EU’s GDP represents a significant advantage to countries with the maximum degree of foreign direct investment, if they are able to induce the Governments and official bodies of those countries to procure for them the return that they no doubt feel is justified, given the contribution that countries such as Germany make to the European Union as a whole. All that requires a great deal of careful analysis.

I do not want to be unduly suspicious, but I fear that there is a considerable amount of hand-wringing over the extent to which Germany is expected to contribute to the European Union in relation, for example, to Greece and to Spain, when in fact, as Wolfgang Münchau said in the Financial Times a couple of days ago, the root problem is the imbalance that Germany is creating by its refusal to import. I cannot be sure about this, but BIS should ask itself the serious question whether there is not a similar problem in relation to public procurement.

If Germany, for example, makes massive contributions to other countries in Europe, no doubt it believes that if it in turn obtains contracts for the roads, railways and all the other things that make up the public procurement system, it will therefore, through the contracts that it has secured there, receive a repayment—with fantastic profits attached, no doubt—that returns the money to Berlin. That is no doubt what it wishes to achieve—and is achieving.

[Mr Cash]

I am glad that the hon. Gentleman raises that issue, because it is very much the direction in which we should go. We need an analysis and we need to know whether the UK is stepping up to the plate. We know that we have incredibly good industries, but are we making the most of them? Are we being cheated? Are we—if it falls short of cheating—being taken for a ride? Are the rules being properly complied with, and should BIS not conduct a strategic analysis of the issue, irrespective of the fact that the Business Secretary, being a Liberal Democrat, has an apparent abhorrence of investigating what I should like him to look at in terms of the inadequacies and manipulations of the European Union?

I am not being hostile or over-suspicious, but when 18% of GDP is tied up in such public procurement, it is very important for us to be completely sure that we are having a calm and collected look at the extent to which it operates for or against us. The evidence on Bombardier suggested that things had gone badly wrong. I do not really care which side of the House is at fault; as far as I am concerned, this is an opportunity to get it right. I am glad to see that those on both Front Benches are nodding in agreement, because I know that their main concern is to serve the national interest, and that would be well achieved by making such an analysis.

The document contains, as part of the study that the European Union conducted, issues relating to small and medium-sized enterprises. Bigger manufacturing industries tend to be able to look after themselves, but some SMEs need to be carefully monitored and given every possible advantage to enable them to get into the procurement market. The document also refers to the “strategic use” of procurement in Europe—strategic, I imagine, in the context of global trade.

There are deep concerns about the extent to which our water, electricity and many other main utilities are exposed to degrees of competition that are apparently not complied with in some other countries. I hope that that, too, will form part of the overall strategic analysis.

[Kelvin Hopkins]

Some of our utilities, such as electricity and water, are owned by foreign companies—even foreign state-owned companies—and there is a suggestion that they are exploiting the British market to subsidise their own markets.

[Mr Cash]

Yes. This is all part of what I would like someone to look into very carefully. We are far too used to hearing generalisations and soft words when we are in fact talking about very substantial sums of money—on a monumental scale—and the question of whether this is a fair and free market that benefits us. I take into account the remarks of my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) about the manner in which free trade operates, but for practical purposes, in terms of public procurement, I would want to be satisfied that it always works on a fair and reasonable basis and does not in any way upset the UK economy.

This is a very important debate, albeit not one that has attracted a vast amount of interest. I am afraid that these European debates, the contents of which are extremely important, do not necessarily attract the degree of attention that they deserve, because although they deal with people’s daily lives, with whether the UK economy will function effectively, and with many other areas within the rubrics of the European Union’s legislative framework, they do not have the word “domestic” stamped on them, and people think that when we talk about “Europe” we do not mean the UK. The truth is that the UK is affected very directly by everything that happens in the EU, and I want to be entirely satisfied that we get the full benefit of the trading system that the single market is supposed to provide.

[Kelvin Hopkins]

The work that the Chair of the European Scrutiny Committee does, in which some of us try to support him, does make a difference, and this House does hear about the realities of the European Union. I think that our Front Benchers, possibly our civil servants, and certainly the public outside appreciate that we are taking these things seriously. I pay particular tribute to the hon. Gentleman in that regard.

[Mr Cash]

That is extremely generous of the hon. Gentleman. I feel very strongly that we have a duty to look at these matters and to do what we can to help in debating them for the benefit of our constituents in the United Kingdom as a whole.

The explanatory memorandum contains a reference to the impact assessment and its executive summary, which gives us reason to believe that the impact on the European Union has been considered. However, the European Union is not an end in itself; it is an artificial framework that has been created for the purpose of an objective, which is, ultimately, political union. We know that. We also know, from what Chancellor Merkel has been saying recently, that that is very much tied up with her own agenda; I do not need to go down that route. We must consider the impact on the United Kingdom of the huge amount of money involved in public procurement, and the effect in relation to utilities, which may determine whether we get any energy and whether we have a proper water system, electricity system, and so forth. Enabling other countries’ companies to have control over those matters is a question not only of trading but of national security.

It is very important to have these things properly looked at. I am sure that the Minister and the duty Whips will pass on my messages to BIS, and that we will end up with a virtuous circle whereby we have a proper analysis to ensure that the United Kingdom gets what it deserves out of the European Union, and does not participate in it in ways that are, as our debate on subsidiarity amply demonstrated, unnecessary.