Public Procurement Processes

Debate between Kirsty Blackman and Jon Trickett

Wednesday 25th January 2023 Westminster Hall

[Jon Trickett]

My hon. Friend is absolutely right to ask that question. No convincing answer has been provided as to whether value for money was achieved. In fact, it is as plain as the nose on your face that there was no value for money, and I will come to that in a second.

In recent decades, there has been a presumption in favour of outsourcing. That was never the case before. Britain used to be proud of its public service and of the high standards of ethics in the civil service and in politics. It is hard to share that pride these days. The presumption in favour of outsourcing contracts and obtaining services from the private sector has gone through the leadership of all the political parties, and it is time it stopped.

There are seven separate reasons why one should be cautious about that presumption. I hasten to say, though, that there will always be a case for some procurement from the private sector—for instance, police motorbikes will not be nationalised in the immediate future, so one can see that there is a case there—but the presumption should end. Let me briefly refer to the seven issues that it is important to consider.

First, the Government Procurement Service is not as professional as it needs to be. It is possible to get a university degree these days in good procurement practice. That is a necessity to ensure value for money for every penny spent, but the service is under-resourced and not as professional as it needs to be. That is not to criticise the civil servants who do a difficult job in difficult circumstances, but they are in danger of being flooded by the provision of contracts.

I worked in the private sector, as a plumber in the building industry. We were monitored by the main developers to make sure that we provided value for money. Quite often, I confess, we would see whether we could get extras built in on top of the money in the original contract. It was for the quantity surveyors who worked for the developers and builders to make sure that we did not get away with anything. Can we honestly say that every single line in every contract is monitored in the same way as in the private sector? I do not think we can. The reason is because staff are under-resourced, and we are under-resourced because we are outsourcing as an ideological decision rather than anything else.

Here is my second point. More often than not, there is no public comparator. When I was the leader of Leeds City Council, I would ensure that if something was going out to the private sector, there would be a public sector bid made by the council, which would not have a slice on top for profitability. I would then see whether the private sector could compete with the public sector bid. That is one thing that might be done, but there are no public sector comparators under the present neoliberal economic settlement, which we regard with despair, to be honest. Therefore, there is no guarantee that a cartel or group of racketeers is not fixing prices between them to rip off the taxpayer. We cannot be clear about whether that is happening, although without a proper procurement service, I am sure that it is.

My third point is this. No evidence has been produced anywhere in the world that outsourcing is cheaper than insourcing. It has been looked at by the Public Accounts Committee and various bodies throughout the world. What is striking is that larger global companies are now insourcing. They were outsourcing, buying in accountancy and legal services and so on. That is stopping. Why are they insourcing? Because it is cheaper and more effective, and delivers better value for money. Yet here we are with a Government that seem hellbent on outsourcing, for ideological reasons rather than to protect the public purse.

My fourth point is that the private sector puts in prices, but the first thing it does when it wins the contract is to drive down the pay and conditions of the staff employed. Wherever one looks, that is the case. I have experience of that in my constituency. We had a service for cleaning a school a few years ago. The first thing the company did was to cut wages and try to get rid of some of the staff. The staff went on strike, which went on a long time, and the school was filthy. That contract was frankly a disgrace. We all know that that happens everywhere. We see wages falling as a share of GDP. What is the process behind that happening? There are a number of processes, but one is outsourcing, driving down wages in order to increase profits.

My fifth point is this. A service provided in the public sector is motivated by the single ethos of public service. It tries to provide a service to the public without a mind to delivering profits and dividends to shareholders. There are two contesting ethoses—if that is the correct plural—in play. One is serving and enhancing shareholder value as a private sector provider; the other is public service. Well, I know what I want for the staff who treat me, my family or my constituents. I want people who are motivated by one thing only: providing the highest possible quality service. That is what motivated people. The three women I just talked about, who were cleaners and went on strike, were treated in a really shabby way. Their greatest concern was the kids left in the school. The toilets were not being cleaned. They would talk to me regularly about their guilty consciences at being unable to provide the service. They were interested in only one thing: providing a service to those children.

[Kirsty Blackman]

On the point about wages, does the hon. Member share my concern that, although we have control of public sector wages, the Conservatives are not keen on negotiating fair pay settlements? That means that public sector wages are actually being reduced and done down, compared with where they should be.

[Jon Trickett]

I totally agree with the hon. Member. We are seeing a fragmentation of the labour market and the driving down of people’s incomes—particularly of manual workers and others—and I resent it, on behalf of those people. It is not right for the country; after all, if wages are in long-term decline, the economy itself will be in long-term decline as well.

My sixth and penultimate point is about pay and pay ratios. What happens in the public sector—although we would have to say, if we were living in a purely ethical economic environment, that certain public servants are probably paid more than they ought to be—is that pay ratios accelerate the minute a service is outsourced, to the point where we see people earning massive multiples of what the lowest paid in the same service receive. That is not congenial to providing a public-oriented service, which is what we would want to see. Pay ratios in the public sector are accountable through Parliament to the public in a way that they are not once they have been privatised. Indeed, once a service has been privatised—outsourced—it is no longer subject to all the constraints that the public sector has to operate under. Indeed, one further point to make is that if I want to understand why a public sector service in my constituency or the country is deteriorating, I can submit a freedom of information request or ask questions in Parliament. The minute that service has been privatised, we cannot do that, so it is not accountable.

My final point is about the impact on the local and national economy. If we do not control procurement in a proper way, we are unable to direct it to local providers of services in a way that we would expect to be able to do with taxpayers’ money. That has an impact, too, on the local economy.

For all those reasons, this is an important debate, and I am glad that it was raised by my hon. Friend the Member for Birkenhead. It is beyond the legislation that is before us. We need an ideological shift; we need a presumption in favour of the public sector, not the private sector, and I hope that I have contributed in a small way to making an argument for that.

--- Later in debate ---

[Kirsty Blackman]

I absolutely agree. It is a further power grab, just like the United Kingdom Internal Market Act 2020. We have an agreed settlement that was put to a referendum in the first place. We have the Scotland Act 1998, which gives the Scottish Parliament its powers. This is within those powers. It is our responsibility—a responsibility that our parliamentarians in Scotland were elected to carry out—and that the UK Government are trying to take that back means that people in Scotland are not getting what they voted for. They voted for politicians in order to direct this, but their politicians are unable to do so because the UK Parliament is trying to take back control.

Turning to the issues that have been raised today, I will touch first on the EU principles that have been written into the Procurement Bill, which concern transparency, equal treatment, non-discrimination and proportionality. We agree that we should remain as closely aligned with the EU as possible in this regard, and that keeping those principles is absolutely the right thing to do.

[Jon Trickett]

I wonder whether the hon. Lady agrees with those learned commentators who said that EU rules actually preclude the use of procurement to achieve social objectives, and that that was an argument for Brexit rather than for remaining in the European Union.

[Kirsty Blackman]

I think a number of other states have done procurement in a more flexible way even though they are in the European Union. It is not necessarily the case that the way the UK did procurement prior to Brexit is the only way to do procurement within the EU, as a number of states manage to do it very differently. We all have to work within the global procurement agreement. That is part of the World Trade Organisation, which sets rules that, similarly, the EU procurement rules abide by. I am not aware that anybody has suggested that we should step outside that global procurement framework; whether or not they support Brexit, people are still keen to remain part of that.

On transparency and the comments by the hon. Member for Hemsworth (Jon Trickett) about the kind of ideological shift that is required, I agree that this is ideology. We can do procurement in a number of different ways—we can focus on external companies in the private sector, or we can reframe that and focus on the public sector. We can think about the best way to do it. On the basis that they are trying their very best to defund it, I have concerns about the current UK Government’s willingness to use the public sector, which seems completely ideologically opposed to what they would be keen to achieve. However, I agree that we should go further in that direction, on the basis that we can better implement and embed fair working practices because we have much more control over the terms and conditions of people who are directly employed by local authorities or other public sector bodies and we can be more sure they are employed in a fair way.

The right hon. Member for Orkney and Shetland (Mr Carmichael) mentioned Hikvision, which is involved in the Chinese Government’s detention camps and what is happening with the Uyghur Muslims through its facial recognition technology. Some 61% of UK public authorities use Hikvision cameras. That is not a small number. In Scotland, we have committed to getting rid of Hikvision cameras and ending our work with Hikvision, and the US has blacklisted it. The UK Government still have not chosen to do that, so I would very much welcome a commitment from the Minister that they will look at Hikvision specifically and consider what actions they can take to ensure that they are not supporting a company that is committing human rights abuses. It seems to me that the Procurement Bill fails to take into account some of those abuses, despite pushes by the Lords to make that happen.

Again, climate change issues are not embedded in the Procurement Bill. It does not take into account the climate change targets in Scotland, for example. Every Government should be focused on the impact that every single thing that they do will have on the climate, and on future generations as a result of the climate change it will cause. The UK Government should be leading by example by having that thread running through everything thing they do, but they refuse to. There is no point in just talking about climate change; we need to make sure that we are focusing on it in every single thing that we do. The UK Government are failing to put actions in place; they are only using words.

I am aware that I am short on time, so let me briefly mention the Supplier Development Programme in Scotland, an amazing organisation that was set up to ensure that local companies are linked with public sector procurers. It works incredibly well, so I just wanted to plug it briefly. I thank the hon. Member for Birkenhead for bringing forward the debate, and I thank all those who have made contributions.